Tuesday, November 1, 2005

Part IV

Department of Defense Office of Personnel Management 5 CFR Chapter XCIX and Part 9901 Department of Defense Human Resources Management and Labor Relations Systems; Final Rule

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DEPARTMENT OF DEFENSE NSPS—National Security Personnel System Section 9901.231—Conversion of Positions OMB—Office of Management and Budget and Employees to the NSPS OFFICE OF PERSONNEL OPM—Office of Personnel Management Classification System MANAGEMENT PEO—Program Executive Office Subpart C—Pay and Pay Administration PFR—Petition for Review General Comments Section 9901.301—Purpose 5 CFR Chapter XCIX and Part 9901 RFR—Request for Review SES—Senior Executive Service Section 9901.302—Coverage RIN 3206–AK76/0790–AH82 SL—Senior Level Section 9901.303—Waivers ST—Scientific or Professional Positions Section 9901.304—Definitions Department of Defense Human WGI—Within-Grade Increase Section 9901.311—Major Features Resources Management and Labor Section 9901.312—Maximum Rates Table of Contents Relations Systems Section 9901.313—National Security This supplementary information section is Compensation Comparability AGENCY: Department of Defense; Office organized as follows: Section 9901.321—Structure of Personnel Management. Introduction Section 9901.322—Setting and Adjusting Rate Ranges ACTION: The Case for Action Final rule. Section 9901.323—Eligibility for Pay Pay and Classification Increase Associated with a Rate Range SUMMARY: The Department of Defense Performance Management Adjustment Staffing, Employment and Workforce (DoD or the Department) and the Office Section 9901.331—General Shaping of Personnel Management (OPM) are Section 9901.332—Local Market Adverse Action and Appeals issuing final regulations to establish the Supplements Labor-Management Relations National Security Personnel System Section 9901.333—Setting and Adjusting (NSPS), a human resources management Development of the National Security Local Market Supplements system, within DoD, as authorized by Personnel System Section 9901.334—Eligibility for Pay Strategic Engagement and Establishment of the National Defense Authorization Act Increase Associated with a Supplement the Program Executive Office Adjustment (Pub. L. 108–136, November 24, 2003). Development of Design Options These regulations govern basic pay, Section 9901.341—General Guiding Principles and Key Performance Section 9901.342—Performance Payouts staffing, classification, performance Parameters Section 9901.343—Pay Reduction Based on management, labor relations, adverse Communications During the Design Unacceptable Performance and/or actions, and employee appeals. These Process Conduct changes are designed to ensure that the Outreach to Employee Representatives Section 9901.344—Other Performance Department’s human resources Outreach to Employees Payments management and labor relations systems Outreach to Other Stakeholders Section 9901.345—Treatment of align with its critical mission Development of Design Options—Working Developmental Positions Groups Section 9901.351—Setting an Employee’s requirements and protects the civil Publication of Proposed Regulations service rights of its employees. Starting Pay Public Comments Section 9901.352—Setting Pay Upon DATES: Effective November 28, 2005. Meet-and-Confer Process Reassignment FOR FURTHER INFORMATION CONTACT: At Major Issues Section 9901.353—Setting Pay Upon OPM: Nancy Kichak at 202–606–6500; Specificity of the Regulations Promotion at DoD: Brad Bunn at 703–696–4664. Pay for Performance and Pay Pool Funding Section 9901.354—Setting Pay Upon Adverse Actions and Appeals SUPPLEMENTARY INFORMATION: Reduction in Band Mandatory Removal Offenses Section 9901.355—Pay Retention Table of Abbreviations Labor Relations Section 9901.356—Miscellaneous AJ—Administrative Judge Management Rights/Scope and Duty to Section 9901.361—General COLA—Cost of Living Adjustment Bargain Section 9901.371—General CONUS—Continental United States Independence of the National Security Section 9901.372—Creating Initial Pay DARPA—Defense Advanced Research Labor Relations Board Ranges Projects Agency Response to Specific Comments and Detailed Section 9901.373—Conversion of DoD—Department of Defense Explanation of Regulations Employees to the NSPS Pay System ECI—Employment Cost Index Subpart A—General Provisions Subpart D—Performance Management EEO—Equal Employment Opportunity Section 9901.101—Purpose General Comments EEOC—Equal Employment Opportunity Section 9901.102—Eligibility and Coverage Section 9901.401—Purpose Commission Summary of Coverage Eligibility Chart Section 9901.402—Coverage EPI—Extraordinary Pay Increase Section 9901.103—Definitions Section 9901.403—Waivers FLRA—Federal Labor Relations Authority Section 9901.104—Scope of Authority Section 9901.404—Definitions FLSA—Fair Labor Standards Act Section 9901.105—Coordination with OPM Section 9901.405—Performance FMCS—Federal Mediation and Conciliation Section 9901.106—Continuing Management System Requirements Service Collaboration Section 9901.406—Setting and FSIP—Federal Service Impasses Panel Section 9901.107—Relationship to Other Communicating Performance FWS—Federal Wage System Provisions Expectations GAO—Government Accountability Office Section 9901.108—Program Evaluation Section 9901.407—Monitoring (former General Accounting Office) Subpart B—Classification Performance and Providing Feedback GS—General Schedule Section 9901.201—Purpose Section 9901.408—Developing HR—Human Resources Section 9901.202—Coverage Performance and Addressing Poor KPP—Key Performance Parameter Section 9901.203—Waivers Performance LWOP—Leave Without Pay Section 9901.204—Definitions Section 9901.409—Rating and Rewarding MRO—Mandatory Removal Offense Section 9901.211—Career Groups Performance MSPB—Merit Systems Protection Board Section 9901.212—Pay Schedules and Pay Subpart E—Staffing and Employment NAF—Nonappropriated Fund Bands General Comments NAPA—National Academy of Public Section 9901.221—Classification Section 9901.501—Purpose Administration Requirements Section 9901.502—Scope of Authority NSLRB—National Security Labor Relations Section 9901.222—Reconsideration of Section 9901.503—Coverage Board Classification Decisions Section 9901.504—Definitions

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Section 9901.511—Appointing Authorities Section 9901.917—Duty to Bargain and This Supplementary Information Section 9901.512—Probationary Periods Consult addresses the following areas: Section 9901.513—Qualification Standards Section 9901.918—Multi-Unit Bargaining • The Case for Action Section 9901.514—Non-Citizen Hiring Section 9901.919—Collective Bargaining • Summary of the Design Process Section 9901.515—Competitive Examining Above the Level of Recognition Æ Strategic Engagement and Procedures Section 9901.920—Negotiation Impasses Establishment of the Program Executive Section 9901.516—Internal Placement Section 9901.921—Standards of Conduct Office Subpart F—Workforce Shaping for Labor Organizations General Comments Æ Development of Design Options Section 9901.922—Grievance Procedures Æ Section 9901.601—Purpose and Section 9901.923—Exceptions to Meet-and-Confer Process Applicability • Major Issues Arbitration Awards • Section 9901.602—Scope of Authority Section 9901.924—Official Time Response to Specific Comments and Section 9901.603—Definitions Section 9901.925—Compilation and Detailed Explanation of Regulations Section 9901.604—Coverage Publication of Data • Next Steps Section 9901.605—Competitive Area Section 9901.926—Regulations of the The Case for Action Section 9901.606—Competitive Group Board Section 9901.607—Retention Standing Section 9901.927—Continuation of ‘‘* * * a future force that is defined less by Section 9901.608—Displacement, Release, Existing Laws, Recognitions, size and more by mobility and swiftness, one and Position offers Agreements, and Procedures that is easier to deploy and sustain, one that Section 9901.609—Reduction in force Section 9901.928—Savings Provisions relies more heavily on stealth, precision Notices Next Steps weaponry, and information technologies.’’ Section 9901.610—Voluntary Separation NSPS Implementation Section 9901.611—Reduction in force With that statement on May 25, 2001, Employee Transition Plan (Spiral Strategy) Appeals President Bush set a new direction for HR and Labor Relations Transition Subpart G—Adverse Actions defense strategy and defense Development of Implementing Issuances General Comments management—one toward and Continuing Collaboration Training Section 9901.701—Purpose Regulatory Requirements transformation. On January 31, 2002, Section 9901.702—Waivers Secretary of Defense Donald Rumsfeld Section 9901.703—Definitions E.O. 12866—Regulatory Review Regulatory Flexibility Act echoed the sentiments expressed by Section 9901.704—Coverage President Bush, stating that ‘‘[a]ll the Section 9901.711—Standard for Action E.O. 12988—Civil Justice Reform Section 9901.712—Mandatory Removal E.O. 13132—Federalism high-tech weapons in the world will not Offenses Paperwork Reduction Act of 1995 (44 transform the U.S. armed forces unless Section 9901.714—Proposal Notice U.S.C. chapter 35) we also transform the way we think, the Section 9901.715—Opportunity to Reply Unfunded Mandates way we train, the way we exercise, and Section 9901.716—Decision Notice Introduction the way we fight.’’ Section 9901.717—Departmental Record Transformation is more than Subpart H—Appeals The Secretary of Defense, Donald acquiring new equipment and General Comments Rumsfeld, and the Director of the Office embracing new technology—it is the Section 9901.802—Applicable Legal of Personnel Management, Linda M. process of working and managing Standards and Precedents Section 9901.803—Waivers Springer, jointly prescribe this final creatively to achieve real results. To Section 9901.804—Definitions regulation to establish a flexible and transform the way DoD achieves its Section 9901.805—Coverage contemporary system, consistent with mission, it must transform the way it Section 9901.806—Alternative Dispute statutory merit system principles and leads and manages the people who Resolution prohibitions against prohibited develop, acquire, and maintain our Section 9901.807—Appellate Procedures personnel practices (in 5 U.S.C. 2301 Nation’s defense capability. Those Section 9901.808—Appeals of Mandatory and 2302, respectively), for managing responsible for defense transformation— Removal Actions the Department’s human capital. This including DoD civilian employees— Section 9901.809—Actions Involving system has been developed pursuant to must anticipate the future and wherever Discrimination Subpart I—Labor-Management Relations a process based on extensive outreach to possible help create it. The Department General Comments employees and employee must seek to develop new capabilities to Section 9901.901—Purpose representatives. In addition, DoD and meet tomorrow’s threats as well as those Section 9901.902—Scope of Authority OPM have engaged in outreach to the of today. NSPS is a key pillar in the Section 9901.903—Definitions public as well as to the Congress and Department of Defense’s Section 9901.904—Coverage other key stakeholders. As enacted by transformation—a new way to manage Section 9901.905—Impact on Existing section 1101 of the National Defense its civilian workforce. NSPS is essential Agreements Authorization Act (Pub. L. 108–136, to the Department’s efforts to create an Section 9901.906—Employee Rights November 24, 2003, hereinafter referred environment in which the Total Force Section 9901.907—National Security Labor Relations Board to as ‘‘enabling legislation’’ or ‘‘enabling (military personnel, civilian employees, Section 9901.908—Powers and Duties of statute’’) and codified at 5 U.S.C. 9902, and contractors) thinks and operates as the Board the system preserves all core civil one cohesive unit. Section 9901.909—Powers and Duties of service protections, including merit DoD civilians are unique in the Federal Labor Relations Authority system principles, veterans’ preference, government: They are an integral part of Section 9901.910—Management Rights and due process. It also protects against an organization that has a military Section 9901.911—Exclusive Recognition discrimination, retaliation against function. DoD civilians must of Labor Organizations whistleblowers, and other prohibited complement and support the military Section 9901.912—Determination of personnel practices, and ensures that around the world in every time zone, Appropriate Units for Labor Organization Representation employees may organize and bargain every day. Just as new threats, new Section 9901.913—National Consultation collectively (when not otherwise missions, new technology, and new Section 9901.914—Representation Rights prohibited by law, including these tactics are changing the work of the and Duties regulations, applicable Executive orders, military, they are changing the work of Section 9901.916—Unfair Labor Practices and any other legal authority). our 700,000 civilians. To support the

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interests of the United States in today’s civilian human resources management A key to the success of NSPS is national security environment—where for DoD civilians. The attacks of ensuring employees perceive the system unpredictability is the norm and greater September 11 and the continuing war as fair. In a human resources agility the imperative—civilians must be on terrorism make clear that flexibility management system, fairness is the an integrated, flexible, and responsive is not a policy preference. It is nothing basis for trust between employees and part of the team. less than an absolute requirement, and supervisors. The Department’s mission At best, the current personnel system it must become the foundation of DoD cannot be accomplished without the is based on 20th century assumptions civilian human resources management. workforce. It is a tenet of the about the nature of public service and NSPS is designed to promote a Department that employees will cannot adequately address the 21st performance culture in which the exercise personal responsibility and century national security environment. performance and contributions of the sustain a high level of individual Although the current Federal personnel DoD civilian workforce are more fully performance and teamwork when they management system is based on recognized and rewarded. The system perceive that the human resources important core principles, those offers the civilian workforce a system and their supervisors are fair. principles are operationalized in an contemporary pay-banding construct, The Department and the Office of inflexible, one-size-fits-all system of which will include performance-based Personnel Management are addressing defining work, hiring staff, managing pay. As the Department moves away fairness in the National Security people, assessing and rewarding from the General Schedule system, it Personnel System in several performance, and advancing personnel. will become more competitive in setting dimensions: System design; the right to These inherent weaknesses make salaries and it will be able to adjust seek review of important categories of support of DoD’s mission complex, salaries based on various factors, management decisions; workforce costly, and ultimately risky. Currently, including labor market conditions, access to information about system pay and the movement of personnel are performance, and changes in duties. The provisions, processes, and decision pegged to outdated, narrowly defined HR management system is a foundation criteria; and accountability mechanisms. work definitions; hiring processes are for a leaner, more flexible support NSPS regulations and implementing cumbersome; high performers and low structure and will help attract skilled, issuances will include rules to guard performers are paid alike; and the labor talented, and motivated people, while against arbitrary actions. Examples system encourages a dispute-oriented, also retaining and improving the skills include written performance adversarial relationship between of the existing workforce. expectations, the guarantee that management and labor. These systemic Despite the professionalism and employees rated higher than inefficiencies detract from the potential dedication of DoD civilian employees, ‘‘unacceptable’’ will receive the full effectiveness of the Total Force. A more the limitations imposed by the current minimum by which their pay rate range flexible, mission-driven system of personnel system often prevent is adjusted, the requirement to prescribe human resources management that managers from using civilian employees the conditions for probationary periods retains those core principles will effectively. The Department sometimes established by the Secretary, public provide a more cohesive Total Force. uses military personnel or contractors notice of vacancies when the The Department’s 20 years of experience when civilian employees could have Department is recruiting externally, and with transformational personnel and should have been the right answer. prohibition against establishing demonstration projects, covering nearly The current system limits opportunities reduction in force competitive areas that 30,000 DoD employees, has shown that for civilians at a time when the role of target an individual employee on the fundamental change in personnel DoD’s civilian workforce is expanding basis of non-merit factors. management has positive results on to include more significant participation NSPS continues employees’ and labor individual career growth and in Total Force effectiveness. NSPS will organizations’ rights to challenge or seek opportunities, workforce generate more opportunities for DoD review of key decisions. For example, responsiveness, and innovation; all civilians by easing the administrative all employees will be able to request these things multiply mission burden routinely required by the current reconsideration of their performance effectiveness. system and providing an incentive for ratings through an administrative The immense challenges facing DoD managers to turn to them first when grievance procedure. Bargaining unit today require a civilian workforce certain vital tasks need doing. This will employees will also have the option of transformation: Civilians are being free uniformed men and women to focus using a negotiated grievance procedure. asked to assume new and different on matters unique to the military. Employees must be notified in advance responsibilities, take more risk, and be The law requires the Department to of a proposed adverse action, be given more innovative, agile, and accountable establish a contemporary and flexible time and opportunity for reply, and be than ever before. It is critical that DoD system of human resources given a decision notice that includes the supports the entire civilian workforce management. DoD and OPM crafted reasons for the decision. Labor with modern systems—particularly a NSPS through a collaborative process organization officials may file unfair human resources management system involving management, employees, and labor practice claims or grievances. and a labor relations system that employee representatives. DoD The Department and its Components support and protect their critical role in leadership will ensure that supervisors will make information about NSPS DoD’s Total Force effectiveness. The and employees understand the new rules, policies, and practices readily enabling legislation provides the system and can function effectively available to the workforce in the form of Department of Defense with the within it. The system retains the core published regulations, published authority to meet this transformation values of the civil service and allows implementing issuances, local level challenge. employees to be paid and rewarded instructions, training, and other sources. More specifically, the law provides based on performance, innovation, and The last dimension of accountability the Department and OPM—in results. In addition, the system provides for fair decisions and practices under collaboration with employee employees with greater opportunities NSPS will call on two major streams of representatives—authority to establish a for career growth and mobility within information. First, human resources flexible and contemporary system of the Department. management accountability reviews

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within the Department will be used to one-size-fits all approach. Labor market and mitigate the impact of any identify and address issues regarding conditions will also be considered when reductions it faces. the observance of merit system making pay-setting decisions. As D. Adverse Actions and Appeals principles and regulatory and policy prescribed in the enabling legislation, requirements, including those the new compensation system will Consistent with the enabling established under NSPS. In addition, better link individual pay to legislation, the final regulations the Department will monitor the performance using performance rather streamline and simplify adverse actions outcomes of administrative and than time on the job to determine pay and appeals procedures, but without negotiated grievances, performance increases. compromising due process for DoD rating reconsiderations, equal employees. Employees will still receive B. Performance Management employment opportunity complaints, notice of a proposed adverse action, the and whistleblower complaints to correct In recognition of the increased right to reply, and the right to appeal to chronic problems and particular importance of performance in making the Merit Systems Protection Board failings. pay and retention decisions, the (MSPB). In the proposed regulations, we The second stream will be NSPS Department has created a much more proposed to replace the two existing program evaluation findings. These will robust performance management authorities and adopt a single process enable the Secretary and the Director to system. and standard for all actions whether determine whether the design of NSPS The Department will use a multi-level based on unacceptable performance or and the pattern of its results meet system that makes distinctions in levels misconduct. In doing so, we proposed to statutory requirements like fairness and of employee performance. The system adopt the higher of the two current equity and the specific performance will link employee achievements, burdens of proof—‘‘preponderance of expectations of the NSPS Requirements contributions, knowledge, and skills to the evidence’’—rather than the lower Document for a credible and trusted organizational results. It will also allow standard—‘‘substantial evidence.’’ We system. Section 9901.108 of these final the Department to better recognize and have retained this higher burden of regulations codifies the requirement for support team contributions and proof. In addition, the final regulations NSPS program evaluation. It opens to accomplishments. Performance clarify that the full MSPB’s standard for designated employee representatives the expectations will be clearly review is as specified in the enabling design and results of evaluations of communicated to employees and will be legislation. The final regulations retain particular NSPS aspects so that they can linked to the organization’s strategic authority for the Secretary to establish a provide comments and goals and objectives. The ability to number of mandatory removal offenses recommendations to help ensure recognize valid distinctions in (MROs) that have a direct and balanced and fair methods and performance and reward employees substantial adverse effect on the conclusions. A robust and long-term based on those distinctions will foster a Department’s national security mission. NSPS program evaluation plan of high performance culture within the The final regulations also retain studies and reviews, transactional data Department. authority for the Department to review decisions of MSPB Administrative analyses, opinion surveys, and other C. Staffing, Employment and Workforce Judges who are the first step in the evaluative methods will be fielded with Shaping NSPS implementation. NSPS appeals process. Fairness in NSPS is not a specific NSPS will retain the merit system E. Labor Management Relations thing, but rather an intrinsic quality principles and veterans’ preference being built into the design of a flexible while giving the Department the To ensure that the Department has the human resources management system— flexibility necessary to streamline the flexibility to carry out its vital mission, one to be accounted for during reviews hiring process and adapt quickly to as authorized by the enabling and evaluations of NSPS operations and critical mission needs. The Department legislation, the regulations, among other decisions. will be able to use direct-hire authority things, revise management’s rights and for severe shortage or critical needs. its duty to bargain to ensure that the A. Pay and Classification NSPS will also provide for a more Department can act as and when The NSPS pay and classification efficient process for creating appointing necessary. Collective bargaining is system will provide a more flexible authorities, in conjunction with the prohibited on such critical matters as support structure that will help attract Office of Personnel Management, as new procedures observed in making work skilled, talented, workers; retain and requirements emerge. As part of this assignments and deployments unless appropriately reward current process, the system provides for the Secretary, in his or her sole, employees; and create opportunities for transparency and public awareness exclusive, and unreviewable discretion, civilians to participate more fully in the through notice in the Federal Register. elects to bargain. The Secretary may total integrated workforce. A pay The new pay-setting flexibilities will authorize bargaining on these matters to banding structure will replace the also enhance the Department’s ability to advance the Department’s mission artificial limitations created by the attract and retain the talented workforce accomplishment or promote current pay and classification systems. necessary to accomplish its mission. organizational effectiveness. If the With broad pay bands, the Department Through workforce shaping Secretary does not elect to bargain will be able to move employees more flexibilities, the Department will create procedures on these matters, freely across a range of work a reduction in force system that places consultation is required. Management opportunities without being bound by more emphasis on performance while and exclusive representatives will narrowly described work definitions. continuing to protect veterans’ negotiate over changes that have The pay structure will be much more preference rights. The downsizing foreseeable, significant, and substantial responsive to market conditions. The process will be less disruptive to impact, as well as appropriate Department will be able to adjust rate employees and the mission. The arrangements for employees affected by ranges and local market supplements Department will continue to fully utilize those changes, under certain specified based on variations relating to specific tools such as separation incentives and conditions. Additionally, the occupations, rather than the current the Priority Placement Program to avoid regulations create the National Security

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Labor Relations Board (NSLRB) to underscore the Department’s purpose The PEO identified numerous address those issues that are most and intent in creating NSPS. The channels for disseminating relevant, important to accomplishing the DoD Guiding Principles are: timely, and consistent information. mission, with other matters retained by • Put mission first—support National These include: Print and electronic the Federal Labor Relations Authority Security goals and strategic objectives; media; e-mail; town hall meetings; focus (FLRA). The regulations provide the • Respect the individual—protect groups; speeches; and briefings. A Secretary discretion as to when the rights guaranteed by law; website was developed to serve as a NSLRB will be in place. The regulations • Value talent, performance, primary, two-way communications tool also provide the Secretary discretion, in leadership and commitment to public for the workforce, other stakeholders, consultation with the Director, to service; and the general public. The website designate another third party to exercise • Be flexible, understandable, includes the capability for visitors to the authority of the Board in the credible, responsive, and executable; submit questions and comments. The interim. The revisions to the regulations • Ensure accountability at all levels; PEO has responded to thousands of strike the right balance between the • Balance HR interoperability with questions and comments. mission needs of DoD and the unique mission requirements; and The website will remain available meaningful involvement of employees • Be competitive and cost effective. during implementation and will provide and their representatives. In addition, senior leadership current information for managers, approved a set of Key Performance supervisors and employees. Development of the National Security Parameters (KPPs), which define the Personnel System minimum requirements and/or Outreach to Employee Representatives A. Strategic Engagement and attributes of the system. Those KPPs are In January and February 2004, we met Establishment of Program Executive summarized below: with union leaders for the purpose of Office • High Performing: Employees/ exchanging ideas and interests on a new supervisors are compensated/retained labor relations system. All unions While dialogue with employee based on performance/contribution to holding DoD national consultation representatives began in January 2004, mission; rights (NCR) at the time were invited to in April senior DoD leadership initiated • Agile and Responsive: Workforce the January 22, 2004, meeting. Seven of a collaborative process to design and can be easily sized, shaped, and these eight NCR unions elected to implement NSPS. This process was deployed to meet changing mission attend. In addition, one additional crafted by a group of 25 to 30 senior requirements; union without DoD national experts representing DoD, OPM, and the • Credible and Trusted: System consultation rights was invited to attend Office of Management and Budget. The assures openness, clarity, accountability and participated in the January 22, Defense Acquisition Management model and merit principles; 2004, meeting. Union leadership from was used to establish the requirements • Fiscally Sound: Aggregate increases all of the 43 unions representing DoD for the design and implementation of in civilian payroll, at the appropriations employees were invited to attend and NSPS, including Guiding Principles and level, will conform to OMB fiscal participate in the February 26–27, 2004, Key Performance Parameters (KPPs), guidance, and managers will have meeting. Twenty-six unions attended which defined the minimum flexibility to manage to budget; and participated in the February 2004 requirements for NSPS. The Honorable • Supporting Infrastructure: meeting. Gordon R. England was appointed by Information technology support and In the spring of 2004 and continuing the Secretary of Defense as the NSPS training and change management plans over the course of several months, we Senior Executive. As the NSPS Senior are available and funded; and sponsored a series of additional Executive, Secretary England • Schedule: NSPS will be operational meetings with union leadership to established the NSPS Program Executive and demonstrate success prior to discuss design elements of NSPS. Office (PEO) as the central DoD policy November 2009. Officials from DoD and OPM met and program office to conduct the throughout the summer and fall with design, planning and development, Communications During the Design union officials representing many of the deployment, assessment, and full Process DoD civilians who are bargaining unit implementation of NSPS. In undertaking a project of this employees. These sessions provided the The entire process was accomplished magnitude, impacting over 700,000 opportunity to discuss the design jointly with OPM. An integrated civilians of the Department, it was elements, options, and proposals under executive management team composed essential to ensure the availability of consideration for NSPS and solicit of senior DoD and OPM leaders information on the new HR and labor union feedback. provided overall policy and strategic relations systems. It was also critical to During this time, 10 meetings (in advice to the PEO and served as staff to solicit the views and ideas of addition to the 2 meetings held in the Senior Executive. employees, employee representatives January and February 2004) were held B. Development of Design Options and other stakeholders. with officials of the 43 unions that In April 2004, the PEO developed and represent DoD employees, including the Guiding Principles and Key implemented a communications 9 unions that currently have national Performance Parameters strategy. The objectives of DoD’s consultation rights. These union In setting up the process for the communications strategy are to (1) officials represent over 1,500 separate design of the system, senior leadership demonstrate the rationale for and bargaining units covering about 450,000 adopted a set of Guiding Principles as benefits of NSPS; (2) demonstrate employees. These meetings involved as a compass to direct efforts throughout openness and transparency in the many as 80 union leaders from the all phases of NSPS development. They design and process of converting to national and local level at any one time, translate and communicate the broad NSPS; (3) express DoD’s commitment to and addressed a variety of topics, requirements and priorities outlined in ensuring NSPS is applied fairly and including: The reasons change is needed the enabling legislation into concise, equitably; and (4) address potential and the Department’s interests; understandable requirements that criticism of NSPS. employee communications; and

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proposed design options in the areas of responded to dozens of requests for variations on the six areas of focus: (1) labor relations and collective special briefings. DoD and OPM also Compensation (classification and pay bargaining, adverse actions and appeals, met with the Government banding); (2) performance management; and pay and performance management. Accountability Office, Office of (3) hiring, assignment, pay setting, and Management and Budget, and workforce shaping; (4) employee Outreach to Employees Department of Homeland Security to engagement; (5) adverse action and In keeping with DoD’s commitment to keep them up to date on the team’s appeals; and (6) labor relations. Each provide employees and managers an activities; and consulted with the Merit option was evaluated against the opportunity to participate in the Systems Protection Board on the Guiding Principles and KPPs. development of NSPS, the PEO appeals process to ensure that it Potential options presented a wide sponsored a number of Focus Group provides employees the protections of range of views and concerns. The PEO sessions and town hall meetings at due process. and senior leaders representing various sites across DoD. In mid-July organizations within DoD reviewed all 2004, a total of 106 focus groups were Development of Design Options— the options. After extensive discussion, held throughout DoD, including Working Groups the selected options were presented to overseas locations. Separate focus In order to incorporate all the the Overarching Integrated Product groups were held for employees, information and develop options, the Team (OIPT) for review and the Senior civilian and military supervisors, and PEO established functionally aligned Executive for approval. managers and practitioners from HR, Working Groups. Over 120 employees legal and EEO communities. Bargaining representing the Military Departments Publication of Proposed Regulations unit employees and union leaders were (Army, Navy, Air Force), other DoD These extensive and collaborative invited to participate. For the major Components, and OPM participated in design efforts all preceded the formal system design elements, focus group the process. process for developing the new HR and participants were asked what they The Working Groups reviewed all labor relations systems. The enabling thought worked well in the current HR available information, including: legislation established a formal process systems and what they thought should Pertinent laws, rules, regulations; input in this regard, officially beginning when be changed. Over 10,000 comments, from NSPS focus groups and town hall; the Secretary and the Director published ideas and suggestions received during union consultation meetings; data proposed regulations to establish the the focus group sessions were review and analysis from alternative new DoD HR and labor relations summarized and provided to NSPS personnel systems and laboratory and systems in the Federal Register on Working Groups for use in developing acquisition demonstration projects; the February 14, 2005. The process was options for the labor relations, appeals, enabling legislation; and Guiding designed to ensure collaboration with adverse actions, and human resources Principles and Key Performance employee representatives in the design design elements of NSPS. Parameters. In addition, subject matter and implementation of the new HR and In addition, town hall meetings were experts briefed the Working Groups on labor relations systems. held in DoD facilities around the world a variety of topics, such as pay-for- The first formal step provided a 30- during the summer of 2004, providing performance systems, alternative day period for the public, employees, an opportunity to communicate with the personnel systems, pay pool and employee representatives to review workforce, provide the status of the management, and market sensitive and submit formal comments on the design and development of NSPS, and compensation systems. proposed system. The second step solicit thoughts and ideas. The NSPS In developing options for the NSPS, provided for a minimum of 30 days to Senior Executive, Secretary England, the Working Groups benefited from the ‘‘meet and confer’’ with employee conducted the first town hall meeting at Government’s experience under representatives in order to attempt to the Pentagon on July 7, 2004. Some of demonstration project authorities (e.g. reach agreement on the design of the the town hall meetings were broadcast the China Lake Demonstration Project new system. The third step required live, as well as videotaped and originally authorized by section 6 of the notification to Congress on the decision rebroadcast on military television Civil Service Miscellaneous to implement the new system. The new channels and websites to facilitate the Amendments Act of 1983; the Defense system becomes effective 30 days after widest possible dissemination. reinvention laboratory demonstration congressional notification. projects authorized by section 342 of the Outreach to Other Stakeholders National Defense Authorization act for C. Public Comments In addition to reaching out to DoD fiscal year 1995, as amended; and the In response to the proposed rule, the employees and labor organizations, DoD Acquisition Workforce Demonstration Department received 58,538 comments and OPM met with other groups who Project, authorized be section 4308 of during 30-day public comment period. were thought to be interested in the the National Defense Authorization Act The Department received comments design of a new HR system for DoD. for fiscal year 1996, as amended) and from a wide variety of individuals DoD and OPM invited selected alternative personnel systems (e.g. the including DoD civilian and military stakeholders to participate in briefings Defense Intelligence Personnel System, personnel, DoD organizations, labor held at OPM in August and September the Government Accountability Office, organizations, other Federal agencies, 2004. and the Federal Aviation Members of Congress and the general Those invited to the briefings Administration), the DoD ‘‘Best public. At the conclusion of the public included: Public interest groups, such as Practices’’ initiative (68 FR 16120, April comment period, and continuing over the National Academy of Public 2, 2003), and the compilation of the next several months, DoD and OPM Administration (NAPA), Coalition for research materials from the Department staff reviewed and analyzed the Effective Change, and Partnership for of Homeland Security HR Systems comments. Public Service; veterans’ service Design process. In general, the comments ranged from organizations; and non-union employee At the conclusion of the process, the overall rejection of the proposed advocacy groups. Both before and after Working Groups provided a set of regulations to enthusiastic acceptance. these briefings, DoD and OPM options covering a broad range of Many comments focused on the need for

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fairness in the system and the need for D. The Meet-and-Confer Process Airways Systems Specialists (PASS); training of employees and managers. The public comment period was Retail Wholesale, and Department Store Concerns were expressed about followed by the second step in the Union (RWDSU); Seafarers Int’l. Union maintaining due process and the scope formal development process—an of North America (SIUNA); Service of bargaining. additional 30-day period during which Employees International Union (SEIU); Many of the comments were from DoD and OPM representatives were to Sheet Metal Workers Int’l. Assn. national labor organizations and their meet and confer with employee (SMWIA); Sport Air Traffic Controllers members.1 Almost 80 percent of the representatives to resolve differences (SPORT); United Assn. of Journeymen comments were form letters submitted over the proposed regulations wherever and Apprentices of the plumbing, by email or letter.2 The form letters possible. sprinkler fitting industry of the U.S. and expressed general opposition to the The meet-and-confer process began Canada (UA); United Nurses Assn. of proposed regulations. These officially in April 2005. On April 8, California (UNAC); and United Power submissions expressed concerns that the 2005, a meeting with labor organizations Trades Org. (UPTO) proposed regulations lacked sufficient • was held to discuss procedures to be Other unions also participated in specificity. The comments also followed during the meet-and-confer the meet-and-confer process. These expressed a desire to remain with the process. include: Fraternal Order of Police (FOP) current system, citing too much power The following principals participated and the National Assn. of Independent being given to managers and in the meet-and-confer process: Labor (NAIL). supervisors, with no corresponding • • Forty-three labor organizations were Five representatives from DoD, accountability. Specific concerns invited to participate. Thirty-six of those including the Principal Deputy Under included: Adequate funding of pay labor organizations were represented by Secretary of Defense (Personnel and pools; deployment of civilians to war a ‘‘coalition’’ led by the AFL–CIO, and Readiness), the Program Executive zones; and the lack of third-party review were authorized to send an unlimited Officer, the Deputy PEO, and two senior for performance appraisals, adverse number of representatives. Eighteen of program managers. actions and labor disputes. There was • the labor organizations chose to send Two senior executives from the also concern that the regulations did not Office of Personnel Management (OPM) adhere to congressional intent to representatives. The actual number of representatives present in the room and various senior program managers as maintain the requirements of the necessary. applicable labor relations statutes. typically ranged from 25 to 50. • The coalition includes: American The Secretary, in consultation with Approximately 415 of the commenters 3 Federation of State, County and the Acting Director, also requested the included substantive analysis of the services of the Federal Mediation and proposed regulations. Virtually all of Municipal Employees (AFSCME); American Nurses Assn. (ANA); Antilles Conciliation Service for the entire meet- these comments favor some changes, and-confer process. Face-to-face meet- along with a wide variety of views on Consolidated Education Assn. (ACEA); Assn. of Civilian Technicians (ACT); and-confer sessions occurred from April the merits of the proposed regulations. 18, 2005, through June 2, 2005. During Acknowledging that there are strong American Federation of Government Employees (AFGE); American that period, the parties met for 19 days, views on the proposals presented, DoD with other days spent preparing for and OPM reviewed and carefully Federation of Teachers (AFT); Communications Workers of America meetings and exchanging considered all the comments and the recommendations for amendments to arguments made for and against the (CWA); Fairchild Federal Employees Union (FFEU); Federal Education Assn. the regulations. The Department proposed changes. provided 36 written recommendations The major comments received on the (FEA); Int’l. Assn. of Machinists and to revise the regulations as well as 14 proposed regulatory changes are Aerospace Workers (IAMAW); Graphic recommended clarifications of intent. summarized below, together with a Communications International Union The unions presented revised discussion of the changes made as a (GCIU); Hawaii Council of Commissary regulations for each subpart of the result of the comments. Also Dept. of Defense Unions (HCCDU); Int’l. proposed regulations in addition to summarized are the suggestions for Brotherhood of Boilermakers; Int’l. changes considered where no change is Assn. of Fire Fighters (IAFF); Int’l. Assn. other revisions covering such topics being made. In addition to the more of Tool Craftsman (IATC); Int’l. as—exigencies and post-implementation substantive comments discussed below, Brotherhood of Electrical Workers bargaining, implementing issuances, a number of editorial suggestions were (IBEW); Int’l. Brotherhood of Teamsters, and third-party review of performance made, some of which have been adopted Chauffeurs, Warehousemen and Helpers appraisals and adverse actions. At the and others which have not. A number of America (IBT); Int’l. Guard Union of conclusion of the meet-and-confer of other changes have been made to America (IGUA); Int’l. Union of process, the NSPS Senior Executive and better organize or structure the Operating Engineers (IUOE); Int’l. Union the Acting Director of OPM met with regulatory text. Finally, we received a of Painters and Allied Trades (IUPAT); representatives from the labor number of comments on issues that go Int’l. Federation of Professional and organizations in mid-June 2005, to beyond the scope of these regulations, Technical Engineers (IFPTE); Int l. provide them with an opportunity to which are not addressed in the Organization of Masters, Mates and present their issues and concerns discussion that follows. Pilots (IOMMP); Laborers International directly to the principals. Unions (LIUNA); National Marine The review of the public comments 1 DoD has 43 different unions representing over Engineers Beneficial Assn. (MEBA); and the proposals during the meet-and- 1,500 separate bargaining units covering about Metal Trades Dept./AFL–CIO (MTD); confer process has led to significant 450,000 employees. In the spring of 2004, thirty-six revisions of the proposed regulations. unions joined together to form the United National Assn. of Aeronautical Department of Defense Workers Coalition (‘‘the Examiners (NAAE); National Air Traffic Some of the revisions are substantial, Coalition’’). Controller Assn. (NATC); National 3 2 There were 41 different form letters totaling Federation of Federal Employees During this period of time, the Honorable Dan 43,714 comments. An additional 1,850 form letters Blair was Acting Director of the Office of Personnel were received with additional comments added by (NFFE); National Assn. of Gov. Management. On June 28, 2005, the Honorable the commenter. Employees (NAGE); Professional Linda M. Springer was sworn in as OPM’s Director.

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such as extending employees the right Major Issues these comments, and as a result of the to grieve performance ratings of record, The 58,538 public comments, in meet-and-confer process, we have added restricting authority to issue addition to the face-to-face discussions greater detail to certain sections of the 4 implementing issuances that supersede during the meet-and-confer process, subparts at issue. These additions are inconsistent provisions of collective clearly defined the issues that were of documented at length in our responses bargaining agreements, changing the most concern to DoD civilians to the detailed comments that follow. However, even with added detail, all standard for mitigating penalties, potentially covered by all or parts of five of the subparts at issue retain their providing an opportunity for labor NSPS. Major issues identified were as original structure in the final organizations to submit names of follows: (a) Specificity of the regulations, establishing a general potential members of the NSLRB, and Regulations; (b) Pay for Performance policy framework to be supplemented retaining the current interest of justice and Pay Pool Funding; (c) Adverse by detailed Departmental implementing standard for payment of attorney fees. Actions and Appeals; (d) Mandatory Other revisions are purely technical. issuances. We believe this is the Removal Offenses; (e) Labor Relations; appropriate approach, providing the Significant differences with many of (f) Management Rights/Scope and Duty Department the flexibility it requires in the labor organizations remain over to Bargain; and (g) Independence of the implementing an HR system of this such issues as the scope of bargaining, NSLRB. Because these issues are critical scope. implementing issuances that supersede to understanding the objectives of the Labor organization comments focus conflicting provisions of collective Department’s new HR and labor primarily on process, asserting that by bargaining agreements, the specificity of relations systems, as well as the including greater detail in the proposed the regulations, the ability to grieve pay implementation of NSPS, we have given regulations, they would have been given decisions, the use of behavior as part of them particular attention in the an opportunity to participate and performance evaluation and the use of following sections of this provide input to the final regulations via performance in a reduction in force. SUPPLEMENTARY INFORMATION. the statutory meet-and-confer process These differences cannot be reconciled a. Specificity of the Regulations set forth in 5 U.S.C. 9902(f)(1)(A)–(C). with the need for a contemporary and Among other things, that statutory flexible system of human resources A significant issue raised in the process requires the Department and management as DoD seeks to transform public comments and during the meet- OPM to provide employee the civilian part of the Total Force of and-confer process concerns the lack of representatives with an opportunity to military personnel, civilian employees, specificity in the proposed regulations. comment on the proposed regulations and DoD contractors. The current Many of the commenters recommended and, thereafter, meet with DoD and system limits opportunities for civilians that the regulations include far greater OPM officials (under the auspices of the at a time when the role of DoD’s civilian specificity, while others referred to the Federal Mediation and Conciliation workforce is expanding to include more inability to provide substantive Service, if necessary) in an attempt to significant participation in Total Force comments on the proposed rule without resolve any concerns and effectiveness. NSPS will generate more more information. disagreements. As the labor opportunities for DoD civilians by These comments and concerns organizations and other commenters easing the administrative burden focused almost exclusively on the have correctly pointed out, the proposed routinely required by the current subparts establishing the HR system— regulations did not provide for an system. It will provide an incentive for those dealing with Subpart B— analogous opportunity with respect to managers to (1) identify military Classification, Subpart C—Pay and Pay the development of implementing positions that can be converted to Administration, Subpart D— issuances. This became a major topic of civilian and (2) to turn to civilians first Performance Management, Subpart E— discussion during the meet-and-confer when certain vital tasks need doing. Staffing and Employment, and Subpart process, with labor organizations This will free military men and women F—Workforce Shaping. Those subparts insisting that DoD and OPM either to focus on matters unique to the remain relatively general in nature and include all implementing details in military, while greatly increasing the expressly provide for the Department to these final regulations or subject the role of the Department’s civilian develop implementing issuances to Department’s implementing issuances to employees. The need for a flexible and carry out the policies established in collective bargaining. We did not adopt contemporary system to support the accordance with NSPS. In contrast, the either alternative. Including such detail Department’s national security mission subparts dealing with adverse actions, in these regulations would not provide is nothing less than an absolute appeals, and labor relations (subparts G, the Department the flexibility its requirement and it must become the H, and I, respectively) are more detailed, mission requires. In addition, collective foundation of DoD civilian human requiring fewer implementing bargaining over the content of resources management. issuances. implementing issuances is prohibited by Where we indicate agreement in this The law requires the Department to the enabling legislation. Supplementary Information, we are establish a contemporary and flexible In summary, the inflexibility of the referring to agreements reached between system of human resources management current system required new ways to DoD and OPM, after consideration of (see 5 U.S.C. 9902(b) (1) and (2)). Of all meet the rapidly changing requirements public comments and proposals made of the various objectives set by Congress for DoD civilians to provide support to during the meet-and-confer process, for this system in the enabling the military members. A standardized, rather than to agreements reached legislation, flexibility was the very first yet flexible DoD environment that between management and labor enumerated. Unnecessary and excessive promotes the growth of all employees organization representatives during the detail in subparts B, C, D, E, and F and improves the manager’s ability to meet-and-confer process. would undermine that objective. The manage the workforce is essential. The regulations provide the overall regulations were developed to provide 4 Implementing issuances are defined in framework for the new HR system the Department the ability to maintain § 9901.103 of the regulations. Issuances are defined without the inflexible requirements flexibility, while at the same time in § 9901.903. present in today’s system. In response to involving employee representatives in

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the details of new processes established concerning fraud, waste, and abuse. pay systems, employees rated through implementing issuances. Some commenters recommended that unacceptable will not get an annual Five of the subparts in these final current employees be allowed to remain adjustment. Second, the NSPS system regulations remain relatively general in in the existing system or have the option provides for individual base pay nature, providing broad policy to stay in the current system or convert increases based on an employee’s parameters but leaving much of the to NSPS. Still others wanted a more performance, whether by demonstrating details to implementing issuances. We gradual implementation with testing of requisite competencies at the entry/ believe this structure, patterned after the the effectiveness of the new system on developmental level or by meeting or chapters in title 5 that they replace, is various populations first. exceeding performance expectations at appropriate. By providing for detailed We have retained the system the full performance level. In contrast to implementing issuances, the subparts described in the proposed regulations. the present pay systems, under NSPS, dealing with Classification, Pay and Pay We believe Congress and the American an employee will progress through the Administration, Performance people expect their public employees to pay range based on how well he or she Management, Staffing and Employment, be paid according to how well they performs. and Workforce Shaping provide the perform, rather than how long they have This concept may be simply Department with the flexibility been on the job. They also expect the summarized: The higher the mandated by Congress, and they do so Department to do everything it can to performance, the higher the pay. This, without compromising the Department’s recruit and retain the most talented too, is a fundamental principle of the commitment to substantive employee individuals it can find to carry out its new system, and we choose the order of representative involvement in the critical mission. The GS and FWS pay these words deliberately. This system development of those implementing systems do not provide the opportunity does not assume that individuals are issuances. to appropriately reward top performers motivated by pay, but rather that we or pay them according to their true b. Pay for Performance and Pay Pool have an obligation as an employer to value in the labor market. Under the GS Funding reward the highest performers with and FWS pay systems, performance is additional compensation—however they The pay system we described in the rewarded as an exception rather than may be motivated to achieve excellence. proposed regulations was designed to the rule, and market is defined as ‘‘one The Department has a special fundamentally change the way we pay size fits all,’’ with no distinction for responsibility in this regard. Thus, the employees in the Department of differences in market pay based on system we have designed is not a Defense. Instead of a pay system based occupation. ‘‘performance-for-pay’’ system, but a primarily on tenure and time-in-grade, The GS and FWS pay systems are ‘‘pay-for-performance’’ system. we proposed a system that bases primarily longevity-based systems—that Nevertheless, we believe it will inspire individual pay increases on is, pay increases are linked primarily to DoD employees to perform at their best. performance. This proposal honors the passage of time. While time in grade This is in contrast to the GS and FWS major points that were debated by the determines eligibility for a GS or FWS pay systems, where it is possible for a Congress and agreed upon with the step increase, it is true that a finding high-performing employee to be paid passage of the enabling legislation. In that the employee is performing at an the same, or even less, than a lower addition, the proposed pay system acceptable level of competence is also performing co-worker. would be far more market-sensitive than required. However, this minimal As it designs and implements NSPS, the current pay system. The proposed requirement is met by roughly 99 the Department is taking the following changes relating to classification, pay, percent of all GS employees. Thus, at steps to ensure that the performance and performance management were any given grade level, the vast majority management system functions properly: designed to achieve these two primary of employees can expect to • Training managers to provide goals. automatically receive base pay increases candid and constructive feedback to A number of commenters agreed with of up to 30 percent over time—in help employees maximize their the proposal to create a more addition to the annual across-the-board contribution and potential; occupation-specific and market- and pay increases—so long as their • Emphasizing the need for ongoing performance-based classification and performance is ‘‘acceptable.’’ Even and meaningful dialogue between pay system. However, most commenters employees whose performance is managers and employees; strongly recommended that we maintain unacceptable receive annual across-the- • Use of a pay pool process to ensure the status quo; that is, that DoD board pay increases that range from 3 to that performance decisions are made in continue to rely on the General 5 percent, and special rates that are even a careful, deliberative environment that Schedule (GS) and Federal Wage System higher. Over time, even less productive uses a consistent approach to decisions (FWS) classification and pay systems. employees will progress steadily to the regarding performance ratings and Many commenters thought the proposed top of the GS and FWS pay ranges and shares; pay-for-performance system would may end up being paid significantly • Implementing a new competency- lower employee morale, increase more than higher-performing employees based performance management system competition among employees, and with less time in grade. Such a system that is intended to create a clear linkage undermine teamwork and cooperation. cannot be fairly characterized as between employee performance and the Some also questioned the ability of the providing performance-based pay. Department’s strategic plan and core Department to successfully implement The NSPS pay-for-performance values; the proposed system, or of DoD system, by contrast, is designed to • Increasing employee understanding managers to establish and apply recognize and reward performance in and ownership of organizational goals performance standards fairly and two key ways. First, it establishes the and objectives; consistently to pay decisions. Other fundamental principle that no employee • Adopting automation tools that commenters thought a pay-for- may receive a base pay or local market facilitate ‘‘best practices’’ in the pay-for- performance system would have a supplement increase if his or her performance environment; chilling effect on the expression of performance does not meet or exceed • Reinforcing the use of team and dissenting opinions, especially those expectations. In contrast to the present organizational rewards; and

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• Preserving non-cash rewards as percent before the project began, testimony by the NSPS Senior Executive tools to recognize performance. reached 51 percent by 1985, and was 69 to the Senate Armed Services The 50-plus-year-old GS pay system percent by 1988. Employee support was Committee in April 2005. Secretary also is not sufficiently market-sensitive, 70 percent when Congress made the England was asked what assurances he potentially under-valuing the talents of project permanent in 1994. Today, could give that limited appropriations the Department’s most critical thousands of Federal employees already or other budget pressures would not employees. Under the GS and FWS pay are covered by successful performance- result in pay pools too small to truly systems, all employees in a given based pay systems. reward performance. He declared that geographic location receive the same The system we have devised is also the Department viewed this as a basic annual pay adjustment without regard consistent with the findings and covenant with its employees and to their occupation or the level of duties recommendations of NAPA in its May confirmed that action is being taken to and responsibilities they are expected to 2004 Report, ‘‘Recommending protect pay pool funding. perform. This one-size-fits-all approach Performance-Based Federal Pay.’’ The The Department is implementing treats all occupations alike, across the basis for managing individual salary financial policies for NSPS. Protection board as well as in particular locations, increases should be pay for of pay pool funding is being addressed regardless of market value. Thus, we performance. This recommendation has in several different ways. First, the inevitably end up underpaying been a constant theme in discussions for Department will mandate the minimum employees in some occupations and more than two decades and the composition and expenditure of pay overpaying others. Even within an principle in every demonstration project pool funds. Second, appropriate senior- occupation, the rigidities of the current that tested new pay policies. The level officials are required to certify that pay systems sometimes force us to evidence from the projects confirms that funds allocated to the performance- underpay employees at the entry/ pay for performance can be successful based pay pools have been used only for developmental grades, with recruiting in DoD. Nonetheless, the switch to a the purpose for which they were difficulties and high attrition the result. pay-for-performance system will be intended. Third, any exception to the The new NSPS pay system is implemented via a spiral (multi-phase) minimum funding of the pay pool will designed to be much more market- approach resulting in application of the be based on stringent criteria, along sensitive. First, it allows NSPS, after NSPS HR system, including the pay-for- with higher-level approval. Fourth, coordination with OPM, to define performance system, to new segments of mechanisms will be in place to monitor occupational career groups and levels of the DoD population at approximately 6- compliance. work within each career group that are month intervals over a 2-year period. In accordance with the enabling tailored to the Department’s missions The phased intervals of implementation legislation, for fiscal years 2004 through and components. Second, it gives DoD will provide opportunities to assess and 2008, the aggregate amount allocated for considerable discretion, after adjust the system as each new group of compensation of DoD civilian coordination with OPM, to set and employees is covered by the new employees under NSPS, to the adjust the minimum and maximum system. For the most part, populations maximum extent practicable, will not be rates of pay for each of those career phased into NSPS will be grouped by less than if they had not been converted groups or bands, based on national and organization in order to facilitate the to the NSPS. This takes into account local labor market factors and other change in organizational culture that potential step increases and promotions conditions. Instead of ‘‘one size fits all’’ will be essential to the success of NSPS employees would have received if not pay rates and adjustments, the system and the improved organizational converted to NSPS. In addition, allows DoD to customize those performance resulting from its § 9901.313(b) provides that for fiscal adjustments and optimize valuable but implementation. years 2009 and beyond, DoD will limited resources. This kind of In summary, we believe the develop a formula that ensures, to the flexibility, which is lacking under the Department’s pay-for-performance maximum extent possible, that GS and FWS pay systems, will enable system is an imperative, essential to employees are not disadvantaged in the DoD to allocate payroll dollars to the DoD’s ability to attract, retain, and overall amount of pay available, in the occupations and locations where they reward a workforce that is able to meet aggregate, as a result of conversion to are most needed to carry out the the high expectations set for it by the NSPS, while providing flexibility to Department’s mission. Department’s senior leaders for the accommodate changes in the function of The goals and principles of the new purpose of accomplishing the the organization, changes in the mix of system are sound, and we have Department’s mission—the defense of employees performing those functions, confidence that the Department has the our nation. and other changed circumstances that capability to execute them effectively. Many commenters expressed concern may affect pay levels. Pay-for-performance systems like that that there will not be sufficient proposed for DoD are not new. Pay resources made available to fund pay c. Adverse Actions and Appeals banding has been around in the Federal pools at adequate levels. There were In authorizing the creation of a new Government since 1980, and the Federal also many comments suggesting that human resources system for the Government has substantial experience pay pool money will be diverted from Department, Congress specifically in implementing performance-based pay pay to mission requirements or to required that employees be afforded the systems (e.g., in demonstration reward supervisors and managers, protections of due process. Recognizing projects). DoD alone has tested and thereby leaving less for lower-graded the critical nature of the Department’s implemented 11 performance-based pay employees. mission, Congress also stated in 5 U.S.C. systems since 1980. Research shows that Proper funding of pay pools is 9902(h)(2) that the new appeals process employee attitudes toward such systems fundamental to the success of NSPS. may ‘‘establish legal standards and change over time, as they gain DoD senior leadership recognized its procedures for personnel actions, experience with them. For example, importance in setting two Key including standards for applicable employee support for the ‘‘China Lake’’ Performance Parameters—‘‘Credible and relief, to be taken on the basis of broadbanding/pay-for-performance Trusted’’ and ‘‘Fiscally Sound.’’ In employee misconduct, or performance demonstration project was only 29 addition, this issue was the subject of that fails to meet expectations.’’

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The proposed regulations included a concern, about the proposal to permit regulations precluded mitigation except number of changes to adverse actions the Department to review arbitrator and where a determination is made that the and appeals procedures. Consistent with MSPB AJ decisions on adverse actions. penalty is so disproportionate to the the enabling legislation, these changes Commenters expressed skepticism that basis for the action as to be wholly were intended to simplify and the stringent standards established for without justification. Since the enabling streamline those procedures and this review would adequately protect legislation specifically provides the provide for greater individual due process of employees. Commenters criteria for full MSPB review of NSPS accountability, all without also expressed concern about the appeals decisions, the Secretary and compromising guaranteed due process proposal to limit the ability to mitigate Director agree that it is unnecessary to or protections against whistleblower penalties unless the penalty was require the full Board to apply the reprisal or discrimination. Greater ‘‘wholly without justification.’’ ‘‘wholly without justification’’ standard. accountability is particularly critical to Commenters generally supported the The criteria for full MSPB review as the Department. By its very nature, the proposal to adopt a ‘‘preponderance of provided in the enabling legislation Department’s national security mission evidence’’ standard of proof, although a have been added to these regulations. requires an exceptionally high level of few commenters were opposed to this Furthermore, the Secretary and Director workplace order and discipline. The fact proposal. agree to revise the ‘‘wholly without that DoD employees provide critical These comments express a justification’’ standard for MSPB AJs support to the military mission of fundamental misconception of the that are used as part of the Department’s defending the country means that they, requirements of due process as appeals process as well as arbitrators. and the Department have a special established by the United States The standard has been revised to responsibility to the public. Supreme Court. For example, in preclude mitigation except when the With that in mind, the proposed accordance with Supreme Court action is ‘‘totally unwarranted in light of regulations provided for shorter notice decisions, due process requires that all pertinent circumstances.’’ This for adverse actions, an accelerated before an employee who has a property standard is similar to that recognized by appeals adjudication process using interest in a job is removed, he or she the Federal courts and is intended to MSPB AJs, a preponderance of the is entitled to notice, an opportunity to limit mitigation of penalties by evidence burden of proof to sustain the reply, a decision, and a post-decision providing deference to an agency’s Department’s adverse actions, whether review. The final regulations preserve penalty determination. The Department based on conduct or performance, or these due process rights for covered has statutory authority to establish new both, and specifically limited the employees and afford even greater legal standards. In this case, the mitigation of agency selected penalties protection than the U.S. Constitution Department is electing to adopt a legal by MSPB AJs and private arbitrators. requires. Recognizing that many of these standard that meets the need of the The proposed regulations also required comments were erroneously Department by ensuring deference is that arbitration decisions on adverse characterized as due process issues, we provided to the Department’s penalty actions be reviewable by the Department nevertheless considered their merits. determinations along with the DoD and OPM have decided that the and the full MSPB prior to review by the requirement that AJs give consideration final regulations will continue to Federal Circuit Court of Appeals. The to the Department’s national security provide for a shorter, 15-day minimum proposed regulations also gave the mission. Secretary authority to establish a advance notice to an employee of a number of mandatory removal offenses proposed adverse action (compared to a Under the final regulations, MSPB AJs (MRO)—that is, offenses that have such 30-day notice under current law). We (as well as arbitrators) will also be able a direct and substantial impact on have also retained the provision giving to mitigate penalties in adverse action national security that they must carry a employees a minimum of 10 days to cases, but only under limited mandatory removal penalty. While the respond to the charges specified in the circumstances. We continue to believe enabling legislation provides authority notice of adverse actions. Some that, because the Department bears full to establish an internal appeals process commenters suggested that the 10-day accountability for national security, it is using adjudicators other than MSPB AJs, period was not long enough, but this in the best position to determine the the Secretary and the Director decided notice is actually longer than the 7-day penalty for poor performance and/or that with the changes outlined above, minimum reply period that is provided misconduct, subject to a more limited DoD could achieve the objectives of the under current law. This reply period review than exists now under chapter enabling legislation using MSPB AJs for runs concurrently with the notice 75 of title 5, U.S. Code. Thus, its initial review of employee adverse period, which is also consistent with judgment in regard to penalty should be action appeals. Ultimately, the enabling current law. Employees continue to given deference. This limited standard legislation provides for full MSPB have a right to be heard before a for mitigation of penalties selected by review of any DoD final appeals proposed adverse action is taken against DoD is intended to explicitly restrict the decision as well as for judicial review. them. This change protects that right authority of MSPB AJs and arbitrators to Commenters, including labor while still providing for a more modify penalties to those situations organizations participating in the meet- streamlined process. Since these are where the penalty is simply not and-confer process, generally expressed minimum time periods, local warranted. MSPB AJs and arbitrators concern that these changes, separately management may extend these time may not modify the penalty imposed by and together, would vitiate the due limits on a case-by-case basis if the Department unless such penalty is process rights of DoD employees. They necessary. totally unwarranted in light of all argued that the changes would We are persuaded by the concerns pertinent circumstances. Consistent substantially diminish the authority of expressed by commenters, as well as with the intent that deference be given third parties such as MSPB and labor organizations during the meet- to agency selected penalties, the arbitrators to fully and fairly review and and-confer process, that the enabling regulations also provide that when a adjudicate adverse actions. legislation establishes the standard by penalty is mitigated, the maximum Commenters, as well as some members which the full MSPB may mitigate justifiable penalty must be applied. In of Congress, expressed particular penalties. Specifically, the proposed determining the maximum justifiable

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penalty, MSPB AJs and arbitrators will procedures, finding them difficult to • Purchasing, using, or transporting use the applicable agency table of follow. We are persuaded by their weapons or materials for the purpose of penalties or other internal guidance. concerns and have reorganized the committing, attempting to commit, or Commenters and labor organizations appellate procedures in a user-friendly aiding and abetting terrorism. expressed strong concerns over DoD format. • Committing, attempting to commit, reviewing MSPB AJ decisions. These With the changes outlined above, we or aiding and abetting an act of sabotage concerns ranged from whether the believe we have addressed and resolved against the Department of Defense that Department had legal authority to the concerns raised by commenters resulted or could have resulted in loss conduct this review to whether this regarding adverse actions and appeals. of life, significant financial loss or assists in achieving the Department’s Due process is preserved under the final adverse impact on military readiness. • goal of streamlining the appeals process. regulations. Thus, the adverse actions Soliciting or intentionally accepting Some expressed concerns that this and appeals procedures set forth in a bribe or other unauthorized personal would not be a truly independent these regulations are ‘‘fair, efficient, and benefit in return for an act that appeals process as a result. We expeditious,’’ consistent with compromises or could compromise recognize these concerns, but believe congressional direction. national security. that the process provides for appropriate • Employees involved in the review and safeguards. The enabling d. Mandatory Removal Offenses Personnel Reliability Program failing to legislation authorizes an appeals The proposed regulations authorized safeguard the assets for which they are process resulting in a final Department the Secretary to identify offenses that, directly responsible and such failure decision that is subject to full MSPB because they have a direct and results in loss, theft, sabotage, review. Consistent with this authority, substantial adverse impact on the unauthorized use, destruction, we have established an independent Department’s national security mission, detonation, or damage. • Intentionally engaging in activities appeals process using existing and warrant a mandatory penalty of removal that compromise or could compromise familiar resources, MSPB AJs, to from the Federal service. Only the the information or financial adjudicate employee appeals of DoD Secretary could mitigate the removal of adverse actions. These AJs would issue infrastructure, including major an employee determined to have procurement fraud, of the Department of initial decisions that would lead to a committed such a mandatory removal final Department decision subject to full Defense, when the employee knew or offense (MRO). Employees alleged to reasonably should have known of the MSPB review. The decision to utilize have committed these offenses would the MSPB AJ corps, rather than compromise or potential compromise. have the right to advance notice, an There is no question that employees establishing a new corps of AJs, is opportunity to respond, and a written purposeful. We are mindful of the need must be made aware of the final list of decision. They would also be entitled to MROs approved by the Secretary. Both to conserve resources and recognize the appeal that decision to the independent value these AJs’ independence brings to the Secretary and the Director believe MSPB AJs, who could reverse the action that this is a basic issue of fairness and the process. Nevertheless, to ensure that but could not mitigate the removal the Department receives proper a tenet of an organizational culture that penalty. Decisions of the MSPB AJs are establishes clear accountability. That is deference to its critical mission subject to review by DoD as well as the requirements, the Department will why the proposed regulations provided full MSPB. retain the opportunity to review and that MROs will be identified to Commenters and unions expressed a modify, under criteria prescribed in employees in advance, as part of number of objections to the concept of these regulations, those initial AJ implementing issuances, and made decisions before they become final MROs. Since no examples of potential known to all employees upon Department decisions. In response to MROs were provided in the proposed identification. During the meet-and- concerns raised by the unions during regulations, they feared that removal confer process, participating labor the meet-and-confer process, this review could be too harsh a penalty as for yet organizations were especially concerned will occur at the DoD level. This unspecified offenses. They also were about this issue. We agree that these highlights that the highest levels of the concerned that employees would not be offenses should not be a surprise to Department wish to ensure that this given full and complete notice of such anyone, and have retained these process is applied fairly and offenses prior to their application. provisions in the final regulations but consistently across the Department. As proposed, an MRO should have a have also added a requirement that they Also, in order to ensure timely decisions direct and substantial adverse impact on be publicized via notice in the Federal by the Department when taking action the Department’s national security Register. The Secretary also intends to on an AJ or arbitrator decision, time mission. Accordingly, we have decided consult with the Department of Justice limits for taking action will be to retain MROs. However, in response to in preparing the list of offenses for established in implementing issuances. comments, the Secretary and the publication. Ultimately, any decision of the Director understand the concern over With these changes, the final Department is subject to review by the the lack of specificity with regard to regulations provide for the full MSPB and the Court of Appeals for MROs. During the meet-and-confer independence demanded by the Federal Circuit. We believe this process, participating labor commenters while assuring DoD’s process affords employees full and fair organizations expressed a similar ability to remove employees who engage opportunity for redress, as well as concern, but we believe we were able to in offenses that have direct and adjudicative independence, and satisfactorily address most of their substantial impact on the Department’s deference to DoD’s critical mission objections about lack of specificity by national security mission. The Secretary needs, consistent with the NSPS sharing with them potential mandatory is accountable to the President and the statutory authority. removal offenses. American people for safeguarding Finally, many commenters and labor In addition to those MROs discussed national security. No other agency or organizations participating in the meet- during the meet-and-confer process, an department bears this burden. These and-confer process expressed concerns illustrative list of potential MROs regulations ensure that the Secretary’s about the organization of the appellate follows: authority aligns with that responsibility.

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e. Labor Relations relations system that would provide the a direct connection between the Without exception, employee flexibility necessary to respond to a exigency and the Department’s national representatives objected to the proposed variety of vital operational challenges security mission. Even under such labor relations regulations, both in their and carry out its national security mission critical and exigent conditions, comments and during the meet-and- mission. they insisted that post implementation To achieve this objective, the confer process. Employee agreements would have prospective proposed regulations revised, among representatives argued that Congress effect only if the emergency was other things, the management rights and expressly specified only two unforeseen. If the national security duty to bargain provisions found in 5 modifications to chapter 71—bargaining exigency were foreseen, then any U.S.C. chapter 71. We expanded the list remedy for Department action that was above the level of recognition and of management rights that are excluded contrary to a contractual provision independent third party review of from bargaining, including the numbers, would have retroactive effect unless the decisions. We disagree. In enacting types, and grades of employees or retroactive effect would ‘‘unduly disrupt chapter 99, Congress expressly positions assigned to any organizational Department operations reasonably recognized the need for the Department subdivision, work project, or tour of necessary to carry out the Department’s to design a labor relations system that duty; and the technology, methods, and national security mission.’’ both addresses the unique role that the means of performing work—rights that We recognize the good faith effort Department’s civilian workforce plays deal directly with the Department’s made by these labor organizations to in supporting the Department’s national national security operations. In meet the Department’s operational security mission and allows for a addition, we excluded from bargaining needs. However, their proposals were collaborative issue-based approach to the procedures that the Department lacking in several respects. We have, labor management relations. would follow in exercising these therefore, retained the management Moreover, Congress specifically expanded operational management rights/scope of bargaining provisions in authorized the Secretary, together with rights. We also proposed to allow the the proposed regulations with some the Director, to establish and adjust this Department to take action in any of modifications. labor relations system in support of the these areas without advance notice to With respect to procedures, the overall HR management system labor organizations and without pre- proposals offered by the labor notwithstanding the provisions of the implementation bargaining. organizations do not go far enough. current system as set forth in chapter 71. Without exception, labor They would still require the Department Thus, the Secretary and the Director organizations objected to the proposed to bargain, before acting, over the have modified chapter 71 ‘‘to address regulations, both in their comments and procedures it would follow in exercising the unique role that the Department’s during the meet-and-confer process, its management rights, including those civilian workforce plays in supporting arguing that altering the scope of that deal directly with its operations. the Department’s national security bargaining in any way is contrary to the Once negotiated, those procedures can mission.’’ (5 U.S.C. 9902(m)) In taking enabling legislation. They also claimed and do place significant constraints on the steps necessary to establish and that these changes were unnecessary critical actions such as the assignment adjust this labor relations system, because current law already provided of work, the deployment of personnel, Congress further recognized that the the Department with sufficient and the staffing of tours of duty. These provisions of this system will supersede flexibility to deal with emergencies. procedures are negotiable under 5 existing collective bargaining They also took strong exception to the U.S.C. chapter 71. Labor organizations agreements covering Department provisions in the proposed regulations would have the Department continue employees and negotiated pursuant to that would allow issuances to supersede that obligation, but under time limits the provisions of chapter 71. Finally, conflicting provisions of any collective and with an expanded interpretation of Congress indicated that the authority of bargaining agreements and limit the chapter 71 provisions regarding the Secretary and Director to devise and bargaining to only those matters that are emergencies that would allow adjust the Department’s labor relations not inconsistent with the issuances. management to bargain post system would expire in 2009 absent Labor organizations did acknowledge implementation in certain limited further action by Congress (5 U.S.C. the Department’s need to take certain circumstances. 9902(d)(2) and 5 U.S.C. 9902(m)(1), (2), actions without pre-implementation However, in today’s operational (8), and (9)). bargaining, and during the meet-and- environment, the exception has become confer process they proposed a process the rule. Department managers, f. Management Rights/Scope and Duty for accelerated bargaining within supervisors, and employees are critical To Bargain established time limits and the use of to the Department’s mission to defend The ability to act quickly is central to binding arbitration to resolve all our national security. The Department the Department’s national security bargaining disputes. Additionally, they must be able to rely on the judgment mission—not just during emergencies suggested that the term ‘‘emergency’’ be and ability of managers and supervisors but, more importantly, in order to interpreted as including ‘‘exigencies to make day-to-day decisions—even if prepare for or prevent emergencies. The requiring action reasonably necessary to this means deviating from established or ability to act quickly is necessary even carry out the Department’s national negotiated procedures. Moreover, the in meeting day-to-day operational security mission before collective Department’s managers and supervisors demands. The Department must be able bargaining concerning the action can be must be able to make split-second to assign employees and to introduce completed,’’ and that in such exigencies decisions to deal with operational the latest security technologies without the Department will afford the realities free of procedural constraints. delay. This principle was crucial in the opportunity to bargain when With respect to post-implementation formulation of the enabling legislation circumstances reasonably allow. Their bargaining, the proposals offered by and in the congressional debate that proposals would have allowed the labor organizations are similarly followed its introduction. Congress Department to temporarily suspend lacking. Although they would allow clearly recognized the Department’s provisions of collective bargaining management to implement without need to operate under a new labor agreements in situations where there is bargaining in advance when faced with

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an emergency, they would still require the term of that agreement. This ensures agreements on appropriate arrangements immediate post-implementation the viability of the collective bargaining and procedures for (a)(1) and (a)(2) negotiations and third-party impasse process under NSPS. When a provision management rights are not precedential resolution over such matters. However, of a collective bargaining agreement or binding on subsequent acts, or the reality of DoD’s operational conflicts with an issuance, the collective retroactively applied, except at the environment today is that change is bargaining provision remains in effect Secretary’s sole, exclusive, and constant, and as a consequence, so too until the expiration or renegotiation of unreviewable discretion. Procedures would be post-implementation the agreement, at which time the parties and appropriate arrangements in term bargaining, with the prospect of will have to bring the conflicting agreements are binding, except that prolonged third-party impasse provision into conformance with the nothing will delay or prevent the resolution. These negotiations would be issuance. This is comparable to the Secretary from exercising his or her required even in cases where the change process that has long been followed authority under subpart I. For example, was short-lived and/or where its impact regarding Governmentwide regulations. the Secretary may authorize deviation was insignificant, insubstantial, or Specifically, issuances will be subject to from such agreements when it is transient. The demand on DoD’s national consultation with those labor necessary to carry out the Department’s frontline managers, supervisors and organizations holding national mission. This authority builds on the employees to engage in constant post- consultation rights. Moreover, following authority that exists today when an implementation negotiations would consideration of comments and emergency occurs, as that term is divert them from accomplishing the recommendations received through the applied under chapter 71, to address the mission. This is unacceptable and national consultation process, issuances unique nature of the Department’s inconsistent with the authority Congress are subject to collective bargaining to mission and the operational demands it granted to the Department in the the extent proposals are not inconsistent must face. enabling legislation. with the issuance and are otherwise Taken together, we believe these Further, under 5 U.S.C. chapter 71, negotiable under § 9901.910 and revisions meet the Department’s mission interpretations of negotiated appropriate § 9901.917. needs, are consistent with the enabling arrangements tend to assume that those More importantly, and in response to legislation’s intent to preserve collective agreements have anticipated future concerns that managers may issue bargaining rights as provided for in 5 changes, but today’s operational implementing issuances and issuances U.S.C. chapter 99, and assure employees environment belies that assumption. for the sole purpose of invalidating that issuances will not be issued for the Changes necessitated by operational particular provisions of a collective improper purpose of eliminating local demands are recurring and variable. Our bargaining agreement that they do not bargaining. While commenters have frontline managers and supervisors like, we have also modified the argued that any alteration of the scope must not be bound by agreements regulations to specify that implementing of bargaining violates the enabling presupposing circumstances that are issuances, that is, those that implement legislation, this interpretation is assumed to be constant, when they must NSPS and supersede conflicting inconsistent with the express authority face current and future exigencies. provisions of existing collective Congress has given the Secretary and Nevertheless, in recognition of the bargaining agreements, may only be the Director to establish and from time concerns articulated by commenters issued by the Secretary, Deputy to time adjust the labor relations system during the public comment period and Secretary, Principal Staff Assistants, or for the Department to address the during the meet-and-confer process by Secretaries of the Military Departments. unique role that the Department’s participating labor organizations and as We have limited ‘‘Principal Staff civilian workforce plays in supporting a result of the June 16, 2005, meeting of Assistants’’ to senior officials in the the Department’s national security the United DoD Workers Coalition, Office of the Secretary of Defense who mission. These regulations fulfill that DoD’s NSPS Senior Executive, and report directly to the Secretary and statutory requirement while providing OPM’s Acting Director, the Secretary Deputy Secretary of Defense. We also employees with the rights envisioned by and the Director decided that the have added a new subparagraph, Congress. proposed regulations would be revised § 9901.905(c) to make clear that any g. Independence of the National in a number of ways. provision of a collective bargaining Security Labor Relations Board First, we have modified the definition agreement that is inconsistent with of ‘‘issuances’’ to make clear the issuances that do not implement NSPS The National Security Labor Relations distinction between an ‘‘implementing will remain in effect until the Board (NSLRB) described in the NSPS issuance’’ and an ‘‘issuance’’. An expiration, renewal, or extension of the regulations is intended to act as one ‘‘implementing issuance’’ is a document agreement, whichever occurs first. element of independent third-party issued to carry out a policy or procedure Finally, we have modified the review of collective bargaining disputes implementing NSPS (but does not regulations to permit bargaining, in the as provided for in 5 U.S.C. 9902(m)(6). include internal operating guides, sole, exclusive, unreviewable discretion Commenters, including labor manuals, or handbooks that do not of the Secretary, over the procedures organizations participating in the meet- change employees’ conditions of that would be followed in exercising the and-confer process, objected to the employment), while an ‘‘issuance’’ is a expanded operational management creation of the NSLRB because they document to carry out a non-NSPS rights. We have also modified the believe that an internal DoD review policy or procedure of the Department. regulations to permit bargaining, at the board would not be independent from We have also clarified that while an election of the Secretary, over management influence, unlike the implementing issuance immediately appropriate arrangements on the routine Federal Labor Relations Authority supersedes those provisions of matters related to the expanded (FLRA). Commenters suggested that any collective bargaining agreements that operational management rights. The board whose membership would be are inconsistent with the implementing Secretary may authorize such bargaining appointed and removed by the Secretary issuance, an issuance does not to advance the Department’s mission could not reasonably be expected to supersede a conflicting provision of a accomplishment or promote remain impartial. They also suggested collective bargaining agreement during organizational effectiveness. Mid-term that the primary reason for taking

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jurisdiction of these matters away from duties in a fair and impartial manner by believe the authority in subpart B to the independent and impartial FLRA is (1) including employee representatives classify work into broader career groups to guarantee that DoD management can in the process for selecting such supports this objective. influence the NSLRB’s decisions, giving members; (2) requiring that individuals Section 9901.102—Eligibility and them an unfair advantage over employee appointed as members have integrity, Coverage representatives. impartiality, and subject matter We have decided to retain the NSLRB. expertise; (3) limiting the grounds on Section 9901.102 sets forth general Employing the NSLRB to adjudicate which the Secretary can remove NSLRB rules regarding employee eligibility and labor disputes in place of the FLRA members; and (4) providing for FLRA coverage under the various subparts of ensures timely and efficient case review of NSLRB decisions and, as part 9901. Categories of eligible management by a body cognizant of the prescribed in chapter 71, judicial review employees become covered only when important and unique nature of the of FLRA decisions. the Secretary affirmatively approves Department’s mission. We believe that coverage as of a specific effective date. the final regulations have adequately Response to Specific Comments and Commenters indicated that the balanced the Department’s interest in Detailed Explanation of Regulations Secretary’s discretionary authority in timeliness and mission recognition with Subpart A—General Provisions coverage matters is too broad. We believe it is essential that the Secretary employees’ desire to have an impartial Section 9901.101—Purpose dispute adjudicator. The regulations be given such discretion. The authority establish NSLRB membership criteria Section 9901.101 explains the overall to establish systems would be that require candidates to exhibit purpose of the regulations in 5 CFR part meaningless unless there is integrity and impartiality in addition to 9901, which is to implement a new corresponding authority to place eligible extensive knowledge of labor laws, human resources management system employees under the system. The DoD’s mission, or both. Although the and a new labor relations system, as Secretary needs flexibility to phase in Secretary has authority to remove authorized by 5 U.S.C. 9902. The coverage in an orderly way, while NSLRB members before the expiration section states various guiding principles retaining authority to change effective of their terms, that authority is limited and key operational characteristics and dates as needed, based on changing to removal for inefficiency, neglect of requirements. We have added a conditions or mission requirements. duty or malfeasance in office, which is reference in § 9901.101(a) to the labor Commenters stated that the authority a standard similar to that for removing relations system, which is established in § 9901.102(b)(1) to establish an members of the FLRA. In addition, since under 5 U.S.C. 9902(m), since this is a immediate effective date for subpart I the standard is established in these separate and distinct authority. (See (dealing with labor relations) conflicts jointly prescribed regulations, it may additional discussion regarding this with 5 U.S.C. 9902(l). Section 9902(l) not be changed unilaterally by the distinction in the analysis of comments provides that the Secretary may apply Secretary. Finally, we stress that the regarding § 9901.102.) the ‘‘National Security Personnel NSLRB decisions are subject to review Commenters questioned the authority System’’ only if (1) the affected by the FLRA, which acts as another to waive or modify statutes through organizational or functional unit has no element of independent third-party these regulations. We are modifying more than 300,000 employees or (2) the review. The FLRA decisions, including § 9901.101(a) to clarify that 5 U.S.C. Secretary determines ‘‘in accordance those reviewing decisions of the NSLRB, 9902 provides authority for these with subsection (a)’’ that the remain subject to judicial review as they regulations to waive or modify certain Department has in place a performance are under chapter 71. These regulations statutory provisions. management system that meets the establish that the NSLRB will operate A commenter recommended that the criteria in 5 U.S.C. 9902(b). The term independent of the chain of supervision regulations restate the statutory merit ‘‘National Security Personnel System’’ is as does any agency administrative judge principles instead of just referencing defined in 5 U.S.C. 9902(a) to be the or administrative review board whose them as a guiding principle. We do not ‘‘human resources management decisions can be appealed to a higher believe such a restatement is necessary; system,’’ which is established under the authority. however, we have added a statutory authority of subsection (a). Section Multiple commenters, including labor citation—5 U.S.C. 2301—in 9902(b) provides requirements for a organizations participating in the meet- § 9901.101(b)(1). system established ‘‘under subsection and-confer process, recommended that Commenters expressed concern (a).’’ Under 5 U.S.C. 9902(b)(3)(D) and the labor organizations be given the regarding the key operational (d), the human resources management opportunity to participate in the NSLRB characteristic ‘‘Agile and Responsive system established under subsection (a) nomination process. We agree and have Workforce and Management,’’ which does not reach to the labor relations included in the final regulations an was further described as ‘‘workforce can system established under 5 U.S.C. explicit requirement that the Secretary be easily sized, shaped, and deployed to chapter 71. Instead, 5 U.S.C. 9902(m) consider labor organization meet changing mission requirements.’’ provides a totally separate authority to nominations. Whereas the proposed In particular, some objected to viewing establish and adjust a ‘‘labor relations regulations did not provide a role for civilian employees as deployable in the system.’’ We believe it is clear that the labor organizations in the nomination same manner as military personnel. limitations in 5 U.S.C. 9902(l) apply process, the final regulations provide While DoD has always had and will only to the human resources that the Secretary will consider labor continue to have the right to assign management system established under 5 organization nominations in selecting employees to serve in geographic U.S.C. 9902(a). the two non-chair members of the locations based on mission Commenters raised questions about NSLRB. This assures labor organizations requirements, the word ‘‘deploy’’ in this the coverage of employees in certain a voice in the NSLRB selection process. section is being used in a broader DoD laboratories who are covered by a While we have not adopted all context and was intended to encompass demonstration project or an alternative suggestions related to the NSLRB, we the strategic organization of work based system. Section 9902(c) of title 5, U.S. believe the final regulations ensure that on employee skills and competencies Code, states that the National Security NSLRB members will discharge their and mission needs. In particular, we Personnel System will not apply to

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defense laboratories in organizations extend coverage to eligible employees NSPS, unless they elect otherwise. This listed in Section 9902(c)(2) before under subparts B through H to the proposal is not practicable from an October 1, 2008, and will apply after extent those provisions are not in administrative viewpoint and is that date only if the Secretary conflict with other statutory contrary to the objectives behind the determines that greater flexibilities are requirements. enabling legislation. We believe the available. Consistent with the Commenters proposed that certain flexibilities provided under the explanation in the preceding paragraph, occupations be excluded from proposed NSPS will yield significant the reference to the ‘‘National Security coverage—e.g., attorneys or law benefits to the Government and will also Personnel System’’ in 5 U.S.C. 9902(c) enforcement officers—because of the benefit employees based on their refers to the human resources nature of their work. We disagree. We performance. It is therefore not management system which is defined as believe the flexible systems we are acceptable to delay full application of the National Security Personnel System authorizing can be applied successfully NSPS. in Section 9902(a). Thus, the restrictions to all occupational categories. Commenters questioned why in 5 U.S.C. 9902(c) do not apply to the Commenters raised questions members of the Senior Executive coverage of these laboratory employees regarding the purpose of § 9901.102(f). Service (SES) are not covered by under the labor relations system Paragraph (f) is intended to allow the NSPS—specifically, the classification, established under 5 U.S.C. 9902(m), and Secretary to extend NSPS coverage to pay, and performance provisions in these employees may be covered by employees who are currently covered by subparts B through D. In fact, SES subpart I (dealing with labor relations) systems established administratively members are eligible for coverage under before October 1, 2008. under authorities outside of title 5, but those NSPS provisions, subject to the Commenters objected to the possible only when those authorities give DoD conditions in § 9901.102(d). (See coverage of certain civilian mariners the discretion to cover those employees coverage provisions in who are currently covered by a pay under administratively determined §§ 9901.202(b)(4), 9901.302(b)(4), and system established under 5 U.S.C. 5348 systems or to leave them in the title 5 9901.402(b)(1).) We note that the SES and are also covered by 5 U.S.C. chapter systems that would otherwise apply. For pay and performance provisions in title 71. These employees will be covered by example, if DoD has discretionary 5 are already designed to be subpart I (dealing with labor relations). statutory authority to cover a category of performance-sensitive. Thus, DoD does However, the Secretary has determined employees under an administratively not plan to cover SES members in its that they will not be covered by the determined classification and pay initial implementation spirals. DoD may human resources system, including the system instead of the General Schedule, determine at a later date whether adverse actions and appeals provisions. such employees remain potentially coverage under NSPS pay and Other commenters asked about certain eligible for General Schedule coverage performance provisions is necessary Army Corps of Engineers employees and accordingly would also be eligible given the title 5 authorities that already under Public Law 97–257. U.S. Army for NSPS coverage. Commenters apply to SES members. Corps of Engineers employees paid from questioned whether paragraph (f) could In light of the numerous comments Corps of Engineers Special Power Rate be used to cover educators employed by regarding the coverage eligibility of Schedules will be covered by subpart I the DoD Education Activity in an NSPS specific categories of DoD employees (dealing with labor relations). The pay system. Since the pay system for under the various subparts of these Secretary has determined that they will those educators employed overseas regulations, we have prepared the not be covered by the human resources (Department of Defense Dependents following summary chart showing system, including the adverse actions Schools) is established under various categories of employees that are and appeals provisions. nondiscretionary statutory provisions in eligible for coverage under the NSPS Commenters asked whether a category title 20, they are not eligible for systems. This chart is not intended to be of employees could be covered by some, coverage under an NSPS pay system. comprehensive or authoritative, but but not all, provisions of subparts B However, the pay system for those covers the major categories of through H. In particular, commenters educators employed in the Continental employees in DoD outside of the noted that National Guard Technicians United States (Defense Domestic General Schedule. In the chart, were eligible for coverage but were Elementary and Secondary Schools) is categories of employees that are subject to certain provisions outside established under discretionary identified as eligible for coverage under title 5—e.g., qualification requirements provisions in title 10. Therefore, they a particular subpart are annotated with established under title 32, instead of are eligible for coverage under an NSPS ‘‘Yes,’’ and those that are identified as qualification standards established pay system. ineligible for coverage are annotated under 5 U.S.C. chapter 51. Since 5 Commenters proposed that current with ‘‘No.’’ The chart and its footnotes U.S.C. 9902 does not provide authority employees (or at least current must be read together for full to modify or waive statutory provisions employees meeting certain age and information on coverage eligibility. outside of certain specified chapters in service requirements) be Actual coverage is subject to applicable title 5, any such provisions would ‘‘grandfathered’’ and left in existing title law and approval by the Secretary under continue in effect. The Secretary may 5 systems instead of being covered by § 9901.102(b).

SUMMARY OF NON-GENERAL SCHEDULE COVERAGE ELIGIBILITY UNDER 5 CFR PART 9901

Eligible for human re- Eligible for labor Category sources system/ relations system appeals process (subpart I) (subparts B-H)

Air and Army Reserve Technicians ...... Yes ...... Yes. Army and Air National Guard technicians (dual status) under 32 U.S.C. 709 ...... Yes 1 ...... Yes.2

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SUMMARY OF NON-GENERAL SCHEDULE COVERAGE ELIGIBILITY UNDER 5 CFR PART 9901—Continued

Eligible for human re- Eligible for labor Category sources system/ relations system appeals process (subpart I) (subparts B-H)

Army and Air National Guard technicians (non dual status) under 32 U.S.C. 709 ...... Yes 1 ...... Yes.2 Hydropower Corps of Engineers Special Power Rate Schedules (WB pay plan) ...... No ...... Yes. Navy Civil Service Mariner (WM pay plan) ...... No ...... Yes. Overseas Teachers (DoDDS) ...... No ...... Yes. Pentagon Force Protection Agency (title 5 and title 10 employees) ...... Yes 3 ...... Yes. Federal Wage System (WA, WD, WG, WJ, WK, WL, WN, WO, WS, WT, WY, XF, XG, XH pay plans) ...... Yes ...... Yes. Nonappropriated Fund ...... Yes 4 ...... Yes. Domestic Teachers (DDESS) ...... Yes 4 ...... Yes. Defense Laboratories in Organizations listed in 5 U.S.C. 9902(c) ...... No 5 ...... Yes. Armed Services Board of Contract Appeals ...... No for Board No for Board members;. members; Yes for other Yes for other employees. employees. Court of Appeals for the Armed Forces ...... No for Judges No for Judges and attorneys and attorneys in chambers; in chambers; Yes for other Yes for other employees 6. employees.6 Consultants and Experts (10 U.S.C. 129b) ...... No ...... No. DARPA, scientists and engineers ...... No ...... No. DCIPS (including DISES) ...... No ...... No. Executive Schedule ...... No ...... No. Faculty at DoD Educational Institutions: ...... Yes 4 ...... Yes. Air University, Air Force Institute of Technology, Army War College/Command & General Staff Col- lege, Defense Acquisition University, National Defense University, Defense Language Institute, George C. Marshall Center, Asia-Pacific Center for Security Studies, Western Hemisphere Institute for Security Cooperation, U.S. Naval Postgraduate School, Naval War College/U.S. Marine Corps Univer- sity, USAF Academy, U.S. Naval Academy, U.S. Military Academy. Faculty and staff at USUHS ...... No ...... No. Foreign Nationals (Direct Hire) ...... No ...... No. Schedule C ...... Yes ...... No. SES ...... Yes ...... No. Senior Level (SL/ST) ...... Yes ...... Yes. DoD Office of the Inspector General ...... Yes, unless ap- No. pointed under authority of the Inspector General Act of 1978 (5 U.S.C. App. §6)7. 1 Subject to limitations pursuant to 32 U.S.C. 709. 2 But excluded from national level bargaining under 5 U.S.C. 9902(g). 3 Title 10 employees under title 10 discretionary authority and subject to 10 U.S.C. 2674. 4 Under title 10 discretionary authority. 5 Until 2008, excluded from HR system and appeals process pursuant to 5 U.S.C. 9902(c). 6 Pursuant to 10 U.S.C. chapter 47, subchapter XII. 7 Currently there are no appointees under that authority.

Section 9901.103—Definitions clarified that implementing issuances definition of ‘‘NSPS’’ to more closely Section 9901.103 provides definitions do not include internal operating track the language in the statute. of terms used in more than one subpart. guides, handbooks, or manuals that do ‘‘NSPS’’ means the human resources Commenters expressed concerns about not change conditions of employment. management system established under 5 some definitions. This is consistent with current practice. U.S.C. 9902(a). It does not include the Commenters requested greater clarity We have also added a definition of labor relations system established under with respect to the use of ‘‘Military Department.’’ 5 U.S.C. 9902(m). We do, however, use ‘‘implementing issuances.’’ To address general comments ‘‘NSPS’’ in the supplementary Accordingly, we are revising the regarding the need for greater specificity information and in public statements as definition of ‘‘implementing issuances’’ where possible, we have added a shorthand reference to describe both to make clear that such documents can definitions of the terms ‘‘initial the HR and the labor relations systems. be issued by only certain high-level DoD probationary period’’ and ‘‘in-service We also note that chapter 99 is entitled officials (despite the Secretary’s broad probationary period.’’ These terms are the National Security Personnel System. delegation authority), including those used in subpart E (Staffing and Commenters expressed concern about formally designated as acting in those Employment) and subpart F (Workforce the definition of ‘‘performance.’’ In high-level positions. We have also Shaping). In addition, we clarified the particular, commenters objected to the

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use of the terms ‘‘behavior,’’ reserved for Congress. In fact, this under the Fair Labor Standards Act ‘‘demeanor,’’ ‘‘attitude,’’ and ‘‘manner of section merely implements an authority (FLSA). OPM’s authority to administer performance’’ in defining performance. provided by Congress. Under 5 U.S.C. the FLSA is found in section 4(f) of the We note that these terms are used in a 9902, DoD and OPM may prescribe Fair Labor Standards Act of 1938, as context that makes clear that we are regulations establishing new human amended. (See also 29 U.S.C. 204(f).) dealing with observable behaviors that resources management and labor Since this authority is outside the affect the accomplishment of relations systems notwithstanding waivable title 5 chapters, these assignments, responsibilities, and certain title 5 provisions. In other regulations do not affect OPM’s FLSA organizational goals. We believe words, Congress has provided that regulations or OPM’s authority to settle performance assessments would not be systems established by regulation may FLSA claims. complete without considering be used in place of certain statutory Section 9901.105—Coordination With employees’ behaviors in carrying out systems. This is not dissimilar to OPM assigned work. For example, customer numerous cases where Congress has service is generally a paramount excluded an agency from a title 5 Section 9901.105 identifies the areas organizational objective. Thus, the provision and allowed the agency to which trigger a requirement to manner in which employees treat develop its own rules administratively, coordinate DoD implementing issuances customers is an important aspect of except that, in the case of NSPS, and certain other actions with OPM. As overall performance. Employee Congress has actually established described in the section, ‘‘coordination’’ behaviors can be objectively observed additional requirements to guide system entails (1) providing OPM with an and evaluated against established development in terms of both substance opportunity to review and comment on performance expectations. Some and procedure. DoD proposals and to officially concur commenters suggested that assessments Commenters asserted that this section or nonconcur with all or part of the of manner of performance would open was misleading in that it did not reveal proposals, (2) taking OPM’s views into the door to abuse, cronyism, that the enabling legislation gave DoD account, and (3) advising OPM of the punishment for criticism of authority to waive any part of title 5, final DoD decision, including management, or retaliation against including provisions dealing with reasonable advance notice of the whistleblowers. We disagree. Under retirement, health benefits, life decision’s effective date. NSPS, employees are still protected insurance, leave, etc. This assertion is Commenters expressed concern that against prohibited personnel practices incorrect. Section 9901.104 identifies § 9901.105 gave DoD too much and will have the same whistleblower the limited number of title 5 provisions authority. Some recommended that DoD rights they have always had. We note that are subject to waiver or should be required to get formal OPM that managers will be held accountable modification. DoD and OPM have no approval, rather than just ‘‘coordinate’’ for how they manage this process. authority to waive or modify title 5 with OPM. A commenter also suggested A commenter questioned whether the provisions, except as provided for in 5 that DoD should be required to definition of ‘‘promotion’’ allows U.S.C. 9902. (Other laws are affected coordinate with other agencies with management to add higher-level duties only for the purpose of dealing with national security missions so that without providing pay increases. It references to waived or modified national security employees would have appears that this comment is primarily provisions, as described in § 9901.107). a common framework. Under the directed at the new classification Section 9902(b)(5) of title 5, U.S. Code, enabling legislation, OPM’s authority is authority under subpart B that would states that a system established under 5 to approve jointly developed allow DoD to reduce the number of U.S.C. 9902(a) is ‘‘not limited by any regulations, and OPM has exercised that grade level distinctions by using bands specific law or authority under this title authority in these part 9901 regulations. to describe levels of work. Each band [i.e., title 5] * * * that is waived in By design, and in keeping with the will encompass a single broad level of regulations prescribed under this statutory objective of establishing a work that may encompass a range of chapter [i.e., chapter 99], subject to ‘‘flexible’’ system, these regulations give duties previously performed at different paragraph (3).’’ The referenced DoD considerable authority within the grade levels. Promotion is movement to paragraph (3) in 5 U.S.C. 9902(b) regulatory framework. At the same time, a higher level of work, i.e., higher band. includes a subparagraph (D) that links to OPM continues to have a role in Commenters requested greater clarity 5 U.S.C. 9902(d), which in turn specifies overseeing the civil service system and regarding the term ‘‘unacceptable that most of title 5 is nonwaivable, in advising the President on civil performance.’’ In conjunction with except as provided for in section 9902. service matters, including matters related changes made in subpart D Commenters questioned the inclusion covered by these regulations. We believe (Performance Management), we are of chapters 33 and 35 in the list of a coordination role is sufficient to allow clarifying that an employee’s waivable or modifiable chapters in OPM to fulfill its responsibilities. In this performance may be found to be § 9901.104, since those chapters include coordination role, OPM will ensure that unacceptable based on failure to veterans’ preference rules. However, Governmentwide interests and the successfully complete work assignments § 9901.104(a) states that chapters 33 and interests of other agencies are or other instructions that amplify 35 may be waived or modified only as appropriately considered. written performance expectations. authorized by 5 U.S.C. 9902(k). Section In these final regulations, we have 9902(k) of title 5, U.S. Code, requires the added a coordination requirement with Section 9901.104—Scope of Authority Secretary to comply with veterans’ respect to the establishment of policies Section 9901.104 identifies the preference requirements. Thus, the and procedures for time-limited provisions in title 5 that are subject to regulations in subpart E (Staffing and appointments under § 9901.511(d), waiver or modification under 5 U.S.C. Employment) and subpart F (Workforce consistent with our original intent. The 9902. Shaping) that modify parts of chapters supplementary information for the Commenters objected to any 31 and 33 do not affect veterans’ proposed regulations stated that modification or waiver of any title 5 preference rights and protections. coordination with OPM would occur in provision. A commenter suggested this A commenter questioned the effect of this area. (See 70 FR 7563.) We have section would grant legislative power the NSPS regulations on determinations added a coordination requirement with

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respect to the modification of coverage, suggested that adjustments to the HR representatives from more than 1500 retention procedures, or appeals rights system or labor relations system should Departmental bargaining units in the under subpart F (Workforce Shaping). be subject to the meet-and-confer continuing collaboration process, we do This coordination requirement is process rather than the continuing agree that bargaining units affected by consistent with § 9901.602, which collaboration process, and others an implementing issuance should be provides that, in accordance with suggested that there should be collective represented in the process. Therefore, § 9901.105, DoD will prescribe bargaining over implementing we have retained the provision giving implementing issuances to carry out the issuances. In addition, commenters the Secretary sole and exclusive provisions of subpart F. Also, we have questioned whether continuing discretion to determine the number of moved the coordination provision collaboration on implementing employee representatives that may related to qualification standards from issuances met the requirements of 5 participate in the process, but we have § 9901.105(c) to § 9901.105(e) to address U.S.C. 9902(f)(1)(D), which requires a modified the final regulations to make concerns raised during the meet-and- method for employee representatives to clear that each national labor confer process that language in the participate in any further planning or organization with one or more proposed regulations did not clearly development which might become bargaining units affected by an identify OPM’s role in this matter. necessary. implementing issuance will be provided Finally, we have added a requirement As we have already explained, we the opportunity to participate in the that the Secretary coordinate with the agree that adjustments to the HR system process. We believe this will provide for Director regarding the Secretary’s regulations or the labor relations system an efficient and meaningful continuing determination under 5 U.S.C. 9902(l) regulations would be subject to the collaboration process, particularly when that the Department has in place a meet-and-confer process described in 5 large numbers of bargaining units are performance management system that U.S.C. 9902(f)(1)(A–(C) and (m)(3). affected. meets the criteria in 5 U.S.C. 9902(b). However, we did not adopt the Commenters, including labor This determination must be made before suggestion to require that implementing organizations participating in the meet- the Department applies the human issuances be subject to collective and-confer process, suggested that resources management system bargaining or the meet-and-confer employee representatives should be established under 5 U.S.C. 9902(a) to an process. Collective bargaining is involved before a draft implementing organization or functional unit that inappropriate for the development of issuance is proposed. In fact the exceeds 300,000 civilian employees. HR system implementing issuances, continuing collaboration process since it is inconsistent with the provides the Secretary flexibility to Section 9901.106—Continuing requirements of Section 9902(f)(4). In involve affected labor organizations Collaboration addition, Congress expressly required whenever appropriate, including at the As authorized by 5 U.S.C. DoD and OPM to develop a separate conceptual stage. These commenters 9902(f)(1)(D) and (m), section 9901.106 method, apart from the meet-and-confer further suggested that there should be of the regulations establishes a process process, for employee representatives to some feedback to the labor organizations called ‘‘continuing collaboration’’ for participate in the further planning and regarding the disposition of any involving employee representatives in development of the HR system (which recommendations made during the the further planning and development will be manifested in the implementing continuing collaboration process. We of the HR and labor relations systems issuances). The continuing collaboration after promulgation of the joint DoD/ process does meet the requirements of 5 agree and have modified the regulations OPM enabling regulations. Under this U.S.C. 9902(f)(1)(D), and we therefore to ensure that the Department considers continuing collaboration provision, DoD have retained this process in the final the views and recommendations offered will provide employee representatives regulations. during the process before taking final the opportunity to participate in the In addition, we have added language action. A commenter also expressed development of implementing issuances to clarify that the continuing concern that the Secretary was not that carry out the provisions of part collaboration process in § 9901.106 is required to adopt suggestions or 9901. the exclusive process for employee recommendations, but we believe 5 Section 9901.106 implements 5 U.S.C. representatives to participate in the U.S.C. 9902 intended the Secretary to 9902(f)(1)(D), which requires the further planning, development, and have the final authority to implement Secretary and the Director to develop a implementation of the NSPS HR and the NSPS. In addition, employee method for employee representatives to labor relations systems established by representatives will receive from the participate in further planning and these enabling regulations. (See 5 U.S.C. Department a written statement of the development after promulgation of joint 9902(f)(4) and (m)(1)–(2).) reasons for taking final action regarding DoD/OPM regulations establishing the We also received comments during an implementing issuance. HR system under 5 U.S.C. 9902(a). In the meet-and-confer process, as well as Finally, commenters, including labor addition, this section provides for the written comments, suggesting that all organizations participating in the meet- same continuing collaboration with labor organizations representing and-confer process, recommended that respect to application of the labor employees affected by an implementing the regulations provide employee relations system established by joint issuance should have the opportunity to representatives a reasonable time to DoD/OPM regulations under 5 U.S.C. be represented in the continuing submit their comments. The complexity 9902(m). Section 9901.106 does not collaboration process. Labor of issues will vary greatly from apply to the adjustment of the NSPS organizations recommended that we implementing issuance to implementing enabling regulations themselves. Such eliminate the provision authorizing the issuance, which makes it imprudent to regulatory adjustments must be made Secretary to determine the number of establish a standard time for using the meet-and-confer process employee representatives who will commenting in the regulations. described in 5 U.S.C. 9902(f)(1)(A)–(C) participate in the continuing Therefore, we have not adopted this or (m), as applicable. collaboration process. While, as a recommendation and have retained the During the meet-and-confer process, practical matter, it would be provision authorizing the Secretary to several participating labor organizations administratively inefficient to include establish these timeframes.

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Section 9901.107—Relationship to 1614 as unnecessary because the appropriate for the subject, NSPS Other Provisions paragraph specifically provides that the evaluation methods established under Section 9901.107 describes the employment discrimination laws that § 9901.108 will elicit workforce relationship of the NSPS regulations to the Equal Employment Opportunity observations and recommendations; and other laws and regulations. Commenters Commission (EEOC) enforces under 42 employees also may use normal expressed confusion regarding the U.S.C. 2000e et seq., 29 U.S.C. 621 et Departmental processes to comment on purpose of this section ‘‘ in particular, seq., 29 U.S.C. 791 et seq., and 29 U.S.C. the human resources system. In paragraph (b). For example, a 206(d) are not waived, modified, or addition, we note that the term commenter suggested that DoD was otherwise affected by these regulations. ‘‘employee representative’’ as used in 5 attempting to exempt itself from title 5 This is consistent with the enabling U.S.C. 9902 is not limited to rules on back pay. Paragraph (b) is statute and our commitment to full and representatives of labor organizations. merely addressing situations where vigorous enforcement of Federal sector DoD may request views and comments nondiscrimination laws. This means other laws contain references to from representatives of other employee that employees and applicants for statutory provisions that are being groups, such as a managers’ association. employment will have the right to file waived and replaced by NSPS Commenters requested greater detail EEO complaints under those provisions regulations. In general, our purpose is to on the nature of DoD evaluations, such of law as they do today and that EEOC’s give those other laws continuing effect as evaluation criteria, benchmarks, jurisdiction over those complaints by deeming the references to waived parameters, and timeframes. remains unchanged. provisions to be references to the NSPS Commenters also stated that the regulations replacing those waived Section 9901.108—Program Evaluation program evaluation process in the proposed regulation is too vague with provisions. Thus, for example, we are Section 9901.108 requires that DoD not eliminating NSPS employees’ respect to the participation of employee establish procedures for evaluating the representatives and recommended that entitlement to back pay under 5 U.S.C. NSPS regulations and their 5596, but are merely giving meaning to we incorporate more specific implementation. provisions, such as providing references in Section 5596 to statutory Commenters recommended that other provisions in chapters 71 and 77 that no information to employee organizations, organizations, such as OPM, be involved timeframes for review, and procedures longer apply to NSPS employees. The in program evaluation. They consider it final regulations reflect a technical for employee organizations to collect important that program evaluations be information directly from employees. revision in paragraph (b)(3) to make conducted by independent, unbiased Section 9901.101 of these regulations clear that all references in section 5596 organizations. This regulation is meant already identifies ‘‘key operational to provisions in chapter 71 (dealing to place a self-evaluation requirement characteristics and requirements,’’ with labor relations) are considered to on DoD, not to address third-party which are essentially high-level be references to corresponding evaluations of NSPS. We believe it is a evaluation criteria. DoD will provide provisions in subpart I of these matter of good management that any additional detail as it develops its regulations. Also, in paragraph (b)(2), agency implementing new human evaluation program. The timing, nature we revised a regulatory citation resources management and labor and complexity of NSPS program consistent with the rearrangement of relations systems have responsibility for evaluations will vary greatly and will be sections in subpart H. evaluating those systems so that Commenters expressed concern problems can be corrected and affected by the spiral rollout strategy for regarding § 9901.107(a)(2), which (1) improvements made. Under law and the human resources system. We provides that part 9901 must be Executive order, OPM has general consider it to be imprudent to set interpreted in a manner that recognizes oversight responsibilities with respect to standard timeframes. We believe this is DoD’s need to accomplish its critical agency administration of human an area where flexibility is essential so national security mission swiftly and resources management programs. Of that DoD can adjust the evaluation effectively and (2) accords DoD and course, OPM has a particular interest program based on experience. OPM’s interpretation of the regulations and accountability with respect to Accordingly, we have not adopted the great deference. The principle of NSPS, since Congress authorized OPM recommendations made by commenters providing deference to the agencies and DoD to jointly prescribe the NSPS for greater specificity. responsible for regulating and regulations. OPM expects to review the Subpart B—Classification implementing a statute is well results of DoD evaluations of NSPS and established. We believe it is entirely may conduct evaluations of its own. General Comments appropriate that the regulations Nothing in these regulations prevents Commenters were concerned about recognize that the need for deference is evaluations of NSPS by other the lack of specificity about the even greater when the agency is appropriate organizations, such as the structure of the NSPS classification responsible for defending and protecting Merit Systems Protection Board or the system and commented on this issue our country and its citizens against Government Accountability Office. with regard to each section of this external threats. We have clarified that A commenter suggested that DoD subpart. A number of commenters felt deference is to be given to DoD’s and establish an ongoing mechanism the proposed regulations were too vague OPM’s interpretation of these whereby employees can submit and did not provide enough details regulations. In paragraph (c), we have observations and recommendations for about how the career groups and bands removed the reference to law improving NSPS (including anonymous will be established, which occupations enforcement officer geographic submissions). The commenter observed will be in each career group, and which adjustments under section 404 of the that this was especially important when positions will be in each band. Federal Employees Pay Comparability employees (including supervisors) are Commenters recommended a number of Act of 1990, since those adjustments are not part of a bargaining unit. We do not amendments to subpart B to provide no longer payable. believe it is necessary to establish a more detailed criteria. Finally, in paragraph (d), we have special, ongoing mechanism for such Commenters expressed a strong desire removed the reference to 29 CFR part input within this regulation. When that this subpart of the regulations be

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more specific and that employees and Other Comments on Specific Sections of greater than the flexibilities they employee representatives be involved in Subpart B currently have under demonstration authority. the design of the NSPS classification Section 9901.201—Purpose system. Responding to the lack of detail Commenters recommended excluding in the regulations, labor organizations Section 9901.201 explains the Civilian Mariner, Emergency Essential recommended that the bar on collective purpose of subpart B, which establishes Civilians, and dual status military a classification structure and rules for bargaining of the NSPS classification technicians from coverage under this covered DoD positions and employees. system under § 9901.903 of the subpart. We have not changed coverage The lack of details in this subpart of the under this subpart based on these proposed regulations be removed. proposed regulations caused some Commenters also requested that comments. The classification system is commenters to question whether the an integral part of NSPS and provides implementing issuances for this subpart proposed classification system would the flexibility needed as the foundation be subject to public review and provide for ‘‘equal pay for equal work.’’ for the performance management and comment. We have not removed the bar The merit system principle at 5 U.S.C. pay components of the system. on collective bargaining. While the 2301(b)(3) ensures that ‘‘Equal pay detailed implementing issuances for this should be provided for work of equal Section 9901.203—Waivers subpart will not be subject to public value, with appropriate consideration of Section 9901.203 of the regulations review and comment, they will be both national and local rates paid by specifies the provisions of title 5, U.S. established under the ‘‘continuing employers in the private sector, and Code, that are waived for employees collaboration’’ provisions in § 9901.106. appropriate incentives and recognition covered by the NSPS classification Under continuing collaboration, the should be provided for excellence in system established under subpart B. As exclusive process for employee performance.’’ The NSPS classification specified in § 9901.203(a) the waivers representative involvement (5 U.S.C. system established by these regulations apply when a category of DoD 9902(f)(4)), employee representatives will provide for a classification employees is covered by a classification will have the opportunity to review and structure with consistently defined system established under this subpart, comment on draft implementing work levels, while the performance except with respect to OPM’s authority issuances. Furthermore, we have added management and compensation systems under 5 U.S.C. 5112(b) and 5346(c) to will establish the value of that work, as a new section at § 9901.205, which act on requests for review of required under this principle. further clarifies that classification classification decisions, under matters are not subject to collective Section 9901.202—Coverage § 9901.107 and § 9901.222(d). Section bargaining. This is consistent with the 9901.203(b) states that the classification Section 9901.202 identifies the of positions above GS–15 is not waived statutory mandate that the scope of employees and positions eligible for for certain purposes. bargaining not be expanded under NSPS coverage under this subpart, including A commenter requested clarification (5 U.S.C. 9902(m)(7)). those otherwise covered by the General of whether this section waives 5 U.S.C. We understand the desire for the Schedule and prevailing rate systems, 6303(f) regarding the annual leave regulations to provide more specificity employees in SL and ST positions, and accrual for members of the SES and about how the NSPS classification members of the SES, subject to employees in SL and ST positions. As system will operate. However, the § 9901.102(d). This section also specified in § 9901.203(b), this is one of provides the authority for the Secretary regulations must provide sufficient the enumerated provisions that may not to designate additional employees and be waived. flexibility for a classification system positions for coverage. Commenters with career groups and bands that requested clarification of coverage for Section 9901.204—Definitions support the market-based features of the students and for laboratories. Students This subpart defines the key NSPS pay system and can be in positions otherwise classified to the components and terms used in the customized to meet DoD’s mission General Schedule or other covered NSPS classification system. A requirements and strategic human classifications systems will be covered commenter suggested revising the capital needs both today and in the under the NSPS classification system. definition of ‘‘classification’’ to remove future. Except as otherwise explained in Section 9902(c) of title 5, U.S. Code, the phrase ‘‘job evaluation,’’ to this section of the SUPPLEMENTARY specifies that coverage will not occur eliminate potential confusion with INFORMATION, we have not modified before October 1, 2008, for the defense ‘‘performance evaluation.’’ We did not subpart B of the regulations in response laboratories in the following make this change. The phrase is not to these comments. The regulations organizations: Aviation and Missile used to define classification, but rather provide for implementing issuances that Research Development and Engineering is included to explain that the terms will provide further details, including Center, Army Research Laboratory, may be used interchangeably. the criteria for the career groups and Medical Research and Materiel definitions of the bands. DoD will Command, Engineer Research and Section 9901.211—Career Groups consider the suggestions and Development Command, Section 9901.211 provides DoD the recommendations made by commenters Communications-Electronics Command, authority to establish career groups. as it develops these implementing Soldier and Biological Chemical DoD’s implementing issuances will issuances. Command, Naval Sea Systems provide the criteria and rationale for Command Centers, Naval Research grouping occupations or positions into Commenters recommended that DoD Laboratory, Office of Naval Research, career groups. issue classification standards to ensure and Air Force Research Laboratory. One commenter noted that this consistent application of the NSPS Section 9902(c)(1) of title 5, U.S. Code, section does not mention OPM’s role in classification system. DoD will establish provides that on or after October 1, establishing the career groups. Under standardized classification procedures 2008, these laboratories will be covered § 9901.105(c)(1), DoD is required to and criteria in the implementing to the extent the Secretary determines coordinate with OPM before issuances required by this subpart. the flexibilities provided by NSPS are establishing career groups.

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Commenters expressed a need for establishing NSPS pay schedules and official position of record including the consistent career groups across DoD. We pay bands for prevailing rate positions. pay system, career group, occupational did not make a change in the regulations A commenter questioned how duty series, pay schedule, or pay band. based on this comment; however, DoD levels within bands will be described. Commenters expressed concern that anticipates uniform career groups. DoD will establish a process for this section provides insufficient detail. Several commenters provided specific consistently describing the duties of DoD’s implementing issuances will recommendations about grouping positions. establish policies and procedures for occupations together into career groups. Several commenters requested that handling an employee’s request for Other comments recommended limiting DoD establish military rank reconsideration of classification the number of career groups to keep the equivalencies for each band, for decisions. system simple. In developing the purposes such as travel A commenter noted that current implementing issuances, DoD will accommodations. Such equivalency regulations provide employees the right consider these suggestions. determinations are outside the scope of to request reconsideration of official the NSPS regulations. titles of their positions of record and Section 9901.212—Pay Schedules and Several commenters noted the asked that the regulations provide this Pay Bands importance of dual career paths to right under the NSPS classification Section 9901.212 provides DoD with support both supervisory and non- system. We agree and have added the authority to establish pay schedules supervisory expertise. DoD agrees that ‘‘official title’’ to § 9901.222(a). within each career group, and pay bands this is an important feature to include Commenters were concerned that within each pay schedule. One in the NSPS classification system. The there was no independent review to a commenter noted that the bands, as pay band structure supports this neutral party. Paragraphs (a) and (c) of defined in this section, are simple to concept through pay bands, such as this section provide employees the right understand. expert and supervisory bands, which to directly request OPM reconsider the Commenters noted an incorrect could provide for parallel career classification of their official position reference in the proposed regulations at progression. and allow an employee to request that § 9901.212(d). We have corrected the OPM reconsider a DoD classification reference. Section 9901.221—Classification reconsideration decision, respectively. Commenters noted that this section Process This right is parallel to the classification does not mention OPM oversight and Section 9901.221 of the regulations appeal right of current General Schedule recommended that OPM review and requires DoD to establish a method for employees under 5 U.S.C. 5112(b). approve the pay schedules. Under describing jobs and documenting those Commenters suggested that the § 9901.105(c)(1), coordination of pay descriptions. DoD will establish regulations authorize retroactive schedules and pay bands with OPM is procedures for assigning each job to an promotions if an employee’s position is required. occupational series, career group, pay found to be misclassified, and one The proposed regulations stated in schedule, and band, and will classify commenter suggested that retroactive § 9901.221(a) that pay schedules ‘‘may each job accordingly. promotions be limited to 2 years include two or more pay bands.’’ We Labor organizations participating in preceding the reconsideration made a technical correction to clarify the meet-and-confer process expressed determination. Under the current that a pay schedule may include one or concern that employee promotions classification law and regulations (5 more pay bands. might be unduly delayed because U.S.C. chapter 51 and 5 CFR part 511) Commenters expressed a need for § 9901.221(d) in the proposed classification decisions generally may consistent pay bands throughout DoD. regulations did not provide a timeframe not be made effective retroactively. (See We did not make a change in the for classification decisions. As a result 5 CFR 511.701(a)(4).) In addition, the regulations based on this comment; of these discussions, we have added a Supreme Court has held that neither the however, DoD anticipates that bands requirement in this section that Classification Act under 5 U.S.C. will be defined consistently for a given personnel actions implementing chapter 51 nor the Back Pay Act under occupation. Several commenters classification decisions occur within 5 U.S.C. 5596 creates a substantive right recommended grouping particular four pay periods after the date of the to back pay for periods of wrongful General Schedule grades into pay bands. decision. classifications. (See United States v. Commenters also recommended placing Some commenters expressed concerns Testan, 424 U.S. 392 (1976).) specific occupations (e.g., attorney) into that under the NSPS classification OPM regulations at 5 CFR 511.703 particular bands. Additional system, position descriptions will not be provide an exception to this general rule commenters suggested ways to band required. They were concerned that the and allow a retroactive effective date if supervisory positions, while other duties required by a position will not be upon classification appeal an employee commenters requested clarification of clearly defined and will be too broad, is found to have been wrongfully how supervisory and team leader which may result in uncertain demoted. Any similar retroactive positions will be placed into bands. DoD expectations or the assignment of work effective date provisions regarding will consider these suggestions and unrelated to an employee’s position. classification reconsideration decisions address the number and composition of While NSPS provides increased will be addressed in DoD’s policies and pay bands and the assignment of flexibility, DoD will establish a process procedures for reviewing these requests, supervisor and team leader positions to for consistently describing the under § 9901.222(b). bands in its implementing issuances. requirements of positions. Commenters suggested that Several commenters requested further classification reconsideration decisions detail on the classification of prevailing Section 9901.222—Reconsideration of should be based on OPM’s classification rate positions under NSPS. One Classification Decisions standards. The appropriate criteria for commenter suggested adopting the Section 9901.222 of the proposed reconsideration are those criteria used bands used for DoD nonappropriated regulations provides employees the in classifying the position. As noted in fund (NAF) employees. DoD will right to request that DoD or OPM § 9901.222(e), where DoD has adopted consider these comments when reconsider the classification of their OPM standards, OPM criteria will be

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used; and where DoD has established its and the pay administration rules otherwise explained in this section of own criteria for classifying positions governing the NSPS pay system. the SUPPLEMENTARY INFORMATION, we under this subpart, DoD criteria will be Commenters felt the regulations were have not modified subpart C of the used. too vague and difficult to understand regulations in response to these Commenters suggested that DoD because of the lack of detailed comments. should have a central classification information on such issues as However, we concur with appeals office. This change has not been establishment of career groups and pay commenters that the NSPS pay system made in the regulations. DoD currently schedules, establishment and must be designed in a transparent and has a central classification appeals adjustment of pay band rates and rate credible manner that involves office. ranges, establishment and adjustment of employees and employee local market supplements, composition representatives. While we have not Section 9901.231—Conversion of and funding of performance pay pools, removed the bar on collective Positions and Employees to the NSPS pay-setting, and premium pay. bargaining in subpart I, the Classification System Commenters expressed difficulty in implementing issuances, as defined in Section 9901.231 of the regulations understanding how their rate of basic § 9901.103, which will include the addresses the conversion of positions to pay and pay adjustments would be details of the NSPS pay system, will be the classification system established determined under NSPS and the impact covered by the ‘‘continuing under this subpart. individual and group performance collaboration’’ provisions in § 9901.106, Commenters expressed concerns would have on pay. Other commenters which Congress established as the about the conversion process, finding it recommended that the regulations be exclusive process for the involvement of vague and requesting further detail. withdrawn until the entire system could employee representatives in the further They questioned whether all positions be disclosed or tested. planning and development of the HR will be reclassified, whether employees Commenters, including labor system (5 U.S.C. 9902(f)(1)(D) and will be required to reapply for their organizations participating in the meet- (f)(4)). (See Section 9901.103— current job, and how DoD will deal with and-confer process, repeatedly Definitions and Section 9901.106— employees in entry positions who have referenced the lack of specificity when Continuing Collaboration.) Further, DoD completed training but not yet met time- recommending a number of will consider the suggestions and in-grade criteria. A commenter amendments to subpart C of the recommendations made by commenters requested that the length of ‘‘save pay’’ regulations which they felt would as it develops implementing issuances be a minimum of 2 years. Additionally, provide detailed criteria and situations for the NSPS pay system. Finally, we commenters requested guidance on for setting and adjusting rate ranges; have added a new section at § 9901.305, converting employees currently entitlement to rate range adjustments; which further clarifies that pay matters classified under demonstration projects setting and adjusting local market are not subject to collective bargaining. and on converting employees leaving supplements; entitlement to local This is consistent with the statutory DoD from NSPS to the General market supplements; eligibility and prohibition against expanding the scope Schedule. A commenter requested that amounts of performance pay increases; of bargaining under NSPS to those employees be provided new position and setting pay for initial hires, matters not subject to bargaining today descriptions prior to conversion. DoD reassignments, promotions, and because they are governed by law or will consider these comments when reductions in band. Amendments were Governmentwide regulations (5 U.S.C. issuing the implementing issuances to also suggested for initial conversion into 9902(m)(7)). prescribe the conversion process. NSPS. Commenters also stated that the Commenters questioned the Citing the lack of specificity, regulations should require the new pay applicability of the conversion rules to commenters and the labor organizations system to fully comply with the merit employees converted to the NSPS pay participating in the meet-and-confer system principles and protect against system from demonstration projects and process stated that the regulations prohibited personnel practices, alternative pay systems. In response to should be revised to remove the bar in implement the performance these comments, we revised subpart I on collective bargaining of the management provisions of subpart D § 9901.231(b) to provide that DoD will NSPS pay structure and system and to prior to implementing the pay system in convert employees to the system provide that the NSPS pay system be subpart C, require DoD to assess the subject to national consultation rights. without a reduction in their rate of pay, impact of the pay system on employees Numerous commenters requested that prior to implementation, and establish a including any applicable locality the regulations be more transparent and DoD compensation board. Neither the payment, special rate supplement, local that DoD work closely with employees merit system principles nor the rules market supplement, or ‘‘similar and employee representatives in regarding prohibited personnel practices payment under other legal authority.’’ designing the NSPS pay system. They are waived under NSPS. Regarding We also made a technical correction, also cited the lack of details in the testing and/or assessment of the system changing the term ‘‘special rate’’ to regulations as the basis for doubting the prior to implementation, the ‘‘special rate supplement.’’ This change fairness and equity of the NSPS pay Department has tested many of these is consistent with other recently system. flexibilities via the demonstration published special rate regulations. We recognize the desire that the projects. Additionally, the Department Subpart C—Pay and Pay regulations provide greater specificity will use a spiral implementation Administration and guarantees pertaining to the NSPS strategy that will allow it to make pay system. However, the regulations modifications as necessary based on General Comments must afford DoD sufficient flexibility to lessons learned in the earlier spirals. Commenters and the labor design an agile pay system that is With regard to the recommendation for organizations participating in the meet- performance-based, market-based, and a compensation board, establishment of and-confer process articulated concerns tailored to DoD’s performance goals, a mechanism for determining rate range about the lack of specificity in subpart mission requirements, and strategic adjustments will be addressed in C of the regulations on the pay structure human capital needs. Except as implementing issuances.

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Commenters stated the concern that increases are in addition to annual systems (e.g., demonstration projects). they would lose pay comparability with across-the-board pay increases. Even Currently, approximately 44,000 of the DoD employees remaining under the employees whose performance is Department’s employees are covered by General Schedule and with employees unacceptable receive the annual across- performance-based pay systems. in other Federal agencies. Commenters the-board and locality pay increases that Other Comments on Specific Sections of stated that employees should receive average between 3 and 5 percent. Over pay increases equivalent to the increases time, even minimally productive Subpart C they would have received under the employees will progress steadily to the Section 9901.301—Purpose General Schedule. Many commenters top of the General Schedule pay range also stated that the Department should and may be compensated significantly Many commenters stated that the pay- continue to rely on the General more than higher performing employees for-performance system would lower Schedule classification and pay with less time in grade. A system based employee morale, increase competition system—in essence, a retention of the primarily on longevity is not designed among employees, and undermine status quo—or make the General to base compensation on performance. teamwork and cooperation. Schedule system more flexible. Other Commenters stated that employees The NSPS performance management commenters questioned the have no basis to predict salary from year system provides opportunities for the Department’s ability to successfully to year and that they have no way of Department to recognize and reward implement the system and/or the ability knowing the amount of their annual teamwork. The Department does not of the Department’s managers to salary increases. Commenters stated that assume that employees are solely establish and apply performance many benefits (e.g., leave, retirement, motivated by pay. As a responsible standards fairly and consistently to pay life insurance) are based on salary, and employer, the Department has the determinations, especially if they have since raises are not guaranteed and obligation to reward the highest not used the current system effectively. cannot be predicted under NSPS, they performers with the highest levels of Other commenters stated that the NSPS will be losing benefits. Other compensation—regardless of their pay system must contain the commenters stated that their ‘‘high- motivational basis for achievement. The transparency and objectivity of the three’’ average salary could be less Department believes the new system General Schedule, including the under NSPS, which will reduce will enhance employees’ desire to strive involvement of Congress and the employee annuities. A commenter also for maximum achievement. More Federal Salary Council. noted that because salary costs under importantly, this will provide for more The Department plans to implement the NSPS pay system cannot be easily equitable treatment of employees based the system described in the proposed predicted, the A–76 contract bidding on level of performance (which is regulations. That system is consistent process will be more difficult to consistent with merit system principles) with the statutory requirement that the analyze. and will help create a high-performance Department establish a ‘‘pay-for- The Department, while recognizing culture within the Department. In performance’’ system that better links that there is less predictability under the addition, a pay-for-performance system individual pay to performance. (See 5 NSPS pay system, also notes that pay will allow the Department to be more U.S.C. 9902(b)(6)(I).) Furthermore, we increases are not completely predictable competitive in recruiting and retaining believe Congress and the American under the current system—other than top performers who have higher value public expect their public employees to periodic within-grade increases. in the labor market. be paid according to how well they Additionally, under current title 5 Commenters stated that since DoD perform, rather than how long they have provisions a number of situations affect been on the job. They also expect the an employee’s salary (e.g., transfer from bases military ‘‘within-grade increases’’ Department to maximize its efforts to one locality pay area to another and on longevity, civilian employees should recruit and retain the most talented and change from an occupation with a continue to receive time-based motivated workforce to accomplish its special rate to an occupation without increases. The enabling legislation did critical national defense mission. one) and therefore affect an employee’s not grant the Department authority to The General Schedule classification annuity calculation. Furthermore, NSPS waive the provisions of title 10, United and pay system is an impediment to is a pay-for-performance system that States Code, under which military pay these expectations. The General will provide meaningful financial and benefits are established. Schedule does not provide the rewards to high-performing employees Additionally, while the Department opportunity to appropriately reward top and greater employee control over values both its military personnel and performers and/or compensate them in future pay increases. High-performing civilian employees, it continues to relation to their labor market value. employees will have the opportunity to support separate pay and benefit Under the General Schedule, achieve significant pay increases—the systems in recognition of the different performance is rewarded by exception, higher the performance, the higher the attributes and demands of military and and market value is defined as ‘‘one size pay. The Department will be able to use civilian service. fits all.’’ salary trends to estimate future costs for Section 9901.302—Coverage The General Schedule pay system is purposes such as A–76. primarily a longevity-based system, i.e., Commenters questioned the Section 9901.302 lists the categories pay increases are linked primarily to Department’s statements that DoD has of employees eligible for coverage under time in grade. In addition to length of more than 20 years’ experience with subpart C. Commenters stated that time, employees must be found to be pay-for-performance systems. Pay-for- Federal Wage System (FWS) and other performing at an ‘‘acceptable level of performance systems similar to this prevailing rate employees should not be competence’’ to receive a step increase. proposal are not new. Pay banding has covered by the NSPS pay system. Others However, since 99 percent of all been part of the Department’s stated that since FWS and other employees satisfy this requirement, compensation program since 1980, and prevailing rate pay systems are already virtually all employees can expect to the Department has a significant amount based on market rates, such employees receive base pay increases automatically of experience in implementing and should be excluded from coverage. of up to 30 percent over time. These evaluating performance-based pay Other commenters thought the NSPS

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pay system should cover GS and FWS excepted from the competitive service career groups but to place them under employees at the same time. because of their confidential, policy- separate pay schedules. NSPS does not The Department intends to include all determining, policy-making, or policy- establish a supervisory differential. eligible employees in the NSPS human advocating character are ineligible. This Section 9901.312—Maximum Rates resources management and labor exclusion is identical to the exclusion in relations systems, as described in the 5 CFR part 537, Repayment of Student Section 9901.312 provides the Subpart A—General provisions section Loans, and it does not exclude most Secretary with the authority to establish of this SUPPLEMENTARY INFORMATION. attorneys and other excepted service limitations on maximum rates of basic However, the Department does not employees from eligibility for student pay and aggregate pay for employees intend to cover FWS employees in the loan repayment. covered by the NSPS pay system. initial implementation phases of the During the meet-and-confer process, NSPS human resources management Section 9901.304—Definitions participating labor organizations system. (See the Next Steps section of Section 9901.304 provides definitions recommended retitling the section this SUPPLEMENTARY INFORMATION.) Prior of terms used in subpart C. Commenters ‘‘Maximum and Minimum Rates’’ and to including FWS employees in the asked whether extraordinary pay adding a requirement to the end of the system, the Department will conduct increases (EPIs) are basic pay increases section that the overall amount additional analyses to determine the or bonuses. We have revised the allocated for compensation for DoD appropriate application of NSPS in the definition of ‘‘extraordinary pay employees covered by NSPS must not trades and crafts environment. Part of increase’’ or ‘‘EPI’’ to clarify that an EPI be less than the amount that would have that analysis will include reviewing may be a basic pay increase or a bonus. been allocated for compensation if they current wage survey approaches. A commenter asked for the meaning had not been converted to NSPS. This A commenter urged the regulations to of ‘‘pay pool level,’’ as used in the section has not been changed; however, exclude law enforcement officers from definition of ‘‘modal rating.’’ The this topic is addressed under Section the NSPS pay system. The commenter definition of modal rating has been 9901.313—National Security stated that DoD has not provided any revised to clarify that the term modal Compensation Comparability of this evidence that a pay-for-performance rating for this subpart refers to the most SUPPLEMENTARY INFORMATION. system is appropriate for law frequently occurring rating for Commenters expressed concerns that enforcement work, that law enforcement employees in the same pay band within maximum rates would limit the work often has no counterpart outside a particular pay pool for a particular Department’s ability to reward pay for the Federal Government for labor rating cycle. good performance and reduce current market comparisons, and that the In response to general comments pay potential. However, we note that proposal does not consider the current requesting greater clarity, we have any pay system will include salary difficulties in recruiting and retaining revised the definition of ‘‘pay pool’’ to ranges (including a maximum rate) for law enforcement officers. The mean ‘‘the amount designated for any given set of jobs, consistent with the Department considers pay for performance payouts’’ instead of ‘‘the applicable labor market. Even the most performance appropriate for law dollar value of the funds set aside for outstanding performers will be limited enforcement work. It also recognizes performance payouts.’’ by the salary range for the job they that it will have to use appropriate Commenters made various other perform. The proposed NSPS pay comparisons when making requests for additional definitions of system is designed to allow the best determinations regarding pay ranges for terms used in subpart C, such as performers to progress in pay more law enforcement officers. ‘‘compensation,’’ ‘‘aggregate pay,’’ rapidly. The ability to reach the range Commenters stated that employees ‘‘conduct,’’ ‘‘pay system,’’ and ‘‘rate maximum more quickly is a benefit to appointed under the authority of section range.’’ In some cases, we do not believe the high-performing employee. 1113 of Public Law 106–398 should be a definition is needed. In other cases, Section 9901.313—National Security added to the coverage statement in we believe it is more appropriate to Compensation Comparability § 9901.302. We believe that this refers to define or explain such terms in section 1101 of the National Defense implementing issuances in order to Section 9901.313 is consistent with 5 Authorization Act for Fiscal Year 1999, preserve the Department’s flexibility. U.S.C. 9902(e)(4), which requires that, as amended. This section provides to the maximum extent practicable, Section 9901.311—Major Features authority for DARPA and selected through fiscal year 2008, the overall military department laboratories to hire Section 9901.311 provides DoD with (aggregate) amount allocated for and pay a limited number of scientists the authority to establish the NSPS pay compensation of the Department’s and engineers. As shown in our matrix, system through implementing issuances civilian employees covered by NSPS these positions are outside the scope of and lists the major features of the NSPS may not be less than the amount that NSPS. (See Section 9901.102—Eligibility pay system. Commenters questioned would have been allocated for and Coverage.) whether supervisory and compensation of such employees if they nonsupervisory employees will be had not been converted to the NSPS pay Section 9901.303—Waivers under the same pay system. Others system. Section 9901.303 lists the provisions questioned the use of a supervisory During the meet-and-confer process, of title 5 which DoD may waive or differential under the system. the participating labor organizations modify under these regulations, The same pay structure and pay recommended adding a new paragraph including the student loan repayment administration rules cover both to this section of the regulations that authority at 5 U.S.C. 5379. Commenters supervisory and nonsupervisory requires the rates of compensation for expressed concern that attorneys and employees. Details on the treatment of DoD civilian employees to be adjusted other excepted service positions are supervisors and non-supervisors under at the same time and in the same ineligible to participate in the student this section will be addressed in the proportion as the rates of compensation loan repayment program. implementing issuances. At this time, for members of the armed forces, as Section 9901.303(c) states that DoD plans to include supervisory and required by 5 U.S.C. 9902(e)(3). Other employees occupying positions nonsupervisory employees in the same commenters recommended that civilian

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employees receive pay increases circumstances that might impact pay different rate range adjustments for identical to members of the armed levels’’ in that same paragraph. different pay bands, and adjust the forces. Comparability with military pay Commenters stated that DoD could use minimum and maximum rates of a pay is already addressed under 5 U.S.C. the flexibility provided by this section band by different percentages. 9902(e)(3) and does not need to be to lower payroll costs and divert such Commenters, including labor repeated in these regulations. funds to other budget needs. organizations participating in the meet- Commenters requested clarification The enabling legislation recognizes and-confer process, were concerned on the formula DoD will develop in that all future circumstances cannot be about the frequency and effective dates applying this section. Commenters predicted. The terminology ‘‘to the of rate range adjustments. In response to recommended that DoD ensure that maximum extent practicable’’ was used these comments, paragraph (b), which through 2008 each individual in the enabling legislation and was says DoD may determine the effective installation receive the same funding it designed to preserve the flexibility to date of newly set or adjusted band rate would have received under the General accommodate changes in missions, ranges, has been modified to add: Schedule. Others, including labor changes in the composition of the ‘‘Established rate ranges will be organizations during the meet-and- workforce (e.g., mix of new employees, reviewed for possible adjustment at confer process, recommended that the long-term employees, and retirement least annually.’’ We anticipate making final regulations state that the money eligible employees), and other changes rate range adjustments (when allocated to employees collectively will that might affect pay levels. Further warranted) and performance payouts in be the same as that allocated under the defining the term would be inconsistent January of each year. However, we have General Schedule. Commenters also with the intent of the law. However, not revised the regulations to prescribe asked whether the amount of money under NSPS guiding principles, the an effective date for such adjustments available to employees after 2008 will Department values a high-performing because this would unduly limit the be less than the amount available under workforce and recognizes that Department’s ability to make the General Schedule. Commenters maximum effort to adequately fund adjustments at other times in response requested that § 9901.313 include a civilian employee compensation is to significant labor market changes or requirement that the Department crucial. The term ‘‘pay in the aggregate’’ nonstandard performance cycles. actually spend the same level of funding refers to the concept addressed earlier Commenters questioned whether for employee pay increases under NSPS that the enabling legislation does not consideration of the ‘‘availability of as would be spent under the General require that each individual employee funds’’ in § 9901.322(a) will allow DoD Schedule. Other commenters pointed will receive the same pay increase to use salary funds for other budget out that this section protects a pool of under NSPS that he or she would have needs and noted that this factor appears money, but does not protect the pay of received under the General Schedule. to contradict the funding guarantees individual employees. The enabling legislation protects pay for provided under § 9901.313—National The Department is developing employees overall rather than at the security compensation comparability. financial policy guidance for issuance. individual level. We believe it is clear in the regulations In addition, training will be conducted A commenter recommended that the that DoD must comply with § 9901.313. to reinforce these funding requirements. two uses of the term ‘‘pay’’ in The availability of funds criterion may However, Public Law 108–136 does not § 9901.313(b) be replaced with the term be considered only after the require that every installation be funded ‘‘compensation’’ because requirements of § 9901.313 have been at the same level as under the General ‘‘compensation’’ is defined in paragraph met. Schedule, nor does it require that each (c) and ‘‘pay’’ is not. We agree and have Commenters asked why labor market individual employee will receive the replaced the term ‘‘pay’’ with conditions will be considered in setting same pay increase under NSPS that he ‘‘compensation’’ in § 9901.313(b). and adjusting rate ranges. Others asked or she would have received under the During the meet-and-confer process, why different pay adjustments should General Schedule. the participating labor organizations be made for different pay bands. Other One of the key requirements of the recommended adding a paragraph to commenters felt that basing pay for NSPS pay-for-performance system is this section to address locality pay employees on the local job market is a providing meaningful financial rewards funding. Another commenter step in the right direction of closing the to high-performing employees. Without recommended that the payments pay gap between Federal employees and the proper funding, this requirement included as ‘‘compensation’’ under their private sector counterparts. cannot be realized. Although the § 9901.313(c) be clarified. To clarify Commenters asked whether a private enabling legislation does not mandate a what types of payments are included in sector company’s lay-offs will cause a funding level beyond fiscal year 2008, the term ‘‘compensation’’ as used in this rate range minimum or maximum to be the Department recognizes the section, we have redefined adjusted downward. importance adequate funding plays in a ‘‘compensation’’ to mean basic pay The Department has not revised pay-for-performance system. ‘‘taking into account any applicable § 9901.322(c). The ability to adjust rate Commenters questioned the meaning locality payment under 5 U.S.C. 5304, ranges based on labor market conditions of various terms used in this section. special rate supplement under 5 U.S.C. and to adjust different pay bands by For example, commenters asked what 5305, local market supplement under different percentages is a key flexibility ‘‘pay in the aggregate’’ means in § 9901.332, or similar payment under in designing a system responsive to paragraph (a). Commenters also asked other legal authority.’’ labor market factors. Under for a definition of ‘‘to the maximum § 9901.322(a), the Department will extent practicable’’ in paragraph (b) of Section 9901.322—Setting and consider a number of factors in this section and who would decide what Adjusting Rate Ranges determining appropriate rate ranges. ‘‘to the maximum extent practicable’’ Section 9901.322 provides DoD with Labor market conditions are only one of means. Commenters also questioned the the authority to set and adjust rate these factors. Others include such meaning of ‘‘flexibility to accommodate ranges, determine the effective date of factors as the Department’s mission changes in the function of the rate range adjustments, establish requirements, availability of funds, and organization and other changed different rate ranges and provide pay adjustments granted to employees

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of other Federal agencies. The NSPS employees, including high performers, (as amended) authorize the payment of regulations do not give any one factor can have their pay cut if DoD decides to COLAs in nonforeign areas.) greater weight than others. Given the use the money for mission or other Commenters stated that it is unfair for circumstances of a particular year, any requirements. Others stated that every the Secretary to set pay in secret, that factor may have a greater or lesser effect year Congress and the President such decisions may result in no or on decisions regarding adjustments in determine the cost-of-living adjustment smaller increases for some pay bands rate ranges. Section 9901.322 refers to (‘‘COLA’’) increase that employees compared to others, that unlike General ‘‘other relevant factors,’’ which could receive and that it is not fair to take Schedule pay decisions, pay-setting include any number of indicators, such money Congress intended to offset decisions will now be made behind as recruitment and retention rates for inflation and put the money in a closed doors and employees will have specific occupations/locations and the performance pool. Commenters no opportunities to influence the projected availability of candidates for recommended that DoD continue to decisions, and that the Bureau of Labor specific occupations compared to allocate the annual average pay raise Statistics (BLS) data used by the current projected vacancies in these that is authorized and appropriated by system is available for public review occupations. In the framework set by Congress for GS employees to NSPS and accountability. A commenter also § 9901.322, private sector pay trends do employees who are fully successful in questioned what safeguards are in place not require the Department to match addition to other rewards based on to ensure that rate range adjustments do these trends automatically, because they outstanding performance. The current not result in EEO violations. Merit are only one of several factors that may practice under the General Schedule of system principles and anti- be considered in setting and adjusting increasing pay for all employees by the discrimination laws are not waived rate ranges. same amount results in the overpaying under NSPS. The merit system principle Commenters and labor organizations of employees in some occupations and at 5 U.S.C. 2301(b)(3) ensures that participating in the meet-and-confer the underpaying of employees in other ‘‘Equal pay should be provided for work process were concerned about the occupations. Under NSPS, the of equal value, with appropriate flexibility provided in § 9901.322(d) Department is creating a system that consideration of both national and local allowing DoD to adjust the minimum allows the flexibility necessary to rates paid by employers in the private and maximum rates of a pay band by consider both market factors and sector, and appropriate incentives and different percentages. The labor performance in making compensation recognition should be provided for organizations recommended that the decisions. excellence in performance.’’ regulations require pay band minimum The Department concurs with and maximum rates to be adjusted by As set forth in 5 U.S.C. 5303, the commenters that the NSPS pay system the same percentage. Other commenters amount of the annual January must be designed and executed in a recommended that the minimum and adjustment in the General Schedule is transparent and credible manner that maximum rates be adjusted by the same based on a formula using the involves employees and employee percentage to minimize administrative Employment Cost Index (ECI)—a representatives. The Department will burdens and to avoid pay compression measure of the movement in wages and establish in its implementing issuances if the minimum rate is increased, but salaries for private industry workers. a process for determining rate range not the maximum rate. However, the President may propose an adjustments. Employee representatives Commenters also felt that allowing alternate plan due to national will be involved through the the Department to adjust the maximum emergency or economic conditions and ‘‘continuing collaboration’’ process. rate of a pay band by an amount notify Congress of his plan to adjust the Section 9901.323—Eligibility for Pay different from the minimum rate could General Schedule by a different amount Increase Associated With a Rate Range benefit a few favorite employees at the than that indicated by the ECI. In recent Adjustment top of a band by providing opportunities years Congress has specified in for greater performance pay increases at legislation the amount of the increase in Section 9901.323 provides that an the expense of other good employees. General Schedule pay. However, employee must have a rating of record Commenters also were concerned that, whether it is specified by the President above ‘‘unacceptable’’ to receive a pay if minimum pay band rates are not or by legislation, the adjustment in increase associated with a rate range increased, employees in such bands will General Schedule rates is not based on adjustment. A number of commenters not receive a rate range adjustment. A a cost-of-living calculation, and is not a stated that payment of rate range commenter suggested that employees COLA increase. (As a point of adjustments should not be based on receive the average percentage increase clarification, nonforeign area cost-of- employee performance. Commenters of the minimum and maximum pay living allowances (COLAs) are paid as objected to withholding such annual band rates to prevent DoD from freezing additional compensation to certain increases for employees with an pay. The Department does not believe Federal employees in Alaska, Hawaii, unacceptable rating, especially if that a requirement to automatically Puerto Rico, Guam, the U.S. Virgin employees are denied the ability to adjust the minimum and maximum pay Islands, and the Commonwealth of the appeal or grieve the rating. As discussed band rates by the same amount would Northern Mariana Islands. The COLA is in our analysis of comments on subpart provide the flexibility necessary to make designed in recognition of the higher D, we have revised the regulations to the NSPS pay structure reflective of living costs in these local areas provide bargaining unit employees with market-based factors. However, pay compared with living costs in the the option of grieving a rating of record compression is one the factors that will Washington, DC, area. To set the COLA through a negotiated grievance process. be considered in establishing minimum rates, OPM surveys the prices of more The Department believes that providing and maximum rates. than 200 items, including goods and pay increases to employees whose Commenters stated that only Congress services, housing, transportation, and ratings are unacceptable is inconsistent should have power to set pay raises. miscellaneous expenses in each of the with a performance-based pay system. Others stated that § 9901.322 will allow allowance areas and in the Washington, Commenters and the labor DoD to reduce congressionally approved DC, area. Section 5941 of title 5, United organizations participating in the meet- pay raises to a lower level and that all States Code, and Executive Order 10000 and-confer process expressed concerns

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that § 9901.323(c) penalizes employees Commenters asked if employees on authority to determine the extent to who do not have a rating of record by retained rates will receive rate range which local market supplements will not guaranteeing them a rate range increases. We have revised § 9901.323(a) apply to employees receiving a retained adjustment and that such employees to clarify that employees receiving a rate. Section 9901.355(e) provides that should be presumed to have a rating of retained rate under § 9901.355 will not employees receiving a retained rate are above ‘‘unacceptable.’’ In response to receive a rate range increase. entitled to any applicable local market supplement. (See Section 9901.355— these comments, we have revised the Section 9901.331—General regulations to provide that an employee Pay retention.) without a current rating of record for the Section 9901.331 includes general provisions regarding local market Section 9901.332—Local Market most recently completed appraisal Supplements period will receive the same percentage supplements. Commenters asked for increase as employees with a rating clarification of the difference between Section 9901.332 provides DoD with above ‘‘unacceptable.’’ Paragraph (a) has GS locality pay and the NSPS local the authority to establish local market been modified to add that, except for market supplements described in supplements and local market area employees receiving a retained rate § 9901.331. Commenters also asked boundaries. This section also provides under § 9901.355, employees with a whether local market supplements will the purposes for which local market current rating of record above replace current GS locality rates and supplements are considered basic pay. ‘‘unacceptable,’’ and employees who do special rates and nonforeign area cost-of A number of commenters expressed not have a current rating of record for living-allowances. Finally, some concerns about variations among local the most recently completed appraisal commenters questioned the cost of market supplements for occupations in period, will receive a percentage administering a new locality pay the same geographic area. The commenters felt this flexibility allows increase in basic pay equal to the system. The local market supplement errors and inequities to develop over percentage by which the minimum of authority replaces the GS locality pay time and will be confusing to their rate range is increased (not to and special rate authorities. Under employees. Other commenters were exceed the maximum rate of the band). NSPS, employees stationed in locations pleased to see a shift in the Additionally, paragraph (c) has been outside the 48 contiguous States will determination of locality pay from deleted. continue to receive applicable foreign strictly geographic to occupation-based Commenters stated it was not clear and nonforeign area cost-of-living as a way to help recruit and retain whether all employees with a rating of allowances and other differentials and employees. The Department believes record above ‘‘unacceptable’’ will allowances under 5 U.S.C. chapter 59. that variations in local market receive the same percentage increase. Under the GS locality pay system, all supplements based on occupations are Other commenters stated that this employees in a geographic location appropriate and reflective of the section implies that all employees above receive the same locality rate without conditions in some labor markets. ‘‘unacceptable’’ will receive a rate range regard to their occupation or the level of Commenters felt that the criteria for adjustment, but those with salaries at duties and responsibilities they are establishing local market supplements the top of the pay band may not if the expected to perform. This ‘‘one-size fits and local market areas should be in maximum rate of that band is not all’’ method treats all occupations alike, regulation. A commenter stated that the increased. regardless of market value and regulations should require clear, Section 9901.323(a) provides that competition. This method results in compelling criteria for the establishment employees with a rating of record above underpaying employees in some of additional local market supplements unacceptable will receive a percentage occupations and geographic areas while that require a balance of human increase in basic pay equal to the overpaying others (as compared to the resources interoperability with mission percentage by which the minimum rate applicable labor market). NSPS is requirements. Another commenter of their rate range is increased. designed to be much more market- recommended that the regulations be However, this increase is subject to sensitive. It gives the Department modified to ensure that employees in § 9901.356(b), which provides that an significant discretion to set and adjust rural areas and those adjacent to current employee’s rate of basic pay may not the minimum and maximum rates of locality pay areas are not unfairly exceed the maximum rate of the pay for each pay band based on national impacted. Others questioned whether employee’s pay band rate range, except and local labor market factors and the cost of living, hazardous duties, when pay retention under § 9901.355 conditions. Instead of ‘‘one size fits all’’ education, or unique or special skills applies. pay increases, NSPS allows the requirements will be considered in Commenters asked if an employee’s Department to allocate payroll dollars to establishing local market supplements. pay could drop below the minimum of the occupations and locations where A number of commenters asked whether the pay band rate range due to not they are most needed to carry out the local market supplements will apply to receiving a pay increase based on Department’s mission. The Department employees stationed in nonforeign and unacceptable performance. Other believes that the development of a new foreign areas and noted that such commenters asked whether employees system to identify appropriate rate range payments may help with staffing in will be converted to the next lower band adjustments and local market those areas. if pay falls below the pay band supplements is critical to appropriately In response to comments requesting minimum rate. Under the NSPS pay compensating its workforce and will additional specificity, we have revised system, an employee’s pay could drop consider cost factors as it determines the paragraph (a) to clarify that the below the minimum of the pay band most effective and efficient method for Secretary will have sole and exclusive rate range if the minimum of the rate this purpose. authority to establish local market areas range exceeds the employee’s salary. In response to comments regarding for ‘‘standard local market However, this situation does not require the lack of specificity in the pay supplements’’ and ‘‘targeted local the employee to be placed in a lower retention provisions of the regulations, market supplements.’’ We have also pay band. The employee’s pay band is we have removed the language in added definitions of ‘‘standard local determined by work assignment. § 9901.331 providing DoD with the market supplement’’ and ‘‘targeted local

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market supplement’’ in § 9901.304. accumulated and accrued annual leave language is retained since it does not Standard local market supplements under 5 CFR part 550, subpart L, prevent the Department from apply to employees within a given pay consistent with the locality pay conducting a review more frequently. schedule or band who are stationed regulations at 5 CFR part 531, subpart F. However, we have not revised the within a specified local market area, We note that paragraph (c) includes a regulations to prescribe an effective date unless a targeted local market catchall provision under which local for such adjustments because this would supplement applies. Targeted local market supplements are considered unduly limit the Department’s ability to market supplements apply to a defined basic pay in computing other payments make adjustments at other times in category of employees (based on and adjustments for which locality pay response to significant labor market occupation or other appropriate factors) under 5 U.S.C. 5304 is considered basic changes. that may be established to address pay. (See § 9901.332(c)(11) in these final Section 9901.334—Eligibility for Pay recruitment and retention difficulties or regulations. We have revised the Increase Associated With a Supplement for other appropriate reasons. language in the proposed regulations, Adjustment DoD will consider the comments which was located in § 9901.332(c)(8), regarding the establishment of local to clarify this provision.) Thus, local Section 9901.334 provides that an market supplements and local market market supplements also would be used employee must have a rating of record areas in developing the implementing in computing percentage-based awards above ‘‘unacceptable’’ to receive a pay issuances. The regulations do allow for under 5 U.S.C. chapter 45, consistent increase associated with a local market the possibility of establishing local with the treatment of locality pay under supplement adjustment. A number of market supplements in foreign and 5 CFR 531.610(h). Local market commenters stated that payment of local nonforeign areas outside the 48 supplements are not considered basic market supplement adjustments should contiguous States; however, in pay in applying the performance not be based on employee performance. determining the need for and level of payouts provision; instead, local market Commenters objected to withholding any such supplements, DoD will take supplements are applied after such increases for employees with an into account employees’ entitlement to determining the employee’s new rate of unacceptable rating, especially if allowances and differentials under 5 basic pay. employees are denied the ability to U.S.C. chapter 59. appeal or grieve the rating. As discussed A commenter questioned the attempt Section 9901.333—Setting and in our analysis of comments on subpart to preclude judicial review of local Adjusting Local Market Supplements D, we have revised the regulations to market area boundaries under Section 9901.333 provides DoD with provide bargaining unit employees with § 9901.332(b). We have clarified the authority to set and adjust local the option of grieving a rating of record § 9901.332(b) to be more consistent with market supplements and determine the through a negotiated grievance process. the limitation on judicial review of effective date of such adjustments. A However, the Department does not locality pay areas in 5 U.S.C. 5304(f)(2). number of commenters requested consider providing pay increases to Section 5304(f)(2) of title 5, U.S. Code, clarification on how labor market employees with ratings of unacceptable is not waived by these regulations, but conditions would be considered in to be consistent with the intent of a is modified for continued application. setting local market supplements. For performance-based system. Judicial review of any DoD regulation example, some commenters questioned Commenters and the labor regarding the boundaries of standard how local market supplements will organizations participating in the meet- local market areas is limited to whether work for occupations that have no local and-confer process expressed concerns or not the regulation was promulgated labor market, no private-sector job that § 9901.334(c) penalizes employees in accordance with the administrative equivalents, or where local market rates who do not have a rating of record by procedures requirements in 5 U.S.C. are not high. Other commenters noted not guaranteeing them a local market 553. This same type of limitation on that local labor markets can be volatile supplement adjustment and that such judicial review applies to locality pay and that the ups and downs of the employees should be presumed to have areas administered by the President’s market may be difficult for employees to a rating of above ‘‘unacceptable.’’ In Pay Agent under the current locality pay understand. Commenters also response to these comments, we have law. questioned whether local market revised the regulations to specify that an A number of commenters asked for supplements may be reduced. The employee without a current rating of clarification on the purposes for which Department will consider these record for the most recently completed local market supplements are comments as it develops its procedures appraisal period will receive the same considered basic pay. Commenters for setting and adjusting local market percentage increase as employees with a stated that local market supplements supplements. rating above ‘‘unacceptable.’’ Paragraph should be considered basic pay for the Commenters stated that 9901.333(b) (a) has been modified to add that same purposes as GS locality rates. should be revised to state that employees with a current rating of Commenters also questioned whether supplements will be reviewed record above ‘‘unacceptable’’ and local market supplements will be used periodically. Labor organizations employees who do not have a current to compute awards and performance participating in the meet-and-confer rating of record for the most recently payouts under § 9901.342 that are process recommended that the completed appraisal period will receive computed as a percentage of basic pay. regulations be amended to require that a pay increase resulting from a In response to these comments, we local market supplements be adjusted supplement adjustment. Additionally, have revised paragraph (c) to add that the first pay period in January and that paragraph (c) has been deleted. local market supplements are basic pay supplements be reviewed at least Commenters asked whether for recruitment, relocation, and annually in conjunction with rate range employees on retained rates will receive retention incentives, supervisory adjustments to determine whether an local market supplement increases. differentials, and extended assignment adjustment is warranted. Section Commenters also asked whether all incentives under 5 U.S.C. chapter 57, 9901.333(b) provides that DoD will employees with a rating of record above subchapter IV, and 5 CFR part 575, and review established local market unacceptable will receive the same for lump-sum payments for supplements at least annually. This percentage local market supplement

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increase. As previously discussed in implement a contribution-based system. equity across organizational units and to this Supplementary Information, Other commenters agreed that the level guard against potential discrimination § 9901.355 is revised to provide that and value of an employee’s contribution or politicization before finalizing employees receiving a retained rate will should be factored into performance ratings. The regulations and receive any applicable local market payouts. Others recommended that implementing issuances will require supplement increase. contributions not be factored into that decisions made by pay pool panel performance payouts because members and managers must be Section 9901.341—General management controls an employee’s consistent with the merit systems During the meet-and-confer process, possible contribution level and the principles found in 5 U.S.C. 2301. We the participating labor organizations contribution assessment is arbitrary. have added a new paragraph (a)(3) in recommended adding language at the NSPS is a performance-based system, § 9901.342 that expressly states the end of § 9901.341 stating that the pay and we believe it is appropriate to requirement that pay pools will be and pay administration process must be consider an employee’s contribution in managed by a pay pool manager or pay fair, transparent, and credible. The the rating and performance payout an pool panel, with the responsibility for regulations already set forth the employee receives. reviewing proposed rating and share objectives that the entire NSPS, Based on a comment regarding assignments to ensure fairness and including the NSPS pay system, be language consistency between consistency. understandable, credible, trusted, and §§ 9901.341 and 9901.342(a), we have Regarding the comments on the consistent with merit system principles. added team performance as a factor in commingling of employees and (See § 9901.101.) awarding performance-based pay to supervisors in the same pay pool, we Based on a comment regarding employees. Other commenters have not prescribed this level of language consistency between questioned how team or organizational specificity for the structuring of the pay §§ 9901.341 and 9901.342(a), to performance will affect individual pool in this rule. There are a number of maintain consistency we have added employee payouts. Some commenters considerations relative to pay pool individual contribution as a factor in believe that organizational performance constructs. These include functional or awarding performance-based pay to should not affect an individual’s pay, organizational orientations, funding, employees. while other commenters stated that and population size. Depending on Section 9901.342—Performance Pay performance payouts should be based these and other factors it may be Increases on organizational performance. Under appropriate to commingle supervisory the NSPS range of shares concept, and non-supervisory personnel Section 9901.342(a) provides an organizational performance can be provided other measures are taken to overview of the DoD performance-based considered in determining the prevent actual and perceived conflicts pay system for employees under a appropriate share assignment. of interest. For example, participants in performance management system Regarding the use of pay pool panels, the pay pool process will not be allowed established under subpart D. Under a a number of comments suggested that to participate in deliberations that pay-for-performance system, a portion pay pool deliberations and directly affect their own performance of the annual salary increase received by recommendations are susceptible to assessment or pay. This level of detail an employee is based on his or her internal politics, funding availability, is best handled in implementing rating of record. The rating is staffing needs, and personal favoritism. issuances. retrospective, looking back over the Similarly, many commenters, including Some comments expressed the belief employee’s performance and labor organizations participating in the that pay-for-performance is contrary to contribution over the applicable rating meet-and-confer process, expressed the needs of national security and that period. This section establishes that concern that unless the regulations instead of encouraging team cooperation NSPS will use a pay pool concept to preclude supervisors from inclusion in and organizational efforts, the system manage, control and distribute the same pay pool as their subordinate will encourage unhealthy competition. performance-based payouts. Pay pool employees, management cronyism The deterioration of team or panels serve as calibration committees would undermine the system. collaborative work ethics and and are normally populated by Commenters also expressed concerns atmosphere is not an inevitable outcome management officials. DoD about a pay pool manager’s ability to of a pay-for-performance system. We implementing issuances will provide overturn a supervisor’s decisions. Other expect that the importance of teamwork additional details regarding pay pool commenters questioned how and cooperation will be reinforced in constructs, pay pool management, and a consistency will be ensured among pay the expression of performance standards pay pool reconciliation process. The pay pools. and performance objectives. Through pool concept improves fairness over the Subject to continuing collaboration, communication, ongoing feedback, current performance evaluation implementing issuances will require performance rating and performance methodologies in the Department by that pay pool management be rewards, the importance of teamwork forcing the open collaboration of peer transparent and credible while and cooperation will be impressed on managers in discussing and assigning protecting the privacy interests of employees. ratings to employees within the pay employees concerned and allowing the Some commenters questioned the use pool. The specific processes for free exchange of viewpoints and of the modal rating for employees who performance management and the observations. Subject to continuing do not have a rating of record. The final accompanying performance-based pay collaboration, implementing issuances regulations continue to provide that, for decisions will be addressed in DoD will provide safeguards to support the certain employees without a rating of implementing issuances. neutrality and impartiality of pay pool record, DoD will base the performance Commenters expressed mixed proceedings. The responsibilities of a payout under § 9901.342 on the concerns about basing performance pay pool manager under a pay-for- employee’s last rating of record or payouts on employee contributions. performance system typically include modal rating, whichever is most Some commenters recommended that the review of supervisors’ proposed advantageous to the employee. (As the regulations allow components to ratings of record for consistency and discussed later, we have made some

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clarifying language changes in A number of comments addressed or her manager. Expectations for raters § 9901.342(f) and (g) and added a concerns that pay increases will be and pay pool panel participants will be sentence to give DoD authority to subject to influences beyond the control emphasized in training materials and address situations where it is not of the individual employee, such as the implementing issuances. possible to determine the modal rating. number of shares assigned to other During the meet-and-confer process, Also, we have revised the definition of employees in the pay pool, pay pool participating labor organizations ‘‘modal rating’’ in § 9901.304.) DoD funding levels, the use of pay pool requested that a fixed number of shares, considered several options for funds for entry/developmental pay rather than a range of shares, be addressing this issue and determined increases, and the distribution of associated with a particular rating level. that use of a modal rating is the most discretionary payments. Similarly, Commenters also expressed the belief equitable. The modal rating provision many commenters were concerned that that by fixing a single share per level of applies only to employees returning if more employees within a pay pool performance, employees would be better from a period of military service as receive higher ratings, the value of the insulated from bias and unfair treatment described in § 9901.342(f) or employees payout for each employee is reduced. by management. The Department returning to duty after being in a Commenters also suggested that this pay recognizes that a valid, reliable, and workers’ compensation status as pool and shares system will result in transparent performance management described in § 9901.342(g), except as forced ratings distributions and quotas. system with adequate safeguards for otherwise provided in DoD Other commenters, including the labor employees is essential. However, for a implementing issuances. (See organizations participating in the meet- system to be effective, it must avoid a § 9901.342(a)(2).) and-confer process, made a number of rigid, one-size-fits-all approach by We note that in § 9901.342(a)(2), the recommendations regarding the funding providing the flexibility to address a term ‘‘performance payout’’ has been for pay pools. Finally, a number of variety of circumstances. By allowing a substituted for ‘‘pay increase or bonus commenters expressed concerns about range of decision points regarding the payment under this part’’ as a matter of including across-the-board increase number of shares, managers can more consistent terminology. money in pay pool funds. appropriately address the variety and During the meet-and-confer process, It is true that pay pools will not have complexity of factors that relate to the participating labor organizations unlimited funds available. To create a employee compensation. For example, recommended deletion of the proposed system based on that approach would be factors that may be considered in the language at § 9901.342(a)(2) authorizing fiscally unsound. In keeping with our assignment of shares could include the the appropriate rating official to prepare guiding principles, the NSPS position of the employee’s salary within a more current rating of record, performance management system is the rate range, the receipt of a consistent with § 9901.409(b). Other designed to place greater emphasis on promotion pay increase within the last commenters also were concerned about making meaningful distinctions year, the employee’s contribution to the the fairness of this provision. One between different levels of performance accomplishment of important commenter agreed with the flexibility to and to reward employees appropriately organizational objectives, team/ prepare a more current rating of record, based on those levels. The proposed organizational performance, whether the but cautioned that any payout should be regulations state that supervisors and performance was sustained and likely to based on overall performance, not managers will be held accountable for continue over time or related to a performance that has occurred more making meaningful distinctions among particular set of tasks or projects, or recently. employees based on performance and other appropriate factors. In response to We have not changed the regulations contribution. Implementing issuances the concerns expressed regarding use of in response to these comments. This will continue to stress accountability at a range of shares, we have added a new provision is intended to allow a rating all levels for performance evaluations paragraph (c)(3) in § 9901.342, which (1) official to raise or lower an employee’s and the related pay decisions and will requires that DoD provide in rating of record based on sustained and provide more specific guidance on pay implementing issuances additional significant changes in his or her pool funding. We note that a share- guidance on the use of share ranges, performance since the last rating of based system does not result in forced including some examples of appropriate record and is consistent with current distribution of ratings, since a share- use of factors in making specific share regulations. In keeping with the based system does not rely on the assignments; (2) requires that DoD principle that pay and retention should distribution of ratings to control costs. organizations inform employees of the be linked to performance, it is Current across-the-board increases will factors that may be considered in incumbent on management to ensure be replaced by a combination of making share assignments within their that the record accurately reflects adjustments, including adjustments to pay pool at least 90 days prior to the performance, whether it has improved minimum levels of the rate ranges and end of the appraisal period; and (3) or deteriorated. This is particularly true performance-based increases, and, thus, provides that pay pool managers and/or in the case of an employee who was such funding may be included in the pay pool panels will review proposed previously performing below pay pool. The Department believes that share assignments to ensure that factors expectations and who shows this is consistent with intent of the are applied consistently across the pay improvement over a significant period enabling legislation. pool and in accordance with the merit of time, perhaps as a result of work Another recurring theme among system principles. restructuring or additional training. We commenters was the concern that an Section 9901.342(d) of the regulations note that the issuance of any rating of employee’s pay would be subject to his provides the parameters and criteria for record is subject to reconsideration or her manager’s communication and the performance share calculation procedures. While the regulations persuasion skills as demonstrated at the methodology in sufficient specificity so remain unchanged, the implementing pay pool panel meetings. We agree that that managers, employees, and issuances will require that such ratings care must be taken during the pay pool employee representatives can better be subject to procedures similar to those management process to ensure that an understand how performance pay required for ratings issued at the end of employee’s final rating is more than a increases will be determined and paid. the appraisal period. function of the negotiating skills of his At the same time, the regulations allow

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DoD to tailor the performance share a pay band, which would allow the performance management calculation to the mission and Department to set pay more consistently responsibilities under NSPS. performance needs of individual with the labor market and to be more Consistent with other changes in the components and the specific effective in attracting and retaining top regulations that clarify how DoD will performance requirements and priorities performers. Several DoD personnel grant performance payouts to retained of organizations, individuals, and demonstration projects have rate employees, we have amended occupational groups. successfully used control points in their § 9901.342(d)(6) to clarify that for an Commenters requested that the pay-for-performance systems. We will employee receiving a retained rate regulations provide a more detailed ensure that if control points are used under § 9901.355, a lump-sum explanation of the formulas used to under NSPS, they are well defined and performance payout may not exceed the derive share values and payout understandable to employees. amount that may be received by an amounts. This can best be handled by Section 9901.342(d)(4) specifies that a employee in the same pay pool with the DoD in its implementing issuances or performance payout may not cause an same rating of record who is at the operating procedures. Similarly, some employee’s rate of basic pay to exceed maximum rate of the band. (See Section comments requested that share values the maximum rate of the band or 9901.355—Pay Retention for additional be set or predetermined. Some applicable control point. Commenters information.) commenters recommended that share expressed concerns that this provision Section 9901.342(e) specifies the value be expressed as a dollar amount. unduly limits pay increases and that the circumstances under which Others recommended that share value paragraph should be modified to state performance payouts may be prorated. be expressed as a percentage. Because that an employee’s rate of basic pay may Commenters asked for clarification or DoD is prohibiting the use of forced not exceed a control point only if the made suggestions regarding when and how performance payouts would be ratings distribution, the exact value of a employee does not meet the applicable prorated. This language remains share cannot be determined prior to control point criteria. We have not unchanged. Policies relative to proration completion of the rating process. In modified the regulations in response to can best be handled by DoD in its addition, the regulations preserve this comment, since we believe the flexibility in setting share values to implementing issuances. regulatory text is clear. Section Sections 9901.342(f) clarifies how establish a more nimble pay-for- 9901.342(d)(4) states that an employee performance system. We have not DoD will set the rate of basic pay for may not receive a pay increase that employees upon reemployment after changed the regulations in response to causes his or her rate of basic pay to these comments. performing honorable service in the exceed an ‘‘applicable’’ control point. A Commenters questioned the uniformed services and how intervening control point is not applicable unless relationship of the share value to the performance pay adjustments for such employee’s salary. DoD intends to the employee fails to meet the criteria employees would be determined upon prescribe a payout calculation such that established under § 9901.342(d)(3). reemployment. The regulations require an employee’s payout will be a function Also relative to § 9901.342(d)(4), a DoD to issue implementing issuances of the pool total base salary value, the number of comments relayed concern governing how it will set the rate of number of shares assigned within the that management decisions relative to basic pay for employees upon pool, the employee’s salary (if the share the distribution of performance payouts reemployment and require DoD to credit value is computed on a percentage between bonuses and increases in basic the employee with intervening rate basis), and the number of shares pay would be subject to bias and range adjustments under § 9901.323 and assigned to the employee. favoritism. Many comments suggested increases from performance payouts. Section 9901.342(d)(3) authorizes that organizations might institute Commenters agreed that employees DoD to establish ‘‘control points’’ within polices that promote the use of lump- returning from performing honorable a pay band that limit increases in the sum payments in lieu of increases in uniformed service should not be rate of basic pay and may require certain basic pay as a cost savings measure. disadvantaged under the NSPS pay criteria to be met for increases above the Commenters especially emphasized the system. However, some comments control point. A commenter likened long-term cost to employees in terms of suggested that employees performing control points to ‘‘invisible barriers that retirement benefits. We acknowledge military service will be negatively prevent most employees from ever that such decisions cannot be taken affected upon return to civilian service reaching the top of their band.’’ The lightly. Again, these regulations require, under NSPS. For example, a commenter same commenter suggested that the use and DoD implementing issuances will noted that the regulations do not of pay pools will provide sufficient cost emphasize, that such distinctions must address the flexibility managers will control without the need for control be consistent with the merit system have to assign a returning service points. A number of other commenters principles found in 5 U.S.C. 2301 and member to the low end or the high end also expressed similar concerns about supported by employee job performance of the share range assigned to a rating control points. During the meet-and- and contribution. Training and level. We have revised the language to confer process, participating labor supplemental guidance will illustrate clarify that the pay of an employee organizations recommended that the the short- and long-term outcomes of returning from qualifying service (who authority to establish control points be payout distribution decisions as they does not have a rating of record for the deleted from the regulations. affect organizations and employees. In appraisal period serve as the basis for The concept of control points is not addition to the system requirements at the performance payout) will be set at inconsistent with the goals of a pay-for- § 9901.405(b)(4) and (c), which hold a rate including performance-based pay performance system, which envisions a supervisors accountable for effective increases equal to either the average greater link between pay decisions and performance management, the proposed increase received by employees an individual’s performance. Control regulations provide at § 9901.406(c) that assigned the modal rating or assigned points are tools to manage employees’ the performance expectations for the same rating as the employee’s progression through the bands and can supervisors and managers will include actual, most recent rating of record, help to ensure that only the highest the assessment and measurement of whichever is most advantageous to the performers move into the upper range of how well they exercise their employee.

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Additionally, the following language their descriptors. Therefore, it is § 9901.343 clarify that reductions in pay was added to § 9901.342(f): ‘‘In unusual premature to guarantee a pay increase to under this section are subject to adverse cases where insufficient statistical any specific group of employees. action procedures. Such clarification is information exists to determine the unnecessary because § 9901.343 already Section 9901.343—Pay Reduction Based modal rating or when previous ratings refers to the regulations at § 9901.352 on Unacceptable Performance and/or do not convert to the NSPS rating scale, and § 9901.354 clarifying that such Conduct DoD may establish alternative reductions are subject to adverse action procedures for determining a basic pay Section 9901.343 provides DoD with procedures under subpart G (or similar increase under this section.’’ This the authority to reduce an employee’s authority). language was added primarily in rate of basic pay for unacceptable Section 9901.344—Other Performance response to concerns that some performance or conduct under the Payments organization may experience skewed adverse action procedures in subpart F pay pools during the first years NSPS is of these regulations. During the meet- Section 9901.344 of the regulations implemented because of the absence of and-confer process, the participating provides DoD with the authority to a statistically significant number of labor organizations were very concerned reward employees or groups of employees in the pay pool due to that the proposed regulations provided employees through other types of mobilizations (as in the case of military DoD with the authority to reduce an payments. Situations where such technicians). employee’s pay any number of times payments may be warranted include Section 9901.342(g) clarifies how DoD within the appraisal period. In response recognition of extraordinary individual will set the rate of basic pay for we have revised this section to specify performance and organizational or team employees upon reemployment after that an employee’s rate of basic pay may achievements. This section further being in a workers’ compensation status. not be reduced more than once in a 12- explains that an employee in receipt of This section has been modified to the month period based on unacceptable an extraordinary pay increase (EPI) is extent necessary so that it remains performance, conduct, or both. expected to continue to perform and consistent with § 9901.342(f) and in Other commenters felt that pay contribute at an exceptionally high response to comments made about reductions should not be permitted for level. paragraph (g) that were similar to those any reason and that pay reductions do Both public comments and made about paragraph (f). not improve performance, are disruptive recommendations made by labor During the meet-and-confer process, to the workplace, and have greater organizations participating in the meet- the participating labor organizations impact on an employee’s family than on and-confer process suggested that recommended adding a new paragraph the employee. DoD believes it is funding for these payments should be to § 9901.342 requiring that all necessary to retain flexibility to reduce separate from funding for the provisions in part 9901, including the pay of an unacceptable performer in performance pay pools. Some of the ratings of record and payouts, be subject order to achieve and retain a high- comments expressed concern that use of to a final independent third-party performing workforce. these payments would unfairly divert review. A commenter agreed with the During the meet-and-confer process, funds from deserving employees to rule in § 9901.342(c) that employees participating labor organizations unfairly reward or overpay other with unacceptable ratings of record recommended that § 9901.343 specify employees. As stated previously, should not receive a performance that the maximum 10 percent reduction managers and supervisors at all levels payout, but only if the employee has the will include any annual increase, local will be held accountable for fairly and ability to appeal or grieve the rating. market supplement, or other pay impartially making performance-based Other commenters made similar increases withheld from the employee reward determinations. DoD recommendations and questioned what but given to employees who are implementing issuances will provide for appeals or grievance process employees similarly situated and rated above checks and balances to mitigate the can use if they do not agree with their unacceptable. Similarly, the labor potential for abuse. pay increase. As discussed in our organizations recommended that the Commenters asked whether analysis of comments on subpart D, we proposed regulations be revised to extraordinary pay increases (EPIs) are have revised the regulations to provide provide that the pay of employees who basic pay increases or bonuses. As bargaining unit employees with the improve performance within 90 days previously stated, we have revised the option of grieving a rating of record will be adjusted retroactively to reflect definition of ‘‘extraordinary pay through a negotiated grievance process. pay increases they would have received increase’’ or ‘‘EPI’’ in § 9901.304 to If that process results in a new rating of if they had been performing at an clarify that an EPI may be a basic pay record, the employee’s rate of basic pay acceptable level at the time such increase or bonus. (See Section would be adjusted accordingly. increases were effected for the rest of 9901.304—Definitions.) However, management decisions as to the workforce. Other commenters felt Commenters questioned whether an the amount of a pay increase are not that a 10 percent limit on pay EPI could be revoked if an employee subject to review as long as those reductions is too high. The does not continue to perform at an decisions are consistent with the recommendation to count increases not exceptionally high level. Others validated rating of record and within the received (e.g., minimum rate range recommended that the exceptionally flexibilities provided by the regulations. adjustments) as part of the 10 percent high level performance expectation be During the meet-and-confer process, reduction limit, to restore all lost pay if removed from the regulations as an the participating labor organizations the employee’s performance improves unfair requirement. We believe that the recommended adding a requirement to during a 90-day improvement period, extraordinary pay increase is an the regulations for all employees rated and to lower the pay reduction limit are important flexibility and have not ‘‘fully successful’’ or better to share in inconsistent with the intent of the NSPS revised the language. performance payouts. We have not pay system. Commenters asked for clarification on accepted this recommendation. The Commenters and the labor whether payments in recognition for Department has not definitively organizations participating in the meet- organizational or team achievement will identified the number of rating levels or and-confer process recommended that be basic pay increases or bonuses and

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what other special circumstances might Section 9901.351—Setting an Department has maximum flexibility in warrant additional payments. Under Employee’s Starting Pay setting rates of pay when employees are NSPS payouts based on organizational Section 9901.351 of the proposed reassigned from one position to another or team achievement could take the regulations provides for DoD to set the within a pay band or across comparable form of either basic pay increases or starting rate of pay for individuals who pay bands. However, we have clarified bonuses. Any other special are newly appointed or reappointed to that appropriate parameters will be circumstances will be addressed in the Federal service anywhere within the described in implementing issuances. In response to comments regarding implementing issuances. assigned pay band, subject to DoD the applicability of the adverse action implementing issuances. Some Section 9901.345—Treatment of procedures to certain employees, we commenters expressed concern over the Developmental Positions have revised § 9901.352(b) to clarify the lack of specificity in this section and procedures applicable to employees Section 9901.345 of the regulations questioned what criteria will be used in subject to actions not covered by provides DoD with the authority to setting pay for new employees. Other subpart G. establish policies and procedures for commenters expressed the belief that it A number of commenters strongly adjusting the pay of employees in is unfair to offer new employees higher objected to providing DoD with the developmental positions. During the salaries than current employees. authority to reduce pay when an meet-and-confer process, the We have not changed the regulation employee is involuntarily reassigned to participating labor organizations in response to these comments. The a comparable band when not as a result requested that the regulations clarify Department needs maximum flexibility of unacceptable performance or how such employees will progress in setting starting rates of pay to be conduct. Commenters suggested that through a pay band. Other commenters competitive when recruiting new talent. this authority could be used to punish also asked for clarification and Appropriate parameters will be employees and could result in recommended that entry/developmental described in implementing issuances. significant pay reductions. Commenters employees receive pay increases Commenters requested clarification asked whether pay retention would equivalent to GS entry/developmental on the meaning of the terms ‘‘newly apply in such involuntary situations. pay increases. The language has been appointed’’ and ‘‘reappointed’’ and The Department will address specific modified to clarify that entry/ whether this section will be used to set parameters and guidance concerning developmental pay adjustments may be pay for employees of other agencies who management’s authority to set or reduce made in lieu of or in addition to those are ‘‘newly appointed’’ to an NSPS pay when an employee is involuntarily authorized under § 9901.342. However, position. A commenter stated that any reassigned, to include defining we have not modified the language to Government employee entering into the appropriate circumstances for pay require that developmental employees NSPS pay system should receive no retention consistent with the changes in progress in the same time frames as reduction in basic pay. Except for the § 9901.355. under the current system, because such pay administration terms defined in Commenters asked whether adverse a change would be inconsistent with a § 9901.103, NSPS pay administration action procedures apply to all pay performance-based system. terminology and additional guidance as reductions under § 9901.352. to how pay will be set for individuals Commenters and the labor organizations During the meet-and-confer process, moving into NSPS from outside the participating in the meet-and-confer participating labor organizations also Federal Government and from other process recommended that § 9901.352(a) requested the addition of language so Federal agencies will be addressed in be amended to make any reduction in that employees in developmental implementing issuances. pay subject to adverse action positions will be given equivalent A commenter suggested that NSPS procedures. However, there are access to the training and assignments incorporate a signing or recruitment situations when reductions in pay needed to meet standardized assessment bonus authority in § 9901.351 or another would not appropriately be covered by or certification points and progress to section of the regulations. The enabling adverse action procedures (e.g., return the full performance band on a timely legislation does not give the Department of an employee to their position of basis. In many cases, employee training the authority to waive the recruitment, record at the end of a temporary and development occurs within DoD on relocation, or retention incentive promotion). Therefore, we have not a decentralized basis. Since training and authorities in 5 U.S.C. chapter 57. adopted this suggestion. development opportunities are Therefore, these provisions remain Other commenters agreed to the 10 administered according to each unit’s applicable to NSPS employees. percent limit on pay reductions, but needs and competency requirements, it were concerned that the adverse action Section 9901.352—Setting Pay Upon would be difficult to address these procedures and methods for challenging Reassignment issues appropriately at the DoD-wide performance ratings in the NSPS level. However, all of these programs Section 9901.352(a) provides for DoD regulations are inadequate. We believe must be consistent with the merit to set pay anywhere within the assigned these concerns are appropriately system principles. DoD will provide pay band when an employee is covered in subparts D and G, further guidance in implementing reassigned, either voluntarily or respectively. issuances regarding increases resulting involuntarily. Some commenters During the meet-and-confer process, from the acquisition of skills and expressed concern over the lack of participating labor organizations competencies for employees in specificity in the regulations. Others recommended that the language in developmental positions. expressed concern about the § 9901.352 specify that the maximum 10 Commenters questioned whether opportunity for management to show percent reduction will include any entry/developmental pay increases will favoritism in setting pay. Except as annual increase, local market come out of the performance pay pool. discussed in this section of the supplement, or other pay increases The Department will address the SUPPLEMENTARY INFORMATION, we have withheld from the employee but given financial management of pay pools in not changed the regulation in response to employees who are similarly situated financial policies. to these comments, thereby ensuring the and rated above unacceptable. We

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believe counting increases not received promotion cannot be lower than the section § 9901.354(b) specify that the (e.g., minimum rate range adjustments) minimum of the rate range for the maximum 10 percent reduction will as part of the 10 percent reduction limit applicable pay band and no higher than include any annual increase, local is inconsistent with the intent of the the maximum of the rate range for the market supplement, or other pay NSPS pay system. applicable pay band. increases withheld from the employee The labor organizations participating Commenters also requested that the but given to employees who are in the meet-and-confer process also regulations clarify what types of similarly situated and rated above recommended deleting the reference to movements will be considered unacceptable. We believe counting ‘‘conduct’’ in § 9901.352(b), and other ‘‘promotions.’’ The Department will increases not received (e.g., minimum commenters stated that conduct should provide specific guidance on the types rate range adjustments) as part of the 10 not be a basis for pay reductions. We of movements which will be considered percent reduction limit is inconsistent believe we have appropriately ‘‘promotions’’ for pay administration with the intent of the NSPS pay system. addressed the issue of conduct as part purposes under NSPS in implementing In response to comments regarding of performance in our discussion of the issuances. the applicability of the adverse action definition of ‘‘performance’’ in subpart procedures to certain employees, we Section 9901.354—Pay Setting Upon A. have revised § 9901.354(b) to clarify the Reduction in Band A commenter asked whether procedures applicable to employees § 9901.352 provides DoD with the Section 9901.354(a) of the proposed subject to actions not covered by authority to increase an employee’s pay regulations allowed DoD to set pay subpart G. upon reassignment to a different anywhere within the assigned pay band Section 9901.354(c) of the proposed position in the same pay band. We have when an employee is reduced in band, regulations provided that if an employee revised § 9901.352(a) to clarify that DoD either voluntarily or involuntarily, is reduced in band involuntarily, but may set pay anywhere within the subject to § 9901.354(b). Some not through adverse action procedures assigned pay band when an employee is commenters expressed concern over the (e.g., termination of a temporary reassigned to a position in the same or lack of specificity in the regulations. promotion or failure to successfully comparable pay band. We have also Others expressed concern about the complete a supervisory probationary added a new paragraph (c) to § 9901.352 opportunity for management to reduce period), DoD would limit any reduction to provide that when an employee an employee’s pay repeatedly or for any in pay in accordance with implementing completes a temporary reassignment or reason. The Department will ensure issuances. During the meet-and-confer when an employee’s in-service appropriate parameters are described in process, participating labor probationary period is terminated, the implementing issuances. We have not organizations recommended that we employee’s rate of basic pay will be set changed § 9901.354(a) to provide more amend this section to ensure an at the same rate the employee received specificity. However, in response to employee reduced in band prior to the temporary reassignment or comments requesting clarification, we involuntarily, but not through adverse placement in the position requiring the have amended paragraph (a) to state that action procedures, will have his or her in-service probationary period, with DoD may set pay anywhere within the pay reduced to not less than the amount appropriate adjustment of the assigned pay band subject to the employee would have received if he employee’s rate of basic pay based on § 9901.354(b) and (c). or she had not been temporarily rate range increases or performance Some commenters objected to pay promoted or assigned to a supervisory payouts that occurred during the time reductions of any amount upon position. Other commenters raised the employee was assigned to the new reduction in band. Others felt that the similar concerns. Based on these position. 10 percent limit on pay reductions recommendations, we have revised this under § 9901.354(b) is too high. Some section to state that such an employee’s Section 9901.353—Setting Pay Upon commenters agreed to the 10 percent pay will be set at the level the employee Promotion limit, but were concerned that the would have received if he or she had Section 9901.353 of the proposed adverse action procedures and methods not been temporarily promoted or regulations allowed DoD to set pay for challenging performance ratings in assigned to a supervisory or other anywhere within the assigned pay band the NSPS regulations are inadequate. position requiring an in-service when an employee is promoted to a Other commenters stated that conduct probationary period, including rate position in a higher pay band, subject to should not be a basis for pay reductions range and performance payout increases DoD’s implementing issuances. During or reductions in band. We have not that occurred during the intervening the meet-and-confer process, revised the regulations in response to period. We have also clarified that any participating labor organizations these comments. We believe that resulting reduction in pay is not expressed concern that no parameters allowing for reductions in pay within considered an adverse action under were provided on pay setting actions defined limits for unacceptable subpart G (or similar authority) and suggested a pay increase of at least performance or conduct is an essential consistent with the provision in a 6 percent increase over current pay feature of a performance-based pay § 9901.356(e) of the proposed when an employee is promoted under system. Consistent with NSPS as a regulations. NSPS. Other commenters also expressed performance-based system, the strong concerns that the proposed Department will address in Section 9901.355—Pay Retention regulations did not guarantee pay implementing issuances the parameters Section 9901.355 of the proposed increases upon promotion and provided and guidance covering circumstances regulations provided that DoD would for possible pay reductions. which could lead to a reduction in pay issue implementing issuances regarding In response, we have revised the final as a result of a reduction in band and pay retention. This section also regulations to provide a general rule the appropriate percentage of the provided that pay retention would be establishing a minimum percentage reduction. based on the employee’s rate of basic increase of 6 percent for promotions; During the meet-and-confer process, pay in effect immediately before the however, regardless of the minimum participating labor organizations action that would otherwise reduce the percentage, the salary resulting from the recommended that the language in employee’s rate and that a retained rate

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will be compared to the range of rates During the meet-and-confer process, strongly objected to providing DoD such of basic pay applicable to the the participating labor organizations authority. They did not understand why employee’s position. During the meet- recommended that § 9901.356(e) be title 5 premium pay provisions need to and-confer process, participating labor revised to require DoD to set an be waived and were concerned that DoD organizations recommended that we employee’s pay upon expiration of a will reduce premium pay entitlements address the lack of specifics on pay temporary reassignment or promotion to save money. Commenters expressed retention. Other commenters also under § 9901.354(c) and not be subject concerns about the lack of specificity in suggested that the regulations provide to separate implementing issuances. this section and that this section more detail on pay retention Other commenters asked whether provides DoD with too much authority entitlements. §§ 9901.356(e) and 9901.354(c), which to affect employees’ pay. Other Accordingly, we have revised the both cover pay-setting upon expiration commenters questioned whether language in this section to clarify that of temporary promotions, are consistent. specific types of premium pay, such as (1) employees will receive pay retention Other commenters requested a environmental differential pay and for a 2-year period under appropriate definition of ‘‘temporary reassignment’’ compensatory time off for travel, would circumstances, e.g., reduction in force or and expressed concerns that be waived under this authority. During reclassification; (2) employees on pay § 9901.356(e) provided a loophole DoD the meet-and-confer process, retention may receive performance could use to reduce an employee’s pay participating labor organizations payouts as bonuses, not salary without following adverse action recommended adding a paragraph to adjustments; (3) employees on pay procedures. The term ‘‘reassignment’’ is this section providing that premium pay retention will not receive minimum rate defined in § 9901.103 of subpart A. The under NSPS will not be less than would range adjustments; (4) employees on pay specific conditions and considerations have been applicable if employees had retention will receive local market of pay setting upon reassignment are not been converted to NSPS. Other supplements; and (5) local market more appropriately addressed in commenters made similar supplements are not considered part of implementing issuances. However, as recommendations. basic pay in applying pay retention. In previously discussed, we have revised We believe the ability to modify addition, as previously discussed, we §§ 9901.352 and 9901.354 to clarify that premium pay in response to current and have revised § 9901.342(d)(6) to clarify upon completion of a temporary future Departmental needs is a critical how performance bonus payouts will be reassignment or temporary promotion, feature of NSPS. This flexibility computed for an employee receiving a an employee’s rate of basic pay will be facilitates the Department’s ability to retained rate. (See Section 9901.342— set at the same rate the employee accomplish its diverse missions. For Performance Pay Increases for received prior to a temporary example, it is essential that the Department have the ability to fully additional information.) reassignment or temporary promotion. In addition, we do not believe compensate deployed employees and Commenters questioned whether §§ 9901.356(e) and 9901.354(c) were employees supporting surge grade or ‘‘band’’ retention will apply inconsistent. However, to further clarify, requirements; the ability to equitably under the NSPS pay system. The NSPS we have moved the provision in compensate employees performing pay system does not include a grade or § 9901.356(e) of the proposed overtime work; and the ability to make ‘‘band’’ retention authority. regulations to new §§ 9901.352(c) and premium pay provisions fair, equitable, Section 9901.356—Miscellaneous 9901.354(c) to provide that any understandable, and credible to our reductions in pay at the conclusion of employees. Specific issues regarding Section 9901.356 provides a temporary promotion or temporary premium pay, including payments made miscellaneous pay administration rules reassignment would not be covered by under subchapter V of chapter 55 as for the NSPS pay system. Commenters adverse action procedures. We have well as those made in lieu of subchapter were confused by § 9901.356(a) and removed § 9901.356(e) from the final V of chapter 55, will be addressed in asked whether an employee’s pay can be regulations because it is no longer implementing issuances. Implementing less than the minimum rate of the pay necessary. (See Section 9901.352— issuances are subject to continuing band. Under the NSPS system, an Setting Pay Upon Reassignment and collaboration. Also, under § 9901.105, employee’s pay could drop below the Section 9901.354—Setting Pay Upon any policies regarding premium pay that minimum rate of the pay band if the Reduction in Band in this differ from those that exist in minimum rate of the rate range for that SUPPLEMENTARY INFORMATION for Governmentwide regulations must be band exceeds the employee’s salary. additional information.) coordinated with OPM. We have revised This could occur if the employee has an During the meet-and-confer process, § 9901.361(a) to clarify that these unacceptable performance rating and participating labor organizations also regulations are the source of the does not receive a rate range adjustment recommended adding a new paragraph authority to waive the premium pay under § 9901.323. However, this (f) to § 9901.356 to address provisions, consistent with situation does not require the employee determinations of ratings of record for § 9901.303(a)(2). to be placed in a lower pay band. The employees who perform activities Commenters stated that law employee’s pay band is determined by during duty time that are not DoD enforcement officer availability pay work assignment. assignments (e.g., EEO counselors and should not be waived for NSPS law Commenters asked whether the union representatives) for the purpose enforcement officers. Commenters noted special pay increase under of performance payouts and RIF that OPM has stated that Federal law § 9901.356(d), which DoD may pay to an retention. This issue will be addressed enforcement officers should have NSPS employee prior to moving to a GS in implementing issuances. consistency in terms of premium pay position, will be paid to employees entitlements. Other commenters moving to GS positions in DoD and Section 9901.361—General questioned why firefighter pay under 5 other agencies. DoD may apply Section 9901.361 provides DoD with U.S.C. 5545b is not waivable, if DoD can § 9901.356(d) to an NSPS employee the authority to issue implementing waive availability pay. moving to a GS position within or issuances establishing premium pay Under 5 U.S.C. 9902(d)(2), DoD may outside of DoD. provisions. A number of commenters waive premium pay provisions under 5

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U.S.C. chapter 55, subchapter V, non-NSPS position to a position already In response to comments regarding including availability pay for criminal covered by NSPS under any the applicability of the conversion rules investigators under 5 U.S.C. 5545a, but circumstances. The Department will to employees converted to the NSPS pay is prohibited from waiving pay for issue implementing issuances detailing system from demonstration projects and firefighters under 5 U.S.C. 5545b. DoD the conversion procedure for employees alternative pay systems, we have revised must coordinate with OPM prior to entering an organization after its § 9901.373(a) to provide that DoD will establishing policies regarding premium conversion to the NSPS pay system. convert employees to the system pay for law enforcement officers that Commenters requested a 3-year without a reduction in their rate of pay, differ from those in Governmentwide moratorium on any action that would including any applicable locality regulations. (See § 9901.105.) reduce an employee’s pay after the payment, special rate supplement, local Commenters also questioned whether employee’s conversion to the NSPS pay market supplement, or ‘‘similar this section provides DoD with the system. The Department is not changing payment under other legal authority.’’ authority to change FLSA overtime pay. the conversion rules to provide a Also, consistent with other changes in As previously discussed, since the moratorium on such actions. The subpart C, we have revised FLSA authority is outside the waivable Department guarantees employees will § 9901.373(b) to address other adverse title 5 chapters, these regulations do not convert into the NSPS pay system action authorities for employees subject affect FLSA overtime pay entitlements. without a reduction in pay. However, to actions not covered by subpart G. (See Section 9901.104—Scope of subsequent employee pay actions will Commenters stated that employees on Authority for additional information.) be based on pay-for-performance temporary promotions will lose money at conversion under § 9901.373(d). Section 9901.371—General criteria. Others stated that all employees on Commenters requested that Section 9901.372—Creating Initial Pay temporary promotions will be §§ 9901.371 through 9901.373, regarding Ranges downgraded upon conversion into the conversion of employees into the Section 9901.372 provides DoD with NSPS. Other commenters recommended NSPS pay system, be revised to provide that the regulations provide DoD detailed information on converting the authority to set initial pay band rate ranges under subpart C. Some components the option to terminate employees in demonstration projects temporary promotions prior to and alternative personnel systems to commenters supported the use of the General Schedule salary structure as the conversion and repromote the employee NSPS. immediately after conversion. baseline for moving an employee into a The Department recognizes the desire Under § 9901.372(d) employees will new band to allay concerns that pay that the regulations provide greater be returned to their permanent position specificity. However, employees in rates will be reduced. Other commenters upon conversion to the NSPS pay organizations currently covered by recommended that the regulations system. However, organizations may demonstration projects and alternative guarantee that the initial rate ranges be simultaneously reassign or repromote an personnel systems have the same rights at least equal to the employees’ former employee to the position held prior to and protections as other employees rate ranges. During the meet-and-confer conversion. The Department will issue upon their conversion to the NSPS pay process, the participating labor implementing issuances detailing the system. Sections 9901.372 and 9901.373 organizations recommended that pay-setting procedures for employees have been revised to clarify such § 9901.372 be amended to require initial who are returned to a temporary protections. (See Section 9901.372— pay band rate ranges to link to the position. Creating Initial Pay Ranges and Section ranges that applied to employees in Many commenters requested details 9901.373—Conversion of Employees to their former pay system. The on whether employees would receive a the NSPS Pay System.) Department has not changed the pay increase for the time spent towards Commenters asked whether regulatory language in this area but will their next within-grade increase upon §§ 9901.371 through 9901.373 are consider these comments when conversion into the system and applicable to employees coming into developing implementing issuances. recommended that the regulations NSPS after the initial spiral for an In response to comments regarding provide explicitly for such increases. organization. Other commenters asked the applicability of the conversion rules During the meet-and-confer process, the whether the pay-setting rules in to employees converted to the NSPS pay participating labor organizations also §§ 9901.351, 9901.352, and 9901.353 system from demonstration projects and recommended that the regulations will apply to such employees. Another alternative pay systems, we have revised require such increases to be paid upon commenter stated that the language in § 9901.372 to provide that initial pay conversion. Other commenters stated § 9901.371(a), which excludes band ranges may link to the ranges that that § 9901.373(e) is confusing, since it employees ‘‘reassigned or transferred’’ apply to employees in their previously implies the Secretary of Defense could to the NSPS system, is not adequate, applicable pay system, taking into use this authority to reduce pay. Still since employees could move into such account any applicable locality others asked whether DoD will pay such positions by another pay action. payment, special rate supplement, local increases to employees converting into These sections apply only to market supplement, or ‘‘similar NSPS from demonstration projects or employees in an organization at the time payment under other legal authority.’’ alternative pay systems. the organization undergoes its During the conversion to NSPS, the Section 9901.373—Conversion of conversion to the NSPS pay system. Department will provide a prorated pay Employees to the NSPS Pay System They do not apply to an employee who increase based on the amount of service moves into an organization after the Section 9901.373 provides the rules a GS or prevailing rate employee organization has been converted to the for converting employees into the NSPS performing at an acceptable level has NSPS pay system. We have revised pay system when that system is initially completed towards the next within- § 9901.371(a) by replacing ‘‘are applied to a category of employees. grade increase (WGI). Section reassigned or transferred’’ with ‘‘move’’ Section 9901.373(a) provides that DoD 9901.373(e) is the authority under to clarify that the conversion provisions will convert employees into the system which the Department will provide the exclude employees who move from a without a reduction in their rate of pay. prorated pay increase—commonly

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referred to as a ‘‘WGI buy-in.’’ We have will be based on base pay plus locality • Concern that employees with the revised this paragraph to provide DoD pay, employees outside CONUS do not same performance rating could receive with the discretion to pay conversion have a locality pay rate which will two different amounts of money or that increases to employees in other pay result in a lower pay rate at the time of one could receive a pay increase and systems, subject to DoD implementing conversion. another a bonus. issuances. Under the current title 5 provisions, Directly related to the concern for Some other commenters asked employees returning to CONUS fairness was the concern that the new whether employees on a special rate positions receive the applicable locality system provide adequate performance would receive a pay increase for the rate. Under NSPS provisions, employees management safeguards and the time spent towards their next within- returning to CONUS positions will recommendation that the new system grade increase and others asked whether receive the local market supplement provide adequate checks and balances such a pay increase would be calculated applicable to their new position and over the exercise of discretionary using the applicable special rate table or geographic location. We anticipate that authority of supervisors and managers the General Schedule base rate. local market supplements will initially to affect the pay of employees through During the conversion to NSPS, the be set equal to the applicable locality performance. Some commenters Department will provide a prorated pay pay rate. assumed that the accountability increase to employees on a special rate. measures provided in the proposed Commenters asked for assurances The increase will use the same formula regulations were the only safeguards to regarding how pay will be set if for determining the prorated pay be included in NSPS and therefore employees leave NSPS and return to GS increase that will be used for employees found the proposed regulations on regular General Schedule rates. positions. Upon movement to a GS insufficient. Some understood that the Commenters requested details on position, pay for NSPS employees will implementing issuances would further whether employees would receive a pay be set under the GS pay-setting rules at define these tools, which could include increase for the time spent in grade 5 CFR part 531, subpart B, subject to the the use of an oversight panel, but towards a career-ladder promotion. gaining organization’s pay-setting preferred that they be specified in the During the meet-and-confer process, the policies. enabling regulations. Others simply participating labor organizations Subpart D—Performance Management wanted to emphasize the importance of recommended that the regulations safeguards and checks and balances in require that such increases be paid upon General Comments a pay-for-performance system. conversion. A number of other A general concern expressed by many The regulations make every attempt to commenters made similar commenters, as well as labor ensure that the NSPS performance recommendations. organizations during the meet-and- management system will be fair. First, The Department does not consider confer process, was a lack of specificity the regulations adopt guiding principles prospective career-ladder promotions to in the proposed regulations. Many based on the performance management be time-based. All promotions, even commenters wanted to see detailed system criteria Congress has recently career-ladder promotions, involve the requirements and procedures for how enacted with respect to chapters 47, 54, assignment of higher-graded duties to an the classification, pay, and performance and 99 of title 5, United States Code. employee. After employees have systems would operate. The regulations These principles require any converted to NSPS, the system will set forth the general requirements and performance management system(s) provide sufficient capability to establish a framework for the established by DoD to be fair, credible, recognize the progression of trainees development of more specific systems and transparent and to adhere to the through pay increases under § 9901.345. through a series of implementing merit system principles found in 5 Commenters asked how employees on issuances. For example, the U.S.C. 2301. Second, the Department is leave without pay (LWOP) and on other performance management implementing committed to further developing these absences, such as suspensions, long- issuances will address the specific principles as it designs its performance term training assignments, and processes and practices that will be management system through its Intergovernmental Personnel Act used within the Department and its implementing issuances. Section assignments, will be converted into the components regarding such matters as 9901.401 requires DoD to establish NSPS pay system. Other commenters rating levels, core competencies, ‘‘effective safeguards to ensure that the asked how employees on grade and pay standard performance factors, and management of the system is fair and equitable and based on employee retention will convert into the NSPS progress reviews. system. performance,’’ and § 9901.405(c) Employees are placed in a LWOP By far the greatest concern expressed specifies supervisory and managerial status for a number of different reasons. by commenters regarding the proposed responsibilities for effective Each circumstance affects the performance management regulations performance management. conversion rules applicable to an involved the perception of fairness of Many commenters recognized that employee. In recognition of this, the the new system. This concern was conversion to the NSPS would require Department will issue implementing expressed in a variety of ways, new skills, knowledge, and a change in issuances governing the conversion including the following: organizational culture. These procedures for employees in a LWOP • Potential for rater subjectivity, commenters overwhelmingly status. Implementing issuances also will consistency of raters, rater favoritism, emphasized the need for DoD to include address the conversion of (1) employees rater bias, and potential for ‘‘cronyism.’’ proper training programs for employees, absent for various other reasons and (2) • Equality of treatment across agency but especially supervisors and employees on grade or pay retention. lines, i.e., employees performing the managers, since they will carry the Commenters stated that employees same amount and quality of work in one primary responsibility for administering outside CONUS could be negatively DoD agency could receive a lower a pay-for-performance system. The affected when they return to CONUS performance-based pay increase than a commenters further acknowledged the positions in NSPS because, unlike counterpart in another DoD need for NSPS training programs to be CONUS employees whose conversion organization. properly funded and appeared to draw

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a nexus between fair administration of relate to the operation of the regulations. Consequently, no change performance management and pay and performance management system DoD was made to this section. the level of supervisory competency and will establish through implementing Section 9901.403—Waivers training. A significant number of issuances. As such, they are not commenters were also concerned about specifically addressed by these enabling Section 9901.403 specifies that the participation of military supervisors regulations. These comments will be employee coverage under this subpart in the administration of civilian taken into account by DoD as it results in the waiver of the provisions performance management and pay develops a more detailed picture of the of 5 U.S.C. chapter 43 with regard to under NSPS. These commenters were NSPS performance management system that employee or category of employees. concerned about the potential effect through implementing issuances. Many employees and labor military supervisors unfamiliar with organizations strongly recommended civilian performance management and Other Comments on Specific Sections of that we continue to manage pay-for-performance processes might Subpart D performance subject to 5 U.S.C. chapter have on employees’ pay and retention. Section 9901.401—Purpose 43. However, for the reasons explained They also raised concerns about the in the Pay for Performance discussion effect of frequent military assignment Many commenters, including under Part VII, Major Issues, of this rotations on the familiarity of participating labor organizations during SUPPLEMENTARY INFORMATION, we have supervisors with the civilian the meet-and-confer process, questioned concluded that the waiver of chapter 43 subordinates’ work and performance. the need to revise current performance is appropriate. No change has been DoD is committed to extensive management rules, stating that what made in this section. training for managers, supervisors, and NSPS proposes under the new Section 9901.404—Definitions employees so that they understand the performance management system could requirements of the performance be done under the current rules, with Commenters asked for additional management system. Further, DoD is additional training for management and explanation of terms used in the committed to the training of managers staff, or through minor modifications of proposed regulations or that we define and supervisors, including military 5 U.S.C. chapter 43 rather than the additional terms. We have addressed members, and will focus that training on redesign of the entire performance some of these terms in the how to establish and communicate management system. Others SUPPLEMENTARY INFORMATION regarding performance expectations, how to assess recommended putting specific subpart A of the regulations, where we employee performance, and how to provisions from chapter 43 into the have defined common terminology that appropriately translate that assessment NSPS performance management is used in several subparts of the into pay adjustments. Finally, the requirements. regulations. Many of the terms are more Department is committed to creating a appropriately left to implementing Section 9901.401 provides for the issuances. However, two of the terms performance culture in DoD that establishment of a DoD performance sustains a high performance related to this subpart that drew a management system and sets out the number of comments are addressed organization. guiding principles that govern it. These Commenters also suggested that there here. guiding principles are based on the should be a formal evaluation of any Several commenters expressed criteria Congress recently enacted with performance management system. concern about the definition of respect to chapter 99 of title 5, U.S. Section 9901.108 of both the proposed ‘‘unacceptable performance’’ in Code. The regulations are based on a and final regulations includes the § 9901.103. That definition defines clear mandate from Congress to requirement for the establishment of ‘‘unacceptable performance’’ as ‘‘the procedures for evaluating regulations strengthen the performance failure to meet one or more performance and the implementation of any management system to support a high expectations.’’ A few commenters regulations established under 5 U.S.C. performance culture and serve as the expressed concern that under the 9902. Therefore, no change was made in basis for pay decisions, as explained in proposed definition, performance subpart D to address this comment the Case for Action. measures could only define and because the performance management Section 9901.402—Coverage differentiate ‘‘acceptable’’ and system is covered by the overall ‘‘unacceptable’’ performance. Other evaluation requirement. Section 9901.402 of the proposed commenters were concerned that In addition, during the meet-and- regulations clarified which categories of unattainable goals and expectations confer process, participating labor employees are eligible for coverage would be used in conjunction with the organizations suggested including a under subpart D—Performance proposed definition. In response to requirement for the Government Management. Commenters these concerns, we have modified the Accountability Office (GAO) to conduct recommended that this subpart be definition of ‘‘unacceptable an annual review of the performance revised to exclude employees whose performance’’ found in § 9901.103. The management system, including pay-for- pay is set by other statute (e.g., overseas new definition provides that performance provisions and payouts, teachers). Other commenters raised performance expectations may be and make a report to Congress. Congress questions concerning whether certain amplified through work assignments or has stated that it will carefully monitor populations of employees would be other instructions, for which the the development and implementation of covered by this subpart. Section 9902(a) employee is held individually the NSPS. Furthermore, it would not be of title 5, U.S. Code, provides authority accountable. As part of its appropriate for DoD and OPM to for the Secretary of Defense to make implementation strategy, DoD will mandate that GAO prepare an annual such determinations upon provide training on setting appropriate report to Congress. establishment of the NSPS or after NSPS performance expectations. Most of the suggestions discussed in is established by regulation. Therefore, During the meet-and-confer process, the general comments section, as well as it is not necessary to determine the participating labor organizations many others that suggest specific inclusion/ exclusion of each unique suggested that the definition of practices or processes, by their nature population within DoD in the enabling ‘‘performance expectations’’ in the

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proposed regulations be amended to and operation of performance Section 9901.406—Setting and require such expectations to meet management systems. We will address Communicating Performance certain characteristics (e.g., objective some of these concerns here, and others Expectations and observable or verifiable descriptions will be addressed more appropriately as Section 9901.406 provides the of manner, quality, quantity, timeliness, DoD develops the implementing requirements and guidelines for and cost effectiveness). Many of the issuances. For example, a few communicating with employees commenters also suggested that this commenters recommended more overtly regarding their performance through the language be modified to require that any embedding the concept of contribution use of ‘‘performance expectations.’’ performance expectation used in in the enabling regulations. However, Regarding the requirements in assessment of performance be ‘‘objective we find that the concept of contribution § 9901.406(a), some commenters said it and measurable.’’ While many of these already is clearly presented in the would be difficult to link individual characteristics are noteworthy, due to enabling regulations, including a performance to the Department’s the breadth of missions and types of definition of the term in subpart A. strategic objectives, some thought the work performed in DoD, such linkage already exists in the current characteristics may not always be Other commenters suggested system, and some recommended that applicable to each and every providing system transparency by DoD implementing issuances amplify performance expectation. In response to requiring the agency to publish the how this be done. We agree that comments that the definition of performance ratings and payouts for all additional guidance will be helpful and ‘‘performance expectations’’ was too employees. We agree with the concept that this degree of specificity is best broad, we have revised the definition to of incorporating additional transparency accomplished through DoD explain that expectations are based on in the performance management system, implementing issuances and/or DoD (1) the duties, responsibilities, but not at the expense of employee Component regulations and guidance. competencies, and objectives associated confidentiality and privacy. There are Therefore, no changes were made in with an employee’s position and (2) the many other effective methods for contributions and demonstrated providing transparency that do not response to these comments. We received comments concerning competencies management expects of an require disclosure of individual the content of § 9901.406(b), which also employee. performance ratings. Many of these was a topic of discussion during the methods are practiced today in DoD’s Section 9901.405—Performance meet-and-confer process. A majority of Management System Requirements pay-for-performance demonstration commenters objected to the inclusion of projects. While protecting individual Section 9901.405 provides for the ‘‘professionalism and standards of identifying information, organizations appropriate conduct and behavior, such establishment of a performance often publish summary results and management system under NSPS as civility and respect for others’ as aggregate data such as average ratings indicators of performance. Most of these through the use of implementing and payouts within pay pools and issuances. This section also establishes commenters believed assessment of career paths. Additionally, the requirements that must be met by these traits would lead to arbitrary and organizations often provide employees the NSPS performance management subjective determinations. Others with comparative compensation data in system. thought this provision would be a tool During the meet-and-confer process, the form of scatter grams or similar for advancing favoritism or retaliation in participating labor organizations graphic representations of payout the workforce. Still others interpreted proposed that the development of the statistics, in which data points are this requirement to apply to performance management system be anonymous. nonsupervisory employees only and accomplished through a three-step Several commenters proposed tying recommended the application of this process: Continuing collaboration, performance ratings to customer requirement to supervisors and national consultation, and finally satisfaction and/or the use of 360-degree managers, as well. We have addressed bargaining. Such a cumbersome and ratings. These suggestions are related to these issues in our discussion of the inefficient process would inevitably the operation of the performance definition of ‘‘performance’’ in subpart lead to a fragmented and inconsistent management system, the details of A. These requirements apply equally to implementation of the NSPS. which DoD will establish through all employees, including supervisors Furthermore, it is inconsistent with the implementing issuances. While we and managers. statutory prohibition against expanding agree that the use of customer input During the meet-and-confer process, the scope of bargaining (5 U.S.C. and/or 360 degree ratings should be the participating labor organizations 9902(m)(7)) and the mandate that the tools available to DoD Components in recommended changes to specify that collaborative process established by 5 the implementation of this subpart, performance expectations are U.S.C. 9902(f) be the exclusive process these tools are not appropriate for appropriately and clearly for involvement of employee application to all types of work and communicated to employees. representatives in the planning, work environments. Therefore, we did Management shared these concerns and agreed that the basic performance development, and implementation of not adopt the suggestion to require their expectations should be provided to the NSPS HR system. Therefore, this use Department-wide. suggestion has not been incorporated employees in writing. We have revised into the final regulations, and During the meet-and-confer process, this section accordingly. continuing collaboration in the the participating labor organizations Other comments expressed concern development of the implementing recommended that appraisals be that employees could be rated against issuances will be the means for ensuring required once a year. Management expectations that had not been employee involvement in the design agreed with this recommendation, and communicated or that employees would and implementation of the performance this section has been modified to be rated against continually varying and management system. include the requirement that changing expectations. We believe the Many commenters had specific ideas performance appraisals occur at least regulations sufficiently address and recommendations for the design annually. concerns about communication of

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performance expectations. This section allowed for the use of any other means Section 9901.408—Developing of the proposed regulations clearly as long as it would be clear to a Performance and Addressing Poor stated the requirement that performance reasonable person, has been deleted. Performance expectations be communicated to Several commenters objected to the Section 9901.408 addresses two employees prior to holding the language in § 9901.406(f) limiting aspects of developing or improving employee accountable for them. No employee involvement in developing performance: The continual changes were made in the regulations to improvement that is part of a high- address concerns about management performance expectations to ‘‘insofar as performance culture and the remedial flexibility to change performance practicable.’’ In some cases, individual improvement that addresses poor expectations. Such flexibility is employees may not be directly involved performance. necessary to enable DoD to respond to in the development of particular Many commenters expressed concern changes in organizational mission and performance expectations because the that without the protections provided by priorities. performance expectations were Labor organizations participating in developed through a group endeavor, or mandatory improvement periods, the meet-and-confer process, as well as the same expectations might be applied management would be overly harsh in adverse actions related to poor many commenters, raised concerns to an entire group of employees where performance. Similarly, during the regarding supervisory and managerial a smaller group of employees was accountability. Specifically, they meet-and-confer process and through involved in their initial development. written comments, participating labor questioned how this would be Some commenters also objected to accomplished, since many believe organizations asked that employees be reserving final decisions regarding provided a reasonable opportunity to supervisors and managers are not held performance expectations to the sole accountable now. Section 9901.406(c) improve performance before an adverse and exclusive discretion of action is proposed or initiated, except in expressly states that supervisors’ and management. This is no different than managers’ performance expectations the most extreme case of a performance the current practice regarding will include ‘‘assessment and deficiency that endangers national performance elements and standards, measurements’’ of how well they security or the safety of personnel. The complete their performance and both performance elements/ proposed regulations provided for an management responsibilities. DoD will standards and performance expectations improvement period as one of several provide training on the appropriate are part of assigning work, which is a options available to address or correct competencies to ensure that supervisors management right. unacceptable performance prior to and managers are prepared to do this. In taking an adverse action. We continue to Section 9901.407—Monitoring believe an improvement period should addition, supervisors’ and managers’ Performance and Providing Feedback ratings of record will be based, in part, be an option under the new system, but on how well they perform this Section 9901.407 establishes the basic not a requirement as it is now under important function. Ultimately, pay responsibility for supervisors to monitor chapter 43 of title 5, U.S. Code. decisions for supervisors and managers employee and organizational Therefore, we made no changes as a result of these recommendations. An will be affected by their performance of performance and inform employees of agency may now take a performance this function. their progress in meeting their action under chapter 75 without Section 9901.406(d) of the proposed performance expectations. This section regulations provides examples of a affording an improvement period. received two primary comments: variety of forms performance Additionally, as specified in subpart H, expectations could take. Many (1) The recommendation that the employees continue to have the right to commenters made suggestions regarding regulation require more than one appeal adverse actions. the purpose and content of performance progress review per year and (2) the At least two commenters expectations. Some of these commenters concern that interim performance or recommended modification of the recommended the establishment of progress reviews would not occur language in § 9901.408(c) to standard performance elements in order despite regulatory language. We agree acknowledge adverse action appeal to promote consistency across that multiple interim performance procedures for groups of employees not organizational lines. Other commenters reviews and/or interim feedback are covered by subpart H of the NSPS recommended the use of performance appropriate for many types of work and regulations. In response to this standards tied to each individual’s area positions. However, since this is not recommendation, we have revised this of responsibility. The performance true of all types of work, the enabling section to reference appropriate appeal management system envisioned by the regulation will continue to specify a procedures for employees not covered Department will include both standard minimum interim performance review by actions subject to subpart H. performance elements and individual requirement of at least once during each Section 9901.409—Rating and goals and objectives. These elements of appraisal period. We also made no Rewarding Performance the system will be addressed in the DoD implementing issuances. change in response to comments Section 9901.409 establishes the In addition, individual commenters indicating that regulations alone would requirements regarding rating and and participating labor organizations not result in conducting interim rewarding employee performance, alike expressed concern that the performance reviews. We believe the including the use of a multi-level rating explanation of performance proposed regulation provides sufficient system, the purposes for which ratings expectations was too broad. In response, language in subpart D to hold may be issued, and procedures for a new paragraph has been added to supervisors and managers accountable challenging a rating of record. § 9901.406 to explain that performance for effectively managing the Section 9901.409(a) received many expectations may be amplified through performance of employees. (See our comments indicating that DoD was particular work assignments or other previous discussion regarding taking a step backward in moving from, instructions, which need not be in § 9901.406(c).) in some cases, a pass/fail performance writing, and 9901.406(d)(5), which management systems to a multi-level

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rating system. A few comments opportunity for third-party review. This • Limit probationary periods to the indicated that the new performance issue was also raised during the meet- initial hire and the first supervisory management system should require and-confer process with participating appointment only; more than three rating levels. Since labor organizations. These organizations • Include information on crediting meaningful performance distinctions are indicated their strong belief and desire time toward completion of a an essential requirement in a pay-for- that employees must have access to a probationary period and appeal rights; • performance system, language requiring negotiated grievance procedure and List the series that will be covered a multi-level rating system was retained. binding arbitration for the by direct hire authority and specify who While the regulations specify minimum reconsideration process to be credible. may determine which series will be requirements, the details of the added or deleted; In response to these concerns, • performance management system will § 9901.409(h) was added to enable Clarify whether time-in-grade still be developed through the implementing applies; bargaining unit employees to choose to • issuances. Such details would include use either an administrative Specify what happens to career- conditional employees when they move specifying the number of rating levels reconsideration process under this into NSPS; and providing descriptions of the subpart or a negotiated grievance • different levels of performance. Identify the contemporary hiring process under § 9901.922(h), but not practices that are acceptable, e.g., using In regard to § 9901.409(b), some both. commenters were happy to see their headhunters, signing bonuses, In addition to concerns regarding the newspaper ads; and performance rating of record used as a • basis for pay. Most commenters, ability to grieve a rating of record, many Address how NSPS will streamline however, did not agree with the linkage commenters also expressed a similar the lengthy process of rating and of pay to performance and indicated concern regarding the ability to have a ranking. their preference for pay based on pay determination reconsidered. This We understand the desire for the longevity. As stated under the Pay for was also a topic of discussion during the regulations to provide more specificity Performance portion in the Major Issues meet-and-confer process. We have made and assurances regarding NSPS staffing Section of the SUPPLEMENTARY no changes in the final regulations in and employment. However, the INFORMATION, the enabling statute this regard. However, we recognize that regulations must also provide DoD with requires that the Department establish a changing a rating of record as the result sufficient flexibility to design an agile ‘‘pay-for-performance’’ system that of a reconsideration could lead to a system to attract high quality employees better links individual pay to conforming change in the employee’s and the ability to place employees in a performance. (See 5 U.S.C. payout. manner consistent with mission 9902(b)(6)(I).) Also, we believe Congress A few commenters recommended requirements and strategic human and the American people want to see modification of § 9901.409(i) to capital needs. These suggestions and DoD’s employees compensated based on recognize alternative reduction in force requests for more detailed information performance rather than longevity. procedures for employee groups not will be considered in developing the Therefore, we retained the language covered by subpart F of these implementing issuances. Many commenters stated current establishing the rating of record as a regulations. We agree and have hiring flexibilities were sufficient and basis for pay determinations. modified this section accordingly. In addition, commenters expressed felt the Department had not concern that the authority to issue Subpart E—Staffing and Employment demonstrated why changes were needed in the staffing and employment areas or additional ratings may be vulnerable to General Comments abuse, especially during RIF. The how our proposals would result in a less authority to issue additional ratings of As previously addressed in the cumbersome or fairer hiring process. record enables management to issue subpart A supplemental information, Still others indicated they saw little in new ratings of record to recognize commenters expressed concerns about our proposal that would substantially significant deterioration or the lack of specificity in subpart E of the alter or improve management’s ability to improvement in performance since the proposed regulations on external hire or move employees as mission- previous rating of record was issued. recruitment and internal placement. related requirements dictate. We DoD will include appropriate safeguards Although some commenters found the disagree. For example, in § 9901.511(c), in its implementing issuances. staffing and employment concepts to be we have removed a time-consuming Similarly, while some commenters simple and supported our plan, many step in establishing a direct hire were happy that performance would be commenters felt the proposed authority by providing DoD with the used as a basis for determining regulations were too vague. They did authority to make severe shortage and reduction in force (RIF) standing, others not support issuing detailed guidance in critical need determinations without thought performance should be given internal implementing issuances approval by OPM. In addition, equal weight with seniority. However, because that process does not § 9901.515(a) permits limiting most commenters thought seniority adequately allow for public comment. consideration under competitive should continue to determine retention examining to highly qualified applicants standing in the event of a RIF. Length Because of the lack of specificity, in a commuting area instead of having of service does play a role. However, we commenters recommended a number of to consider potentially thousands of believe that it is essential that different amendments to subpart E of applications from across the country. performance play a larger role in the regulations to provide detailed Also, § 9901.511(d) provides DoD the retention so no change was made in this criteria and conditions for addressing capability to convert employees on section of the regulations. staffing and employment issues time-limited appointments, which may We received a number of comments involving external hiring and internal be necessary because of funding or concerning § 9901.409(g). The majority placement. The commenters organizational issues, to career of commenters thought the recommended the regulations: appointments, if such a possibility is reconsideration process to challenge • Specify the time limits for stated in the vacancy announcement so performance ratings should include an probationary periods; that interested persons may apply for

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the potential conversion opportunity. about priority placement programs and Merit Systems Protection Board, as We believe these additional flexibilities how they will work under NSPS. appropriate. will permit DoD to meet workforce and Commenters inquired as to how pay- These and other bargaining issues are organizational goals in a much more banded positions would be dealt with, specifically addressed in several places timely fashion. how hiring flexibilities will impact the in the SUPPLEMENTARY INFORMATION Numerous commenters also believed DoD Priority Placement Program, and under Major Issues, as well as in that management does not currently whether or not the Governmentwide subparts A and I. fully utilize existing hiring flexibilities. priority placement mechanism, the Section 9901.502—Scope of Authority The Department will continue to Reemployment Priority List, might be provide training on existing hiring eliminated because it is inconsistent Section 9901.502 of the proposed flexibilities, and we are confident that with a performance-based human regulation authorizes the modification the extensive training planned for NSPS resources system. The Department has a and replacement of certain provisions of implementation will educate managers longstanding commitment to protect title 5 related to hiring and assigning and employees about the new and assist employees who have been employees when a specified category of flexibilities NSPS will offer. Once affected by its workforce shaping employees, applicants, and positions is managers are aware of these flexibilities, initiatives, and we will continue to covered by this subpart. This section we believe they will utilize them to honor that responsibility. DoD’s Priority also authorizes DoD to prescribe, in more effectively hire and place Placement Program will be modified to accordance with § 9901.105, employees where their skills and incorporate NSPS features, just as it has implementing issuances to carry out the knowledge will be most useful to the previously been modified to provisions of this subpart. Commenters Department. accommodate other changes throughout objected to the proposed waiver and/or Several comments pointed out our the years. modification of various provisions of proposals do not address the issue of title 5; however, modification and/or Many commenters referred to the lengthy background security checks or replacement of the specified sections of requirement that DoD staffing and other impediments to hiring, such as title 5 is authorized by enabling employment regulations be designed in funding problems and hiring freezes. legislation (5 U.S.C. 9902(k)) and is a transparent and credible manner that While we understand that the essential to the development of a more involves employees and employee administrative processes involved in flexible system for hiring and assigning representatives. We agree that employee completing background security employees. investigations and resolving funding representatives should be provided an issues may play a significant role in the opportunity to participate in the Section 9901.503—Coverage speed of the hiring process, they are development of implementing Section 9901.503 provides the outside the scope of the enabling issuances. This issue is specifically Secretary the authority to determine legislation. addressed in the SUPPLEMENTARY employee eligibility and coverage in Commenters, including labor INFORMATION in subpart A. accordance with § 9901.102(b). Several organizations participating in the meet- Comments on Specific Sections of commenters, including labor and-confer process, were concerned Subpart E organizations participating in the meet- about a perceived threat of involuntary and-confer process, recommended that deployment, particularly to hazardous Section 9901.501—Purpose certain types of positions be excluded overseas locations. While they Section 9901.501 of the proposed from coverage under the new personnel understand the requirement to support regulation explains the purpose of system, including Police Officers, our military members in every way, subpart E, which contains regulations Teachers, Civil Service Mariners, and some believe that NSPS is an attempt to for the establishment of qualification National Guard Technicians under title institute a ‘‘backdoor draft.’’ requirements; recruitment for, and 32. These and other coverage issues are Commenters also stressed that appointment to, positions; and specifically addressed in the management should not have the ability assignment, reassignment, detail, SUPPLEMENTARY INFORMATION in subpart to reassign or detail employees to transfer, or promotion of employees, A. perform similar or different duties at a consistent with 5 U.S.C. 9902(a) and (k). moment’s notice. Our need to institute Section 9901.504—Definitions During the meet-and-confer process, a flexible system with the ability to participating labor organizations In response to multiple comments deploy the Department’s personnel in a recommended that we add paragraphs requesting an explanation of, and/or manner consistent with mission (d) and (e) to this section, as follows: improved distinctions between, similar requirements does not mean that terms, we have— employees will be reassigned in a (d) The policies and procedures for • Revised the definition of capricious, arbitrary manner or totally staffing and employment will be ‘‘temporary employee’’ to clarify the without warning. Under current law, planned and developed in accordance Department’s intent. A temporary management already has authority to with 5 U.S.C. 9902(f)(1)(d), and will be employee is an individual not on a assign work to be performed and to subject to national consultation rights career appointment who is employed for accomplish the mission of the and the duty to bargain under 5 U.S.C. a limited period of time not to exceed Department, including the authority to chapter 71. 1 year. The appointment may be reassign or detail employees. We intend (e) Compliance with the policies, extended, up to a maximum established to continue to treat our employees in a procedures, issuances and provisions of by implementing issuances, to perform fair, credible, and respectful manner. collective bargaining agreements on the work of a position that does not We will develop the processes and staffing and employment will be subject require an additional career employee. procedures under NSPS that will help to the negotiated grievance procedure • Revised the definition of ‘‘term us to achieve this. and binding arbitration before an employee’’ to clarify the Department’s Several commenters, including labor independent third party, an alternative intent. A term employee is an organizations participating in the meet- dispute resolution process that is individual not on a career appointment and-confer process, raised questions mutually agreed to by the parties, or the who is employed for a period of time of

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more than 1 year. The appointment may (b)(2)(ii) of this section, DoD will generally, a direct hire authority is used be extended, up to a maximum provide reasonable advance notice, to appoint applicants not currently established by implementing issuances, where practicable, to the relevant employed in the civil service. when the need for an employee’s service congressional committees and to the A technical correction was made to is not permanent. respective labor organizations, of the § 9901.511(c)(3) by removing the • Revised the definition of ‘‘time- reason(s) why the Secretary has elected reference to paragraph (a). limited employee’’ to clarify the to establish a new appointing authority Section 9901.511(d) authorizes the meaning. A time-limited employee is an to meet critical mission requirements or Secretary to prescribe procedures for individual appointed to a position for a fill a severe shortage/critical hiring need making time-limited appointments and period of limited duration (i.e., term or without a preceding comment period. for converting those employees without temporary) in either the competitive or We do not agree. We recognize that if further competition to the career service excepted service. these hiring authorities are exercised provided certain conditions are met. • Added a definition of ‘‘initial and conditions of employment are Commenters cited unease with our idea probationary period’’ to subpart A to impacted, local bargaining may occur in of time-limited appointments that they clarify the intent of § 9901.512 and accordance with subpart I, as believe will result in NSPS evolving ensure consistency between subpart E appropriate. We also agree that labor into a system based on temporary and subpart H. An initial probationary organizations, and indeed all employment. Some commenters do not period means the period of time, as employees, should receive notice via believe temporary employees should designated by the Secretary, well-established processes, such as have the ability to convert to permanent immediately following an employee’s publication of notices in the Federal appointments without once again going appointment during which an Register. through a competitive process. During authorized management official Some commenters did not understand the meet-and-confer process, determines whether the employee the need for additional appointing participating labor organizations fulfills the requirements of the position authorities and viewed this flexibility as indicated that term employees should to which assigned. diminishing veterans’ preference and as not perform work of permanent • Added a definition of ‘‘in-service a mechanism for promoting nepotism, positions. probationary period’’ to subpart A to favoritism, and cronyism that will lead Regarding the comment about NSPS clarify the intent and ensure consistency to more discrimination complaints and developing a system based on temporary between subpart E and subpart H. An grievances. In a related issue, one employment, we have revised in-service probationary period, such as commenter expressed concern over the definitions for time-limited a supervisory probationary period, lack of any reference to granting 5 or 10 appointments, both temporary and term, means the period of time, as designated preference points to veterans. in § 9901.504 to include specific by the Secretary, during which an In establishing new appointing information on appropriate timeframes authorized management official authorities, the regulations provide for for time-limited appointments. The determines whether the employee review by OPM and, when an Department will provide further fulfills the requirements of the position appointment is made using a new guidance in implementing issuances on to which assigned. competitive appointing authority or a the appropriate use of time-limited new excepted appointing authority that appointments to meet mission needs. Section 9901.511—Appointing may lead to a subsequent Regarding the comment about Authorities noncompetitive appointment to a additional competition before Section 9901.511(b)(2) of the competitive position in the career converting a temporary appointment to proposed regulations provides for DoD service, a requirement for public a career appointment, we note that and OPM to jointly publish a notice in comment. Implementing issuances will § 9901.511(d)(2) requires a time-limited the Federal Register when establishing provide additional guidance and vacancy announcement to include a new competitive appointing authority parameters to ensure that these information about the possibility of or a new excepted appointing authority authorities are utilized for specified noncompetitive conversion, if that may lead to a subsequent purposes in accordance with merit applicable, and that the individual be noncompetitive appointment to a system principles and the principles of appointed to the time-limited competitive position in the career veterans’ preference. NSPS does not appointment under NSPS competitive service. Further, the section requires a change or diminish preference as examining procedures. We believe that period of public comment prior to the indicated in § 9901.501(c). additional competition is not necessary establishment of such an authority Section 9901.511(c) authorizes the due to the competition required for unless a critical mission requirement Secretary to exercise direct hire initial placement into the time-limited exists. Commenters criticized this authority when there is a severe appointment. Also, in response to the section stating that this authority and shortage of candidates or a critical comment during meet-and-confer, we our lack of specificity will lead to a hiring need. One commenter suggested have revised and clarified § 9901.511(d) patronage or spoils system and that direct hire authority should be to indicate that: (1) Term employment corruption of the merit system. They automatically allowed without will not be used for positions that generally opposed the Department’s extensive documentation for those should be filled on a permanent basis; ability to establish a new appointing positions for which a separate pay and (2) term appointments may be used authority, even if a critical mission schedule is authorized. We have not to accomplish permanent work in requirement exists, without first issuing adopted this suggestion. Other circumstances where the position a notice in the Federal Register commenters wondered if the direct hire cannot be filled permanently, e.g., the allowing for a public comment period. authorities could apply to career incumbent will be out of the position for During the meet-and-confer process, employees or if they were meant only a significant period of time, but is participating labor organizations for new hires. The specific criteria and expected to return. recommended that we add paragraph instructions concerning direct hire One commenter suggested that since (iii) to 9901.511(b)(2) to state: ‘‘In authorities will be provided in the there is no clear distinction between exercising its authority under paragraph implementing issuances; however, temporary and term employees, we

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should refer to these employees simply meet-and-confer process, labor standards do not fully cover the as time-limited and delete the example organizations indicated that in-service occupation or are not available.’’ ‘‘(e.g., an individual employed on a probationary periods should apply to We believe the Department may have temporary or term basis)’’ from supervisory positions only. a need to modify existing, or establish § 9901.511(d)(2). We deleted this Based on the comments received, new, qualification standards to meet example as it is not necessary and we including comments from labor mission requirements. In addition, have clarified the distinction between organizations participating in the meet- § 9901.105 of subpart A does include temporary and term employees with the and-confer process, we have revised the the establishment of alternative or revised definitions in § 9901.504. final regulations to set parameters on additional qualification standards as an Another commenter suggested that we probationary periods and to indicate the item to be coordinated with OPM. have only two appointment types, types of circumstances that would lead Therefore, we have not revised this permanent and temporary, to simplify the Department to establish longer section. recruitment. We did not adopt this probationary periods. The Department Section 9901.514—Non-Citizen Hiring suggestion. Different circumstances and will retain the flexibility to create Section 9901.514 of the proposed needs justify the use of both temporary probationary periods of varying lengths employees and term employees. regulations provides for DoD to within those overall time frames. establish procedures for appointing non- Section 9901.512—Probationary Periods Specifically, we revised § 9901.512 to citizens to excepted service positions Section 9901.512 of the proposed include that: (1) Probationary periods within the National Security Personnel regulations provides that the Secretary under NSPS will be between 1 year and System. During the meet-and-confer may establish probationary periods, 3 years; (2) probationary periods process, participating labor both initial and in-service, for established for more than 1 year will be organizations recommended that we employees appointed to positions in the applied to categories of positions or strike this entire section and also competitive and excepted service types of work that require a longer time remove references to non-citizen hiring covered by the National Security period to evaluate the employee’s ability authority. Several commenters also Personnel System. For clarity, we to perform the work; (3) in-service disagreed with the hiring of non-citizens consolidated all information pertaining probationary periods will apply to citing that such appointments are to probationary periods, both initial and certain groups of positions or inconsistent with ‘‘national security’’ or in-service, in this section and deleted occupations under prescribed specific might lead to the outsourcing of DoD references to in-service probationary conditions; and (4) that an employee functions. Many were skeptical that periods from § 9901.516. We have also who fails to complete an in-service qualified U.S. citizens could not be added a definition of initial probationary period will be returned to found or trained. The Department probationary period to subpart A of part a grade or band no lower than that held currently has the authority, delegated by 9901. before the in-service probationary OPM, to hire non-citizens. Therefore, Commenters were disturbed by the period and the employee will be this provision simply codifies in the lack of specificity on probationary entitled to have his or her pay set in regulation the authority already given to periods. They pointed out that the accordance with the applicable section the Department. We have retained the opportunity for multiple or extended of subpart C. Implementing issuances Governmentwide criteria that this probationary periods may result in will clarify that decisions to establish authority can only be used in the inconsistencies and abusive treatment probationary periods longer than 1 year absence of qualified U.S. citizens and by supervisors who might retain will be made at the Department level. In when immigration and security employees in a perpetual probationary addition, we have clarified that nothing requirements are met. Although the status simply by moving them from one in this section prohibits an action non-citizen hiring authority is rarely position to another. Commenters were against an individual serving an in- used, the Department does occasionally concerned that managers will be able to service probationary period for cause have situations where there are no make arbitrary decisions as to who unrelated to performance. qualified U.S. citizens available for serves an in-service probationary period Section 9901.513—Qualification critical positions. and when. Commenters, including labor Standards organizations participating in the meet- Section 9901.515—Competitive and-confer process, indicated that Section 9901.513 provides for DoD to Examining Procedures probationary periods should not exceed either continue to use qualification Section 9901.515 of the proposed 1 year. Some commenters asserted that standards established or approved by regulations provides DoD authority to probationary periods of longer than 1 OPM, or to establish its own for establish procedures for examining year show a lack of faith in management positions covered by NSPS. One applicants for entry into competitive to make decisions about an individual’s commenter wanted to know what is and excepted service positions in NSPS, ability to perform satisfactorily within wrong with the OPM qualification including the use of traditional that timeframe. Commenters wanted to standards and if he/she would be numerical rating and ranking or either retain the Governmentwide required to have different qualifications alternative ranking and selection probationary periods established by from the position hired into; another procedures (category rating), and OPM or to establish specific commenter suggested that we obtain specifies which applications/applicants probationary periods to be published in OPM approval for all qualification the Department must accept and the Federal Register. A few commenters standards for positions covered by consider after a period of public notice. supported longer probationary periods, NSPS; several others suggested possible In response to comments we received on such as a 3-year probationary period to changes for NSPS qualification § 9901.515(a) asking who competitive substitute for the career-conditional standards. One commenter stated that examining procedures apply to, we have period that currently exists. However, the first sentence of this section added wording to clarify that we are other commenters expressed concern contradicts the second sentence and referring to applicants from outside of because probationary periods could be suggested we add the following at the the civil service when we address who as long as 5 or 10 years. During the end of the second sentence: ‘‘when OPM is recruited under competitive

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examining procedures. We have merit system principles in 5 U.S.C. 2301 were concerned that subpart F provides modified § 9901.515(a)(1) to reflect that and veterans’ preference requirements the Department with excessive rights to DoD will accept applications for vacant as set forth in 5 U.S.C. 3309 through make decisions concerning the staffing positions from all ‘‘U.S. citizens,’’ as 3320, and include provisions for of organizations, the abolishment of opposed to all ‘‘sources,’’ to reflect a employees entitled to priority positions, and the need to implement a commenter’s concern that the term consideration in accordance with 5 reduction in force (RIF). We disagree. ‘‘sources’’ implies we are referring to U.S.C. 8151. In response to a comment The Department has no greater right to noncompetitive sources. we received suggesting that this make restructuring decisions under In a related matter, commenters paragraph should address preference subpart F than the Department presently expressed concern about DoD’s ability eligibility in the competitive service as has under section 351.201(a)(1) of to narrow the groups of employees who well as the excepted service under OPM’s RIF regulations. will be considered for jobs, including NSPS procedures, and to provide clarity the elimination of highly-qualified regarding the application of veterans’ Commenters, including comments workers from various segments of preference, we have revised the second during the meet-and-confer process, society and the treatment of veterans. sentence of this section to include a were also concerned that because The ability to narrow the area of reference to 5 U.S.C. 1302(b) and (c) subpart F provides more weight to consideration will not preclude us from concerning veterans’ preference in performance as a retention factor than opening any recruitment action as employment. We also made a technical under OPM’s 5 CFR part 351 RIF broadly as we choose. However, because correction to the third sentence by regulations, employees’ retention technology has made the Federal removing the reference to 5 U.S.C. standing under subpart F would be Government a more applicant-friendly 1302(c). primarily based upon performance employer, it has also increased the Section 9901.516—Internal Placement ratings rather than upon tenure and administrative burden involved to veterans’ preference. In fact, subpart F efficiently and effectively fill mission- Section 9901.516 of the proposed provides that, consistent with OPM’s critical jobs. At times, we are regulations provides for DoD to RIF regulations, tenure remains the most overwhelmed by the volume of prescribe implementing issuances important retention factor, with applications that must be evaluated and regarding the assignment, reassignment, considered, especially when filling a veterans’ preference the second most reinstatement, detail, transfer, and important factor. Subpart F gives small number of jobs. In these instances, promotion of individuals or employees we need the ability to narrow the pool performance greater retention weight by into or within NSPS. This section also providing that performance is the third of applicants we consider, and there addressed the establishment of in- most important factor, while creditable may be a sufficient number of qualified service probationary periods by way of service is the least important of the four applicants within the local commuting the implementing issuances. For clarity, factors. Under OPM’s RIF regulations, area. DoD will continue to provide equal we moved all references to probationary treatment and equal access and will periods, to include in-service creditable service is the third most comply with the merit system probationary periods, to § 9901.512. We important factor while performance is principles. made no other changes to this section. the least important factor. The Section 9901.515(b) of the proposed additional weight on performance is regulations allows DoD to establish Subpart F—Workforce Shaping consistent with the Department’s procedures for the examination of General Comments implementation of a performance-based applicants for entry into competitive HR system. and excepted service positions in NSPS. Commenters, including comments Such procedures must adhere to the during the meet-and-confer process,

TABLE.—RELATIVE WEIGHT OF RETENTION FACTORS

Order of retention factors NSPS 5 CFR 9901 subpart F workforce from highest to lowest OPM’s 5 CFR part 351 RIF regulations shaping regulations

1 ...... Tenure (i.e., type of appointment) ...... Tenure (i.e., type of appointment). 2 ...... Veterans’ Preference ...... Veterans’ Preference. 3 ...... Creditable Federal Service ...... Performance Ratings. 4 ...... Performance Ratings ...... Creditable Federal Service.

In order to ensure fairness in RIF Commenters, including labor further clarifies that competitive areas actions and an impartial review of organizations participating in the meet- and competitive groups are not subject Department decisions, such as and-confer process, recommended that to collective bargaining. Even so, in abolishing positions and crediting the design and implementation of developing final subpart F regulations, performance ratings, subpart F provides subpart F should be subject to collective we did consider all comments an appeal right under § 9901.611 for an bargaining. This would be inconsistent submitted by participating labor employee who is reached for a RIF with the enabling legislation (5 U.S.C. organizations, including comments action resulting in separation, reduction 9902(f)(4)), which makes the during the meet-and-confer process. in pay band, or furlough for more than collaborative process the exclusive 30 consecutive days (or more than 22 process for involvement of employee discontinuous workdays), and who representatives in the planning, believes that the Department improperly development, and implementation of applied subpart F. the HR system. We have added language at §§ 9901.605(f) and 9901.606(e), which

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Other Comments on Specific Sections of list.’’ Commenters were also concerned A commenter suggested that subpart F Subpart F that this discretion in the definition include term employees, who in fact could lead to abuse in conducting RIF compete for retention in the ranking Section 9901.601—Purpose and actions. After consideration of the order covered in § 9901.607(a)(1). Other Applicability comments, we decided to revise the commenters, including comments Section 9901.601 specifies that definition of ‘‘retention factors’’ to during the meet-and-confer process, subpart F implements the Department’s reflect the actual ranking order of the suggested that subpart F exclude term system to determine employees’ four principal retention factors found in employees from RIF competition. We retention rights resulting from § 9901.607(a) (i.e., tenure first, veterans’ did not adopt this suggestion. The organizational decisions such as preference second, performance third, Department will clarify the coverage of realignment, reorganization, and and creditable service fourth) without term employees in subpart F through closure. any additional changes to the definition. implementing issuances. In response to As an alternative to the RIF system in The Department will appropriately another comment, the Department will the proposed regulation, commenters cover any consideration given to also clarify through implementing suggested that the Department retain or additional retention factors through issuances the retention rights under modify OPM’s present 5 CFR part 351 implementing issuances. However, even subpart F of seasonal employees, retention regulations as an alternative to if the Department chooses to give employees on other nonpermanent subpart F. These suggestions were consideration to additional factors appointments, and employees on inconsistent with a performance-based under authority of this definition, the probationary appointments. HR system and were not adopted. Department must still follow the Commenters, including comments during the meet-and-confer process, Section 9901.602—Scope of Authority ranking order of the four factors found in § 9901.607(a). asked for clarification when subpart F As authorized by 5 U.S.C. 9902(k), A commenter suggested that a would apply to employees of the § 9901.602 provides that subpart F definition of ‘‘tenure’’ be added to Department. We agree that clarification modifies and then applies the statutory § 9901.603. We did not adopt this is necessary. Proposed § 9901.604(b)(1) retention provisions in 5 U.S.C. 3501 suggestion. Section 9901.603 defines provided that subpart F applies to the through 3503, except for the veterans’ ‘‘tenure group’’ as the initial grouping of release of a competing employee from a preference provisions which are not employees for RIF competition on the retention list by actions such as modified in sections 3501 and 3502. basis of the type of their appointments. separation or reduction in band for a Finally, the section also provides that Section 9901.607(a)(1) provides the reason covered in § 9901.601 (e.g., the Department will further implement realigning, reshaping, etc). After ranking order of tenure as used in RIF subpart F through implementing consideration of the comments, we actions under subpart F. The issuances in accordance with revised § 9901.604(b)(1) to clarify that Department will publish implementing § 9901.105. subpart F also applies to a displacement issuances on ‘‘tenure’’ to clarify for action affecting a competing employee Section 9901.603—Definitions purposes of subpart F that tenure is within a retention list. Section 9901.603 defines specific granted and governed by the type of A commenter agreed with the transfer terms for purposes of subpart F. appointment under which an employee of function provisions in Commenters, including labor is currently serving without regard to § 9901.604(b)(2), which provides that organizations participating in the meet- whether his or her appointment is in a the Department applies 5 CFR part 351, and-confer process, suggested that competitive position or an excepted subpart C, of OPM’s regulations to a subpart F clarify the definition of position. transfer of function situation. Also, ‘‘competing employee.’’ The Department Section 9901.604—Coverage other commenters suggested that the will publish implementing issuances Department develop its own transfer of clarifying who is a ‘‘competing Section 9901.604 specifies which function procedures for purposes of employee’’ under subpart F. employees and which personnel actions subpart F. After consideration of the In order to clarify how the are covered by subpart F. comments, we revised § 9901.604(b)(2) Department will consider performance Commenters suggested that and a conforming change in § 9901.602 as a retention factor under § 9901.604(a) of subpart F specifically to provide that, consistent with the § 9901.607(a)(3), we added a definition exclude National Guard technicians requirements in section 5 U.S.C. 3503, of ‘‘modal rating’’ to § 9901.603. For who have retention rights under 32 the Department may through purposes of subpart F, ‘‘modal rating’’ U.S.C. 709. The technicians are not implementing issuances implement its means the rating of record that occurs currently covered by OPM’s RIF own transfer of function procedures most frequently in a particular regulations; therefore, implementing under subpart F. competitive group. The Department will issuances will similarly exclude the Section 9901.604(b)(3) provides that publish implementing issuances further National Guard technicians from the Department applies section 351.604 clarifying the consideration of subpart F. of OPM’s regulations to implement a performance in RIF competition under Commenters, including comments RIF furlough of more than 30 subpart F. during the meet-and-confer process, consecutive calendar days. Commenters Commenters, including comments suggested that the regulations suggested that the Department develop during the meet-and-confer process, on specifically address the provision in its own RIF furlough procedures for both sections 9901.603 and 9901.607 § 9901.604(a)(2) providing that subpart purposes of subpart F. However, we (‘‘retention list’’) suggested that the F also applies to other employees believe that only clarification is definition of ‘‘retention factors’’ ‘‘designated by the Secretary as DoD necessary. Consistent with the specifically address the provision that may be authorized to include under 5 definition of ‘‘furlough’’ in 5 CFR retention factors includes ‘‘such other U.S.C. 9902.’’ We retained the section as 351.203 and the regulations in 5 CFR factors as the Secretary considers originally proposed. The Department 351.604, we revised § 9901.604(b)(3) to necessary and appropriate to rank will implement § 9901.604(a)(2) through provide that subpart F applies to the employees within a particular retention implementing issuances. furlough of a competing employee for

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more than 30 consecutive days or more retained § 9901.605(a) without revision. today under current OPM regulations than 22 discontinuous workdays. The Section 9901.605(a) provides the where employees compete for retention Department will implement Department with the option of only within a single competitive area. § 9901.604(b)(3) through implementing restricting RIF actions to organizations A commenter was concerned that a issuances covering both continuous and and positions directly affected by competitive area defined in § 9901.605 discontinuous furloughs. organizational decisions such as could limit the potential future Section 9901.604(c)(2) provides that realignment, reorganization, and promotion opportunities of an employee subpart F does not apply to a reduction closure. The Department also retains the involved in RIF competition. That in band based upon reclassification due option to use a competitive area larger scenario, too, may result from any RIF to new classification standards or the than the minimum standard (e.g., an situation, including actions taken today correction of classification error. entire activity could be defined as a under OPM’s regulations. Demotions resulting from single competitive area). A commenter was concerned that an misclassification or a new classification To ensure fairness in the employee reached for a RIF action under standard are similarly excluded from Department’s competitive area subpart F could not appeal a OPM’s RIF regulations. Commenters, decisions, § 9901.605(e) requires that a competitive area decision. As including labor organizations competitive area must be established previously noted, an employee may participating in the meet-and-confer only on the basis of legitimate appeal the competitive area as part of a process, suggested that § 9901.604(c)(2) organizational reasons. The section RIF appeal under § 9901.611. be revised to apply subpart F to both a prohibits establishment of a competitive reduction in band and a reduction in area for the purpose of targeting an Section 9901.606—Competitive Group pay resulting from a classification employee for a RIF action because of Section 9901.606 covers the decision. We did not adopt this nonmerit factors. An employee who is ‘‘competitive group,’’ which serves as suggestion because the Department reached for a separation, demotion, or the basis for ranking employees on the believes there is no need to establish furlough action, and believes that the basis of their relative retention standing. rules that differ from the Department improperly established a After the Department applies the Governmentwide RIF regulations in this competitive area under subpart F, may retention factors (i.e., tenure, veterans’ regard. appeal the Department’s decision under preference, performance, and creditable Section 9901.604(c)(7) provides that, § 9901.611. service), the competitive group ranks with one exception, subpart F does not Commenters suggested that subpart F employees in the order of their relative apply to a reduction in band based upon clarify the competitive area standard standing on a ‘‘retention list’’ that is job erosion. The exception provides that and terminology under § 9901.605(a). similar to a ‘‘retention register’’ under 5 subpart F applies to a reduction in band Commenters also requested that subpart CFR 351.404 of OPM’s RIF regulations. based upon job erosion when the agency F clarify the Department’s oversight role has formally announced a reduction in in reviewing competitive area decisions. Commenters, including labor force in the competitive area that will be Another commenter suggested that organizations participating in the meet- effective within 180 days. Demotions subpart F clarify whether § 9901.605 and-confer process, were concerned that resulting from job erosion are similarly potentially authorizes establishment of a a competitive group established under excluded from OPM’s RIF regulations, one-person competitive area. Finally, § 9901.606(a) provides too narrow a with a comparable exception. commenters, including labor basis for RIF competition. After Commenters, including labor organizations participating in the meet- consideration of comments on organizations participating in the meet- and-confer process, suggested that establishment of a competitive group, and-confer process, suggested that subpart F clarify the Department’s § 9901.606(a) is adopted without § 9901.604(c)(7) be revised to apply procedures for approving a change in revision. Section 9901.606(a) provides subpart F to both a reduction in band the competitive area definition within the Department with an additional and a reduction in pay resulting from 90 days of the effective date of the RIF. option to restrict RIF actions to job erosion. We did not adopt this The Department will clarify the organizations and positions directly suggestion because the Department competitive area standard, its affected by organizational decisions believes there is no need to establish terminology, and related material in such as realignment, reorganization, and rules that differ from the implementing issuances. closure. The Department also retains the Governmentwide RIF regulations in this Labor organizations participating in option to establish a larger competitive regard. the meet-and-confer process suggested group that potentially could cover an that § 9901.605 be revised to provide entire activity. Section 9901.605—Competitive Area that a competitive area may not include A commenter was concerned that a Section 9901.605 covers ‘‘Competitive only preference eligibles. This competitive group defined in Area,’’ which defines the organizational suggestion was not adopted. Section § 9901.606(a) could limit the potential and geographic boundaries within 9901.605 provides that the Department future promotion opportunities of an which employees compete for retention establishes competitive areas solely on employee involved in RIF competition. under subpart F. the basis of organizational and That situation could result in any RIF, Commenters, including labor geographic decisions, not on the basis of including actions taken today under organizations participating in the meet- the retention standing of individual OPM’s regulations. and-confer process, believed that the employees in the competitive areas. Commenters suggested that subpart F minimum competitive area under A commenter was concerned that a clarify how and when the Department § 9901.605(a) was too narrow and could competitive area defined under will establish and/or modify encourage the Department to target § 9901.605 could result in the release of competitive groups. A commenter also employees for RIF actions. One an employee with higher performance suggested that subpart F clarify commenter supported the competitive ratings than another employee in a competitive group terminology. The area standard under § 9901.605(a). After different competitive area. We recognize Department will clarify its competitive consideration of comments on the that this scenario may result from any group policies in implementing competitive area standard, we have RIF situation, and could also occur issuances.

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Section 9901.606(c) provides that the Section 9901.607(a)(1) provides that that implement the retention preference Department uses employees’ official in ranking employees on the retention requirements. positions of record to place employees list, employees with career tenure, A commenter suggested that into a competitive group. The section including employees serving an initial § 9901.607(a)(2) be revised to increase also provides that the Department ‘‘may probationary period, are listed first, the relative weight of veterans’ supplement an employee’s official followed by employees on term and preference as a retention factor. This position description by using other similar appointments as identified in suggestion was not adopted. Section applicable records that document the DoD implementing issuances. 9901.607(a)(2) provides veterans’ employee’s actual duties and Commenters, including comments preference with the same weight in responsibilities.’’ A commenter during the meet-and-confer process, determining RIF retention standing as suggested that the Department place suggested that employees serving an under OPM’s regulations. employees into a competitive group initial probationary period on As noted in the General Comments only on the basis of their official appointment to the Federal service be section above, commenters, including positions of record. Other commenters listed below employees with career labor organizations participating in the suggested that subpart F cover how the tenure, and above employees with term meet-and-confer process, were Department will use records other than or similar appointments. We agree with concerned that § 9901.607(a)(3) official positions to establish this suggestion and have accordingly excessively increases the relative weight competitive groups. After consideration revised § 9901.607(a)(1) to incorporate of performance as a retention factor of the comments, we have retained this change. Commenters suggested that under subpart F. Section 9901.607(a)(3) § 9901.606(c) without revision. Section § 9901.607(a)(1) be revised to clarify considers performance as the third most 9901.606(c) provides the Department whether, before a RIF, the Department important retention factor after tenure with maximum flexibility in may convert a temporary noncompeting and veterans’ preference. Under OPM’s establishing competitive groups based employee with no retention rights under RIF regulations, performance receives upon employees’ actual duties and subpart F to a permanent position that the least weight as a retention factor. As responsibilities. provides the incumbent with full we noted in the General Comments, the Commenters suggested revision of retention rights. We did not adopt this additional retention weight for § 9901.606 to provide that the suggestion. The Department has the performance is fully consistent with the Department may not establish a right to take appropriate personnel goal of increasing the likelihood that competitive group comprised of fewer actions before, during, and after the higher-performing employees will be than 25 employees. Commenters, effective date of the RIF. A commenter retained in the event of a RIF. including labor organizations suggested that § 9901.607(a)(1) be Commenters, including labor participating in the meet-and-confer revised to include service as a tenure organizations participating in the meet- process, also suggested revision of element. We did not adopt this and-confer process, asked that § 9901.606 to provide that the suggestion. Creditable service is a § 9901.607(a)(3) clarify how the Department may not establish a separate retention factor covered by Department will provide additional competitive group comprised only of § 9901.607(a)(4). weight to performance as a retention preference eligibles. We did not adopt Commenters noted that factor. The Department will publish these suggestions. The Department § 9901.607(a)(2) erroneously referenced implementing issuances clarifying the makes staffing decisions under subpart 5 CFR 351.504(c) and (d) rather than 5 consideration of performance in RIF F based upon organizational CFR 351.501(c) and (d) of OPM’s RIF competition under subpart F. Other considerations. Consistent with this regulations. We corrected this misprint. commenters requested clarification on premise, § 9901.606 provides that the Commenters were concerned that how the Department will ensure that Department establishes competitive § 9901.607(a)(2) reduces the relative ratings are impartial and objective, as groups based upon employees’ positions weight of veterans’ preference as a well as how an employee may contest without regard to the number of retention factor under subpart F. In fact, a rating within the Department. These employees performing those positions. § 9901.607(a)(2) applies veterans’ concerns are discussed in subpart D. preference with the same retention Section 9901.607—Retention Standing Commenters, including labor weight as under OPM’s current RIF organizations participating in the meet- Section 9901.607 covers ‘‘retention regulations, which are referenced in and-confer process, suggested that standing’’ on a ‘‘retention list’’ under § 9901.607(a)(2). Specifically, under § 9901.607(a)(3) be revised to clarify that subpart F. The Department ranks § 9901.607(a)(2) veterans’ preference is the Department will not always use a employees on a ‘‘retention list’’ on the considered as a retention ranking factor single rating of record to determine the basis of their relative retention standing. immediately after tenure on the same weight of performance upon an This section also covers access by basis as OPM’s regulations consider employee’s retention standing. We agree employees and their representatives to veterans’ preference in the context of with this suggestion. The Department’s the retention list. tenure. implementing issuances covering the Commenters suggested that subpart F A commenter suggested that consideration of performance in RIF clarify the ranking order of the factors § 9901.607(a)(2) be revised to include a competition under subpart F will the Department uses to establish cite to the statutory basis for veterans’ explain how employees will receive retention lists under § 9901.607. In fact, preference in RIF. This suggestion was retention credit for their multiple sections 9901.607(a)(1)–(4) mandate the not adopted. Section 9901.602 states ratings under the Department’s required order and weight of the that, without modification, subpart F personnel system. In a conforming retention factors (i.e., tenure has the applies the RIF and statutory preference change, § 9901.603 includes a definition most weight, creditable service has the requirements mandated by 5 U.S.C. of ‘‘modal rating’’ that the Department least weight). The Department will 3501 through 3503. Also, will use to determine retention credit publish implementing issuances further § 9901.607(a)(2) references back to the for employees who do not have any clarifying the ranking order of the provisions in 5 CFR 351.501(c) and (d) ratings of record under the Department’s retention factors in § 9901.607(a). of OPM’s reduction in force regulations personnel system.

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Commenters suggested that Department uses 5 CFR 351.503 of We agree that clarification is necessary. § 9901.607(a)(3) be revised to provide OPM’s RIF regulations, but without We revised § 9901.608(a)(1)(i) to provide that performance receive the same or no regard to provisions covering additional that in determining the qualifications of greater retention weight than creditable service credit for performance in 5 CFR a higher-standing employee to displace service. This suggestion was not 351.503(c)(3) and (e) of OPM’s a lower-standing employee under adopted. Consistent with the regulations. The Department will subpart F, the Department uses, as Department’s personnel system that publish implementing issuances applicable, 5 CFR 351.702 of OPM’s emphasizes performance, clarifying RIF service credit under retention regulations, or its own § 9901.607(a)(3) provides that subpart F. qualifications, consistent with other performance receives greater weight as a In a clarifying edit, we added requirements in 5 CFR 351.702. The retention factor than creditable service. § 9901.607(a)(5), which provides that Department will publish implementing A commenter suggested that the Department may establish tie- issuances clarifying qualification performance receive less weight under breaking procedures when two or more determinations for displacement within subpart F than veterans’ preference. As employees have the same retention a retention list under § 9901.608(a). We previously noted, §§ 9901.607(a)(2) and standing. This sentence was included in also added § 9901.608(a)(1)(iii) to clarify (a)(3) provide that veterans’ preference § 9901.607(a)(4) of the proposed that a displaced employee must be in is considered as a retention factor before regulations. the same or lower pay band as the performance under subpart F. Commenters, including labor higher-standing employee who Commenters suggested that organizations participating in the meet- displaced him/her. § 9901.607(a)(3) be revised to increase and-confer process, suggested that Commenters suggested that the relative weight of performance over § 9901.607(c) be revised to provide that § 9901.608(a) be revised to clarify veterans’ preference as a retention all employees have access to a retention terminology such as ‘‘status’’ and factor. This suggestion was not adopted. list established under § 9901.607(a)(1). ‘‘undue interruption.’’ The Department Section 9901.607(a)(2) considers We did not adopt this suggestion will publish implementing issuances veterans’ preference on the same basis because § 9901.607(c) provides that clarifying terminology under as under OPM’s regulations determining employees who have received a specific 9901.608(a). RIF retention standing, while written RIF notice have access to a A commenter suggested that § 9901.607(a)(3) provides less weight to retention list in accordance with 5 CFR § 9901.608(a) be revised to require the performance than veterans’ preference 351.505 of OPM’s RIF regulations. Department to provide positive efforts as a retention factor. However, we believe that clarification is that would increase the likelihood of Commenters suggested that subpart F necessary. We revised § 9901.607(c) to higher-standing employees being provide retention credit for performance provide that in allowing access to qualified to displace employees with on the same basis as OPM regulations. retention records, the Department uses lower retention standing. We did not This suggestion was not adopted. The section 5 CFR 351.505 of OPM’s adopt this suggestion. We believe it additional weight for performance as a reduction in force regulations, but would be unfair for the Department to retention factor under subpart F is substitutes ‘‘retention list’’ for pursue a program whose purpose is to consistent with the increased emphasis ‘‘competitive level’’ or ‘‘retention increase the likelihood of one category on performance in the Department’s register.’’ The Department will publish of employees displacing a different new personnel system. implementing issuances clarifying category of employees in a RIF. Commenters, including labor access to retention lists under Commenters suggested that organizations participating in the meet- 9901.607(c). § 9901.608(b)(1) be revised to clarify the and-confer process, were concerned that order in which employees are released § 9901.607(a)(4) excessively decreases Section 9901.608—Displacement, from the retention list. Section the relative weight of creditable service Release, and Position Offers 9901.608(b)(1) provides that, consistent as a retention factor under subpart F. Section 9901.608 covers personnel with the order of retention required by Section 9901.607(a)(4) considers service actions that result in displacement § 9901.607(a), employees with the as the fourth and least important within the retention list or the release of lowest retention standing are released retention factor. Under OPM’s RIF an employee from a retention list under before higher standing employees on the regulations, service is the third most subpart F. A qualified employee reached retention list. important retention factor, while for release from his/her present position Commenters also suggested that performance receives the least weight as because of position abolishment or § 9901.608(b)(2) clarify displacement a factor. Again, the decreased retention displacement by a higher-standing rights involving time-limited positions. weight on service and the additional employee on the retention list may We agree that clarification is necessary. weight for performance are consistent potentially displace a lower-standing We revised § 9901.608(b)(2) to provide with the increased emphasis on employee on the list before separation that under subpart F a competing performance in the Department’s or furlough by RIF. employee may not be released from a performance-based personnel system. A commenter suggested that retention list containing a position held A commenter suggested that subpart F § 9901.608(a) be revised to clarify how by a temporary employee when the clarify ‘‘length of service.’’ Section the Department determines that a competing employee is qualified for the 9901.607(a)(4) provides that employees higher-standing employee is qualified to position under § 9901.608(a)(1)(i). The receive retention credit for creditable displace a lower-standing employee on Department will publish implementing civilian and Armed Forces service on the retention list. Another commenter issuances clarifying release from the basis of 5 U.S.C. 3502(a)(A) and (B), suggested that § 9901.608(a)(1)(i) be retention lists under 9901.608(b). and OPM’s regulations in 5 CFR revised to eliminate a requirement that A commenter suggested that 351.503. However, we believe that the Department only uses 5 CFR 351.702 § 9901.608(b) clarify the procedures that clarification is necessary. We revised of OPM’s retention regulations to the Department uses to break ties in § 9901.607(a)(4) to provide that in determine employees’ qualifications for employees’ relative retention standing. calculating creditable civilian and displacing a lower-standing employee The Department will publish uniformed service under subpart F, the on the retention list under subpart F. implementing issuances clarifying tie-

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breaking procedures in releasing employees under subpart G of part 351 separation option to avoid RIF actions. employees from retention lists. Section of OPM’s RIF regulations. This The Department will publish 9901.607(a)(5) of the final regulations suggestion was not adopted. Section implementing issuances clarifying the covers the Department’s right to 9901.608(d) provides the Department applicability of voluntary RIF establish tie-breaking procedures. with flexibility to restrict RIF actions to separations under § 9901.610. A commenter suggested that organizations and positions directly Section 9901.611—Reduction in Force § 9901.608(b)(3) clarify how the affected by organizational decisions Appeals Department will use exceptions to the such as realignment, reorganization, and regular order of release from the closure. In a related clarification, we Section 9901.611 covers RIF appeals. retention list. We agree that clarification revised § 9901.608(d)(2) to provide that An employee who is reached for a RIF is necessary. We revised the furlough of an employee released action resulting in separation, reduction § 9901.608(b)(3) to provide that in from a retention list is covered by in band, or furlough under temporarily postponing the release of an § 9901.604(b)(3). The Department will § 9901.604(b), and who believes that the employee from the retention list, the publish implementing issuances Department improperly applied subpart Department uses 5 CFR 351.506, clarifying actions following the release F, has the right to appeal to the Merit 351.606, 351.607, and 351.608 of OPM’s of employees from a retention list under Systems Protection Board. Also, RIF regulations, but substitutes the term § 9901.608(d). commenters during the meet-and-confer ‘‘retention list’’ for the term process suggested, as an alternative to ‘‘competitive level’’ where part 351 uses Section 9901.609—Reduction in Force appealing RIF actions to the Board, that term in the four identified sections. Notices employees should instead have the right The Department will publish Section 9901.609 covers the notice to file a grievance. We did not adopt this implementing issuances further that the Department must issue to each suggestion. Section 9901.611(a) clarifying exceptions to the usual order employee before release from the references 5 CFR 351.901 of OPM’s of release under § 9901.608(b)(3). retention list under subpart F. The regulations in providing the same Commenters suggested that Department must issue a specific impartial right to appeal a RIF action § 9901.608(c) clarify whether the written notice a minimum of 60 days under subpart F as provided to an Department will consider employees’ before the employee is reached for employee under OPM’s retention retention standing in offering vacant release from the retention list by a RIF regulations. positions under subpart F. We agree that action (e.g., separation or furlough). For clarification, we revised clarification is necessary. Section Commenters suggested that § 9901.611(a)(3) to provide that an 9901.608(c) provides that the § 9901.609 be revised to provide 120 employee has the right under subpart F Department must use retention standing days written notice. This suggestion was to appeal a furlough of more than 30 in offering a vacant position in the same not adopted. The requirement for a days, as defined in § 9901.604(b)(3). competitive area to an employee minimum 60 days notice of a RIF action Commenters, including labor released from a retention list under is consistent with the requirements of 5 organizations participating in the meet- subpart F. We revised § 9901.608(c) to U.S.C. 3502(d)(1)(A) for OPM’s and-confer process, suggested that clarify that the Department must use regulations published in 5 CFR § 9901.611(a) be revised to provide a retention standing when offering a 351.801(a)(1). The Department will right to appeal a RIF action under vacancy in the same competitive area to publish implementing issuances subpart H of part 9901 (‘‘Appeals’’). an employee who is competing on the clarifying the content of RIF notices This suggestion was not adopted. retention list under § 9901.608(a)(1) issued under § 9901.609. Subpart H of part 9901 only covers because of either position abolishment In a clarifying change consistent with appeals of certain adverse actions taken or displacement by an employee with management flexibilities provided by 5 under subpart G of part 9901 (e.g., higher retention standing. The CFR 351.801(b), § 9901.609 is revised to removals, suspensions for more than 14 Department will publish implementing provide that when the Department days, furloughs of 30 or less consecutive issuances clarifying offers of vacancies applies subpart F because of days, and reductions in pay band—or a under § 9901.608(c). circumstances not reasonably comparable reduction). The procedures A commenter asked whether a foreseeable, the Secretary, at the request in subpart H are appropriate for released employee who is offered a of a component head or designee, may reviewing an adverse action appeal (i.e., vacancy under § 9901.608(c) has any approve a RIF notice period of less than an appeal of a personnel action that the potential rights to pay retention. The 60 days. The notice period must cover Department took for cause). In contrast, Department will publish implementing at least 30 days before the date of release § 9901.611(a) provides for the right to issuances clarifying employees’ from the retention list. The Department appeal a RIF action (i.e., an appeal of a entitlements to pay retention under will publish implementing issuances personnel action that the Department § 9901.608(c). However, in a conforming covering a RIF notice period of less than took for an organizational reason) on the change, we have revised § 9901.355 of 60 days under § 9901.609. same basis as under OPM’s RIF subpart C to provide additional regulations. information on pay retention. Section 9901.610—Voluntary Commenters suggested revision of Commenters, including labor Separation § 9901.611(a) to provide for expedited organizations participating in the meet- Section 9901.610 covers voluntary Board review of appeals under subpart and-confer process, suggested that separation from the Department as a RIF F. This suggestion was not adopted. § 9901.608(d) be revised to provide that, action. Under this option, the Section 9901.611 provides for the right in lieu of RIF separation or furlough, an Department may allow an employee to to appeal a RIF action to the Board using employee released from a retention list volunteer for separation from the service the same procedures as an appeal under would have potential displacement by reduction in force when the action OPM’s regulations. rights to positions held by lower- avoids the RIF separation of another Commenters, including labor standing employees on other retention employee. organizations participating in the meet- lists similar to ‘‘bump’’ and ‘‘retreat’’ One commenter suggested that the and-confer process, suggested revision regulations provided to released Department use the voluntary of § 9901.611(b) to provide for the right

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to appeal to the Board, or another third- provide further clarification, guidance, fact that the concept of MROs is party appellate body, an action taken and instruction on these regulations retained. under internal Department placement through implementing issuances. It is Section 9901.704—Coverage programs. This suggestion was not also consistent with the continuing adopted. Section 9901.611(b) does not collaboration process described in Section 9901.704 describes the types provide the right to appeal an internal § 9901.106 which implements 5 U.S.C. of actions and employees covered by placement action (including a 9902(f)(1)(D). and excluded from coverage under the subpart. Commenters, as well as labor placement under the Priority Placement Section 9901.702—Waivers Program). An employee who believes organizations participating in the meet- that the Department failed to properly This section specifies the provisions and-confer process, recommended that effect an internal placement action may of title 5, U.S. Code, that are waived for employees who are serving in-service contest the action through a grievance or employees that are covered by the NSPS probationary periods be given appeal other remedy available for the review of adverse action system established under rights. We have clarified that employees the Department’s internal staffing subpart G. During the meet-and-confer who are serving an in-service decisions. process, the participating labor probationary period will have appeal organizations recommended that this rights if they are not returned to a grade Subpart G—Adverse Actions provision be deleted. We do not agree or band and pay rate no lower than that General Comments with this recommendation because it is held before the in-service probationary inconsistent with the enabling period. The labor organizations, during Many commenters, including labor legislation, which allows waiver of the meet-and-confer process, also organizations participating in the meet- certain provisions of title 5, U.S. Code, recommended that we add a provision and-confer process, objected to the and the creation of new adverse action stating that employees who are provisions in subpart G. They felt that procedures. We have made no changes excluded from the enabling legislation the proposed regulations would to this section. are not covered by this provision. Such adversely impact due process rights, a provision is unnecessary because Section 9901.703—Definitions discrimination and whistleblowing employees excluded from coverage claims, and the ability to retain staff. We This section defines terms relevant to under the enabling legislation are not disagree. Under the enabling legislation, this subpart. The labor organizations covered by any provision of the NSPS DoD is prohibited from waiving or participating in the meet-and-confer regulations. modifying any provision relating to process recommended that the We received many comments prohibited personnel practices or merit definition of ‘‘adverse action’’ be suggesting we add reduction in force system principles, including reprisal for amended to include ‘‘demotion’’ and (RIF) actions to coverage. We believe the whistleblowing or unlawful exclude the words ‘‘or other comparable NSPS appeal system should be limited discrimination. The regulations reduction.’’ We disagree. The term to removals, suspensions for more than therefore do not modify these ‘‘demotion’’ is not used in the 14 days, furlough for 30 days or less, protections in any way. The enabling regulations. The concept of demotion is and reduction in pay or pay band (or legislation also requires DoD to ensure covered through reduction in pay band comparable reduction) as set forth in 5 that employees are afforded the (or comparable reduction). The term U.S.C. 9902(h)(4)(A). Employees subject protections of due process, which we ‘‘comparable reduction’’ is taken to RIF actions will continue to have the have done. In accordance with U.S. directly from the enabling legislation. same appeal rights as they do today and Supreme Court decisions, the These labor organizations also that is made clear in subpart F of the regulations ensure employees notice, a recommended that a definition be added regulations. Commenters recommended right to reply, a final written decision, for ‘‘band.’’ Commenters, and labor clarification as to whether adverse and a post-decision review when the organizations during the meet-and- actions resulting from agency suitability Secretary proposes to deprive them of confer process, recommended that a determinations are excluded. We constitutionally protected interests in definition be added for ‘‘day.’’ We agree believe such clarification is unnecessary their employment. Although we have and have added definitions for those since agency suitability actions, made changes to the proposed terms. A definition of ‘‘reduction in including removals, are taken under 5 regulations, due process and other legal pay’’ has also been added to clarify that U.S.C. chapter 73. Suitability actions protections are preserved as required by nonreceipt of a pay increase (such as a under chapter 73 are by definition not Congress, and we do not believe the rate range adjustment, supplemental adverse actions. Moreover, the enabling regulations in this subpart will have any adjustment, or a performance pay legislation expressly excludes from its negative effect on retention efforts. increase) does not constitute a reduction coverage suitability actions taken under in pay and therefore is not an adverse 5 U.S.C. chapter 73. See 5 U.S.C. Section 9901.701—Purpose action. 9902(d)(2). Other commenters This section outlines the purpose of During the meet-and-confer process, recommended that term employees be this subpart and provides for the labor organizations also suggested that excluded from coverage. The development and publication of DoD the definitions of ‘‘indefinite Department wishes to maintain the implementing issuances. During the suspension,’’ ‘‘pay,’’ and ‘‘suspension’’ status quo with respect to term meet-and-confer process, the be modified. Since the definitions for employees’ appeal rights. One participating labor organizations stated these terms are essentially identical to commenter suggested that the that DoD does not have the authority to current statutory and regulatory movement of an employee to a lower prescribe implementing issuances to definitions, we see no basis for making pay band not be considered an adverse carry out the provisions of this subpart. the suggested modifications. Finally, action under NSPS when such We disagree. The enabling legislation labor organizations, as well as movement is the result of a less than expressly states that the Secretary and commenters, recommended the deletion fully successful performance rating. We the Director will jointly prescribe of ‘‘mandatory removal offenses’’ disagree. The enabling legislation regulations for the system. This carries (MROs). We disagree because of that identified a reduction in pay band as an with it the authority for the Secretary to term’s relevance to this section and the appealable action.

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Section 9901.711—Standard for Action be (1) identified in advance as part of minimum period of time for advance This provision describes the standard the Department’s implementing notice to the employee. We have further for taking an action against an employee issuances, (2) publicized upon modified this section to clarify that as ‘‘for such cause as will promote the establishment via notice in the Federal notice of proposed adverse action or efficiency of the service.’’ During the Register, and (3) made known to all opportunity to reply are not required in meet-and-confer process, participating employees on a periodic basis, as the event of a furlough of 30 days or less labor organizations, as well as most appropriate, through means determined without pay due to unforeseeable commenters, agreed with this provision. by the Department. Examples of circumstances. This provision also shortens the However, some commenters stated that potential MROs are provided under Major Issues: Adverse Actions and minimum notice period from 7 to 5 days this standard provides management too Appeals. The offenses that may be in situations where there is reasonable much discretion. We have retained this identified as MROs will be so egregious cause to believe a crime has been long-standing and well established as to have a direct and substantial committed. Commenters and labor ‘‘efficiency of the service’’ standard. adverse impact on the Department’s organizations participating in the meet- Section 9901.712—Mandatory Removal national security mission, and therefore and-confer process recommended Offenses would not properly be subject to retaining the current crime provision notice period of 7 days. We believe that This provision gives the Secretary the mitigation except in unusual 5 days is the appropriate amount of time authority to identify Mandatory circumstances as determined by the to allow for notice and reply in such Removal Offenses (MROs), which are Secretary. Employees who commit such situations given the need to take action offenses that have a direct and offenses must be removed from the in these situations. Commenters substantial impact on the Department’s Department and the Federal service. The expressed concern over the lack of an national security mission. An employee support of the national security mission outweighs any loss of flexibility in the explicit requirement that the who commits such an offense must be system. We disagree that it is Department have actual knowledge of a removed from Federal service, unless inappropriate for the Department to criminal investigation or criminal the Secretary determines in his or her have the ability to take a subsequent charges being filed against an employee sole and exclusive discretion that a action if the offense is found to not be before imposing the 5-day notice period. lesser penalty is appropriate. an MRO. We believe that if an Commenters also recommended that Commenters as well as participating employee’s misconduct is found to ‘‘reasonable cause’’ be defined. The labor organizations during the meet- qualify as an MRO, it does not mean criteria under which the crime and-confer process stated that this that the misconduct should not be provision may be invoked is well provision should be deleted in its addressed. For misconduct amounting established in current statute, entirety because in their view, the to an MRO, mitigation of penalties, regulation, and case law and was not establishment of MROs exceeds DoD’s review of notice letters, and designation changed in the proposed regulations. authority under the enabling legislation of offenses must be at the highest levels We do not believe it necessary to define and is open to abuse. Some commenters of the Department to prevent abuse, reasonable cause in these regulations. stated that MROs should be defined and ensure judicious use of the authority, Each case is unique and considerable subject to public comment through the and provide maximum transparency for guidance is provided in existing case formal rule-making process. employees. In light of the above, we law. Commenters expressed concern that the believe that MROs need not be subject Labor organizations during the meet- Secretary can issue and change the list to public comment through the formal and-confer process recommended at will. Some commenters stated that rule-making process. They will, including a requirement for DoD to the Secretary should not be the only however, be subject to continuing provide employees copies of all mitigating authority for MROs and that collaboration with employee evidence including exculpatory his non-reviewable discretion is representatives. This ensures evidence during the notice period. inappropriate for a political appointee. transparency in the process of While the regulations do not require In addition, commenters stated MROs establishing MROs. that copies of evidence be delivered to do not leave any room for flexibility the employee, the Department will based on individual circumstances or Section 9901.714—Proposal Notice ensure that the employee is informed of mitigating factors and takes the This provision outlines procedures for his or her right to review the flexibility away from DoD supervisors. issuing proposal notices, including a Department’s evidence supporting the Other commenters expressed concern shorter advance notice period of at least proposed action. There is no need to that if an MRO offense is not sustained, 15 days. Commenters and labor specifically require DoD to make an employee can still be charged with organizations participating in the meet- exculpatory evidence available to the a non-MRO offense based on the same and-confer process recommended employee during the notice period since facts. retaining the current 30-day written all evidence relied upon by the We disagree that the establishment of notice of a proposed adverse action. decision-maker must be made available MROs exceeds the Department’s Other commenters argued that due to the employee. authority. The enabling legislation process is denied because of the Labor organizations during the meet- expressly provides authority to waive potential inability to gather and review and-confer process also recommended the current statutory provision evidence within the proposed time modifying the proposed regulations governing adverse action in establishing frame. We disagree that the advance with regard to the status of an employee the HR system. Although no MROs have written notice period should be 30 days. during the notice period. Under current been established, the provision that The shortened notice supports the NSPS law and regulation, an employee is allows for the establishment of MROs goal of streamlining the adverse action normally entitled to be in a pay status must be retained to support the vital process and provides adequate time for during the notice period. A Component mission of the Department. We have consideration of evidence. We have may place an employee in a different revised the proposed regulations to clarified in the regulations that the 15- position or even in a non-duty status, provide, at a minimum, that MROs will day notice period represents the but the employee must continue to be

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paid. The labor organizations and labor organizations participating suggested that we clarify what is meant recommended that the Department’s during the meet-and-confer process also by a ‘‘reasonable amount of official authority to assign an employee to other recommended deletion of the time’’ to review the evidence. duties or to place the employee in a requirement that a reply period run Commenters stated the regulations do non-duty pay status should be concurrently with a notice period. not discuss whether the employee’s substantially limited, even if the We disagree that the reply period representative will be allowed official Department determines that the should be increased and believe the time to assist the employee. We disagree employee’s continued presence would proposed minimum 10-day reply period that the regulations do not allow duty have an adverse impact on the (or 5 days when the ‘‘crime provision’’ time for the employee to prepare a Department’s mission. The labor is invoked) is ample time for an response. The employee may receive organizations recommended deleting employee to prepare a response. We also official time to review the Department’s ‘‘the Department’s mission’’ as a believe that such a period provides supporting evidence and to furnish possible justification for assigning an sufficient time for a manager to consider affidavits and other documentary employee to a different status or an employee’s reply. Furthermore, both evidence, if the employee is otherwise position. We do not believe such the 15-day notice period and the 10-day in an active duty status. With regard to modification is appropriate. Deleting reply period represent minimums and an employee’s representative being ‘‘the Department’s mission’’ as a reason may be extended as necessary at the allowed official time, the proposed for reassigning an employee to other Department’s discretion. We believe that regulation is essentially the same as duties or placing him or her in a non- the reply period should run current law. duty pay status would adversely impact concurrently with the notice period. Section 9901.716—Decision Notice the Department’s flexibility in This is consistent with the goal of accomplishing the mission. streamlining the procedure and is This provision outlines procedures for Commenters stated the Department unchanged from current law. The reply issuance of decision notices. During the should not be allowed to require an period does end prior to the end of the meet-and-confer process, participating employee to use personal leave during notice period; however, this is necessary labor organizations gave alternative the notice period. We disagree with the to allow time for managers to consider proposals regarding the delivery of the labor organizations’ recommended the reply and make a timely decision. decision notice to the employee. One deletion of language in this area. We do Commenters and labor organizations proposal recommended providing the not envision requiring an employee to participating in the meet-and-confer decision notice to the employee on or use personal leave during a notice process requested clarification of before the effective date and deleting all period; however, an employee may provisions in this section which refer to language providing guidance if unable voluntarily elect to request leave. If, in an employee being represented by an to deliver the notice in person. The the exceptional case, the Department individual ‘‘at the employee’s expense.’’ other proposal recommended delivery places an employee on personal leave The circumstances under which the by electronic mail and certified mail, involuntarily, such action would employee will be responsible for paying return receipt requested if unable to constitute an adverse action and be for his or her own representation (e.g., deliver the notice in person. During the subject to the procedural requirements non-Federal employee representative) meet-and-confer process, participating of subpart G and, depending on the facts were clarified during the meet-and- labor organizations also stated that the of the case, could potentially be confer process and are reflected in the Department had no legal authority to appealed under subpart H. This is final regulations. They also mail a decision letter to the last known consistent with current law and the recommended deletion of the provision address. We believe that in proposed language is not intended to that covers disallowing an individual to circumstances when the Department is modify the status quo. serve as the employee’s representative, unable to deliver the decision notice in stating that the exclusion of person, there must be guidelines Section 9901.715—Opportunity to Reply representative standard is too broad and provided to ensure all parties This provision outlines procedures should not be within the discretion of understand their responsibilities; related to the opportunity to reply and the Department. We disagree with this therefore, we did not delete the provides that employees be granted at recommendation because such guidance contained in the subsection. least 10 days to reply (or 5 days when procedures are necessary for the orderly However, in response to discussions there is reasonable cause to believe the and fair resolution of the action. We with labor organizations during the employee has committed a crime). disagree that the standard is too broad, meet-and-confer process and public Commenters and labor organizations as the criteria are specifically related to comments received, the language was participating in the meet-and-confer the Department’s mission. modified to broaden delivery methods process recommended employees be During the meet-and-confer process, to include mail, overnight or express provided at least 30 days to reply the participating labor organizations delivery service or the use of a instead of 10 days, and at least 7 days also recommended extending the reply messenger service. The regulations will when there is reasonable cause to period when the Department is retain the language that the Department believe the employee has committed a considering an employee’s medical will deliver the decision letter to the last crime for which a sentence of condition in regard to a proposed known address of record, if unable to imprisonment may be imposed. They adverse action. We disagree that deliver in person, as the method of last believe the minimum 10-day (or 5-day, extending the reply period in such resort. under the crime provision) reply period situations is necessary in regulation. is not sufficient time for the employee The 10-day reply period set forth in Section 9901.717—Departmental to provide a response and that the § 9901.714 represents a minimum and Record shortened time period limits managers’ may be increased at the Department’s This provision describes the ability to fully consider the employee’s discretion. Departmental Record. During the meet- reply. Other commenters stated the Commenters stated that regulations do and-confer process, participating labor regulations should allow for the not allow duty time for the employee to organizations recommended that we extension of time limits. Commenters prepare a response and one commenter amend this provision to be consistent

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with 5 U.S.C. 7513(e) by deleting the waivable the current statutory interpreted in a way that recognizes the requirement to retain documents requirements for the appeals process. critical national security mission of the pursuant to the General Records Section 9902(b)(5) also states that the Department. Each provision must be Schedule and the Guide to Personnel system established under section construed to promote the swift, flexible, Recordkeeping. Additionally, they 9902(a) is not to be limited by any law effective day-to-day accomplishment of recommended that this provision be or authority that is waived in the NSPS this mission as defined by the Secretary; amended to require the retention of regulations. The modifications in this DoD’s and OPM’s interpretation of exculpatory evidence and any material subpart were made following NSPS regulations must be accorded relevant to the action. Some consultation with MSPB officials, as great deference. During the meet-and- commenters stated that the Department called for in the enabling statute. confer process, the participating labor should retain any information that the In addition, some commenters argued organizations recommended that we employee requests to be retained as a that any modification of current rules delete the requirement that the MSPB part of the official record of any adverse regarding an employee’s ability to make consider DoD’s mission when applying action. We did not revise this provision. and have an allegation of discrimination legal standards not inconsistent with This provision establishes sound reviewed was beyond the authority of this subpart. Some commenters also recordkeeping procedures which are NSPS. We believe these regulations do recommended DoD and OPM not be substantively the same as those in 5 not impermissibly modify existing EEO given deference in their interpretations U.S.C. 7513(e) except that the proposed procedures and fully retain the right of of NSPS regulations. provision provides more guidance employees to have allegations of The authority to require MSPB to give regarding recordkeeping procedures. discrimination fully and fairly reviewed deference to DoD’s and OPM’s Any and all directly relevant evidence and adjudicated. Under these interpretation of NSPS regulations will be retained regardless of whether regulations, employees can raise derives from 5 U.S.C. 9902, including the employee requests the Department allegations of discrimination as part of section 9902(h)(3), which authorizes do so. One commenter suggested that any appeal or grievance of an adverse establishment of legal standards. It is notation be made in an employee’s action and, if dissatisfied with the final also based on longstanding standards of official records in cases where an DoD decision, obtain full MSPB and legal interpretation, which provides that employee under investigation for EEOC review of such allegations. considerable weight be given to an misconduct resigns prior to issuance of Commenters also stated that the agency’s interpretation of its own a proposal notice. The commenter current personnel system already allows regulations. Accordingly, we have not argued that such documentation could separation or removal to be effected modified this section. We believe that prevent the future employment of an rapidly if in the interest of national the Department’s and OPM’s employee who might present a security security under 5 U.S.C. 7532. Section interpretation of the regulations in part risk. We do not believe such a notation, 7532 is limited in its scope regarding 9901 must be given great deference to based on an ongoing investigation, the basis for action and employee ensure that appropriate recognition is would be appropriate. appeal channels; therefore we don’t given to accomplishment of the believe it appropriately addresses the Subpart H—Appeals Department’s national security mission broad range of offenses and penalties when appeals decisions are made. Also General Comments that are necessary to ensure the well during the meet-and-confer process, the Subpart H modifies current MSPB disciplined workforce needed to carry participating labor organizations appellate procedures for certain adverse out the Department’s mission. recommended that we modify the actions taken under subpart G. Such Finally, many commenters objected to language of this section to include changes include establishment of the Department’s review of AJ decisions, references to 5 U.S.C. 2301 and streamlined appellate procedures, questioning the neutrality and 9902(h)(2) and (3). The suggested providing for Department review of impartiality of the review process, as additional citations are not necessary as initial decisions, limited discovery, well as its negative impact on due the law and citations noted in this summary judgment, and expedited process. While the Department has the subpart adequately provide for all timeframes. Commenters, including authority to review initial AJ decisions, requirements. that authority will be limited to those labor organizations participating in the Section 9901.803—Waivers meet-and-confer process, objected to the decisions for which either party has provisions in subpart H, stating that timely filed a request for review. The This section specifies the provisions DoD does not have the authority to Department may remand, modify or of title 5, U.S. Code, that are waived for make changes in MSPB appellate overturn the AJ’s decision only based on employees covered by the NSPS appeals procedures. They argued that there was the criteria in § 9901.807(g)(2)(ii)(B) of process established under subpart H. no evidence that current procedural these final regulations. This section also specifies that the protections or the decisions of an We will continuously monitor and appellate procedures in subpart H arbitrator or MSPB jeopardize national evaluate the appeals process to ensure replace those of the Merit Systems security/defense and there is no need to that these changes are fair. Protection Board (MSPB) to the extent improve efficiency of the MSPB process. Other Comments on Specific Sections of MSPB’s procedures are inconsistent They asserted that it is not necessary for Subpart H with these regulations, and that MSPB MSPB to provide greater deference to must follow these regulations until it DoD than to any other agency. We Section 9901.802—Applicable Legal issues conforming regulations. Some disagree. Section 9902(h) expressly Standards and Precedents commenters recommended we delete authorizes the Secretary to establish an These regulations state that in the reference to modification of 5 U.S.C. appellate process for employees covered applying existing legal standards and 7702 stating this was beyond the by NSPS, including establishing legal precedents, MSPB and arbitrators are authority of NSPS. During the meet-and- standards and procedures, including bound by the legal standard set forth in confer process, the participating labor standards for applicable relief. In § 9901.107(a)(2). Section 9901.107(a)(2) organizations also voiced concern that addition, section 9902(d) makes provides that these regulations must be NSPS does not give DoD the authority

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to waive or modify discrimination enabling legislation. ‘‘Demotions’’ in in the final rules and ‘‘[9901.807(a)]’’ is complaint procedures. NSPS are covered by the concept of the old designation in the proposed The Department’s authority to modify reduction in pay band (or comparable rules. Some commenters recommended 5 U.S.C. 7702 is found in 5 U.S.C. reduction), which is covered under that the entire section be deleted, stating 9902(h), which authorizes the § 9901.805(a). DoD does not have the authority to establishment of a new appeals process. One commenter recommended that make the changes set forth in this Consistent with section 9902(h)(7), we we specify when appeal rights are section. We disagree. Section 9902(h) may modify or adapt the mixed case granted or denied based on failure to expressly authorizes the Secretary to process in these regulations, provided maintain a condition of employment establish an appeals process. In employee rights and remedies are and explain why appeal rights vary addition, § 9902(d) expressly authorizes preserved. The final regulations modify depending on whether the condition of the waiver of the current statutory some of the procedures for processing employment was specified at the time of appeals process. Commenters noted that mixed cases, while preserving the rights appointment or subsequent to § 9901.807 does not include a provision and remedies as required by appointment. The applicability of for MSPB to re-open a decision of its § 9902(h)(7). These rights include the appeal rights when an adverse action is AJs. This is consistent with the enabling right to seek EEOC review of an MSPB based on failure to maintain a condition legislation which limits MSPB review to decision in a mixed case pursuant to 5 of employment requires an the Department’s final decisions which U.S.C. 7702(b), which has not been individualized assessment of an have been appealed to the Board and modified. They also preserve judicial employee’s status and the specific facts thus does not authorize Board reopening review in such cases. Consistent with of the case. It is not possible to specify of initial AJ decisions. Adequate and the enabling legislation, these a broad rule that would cover all such appropriate review of AJ decisions will regulations assure due process and actions. result from the Request for Review appropriately streamline the procedures Section 9901.806—Alternative Dispute (RFR) and Petition for Review (PFR) of the appeals process dealing with Resolution processes. mixed cases. This section of the proposed Section 9901.807(a)(1) [9901.807(a)] Section 9901.804—Definitions regulations encouraged the use of There was no change in this During the meet-and-confer process, alternative dispute resolution (ADR) provision. It was merely redesignated. the participating labor organizations methods to address employee-employer recommended that we amend or delete disputes arising in the workplace, Section 9901.807(a)(2)(i) a number of definitions, such as including those which may involve [9901.807(b)(1)] ‘‘request for review’’ and ‘‘mandatory disciplinary actions. The proposed There was no change in this removal offense.’’ We did not accept regulations also recognize that these provision. It was merely redesignated. these recommendations because the methods may be subject to collective This provision of the proposed proposed changes would alter the bargaining to the extent permitted by regulations is introductory in nature. essence of underlying procedural subpart I of part 9901. During the meet- The actual changes are set forth in later concepts that are critical to the and-confer process, participating labor provisions. While there was discussion successful implementation of NSPS. organizations endorsed the concept. during the meet-and-confer process and Commenters endorsed the concept of Section 9901.805—Coverage comments on the system elements, we ADR and urged a stronger statement on will discuss those comments in the This section of the proposed the use of ADR. Commenters suggested applicable sections. regulation provided that the appeals that we establish ombudsman offices at process covers employee appeals of each component in order to follow the Section 9901.807(a)(2)(ii) certain adverse actions taken under ‘‘best practices’’ noted elsewhere by the [9901.807(b)(2)] subpart G. Commenters and labor Government Accountability Office, and This provision provides that the AJ organizations participating in the meet- to facilitate resolution of disputes at the will adjudicate appeals and deliver his and-confer process suggested we add lowest possible level. We believe that or her decision to each party and to reduction in force (RIF) and demotions the proposed regulations adequately OPM. During the meet-and-confer as covered actions. Commenters also stress the importance of ADR and have process, participating labor recommended that suspensions of 14 made no changes to this section. organizations recommended that NSPS days or less be a covered action. processing rules be deleted and that the Section 9901.807—Appellate Commenters, as well as labor full MSPB have overall and exclusive Procedures organizations participating in the meet- authority in adjudicating appeals. We and-confer process, stated that This section established streamlined disagree. As written, the regulations exclusion of RIF actions from NSPS appellate procedures and provided for meet the goals of ensuring appropriate coverage under the NSPS appeals such things as Department review of deference to DoD’s decisions and process contradicts § 9901.611 which initial decisions, limited discovery, penalty determination in adverse states that RIF actions are appealable to summary judgment, and expedited actions and streamlining the way such the MSPB under 5 CFR 351.901. We timeframes. Commenters and labor cases are handled while continuing to disagree that these are contradictory. organizations participating in the meet- preserve and safeguard employee due The provisions indicate that RIF actions and-confer process stated that this process protections. are not included as appealable actions section of the proposed regulations was under NSPS but are independently not organized well and was difficult to Section 9901.807(a)(3) [9901.807(e)] appealable to the MSPB. We believe the follow. We agree and have reorganized This provision allows OPM to NSPS appeal system should be limited the material as indicated below with the participate or intervene in the appeal at to those actions set forth in the enabling previous section designation in any time it believes that an erroneous legislation. Inclusion of additional brackets. For example, ‘‘9901.807(a)(1) decision may result which will have a actions (such as suspensions of 14 days [9901.807(a)]’’ indicates that substantial impact on civil service law, or less) goes beyond the intent of the ‘‘9901.807(a)(1)’’ is the new designation rule, regulation or policy directive.

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During the meet-and-confer process, of their responsibilities. For purposes of the limits are arbitrary, placing the participating labor organizations stated these regulations, we believe the employee at a disadvantage. that this provision should be deleted. proposed language adequately covers Commenters stated the regulations are We do not agree with the the disqualification issue. unfair, hamper due process, and limit employee defense. We believe these recommendation, as we believe this Section 9901.807(b) [9901.807(k)(4)] provision is consistent with current law limits will usually allow adequate and is necessary for OPM to carry out This provision allows the AJ to methods for discovery of evidence, are its mission. suspend processing a case only if jointly fair, and do not violate due process. requested by the parties. During the Additionally, we have clarified in these Section 9901.807(a)(4)(i) and (ii) meet-and-confer process, participating regulations that the AJ may grant [9901.807(g)(1) and (2)] labor organizations recommended that a additional discovery for necessity and There were no changes in these joint case suspension request good cause. One commenter requested provisions. They were merely requirement be deleted. Commenters that we clarify whether the new redesignated. recommended allowing the AJ to limitations on discovery replace or suspend the case if a single party shows Section 9901.807(a)(5) [9901.807(j)] augment the existing motion to compel good cause since appellants might need process. To the extent existing rules on There was no change in this extra time to hire an attorney or locate discovery, including provisions provision. It was merely redesignated. witnesses. We believe the proposed regarding motions to compel process, Section 9901.807(a)(6) [9901.807(k)(1)] regulations provide sufficient time to are inconsistent with these new prepare a case, provide an appropriate limitations on discovery, the existing This provision sets the time limit for means to suspend a case, and comport provisions are modified. Another an employee to file an initial appeal with the goals of NSPS. No changes commenter requested that we limit the through the NSPS appeal system at 20 have been made to this section. number of all requests for production to days. Commenters noted that EEOC a total of 50 per case. The regulations regulations provide complainants 30 Section 9901.807(c)(1) and (2) [9901.807(i)(1) and (2)] already limit the number of requests for days to file an appeal with the MSPB production to 25 per pleading. However, after agency decision in mixed cases. These provisions discuss settlements. the AJ may grant a party’s motion for Other commenters and labor They prohibit the presiding MSPB AJ additional discovery upon a showing of organizations during the meet-and- from requiring settlement discussions. necessity and good cause. We believe confer process expressed concern Where the parties agree to participate in that this provides appropriate limits on because the employees were given less formal settlement discussions, these requests for production while providing time in the appeal process. In regard to discussions will be conducted by an an avenue for additional discovery if the comments on EEOC regulations, we official other than the presiding AJ. appropriate. Therefore, we choose not to note that the 30-day period provided in During the meet-and-confer process, adopt the suggestion. EEOC regulations simply reflects the participating labor organizations Commission’s adoption of the time limit recommended deletion of Section 9901.807(e)(1), (i), (ii), and (iii) provided in the Board’s current § 9901.807(i)(1). Commenters were in [9901.807(d)(1), (i), (ii), and (iii)] regulations. favor of settlement discussions; These provisions describe the however, some believe that the Section 9901.807(a)(7) [9901.807(k)(2)] standard of proof, which must be met by proposed regulations do not encourage the Department for a decision to be This provision covers disqualification such discussions. Some commenters sustained. Preponderance of the of a party’s representative at any time stated that settlement discussions being evidence is the single standard of proof during the appeal process. During the conducted by the presiding AJ allows under NSPS. Commenters have stated meet-and-confer process, participating the AJ latitude in this area to facilitate the burden of proof for employees has labor organizations stated that this settlement and eliminate additional been increased; however, this is provision should be deleted. formal settlement procedures. The inaccurate. The only change in the level Commenters stated it was not necessary regulations do encourage settlement; of proof is that the regulations adopt a to provide for procedures to disqualify however, we believe strongly that single burden of proof—preponderance a party’s representative. Some settlement should be completely of the evidence—for cases based on commenters expressed concern that voluntary and based on the parties’ performance and/or misconduct. (Under there are no listed criteria for individual interests. Also, we believe current law, agencies must only meet a disqualification. We believe this that settlement proceedings should be substantial evidence burden of proof in provision is necessary in order to ensure conducted by an official who is not performance cases taken under chapter an orderly and fair adjudication. adjudicating the case to avoid actual or 43 of title 5. This is a lower burden than Decisions regarding disqualification will perceived conflicts of interest on the preponderance of the evidence.) The be at the discretion of the AJ and should part of MSPB adjudicating officials. We burden remains the same for an be consistent (to the degree not have made no change in this section. appellant. Other commenters stated that inconsistent with these regulations) the differences between conduct and with current Board rules at 5 CFR Section 9901.807(d)(1), (2), and (3) performance should be acknowledged 1201.31(b) which provide criteria under [9901.807(k)(3), (i), (ii), and (iii)] by maintaining the previous standard which a representative may be These sections modify discovery (‘‘substantial evidence’’) for disqualified. One commenter requested procedures by placing limits on the performance cases. We do not believe that we clarify that Department extent of discovery. During the meet- the differences warrant different representatives will avoid the and-confer process, participating labor standards and note that under current appearance of conflict of interest, but organizations stated that the limits are title 5 provisions, actions taken under may not be disqualified solely on the too restrictive and may be easily abused. chapter 75 based on unacceptable basis of having advised management on Commenters stated the limits would performance are subject to the higher the processing of underlying matters prevent adequate methods to gather standard of proof. The single where such advice was within the scope evidence necessary for the case and that (‘‘preponderance’’) standard for all

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cases, whether taken for reasons of inadequate time for case preparation, appealable under 5 U.S.C. 7701 or performance, or conduct, or a settlement discussions, and discovery, subpart H are bound by the rules in part combination of both, simplifies the and fail to take into account 9901 (which include the standard for appeals process and assures consistency unavoidable witness unavailability. mitigation), we have deleted the without compromising fairness or Other commenters suggested that this references to arbitrators in burdening the employee. No changes section be modified to require AJs to § 9901.807(f)(2) as superfluous. The have been made to these provisions. issue decisions within 30 or 45 days of standard has been revised to preclude the last day of a hearing, or the last mitigation except when the action is Section 9901.807(e)(2) [9901.807(k)(5)] written response to a summary ‘‘totally unwarranted in light of all This provision covers the AJ’s ability, judgment motion. We did not revise this pertinent circumstances.’’ This standard when some or all materials facts are not provision as we believe the 90-day time is similar to that recognized by the in dispute, to issue an order to limit the frame provides ample time for the AJ to Federal courts and is intended to limit scope of the hearing or issue a decision make a fair decision and for appropriate mitigation of penalties by providing without holding a hearing. During the pre-hearing and witness arrangements. deference to an agency’s penalty meet-and-confer process, participating The new time frame also facilitates the determination. The Department has labor organizations stated that they efficient and expeditious resolution of statutory authority to establish new accepted the use of summary judgment an appeal without impairing due legal standards. (See 5 U.S.C. where the facts of the case are not in process protections. 9902(h)(2).) In this case, the Department dispute; however, they recommended is electing to adopt a legal standard that Section 9901.807(f)(2)(i)–(v) the AJ not be able to render such a meets the need of the Department by [9901.807(k)(6)] decision on his or her own initiative. ensuring deference is provided to the They also recommended that credibility These provisions cover mitigation of a Department’s penalty determinations determinations should not be made penalty and require great deference to along with the requirement that AJs give absent a hearing. Commenters stated the Department’s penalty determination. consideration to the Department’s that the burden of proof for the While mitigation is allowed, it is national security mission. The employee has been increased before the allowed under a limited standard. The Department bears full accountability for employee is allowed a hearing. Other labor organizations participating in the national security; therefore, it is in the commenters stated a hearing should be meet-and-confer process objected to the best position to determine the most held if a material fact is in dispute and deference being shown to the appropriate penalty for misconduct or there is a credibility question. Some Department in penalty determination unacceptable performance. In the past, commenters also stated summary and the wholly without justification MSPB has exercised considerable judgments have not worked in other mitigation standard. They further stated latitude in modifying agency penalties, forums. Additionally, there were that the proposed language placing a sometimes to the detriment of DoD’s concerns that the employee entitlement standard for review on the full MSPB is mission. The MSPB AJ and arbitrator to a hearing has been diminished. We not permissible and stated that the fact may still mitigate penalties for all types did not revise this provision. We believe finder or reviewing entity should of offenses, except mandatory removal that the AJ should have the authority to consider the factors as set forth in offenses. The intent is to restrict the rule in this area on his or her own Douglas v. VA, 5 MSPR 280, 305–06 breadth of their discretion to mitigate initiative when some or all material (1981), in determining whether the penalties to only those situations where facts are not in dispute. Allowing proposed penalty is appropriate. We the penalty is totally unwarranted in summary judgment when no material also received numerous comments light of all pertinent circumstances. facts are in dispute eliminates the expressing concern regarding the When mitigating a penalty, MSPB AJs requirement for unnecessary and time- mitigation standard of wholly without and arbitrators must apply the consuming hearings, expediting the justification and the appearance that the maximum justifiable penalty, using the process for both parties. Similarly, when Department will have to meet a lower applicable agency table of penalties or a hearing is appropriate, limiting the threshold to sustain the penalty. other internal guidance. scope of such hearing to matters in Commenters expressed concern that dispute serves the interests of all MSPB has less latitude to modify Section 9901.807(f)(3) and (4) parties. Both of these measures will decisions and protect employee rights. [9901.807(d)(2) and (3)] streamline the appeals process without Commenters objected to the fact that These provisions cover the review of compromising due process. Summary adjudicators would be required to give charges and performance expectations. judgments are a well-established and deference to the Department’s penalty They provide that neither the MSPB AJ effective way of fairly handling cases determination. Based on these nor the full MSPB may reverse the where material facts are not in dispute. comments and concerns we have Department’s action based on the way in When material facts are in dispute, the reconsidered this provision and have which the charge is labeled or the normal hearing process will be removed the full MSPB from coverage conduct characterized, provided the followed. by this standard. The standards for employee is on notice of the facts review for the full MSPB are provided sufficient to respond to the factual Section 9901.807(f)(1) [9901.807(k)(7)] in 5 U.S.C. 9902(h)(5). We will also allegations of the charge. Similarly, an This provision covers the 90-day time consider placing pertinent MSPB AJ or full MSPB may not reverse limit in which an AJ must make an circumstances in an implementing the Department’s action based on the initial decision. During the meet-and- issuance to be used for consideration in way a performance expectation is confer process, participating labor penalty determination. Furthermore, we expressed, provided the performance organizations stated that they accepted agree to revise the ‘‘wholly without expectation would be clear to a expediting the process to require that justification’’ standard for MSPB AJs reasonable person. The labor decisions be issued within 90 days by that are used as part of the Department’s organizations participating in the meet- the MSPB AJ. Commenters expressed appeals process, as well as arbitrators. and-confer process stated that the AJ or concern these time limits, with no Since § 9901.922(f)(2) broadly provides the full Board should have the authority provisions for extension, will result in that arbitrators hearing a matter to consider the way in which the charge

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is labeled, the conduct is characterized, what the employee’s pay status would stated that the RFR process is or the way the performance expectation be while on excused absence. Other unwarranted, fails to preserve due is expressed in determining whether the commenters recommended we allow the process protections, and detracts from agency’s penalty is appropriate. We AJ to grant interim relief or, in the the goals of streamlining the appeals received many comments stating that alternative, establish a procedure for process. These provisions will not be the elimination of the requirement to interlocutory appeal to allow a stay deleted from the regulations. Though clearly articulate the charge is unfair, until the Board hears the full case. somewhat detailed, the Secretary is does not provide the employee Commenters objected to attorney fees expressly authorized by 5 U.S.C. sufficient information to prepare a not being paid until a final MSPB 9902(h) to establish an appeals process. defense, and should not be permitted. decision. We believe the limitation on The process contained in this regulation Other commenters expressed concern the AJs’ authority to grant interim relief is necessary to assure that the over whether the AJ would be allowed is necessary. In addition, it is consistent Department’s national security mission to mitigate the penalty if the AJ found with the enabling legislation, which is appropriately considered in adverse that the stated charge was prohibits granting interim relief unless action appeals decisions. The mischaracterized or mislabeled. These it is specifically ordered by the full Department will be constrained in the commenters also questioned whether Board (5 U.S.C. 9902(h)(4)). It is exercise of this authority by the ‘‘factual allegations’’ meant the same as premature for the AJ to grant interim provisions of § 9901.807(g)(2)(ii). We ‘‘basis for the action.’’ We did not revise relief when DoD has filed a request for anticipate that relatively few cases will this provision, as we believe that as long review. To provide for the efficient be reviewed by the Department under as the employee has sufficient notice to accomplishment of the mission and to this authority. respond to the allegations of a charge, avoid disruption in the workplace, DoD Section 9901.807(g)(1) the Department will have complied with should have discretion in determining [9901.807(k)(8)(i)] the notice and due process requirements the placement of an employee during of these regulations. The Department the period of interim relief. Explanation This provision covers who will must prove by preponderance of the of the pay status of employees in a receive and act on an RFR. During the evidence that an action taken against an period of excused absence is not meet-and-confer process, participating employee promotes the efficiency of the required because, by definition, excused labor organizations stated that the service. Mitigation may also be absence is an absence from duty without proposed regulations did not specify the appropriate in such cases provided it loss of pay and without charge to leave. official who would remand, modify, or meets the standards established in these Finally, the provision relating to reverse the MSPB AJ’s initial decision. regulations. Additionally, this section attorney fees represents no change from We also received comments regarding requires that performance expectations current law. the extension of the strict time frames be clearly conveyed in a manner within the NSPS appeals process. DoD Section 9901.807(f)(6)(i) and (ii) understandable to a ‘‘reasonable will establish the process for receiving [9901.807(h)(1) and (h)(2)] person.’’ MSPB AJs and the full MSPB and acting on an RFR, including time will judge the Department’s expression These provisions of the proposed limits for the Department to take action of performance expectations by a regulations established a new standard on an RFR, in implementing issuances. ‘‘reasonable person’’ standard. These for recovering attorney fees, which was We have clarified that in light of the provisions are written to eliminate intended to simplify the process. expedited time frames in the appellate overly technical and legalistic aspects of Comments received on the proposed process, an extension for the request for the current appeals process, while regulations and labor organizations, review will be granted if a good reason preserving employees’ due process during the meet-and-confer process, for the delay is shown. argued that the new standard was rights. Section 9901.807(g)(2)(i), (ii), (A), (B) unreasonable, unfair, would discourage and (C) [9901.807(k)(8)(ii), (iii), (A), (B), Section 9901.807(f)(5), (i) and (ii) employees from challenging wrongful and (C)] [9901.807(c), (1) and (2)] terminations, violated the Back Pay Act, These provisions covered the granting and would result in uneconomical, These provisions cover the RFR of interim relief. They stated the full piecemeal litigation. After consideration process where, under limited MSPB may not grant interim relief until of these comments, we have revised the circumstances, the Department may after the Department’s final decision. NSPS regulations to retain the pre-NSPS affirm, remand, modify, or reverse an During the meet-and-confer process, statutory standard under which such AJ’s initial decision for which an RFR participating labor organizations fees may be awarded; therefore, all has been filed. Commenters and labor recommended that interim relief be objections to proposed changes have organizations during the meet-and- granted by the full MSPB as a matter of been addressed. confer process stated that this review course if the AJ finds in favor of the authority is arbitrary, capricious and a appellant. We received comments Section 9901.807(g) [9901.807(k)(8)] violation of due process. Comments stating that the enabling legislation does This provision covers the procedures were received regarding additional not specifically allow DoD to limit the utilized to arrive at the Department’s complexity, expense, and length added full MSPB’s authority to grant interim final decision in appeals of adverse to the appeal process by the internal relief in this way. Commenters also actions. Commenters, and participating DoD review. We agree that the internal stated this limitation might labor organizations during the meet- appellate process must be credible and impermissibly alter EEO procedures. and-confer process, stated that the preserve due process. It preserves due Commenters, including labor provisions for the RFR process and the process for reasons stated in the general organizations during the meet-and- Department’s review of AJ decisions comments on adverse actions and confer process, stated DoD should not should be deleted from the regulations. appeals. To that end, the Department is have discretion to temporarily place an Commenters also recommended committed to establishing an internal employee in a different position when simplifying the process and placing entity that adheres to merit system interim relief is ordered by the full deadlines in the Department’s review of principles. This process provides the MSPB. Commenters also questioned AJ decisions. Further, commenters Department the necessary authority to

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review initial AJ decisions to ensure participating in the meet-and-confer Section 9901.807(h)(2)(i), (ii), and that such decisions interpret NSPS and process stated that the Department (iii)(A)(B)(C) and (iv) [9901.807(k)(9) these regulations in a way that should not be allowed to determine and (10)] recognizes the critical mission of the which cases would set precedent, and These provisions cover the petition Department and to determine which of they recommended revising the for review process to the full MSPB. those cases are of a precedent-setting regulation to state that any AJ decision Further, these provisions cover the nature. Although the process may be is precedential unless it is reversed or standards for the full MSPB review as lengthened in some aspects, we have modified by the full MSPB. Commenters stated in 5 U.S.C. 9901(h). During the gained efficiencies and mission-related stated that Departmental decisions meet-and-confer process, participating benefits in other areas that more than should be considered precedential even labor organizations accepted expediting offset any potential increases in time or if subsequently overturned by the full the process to require decisions be costs at any step of the process. MSPB. We believe the Department issued within 90 days by the full MSPB. Moreover, we anticipate relatively few However, these provisions have been cases will be reviewed by DoD, since should be able to determine that some Department decisions are important clarified by including the review DoD may reverse or modify initial AJ standards as stated in 5 U.S.C. 9901(h). decisions only under the limited criteria enough to serve as precedent even specified in § 9901.807(g), thus though not acted upon by the full Section 9901.807(h)(3) [9901.807(k)(11)] minimizing any increase in processing MSPB. Further, we believe that the This provision covers OPM’s request time. Department must be governed by the for reconsideration of an MSPB Some commenters questioned two of rulings of the full MSPB, if the decision. During the meet-and-confer the bases for modifying or reversing an Department’s decision is reversed or process, participating labor AJ decision: The Department’s national modified by the full MSPB, unless organizations recommended that this security mission and conflict with overturned by a court. provision be deleted. We did not accept Governmentwide rules. These this recommendation because this Section 9901.807(g)(4) commenters stated that impact on provision is consistent with current law. [9901.807(k)(8)(ii)] national security mission alone, This provision is necessary for OPM to regardless of the appellant’s guilt or This provision covers the publication carry out its mission, which includes innocence, would not be grounds to protecting Governmentwide modify or reverse an AJ decision. The of precedential decisions. During the meet-and-confer process, participating institutional interests regarding the civil second point the commenters made was service system. that the Department lacked expertise to labor organizations stated that there interpret Governmentwide regulations. were not any details regarding the Section 9901.807(h)(4) [9901.807(l)] We recognize that the wording of the publication of decisions. Commenters This provision addresses the failure of regulation regarding the Department’s echoed this concern. We agree with the MSPB to meet established deadlines and modification or reversal of an AJ’s labor organizations and have added the reporting requirements. Commenters decision based on national security fails clarifying language regarding recommended that this reporting to specifically reference the employee’s publication of DoD precedential requirement be deleted while other guilt or innocence. However, an decisions, the details of which will be commenters recommended that MSPB employee’s culpability is a prerequisite provided in implementing issuances. submit quarterly or annual reports. We to sustaining an action. Additionally, did not accept the recommendations to the requirement for all actions to Section 9901.807(h)(1) [9901.807(f)] change the provisions as we consider promote the efficiency of the service This provision provides for filing for the timelines placed on MSPB as being and further review by the full MSPB a Petition for Review by a party or the an integral part of streamlining the provide additional safeguards for Director of OPM. During the meet-and- Department’s appellate process. This employees. We believe the Department confer process, participating labor reporting requirement is only imposed if has sufficient expertise to determine a deadline is missed. We are confident organizations stated that the Department compliance with Governmentwide that MSPB will rarely, if ever, fail to should delete the provision which regulations. meet the required deadlines. As a result, Lastly, we received comments allows OPM to petition MSPB for any report required by this provision regarding vague remand provisions and review. We disagree. While OPM is will rarely be necessary. lack of time for the AJ to make a responsible for providing guidance and decision if a summary judgment was assistance to DoD in developing a new Section 9901.807(i) [9901.807(m)] remanded with a direction to hold a human resources management system, it This provision covers the hearing. We will establish timelines and also has responsibility for protecting Department’s authority to seek judicial remand provisions for the Department’s Governmentwide institutional interests review of MSPB decisions. We made a review of the AJ’s decision in an regarding the civil service system. technical correction to delete the implementing issuance. Further, we Therefore, we believe that OPM must reference to the Department seeking have revised the regulation to allow the have the authority to act if it believes a reconsideration by MSPB of a final AJ more time, 45 days versus 30 days, decision will have substantial impact on MSPB decision because the Department to make a decision in those instances civil service law, rule, regulation, or has that ability under current MSPB where they are directed to hold a policy directive. One commenter rules. hearing in a case involving summary requested that we clarify whether this Section 9901.808—Appeals of judgment. provision eliminates MSPB’s right to Mandatory Removal Actions Section 9901.807(g)(3)(A) and (B) reopen an appeal on its own motion. In This provision covers appeals of [9901.807(k)(8)(ii), (A) and (B)] accordance with § 9901.807, MSPB may mandatory removal actions (MROs). It This provision covers the precedential only review those decisions for which a states that only the Secretary may effect of a Department decision. petition for review has been filed by the mitigate the penalty for a sustained Commenters and labor organizations Department, OPM, or an employee. MRO. Additionally, it states that if the

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MSPB AJ or the full MSPB sustains an Consistent with section 9902(h)(7), we enable the Department to better utilize employee’s appeal based on a finding may modify or adapt the mixed case its civilian workforce to support rapidly that the employee did not commit an process in these regulations, provided changing national security challenges, MRO, the Department is not precluded employee rights and remedies are such as the Global War on Terrorism from subsequently proposing an adverse preserved. The final regulations modify and supporting humanitarian assistance action based in whole or in part of the some of the procedures for processing missions here and abroad, employee same or similar evidence. During the mixed cases, while preserving the rights representatives are given opportunities meet-and-confer process, participating and remedies as required by section to participate in new areas that have a labor organizations stated that this 9902(h)(7). substantive impact on the daily lives of provision should be deleted in its Some commenters stated this the workers they represent. However, entirety. Commenters and labor provision is unclear and suggested that through continuing collaboration organizations in the meet-and-confer we delete the provision or rewrite it. (§ 9901.107), employee representatives process stated that the Secretary should Several commenters stated that the will have the opportunity to participate not be the only authority to mitigate provision should be modified to in the planning, development, and MROs and that limiting the full Board’s eliminate potential confusion over implementation of the Department’s ability to mitigate MROs is contrary to language that appears to require the implementing issuances, which will the enabling legislation. Commenters Department to forward to MSPB a non- cover subjects ranging from the pay and also stated that the proposed provisions appealed action. We agree with this performance management systems to inappropriately give DoD ‘‘two bites at comment and have amended the staffing and classification. the apple’’ when an action is not found regulations to provide that an appellant The labor relations system is to amount to an MRO since the may choose to pursue his or her consistent with the general parameters Department may take a subsequent allegation of discrimination even when Congress provided, including the action on the same evidence. Other no PFR is filed with the Board. In such process for involving employee commenters were concerned that an cases, the appellant can request the representatives (see 5 U.S.C. 9902(m)(3) employee might not be entitled to Department to refer the discrimination and (4)). It mandated that the new attorney fees even if the employee issue to the Board, the Board will then system may not expand the scope of prevailed on the MRO issue, but failed issue a final decision on the collective bargaining beyond the scope in prevailing in a subsequent action discrimination allegation which may of bargaining available today under based on the same facts. We disagree then be pursued to EEOC or district chapter 71, even where provisions of that this provision should be deleted. court. Some commenters recommended title 5 are waived or waivable (5 U.S.C. The Secretary is expressly authorized we delete the reference to modifying 5 9902(m)(7)), and required that under 5 U.S.C. 9902(h) to establish U.S.C. 7702 stating this was beyond the employees be authorized to organize appeals procedures and standards for authority of NSPS. We believe the and bargain collectively within the relief, including standards for mitigation proposed regulations do not framework established in chapter 99, of penalties. This process is necessary to impermissibly modify existing EEO that is, within the framework of a support the national security mission of rights and remedies. To clarify this system that promotes a collaborative the Department. We do agree, however, section, we have modified some of the issue-based approach to labor relations that the enabling legislation allows proposed language without altering any and which is developed, established, mitigation of MRO penalties by the full of the proposed intent. and implemented to enable the MSPB and have modified the provision Department’s civilian workforce to accordingly. We disagree that it is Subpart I—Labor-Management better support the Department’s national inappropriate for the Department to Relations security mission (5 U.S.C. 9902(b)(4)). have the ability to take a subsequent General Comments These commenters also argued that action if the offense is found to not be there is no legal authority to invalidate an MRO. Though an employee’s Commenters, including, labor provisions in collective bargaining misconduct may not be found to qualify organizations participating in the meet- agreements with implementing as an MRO, it does not mean that the and-confer process, objected to subpart issuances or issuances. Again, we misconduct should not be addressed. I in its entirety arguing that Congress disagree. First, Congress authorized the Subsequent proposal of an adverse did not authorize the Secretary and Department to establish and implement action based in whole or in part on the Director to modify 5 U.S.C. 71 beyond the HR system by providing an same or similar evidence is consistent providing for bargaining above the level alternative to collective bargaining for with what can occur today under of unit recognition and the involving employee representatives in current law. Finally, we believe attorney establishment of a new independent the planning, development, and fees will be fairly awarded based on the third party to review and resolve labor implementation of that system and latest change to these regulations. management disputes. We disagree. In making this the exclusive process for enacting chapter 99, Congress expressly their involvement (5 U.S.C. 9902(f)). It Section 9901.809—Actions Involving recognized the need for the Department would be impossible to implement the Discrimination to design a labor relations system that HR system authorized by Congress This provision outlines the processes both addresses the unique role that the without overriding conflicting for handling appeals of actions in which Department’s civilian workforce plays provisions of existing collective discrimination is alleged. During the in supporting the Department’s national bargaining agreements. meet-and-confer process participating security mission and allows for a Moreover, in taking the steps labor organizations stated that this collaborative issued-based approach to necessary to establish and adjust the provision should be deleted because it labor management relations. The labor labor relations system, Congress inappropriately modifies processes for relations system established in subpart specifically recognized that the discrimination claims. We disagree. I does this by creating a new, tailored provisions of this system will supersede Section 9902(h) expressly authorizes the approach to labor relations. While the existing collective bargaining Secretary to establish legal standards scope of bargaining is reduced in some agreements covering Department and procedures for employee appeals. areas, such as management rights, to employees and negotiated pursuant to

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the provisions of chapter 71 except as aspect of the proposed NSPS, including labor organizations and collective otherwise determined by the Secretary the pay, performance, and classification bargaining are in the public interest, (5 U.S.C. 9902(m)(8)). The proposed system and appeals process, be subject consistent with the enabling regulations stopped well short of this to collective bargaining. Congress legislation’s preservation of collective authority by providing for a process that expressly prohibited expanding the bargaining rights. would not supersede collective scope of collective bargaining in 5 We have decided to retain the bargaining agreements in their entirety. U.S.C. 9902(m)(7) which provides that originally proposed language, while Instead, the proposed regulations nothing in section 9902 will be adding an express reference to the provided a much more constrained construed to expand the scope of collaborative issued-based approach approach, providing only that those bargaining with respect to provisions in authorized by the enabling legislation. specific provisions of collective title 5 that may be waived, modified, or This section of the regulations bargaining agreements conflicting with otherwise affected under section 9902. recognizes and stresses the fundamental these NSPS regulations or NSPS In lieu of bargaining, Congress charged purpose underlying the enabling implementing issuances would be OPM and DoD to establish the legislation and the statutory mandate to superseded. This very narrow authority mechanism for continuing involvement build a flexible HR system that supports is essential to enable the Department to of employee representatives in 5 U.S.C. the unique mission of DoD and the role establish and implement one NSPS 9902(f)(1)(d) and (m)(2). With this in of DoD civilian employees as a critical across the Department. Absence of this mind, we provided a number of part of the Department’s Total Force. authority would effectively defeat the mechanisms to ensure the substantive Consistent with the enabling legislation, intent of Congress by denying the involvement of labor organizations in the labor relations system specifically Department the ability to have a single such things as the development of recognizes the right of employees to HR system to support the Department’s implementing issuances, the organize and bargain collectively subject national security mission. administration of the Department’s new to limitations established by law, During the meet-and-confer process, it pay system, and the nomination of including these regulations, applicable became clear that there was confusion members to the National Security Labor Executive orders, and any other legal over which type of issuance would Relations Board (NSLRB or Board). authority. supersede conflicting provisions of Other concerns related to the scope of Section 9901.902—Scope of Authority collective bargaining agreements. Some bargaining are addressed in the A number of commenters, including commenters, and labor organizations discussion of the related sections of labor organizations participating in the participating in the meet-and-confer subpart I that follow. meet-and-confer process, presented process, recommended that collective We also expressly provided two their views that the enabling legislation bargaining agreements should not be specific mechanisms to address the did not authorize the Department and superseded before their expiration. mandate that the labor relations system OPM to modify provisions of 5 U.S.C. Participating labor organizations should allow for a collaborative, issue- chapter 71. We disagree. The enabling effectively argued that the Department based approach to labor relations. legislation authorizes the Secretary, did not need the authority to National level bargaining, as provided together with the Director, to establish immediately supersede collective for in this regulation, and which is and adjust a labor relations system in bargaining provisions with issuances expressly authorized in the enabling support of the overall HR system not implementing NSPS. We agree and legislation (5 U.S.C. 9902(g)), allows for notwithstanding the provisions of the have amended the final regulations to an issue-based approach to addressing current system, as set forth in chapter 71 provide that conflicting collective matters of significance to the (5 U.S.C. 9902(d)(2) and 5 U.S.C. bargaining agreement provisions will Department as a whole. Multi-unit 9902(m)(1) and (2)). In addition, as not immediately be superseded by bargaining, as provided for in these discussed in General Comments, issuances, although such provisions regulations, allows for a collaborative, Congress provided the parameters for must be brought into conformance with issue-based approach to addressing that system, including, for example, the issuance upon expiration of the matters of interest to specific prohibiting the expansion of the scope agreement or renegotiation of the communities of interest within DoD, provision during the term of the of bargaining; requiring that the system such as military installations that house agreement. address the unique role that the multiple organizations and multiple However, to ensure consistent Department’s civilian force work plays bargaining units. implementation of NSPS across in supporting the Department’s national organizations with representation by Other Comments on Specific Sections of security mission; authorizing the system different bargaining units, we continue Subpart I to allow for a collaborative issue-based to believe that implementing issuances approach to labor management Section 9901.901—Purpose must take effect immediately and thus relations; requiring that employees be supersede any conflicting provisions of The proposed regulation restates the authorized to bargain collectively, as collective bargaining agreements for enabling legislation’s purpose to provided for in chapter 99 (not as NSPS-covered employees. While DoD provide DoD and OPM with a labor- provided for in chapter 71); mandating plans to implement the labor relations management relations system that that the system provide for third party system DoD-wide immediately, the HR addresses the unique role that review of decisions; and authorizing the system will be implemented in spirals. Department employees have in system to utilize national level The implementing issuances for the HR supporting the Department’s national bargaining (an authority separately system will only apply to employees security mission and to promote a established in 5 U.S.C. 9902(g)). who are covered by the NSPS HR collaborative issue-based approach to system. labor management relations. In their Section 9901.903—Definitions Commenters, including labor comments and during the meet-and- In their comments and during the organizations during the meet-and- confer process, participating labor meet-and-confer process, participating confer process, also recommended that organizations recommended that we labor organizations recommended that the design and implementation of every include in this section a statement that the current definition of ‘‘conditions of

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employment’’ be expanded to include requires extensive coordination within disagree. The provisions authorizing the the classification of any position. A the Department. We believe that this establishment of a labor relations system number of commenters, including labor change addresses the legitimate (5 U.S.C. 9902(m)) are clearly separate organizations participating in meet-and- concerns of the commenters while from the authority to establish an HR confer process, also recommended that providing the Department the necessary system (5 U.S.C. 9902(a)) and the we modify the definition of conditions flexibility to meet changing national requirement for phased implementation of employment to eliminate the security requirements and to efficiently in 5 U.S.C. 9902(l) is not applicable to exclusion of pay. As a general matter, manage its workforce. the labor relations system. We have the classification or pay of Federal A number of commenters and labor therefore not adopted this employees is not subject to negotiation organizations participating in the meet- recommendation. today. This restriction is consistent with and-confer process recommended that We also received comments that the prohibition on any expansion of the we not change the definition of certain groups of employees were scope of bargaining in 5 U.S.C. ‘‘supervisor’’ with regard to nurses and unique and therefore should not be 9902(m)(7). Therefore, we have not firefighters. We agree, and have revised covered by the labor relations system. adopted this suggestion. the definition of ‘‘supervisor’’ as it Specifically, commenters suggested that Some commenters, including labor relates to firefighters and nurses to be teachers should be excluded from organizations participating in meet-and- consistent with what is in chapter 71 coverage as they do not play a combat confer process, also raised concerns that today. Commenters also expressed a support role and already sign mobility the revised definition of ‘‘confidential range of concerns regarding the portion agreements giving management all the employee’’ was overbroad and could be of the definition of ‘‘supervisor’’ dealing flexibility it needs. We disagree. Their subject to misapplication. They with supervision of members of the contributions in teaching the children of recommended that we retain the armed forces. A number of commenters our service men and women and the definition of ‘‘confidential employee’’ questioned if the intent was that civilian employees who support them contained in 5 U.S.C. 7103. We agree military technicians who supervise are absolutely critical to the successful with the recommendation and have members of the reserves, such as on accomplishment of the Department’s modified the regulation accordingly. drill weekends, would be considered national security mission. Thus, the During the meet-and-confer process, supervisors. While we believe this final regulations continue to cover the impact of issuances on the collective language is clear, the comments lead us teachers in the labor relations system. bargaining process and existing to believe that it has been Another group of employees that collective bargaining agreements was misunderstood. This provision only commenters recommended for discussed. During these discussions it affects civilian employees and was exclusion from the labor relations became apparent that there was intended to apply to those situations system based on their unique confusion surrounding the distinction where a civilian is exercising characteristics are employees covered between ‘‘implementing issuances’’ and supervisory control over military under the Civilian Mariner or CIVMARS ‘‘issuances.’’ To address these concerns, members. With regard to military program. While we agree that some of we have modified the definitions, technicians who are required to hold the rules governing these employees are including the definition of military reserve positions in addition to unique within the Department, these ‘‘implementing issuance’’ as it appears their civilian positions, this definition employees are presently covered by in subpart A. In addition, we have cross- would only be applicable while serving chapter 71. Given that fact, we find no referenced the definitions of both in their civilian capacity. Thus, an compelling argument that these ‘‘issuance’’ and ‘‘implementing individual who is not a supervisor in employees should not now be covered issuance’’ that appear in subpart A so his or her civilian status, but supervises under the labor relations provisions of that the differences in the two types of reservists while in military status, these regulations and we have therefore issuances will be readily apparent. would not meet the definition of not adopted the recommendation. The labor organizations participating ‘‘supervisor’’ for purposes of subpart I. Some commenters, including in the meet-and-confer process If an individual is exercising participating labor organizations, stated expressed concerns that any manager supervisory duties and authorities over that there was no indication in the could simply sign an issuance or military personnel, as defined in the proposed regulations that DoD or OPM implementing issuance and thereby regulation, we believe that individual is responded to the intent of Congress that invalidate legitimate provisions of a a member of the management team, and ‘‘in designing the labor relations system collective bargaining agreement. They his or her inclusion within a bargaining the Secretary should take into recommended that we restrict the unit would create an inherent conflict of consideration the unique requirements authority to sign such issuances to the interest. Therefore, we have retained and contributions of public safety Secretary or Deputy Secretary alone. We that portion of the definition of employees in supporting the national believe that restricting this authority to ‘‘supervisor’’ with respect to the security mission of the Department.’’ the Secretary or Deputy Secretary is far supervision of members of the armed The commenters are referring to the too restrictive for such a large and forces. Conference Report on H.R. 1588, the diverse Department. Therefore, we have ‘‘National Defense Authorization Act for revised the language to make clear that Section 9901.904—Coverage Fiscal Year 2004,’’ H. Rpt. 108–354, only the Secretary, Deputy Secretary, During the meet-and-confer process, page 760. While the proposed Principal Staff Assistants, or Secretaries the participating labor organizations regulations were silent regarding this of the Military Departments may sign an recommended that the labor relations provision in the conference report, we ‘‘implementing issuance.’’ In addition, system be phased in spirals like the HR have taken into consideration the we have revised the language to make system rather than implemented unique requirements and contributions clear that only these same officials may concurrently Department-wide. In fact, of public safety employees in sign an ‘‘issuance,’’ which may limit the the participating labor organizations supporting the national security mission scope of collective bargaining as asserted that the requirement to phase of the Department. The role of public provided for in this regulation. This is in the HR system was equally applicable safety employees was considered a very high level of approval and to the labor relations system. We throughout the design process for the

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labor relations system. While we agree meet-and-confer process that the will be costs associated with the that these employees are unique within language in the proposed regulations establishment of the NSLRB, we believe the Department, they are presently would have the effect of forcing the these costs will be offset by the covered by chapter 71 and we found no parties to wait until expiration of the 60- increased efficiency in the resolution of compelling reason that these employees day period to seek assistance with any labor disputes. should not now be covered under the bargaining impasse. We agree with this Commenters recommended that the labor relations provisions of these concern and have modified the language final regulations set strict tenure regulations. in the final regulation to permit the requirements and limit the tenure for parties to utilize § 9901.920 impasse NSLRB board members to one term, Section 9901.905—Impact on Existing procedures to obtain assistance at any with no possibility for renewal or Agreements time. extension. We note that the proposed Commenters, including labor regulations set the term of NSLRB organizations participating in the meet- Section 9901.906—Employee Rights member appointments at 3 years, but we and-confer process, expressed concern Commenters recommended that we do not agree that there should be a that Congress did not intend the delete this section as it is essentially prohibition on members serving an Department to have the authority to identical to 5 U.S.C. 7102 and, thus, additional term. These individuals may supersede valid provisions of collective unnecessary. We disagree. Although this be viewed as exemplary adjudicators bargaining agreements through the provision is essentially the same as the not only to management, but also to the promulgation of implementing chapter 71 provision, we believe that it labor organizations. To unilaterally issuances and issuances. These is important to clearly restate these exclude members from serving commenters argued that conflicting rights in subpart I to provide employees additional terms would limit the provisions of collective bargaining notice of their statutory rights. applicant pool and possibly lead to agreements should remain intact until Therefore, we have not adopted the extended vacancies. We therefore have renegotiated regardless of the extension recommended change. not accepted the recommendation. of a new Department policy through However, commenters, including Section 9901.907—National Security implementing issuances or issuances. labor organizations participating in the Labor Relations Board We disagree with respect to meet-and-confer process, recommended ‘‘implementing issuances,’’ but agree as Commenters raised the concern that that we provide for more union to ‘‘issuances,’’ for the reasons the NSLRB will not be fully staffed and involvement in the appointment of explained under General Comments. We operational before the onset of NSLRB members. We agree with these have added a new subparagraph, bargaining disputes arising from commenters and, thus, have modified § 9901.905(c) to make clear that any implementation of subpart I. We agree the regulations to provide a process provision of a collective bargaining with this concern and have modified the whereby employee representatives may agreement that is inconsistent with regulation to provide the Secretary with submit a list of nominees for the issuances that do not implement NSPS the authority to determine the effective Secretary’s consideration for will remain in effect until the date for the establishment of the NSLRB. appointment of non-chair members of expiration, renewal, or extension of the Commenters objected to the creation the NSLRB. We have also provided that agreement, whichever occurs first. of the NSLRB, and recommended that the Secretary may consult with Commenters also expressed concern the regulations preserve the authority of employee organizations to obtain that 60 days is not sufficient time to FLRA, FMCS, and FSIP. They remarked additional information regarding any bring into conformance the remaining that these agencies, which are nominee submitted. negotiable provisions of a collective independent, impartial, and already Other commenters approved of the bargaining agreement, following funded, currently adjudicate the labor proposal to establish the NSLRB, invalidation as authorized by § 9901.905 disputes that the proposed regulations indicating that the NSLRB would afford of the regulations. We disagree. This authorize the NSLRB to resolve. In this the Department greater regularity and bargaining will be limited to only those regard, they challenged the consistency in case processing than specific contract provisions that are independence and impartiality of any currently provided by FLRA. Labor rendered unenforceable, or require NSLRB member appointed by the organizations participating in the meet- changes to their language to conform to Secretary. Therefore, they objected to and-confer process noted that the ‘‘one- the implementing issuance or these any change to the status quo. stop shop’’ concept of the NSLRB was regulations. Therefore, we believe that We disagree that the NSLRB will not preferable to the division of 60 days is sufficient time for bargaining, be an independent and impartial third prosecutorial, adjudicatory, and given the limited scope. For these party. The proposed regulations provide mediation responsibilities provided for reasons, we have not adopted the that NSLRB members may only be in the current system. We agree. recommended changes. removed by the Secretary for Commenters suggested that we pursue We received several comments that inefficiency, neglect of duty, or a new statutory authority for direct this section is confusing. We agree with malfeasance in office. This is the same judicial review of NSLRB decisions. these comments and have revised the standard that currently applies to While such a proposal is reasonable, language in § 9901.905(b) to make clear members of the FLRA. Since this enactment would be time consuming, that it is only those collective bargaining standard and the establishment of the uncertain, and subject to significant agreement provisions that are directly NSLRB itself are provided for in these revision during the legislative process. affected by the collective bargaining enabling regulations, they are beyond Our proposed process as authorized by agreement provisions rendered the scope of the Secretary’s authority to section 9902(m)(6) subjects certain final unenforceable by this regulation or an change unilaterally. In addition, these NSLRB decisions to FLRA review, implementing issuance that must be regulations authorize the NSLRB to which in turn would be subject to brought into conformance. issue its own rules and operational judicial review as it is under chapter 71. We have also substantively modified procedures. The concatenation of these We believe this is a more expeditious the provisions in § 9901.905(b) in provisions assures the NSLRB’s and appropriate approach. This process response to concerns raised during the independence. Moreover, while there affords the parties the opportunity to

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obtain review of an NSLRB decision impasses, and related exceptions to § 9901.908(a)(3) of the proposed without the need for court proceedings arbitration awards. In addition, the final regulations to resolve disputes and, in many cases, the FLRA review regulations clarify that the FLRA will concerning requests for information may be sufficient to resolve the dispute. review Board decisions on unfair labor under § 9901.914(b)(5). Accordingly, we Therefore, we have not adopted this practices (except when the Board have deleted this provision. Disputes suggestion. declines to adjudicate the matter), concerning denial of information However, comments related to arbitration awards under § 9901.908, requests are processed as unfair labor judicial review revealed confusion and negotiability disputes. practices, which are included in regarding the process for judicial Commenters further inquired about § 9901.908(b)(1). review, and we have, therefore, the NSLRB’s authority to investigate Commenters, including labor eliminated the reference to judicial unfair labor practices and other labor organizations participating in the meet- review in § 9901.907. We have instead disputes. We agree that the NSLRB and-confer process, expressed concern added a new paragraph (c) in § 9901.909 should have the authority to investigate with the NSLRB’s authority to resolve that describes the process for appellate and have modified the regulations to national consultation disputes. We agree review of NSLRB decisions. To be provide the NSLRB with authority to and have amended the regulations to absolutely clear, § 9901.909 provides the establish procedures for investigations retain FLRA jurisdiction over disputes mechanism for obtaining judicial review in their regulations. In addition, we regarding the granting of National beginning with the appellate review of have clarified that the Board has the Consultation Rights. Accordingly, we the FLRA. We have also modified authority, similar to that exercised today have deleted § 9901.908(a)(8) of the paragraph (d) (paragraph (c) in the by the FLRA General Counsel, to proposed regulations, which had proposed regulation) of § 9901.909 by exercise unreviewable discretion to reserved this authority to the NSLRB. adding language reflecting our intent dismiss unfair labor practice allegations. Some commenters expressed concern that judicial review of FLRA decisions Commenters expressed concern that with the limitation on the Board’s is obtained pursuant to 5 U.S.C. 7123, the Board would not be fully equipped authority to issue status quo ante which is modified only to conform to handle the extreme workload related awards. These commenters argued that relevant citations in chapter 71 to the to the implementation of the labor the authority to order status quo ante corresponding provisions in subpart I. relations system at stand up. We agree. remedies to make aggrieved employees Although many commenters, We have added a new § 9901.908(a), to whole was essential for employees to including labor organizations reflect the change discussed under perceive the NSLRB as legitimate. We participating in the meet-and-confer § 9901.907, National Security Labor disagree. We believe that the limitations process, did not support its Relations Board, which provides the on the award of status quo ante establishment, we have decided to Secretary with the authority to remedies appropriately recognize and retain the NSLRB. As we indicated in determine the date of establishment of correctly balance the Department’s the Preamble accompanying the the NSLRB. Pending establishment of national security mission and the proposed regulations, it ensures that the NSLRB, the regulations also provide unique role that DoD civilian employees those who adjudicate the most critical the Secretary discretion, in consultation play in supporting that mission. We labor disputes in the Department do so with the Director, to designate another believe the limitations provided in the quickly and with an understanding and third party to exercise the authority of regulations are appropriate and have not appreciation of the unique challenges the Board in the interim. accepted the recommendations. that the Department faces in carrying Commenters questioned why the A labor organization expressed out its mission. proposed regulations authorized the concern that the Board’s de novo review NSLRB to issue, at the request of any authority of an arbitrator’s findings of Section 9901.908—Powers and Duties of party, binding opinions on matters the Board and Section 9901.909— fact made the proposed system within its jurisdiction that would be illegitimate. We disagree. We believe it Powers and Duties of the Federal Labor subject to FLRA and judicial review. Relations Authority is necessary for the Board to review the They further questioned who would underlying facts in any dispute to Commenters recommended that FLRA have standing to seek review, other than ensure that a correct determination has retain greater jurisdiction over the the initial requester, since there would been rendered. Department’s labor disputes. be no specific labor dispute at issue, and Commenters also recommended that Specifically, they expressed the view recommended the deletion of this we define the Board’s remedial that not all labor relations disputes provision. In response to these authorities. We do not believe that this arising under NSPS will significantly concerns, we have revised the language is necessary, just as it was unnecessary impact the DoD’s mission enough to to strike the phrase ‘‘binding to define the FLRA’s remedial warrant their removal from FLRA Department-wide opinions’’ and authorities under chapter 71. jurisdiction. We disagree. It is replaced it with ‘‘guidance,’’ thus Commenters also raised concerns imperative that the NSLRB retain allowing the NSLRB to issue non- regarding the Board’s authority under jurisdiction over matters that require binding guidance. While we have struck § 9901.908(a)(1) and (a)(5) of the efficient review and understanding of the language that would have allowed proposed regulations to decline the Department’s mission. This is FLRA and judicial review of this jurisdiction over individual labor consistent with the requirement in 5 guidance, we anticipate that the disputes. We share their concerns and U.S.C. 9902(m)(1) that the system OPM guidance will be accorded deference by have amended the proposed language to and DoD establish address the unique other third parties in the cases before give the Board the added authority to role that the Department’s civilian them. We also received a comment reject unfair labor practices and workforce plays in support of the suggesting that the procedures to negotiation impasses. Department’s national security mission. request an opinion under this provision As a result, the final regulations give the are confusing. We disagree and have Section 9901.910—Management Rights NSLRB jurisdiction over disputes made no changes to this process. Commenters, including labor concerning the duty to bargain, the Commenters raised concerns about organizations participating in the meet- scope of bargaining, negotiation the NSLRB’s authority under and-confer process, recommended that

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we retain the current language in 5 emergency provisions of chapter 71 duplicative of the introductory U.S.C. chapter 71 with regard to more liberally and to allow post- provisions in 5 U.S.C. 7111. We management rights, arguing that the implementation bargaining in certain disagree. Although labor organization proposed regulations unduly limited the limited situations, the current statute recognition remains unchanged from 5 scope of bargaining. Specifically, does not give the Department the U.S.C. chapter 71, we believe that it is commenters expressed concern that flexibility necessary to carry out its vital important to affirmatively state in these limiting collective bargaining over the national security mission. Today, the regulations that labor organizations will assignment of equipment and shifts Department is increasingly faced with be recognized under subpart I in the could compromise public safety. These an enemy that can attack with little or same manner as they are under chapter commenters recommended that no advance warning. The Department 71. must be agile enough to respond to the management retain the right to Section 9901.912—Determination of emerging and rapidly evolving threats permissively bargain certain subjects Appropriate Units for Labor inherent in 21st century warfare. when appropriate, rather than replacing Organization Representation the requirement to bargain with a Finally, we have modified the requirement to consult with the labor regulations to permit bargaining, in the The proposed regulations under organizations concurrent with taking sole, exclusive, unreviewable discretion § 9901.912(b)(3) and (4) would exclude action. Moreover, commenters suggested of the Secretary, over the procedures all employees engaged in personnel that labor organizations should be able that would be followed in exercising the work and individuals employed in to bargain appropriate arrangements expanded operational management attorney positions. In response to prior to management taking an action rights. We have also modified the comments received, particularly from that potentially could adversely affect regulations to permit bargaining, at the labor organizations participating in the bargaining unit employees rather than election of the Secretary, over meet-and-confer process, which providing for post implementation appropriate arrangements on the routine opposed these exclusions as bargaining. Commenters, most notably matters related to the expanded unnecessary and overbroad, we have labor organizations, objected to the operational management rights. The revised the language to reflect the prohibition of bargaining procedures Secretary may authorize such bargaining current language in 5 U.S.C. chapter 71. Although the proposed regulations concerning management rights at to advance the Department’s mission did not explicitly provide special rules § 9901.910(a)(1) and (2). Labor accomplishment or promote for bargaining unit inclusion or organizations also suggested that the organizational effectiveness. Mid-term exclusion for employees holding right to negotiate procedures for agreements on appropriate arrangements and procedures for (a)(1) and (a)(2) security clearances, there were multiple management rights at § 9901.910(a)(3) is comments on the subject. Commenters illusory. Labor organizations suggested management rights are not precedential or binding on subsequent acts, or suggested that employees with security that no justification has been provided clearances should be excluded from to restrict bargaining over procedures retroactively applied, except at the Secretary’s sole, exclusive, and bargaining units because of national and this restriction is contrary to law. security concerns. Labor organizations Finally, commenters objected to the unreviewable discretion. Procedures and appropriate arrangements in term participating in the meet-and-confer provision that allowed management to process recommended an alternative deviate from established procedures agreements are binding, except that nothing will delay or prevent the approach that would require an because they believe such an action is Secretary from exercising his or her employee with a security clearance to be unreasonable. authority under subpart I. For example, excluded if that employee’s duties Although these issues were discussed the Secretary may authorize deviation required independent judgment in the during the meet-and-confer process, the from such agreements when it is formulation of national security policy. employee and management necessary to carry out the Department’s While we understand the complexity of representatives were unable to fashion a mission. This authority is comparable to the issue, we disagree with both recommendation to resolve these what occurs today when an emergency recommendations because we believe differences that would be acceptable to exists. the existing approach of case-by-case all parties. The labor organizations We have also made some minor exclusion is appropriate. Given the participating in the meet-and-confer changes to the section to make technical sensitivity of the issue, we believe a process, while willing to discuss some corrections and to clarify intent. universal approach to security clearance modifications to the procedures in Specifically, in § 9901.910(e) we have exclusion would be inflexible and chapter 71, held fast to their position corrected the citation from ‘‘§ 9901.913’’ ineffective. that the existing labor relations system to the correct citation of ‘‘§ 9901.917.’’ Section 9901.913—National only needed slight modifications to In response to another commenter, we Consultation meet the Department’s need for have removed the ‘‘foreseeable, flexibility and agility to support its substantial, and significant’’ standard Commenters, including labor national security mission. We disagree from § 9901.910(e)(2)(i) because it is organizations participating in the meet- with the labor organizations’ suggestion unnecessary given the language in and-confer process, recommended that implementing issuances and § 9901.917(d)(2). We have also added deleting these provisions because, in issuances should be subject to an references to sections 9901.918 and their view, they are unlawful deviations adaptation of the FLRA’s compelling 9901.919 to conform to the authorities from chapter 71. We disagree for the need standard, which requires a link in those sections for multi-unit reasons stated under General between the policy to be implemented bargaining and bargaining above the Comments. Commenters further and national security, to override level of recognition, respectively. recommended that the FLRA should collective bargaining agreements. retain jurisdiction over national Furthermore, we believe that, even with Section 9901.911—Exclusive consultation issues. We have adopted modifications discussed with the labor Recognition of Labor Organizations this recommendation and modified the organizations during the meet-and- Labor organizations recommended language accordingly. We also received confer process, to interpret the that we delete the section as it is comments suggesting that the phrases

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‘‘substantial number of employees’’ and meetings where operational matters are information if that official determines ‘‘reasonable time’’ are vague. However, discussed, such as the routine the release would compromise mission, this is the exact language that appears assignment of work, do not rise to the security, or employee safety. These in chapter 71 and the FLRA has a long level of requiring union participation. provisions generally codify current case history of interpreting this language. Furthermore, we believe that allowing law in which the right of the union to Therefore, we have retained the managers to respond to basic questions information is weighed against the language. regarding conditions of employment, rights of employees and management. such as a routine question by a newer This language simply clarifies the Section 9901.914—Representation employee regarding how an overtime existing state of affairs. Thus, we have Rights and Duties roster operates, should not require not adopted the recommendations to Commenters, including labor union participation as the manager is eliminate these provisions. organizations participating in the meet- merely reiterating existing policy. Several commenters also suggested and-confer process, strongly objected to Management and employees must be that the 30-day period for agency head the elimination of the right of an able to freely communicate on such review was unreasonably short. The employee to request representation routine matters if the Department is to process of agency head review, when examined by representatives of operate efficiently. Furthermore, such a including the 30-day limitation, as the Office of the Inspector General and communication in no way diminishes provided for in § 9901.914(d)(1)–(4) is other independent Department and the role of the union, and does not in based on, and adopts, the authority of Component organizations whose any way authorize a manager to discuss heads of agencies that exists today mission includes criminal changing these procedures without under 5 U.S.C. 7114(c). This standard investigations. These commenters union participation. For the forgoing has been in effect for many years under argued that such representation protects reasons, we have not accepted the 5 U.S.C. chapter 71 and has worked employees against abusive or illegal recommendation and have retained the efficiently. Thus, we believe that this is interview techniques and provides language as it appeared in the proposed sufficient time for agency head review reassurance and guidance to employees. regulation. to occur and we have retained the 30- We agree, and have revised the Labor organizations participating in day time frame. We have modified regulations to eliminate these the meet-and-confer process and other § 9901.914(d)(2) and (3) to conform the restrictions on representation. commenters also recommended that we provisions to the revised definition of We also received comments, retain the ‘‘flagrant misconduct’’ ‘‘issuances’’ that could serve as the basis including comments from labor standard for employee conduct while for disapproval of conflicting provisions organizations participating in the meet- serving as union officials. Commenters of collective bargaining agreements and-confer process, that opposed the argued that union representatives are upon agency head approval. We have restrictions on the union’s right to different than other employees because also adopted a comment to revise attend formal EEO proceedings. they have the right to speak, write, § 9901.914(d)(5) to clarify that Alternatively, other commenters associate, and petition for the redress of agreements are unenforceable because strongly supported this restriction. We wronged employees. However, all they conflict with applicable law, rule have carefully considered the comments employees, regardless of whether they or regulation, or issuance, rather than and have come to the conclusion that are union representatives, are expected because an authorized agency official the often sensitive nature of to express their concerns in an has made such a determination. We discrimination complaints, coupled appropriate manner, particularly in have added clarifying language to this with the fact that the employee has scenarios where there could be a safety paragraph in response to numerous exercised an option to not use the or security violation. The intent is not comments regarding the impact of negotiated grievance procedure, to prevent honest and open discussion, issuances on collective bargaining supports this limitation on a labor but rather to ensure that such agreements. The revised language organization’s right to attend such discussions are undertaken in a clarifies that collective bargaining discussions. We believe the procedures professional and courteous manner. agreement provisions that conflict with as described in the proposed regulations Under the proposed standard, there is issuances remain in effect until provide the best balance between the no requirement that a union expiration of the agreement at which unions’ institutional interest in the representative not assert the union’s time the agreement must be brought into matter and the employee’s right to position. The only conduct the revised conformance with the issuance. privacy. Consistent with this standard is intended to stop is the rare, Section 9901.916—Unfair Labor determination, we have added clarifying but utterly unacceptable use of vulgar or Practices language in § 9901.915(a)(2)(C). sexually explicit language, as well as Commenters, including labor physical intimidation by union officials. Commenters, including labor organizations participating in the meet- We believe the revised standard is organizations participating in the meet- and-confer process, expressed the view appropriate, particularly in a military and-confer process, recommended that that there is no valid reason to restrict organization that has a longstanding DoD should not be permitted to enforce the union’s right to attend formal tradition of professionalism and a rule or regulation that is in conflict discussions over operational matters. courtesy. We have therefore not with a collective bargaining agreement if Some of these comments appear to accepted this recommendation. the agreement was in effect prior to the confuse this right as it currently exists Commenters, including labor issuance of the rule or regulation. We under chapter 71. Some commenters organizations participating in the meet- agree with these recommendations to suggest that any formal meeting with and-confer process, objected to the the extent that the rule or regulation is employees requires an invitation for limitations on management’s obligation not implementing NSPS and have union attendance. This is clearly not the to provide information to a union under amended the regulations to reflect the case today, and case law is clear that it the proposed regulations. Generally current 5 U.S.C. 7116(a)(7) unfair labor must be a formal meeting where a these comments focused on the practice with a modification to exclude change to existing conditions of provisions allowing an authorized implementing issuances, which under employment is discussed. Many official to block the release of these regulations, will immediately

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supersede conflicting provisions of other words, this requires consultation may not opt out of or veto that collective bargaining agreements. on procedures for these particular agreement. Commenters, including labor management rights although Section 9901.919—Collective Bargaining organizations participating in the meet- ‘‘bargaining’’ on procedures is Above the Level of Recognition and-confer process, suggested that prohibited at § 9901.910(b). Commenters employees or employee representatives also raised concerns about the Several comments questioned the should have more than 90 days to file application of the § 9901.917(d)(2) procedures that will be used for an unfair labor practice with the Board. standard, given that it contains a bargaining above the level of We concur and have revised the number of undefined words and recognition, such as the approval regulation to provide six months, which phrases, e.g., ‘‘foreseeable, substantial, process for official time requested by is consistent with the current filing and significant in terms of both impact union officials who may be under limits under chapter 71. Finally, to and duration on the bargaining unit, or different Military Departments. In conform this section to the changes on those employees in that part of the response, we have added a provision made to § 9901.908 and to clarify the bargaining unit affected by the change.’’ that the Department will prescribe Board’s authority with respect to Commenters fear that, absent a implementing issuances on the unreviewable discretion, we have definition of these terms and phrases, procedures associated with collective eliminated reference to the term DoD management could interpret them bargaining above the level of ‘‘charge’’ and inserted instead the in a way that would render employee recognition. generic term ‘‘allegation.’’ This also and union rights meaningless. Commenters, including labor supports our goal for the Board to use Commenters recommended that we organizations participating in the meet- a single, integrated, streamlined process delete the provision altogether and rely and-confer process, acknowledged that for resolving labor relations disputes, on the FLRA’s existing de minimis bargaining at the national level could be including unfair labor practices. standard. We have not adopted these appropriate, under certain suggestions. While we agree that the circumstances. They objected, however, Section 9901.917—Duty To Bargain and to giving the Secretary the sole and Consult standard is subject to interpretation, we anticipate that a body of case law will exclusive discretion over the use of this Commenters, including labor develop to guide the parties in applying special bargaining authority as well as organizations participating in the meet- this standard, just as there is a body of the provisions requiring these and-confer process, objected to the case law regarding the FLRA’s de negotiations to supersede all conflicting establishment of a 30-day time limit to minimis standard. provisions of existing collective complete mid-term bargaining, as bargaining agreements. We disagree. proposed in § 9901.917(c). We have Section 9901.918—Multi-unit These provisions are required by 5 modified this section to allow the Bargaining U.S.C. 9902(g)(2). In addition, we parties, by mutual consent, to continue believe they are necessary for effective Commenters expressed concern that mid-term negotiations beyond the national level bargaining. proposed 30-day limitation. This change while unions could request multi-unit Commenters also objected to the to § 9901.917(c) parallels identical bargaining, the Secretary has sole and prohibition on ratification in language in § 9901.917(b). exclusive authority to grant such § 9901.919(b)(5). Based on the same Additionally, based on comments request. While we recognize this rationale relating to this issue with made during the meet-and-confer concern, we believe that the Secretary is regard to multi-unit bargaining, we have process that it was illogical to restrict in a unique position to determine when adopted the recommendation to delete the parties’ ability to seek bargaining an issue is appropriate for multi-unit the proposed ratification language. In its assistance early in the process, we bargaining given variations in mission place, § 9901.919(b)(5) now provides changed the proposed language in and organization across the Department. that individual labor organizations § 9901.917(b) and (c) to allow either We are also unclear as to how one union cannot opt out of, or veto, a final party, at any time prior to going to the could require another union to national level bargaining agreement. Board, to refer matters at impasse to participate in multi-unit bargaining. We FMCS or, if mutually agreeable, to have therefore rejected Section 9901.920—Negotiation another third party. recommendations to allow unions to Impasses We made technical changes to the require multi-unit bargaining. However, Labor organizations objected to the language in § 9901.917(d)(1) to conform we have modified the language to clarify NSLRB adjudicating negotiation it to the revised definitions of the Secretary’s authority to require impasses because they assert that the ‘‘implementing issuance’’ and multi-unit bargaining. NSLRB is not an independent third ‘‘issuance.’’ Commenters found the Commenters, including labor party. We disagree with this assertion § 9901.917(d)(2) limitation on organizations participating in the meet- for the reasons discussed in the Major bargaining to be unnecessary and and-confer process, expressed strong Issues section. During the meet-and- unclear. First, commenters suggested opinions regarding the prohibition on confer process, the participating labor that the lead phrase, ‘‘except as ratification of contracts. While we organizations recommended using otherwise provided in 910(c),’’ was understand that ratification is an arbitrators to resolve negotiation unnecessary. We disagree. The phrase is internal union process, we believe it impasses. We disagree because such a intended to convey that labor would be untenable to give each system would lead to inconsistent and organizations will have a right to individual bargaining unit veto power inefficient results. Use of the NSLRB consult on procedures in exercising over a multi-unit agreement after the will, over time, result in an established management rights at § 9901.910(a)(1) parties have reached agreement. Thus, body of precedent upon which both and (2) even though § 9901.917(d)(2) we have adopted the recommendation management and unions may rely. limits consultation to otherwise to eliminate the prohibition on We have made a conforming change negotiable changes in conditions of ratification, but added a provision that by adding § 9901.905 to the list of employment subject to the foreseeable, when an agreement is reached under sections for which the parties may substantial and significant standard. In this section, individual bargaining units submit disputed issues to the Board. We

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also made a technical correction and-confer process recommended that removed from the scope of the deleting a reference to judicial review pay be subject to the grievance negotiated grievance procedure because for unfair labor practices involving procedure. We note that pay has almost of other available forums for redress. We negotiation impasses since this is exclusively been excluded from the agree that there is a statutory right to file already provided for in § 9901.909. grievance procedure as it has an appeal with the Merit Systems historically been covered by Protection Board (MSPB), but the option Section 9901.921—Standards of Governmentwide regulation or law. The to grieve these adverse actions as an Conduct for Labor Organizations exclusion of pay from the grievance alternative to the MSPB is a well Labor organizations objected to this procedure is in keeping with this established employee right. To address section as duplicative of 5 U.S.C. longstanding practice as we move into the requirement that the appeals process chapter 71. However, we have decided a pay for performance system. As with be fair and to ensure that the to retain it to ensure that labor classification, subjecting pay Department’s national security mission organizations are cognizant of determinations to inconsistent arbitrator is considered, we have retained applicable standards of conduct. interpretations would undermine the regulatory language ensuring uniform Section 9901.922—Grievance Procedure pay system and be inconsistent with review and interpretation of arbitral statutory requirements that the pay awards and AJ decisions. Thus, we have Commenters recommended that the system be fair, credible, and transparent. rejected this comment. term ‘‘administrative’’ be reinserted into Thus, we have retained the language as We also made a technical change to the description of the negotiated proposed. § 9901.922(e) to assure that mixed cases grievance procedure in order to retain Many commenters, including labor processed through a negotiated access to judicial review. As the organizations participating in the meet- grievance procedure can properly be Government’s brief in the pending case and-confer process, presented strong reviewed by the Equal Employment Whitman v. DOT (S. Ct. No. 04–1131) arguments that employee ratings of Opportunity Commission. demonstrates, we do not believe the record should continue to be subject to Section 9901.923—Exceptions to inclusion of the word ‘‘administrative’’ the grievance procedure and binding Arbitration Awards in chapter 71 was intended to authorize arbitration. Most commenters expressed judicial review of grievances. concern that receiving an accurate Labor organizations participating in Nonetheless, since some courts and performance rating was crucial to the meet-and-confer process suggested parties have taken the position that the employees because that rating will be that we reconsider subjecting exceptions addition of the word ‘‘administrative’’ used in determining an employee’s pay. from arbitration decisions on appealable authorized judicial review, we have Thus, employees need a credible system adverse actions to the Merit Systems removed that term from the regulation to challenge ratings of record that they Protection Board for appellate review. to avoid any suggestion that this believe are inaccurate. We agree and We disagree. The Secretary must retain regulation would authorize judicial have provided employees the right to full authority to review an arbitrator’s review. Because this change clarifies grieve their performance ratings of decision on an appealable adverse that judicial review over many issues is record through the negotiated grievance action, similar to the need to review not available, it does not restrict an procedure. Moreover, during the meet- decisions of MSPB Administrative employee’s right to obtain MSPB or and-confer process, the unions agreed Judges, to ensure that the arbitrator EEOC review of adverse actions and that the use of panels, consisting of an interprets NSPS and these regulations in subsequent judicial review of those arbitrator, a management official and a a way that recognizes the critical decisions. Therefore, we have rejected union official, to decide grievances mission of the Department and to ensure the recommendation and retained that regarding ratings of record should be an that deference is provided to the language as proposed. option for employees. Thus, we have Department’s interpretation of these Commenters, including the labor modified the regulations to provide that regulations. This provision is designed organizations participating in the meet- an employee may challenge a rating of to ensure uniformity of interpretation and-confer process, recommended that record either through the negotiated and application of NSPS and these classification issues should be subject to grievance procedure using either a panel regulations. Allowing direct judicial the grievance procedure. However, the or traditional arbitration. Employees review of arbitration decisions would classification of positions generally has also have the option of using the create an inconsistent approach in how been excluded from the grievance administrative reconsideration process MSPB Administrative Judges and procedure. We believe that consistency as set out in § 9901.409(g). arbitrator decisions are treated on of classification, while always We have also added language to identical matters. important, becomes critical as we move reflect case law which prevents an Section 9901.924—Official Time into a pay-for-performance arbitrator, or a panel, from conducting environment. Subjecting classification an independent evaluation of Commenters found the proposed decisions to inconsistent interpretations performance or otherwise substituting regulations to be unclear as to how by arbitrators would undermine the his or her judgment for that of a official time would be allocated among system. This would result in a manager. We have made clear that the union officials from different locals fragmented classification system arbitrator or panel has no authority to when they are engaged in multi-unit throughout the Department with determine appropriate share payouts and/or national level bargaining. We similarly situated employees being under the pay-for-performance system, note that the proposed regulations treated differently. Such a result would as such determinations are made by provide that the Secretary will prescribe be inconsistent with the NSPS Guiding management based on the rating of implementing issuances on the Principles and KPPs, which require that record. We believe that these changes procedures and constraints associated the system be credible and trusted. address the concerns of commenters and with multi-unit bargaining. These Therefore, we have not adopted this will serve to instill confidence in the issuances will address a variety of recommended change. performance rating process. issues including the granting of official Commenters, including labor Finally, a commenter recommended time. However, the comment revealed organizations participating in the meet- that appealable adverse actions be that a parallel provision for collective

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bargaining above the level of recognition Section 9901.928—Savings Provisions reduction in force, adverse action, and has been inadvertently omitted for appeals regulations. § 9901.919. Although multi-unit We received comments The labor relations provisions will be bargaining may also be at the level of recommending deletion of this section implemented DoD-wide for all eligible recognition, there are situations where it because the commenters believe that DoD employees at the same time. The could occur above the level of excluding administrative remedies for labor relations provisions apply to all recognition. Therefore, to ensure clarity, pending grievances is contrary to law. eligible employees even if the HR we have amended this section to We disagree. To the extent that an system does not cover them. provide that the Secretary will prescribe award is prospective in nature, it must implementing issuances on the comply with the applicable procedures, B. Development of Implementing procedures and constraints associated whether established through law, rule, Issuances and Continuing Collaboration with bargaining above the level of regulation or collective bargaining The Secretary will engage in recognition. agreement. continuing collaboration with employee representatives in developing Section 9901.925—Compilation and Next Steps implementing issuances. This will Publication of Data A. NSPS Implementation provide employee representatives an Commenters recommended that this 1. Employee Transition Plan (Spiral opportunity to submit written section be deleted as its sole use and Strategy) comments and discuss their views on purpose, in their view, is to facilitate the human resources management issues. In The Secretary adopted an ‘‘acquisition Board’s unlawful functioning. We some areas, such as classification and model’’ to design and implement NSPS. disagree for the reasons explained under pay matters, law or other agency rules Eligible employees will transition to General Comments, and have retained have governed decisions with no avenue NSPS in phases or ‘‘spirals.’’ The spiral this section. for labor organizations to provide input concept allows the Department to to DoD. Continuing collaboration Section 9901.926—Regulations of the introduce NSPS in successive waves—to provides an historic opportunity for Board initially deploy the new personnel employee representatives to have input system to a number of organizations so into the development of the Commenters recommended that this that we can manage implementation and Department’s human resources section be deleted as its sole purpose, in troubleshoot, evaluate, and report on the management system, as well as certain their view, is to facilitate the Board’s results in a timely manner. As with any aspects of the adverse actions, appeals, unlawful functioning. Commenters new system, especially one with the size and labor relations programs not asserted that the Board must develop its and complexity of NSPS, we may need specifically covered by these own regulations and that the to make refinements as we roll it out to regulations. It is an opportunity for their Department does not have the authority the rest of the workforce. The first views and interests to be heard and to issue interim regulations for an spiral, spiral one, is limited to General considered in the development process independent Board’s operation. We Schedule (GS and GM), Acquisition and gives the Secretary the benefit of agree that the Board should issue its Demonstration Project, and certain their insight. We encourage employee own regulations and have provided the alternative personnel system employees. representatives to take advantage of this Board with that authority. However, we As required by 5 U.S.C. 9902(l), the process and the benefits it offers. believe that it would be impractical for NSPS HR system under 5 U.S.C. 9902(a) the Board to operate without interim The Secretary will provide the may be implemented to a maximum of employee representatives draft copies of rules until such time as the Board issues 300,000 employees without having to its own regulations. Thus, we have implementing issuances for review and make a determination that the comment. If necessary and appropriate, retained the Secretary’s authority to Department has in place a performance develop interim NSLRB regulations. continuing collaboration could include management system that meets the face-to-face meetings or any other means Section 9901.927—Continuation of criteria in 5 U.S.C. 9902(b). Spiral one to exchange information and ideas. We Existing Laws, Recognitions, and will cover up to the statutory limit of expect continuing collaboration to begin Procedures 300,000 employees. shortly after these final regulations After the assessment cycle and become effective. Commenters recommended deletion certification of the performance of this section on the basis that management system are completed, the C. Training invalidation of collective bargaining second spiral will deploy. Spiral two The NSPS training plan presents a agreements provisions before the includes Federal Wage System comprehensive, well-planned learning expiration of their term is, in their view, employees, overseas employees, and strategy to prepare the DoD workforce unlawful. Again, we disagree for the other eligible employees. Spiral three for the transition to NSPS. The plan is reasons explained under General will comprise the DoD labs, currently grounded in the belief that participants Comments. excluded by 5 U.S.C. 9902(c), should need to be informed and educated about Commenters also suggested that the the Secretary make the determination NSPS and trust and value it as a system statements concerning the continuation required by that section. that fosters accountability, respects the of existing collective bargaining 2. HR and Labor Relations Transition individual, and protects his and her agreements and labor organization rights under the law. In building the recognitions are unnecessary. We Transition to the HR system occurs plan, the Department seeks to educate disagree because we want to ensure that when employees convert or spiral into employees about NSPS, teach the skills there is no misunderstanding that these NSPS. Employees covered by the HR and behaviors necessary to implement regulations will not dissolve established system are under the appeals process. and sustain NSPS, foster support and bargaining units within the Department Upon conversion, employees will be confidence in NSPS, and facilitate the nor cancel entire collective bargaining covered by the NSPS performance transition to a performance-based, agreements. management, classification, pay, results-oriented culture.

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The plan adopts a two-fold strategy successful. Some of the component on-line training delivered in a centered around two interrelated behavior-based training has already consistent manner in a self-paced, on- training domains: The NSPS functional begun, and other courses are in demand format. The ‘‘NSPS 101’’ course domain covering the NSPS system development and will be available to serves as a prerequisite for the elements contained within the human train all affected employees in advance classroom sessions. resources, labor relations, and appeals of NSPS implementation. Course Classroom Sessions—the primary sections of the regulations; and the offerings include interpersonal vehicle to communicate critical change management domain, which communication, team building, and information, classroom sessions are focuses on the skills, attitudes, and conflict management to help facilitate under development for employees, behaviors necessary for success under interaction between employees and managers and supervisors, human NSPS. The plan incorporates a blended supervisors. In addition, components resources practitioners, and labor learning approach featuring Web-based continue to offer a variety of relations practitioners. The sessions will and classroom instruction informational forums and learning provide key operational information on supplemented by a variety of learning activities with sponsorship and active all NSPS systems elements, with products, informational materials, and continuing involvement by DoD’s senior particular emphasis on performance workshops to effectively reach intended leadership. management. Topics will include the audiences with engaging, accurate, and The design of the pay-for-performance performance management cycle, timely content. system includes the use of pay pools, developing performance objectives, Within the functional domain, the and we will also provide training for performance evaluation and assessment, Department will offer specialized pay pool managers covering the pay performance coaching, and courses for all of the functional areas pool process, goals and objectives, performance-based communication. covered by the NSPS regulations, authorities, funding considerations, Classroom training will be conducted tailored for specialized audiences (e.g., documentation, effective panel using a train-the-trainer strategy, with supervisors/managers, human resources characteristics, etc. Roles and trainers who participate in a train-the- practitioners, attorneys, and non- responsibilities of the pay pool manager trainer program leading all classroom supervisory employees). These courses and participating supervisors will also training. will cover pay banding, staffing be covered extensively. The training Trainers will be provided with flexibilities, performance management, will also feature a mock pay pool panel instructor guides and will include basic labor relations, the appeals process, and process that takes pay pool panel instructional content supplemented by other matters. The Department has a members through the full assessment video vignettes and interactive robust training infrastructure already in process to include mock payout and exercises. Classroom training is place to train and educate its personnel employee feedback. This training builds scheduled to occur on a ‘‘just-in-time’’ and will leverage that infrastructure as in accountability and supports the basis, approximately 4 to 6 weeks prior we implement NSPS-specific training. needs of both employees and managers to NSPS implementation. Managers and supervisors, including by providing an opportunity to The Department’s leadership military managers and supervisors, are experience the process and identify and recognizes and is committed to key to the success of NSPS and correct procedures prior to undergoing providing the necessary training. extensive training will be given to the actual pay pool experience. Secretary England, during testimony to ensure their understanding of the The PEO training plan was based on the Senate Armed Services Committee, system and the key role they play. our extensive experience with previous stated that ‘‘[t]raining is one of the most Courses aimed at managers and demonstration projects. Training needs critical elements for a smooth and supervisors will focus heavily on the will vary by individual and organization successful transition to NSPS. The performance management aspect of depending on their familiarity with the Department is fully committed to a NSPS. DoD’s Program Executive Office fundamentals of a performance-oriented comprehensive training program for our is developing these courses now and work environment. The core functional managers, supervisors and employees. will make them available to components training courses available will include— All employees will be trained to in time to train employees in advance of • 18 hours for managers and understand the system, how it works, NSPS implementation. Training will supervisors; and how it will affect them.’’ focus on improving skills needed for • 13 hours for employees; and The necessary resources are available effective performance management, • 25 to 40 hours for HR practitioners to provide the training. To address these such as setting clear goals and (depending on the functional area of requirements, the PEO allocated $2 expectations, communicating with expertise; includes training on labor million in FY05 and anticipates employees, and linking individual relations and appeals). allocating another $3 million in FY06 to expectations to the goals and objectives Although the time spent in training fund development and delivery of core of the organization. represents the Secretary’s commitment The Department is also focusing NSPS training courses and delivery of to preparing the workforce, it is focusing the ‘‘train-the-trainer’’ sessions. attention on change management on the results and outcomes of that training to address the behavioral training, as opposed to a prescriptive Regulatory Requirements aspects of moving to NSPS and to better ‘‘one size fits all’’ strategy. E.O. 12866, Regulatory Review prepare the workforce for the changes Employees will receive functional NSPS will bring. The behavior-based training through three primary vehicles: DoD and OPM have determined that training provides the foundation for Print Materials —directed to various the National Security Personnel System future NSPS learning activities and targeted audiences to raise awareness (NSPS) is a significant regulatory action facilitates increased communication and educate them on key NSPS as enacted by Section 1101 of the between supervisors and employees as elements and performance management National Defense Authorization Act for they discuss and jointly develop concepts. Fiscal Year 2004 (Pub. L. 108–136, performance objectives tied to the Web-based Training—two hour-long November 24, 2003) because there is a overall organization’s mission. This is courses, ‘‘Fundamentals of NSPS’’ and significant public interest in revisions of essential if this new system is to be ‘‘NSPS 101,’’ providing introductory, the DoD civilian employment system.

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DoD and OPM have analyzed the systems, the costs associated with materials; conducting employee expected costs and benefits of NSPS to implementing NSPS will not be education and communication be implemented by DoD and that extensive, since DoD has significant activities; developing and conducting analysis is presented here. training and information technology pay surveys to determine future pay Integral to the administration of the infrastructures in place for current adjustments in relation to the labor new performance-based personnel operations. DoD will not have to build market; conducting surveys and data system is a commitment to the DoD new systems or delivery mechanisms, analysis to ensure key performance workforce to the maximum extent but rather will modify existing systems parameters are met; the establishment of practicable, for fiscal years 2004 through and approaches to accommodate the National Security Labor Relations 2008, that the aggregate amount changes brought about by NSPS. Board (NSLRB); and the overall allocated for compensation of DoD The other cost category refers to the operation of the NSPS Program employees under NSPS will not be less cost to establish the National Security Executive Office. The extent of these than if they had not been converted to Labor Relations Board (NSLRB). This costs will be directly related to the level NSPS. This takes into account potential includes typical organizational stand-up of comprehensiveness desired by DoD. step increases and rates of promotion costs, as well as staffing the NSLRB with DoD estimates the overall costs had employees remained in their members and a professional staff. It is associated with implementing the new previous pay schedule. In addition, expected that the NSLRB will develop DoD HR system—including the NSPS implementing issuances will streamlined processes and procedures development and implementation of a provide a formula for calculating the and leverage existing infrastructures and new human resources system and the aggregate compensation amount for technology to minimize start-up and creation of the NSLRB—will be fiscal years after fiscal year 2008. The sustainment cost. approximately $158 million through formula will ensure that, to maximum As has been the practice with 2008. Less than $100 million will be extent practicable, in the aggregate, implementing other alternative spent in any given 12-month period. employees are not disadvantaged in the personnel systems, DoD expects to incur The primary benefit to the public of overall amount of pay available as a an initial payroll cost related to the this new system resides in the result of conversion to the NSPS, while conversion of employees to the pay flexibilities that will enable DoD to providing flexibility to accommodate banding system. This is often referred to build a high-performance organization changes in the function of the as a within-grade-increase (WGI) focused on mission accomplishment. organization, changes in the mix of ‘‘buyout’’ in which an employee’s basic The new job evaluation, performance- employees performing those functions pay, upon conversion, is adjusted by the based pay and management system and other changed circumstances that amount of the WGI earned to date. provides DoD with an increased ability might impact pay levels. While this increase is paid earlier than to attract and retain a more qualified Accordingly, the NSPS performance- scheduled, it represents a cost that and proficient workforce. The new and based pay system carries with it would have been incurred under the improved processes in labor potential implications relative to the current system at some point. However, management relations, adverse actions, base pay of individual employees, under the NSPS final regulations, WGIs and appeals will afford DoD greater depending upon local labor market no longer exist; once under NSPS, such flexibility to manage its workforce in the conditions and individual, team, and pay increases will be based on face of constantly changing threats to organizational performance. However, performance. Accordingly, the total cost the United States and to successfully actual payroll costs under this system of the accelerated WGI ‘‘buyout’’ should support its primary mission of Defense will be constrained by the amount not be treated as a ‘‘new’’ cost attributed and the Global War on Terrorism. Taken budgeted for overall DoD payroll to implementation of NSPS, since it is as a whole, the changes included in expenditures, as is the case with the a cost that DoD would bear under the these final regulations will result in a present GS pay system. DoD anticipates current HR system in the absence of the contemporary, merit-based HR system that accessions, separations, and enabling legislation and corresponding that focuses on performance, generates promotions will net out and, as with the regulations. The portion of the buyout respect and trust, and supports the present system, not add to the overall cost attributable to NSPS primary mission of DoD. cost of administering the system. implementation is the marginal The creation of the performance-based difference between paying out the Regulatory Flexibility Act NSPS will result in some initial earned portion of a WGI upon DoD and OPM have determined that implementation costs, which can be conversion and the cost of paying the these regulations will not have a expressed in two basic categories: (1) same WGI according to the current significant economic impact on a Program implementation costs and (2) schedule. In the absence of NSPS, WGIs substantial number of small entities NSLRB start-up costs. The program would be spread out over time instead because they will apply only to Federal category refers to the costs associated of being paid ‘‘up front.’’ The marginal agencies and employees. with designing and implementing the cost of the accelerated payment of system. This includes the start-up and earned WGIs is difficult to estimate, but E.O. 12988, Civil Justice Reform operation of the Program Executive is not a significant factor in the cost This regulation is consistent with the Office, executing the system design benefit analysis for regulatory review requirements of E.O. 12988. The process, developing and delivering new purposes. regulation clearly specifies the effects training specifically for NSPS, In addition, DoD will incur costs on existing Federal law or regulation; conducting outreach for employees and relating to such matters as training provides clear legal standards; has no other parties, engaging in collaboration development, support, and execution; retroactive effects; specifies procedures activities with employee reprogramming automated payroll and for administrative and court actions; representatives, and modifying human human resources information systems; defines key terms; and is drafted clearly. resources information systems, developing guiding issuances, including personnel and payroll implementation planning, scheduling, E.O. 13132, Federalism transaction processing systems. In the and monitoring; design, production, and DoD and OPM have determined that areas of training and HR automated distribution of communication these regulations will not have

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federalism implications because they 9901.205 Bar on collective bargaining. 9901.405 Performance management system will apply only to Federal agencies and Classification Structure requirements. employees. The regulations will not 9901.406 Setting and communicating 9901.211 Career groups. performance expectations. have financial or other effects on States, 9901.212 Pay schedules and pay bands. the relationship between the Federal 9901.407 Monitoring performance and Classification Process providing feedback. Government and the States, or the 9901.408 Developing performance and distribution of power and 9901.221 Classification requirements. 9901.222 Reconsideration of classification addressing poor performance. responsibilities among the various decisions. 9901.409 Rating and rewarding levels of government. performance. Transitional Provisions Paperwork Reduction Act of 1995 (44 9901.231 Conversion of positions and Subpart E—Staffing and Employment U.S.C. Chapter 35) employees to the NSPS classification General This final regulatory action will not system. 9901.501 Purpose. impose any additional reporting or Subpart C—Pay and Pay Administration 9901.502 Scope of authority. 9901.503 Coverage. recordkeeping requirements under the General Paperwork Reduction Act. 9901.504 Definitions. 9901.301 Purpose. External Recruitment and Internal Placement Unfunded Mandates 9901.302 Coverage. 9901.303 Waivers. 9901.511 Appointing authorities. These regulations will not result in 9901.304 Definitions. 9901.512 Probationary periods. the expenditure by State, local, or tribal 9901.305 Bar on collective bargaining. 9901.513 Qualification standards. governments of more than $100 million Overview of Pay System 9901.514 Non-citizen hiring. annually. Thus, no written assessment 9901.515 Competitive examining of unfunded mandates is required. 9901.311 Major features. procedures. 9901.312 Maximum rates. 9901.516 Internal placement. List of Subjects in 5 CFR Part 9901 9901.313 National security compensation comparability. Subpart F—Workforce Shaping Administrative practice and procedure, Government employees, Setting and Adjusting Rate Ranges 9901.601 Purpose and applicability. 9901.602 Scope of authority. 9901.321 Structure. Labor management relations, Labor 9901.603 Definitions. 9901.322 Setting and adjusting rate ranges. unions, Reporting and recordkeeping 9901.604 Coverage. 9901.323 Eligibility for pay increase requirements, Wages. 9901.605 Competitive area. associated with a rate range adjustment. 9901.606 Competitive group. Linda M. Springer, Local Market Supplements 9901.607 Retention standing. Director, Office of Personnel Management. 9901.331 General. 9901.608 Displacement, release, and Donald Rumsfeld, 9901.332 Local market supplements. position offers. Secretary, Department of Defense. 9901.333 Setting and adjusting local market 9901.609 Reduction in force notices. supplements. 9901.610 Voluntary separation. I Accordingly, under the authority of 9901.334 Eligibility for pay increase 9901.611 Reduction in force appeals. section 9902 of title 5, United States associated with a supplement Subpart G—Adverse Actions Code, the Department of Defense and adjustment. General the Office of Personnel Management Performance-Based Pay amend title 5, Code of Federal 9901.701 Purpose. 9901.341 General. Regulations, by establishing chapter 9901.342 Performance payouts. 9901.702 Waivers. XCIX consisting of part 9901 as follows: 9901.343 Pay reduction based on 9901.703 Definitions. 9901.704 Coverage. CHAPTER XCIX—DEPARTMENT OF unacceptable performance and/or DEFENSE HUMAN RESOURCES conduct. Requirements for Removal, Suspension, MANAGEMENT AND LABOR RELATIONS 9901.344 Other performance payments. Furlough of 30 Days or Less, Reduction in SYSTEMS (DEPARTMENT OF DEFENSE— 9901.345 Treatment of developmental Pay, or Reduction in Band (or Comparable OFFICE OF PERSONNEL MANAGEMENT) positions. Reduction) Pay Administration 9901.711 Standard for action. PART 9901—DEPARTMENT OF 9901.351 Setting an employee’s starting 9901.712 Mandatory removal offenses. DEFENSE HUMAN RESOURCES pay. 9901.713 Procedures. MANAGEMENT AND LABOR 9901.352 Setting pay upon reassignment. 9901.714 Proposal notice. RELATIONS SYSTEMS 9901.353 Setting pay upon promotion. 9901.715 Opportunity to reply. 9901.354 Setting pay upon reduction in 9901.716 Decision notice. Subpart A—General Provisions band. 9901.717 Departmental record. Sec. 9901.355 Pay retention. Savings Provision 9901.101 Purpose. 9901.356 Miscellaneous. 9901.721 Savings provision. 9901.102 Eligibility and coverage. Premium Pay 9901.103 Definitions. Subpart H—Appeals 9901.361 General. 9901.104 Scope of authority. 9901.801 Purpose. 9901.105 Coordination with OPM. Conversion Provisions 9901.802 Applicable legal standards and 9901.106 Continuing collaboration. 9901.371 General. precedents. 9901.107 Relationship to other provisions. 9901.372 Creating initial pay ranges. 9901.803 Waivers. 9901.108 Program evaluation. 9901.373 Conversion of employees to the 9901.804 Definitions. Subpart B—Classification NSPS pay system. 9901.805 Coverage. 9901.806 Alternative dispute resolution. General Subpart D—Performance Management 9901.807 Appellate procedures. 9901.201 Purpose. 9901.401 Purpose. 9901.808 Appeals of mandatory removal 9901.202 Coverage. 9901.402 Coverage. actions. 9901.203 Waivers. 9901.403 Waivers. 9901.809 Actions involving discrimination. 9901.204 Definitions. 9901.404 Definitions. 9901.810 Savings provision.

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Subpart I—Labor-Management Relations ensure accountability at all levels; DoD employees will be based on the 9901.901 Purpose. balance human resources system Federal laws and regulations applicable 9901.902 Scope of authority. interoperability with unique mission to them on the effective date of the 9901.903 Definitions. requirements; and be competitive and action. 9901.904 Coverage. cost effective. (d) Any new NSPS classification, pay, 9901.905 Impact on existing agreements. (2) The key operational characteristics or performance management system 9901.906 Employee rights. and requirements of NSPS and the labor covering Senior Executive Service (SES) 9901.907 National Security Labor Relations relations system, which these members will be consistent with the Board. regulations are designed to facilitate, are policies and procedures established by 9901.908 Powers and duties of the Board. 9901.909 Powers and duties of the Federal as follows: High Performing Workforce the Governmentwide SES pay-for- Labor Relations Authority. and Management—employees and performance framework authorized by 5 9901.910 Management rights. supervisors are compensated and U.S.C. chapter 53, subchapter VIII, and 9901.911 Exclusive recognition of labor retained based on their performance and applicable OPM regulations. If the organizations. contribution to mission; Agile and Secretary determines that SES members 9901.912 Determination of appropriate Responsive Workforce and employed by DoD should be covered by units for labor organization Management—workforce can be easily classification, pay, or performance representation. sized, shaped, and deployed to meet management provisions that differ 9901.913 National consultation. changing mission requirements; substantially from the Governmentwide 9901.914 Representation rights and duties. 9901.915 Allotments to representatives. Credible and Trusted—system assures SES pay-for-performance framework, 9901.916 Unfair labor practices. openness, clarity, accountability, and the Secretary and the Director will issue 9901.917 Duty to bargain and consult. adherence to the public employment joint regulations consistent with all of 9901.918 Multi-unit bargaining. principles of merit and fitness; Fiscally the requirements of 5 U.S.C. 9902. 9901.919 Collective bargaining above the Sound—aggregate increases in civilian (e) At his or her sole and exclusive level of recognition. payroll, at the appropriations level, will discretion, the Secretary may rescind 9901.920 Negotiation impasses. conform to OMB fiscal guidance; the application under paragraph (b) of 9901.921 Standards of conduct for labor Supporting Infrastructure—information this section of one or more subparts of organizations. technology support, and training and this part to a particular category of 9901.922 Grievance procedures. employees and prescribe implementing 9901.923 Exceptions to arbitration awards. change management plans are available 9901.924 Official time. and funded; and Schedule—NSPS and issuances for converting that category of 9901.925 Compilation and publication of the labor relations system will be employees to coverage under applicable data. operational and demonstrate success title 5 or other applicable provisions. 9901.926 Regulations of the Board. prior to November 2009. The Secretary will notify affected 9901.927 Continuation of existing laws, employees and labor organizations in recognitions, agreements, and § 9901.102 Eligibility and coverage. advance of a decision to rescind the procedures. (a) Pursuant to the provisions of 5 application of one or more subparts of 9901.928 Savings provisions. U.S.C. 9902, all civilian employees of this part to them. Authority: 5 U.S.C. 9902 DoD are eligible for coverage under one (f)(1) Notwithstanding any other or more of subparts B through I of this provision of this part, but subject to the Subpart A—General Provisions part, except to the extent specifically following conditions, the Secretary may, prohibited by law. § 9901.101 Purpose. at his or her sole and exclusive (b) At his or her sole and exclusive discretion, apply one or more subparts (a) This part contains regulations discretion, the Secretary may, subject to of this part as of an effective date governing the establishment of a new § 9901.105(b)— specified to a category of employees in human resources management system (1) Establish or change the effective organizational and functional units not and a new labor relations system within date for applying subpart I of this part currently eligible for coverage because the Department of Defense (DoD), as to all eligible employees in accordance of coverage under a system established authorized by 5 U.S.C. 9902. Consistent with 5 U.S.C. 9902(m); and by a provision of law outside the with 5 U.S.C. 9902, these regulations (2) With respect to subparts B through waivable or modifiable chapters of title waive or modify various statutory H of this part, apply these subparts to 5, U.S. Code, if the provision of law provisions that would otherwise be a specific category or categories of outside those waivable or modifiable applicable to affected DoD employees. eligible civilian employees in title 5 chapters provides discretionary These regulations are prescribed jointly organizations and functional units of the authority to cover employees under a by the Secretary of Defense and the Department at any time in accordance given waivable or modifiable title 5 Director of the Office of Personnel with the provisions of 5 U.S.C. 9902. chapter or to cover them under a Management (OPM). However, no category of employees may separate system established by the (b)(1) This part is designed to meet a be covered by subparts B, C, E, F, G, or Secretary. number of essential requirements for the H of this part unless that category is also (2) In applying paragraph (f)(1) of this implementation of a new human covered by subpart D of this part. section with respect to coverage under resources management system and a (c) Until the Secretary makes a subparts B and C of this part, the new labor relations system for DoD. The determination under paragraph (b) of affected employees will be converted guiding principles for establishing these this section to apply the provisions of directly to the NSPS pay system from requirements are to put mission first; one or more subparts of this part to a their current pay system. The Secretary respect the individual; protect rights particular category or categories of may establish conversion rules for these guaranteed by law, including the eligible employees in organizations and employees similar to the conversion statutory merit system principles in 5 functional units, those employees, will rules established under § 9901.373. U.S.C. 2301; value talent, performance, continue to be covered by the applicable leadership, and commitment to public Federal laws and regulations that would § 9901.103 Definitions. service; be flexible, understandable, apply to them in the absence of this In this part: credible, responsive, and executable; part. All personnel actions affecting Band means pay band.

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Basic pay means an employee’s rate of by the Secretary, during which an organizational goals, including an pay before any deductions and authorized management official employee’s behavior and professional exclusive of additional pay of any kind, determines whether the employee demeanor (actions, attitude, and manner except as expressly provided by fulfills the requirements of the position of performance), as demonstrated by his applicable law or regulation. For the to which assigned. or her approach to completing work specific purposes prescribed in Labor organization means an assignments. § 9901.332(c) only, basic pay includes organization composed in whole or in Principal Staff Assistants means any local market supplement. part of employees, in which employees senior officials of the Office of the Career group means a grouping of one participate and pay dues, and which has Secretary who report directly to the or more associated or related as a purpose the dealing with the Secretary or Deputy Secretary of occupations. A career group may Department concerning grievances and Defense. include one or more pay schedules. conditions of employment, but does not Promotion means the movement of an Competencies means the measurable include— employee from one pay band to a higher or observable knowledge, skills, (1) An organization which, by its pay band under implementing abilities, behaviors, and other constitution, bylaws, tacit agreement issuances. This includes movement of characteristics that an individual needs among its members, or otherwise, an employee currently covered by a to perform a particular job or job denies membership because of race, non-NSPS Federal personnel system to function successfully. color, creed, national origin, sex, age, a position determined to be at a higher Contribution means a work product, preferential or nonpreferential civil level of work in NSPS. service, output, or result provided or service status, political affiliation, Rating of record means a performance produced by an employee or group of marital status, or handicapping appraisal prepared— employees that supports the condition; (1) At the end of an appraisal period Departmental or organizational mission, (2) An organization which advocates covering an employee’s performance of goals, or objectives. the overthrow of the constitutional form assigned duties against performance Day means a calendar day. of government of the United States; expectations over the applicable period; Department or DoD means the (3) An organization sponsored by the or Department of Defense. Department; or (2) As needed to reflect a substantial Director means the Director of the (4) An organization which and sustained change in the employee’s Office of Personnel Management. participates in the conduct of a strike performance since the last rating of Employee means an employee within against the Government or any agency record as provided in implementing the meaning of that term in 5 U.S.C. thereof or imposes a duty or obligation issuances. 2105. to conduct, assist, or participate in such Reassignment means the movement of Furlough means the placement of an a strike. an employee within DoD from his or her employee in a temporary status without Mandatory removal offense (MRO) position of record to a different position duties and pay because of lack of work means an offense that the Secretary or set of duties in the same or a or funds or other non-disciplinary determines in his or her sole, exclusive, comparable pay band under reasons. and unreviewable discretion has a direct implementing issuances on a permanent General Schedule or GS means the and substantial adverse impact on the or temporary/time-limited basis. This General Schedule classification and pay Department’s national security mission. includes the movement of an employee system established under chapter 51 Military Department means the between positions at a comparable level and subchapter III of chapter 53 of title Department of the Army, the of work in NSPS and a non-NSPS 5, U.S. Code. Department of the Navy, or the Federal personnel system. Implementing issuance(s) means a Department of the Air Force. Reduction in band means the document or documents issued by the MSPB means the Merit Systems voluntary or involuntary movement of Secretary, Deputy Secretary, Principal Protection Board. an employee from one pay band to a Staff Assistants (as authorized by the National Security Personnel System lower pay band under implementing Secretary), or Secretaries of the Military (NSPS) means the human resources issuances. This includes movement of Departments to carry out a policy or management system established under 5 an employee currently covered by a procedure implementing this part. U.S.C. 9902(a). It does not include the non-NSPS Federal personnel system to These issuances may apply Department- labor relations system established under a position determined to be at a lower wide or to any part of DoD as 5 U.S.C. 9902(m). level of work in NSPS. determined by the Secretary at his or Occupational series means a group or Secretary means the Secretary of her sole and exclusive discretion. These family of positions performing similar Defense, consistent with 10 U.S.C. 113. issuances do not include internal types of work. Occupational series are SES means the Senior Executive operating guidance, handbooks, or assigned a number for workforce Service established under 5 U.S.C. manuals that do not change conditions information purposes (for example: chapter 31, subchapter II. of employment, as defined in 0110, Economist Series; 1410, Librarian SL/ST refers to an employee serving § 9901.903. Series). in a senior-level position paid under 5 Initial probationary period means the OPM means the Office of Personnel U.S.C. 5376. The term ‘‘SL’’ identifies a period of time, as designated by the Management. senior-level employee covered by 5 Secretary, immediately following an Pay band or band means a work level U.S.C. 3324 and 5108. The term ‘‘ST’’ employee’s appointment, during which and associated pay range within a pay identifies an employee who is an authorized management official schedule. appointed under the special authority in determines whether the employee Pay schedule means a set of related 5 U.S.C. 3325 to a scientific or fulfills the requirements of the position pay bands for a specified category of professional position established under to which assigned. employees within a career group. 5 U.S.C. 3104. In-service probationary period, such Performance means accomplishment Unacceptable performance means as a supervisory probationary period, of work assignments or responsibilities performance of an employee which fails means the period of time, as designated and contribution to achieving to meet one or more performance

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expectations, as amplified through work (1) Establishing or substantially § 9901.515 that differ from those assignments or other instructions, for revising career groups, occupational pay applicable to the examination of which the employee is held schedules, and pay bands under applicants for appointment to the individually accountable. §§ 9901.211 and 9901.212(a); competitive and excepted service under (2) Establishing alternative or 5 U.S.C. chapters 31 and 33, except as § 9901.104 Scope of authority. additional occupational series for a otherwise provided by subpart E of this The authority for this part is 5 U.S.C. particular career group or occupation part; 9902. The provisions in the following under § 9901.221(b)(1) that differ from (2) Establishing policies and chapters of title 5, U.S. Code, and any Governmentwide series and/or procedures for time-limited related regulations, may be waived or standards; appointments under § 9901.511(d) modified in exercising the authority in (3) Establishing alternative or regarding appointment duration, 5 U.S.C. 9902: additional classification standards for a advertising requirements, examining (a) Chapters 31, 33, and 35, dealing particular career group or occupation procedures, the appropriate uses of with staffing, employment, and under § 9901.221(b)(1) that differ from time-limited employees, and the workforce shaping (as authorized by 5 Governmentwide classification procedures under which a time-limited U.S.C. 9902(k)); standards; and employee in a competitive service (b) Chapter 43, dealing with (4) Establishing the process by which position maybe be converted without performance appraisal systems; DoD employees may request further competition to the career (c) Chapter 51, dealing with General reconsideration of classification service; and Schedule job classification; decisions by the Secretary under (3) Establishing alternative or (d) Chapter 53, dealing with pay for § 9901.222, to ensure compatibility additional qualification standards for a General Schedule employees, pay and between DoD and OPM procedures. particular occupational series, career job grading for Federal Wage System (d) Subpart C of this part authorizes group, occupational pay schedule, and/ employees, and pay for certain other the Secretary to establish and or pay band under § 9901.212(d) or employees; administer a compensation system for 9901.513 that significantly differ from (e) Chapter 55, subchapter V, dealing employees of the Department covered Governmentwide standards. with premium pay, except section by the NSPS; in so doing, DoD will (f) Subpart F of this part authorizes 5545b; coordinate with OPM prior to— the Secretary to establish and (f) Chapter 71, dealing with labor (1) Establishing maximum rates of administer a workforce shaping system relations (as authorized by 5 U.S.C. basic pay and aggregate pay under for employees of the Department 9902(m)); § 9901.312 that exceed those established covered by the NSPS; in so doing, DoD (g) Chapter 75, dealing with adverse under 5 U.S.C. chapter 53; will coordinate with OPM prior to actions and certain other actions; and (2) Establishing and adjusting pay modifying coverage, retention (h) Chapter 77, dealing with the ranges for occupational pay schedules procedures, or appeal rights under appeal of adverse actions and certain and pay bands under §§ 9901.321(a), subpart F of this part. other actions. 9901.322(a) and (b), and 9901.372; (g) Section 9902(l) of title 5, U.S. (3) Establishing and adjusting local Code, requires the Secretary to make a § 9901.105 Coordination with OPM. market supplements under determination that the Department has (a) As specified in paragraphs (b) §§ 9901.332(a) and 9901.333; in place a performance management through (e) of this section, the Secretary (4) Establishing alternative or system that meets the criteria in 5 U.S.C. will advise and/or coordinate with OPM additional local market areas under 9902(b) before the Secretary may apply in advance, as applicable, regarding the § 9901.332(b) that differ from those the human resources management proposed promulgation of certain established for General Schedule system established under 5 U.S.C. implementing issuances and certain employees under 5 CFR 531.603; 9902(a) to an organization or functional other actions related to the ongoing (5) Establishing policies regarding unit that exceeds 300,000 civilian operation of the NSPS where such starting rates of pay for newly appointed employees. In making this actions could have a significant impact or transferred employees under determination, the Secretary will on other Federal agencies and the §§ 9901.351 through 9901.354 and pay coordinate with the Director. Federal civil service as a whole. Such retention under § 9901.355; (h) When a matter requiring OPM pre-decisional coordination is intended (6) Establishing policies regarding coordination is submitted to the as an internal DoD/OPM matter to premium pay under § 9901.361 that Secretary for decision, the Director will recognize the Secretary’s special differ from those that exist in be provided an opportunity, as part of authority to direct the operations of the Governmentwide regulations; and the Department’s normal coordination Department of Defense pursuant to title (7) Establishing policies regarding the process, to review and comment on the 10, U.S. Code, as well as the Director’s student loan repayment program under recommendations and officially concur institutional responsibility to oversee § 9901.303(c) that differ from or nonconcur with all or part of them. the Federal civil service system Governmentwide policies with respect The Secretary will take the Director’s pursuant to 5 U.S.C. chapter 11. to repayment amounts, service comments and concurrence/ (b) DoD will advise OPM in advance commitments, and reimbursement. nonconcurrence into account, advise the regarding the extension of specific (e) Subpart E of this part authorizes Director of his or her determination, and subparts of this part to specific the Secretary to establish and provide the Director with reasonable categories of DoD employees under administer authorities for the advance notice of the effective date of § 9901.102(b). examination and appointment of the matter. Thereafter, the Secretary and (c) Subpart B of this part authorizes employees to certain organizational the Director may take such action(s) as the Secretary to establish and elements of the Department covered by they deem appropriate, consistent with administer a position classification the NSPS; in so doing, DoD will their respective statutory authorities and system and classify positions covered by coordinate with OPM prior to— responsibilities. the NSPS; in so doing, DoD will (1) Establishing alternative or (i) The Secretary and the Director coordinate with OPM prior to— additional examining procedures under fully expect their staffs to work closely

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together on the matters specified in this any proposed final draft implementing Applications of this rule include, but section, before such matters are issuances. If views and are not limited to, the following: submitted for official OPM coordination recommendations are presented by (1) If another provision of law or and DoD decision, so as to maximize the employee representatives, the Secretary Governmentwide regulations requires opportunity for consensus and must consider these views and coverage under one of the chapters agreement before an issue is so recommendations before taking final modified or waived under this part (i.e., submitted. action. The Secretary will provide chapters 31, 33, 35, 43, 51, 53, 55 employee representatives a written (subchapter V only), 71, 75, and 77 of § 9901.106 Continuing collaboration. statement of the reasons for taking the title 5, U.S. Code), DoD employees are (a) Continuing collaboration with final action regarding the implementing deemed to be covered by the applicable employee representatives. (1) Consistent issuance. chapter notwithstanding coverage under with 5 U.S.C. 9902, this section (ii) To the extent that the Secretary a system established under this part. provides employee representatives with determines necessary, employee Selected examples of provisions that an opportunity to participate in the representatives will be provided with an continue to apply to any DoD employees development of implementing issuances opportunity to discuss their views with (notwithstanding coverage under that carry out the provisions of this part. DoD officials and/or to submit written subparts B through I of this part) This process is the exclusive procedure comments, at initial identification of include, but are not limited to, the for the participation of employee implementation issues and conceptual following: representatives in the planning, design and/or at review of draft (i) Foreign language awards for law development, or implementation of the recommendations or alternatives. enforcement officers under 5 U.S.C. implementing issuances that carry out (4) Employee representatives will be 4521 through 4523; the provisions of this part. Therefore, provided with access to information for (ii) Pay for firefighters under 5 U.S.C. this process is not subject to the their participation in the continuing 5545b; requirements of 5 U.S.C. chapter 71, collaboration process to be productive. (iii) Recruitment, relocation, and including but not limited to the exercise (5) Nothing in the continuing retention payments under 5 U.S.C. 5753 of management rights, enforcement of collaboration process will affect the through 5754; and the duty to consult or negotiate, the right of the Secretary, Deputy Secretary, (iv) Physicians’ comparability duty to bargain and consult, or impasse Principal Staff Assistants, or Secretaries allowances under 5 U.S.C. 5948. procedures, or the requirements of the Military Departments to (2) In applying the back pay law in 5 established by subpart I of this part, determine the content of implementing U.S.C. 5596 to DoD employees covered including but not limited to §§ 9901.910 issuances and to make them effective at by subpart H of this part (dealing with (regarding the exercise of management any time. appeals), the reference in section rights), 9901.916(a)(5) (regarding (b) Continuing collaboration with 5596(b)(1)(A)(ii) to 5 U.S.C. 7701(g) enforcement of the duty to consult or other interested organizations. The (dealing with attorney fees) is negotiate), 9901.917 (regarding the duty Secretary may also establish procedures considered to be a reference to a to bargain and consult), and 9901.920 for continuing collaboration with modified section 7701(g) that is (regarding impasse procedures). appropriate organizations that represent consistent with § 9901.807(f)(6). (2)(i) For the purpose of this section, the interests of a substantial number of (3) In applying the back pay law in 5 the term ‘‘employee representatives’’ nonbargaining unit employees. U.S.C. 5596 to DoD employees covered includes representatives of labor by subpart I of this part (dealing with organizations with exclusive recognition § 9901.107 Relationship to other labor relations), the references in section rights for units of DoD employees, as provisions. 5596 to provisions in chapter 71 are determined pursuant to subpart I of this (a)(1) The provisions of title 5, U.S. considered to be references to those part. Code, are waived, modified, or replaced particular provisions as modified by (ii) The Secretary, at his or her sole to the extent authorized by 5 U.S.C. subpart I of this part. and exclusive discretion, may determine 9902 to conform to the provisions of this (c) Law enforcement officer special the number of employee representatives part. base rates under section 403 of the to be engaged in the continuing (2) This part must be interpreted in a Federal Employees Pay Comparability collaboration process. However, each way that recognizes the critical national Act of 1990 (section 529 of Pub. L. 101– national labor organization with one or security mission of the Department, and 509) do not apply to employees who are more bargaining units accorded each provision of this part must be covered by an NSPS classification and exclusive recognition in the Department construed to promote the swift, flexible, pay system established under subparts B affected by an implementing issuance effective day-to-day accomplishment of and C of this part. will be provided the opportunity to this mission, as defined by the (d) Nothing in this part waives, participate in the continuing Secretary. The interpretation of the modifies or otherwise affects the collaboration process. regulations in this part by DoD and employment discrimination laws that (iii) Each national labor organization OPM must be accorded great deference. the Equal Employment Opportunity with multiple collective bargaining (b) For the purpose of applying other Commission (EEOC) enforces under 42 units accorded exclusive recognition provisions of law or Governmentwide U.S.C. 2000e et seq., 29 U.S.C. 621 et will determine how its units will be regulations that reference provisions seq., 29 U.S.C. 791 et seq., and 29 U.S.C. represented within the limitations under chapters 31, 33, 35, 43, 51, 53, 55 206(d). imposed by the Secretary under (subchapter V only), 71, 75, and 77 of paragraph (a)(2)(ii) of this section. title 5, U.S. Code, the referenced § 9901.108 Program evaluation. (3)(i) Within timeframes specified by provisions are not waived but are (a) The Secretary will evaluate the the Secretary, employee representatives modified consistent with the regulations in this part and their will be provided with an opportunity to corresponding regulations in this part, implementation. The Secretary will submit written comments to, and to except as otherwise provided in this provide designated employee discuss their views and part (including paragraph (c) of this representatives with an opportunity to recommendations with, DoD officials on section) or in implementing issuances. be briefed and a specified timeframe to

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provide comments on the design and the provisions of 5 U.S.C. chapter 51 mission or function; nature of work; results of program evaluations. and 5 U.S.C. 5346 are waived with qualifications or competencies; career or (b) Involvement of employee respect to that category of employees, pay progression patterns; relevant labor- representatives in the evaluation except as provided in paragraph (b) of market features; and other process does not waive the rights of any this section, §§ 9901.107, and characteristics of those occupations or party under applicable law or 9901.222(d) (with respect to OPM’s positions. The Secretary will document regulations. authority under 5 U.S.C. 5112(b) and in implementing issuances the criteria 5346(c) to act on requests for review of and rationale for grouping occupations Subpart B—Classification classification decisions). or positions into career groups. General (b) Section 5108 of title 5, U.S. Code, dealing with the classification of § 9901.212 Pay schedules and pay bands. § 9901.201 Purpose. positions above GS–15, is not waived (a) For purposes of identifying relative (a) This subpart contains regulations for the purpose of defining and levels of work and corresponding pay establishing a classification structure allocating senior executive service ranges, the Secretary may establish one and rules for covered DoD employees positions under 5 U.S.C. 3132 and 3133 or more pay schedules within each and positions to replace the or applying provisions of law outside career group. classification structure and rules in 5 the waivable and modifiable chapters of (b) Each pay schedule may include U.S.C. chapter 51 and the job grading title 5, U.S. Code—e.g., 5 U.S.C. 4507 one or more pay bands. system in 5 U.S.C. chapter 53, and 4507a (regarding Presidential rank (c) The Secretary will document in subchapter IV, in accordance with the awards) and 5 U.S.C. 6303(f) (regarding implementing issuances the definitions merit principle that equal pay should be annual leave accrual for members of the for each pay band which specify the provided for work of equal value, with SES and employees in SL/ST positions). type and range of difficulty and responsibility; qualifications or appropriate consideration of both § 9901.204 Definitions. national and local rates paid by competencies; or other characteristics of employers in the private sector, and In this subpart: the work encompassed by the pay band. Band means pay band. appropriate incentives and recognition (d) The Secretary will designate Basic pay has the meaning given that should be provided for excellence in qualification standards and term in § 9901.103. requirements for each career group, performance. Career group has the meaning given (b) Any classification system occupational series, pay schedule, and/ that term in § 9901.103. or pay band, as provided in § 9901.513. prescribed under this subpart will be Classification, also referred to as job established in conjunction with the pay evaluation, means the process of Classification Process system described in subpart C of this analyzing and assigning a job or § 9901.221 Classification Requirements. part. position to an occupational series, (a) The Secretary will develop a § 9901.202 Coverage. career group, pay schedule, and pay band for pay and other related purposes. methodology for describing and (a) This subpart applies to eligible documenting the duties, qualifications, DoD employees and positions listed in Competencies has the meaning given that term in § 9901.103. and other requirements of categories of paragraph (b) of this section, subject to jobs, and will make such descriptions a determination by the Secretary under Occupational series has the meaning given that term in § 9901.103. and documentation available to affected § 9901.102(b)(2). employees. (b) The following employees of, or Pay band or band has the meaning (b) The Secretary will— positions in, DoD organizational and given that term in § 9901.103. (1) Assign occupational series to jobs functional units are eligible for coverage Pay schedule has the meaning given consistent with occupational series under this subpart: that term in § 9901.103. definitions established by OPM under 5 (1) Employees and positions that Position or job means the duties, U.S.C. 5105 and 5346, or by DoD; and would otherwise be covered by the responsibilities, and related competency (2) Apply the criteria and definitions General Schedule classification system requirements that are assigned to an required by §§ 9901.211 and 9901.212 to established under 5 U.S.C. chapter 51; employee whom the Secretary approves (2) Employees and positions that for coverage under § 9901.202(a). assign jobs to an appropriate career would otherwise be covered by a group, pay schedule, and pay band. § 9901.205 Bar on collective bargaining. (c) The Secretary will establish prevailing rate system established under Pursuant to 5 U.S.C. 9902(f)(4) and 5 U.S.C. chapter 53, subchapter IV; procedures for classifying jobs and may (m)(7), any classification system make such inquiries of the duties, (3) Employees in senior-level (SL) and established under this subpart is not scientific or professional (ST) positions responsibilities, and qualification subject to collective bargaining. This bar requirements of jobs as it considers who would otherwise be covered by 5 on collective bargaining applies to all U.S.C. 5376; necessary for the purpose of this aspects of the classification system, section. (4) Members of the Senior Executive including, but not limited to coverage Service (SES) who would otherwise be (d) Classification decisions become determinations, the design of the effective on the date an authorized covered by 5 U.S.C. chapter 53, classification structure, and subchapter VIII, subject to official approves the classification. A classification methods, criteria, and classification decision is implemented § 9901.102(d); and administrative procedures and (5) Such others designated by the by a personnel action. The personnel arrangements. Secretary as DoD may be authorized to action implementing a classification include under 5 U.S.C. 9902. Classification Structure decision must occur within four pay periods after the date of the decision. § 9901.203 Waivers. § 9901.211 Career groups. Except as provided for in § 9901.222(b), (a) When a specified category of For the purpose of classifying such decisions will be applied employees is covered by a classification positions, the Secretary may establish prospectively and do not convey any system established under this subpart, career groups based on factors such as retroactive entitlements.

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§ 9901.222 Reconsideration of Subpart C—Pay and Pay category of employees, except as classification decisions. Administration provided in § 9901.107 and paragraphs (a) An individual employee may (b) and (c) of this section; and request that DoD or OPM reconsider the General (2) The provisions of 5 U.S.C. chapter classification (i.e., pay system, career § 9901.301 Purpose. 55, subchapter V (except section 5545b), group, occupational series, official title, are waived with respect to that category (a) This subpart contains regulations pay schedule, or pay band) of his or her of employees to the extent that those establishing pay structures and pay official position of record at any time. employees are covered by alternative administration rules for covered DoD (b) The Secretary will establish premium pay provisions established by employees to replace the pay structures implementing issuances for reviewing the Secretary under § 9901.361 in lieu of and pay administration rules requests for reconsideration. Such the provisions in 5 U.S.C. chapter 55, established under 5 U.S.C. chapter 53 issuances will include a provision subchapter V. and 5 U.S.C. chapter 55, subchapter V, stating that a retroactive effective date (b) The following provisions of 5 as authorized by 5 U.S.C. 9902. Various may be required only if the employee is U.S.C. chapter 53 are not waived: wrongfully reduced in band. features that link pay to employees’ (1) Sections 5311 through 5318, (c) An employee may request OPM to performance ratings are designed to dealing with Executive Schedule review a DoD determination made promote a high-performance culture positions; under paragraph (a) of this section. If an within DoD. (2) Section 5371, insofar as it employee does not request an OPM (b) Any pay system prescribed under authorizes OPM to apply the provisions reconsideration decision, DoD’s this subpart will be established in of 38 U.S.C. chapter 74 to DoD classification determination is final and conjunction with the classification employees in health care positions not subject to further review or appeal. system described in subpart B of this covered by section 5371 in lieu of any (d) OPM’s final determination on a part. NSPS pay system established under this (c) Any pay system prescribed under request made under this section is not subpart or the following provisions of this subpart will be established in subject to further review or appeal. title 5, U.S. Code: Chapters 51, 53, and conjunction with the performance (e) Any determination made under 61, and subchapter V of chapter 55. The management system described in this section will be based on criteria reference to ‘‘chapter 51’’ in section subpart D of this part. issued by the Secretary or, where the 5371 is deemed to include a Secretary has adopted an OPM § 9901.302 Coverage. classification system established under classification standard, criteria issued subpart B of this part; and by OPM. (a) This subpart applies to eligible DoD employees and positions in the (3) Section 5377, dealing with the Transitional Provisions categories listed in paragraph (b) of this critical pay authority. (c) Section 5379 is modified. The § 9901.231 Conversion of positions and section, subject to a determination by the Secretary under § 9901.102(b)(2). Secretary may establish and administer employees to the NSPS classification a student loan repayment program for system. (b) The following employees of, or positions in, DoD organizational and DoD employees, except that the (a) This section describes the Secretary may not make loan payments transitional provisions that apply when functional units are eligible for coverage under this subpart: for any noncareer appointee in the SES DoD positions and employees initially (as defined in 5 U.S.C. 3132(a)(7)) or for are converted to a classification system (1) Employees and positions who would otherwise be covered by the any employee occupying a position that established under this subpart. Affected is excepted from the competitive service positions and employees may convert General Schedule pay system established under 5 U.S.C. chapter 53, because of its confidential, policy- from the GS system, a prevailing rate determining, policy-making, or policy- system, the SL/ST system, the SES subchapter III; (2) Employees and positions who advocating character. Notwithstanding system, or such other DoD systems as would otherwise be covered by a § 9901.302(a), any DoD employee may be designated by the Secretary, as prevailing rate system established under otherwise covered by section 5379 is provided in § 9901.202. For the purpose 5 U.S.C. chapter 53, subchapter IV; eligible for coverage under the of this section, the terms ‘‘convert,’’ (3) Employees in senior-level (SL) and provisions established under this ‘‘converted,’’ ‘‘converting,’’ and scientific or professional (ST) positions paragraph, subject to a determination by ‘‘conversion’’ refer to positions and who would otherwise be covered by 5 the Secretary under § 9901.102(b)(2). employees that become covered by the U.S.C. 5376; NSPS classification system as a result of (4) Members of the Senior Executive § 9901.304 Definitions. a coverage determination made under Service (SES) who would otherwise be In this part: § 9901.102(b)(2) and exclude employees covered by 5 U.S.C. chapter 53, Band means pay band. who move from a noncovered position subchapter VIII, subject to Band rate range means the range of to a position already covered by NSPS. § 9901.102(d); and rates of basic pay (excluding any local (b) The Secretary will issue (5) Such others designated by the market supplements) applicable to implementing issuances prescribing Secretary as DoD may be authorized to employees in a particular pay band, as policies and procedures for converting include under 5 U.S.C. 9902. described in § 9901.321. Each band rate DoD employees to a pay band upon (c) This section does not apply in range is defined by a minimum and initial implementation of the NSPS determining coverage under § 9901.361 maximum rate. classification system. Such procedures (dealing with premium pay). Basic pay has the meaning given that will include provisions for converting term in § 9901.103. an employee who is retaining a grade § 9901.303 Waivers. Bonus means an element of the under 5 U.S.C. chapter 53, subchapter (a) When a specified category of performance payout that consists of a VI, immediately prior to conversion. employees is covered under this one-time lump-sum payment made to The Secretary will convert an subpart— employees. It is not part of basic pay. employee’s rate of pay as provided in (1) The provisions of 5 U.S.C. chapter Career group has the meaning given § 9901.373. 53 are waived with respect to that that term in § 9901.103.

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Competencies has the meaning given Promotion has the meaning given that (d) Policies regarding employees’ that term in § 9901.103. term in § 9901.103. eligibility for pay increases based on Contribution has the meaning given Rating of record has the meaning adjustments in rate ranges and that term in § 9901.103. given that term in § 9901.103. supplements, as described in Contribution assessment means the Reassignment has the meaning given §§ 9901.323 and 9901.334; determination made by the pay pool that term in § 9901.103. (e) Policies regarding performance- manager as to the impact, extent, and Reduction in band has the meaning based pay, as described in §§ 9901.341 scope of contribution that the given that term in § 9901.103. through 9901.345; employee’s performance made to the Standard local market supplement (f) Policies on basic pay accomplishment of the organization’s means the local market supplement that administration, including movement mission and goals. applies to employees in a given pay between career groups, positions, pay CONUS or Continental United States schedule or band who are stationed schedules, and pay bands, as described means the States of the United States, within a specified local market area (the in §§ 9901.351 through 9901.356; excluding Alaska and Hawaii, but boundaries of which are defined under (g) Linkages to employees’ ratings of including the District of Columbia. § 9901.332(b)), unless a targeted local record, as described in subpart D of this Extraordinary pay increase or EPI market supplement applies. part; and means a discretionary basic pay increase Targeted local market supplement (h) Policies regarding the setting of or bonus to reward an employee at the means a local market supplement and limitations on premium payments, highest performance level who has been established to address recruitment or as described in § 9901.361. assigned the maximum number of retention difficulties or other shares available under the rating and appropriate reasons and which applies § 9901.312 Maximum rates. contribution scheme when the payout to a defined category of employees The Secretary will establish formula does not adequately (based on occupation or other limitations on maximum rates of basic compensate them for the employee’s appropriate factors) in lieu of the pay and aggregate pay for covered extraordinary performance and standard local market supplement that employees. contribution, as described in would otherwise apply. Unacceptable performance has the § 9901.313 National security compensation § 9901.344(b). comparability. Local market supplement means a meaning given that term in § 9901.103. (a) To the maximum extent geographic- and occupation-based § 9901.305 Bar on collective bargaining. supplement to basic pay, as described in practicable, for fiscal years 2004 through § 9901.332. Pursuant to 5 U.S.C. 9902(f)(4) and 2008, the overall amount allocated for Modal rating means, for the purpose (m)(7), any pay program established compensation of the DoD civilian of pay administration, the most frequent under authority of this subpart is not employees who are included in the rating of record assigned to employees subject to collective bargaining. This bar NSPS may not be less than the amount in the same pay band within a particular on collective bargaining applies to all that would have been allocated for pay pool for a particular rating cycle. aspects of the pay program, including compensation of such employees for Pay band or band has the meaning but not limited to coverage decisions, such fiscal years if they had not been given that term in § 9901.103. the design of pay structures, the setting converted to the NSPS, based on at a Pay pool means the organizational and adjustment of pay levels, pay minimum— elements/ units or other categories of administration rules and policies, and (1) The number and mix of employees employees that are combined for the administrative procedures and in such organizational or functional purpose of determining performance arrangements. units prior to conversion of such payouts. Each employee is in only one Overview of Pay System employees to the NSPS; and pay pool at a time. Pay pool also means (2) Adjustments for normal step the amount designated for performance § 9901.311 Major features. increases and rates of promotion that payouts to employees covered by a pay Through the issuance of would have been expected, had such pool. implementing issuances, the Secretary employees remained in their previous Pay schedule has the meaning given will establish a pay system that governs pay schedule. that term in § 9901.103. the setting and adjusting of covered (b) To the maximum extent Performance has the meaning given employees’ rates of pay and the setting practicable, implementing issuances that term in § 9901.103. of covered employees’ rates of premium will provide a formula for calculating Performance payout means the total pay. The NSPS pay system will include the overall amount to be allocated for monetary value of a performance pay the following features: fiscal years beyond fiscal year 2008 for increase and bonus provided under (a) A structure of rate ranges linked to compensation of the civilian employees § 9901.342. various pay bands for each career group, included in the NSPS. The formula will Performance share means a unit of in alignment with the classification ensure that in the aggregate employees performance payout awarded to an structure described in subpart B of this are not disadvantaged in terms of the employee based on performance. part; overall amount of compensation Performance shares may be awarded in (b) Policies regarding the setting and available as a result of conversion to the multiples commensurate with the adjusting of band rate ranges based on NSPS, while providing flexibility to employee’s performance and mission requirements, labor market accommodate changes in the function of contribution rating level. conditions, and other factors, as the organization and other changed Performance share value means a described in §§ 9901.321 and 9901.322; circumstances that might impact calculated value for each performance (c) Policies regarding the setting and compensation levels. share based on pay pool funds available adjusting of local market supplements to (c) For the purpose of this section, and the distribution of performance basic pay based on local labor market ‘‘compensation’’ for civilian employees shares across employees within a pay conditions and other factors, as means basic pay, taking into account pool, expressed as a percentage or fixed described in §§ 9901.331 through any applicable locality payment under 5 dollar amount. 9901.333; U.S.C. 5304, special rate supplement

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under 5 U.S.C. 5305, local market percentage of basic pay and are set and (10) Other payments and adjustments supplement under § 9901.332, or similar adjusted as described in § 9901.333. authorized under this subpart as payment under other legal authority. specified by implementing issuances; § 9901.332 Local market supplements. (11) Other payments and adjustments Setting and Adjusting Rate Ranges (a) The Secretary may establish local under other statutory or regulatory § 9901.321 Structure. market supplements that apply in authority for which locality-based specified local market areas whose (a) The Secretary will establish ranges comparability payments under 5 U.S.C. boundaries are set at the Secretary’s sole 5304 are considered part of basic pay; of basic pay for pay bands, with and exclusive discretion, subject to minimum and maximum rates set and and paragraph (b) of this section and (12) Any provisions for which DoD adjusted as provided in § 9901.322. § 9901.105(d)(4). Local market (b) For each pay band within a career local market supplements are treated as supplements apply to employees whose basic pay by law. group, the Secretary will establish a official duty station is located in the common rate range that applies in all given local market area. The Secretary § 9901.333 Setting and adjusting local locations. may establish standard or targeted local market supplements. § 9901.322 Setting and adjusting rate market supplements. (a) Within his or her sole and ranges. (b)(1) The establishment or exclusive discretion, the Secretary may, modification of geographic area subject to § 9901.105(d)(3), set and (a) Within his or her sole and boundaries for standard local market adjust local market supplements. In exclusive discretion, the Secretary may, supplements by the Secretary will be determining the amounts of the subject to § 9901.105(d)(2), set and effected by regulations which, supplements, the Secretary will adjust the rate ranges established under notwithstanding 5 U.S.C. 553(a)(2), will consider mission requirements, labor § 9901.321. In determining the rate be promulgated in accordance with the market conditions, availability of funds, ranges, the Secretary may consider notice and comment requirements of 5 pay adjustments received by employees mission requirements, labor market U.S.C. 553. As provided by the non- of other Federal agencies, allowances conditions, availability of funds, pay waived provisions of 5 U.S.C. 5304(f)(2) and differentials under 5 U.S.C. chapter adjustments received by employees of (modified here to apply to DoD 59, and any other relevant factors. other Federal agencies, and any other regulations issued under the authority (b) The Secretary may determine the relevant factors. of this paragraph), judicial review of any effective date of newly set or adjusted (b) The Secretary may determine the such regulation is limited to whether or local market supplements. Established effective date of newly set or adjusted not it was promulgated in accordance supplements will be reviewed for band rate ranges. Established rate ranges with such requirements. possible adjustment at least annually in will be reviewed for possible adjustment (2) Notwithstanding paragraph (b)(1) conjunction with rate range adjustments at least annually. of this section, the Secretary’s under § 9901.322. (c) The Secretary may establish establishment of a standard local market different rate ranges and provide area boundary or boundaries identical to § 9901.334 Eligibility for pay increase different rate range adjustments for those used for locality pay areas associated with a supplement adjustment. different pay bands. established under 5 U.S.C. 5304 does (a) When a local market supplement (d) The Secretary may adjust the not require separate DoD regulations. is adjusted under § 9901.333, employees minimum and maximum rates of a pay (c) Local market supplements are to whom the supplement applies with a band by different percentages. considered basic pay for only the current rating of record above following purposes: ‘‘unacceptable,’’ and employees who do § 9901.323 Eligibility for pay increase (1) Retirement deductions, associated with a rate range adjustment. not have a current rating of record for contributions, and benefits under 5 the most recently completed appraisal (a) Employees with a current rating of U.S.C. chapter 83 or 84; period, will receive any pay increase record above ‘‘unacceptable’’ and (2) Life insurance premiums and resulting from that adjustment. employees who do not have a current benefits under 5 U.S.C. chapter 87; (b) Employees with a current rating of rating of record for the most recently (3) Premium pay under 5 U.S.C. record of ‘‘unacceptable’’ will not completed appraisal period will receive chapter 55, subchapter V, or similar receive a pay increase under this a percentage increase in basic pay equal payments under other legal authority, section. to the percentage by which the including this subpart; minimum of their rate range is (4) Severance pay under 5 U.S.C. Performance-Based Pay 5595; increased. This section does not apply § 9901.341 General. to employees receiving a retained rate (5) Cost-of-living allowances and post under § 9901.355. differentials under 5 U.S.C. 5941; Sections 9901.342 through 9901.345 (b) Employees with a current rating of (6) Overseas allowances and describe the performance-based pay that record of ‘‘unacceptable’’ will not differentials under 5 U.S.C. chapter 59, is part of the pay system established receive a pay increase under this subchapter III, to the extent authorized under this subpart. These provisions are section. by the Department of State; designed to provide the Secretary with (7) Recruitment, relocation, and the flexibility to allocate available funds Local Market Supplements retention incentives, supervisory to employees based on individual differentials, and extended assignment performance or contribution or team or § 9901.331 General. incentives under 5 U.S.C. chapter 57, organizational performance as a means The basic pay ranges established subchapter IV, and 5 CFR part 575; of fostering a high-performance culture under §§ 9901.321 through 9901.323 (8) Lump-sum payments for that supports mission accomplishment. may be supplemented in appropriate accumulated and accrued annual leave circumstances by local market under 5 CFR 550, subpart L; § 9901.342 Performance payouts. supplements, as described in (9) Determining the rate of basic pay (a) Overview. (1) The NSPS pay §§ 9901.332, 9901.333, and 9901.334. upon conversion to the NSPS pay system will be a pay-for-performance These supplements are expressed as a system as provided in § 9901.373(b); system and, when implemented, will

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result in a distribution of available (3) Where the Secretary establishes a who, during the period between performance pay funds based upon range of shares for a rating of record performance payouts, are— individual performance, individual level, he or she will provide guidance in (1) Hired, transferred, reassigned, or contribution, team or organizational implementing issuances on the use of promoted; performance, or a combination of those share ranges. DoD organizations will (2) In a leave-without-pay status elements. The NSPS pay system will use notify employees at least 90 days prior (except as provided in paragraphs (f) a pay pool concept to manage, control, to the end of the appraisal period of the and (g) of this section); or and distribute performance-based pay factors that may be considered in (3) In other circumstances where increases and bonuses. The performance making specific share assignments. Pay prorating is considered appropriate. payout is a function of the amount of pool managers and/or pay pool panels (f) Adjustments for employees money in the performance pay pool and will review proposed share assignments returning after performing honorable the number of shares assigned to to ensure that factors are applied service in the uniformed services. The individual employees. consistently across the pay pool and in Secretary will issue implementing (2) The rating of record used as the accordance with the merit system issuances regarding how to set the rate basis for a performance pay increase is principles. of basic pay prospectively for an the one assigned for the most recently (d) Performance payout. (1) The employee who leaves a DoD position to completed appraisal period, except that Secretary will establish a methodology perform service in the uniformed if an appropriate rating official that authorized officials will use to services (in accordance with 38 U.S.C. determines that an employee’s current determine the value of a performance 4303 and 5 CFR 353.102) and returns performance is inconsistent with that share. A performance share may be through the exercise of a reemployment rating, that rating official may prepare a expressed as a percentage of an right provided by law, Executive order, more current rating of record, consistent employee’s rate of basic pay (exclusive or regulation under which accrual of with § 9901.409(b). Unless otherwise of local market supplements under service for seniority-related benefits is provided in implementing issuances, if § 9901.332) or as a fixed dollar amount, protected (e.g., 38 U.S.C. 4316). The an employee is not eligible to have a or both. Secretary will credit the employee with rating of record for the current rating (2) To determine an individual increases under § 9901.323 and cycle for reasons other than those employee’s performance payout, the increases to basic pay under this section identified in paragraphs (f) and (g) of share value determined under paragraph based on the employee’s DoD rating of this section, such employee will not be (d)(1) of this section will be multiplied record for the appraisal period upon eligible for a performance payout under by the number of performance shares which these adjustments are based. If an this part. assigned to the employee. employee does not have a rating of (3) Pay pools will be managed by a (3) The Secretary may provide for the record for the appraisal period serving pay pool manager and/or pay pool establishment of control points within a as a basis for these adjustments, the panel. The Secretary will define in band that limit increases in the rate of Secretary will base such adjustments on implementing issuances the basic pay. The Secretary may require the average basic pay increases granted responsibilities of pay pool managers that certain criteria be met for increases to other employees in the same pay pool and pay pool panels to include the above a control point. and pay band who received the same review of proposed rating and share (4) A performance payout may be an rating as the employee’s last DoD rating assignments to ensure that employees increase in basic pay, a bonus, or a of record or the modal rating, whichever are treated fairly and consistently and in combination of the two. However, an is most advantageous to the employee. accordance with the merit system increase in basic pay may not cause the In unusual cases where insufficient statistical information exists to principles. employee’s rate of basic pay to exceed (b) Performance pay pools. (1) The the maximum rate or applicable control determine the modal rating or when Secretary will issue implementing point of the employee’s band rate range. previous ratings do not convert to the issuances for the establishment and Implementing issuances will provide NSPS rating scale, the Secretary may management of pay pools for guidance for determining the payout establish alternative procedures for performance payouts. amount and the appropriate distribution determining a basic pay increase under (2) The Secretary may determine a between basic pay and bonus. this section. percentage of pay to be included in pay (5) The Secretary will determine the (g) Adjustments for employees pools and paid out in accordance with effective date(s) of increases in basic pay returning to duty after being in workers’ accompanying implementing issuances made under this section. compensation status. The Secretary will as— (6) Notwithstanding any other issue implementing issuances regarding (i) A performance-based pay increase; provision of this section, the Secretary how to set the rate of basic pay (ii) A performance-based bonus; or will issue implementing issuances to prospectively for an employee who (iii) A combination of a performance- address the circumstances under which returns to duty after a period of based pay increase and a performance- an employee receiving a retained rate receiving injury compensation under 5 based bonus. under § 9901.355 may receive a lump- U.S.C. chapter 81, subchapter I (in a (c) Performance shares. (1) The sum performance payout. Any leave-without-pay status or as a Secretary will issue implementing performance payout in the form of a separated employee). For the issuances regarding the assignment of a bonus for a retained rate employee may intervening period, the Secretary will number or range of shares for each not exceed the amount that would be credit the employee with increases rating of record level, subject to received by an employee in the same under § 9901.323 and increases to basic paragraphs (c)(2) and (c)(3) of this pay pool with the same rating of record pay under this section based on the section. Performance shares will be used whose rate of pay is at the maximum employee’s DoD rating of record for the to determine performance pay increases rate of the same band. appraisal period upon which these and/or bonuses. (e) Proration of performance payouts. adjustments are based. If an employee (2) Employees with unacceptable The Secretary will issue implementing does not have a rating of record for the ratings of record will be assigned zero issuances regarding the proration of appraisal period serving as a basis for shares. performance payouts for employees these adjustments, such adjustments

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will be based on the average basic pay Pay Administration results in a rate of basic pay higher than increases granted to other employees in the maximum rate of the applicable pay the same pay pool and pay band who § 9901.351 Setting an employee’s starting band. An employee’s rate of basic pay pay. received the same rating as the upon promotion may not be less than employee’s last DoD rating of record or Subject to implementing issuances, the minimum of the rate range. the modal rating, whichever is most the Secretary may set the starting rate of advantageous to the employee. In pay for individuals who are newly § 9901.354 Setting pay upon reduction in band. unusual cases where insufficient appointed or reappointed to the Federal statistical information exists to service anywhere within the assigned (a) Subject to paragraphs (b) and (c) of determine the modal rating or when pay band. this section, pay may be set anywhere previous ratings do not convert to the within the assigned pay band when an § 9901.352 Setting pay upon employee is reduced in band, either NSPS rating scale, the Secretary may reassignment. establish alternative procedures for voluntarily or involuntarily. As (a) Subject to paragraphs (b) and (c) of applicable, pay retention provisions determining a basic pay increase under this section and subject to implementing this section. established under § 9901.355 will apply. issuances, the Secretary may set pay (b) Subject to the adverse action § 9901.343 Pay reduction based on anywhere within the assigned pay band procedures set forth in subpart G of this unacceptable performance and/or conduct. when an employee is reassigned, either part (or other appropriate adverse action voluntarily or involuntarily, to a procedures for employees not covered An employee’s rate of basic pay may position in the same or comparable pay by subpart G of this part, such as be reduced based on a determination of band. procedures for National Guard unacceptable performance, conduct, or (b) Subject to the adverse action Technicians under 32 U.S.C. 709(f)), the both. Such reduction may not exceed 10 procedures set forth in subpart G of this Secretary may assign an employee percent unless the employee has been part and implementing issuances (or involuntarily to a position in a lower changed to a lower pay band and a other appropriate adverse action pay band for unacceptable performance greater reduction is needed to set the procedures for employees not covered and/or conduct, and may employee’s pay at the maximum rate of by subpart G of this part, such as simultaneously reduce the employee’s the pay band. (See also §§ 9901.352 and procedures for National Guard rate of basic pay. A reduction in basic 9901.354.) An employee’s rate of basic Technicians under 32 U.S.C. 709(f)), the pay under this paragraph may not cause pay may not be reduced more than once Secretary may reduce an employee’s an employee’s rate of basic pay to fall in a 12-month period based on rate of basic pay within a pay band for below the minimum rate of the unacceptable performance, conduct, or unacceptable performance and/or employee’s new pay band, or be more both. conduct. A reduction in pay under this than 10 percent unless a larger § 9901.344 Other performance payments. paragraph may not be more than 10 reduction is needed to place the percent or cause an employee’s rate of employee at the maximum rate of the (a) In accordance with implementing basic pay to fall below the minimum lower band. issuances authorized officials may make rate of the employee’s pay band. Such (c) The Secretary will prescribe other payments to— a reduction may be made effective at policies in implementing issuances (1) Recognize organizational or team any time. regarding setting pay for an employee achievement; (c) The Secretary will prescribe who is reduced in band involuntarily, (2) Reward extraordinary individual policies in implementing issuances but not through adverse action performance through an extraordinary regarding setting pay for an employee procedures. In the case of termination of pay increase (EPI), as described in whose pay is reduced involuntarily, but a temporary promotion or failure to paragraph (b) of this section; and not through adverse action procedures. successfully complete an in-service In the case of completion of a temporary probationary period, the employee’s rate (3) Provide for other special reassignment or failure to successfully of basic pay will be set at the same rate circumstances. complete an in-service probationary the employee received prior to the (b) An EPI is paid in addition to period, the employee’s rate of basic pay temporary promotion or placement in performance payouts under § 9901.342 will be set at the same rate the employee the position requiring the probationary and will usually be made effective at the received prior to the temporary period, with appropriate adjustment of time of those payouts. The future reassignment or placement in the the employee’s rate of basic pay based performance and contribution level position requiring the probationary on rate range increases or performance exhibited by the employee will be period, with appropriate adjustment of payouts that occurred during the time expected to continue at an the employee’s rate of basic pay based the employee was assigned to the new extraordinarily high level. on rate range increases or performance position. Any resulting reduction in § 9901.345 Treatment of developmental payouts that occurred during the time basic pay is not considered an adverse positions. the employee was assigned to the new action under subpart G of this part (or position. Any resulting reduction in similar authority). The Secretary may issue basic pay is not considered an adverse implementing issuances regarding pay action under subpart G of this part (or § 9901.355 Pay retention. increases for developmental positions. similar authority). (a) Subject to the requirements of this These issuances may require employees section, the Secretary will issue to meet certain standardized assessment § 9901.353 Setting pay upon promotion. implementing issuances regarding pay or certification points as part of a formal Except as otherwise provided in retention. Pay retention prevents a training/developmental program. The implementing issuances, upon an reduction in basic pay that would Secretary may provide adjustments employee’s promotion, the employee otherwise occur by preserving the under this section in lieu of or in will receive an increase in his or her former rate of basic pay within the addition to adjustments under rate of basic pay equal to at least 6 employee’s new pay band or by § 9901.342. percent, unless this minimum increase establishing a retained rate that exceeds

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the maximum rate of the new pay band. chapter 55, subchapter V, subject to a § 9901.372 Creating initial pay ranges. Local market supplements are not determination by the Secretary under DoD will set the initial band rate considered part of basic pay in applying § 9901.102(b)(2). As provided in ranges for the NSPS pay system pay retention. § 9901.303(a)(2), for employees covered established under this subpart. The (b) Pay retention will be based on the by such a determination, the provisions initial ranges may link to the ranges that employee’s rate of basic pay in effect of 5 U.S.C. chapter 55, subchapter V apply to converted employees in their immediately before the action that (except section 5545b), are waived or previously applicable pay system would otherwise reduce the employee’s modified to the extent that the Secretary (taking into account any applicable rate. A retained rate will be compared establishes alternative premium pay locality payment under 5 U.S.C. 5304, to the range of rates of basic pay provisions for such employees in lieu of special rate supplement under 5 U.S.C. applicable to the employee’s position. the provisions in 5 U.S.C. chapter 55, 5305, local market supplement under (c) Subject to any employee eligibility subchapter V. § 9901.332, or similar payment under requirements the Secretary may (b) The Secretary may establish other legal authority). prescribe, pay retention will apply alternative or additional forms of when an employee is reduced in band premium pay, or make modifications in § 9901.373 Conversion of employees to through reduction in force (RIF), premium payments under 5 U.S.C. the NSPS pay system. reclassification, or other appropriate chapter 55, subchapter V (except section (a) When the NSPS pay system is circumstances, as specified in 5545b), for specified categories of established under this subpart and implementing issuances. Pay retention employees through implementing applied to a category of employees, will be granted for a period of 2 years issuances. The types of premium employees will be converted to the (that is, 104 weeks). payments the Secretary may establish or system without a reduction in their rate (d) Employees entitled to a retained modify include, but are not limited to— of pay (including basic pay and any rate will receive any performance (1) Overtime pay (excluding overtime applicable locality payment under 5 payouts in the form of bonuses, rather pay under the Fair Labor Standards U.S.C. 5304, special rate supplement than salary adjustments, as provided in Act); under 5 U.S.C. 5305, local market (2) Compensatory time off; § 9901.342(d)(6). supplement under § 9901.332, or similar (e) Employees entitled to a retained (3) Sunday, holiday, and night pay; payment under other legal authority). rate will not receive minimum rate (4) Annual premium pay for standby range adjustments under § 9901.323(a), duty and administratively (b) When an employee receiving a but are entitled to receive any uncontrollable overtime work; special rate under 5 U.S.C. 5305 before applicable local market supplement (5) Availability pay for criminal conversion is converted to an equal rate adjustments under § 9901.334(a). investigators; and of pay under the NSPS pay system that (6) Hazardous duty differentials. consists of a basic rate and a local § 9901.356 Miscellaneous. (c) The Secretary will determine the market supplement, the conversion is (a) Except in the case of an employee conditions of eligibility for the amounts not a reduction in pay for the purpose who does not receive a pay increase of and the limitations on payments of applying subpart G of this part (or under § 9901.323 because of an made under the authority of this similar authority). unacceptable rating of record, an section. (c) If another personnel action (e.g., employee’s rate of basic pay may not be Conversion Provisions promotion, geographic movement) takes less than the minimum rate of the effect on the same day as the effective employee’s pay band. § 9901.371 General. date of an employee’s conversion to the (b) Except as provided in § 9901.355, (a) This section and §§ 9901.372 and new pay system, the other action will be an employee’s rate of basic pay may not 9901.373 describe the provisions that processed under the rules pertaining to exceed the maximum rate of the apply when DoD employees are the employee’s former system before employee’s band rate range. converted to the NSPS pay system processing the conversion action. (c) The Secretary will follow the rules established under this subpart. An (d) An employee on a temporary for establishing pay periods and affected employee may convert from the promotion at the time of conversion will computing rates of pay in 5 U.S.C. 5504 GS system, a prevailing rate system, the be returned to his or her official position and 5505, as applicable. For employees SL/ST system, or the SES system (or of record prior to processing the covered by 5 U.S.C. 5504, annual rates such other systems designated by the conversion. If the employee is of pay will be converted to hourly rates Secretary as DoD may be authorized to temporarily promoted immediately after of pay in computing payments received include under 5 U.S.C. 9902), as the conversion, pay will be set under by covered employees. provided in § 9901.302. For the purpose the rules for promotion increases under (d) The Secretary may promulgate of this section and §§ 9901.372 and the NSPS pay system. implementing issuances that provide for 9901.373, the terms ‘‘convert,’’ (e) The Secretary has discretion to a special increase prior to an employee’s ‘‘converted,’’ ‘‘converting,’’ and make one-time pay adjustments for movement in recognition of the fact that ‘‘conversion’’ refer to employees who employees when they are converted to the employee will not be eligible for a become covered by the pay system the NSPS pay system. The Secretary promotion increase under the GS without a change in position (as a result will issue implementing issuances system, if a DoD employee moves from of a coverage determination made under governing any such pay adjustment, the pay system established under this § 9901.102(b)(2)) and exclude including rules governing employee subpart to a GS position having a higher employees who move from a eligibility, pay computations, and the level of duties and responsibilities. noncovered position to a position timing of any such pay adjustment. Premium Pay already covered by the NSPS pay system. Subpart D—Performance Management § 9901.361 General. (b) The Secretary will issue (a) This section applies to eligible implementing issuances prescribing the § 9901.401 Purpose. DoD employees and positions which policies and procedures necessary to (a) This subpart provides for the would otherwise be covered by 5 U.S.C. implement these transitional provisions. establishment in DoD of a performance

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management system as authorized by 5 position for less than a minimum period Unacceptable performance has the U.S.C. 9902. (as defined in § 9901.404) during a meaning given that term in § 9901.103. (b) The performance management single 12-month period. system established under this subpart is § 9901.405 Performance management system requirements. designed to promote and sustain a high- § 9901.403 Waivers. performance culture by incorporating When a specified category or group of (a) The Secretary will issue the following elements: employees is covered by the implementing issuances that establish a (1) Adherence to merit principles set performance management system(s) performance management system for forth in 5 U.S.C. 2301; established under this subpart, the DoD employees, subject to the (2) A fair, credible, and transparent provisions of 5 U.S.C. chapter 43 are requirements set forth in this subpart. employee performance appraisal waived with respect to that category of (b) The NSPS performance system; employees. management system will— (1) Specify the employees covered by (3) A link between the performance § 9901.404 Definitions. management system and DoD’s strategic the system(s); In this subpart— plan; (2) Provide for the appraisal of the Appraisal means the review and performance of each employee at least (4) A means for ensuring employee evaluation of an employee’s involvement in the design and annually; performance. (3) Specify the minimum period implementation of the system; Appraisal period means the period of during which an employee will perform (5) Adequate training and retraining time established under a performance before being eligible to receive a rating for supervisors, managers, and management system for reviewing of record; employees in the implementation and employee performance. operation of the performance Competencies has the meaning given (4) Hold supervisors and managers management system; that term in § 9901.103. accountable for effectively managing the (6) A process for ensuring ongoing Contribution has the meaning given performance of employees under their performance feedback and dialogue that term in § 9901.103. supervision as set forth in paragraph (c) among supervisors, managers, and Minimum period means the period of of this section; employees throughout the appraisal time established by the Secretary during (5) Specify procedures for setting and period, and setting timetables for which an employee will perform under communicating performance review; applicable performance expectations expectations, monitoring performance (7) Effective safeguards to ensure that before receiving a rating of record. and providing feedback, and the management of the system is fair Pay-for-performance evaluation developing, rating, and rewarding and equitable and based on employee system means the performance performance; and performance; management system established under (6) Specify the criteria and procedures (8) A means for ensuring that this subpart to link individual pay to to address the performance of adequate agency resources are allocated performance and provide an equitable employees who are detailed or for the design, implementation, and method for appraising and transferred and for employees in other administration of the performance compensating employees. special circumstances. management system; and Performance has the meaning given (c) In fulfilling the requirements of (9) A pay-for-performance evaluation that term in § 9901.103. paragraph (b) of this section, supervisors system to better link individual pay to Performance expectations means the and managers are responsible for— performance, and provide an equitable duties, responsibilities, and (1) Clearly communicating method for appraising and competencies required by, or objectives performance expectations and holding compensating employees. associated with, an employee’s position employees responsible for and the contributions and demonstrated accomplishing them; § 9901.402 Coverage. competencies management expects of an (2) Making meaningful distinctions (a) This subpart applies to eligible employee, as described in § 9901.406(d). among employees based on performance DoD employees and positions in the Performance management means and contribution; categories listed in paragraph (b) of this applying the integrated processes of (3) Fostering and rewarding excellent section, subject to a determination by setting and communicating performance performance; the Secretary under § 9901.102(b)(2), expectations, monitoring performance (4) Addressing poor performance; and except as provided in paragraph (c) of and providing feedback, developing (5) Assuring that employees are this section. performance and addressing poor assigned a rating of record when (b) The following employees and performance, and rating and rewarding required by implementing issuances. positions in DoD organizational and performance in support of the functional units are eligible for coverage organization’s goals and objectives. § 9901.406 Setting and communicating under this subpart: Performance management system performance expectations. (1) Employees and positions who means the policies and requirements (a) Performance expectations will would otherwise be covered by 5 U.S.C. established under this subpart, as support and align with the DoD mission chapter 43; supplemented by implementing and its strategic goals, organizational (2) Employees and positions who issuances, for setting and program and policy objectives, annual were excluded from chapter 43 by OPM communicating employee performance performance plans, and other measures under 5 CFR 430.202(d) prior to the date expectations, monitoring performance of performance. of coverage of this subpart; and and providing feedback, developing (b) Performance expectations will be (3) Such others designated by the performance and addressing poor communicated in writing, including Secretary as DoD may be authorized to performance, and rating and rewarding those that may affect an employee’s include under 5 U.S.C. 9902. performance. It incorporates the retention in the job. Performance (c) This subpart does not apply to elements set forth in § 9901.401(b). expectations will be communicated to employees who have been, or are Rating of record has the meaning the employee prior to holding the expected to be, employed in an NSPS given that term in § 9901.103. employee accountable for them.

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However, notwithstanding this performance and to address poor record for the purpose of any provision requirement, employees are always performance. of title 5, Code of Federal Regulations, accountable for demonstrating (b) If at any time during the appraisal for which an official rating of record is professionalism and standards of period a supervisor determines that an required. Ratings of record will be appropriate conduct and behavior, such employee’s performance is transferred between subordinate as civility and respect for others. unacceptable, the supervisor will— organizations and to other Federal (c) Performance expectations for (1) Consider the range of options departments or agencies in accordance supervisors and managers will include available to address the performance with implementing issuances. assessment and measurements of how deficiency, which include, but are not (f) The Secretary may not lower the well supervisors and managers plan, limited to, remedial training, an rating of record of an employee based on monitor, develop, correct, and assess improvement period, a reassignment, an an approved absence from work, subordinate employees’ performance. oral warning, a letter of counseling, a including the absence of a disabled (d) Performance expectations may written reprimand, or adverse action as veteran to seek medical treatment as include— defined in subpart G of this part, provided in Executive Order 5396. (1) Goals or objectives that set general including a reduction in rate of basic (g) A rating of record may be or specific performance targets at the pay or pay band; and challenged by a nonbargaining unit individual, team, and/or organizational (2) Take appropriate action to address employee only through a level; the deficiency, taking into account the reconsideration process as provided in (2) Organizational, occupational, or circumstances, including the nature and implementing issuances. This process other work requirements, such as gravity of the unacceptable performance will be the sole and exclusive method standard operating procedures, and its consequences. for all nonbargaining unit employees to (c) As specified in subpart H of this operating instructions, manuals, challenge a rating of record. A payout part (or other appropriate appeal internal rules and directives, and/or determination will not be subject to the procedures, if not covered by subpart H other instructions that are generally reconsideration process. of this part, such as procedures for applicable and available to the (h) A bargaining unit employee may National Guard Technicians under 32 employee; and choose a negotiated grievance procedure U.S.C. 709(f)), employees may appeal (3) Competencies an employee is or the administrative reconsideration expected to demonstrate on the job, adverse actions (e.g., suspensions of more than 14 days, reductions in pay process established under paragraph (g) and/or the contributions an employee is and pay band, and removal) based on of this section, but not both, to expected to make. unacceptable performance and/or challenge his or her rating of record. An (e) Performance expectations may be conduct. employee who chooses the amplified through particular work administrative reconsideration process assignments or other instructions § 9901.409 Rating and rewarding may not revert to a negotiated grievance (which may specify the quality, performance. procedure. A payout determination will quantity, accuracy, timeliness, or other (a) The NSPS performance not be subject to the negotiated expected characteristics of the management system will establish a grievance procedure. Any individual or completed assignment, or some multi-level rating system as described in panel reviewing a rating of record under combination of such characteristics). the implementing issuances. a negotiated grievance procedure may Such assignments and instructions need (b) An appropriate rating official will not conduct an independent evaluation not be in writing. prepare and issue a rating of record after of the employee’s performance, (f) Supervisors will involve the completion of the appraisal period. determine the appropriate share payout, employees, insofar as practicable, in the In accordance with implementing or otherwise substitute his or her development of their performance issuances, an additional rating of record judgment for that of the rating official. expectations. However, final decisions may be issued to reflect a substantial (i) A supervisor or other rating official regarding performance expectations are and sustained change in the employee’s may prepare an additional performance within the sole and exclusive discretion performance since the last rating of appraisal for the purposes specified in of management. record. A rating of record will be used the applicable performance management as a basis for— system (e.g., transfers and details) at any § 9901.407 Monitoring performance and (1) A pay determination under any providing feedback. time after the completion of the applicable pay rules; minimum period. Such an appraisal is In applying the requirements of the (2) Determining reduction in force not a rating of record. performance management system and retention standing; and (j) Implementing issuances will its implementing issuances and policies, (3) Such other action that the establish policies and procedures for supervisors will— Secretary considers appropriate, as crediting performance in a reduction in (a) Monitor the performance of their specified in implementing issuances. force in accordance with subpart F of employees and their contribution to the (c) A rating of record will assess an this part (or other appropriate workforce organization; and employee’s performance with respect to shaping procedures for those not (b) Provide ongoing (i.e., regular and his or her performance expectations, as covered by subpart F of this part, such timely) feedback to employees on their amplified through work assignments or as National Guard Technicians under 32 actual performance with respect to their other instructions, and/or relative U.S.C. 709). performance expectations, including contributions and is considered final one or more interim performance when issued to the employee with all Subpart E—Staffing and Employment reviews during each appraisal period. appropriate reviews and signatures. (d) An appropriate rating official will General § 9901.408 Developing performance and communicate the rating of record and addressing poor performance. number of shares to the employee prior § 9901.501 Purpose. (a) Implementing issuances will to payout. (a) This subpart sets forth policies and prescribe procedures that supervisors (e) A rating of record issued under procedures for the establishment of will use to develop employee this subpart is an official rating of qualification requirements; recruitment

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for, and appointment to, positions; and issuances, to perform the work of a (4) At least annually, a consolidated assignment, reassignment, detail, position that does not require an list of all appointing authorities transfer, or promotion of employees, additional permanent employee. established under this section and consistent with 5 U.S.C. 9902(a) and (k). Term employee means an individual currently in effect will be published in (b) The Secretary will comply with not on a career appointment who is the Federal Register. merit principles set forth in 5 U.S.C. employed for a period of more than 1 (c) Severe shortage/critical need 2301 and with 5 U.S.C. 2302 (dealing year up to a maximum established by hiring authority. (1) The Secretary may with prohibited personnel practices). implementing issuances, when the need determine that there is a severe shortage (c) The Secretary will adhere to for an employee’s service is not of candidates or a critical hiring need, veterans’ preference principles set forth permanent. as defined in 5 U.S.C. 3304(a)(3) and 5 in 5 U.S.C. 2302(b)(11), consistent with Time-limited employee means an CFR part 337, subpart B, for particular 5 U.S.C. 9902(a) and (k). individual appointed to a position for a occupations, pay bands, career groups, period of limited duration (e.g., term or § 9901.502 Scope of authority. and/or geographic locations, and temporary) in either the competitive or establish a specific authority to make When a specified category of excepted service. appointments without regard to employees, applicants, and positions is External Recruitment and Internal § 9901.515. Public notice will be covered by the system established under Placement provided in accordance with 5 U.S.C. this subpart, the provisions of 5 U.S.C. 3304(a)(3)(A). 3301, 3302, 3304, 3317(a), 3318 and § 9901.511 Appointing authorities. (2) For each specific authority, the 3319 (except with respect to veterans’ (a) Competitive and excepted preference), 3321, 3324, 3325, 3327, Secretary will document the basis for appointing authorities. The Secretary the severe shortage or critical hiring 3330, 3341, and 5112(a) are modified may continue to use excepted and and replaced with respect to that need, consistent with 5 CFR 337.204(b) competitive appointing authorities and or 337.205(b), as applicable. category, except as otherwise specified entitlements under chapters 31 and 33 in this subpart. In accordance with of title 5, U.S. Code, Governmentwide (3) The Secretary will terminate or § 9901.105, the Secretary will prescribe regulations, or Executive orders, as well modify a specific authority to make implementing issuances to carry out the as other statutes, and those individuals appointments under this section when it provisions of this subpart. will be given career or time-limited determines that the severe shortage or appointments, as appropriate. critical need upon which the authority § 9901.503 Coverage. (b) Additional appointing authorities. was based no longer exists. (a) This subpart applies to eligible (1) The Secretary and the Director may (4) The Secretary will prescribe DoD employees and positions in the enter into written agreements providing appropriate implementing issuances to categories listed in paragraph (b) of this for new excepted and competitive administer this authority and will notify section, subject to a determination by appointing authorities for positions OPM of determinations made under this the Secretary under § 9901.102(b). covered by the National Security section. (b) The following employees and Personnel System, including (d) Time-limited appointing positions in DoD organizational and noncompetitive appointments, and authorities. (1) The Secretary may functional units are eligible for coverage excepted appointments that may lead to prescribe the procedures for appointing under this subpart: a subsequent noncompetitive employees, the duration of such (1) Employees and positions who appointment to the competitive service. appointments, and the appropriate uses would otherwise be covered by 5 U.S.C. (2)(i) DoD and OPM will jointly of time-limited employees. These chapters 31 and 33 (excluding members publish a notice in the Federal Register procedures will preclude the use of of the Senior Executive Service); and when establishing a new competitive employees on term appointments in (2) Such others designated by the appointing authority or a new excepted positions that should be filled on a Secretary as DoD may be authorized to appointing authority that may lead to a permanent basis. Term appointments include under 5 U.S.C. 9902. subsequent noncompetitive may be used to accomplish permanent appointment to a competitive position § 9901.504 Definitions. work in circumstances where the in the career service. DoD and OPM will position cannot be filled permanently, In this subpart— issue a notice with a public comment e.g., the incumbent will be out of the Career employee means an individual period before establishing such position for a significant period of time, appointed without time limit to a authority, except as provided in but is expected to return. competitive or excepted service position paragraph (b)(2)(ii) of this section. (2) The Secretary will prescribe in the Federal career service. (ii) If the Secretary determines that a Initial probationary period has the critical mission requirement exists, DoD implementing issuances establishing the meaning given that term in § 9901.103. and OPM may establish a new procedures under which a time-limited In-service probationary period has the appointing authority as described in employee serving in a competitive meaning given that term in § 9901.103. paragraph (b)(2)(i) of this section service position may be converted Promotion has the meaning given that effective upon publication of a Federal without further competition to the term in § 9901.103. Register notice without a preceding career service if— Reassignment has the meaning given comment period. However, the notice (i) The vacancy announcement met that term in § 9901.103. will invite public comments, and DoD the requirements of § 9901.515(a) and Reduction in band has the meaning and OPM will issue another notice if the included the possibility of given that term in § 9901.103. authority is revised based on those noncompetitive conversion to a Temporary employee means an comments. competitive position in the career individual not on a career appointment (3) The Secretary will prescribe service at a later date; who is employed for a limited period of appropriate implementing issuances to (ii) The individual was appointed time not to exceed 1 year. The administer a new appointing authority using the competitive examining appointment may be extended, up to a established under paragraph (b) of this procedures set forth in § 9901.515(b) maximum established by implementing section. and (c); and

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(iii) The employee completed at least the Secretary will provide public notice Subpart F—Workforce Shaping 2 years of continuous service at the fully for all vacancies in the career service in successful level of performance or accordance with 5 CFR part 330 and— § 9901.601 Purpose and applicability. better. (1) Will accept applications for the This subpart contains the regulations vacant position from all U.S. citizens; implementing the provisions of 5 U.S.C. § 9901.512 Probationary periods. 9902(k) concerning the Department’s (2) Will, at a minimum, consider (a) The Secretary may establish initial system for realigning, reorganizing, and applicants from the local commuting probationary periods of at least 1 year, reshaping its workforce. This subpart area; but not to exceed 3 years, as deemed applies to categories of positions and appropriate for employees appointed to (3) May concurrently consider employees affected by such actions positions in the competitive and applicants from other targeted resulting from the planned elimination, excepted service covered by NSPS. The recruitment areas, as specified in the addition, or redistribution of functions, Secretary will prescribe the conditions vacancy announcement, in addition to duties, or skills within or among for such periods, such as creditable those applicants from the minimum area organizational units, including service, in implementing issuances. of consideration; and realigning, reshaping, delayering, and Initial probationary periods established (4) May consider applicants from similar organizational-based for more than 1 year will be applied to outside that minimum area(s) of restructuring actions. This subpart does categories of positions or types of work consideration as necessary to provide not apply to actions involving the that require a longer time period to sufficient qualified candidates. conduct and/or performance of evaluate the employee’s ability to (b) The Secretary may establish individual employees, which are perform the work. A preference eligible procedures for the examination of covered by subpart G of this part. who has completed 1 year of an initial applicants for entry into competitive probationary period is covered by and excepted service positions in the § 9901.602 Scope of authority. subparts G and H of this part. National Security Personnel System. When a specified category of (b) The Secretary may establish in- Such procedures will adhere to the employees is covered by the system service probationary periods. The merit system principles in 5 U.S.C. 2301 established under this subpart, the Secretary will prescribe the conditions and veterans’ preference requirements provisions of 5 U.S.C. 3501 through for such periods, such as creditable as set forth in 5 U.S.C. 1302(b) and (c) 3503 (except with respect to veterans’ service and groups of positions or and 3309 through 3320, as applicable, preference) are modified and replaced occupations to be covered, in and will be available in writing for with respect to that category, except as implementing issuances. An employee applicant review. These procedures will otherwise specified in this subpart. In who does not satisfactorily complete an also include provisions for employees accordance with § 9901.105, the in-service probationary period will be entitled to priority consideration Secretary will prescribe implementing returned to a grade or band no lower referred to in 5 U.S.C. 8151. issuances to carry out the provisions of than that held before the in-service this subpart. probationary period and will have his or (c) In establishing examining her rate of basic pay set in accordance procedures for appointing employees in § 9901.603 Definitions. with § 9901.352(c) or 9901.354(c), as the competitive service under paragraph In this subpart: applicable. Nothing in this section (b) of this section, the Secretary may use Competing employee means a career prohibits an action against an individual traditional numerical rating and ranking employee (including an employee serving an in-service probationary or alternative ranking and selection serving an initial probationary period), period for cause unrelated to procedures (category rating) in an employee serving on a term performance. accordance with 5 U.S.C. 3319(b) and appointment, and other employees as (c). identified in implementing issuances. § 9901.513 Qualification standards. (d) The Secretary will apply the Competitive area means the The Secretary may continue to use requirements of paragraphs (a) through boundaries within which employees qualification standards established or (c) of this section to the recruitment of compete for retention under this approved by OPM. The Secretary also applicants for time-limited positions in subpart, based on factors described in may establish qualification standards for the competitive service in order to § 9901.605(a). positions covered by NSPS. qualify an appointee for noncompetitive Competitive group means employees § 9901.514 Non-citizen hiring. conversion to a competitive position in within a competitive area who are on a the career service, in accordance with common retention list for the purpose of The Secretary may establish § 9901.511. exercising displacement rights. procedures for appointing non-citizens Displacement right means the right of to positions within NSPS under the § 9901.516 Internal placement. an employee who is displaced from his following conditions: The Secretary may prescribe (a) In the absence of a qualified U.S. or her present position because of implementing issuances regarding the citizen, the Secretary may appoint a position abolishment, or because of assignment, reassignment, qualified non-citizen in the excepted displacement resulting from the reinstatement, detail, transfer, and service; and abolishment of a higher-standing (b) Immigration and security promotion of individuals or employees employee on the retention list, to requirements will apply to these into or within NSPS. Such displace a lower-standing employee on appointments. implementing issuances will be made the list on the basis of the retention available to applicants and employees. factors. § 9901.515 Competitive examining Internal placement actions may be made Modal rating means, for the purpose procedures. on a permanent or temporary basis of reduction in force, the rating of (a) In recruiting applicants from using competitive and noncompetitive record that occurs most frequently in a outside of the civil service for procedures. Those exceptions to particular competitive group. competitive appointments to competitive procedures set forth in 5 Notice means a written competitive service positions in NSPS, CFR part 335 apply to NSPS. communication to an individual

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employee stating that the employee will on a discontinuous basis, except as implementing issuances, the Secretary be displaced from his or her position as otherwise provided in this subpart. will establish approval procedure a result of a reduction in force action (c) Actions excluded. This subpart requirements for any competitive area under this subpart. does not apply to— identified less than 90 days before the Rating of record has the meaning (1) The termination of a temporary effective date of a reduction in force. given that term in § 9901.103. promotion or temporary reassignment (e) Limitations. The Secretary will Retention factors means tenure, and the subsequent return of an establish a competitive area only on the veterans’ preference, performance, employee to the position held before the basis of legitimate organizational length of service, and such other factors temporary promotion or temporary reasons, and competitive areas will not as the Secretary considers necessary and reassignment (or to a position with be used for the purpose of targeting an appropriate to rank employees within a comparable pay band, pay, status, and individual employee for reduction in particular retention list. tenure); forces on the basis of nonmerit factors. Retention list means a list of all (2) A reduction in band based on the (f) Bar on collective bargaining. competing employees occupying reclassification of an employee’s Pursuant to 5 U.S.C. 9902(f)(4) and positions in the competitive area, who position due to the application of new (m)(7), the establishment of a are grouped in the same competitive classification standards or the correction competitive area under the authority of group on the basis of retention factors. of a classification error or classification this subpart is not subject to collective While all positions in the competitive actions covered under § 9901.222; bargaining. (3) Placement of an employee serving group are listed, only competing § 9901.606 Competitive group. employees have retention standing. on a seasonal basis in a nonpay, Tenure group means a group of nonduty status in accordance with (a) The Secretary will establish employees with a given appointment conditions established at time of separate competitive groups for type. In a reduction in force, employees appointment; employees— (1) In the excepted and competitive are first placed in a tenure group and (4) A change in an employee’s work service; then ranked within that group according schedule from other-than-full-time to (2) Under different excepted service to other retention factors. full-time; (5) A change in an employee’s mixed appointment authorities; and Undue interruption means a degree of (3) With different work schedules interruption that would prevent the tour work schedule in accordance with conditions established at time of (e.g., full-time, part-time, seasonal, completion of required work by an intermittent). employee within 90 days after the appointment; (6) A change in the scheduled tour of (b) The Secretary may further define employee has been placed in a different duty of an other-than-full-time competitive groups on the basis of one position. schedule; or more of the following considerations: § 9901.604 Coverage. (7) A reduction in band based on the (1) Career group; (2) Pay schedule; (a) Employees covered. The following reclassification of an employee’s (3) Occupational series or specialty; employees and positions in DoD position due to erosion of duties, except (4) Pay band; or organizational and functional units are that this exclusion does not apply to (5) Trainee status. eligible for coverage under this subpart: such reclassification actions that will take effect after an agency has formally (c) An employee is placed into a (1) Employees and positions who competitive group based on the would otherwise be covered by 5 U.S.C. announced a reduction in force in the employee’s competitive area and when employee’s official position of record. chapter 35 (excluding members of the An employee’s official position Senior Executive Service and employees the reduction in force will take effect within 180 days; or description may be supplemented with who are excluded from coverage by other applicable records that document other statutory authority); and (8) Any other personnel action not covered by paragraph (b) of this section. the employee’s actual duties and (2) Such others designated by the responsibilities. Secretary as DoD may be authorized to § 9901.605 Competitive area. (d) The competitive group includes include under 5 U.S.C. 9902. (a) Basis for competitive area. The the official positions of employees on a (b) Actions covered. (1) Reduction in Secretary may establish a competitive detail or other nonpermanent force. This subpart will apply when a area on the basis of one or more of the assignment to a different position from displacement action occurs within a following considerations: the competitive group. retention list or when releasing a (1) Geographical location(s); (e) Pursuant to 5 U.S.C. 9902(f)(4) and competing employee from a retention (2) Line(s) of business; (m)(7), the establishment of a list by separation, reduction in band, or (3) Product line(s); competitive group under the authority assignment involving displacement, and (4) Organizational unit(s); and of this subpart is not subject to the release results from an action (5) Funding line(s). collective bargaining. described in § 9901.601. (b) Employees included in competitive (2) Transfer of function. The Secretary area. A competitive area will include all § 9901.607 Retention standing. will issue implementing issuances competing employees holding official (a) Retention list. Within each consistent with 5 U.S.C. 3503 positions of record in the defined competitive group, the Secretary will prescribing procedures to be used when competitive area. establish a retention list of competing a function transfers from one (c) Review of competitive area employees in descending order based on competitive area to a different determinations. The Secretary will make the following: competitive area. all competitive area definitions (1) Tenure, with career employees (3) Furlough. The provisions in 5 CFR available for review. listed first, followed by employees 351.604 will apply when furloughing a (d) Change of competitive area. serving an initial probationary period, competing employee for more than 30 Competitive areas will be established for and then followed by employees on consecutive calendar days, or more than a minimum of 90 days before the term appointments and other employees 22 workdays in 1 calendar year if done effective date of a reduction in force. In as identified in implementing issuances;

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(2) Veterans’ preference, in contains a position held by a temporary Systems Protection Board as provided accordance with the preference employee when the competing for in 5 CFR 351.901 if the employee requirements in 5 CFR 351.501(c) and employee is qualified to perform in that was— (d), including the preference restrictions position under § 9901.608(a)(1)(i). (1) Separated by reduction in force; found in 5 U.S.C. 3501(a); (3) The release of an employee from (2) Reduced in band by reduction in (3) The ratings of record, as the retention list may be temporarily force; or determined in accordance with postponed when appropriate under 5 (3) Furloughed by reduction in force implementing issuances; CFR 351.506, 351.606, 351.607, and under § 9901.604(b)(3). (4) Creditable civilian and/or 351.608. Where part 351 uses the term (b) Paragraph (a) of this section does uniformed service in accordance with 5 ‘‘competitive level’’ in these four not apply to actions taken under U.S.C. 3502(a)(A) and (B) and 5 CFR sections, the term retention list (as internal DoD placement programs, 351.503, but without regard to defined in this subpart) is substituted. including the DoD Priority Placement provisions covering additional service (c) Placement in vacant positions. At Program. credit for performance in 5 CFR the Secretary’s option, an employee Subpart G—Adverse Actions 351.503(c)(3) and (e); and affected by § 9901.608(a)(1) may be (5) The Secretary may establish tie- offered a vacant position within the General breaking procedures when two or more competitive area in lieu of reduction in employees have the same retention force, based on relative retention § 9901.701 Purpose. standing. standing as specified in § 9901.607(a). This subpart contains regulations (b) Active uniformed service member (d) Actions for employees with no prescribing the requirements for not on list. The retention list does not offer. If a released employee does not employees who are removed, include the name of an employee who, receive an offer of another position suspended, furloughed for 30 days or on the effective date of the reduction in under paragraph (c) of this section to a less, reduced in pay, or reduced in pay force, is on active duty in the uniformed position on a different retention list, the band (or comparable reduction). The services with a restoration right under 5 Secretary may— Secretary may prescribe implementing CFR part 353. (1) Separate the employee by issuances to carry out the provisions of (c) Access to retention list. An reduction in force; or this subpart. employee who received a specific (2) Furlough the employee under § 9901.702 Waivers. reduction in force notice and the § 9901.604(b)(3). With respect to any category of employee’s representative have access employees covered by this subpart, to the applicable retention list in § 9901.609 Reduction in force notices. subchapters I and II of 5 U.S.C. chapter accordance with 5 CFR 351.505. Where The Secretary will provide a specific 75, in addition to those provisions of 5 5 CFR 351.505 uses the terms written notice to each employee reached U.S.C. chapter 43 specified in subpart D ‘‘competitive level’’ or ‘‘retention for an action in reduction in force competition at least 60 days before the of this part, are waived and replaced by register,’’ the term retention list (as this subpart. defined in this subpart) is substituted. reduction in force becomes effective. When a reduction in force is caused by § 9901.703 Definitions. § 9901.608 Displacement, release, and circumstances not reasonably position offers. In this subpart: foreseeable, the Secretary, at the request Adverse action means a removal, (a) Displacement to other positions on of a Component head or designee, may suspension, furlough for 30 days or less, the retention list. (1) An employee who approve a notice period of less than 60 reduction in pay, or reduction in pay is displaced because of position days. The shortened notice period must band (or comparable reduction). abolishment, or because of displacement cover at least 30 full days before the Band has the meaning given that term resulting from the abolishment of the effective date of release. The content of in § 9901.103. position of a higher-standing employee the notice will be prescribed in Day has the meaning given that term on the retention list, may displace a implementing issuances. in § 9901.103. lower-standing employee on the list if— Furlough has the meaning given that (i) The higher-standing employee is § 9901.610 Voluntary separation. term in § 9901.103. qualified for the position consistent, as (a) The Secretary may— Indefinite suspension means the applicable, with 5 CFR 351.702, or the (1) Separate from the service any placement of an employee in a Department’s own qualifications employee who volunteers to be temporary status without duties and pay applied consistent with other separated even though the employee is pending investigation, inquiry, or other requirements in 5 CFR 351.702; not otherwise subject to separation due administrative action. An indefinite (ii) No undue interruption would to a reduction in force; and suspension continues for an result from the displacement; and (2) For each employee voluntarily indeterminate period of time and ends (iii) The position of the lower- separated under paragraph (a)(1) of this with the occurrence of pending standing employee is in the same pay section, retain an employee in a similar conditions set forth in the notice of band, or in a lower pay band, as the position who would otherwise be actions which may include the position of the higher-standing separated due to a reduction in force. completion of any subsequent employee. (b) The separation of an employee administrative action. (2) A displacing employee retains his under paragraph (a) of this section will Initial probationary period has the or her status and tenure. be treated as an involuntary separation meaning given that term in § 9901.103. (b) Release from the retention list. (1) due to a reduction in force. In-service probationary period has the Employees are selected for release from meaning given that term in § 9901.103. the list on the basis of the ascending § 9901.611 Reduction in force appeals. Mandatory removal offense (MRO) has order of retention standing set forth in (a) An employee who believes the the meaning given that term in § 9901.607(a). provisions of this subpart were not § 9901.103. (2) A competing employee may not be properly applied may appeal the Reduction in pay means a decrease in released from a retention list that reduction in force action to the Merit an employee’s rate of basic pay fixed by

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law or administrative action for the (B) An employee who has completed (8) An employee who is an alien or position held by the employee before a probationary period under a term non-citizen occupying a position any deductions and exclusive of appointment; outside the United States, as described additional pay of any kind. Basic pay (9) Cancellation of a promotion to a in 5 U.S.C. 5102(c)(11); does not include local market position not classified prior to the (9) A member of the National Security supplements under subpart C of this promotion; Labor Relations Board; part or similar payments. Nonreceipt of (10) Placement of an employee (10) A non-appropriated fund a pay increase is not a reduction in pay. serving on an intermittent or seasonal employee; Removal means the involuntary basis in a temporary non-duty, non-pay (11) A National Guard technician who separation of an employee from the status in accordance with conditions is employed under 32 U.S.C. 709; and Federal service. established at the time of appointment; (12) An employee against whom an Suspension means the temporary (11) Reduction of an employee’s rate adverse personnel action is taken or placement of an employee, for of basic pay from a rate that is contrary imposed under any statute or regulation disciplinary reasons, in a nonduty/ to law or regulation; other than this subpart. (12) An action taken under a nonpay status. Requirements for Removal, Suspension, provision of statute, other than one Furlough of 30 Days or Less, Reduction § 9901.704 Coverage. codified in title 5, U.S. Code, which in Pay, or Reduction in Band (or excludes the action from 5 U.S.C. (a) Actions covered. This subpart Comparable Reduction) covers removals, suspensions, furloughs chapter 75 or this subpart; of 30 days or less, reductions in pay, or (13) A classification determination, § 9901.711 Standard for action. reductions in band (or comparable including a classification determination The Secretary may take an adverse reductions). under subpart B of this part; action under this subpart only for such (b) Actions excluded. This subpart (14) Suspension or removal under 5 cause as will promote the efficiency of does not cover— U.S.C. 7532; and the service. (1) An action taken against an (15) An action to terminate grade employee during an initial probationary retention upon conversion to the NSPS § 9901.712 Mandatory removal offenses. period established under § 9901.512(a), pay system established under subpart C (a) The Secretary has the sole, except when the employee is a of this part. exclusive, and unreviewable discretion preference eligible who has completed 1 (c) Employees covered. Subject to a to identify offenses that have a direct year of that probationary period; determination by the Secretary under and substantial adverse impact on the (2) A reduction in pay or pay band of § 9901.102(b)(2), this subpart applies to Department’s national security mission. an employee who does not satisfactorily DoD employees, except as excluded by Such offenses will be identified in complete an in-service probationary paragraph (d) of this section. advance in implementing issuances, period under § 9901.512(b) if the (d) Employees excluded. This subpart publicized upon establishment via employee is returned to a grade or band does not apply to— notice in the Federal Register, and and rate of basic pay no lower than that (1) An employee who is serving a made known to all employees on a held before the in-service probationary probationary period, except when the periodic basis, as appropriate, through period. employee is a preference eligible who means determined by the Secretary. has completed 1 year of that (3) An action that terminates a (b) The procedures in §§ 9901.713 probationary period; temporary or term promotion and through 9901.716 apply to actions taken (2) A member of the Senior Executive returns the employee to the position under this section. However, a proposed Service; from which temporarily promoted, or to notice required by § 9901.714 may be (3) An employee who is terminated in a different position in a comparable pay issued to the employee in question only accordance with terms specified as band, if the employee was informed that after the Secretary’s review and conditions of employment at the time the promotion was to be of limited approval. the appointment was made; (c) The Secretary has the sole, duration; (4) An employee whose appointment (4) A reduction in force action under exclusive, and unreviewable discretion is made by and with the advice and to mitigate the removal penalty on his subpart F of this part; consent of the Senate; (5) An action imposed by the Merit or her own initiative or at the request of (5) An employee whose position has the employee in question. Systems Protection Board under 5 been determined to be of a confidential, U.S.C. 1215; (d) Nothing in this section limits the policy-determining, policy-making, or discretion of the Secretary to remove (6) A voluntary action by an policy-advocating character by— employee; employees for offenses other than those (i) The President, for a position that identified by the Secretary as an MRO. (7) An action taken or directed by the President has excepted from the OPM based on suitability under 5 CFR competitive service; § 9901.713 Procedures. part 731; (ii) OPM, for a position that OPM has An employee against whom an (8)(i) Termination of appointment on excepted from the competitive service; adverse action is proposed is entitled to the expiration date specified as a basic or the following: condition of employment at the time the (iii) The President or the Secretary for (a) A proposal notice under appointment was made; a position excepted from the § 9901.714; (ii) Termination of appointment competitive service by statute; (b) An opportunity to reply under before the expiration date specified as a (6) An employee whose appointment § 9901.715; and basic condition of employment at the is made by the President; (c) A decision notice under time the appointment was made, except (7) A reemployed annuitant who is § 9901.716. when the termination is taken against— receiving an annuity from the Civil (A) A preference eligible employee Service Retirement and Disability Fund § 9901.714 Proposal notice. who has completed 1 year under a time- or the Foreign Service Retirement and (a) Notice period. An employee will limited appointment; or Disability Fund; receive a minimum of 15 days advance

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written notice of a proposed adverse there is reasonable cause to believe the (i) The employee will be allowed to action. However, if there is reasonable employee has committed a crime for provide medical documentation during cause to believe the employee has which a sentence of imprisonment may the opportunity to reply; committed a crime for which a sentence be imposed, the reply period may be (ii) Compliance with 29 CFR 1614.203 of imprisonment may be imposed, the reduced to a minimum 5 days, which and relevant Equal Employment notice period may be shortened to a will run concurrently with the notice Opportunity Commission rules will minimum of 5 days. No notice of period. No opportunity to reply is occur; and proposed action is necessary for necessary for furlough without pay due (iii) Compliance with 5 CFR 831.1205 furlough without pay due to unforeseen to unforeseen circumstances, such as or 844.202, as applicable, will occur in circumstances, such as sudden sudden breakdown in equipment, acts the issuance of a decision to remove. breakdown in equipment, acts of God, of God, or sudden emergencies requiring § 9901.716 Decision notice. or sudden emergencies requiring immediate curtailment of activities. immediate curtailment of activities. (b) The opportunity to reply orally (a) Any reasons for the action other (b) Contents of notice. (1) The does not include the right to a formal than those specified in the proposal proposal notice will inform the hearing with examination of witnesses. notice may not be considered in a employee of the factual basis for the (c) During the opportunity to reply decision on a proposed adverse action. proposed action in sufficient detail to period, the employee will be provided (b) Any response from the employee permit the employee to reply to the a reasonable amount of official time to and the employee’s representative, if the notice, and inform the employee of his review the evidence, and to furnish response is provided to the official or her right to review the evidence affidavits and other documentary designated under § 9901.715(d) during supporting the proposed action. evidence, if the employee is otherwise the opportunity to reply period, and any Evidence may not be used that cannot in an active duty status. medical documentation furnished under § 9901.715(g) will be considered. be disclosed to the employee, his or her (d) An official will be designated to (c) The decision notice will specify in representative, or designated physician receive the employee’s written and/or writing the reasons for the decision and pursuant to 5 CFR 297.204. oral response. The official will have advise the employee of any appeal or (2) When some but not all employees authority to make or recommend a final grievance rights under subparts H or I of in a given category and/or decision on the proposed adverse this part. organizational unit are being action. furloughed, the proposal notice will (d) To the extent practicable, the (e) The employee may be represented notice to the employee will be delivered state the basis for selecting a particular by an attorney or non-Federal employee employee for furlough, as well as the on or before the effective date of the representative, at the employee’s action. If delivery cannot be made to the reasons for the furlough. expense, or other representative of the (c) Duty status during notice period. employee in person, the notice may be employee’s choice, subject to paragraph delivered to the employee’s last known An employee will remain in a duty (f) of this section. The employee will status in his or her regular position address of record on or before the provide a written designation of his or effective date of the action. during the notice period. However, if it her representative. is determined that the employee’s (f) An employee’s representative may § 9901.717 Departmental record. continued presence in the workplace be disallowed if the representative is— (a) Document retention. The during the notice period may pose a (1) An individual whose activities as Department will keep a record of all threat to the employee or others, result representative would cause a conflict relevant documentation concerning the in loss of or damage to Government between the interest or position of the action for a period of time pursuant to property, adversely impact the representative and that of the the General Records Schedule and the Department’s mission, or otherwise Department, Guide to Personnel Recordkeeping. The jeopardize legitimate Government (2) An employee of the Department record will include the following: interests, one or a combination of the whose release from his or her official (1) A copy of the proposal notice; following alternatives may be taken: position would give rise to unreasonable (2) The employee’s written response, (1) Assign the employee to duties costs or whose work assignments if any, to the proposal; where it is determined that the preclude his or her release; or (3) A summary of the employee’s oral employee is no longer a threat to the (3) An individual whose activities as response, if any; employee or others, the Department’s representative could compromise (4) A copy of the decision notice; and mission, or Government property or security. (5) Any supporting material that is interests; (g)(1) An employee who wishes directly relevant and on which the (2) Allow the employee to take leave, action was substantially based. or place him or her in an appropriate consideration of any medical condition that may be relevant to the proposed (b) Access to the record. The leave status (annual leave, sick leave, or Department will make the record leave without pay) or absence without adverse action will provide medical documentation, as that term is defined available for review by the employee leave if the employee has absented and furnish a copy of the record upon himself or herself from the worksite at 5 CFR 339.104, during the opportunity to reply, whenever the employee’s request or the request of without approved leave; or the Merit Systems Protection Board (3) Place the employee in a paid, non- possible. (MSPB), but not less than 15 days after duty status for such time as is necessary (2) A medical examination may be such a request. to effect the action. required or offered pursuant to 5 CFR part 339, subpart C, when an employee’s Savings Provision § 9901.715 Opportunity to reply. medical documentation is under (a) An employee will be provided a consideration. § 9901.721 Savings provision. minimum of 10 days, which will run (3) Withdrawal or delay of a proposed This subpart does not apply to concurrently with the notice period, to adverse action is not required when an adverse actions proposed prior to the reply orally and/or in writing to a notice employee’s medical condition is under date of an affected employee’s coverage of proposed adverse action. However, if consideration . However— under this subpart.

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Subpart H—Appeals Preponderance of the evidence means extent permitted by subpart I of this the degree of relevant evidence that a part. § 9901.801 Purpose. reasonable person, considering the This subpart implements the record as a whole, would accept as § 9901.807 Appellate procedures. provisions of 5 U.S.C. 9902(h), which sufficient to find that a contested fact is (a) General. (1) A covered Department establishes the process for Department more likely to be true than untrue. employee may appeal to MSPB an employees to appeal certain adverse Request for Review (RFR) means a adverse action listed in § 9901.805(a). actions covered under subpart G of this preliminary request for review of an Such an employee has a right to be part. initial decision of an MSPB represented by an attorney or other administrative judge before that representative of his or her own § 9901.802 Applicable legal standards and choosing. The procedures in this precedents. decision has become a final Department decision. subpart do not apply when the action is In accordance with 5 U.S.C. taken under the special national 9902(h)(3), in applying existing legal § 9901.805 Coverage. security provisions established by 5 standards and precedents, MSPB and (a) Subject to a determination by the U.S.C. 7532. arbitrators, in applicable cases, are Secretary under § 9901.102(b)(2), this (2)(i) This section modifies MSPB’s bound by the legal standard set forth in subpart applies to employees in DoD appellate procedures with respect to § 9901.107(a)(2). organizational and functional units that appeals under this subpart, as applicable. § 9901.803 Waivers. are included under NSPS who appeal (ii) MSPB will refer appeals to an AJ When a specified category of removals; suspensions for more than 14 days, including indefinite suspensions; for adjudication. The AJ must make a employees is covered by an appeals decision at the close of the review and process established under this subpart, furloughs of 30 days or less; reductions in pay; or reductions in pay band (or provide a copy of the decision to each the provisions of 5 U.S.C. 7701 are party to the appeal and to OPM. waived with respect to that category of comparable reductions), which constitute appealable adverse actions for (3) The Director of OPM may, as a employees to the extent they are matter of right at any time in the inconsistent with the provisions of this the purpose of this subpart, provided such employees are covered by proceeding, intervene or otherwise subpart. The provisions of 5 U.S.C. 7702 participate in any proceeding under this are modified as provided in § 9901.809. § 9901.704. (b) This subpart does not apply to a section in any case in which the The appellate procedures specified Director believes that an erroneous herein supersede those of MSPB to the reduction in force action taken under subpart F of this part, nor does it apply decision will have a substantial impact extent MSPB regulations are on a civil service law, rule, regulation, inconsistent with this subpart. MSPB to actions taken under internal DoD placement programs, including the DoD or policy directive. will follow the provisions in this (4) If the AJ is of the opinion that an Priority Placement Program. subpart until it issues conforming appeal could be processed more regulations, which may not conflict (c) Appeals of suspensions of 14 days expeditiously without adversely with this part. or less and other lesser disciplinary affecting any party, the AJ may— measures are not covered under this (i) Consolidate appeals filed by two or § 9901.804 Definitions. subpart but may be grieved through a more appellants; or In this subpart: negotiated grievance procedure or an (ii) Join two or more appeals filed by Administrative judge or AJ means the administrative grievance procedure, the same appellant and hear and decide official, including an administrative law whichever is applicable. them concurrently. judge, authorized by MSPB to hold a (d) The appeal rights in 5 CFR (5) If an employee has been removed hearing in a matter covered by this 315.806 apply to the termination of an under subpart G of this part, neither the subpart and subpart G of this part, or to employee in the competitive service employee’s status under any retirement decide such a matter without a hearing. while serving a probationary period. system established by Federal statute Class appeal means an appeal brought (e) Actions taken under 5 U.S.C. 7532 nor any election made by the employee by a representative(s) of a group of are not appealable to MSPB. under any such system will affect the similarly situated employees consistent (f) Except as expressly provided in employee’s appeal rights. with the provisions of Rule 23 of the subpart C of this part, actions taken (6) All appeals, including class Federal Rules of Civil Procedure. under that subpart are not appealable to appeals, will be filed no later than 20 Harmful error means error by the MSPB. days after the effective date of the action Department in the application of its being appealed, or no later than 20 days procedures that is likely to have caused § 9901.806 Alternative dispute resolution. after the date of service of a decision it to reach a conclusion different from The Secretary recognizes the value of under subpart G of this part, whichever the one it would have reached in the using alternative dispute resolution is later. absence or cure of the error. The burden methods such as mediation, an (7) Either party may file a motion to is on the appellant to show that the ombudsman, or interest-based problem- disqualify a party’s representative at any error was harmful, i.e., that it caused solving to address employee-employer time during the proceedings. substantial harm or prejudice to his or disputes arising in the workplace, (b) Case suspension. Requests for case her rights. including those which may involve suspensions must be submitted jointly Mandatory removal offense (MRO) has disciplinary or adverse actions. Such by the parties. the meaning given that term in methods can result in more efficient and (c) Settlement. (1) An MSPB AJ may § 9901.103. more effective outcomes than not require any party to engage in MSPB means the Merit Systems traditional, adversarial methods of settlement discussions in connection Protection Board. dispute resolution. The use of with any action appealed under this Petition for Review (PFR) means a alternative dispute resolution is section. Where the parties voluntarily request for full MSPB review of a final encouraged. Such methods will be agree to enter into settlement Department decision. subject to collective bargaining to the discussions under paragraph (c)(2) of

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this section, if either party decides that no later than 90 days after the date on be paid before an MSPB decision such discussions are not appropriate, which the appeal is filed. becomes final. the matter will proceed to adjudication. (2) Mitigation. (i) An AJ will give great (6) Attorney fees. (i) Except as (2) Where the parties agree to engage deference to the determination provided in paragraph (f)(6)(ii) of this in formal settlement discussions, these regarding the penalty imposed. section or as otherwise provided by law, discussions will be conducted by an (ii) An AJ may not modify the penalty the AJ may require payment by the official other than the AJ assigned to imposed unless such penalty is totally Department of reasonable attorney fees adjudicate the case. Nothing prohibits unwarranted in light of all pertinent incurred by an employee if the the parties from engaging in settlement circumstances. In evaluating the employee is the prevailing party and the discussions on their own. appropriateness of the penalty, the AJ AJ determines that payment by the (d) Discovery. The parties may seek will give primary consideration to the Department is warranted in the interest discovery regarding any matter that is impact of the sustained misconduct or of justice, including any case in which relevant to any of their claims or poor performance on the Department’s a prohibited personnel practice was defenses. However, by motion, either national security mission in accordance engaged in by the agency or any case in party may seek to limit such discovery with § 9901.107(a)(2). which the agency’s action was clearly because the burden or expense of (iii) In cases of multiple charges, the without merit. providing the material outweighs its third party’s determination in this (ii) If the employee is the prevailing benefit, or because the material sought regard is based on the justification for party and the decision is based on a is privileged, not relevant, unreasonably the penalty as it relates to the sustained finding of discrimination prohibited cumulative or duplicative, or can be charge(s). under 5 U.S.C. 2302(b)(1), the payment secured from some other source that is (iv) When a penalty is mitigated, the of reasonable attorney fees must be in more convenient, less burdensome, or maximum justifiable penalty must be accordance with the standards less expensive. applied. The maximum justifiable prescribed in § 706(k) of the Civil Rights Act of 1964 (42 U.S.C. 2000e–5(k)). (1) Prior to filing a motion to limit penalty is the severest penalty that is (g) Department’s final decision. (1) discovery, the parties must confer and not so disproportionate to the basis for attempt to resolve any pending Request for Review. The initial AJ the action as to be totally unwarranted decision will become the Department’s objection(s). in light of all pertinent circumstances. (2) Neither party may submit more final decision 30 days after its issuance, (v) If the adverse action is based on an unless either party files an RFR with than one set of interrogatories, one set MRO, the penalty may only be mitigated of requests for production, and one set MSPB and the Department concurrently as prescribed in § 9901.808. (with service on the other party) within of requests for admissions. The number (3) Reviewing charges. Neither the of interrogatories or requests for that 30-day period in accordance with 5 MSPB AJ, nor the full MSPB, may U.S.C. 9902(h), MSPB’s regulations, and production or admissions may not reverse an action based on the way in exceed 25 per pleading, including this subpart. If a party does not submit which the charge is labeled or the an RFR within the above time limit, the subparts; in addition, neither party may conduct characterized, provided the conduct/compel more than 2 RFR will be dismissed as untimely filed employee has sufficient notice to unless a good reason for the delay is depositions. respond to the charge. (3) The AJ may grant a party’s motion shown. (4) Performance expectations. Neither for additional discovery only upon a (2) Department review process. (i) the MSPB AJ, nor the full MSPB, may showing of necessity and good cause. Thirty days after the timely filing of an (e) Hearing. (1) Burden of proof. An reverse an action based on the way a RFR, the initial AJ decision will become adverse action taken against an performance expectation is expressed, the Department’s final, nonprecedential employee will be sustained by the provided that the expectation would be decision, unless notice is served on the MSPB AJ if it is supported by a clear to a reasonable person. parties and MSPB within that 30-day preponderance of the evidence, unless (5) Interim relief. Pursuant to 5 U.S.C. period that the Department will act on the employee shows by a preponderance 9902(h)(4), employees will not be the RFR. When no such notice is served, of the evidence— granted interim relief, nor will an action MSPB will docket and process a party’s (i) That there was harmful error in the taken against an employee be stayed, RFR as a petition for full MSPB review application of Department procedures in unless specifically ordered by the full in accordance with 5 U.S.C. 9902(h), arriving at the decision; MSPB following final decision by the MSPB’s regulations, and this subpart. (ii) That the decision was based on Department. Timeframes will be established in any prohibited personnel practice (i) If the interim relief ordered by the implementing issuances for those described in 5 U.S.C. 2302(b); or full MSPB provides that the employee instances where action is taken on an (iii) That the decision was not in will return or be present at the place of RFR. accordance with law. employment pending the outcome of (ii) If a decision is made to act on the (2) Decisions without a hearing. If the any petition for review, and the RFR, the other party to the case will be AJ determines upon his or her own Secretary determines, in his or her sole, provided 15 days to respond to the RFR. initiative or upon request by either party exclusive, and unreviewable discretion, An extension to the filing period may be that some or all material facts are not in that the employee’s return to the granted for good cause. After receipt of genuine dispute, he or she may, after workplace is impracticable or the a timely response to the RFR— giving notice to the parties and presence of the employee is unduly (A) If a determination is made that providing them an opportunity to disruptive to the work environment, the there has been a material error of fact, respond in writing, including filing employee may be placed in an or that there is new and material evidence and/or arguments, within 15 alternative position, or may be placed evidence available that, despite due calendar days, issue an order limiting on excused absence pending final diligence, was not available when the the scope of the hearing or issue a disposition of the employee’s appeal. record closed, the matter will be decision without holding a hearing. (ii) Nothing in paragraph (f)(5) of this remanded to the assigned AJ for further (f) Initial decision. (1) Time limit. An section may be construed to require that adjudication or a final DoD decision initial decision must be made by an AJ any award of back pay or attorney fees will be issued modifying or reversing

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that initial decision or decision after (iii) The full MSPB may order (c) Only the Secretary may mitigate remand. Any remand will be served on corrective action only if the Board the penalty within the Department. all parties with an opportunity for those determines that the decision was— (d) If the MSPB AJ or the full MSPB parties to comment to the AJ. An AJ (A) Arbitrary, capricious, and abuse of sustains an employee’s appeal based on decision after remand must be made no discretion, or otherwise not in a finding that the employee did not later than 30 days after the date of accordance with law; commit an MRO, a subsequent proposed receipt of the remand. However, if the (B) Obtained without procedures adverse action (other than an MRO) Department’s remand order includes required by law, rule, or regulation based in whole or in part on the same instructions to hold a hearing, the AJ having been followed; or or similar evidence is not precluded. decision will be made not later than 45 (C) Unsupported by substantial evidence. § 9901.809 Actions involving days after receipt of the remand order. discrimination. Decisions on remand will be treated as (iv) Upon receipt of a petition for full (a) In considering any appeal of an initial decisions for purpose of further MSPB review or an RFR that becomes a action filed under 5 U.S.C. 7702, the review. PFR as a result of the expiration of the Board will apply the provisions of 5 (B) Where it is determined that the Department’s review period in accordance with paragraph (g)(2)(i) of U.S.C. 9902 and this part. initial AJ decision has a direct and (b) In any appeal of an action filed substantial adverse impact on the this section, the other party to the case and/or OPM, as applicable, will have 30 under 5 U.S.C. 7702 that results in a Department’s national security mission, final Department decision, if no petition or is based on an erroneous days to file a response to the petition. The full MSPB will act on a PFR within for review of the Department’s decision interpretation of law, Governmentwide is filed with the full Board, and if rule or regulation, or this part, a final 90 days after receipt of a timely response, or the expiration of the requested by the appellant, the DoD decision will be issued modifying Department will refer only the or reversing that initial decision; or response period, as applicable, in accordance with 5 U.S.C. 9902(h), discrimination issue to the full Board (C) Where it is determined that the MSPB’s regulations, and this subpart. for adjudication. initial AJ decision should serve as (3) Request for reconsideration of (c) All references in 5 U.S.C. 7702 to precedent, a final DoD decision will be final MSPB decision. The Director of 5 U.S.C. 7701 are modified to read 5 issued affirming that initial decision for OPM, after consultation with the CFR part 9901, subpart H. such purposes. Secretary, may seek reconsideration by § 9901.810 Savings provision. (3) Precedential effect. Any decision MSPB of a final MSPB decision in issued by the Department after This subpart does not apply to accordance with 5 U.S.C. 7703(d), adverse actions proposed prior to the reviewing an initial AJ decision is which is modified for this purpose. The precedential unless— date of an affected employee’s coverage Director of OPM must seek under this subpart. (i) The Secretary determines that the reconsideration within 35 days after the DoD decision is not precedential; or date of service of the Board’s final order. Subpart I—Labor-Management (ii) The final DoD decision is reversed If the Director seeks such Relations or modified by the full MSPB. reconsideration, the full MSPB must (4) Publication of decisions. render its decision no later than 60 days § 9901.901 Purpose. Precedential DoD decisions will be after receipt of a response to OPM’s This subpart contains the regulations published. Further details regarding the petition in support of such which implement the provisions of 5 publication of DoD precedential reconsideration. The full MSPB must U.S.C. 9902(m) relating to the decisions will be provided in state the reasons for its decision. Department’s labor-management implementing issuances. (4) Failure of MSPB to meet deadlines. relations system. This labor (h) Appeal of Department’s final Failure of MSPB to meet the deadlines management relations system addresses decision. (1) OPM Petition for Review. imposed by paragraphs (f)(1), (h)(2)(iv), the unique role that the Department’s Any decision under paragraph (a)(2) of and (h)(3) of this section in a case will civilian workforce plays in supporting this section is final unless a party to the not prejudice any party to the case and the Department’s national security appeal or the Director of OPM petitions will not form the basis for any legal mission and promotes a collaborative the full MSPB for review within 30 action by any party. If the AJ or full issue-based approach to labor days. The Director, after consultation MSPB fails to meet the above time management relations. These with the Secretary, may petition the full limits, the full MSPB will inform the regulations recognize the rights of DoD MSPB for review if the Director believes Secretary in writing of the cause of the employees to organize and bargain the decision is erroneous and will have delay and will recommend future collectively, as provided for in 5 U.S.C. a substantial impact on a civil service actions to remedy the problem. 9902 and this part and subject to any law, rule, regulation, or policy directive. (i) Judicial review. The Secretary or an exclusion from coverage or limitation on MSPB, for good cause shown, may employee adversely affected by a final the scope of bargaining pursuant to law, extend the filing period. order or decision of MSPB may seek including this part, issuances, and judicial review under 5 U.S.C. implementing issuances, applicable (2) Petition for Review. (i) Upon 9902(h)(6). Presidential issuances (e.g., Executive receipt of a final DoD decision issued orders), and any other applicable legal under paragraph (g)(2)(ii) of this section, § 9901.808 Appeals of mandatory removal authority. an employee or OPM may file a PFR actions. with the full MSPB within 30 days in (a) Procedures for appeals of adverse § 9901.902 Scope of authority. accordance with 5 U.S.C. 9902(h), actions to MSPB based on MROs will be When a specified category of MSPB’s regulations, and this subpart. the same as for other offenses except as employees is covered by the labor- (ii) The Board may dismiss any otherwise provided by this section. management relations system petition that, in the view of the Board, (b) If one or more MROs are sustained, established under this subpart, the does not raise substantial questions of the MSPB AJ may not mitigate the provisions of 5 U.S.C. 7101 through fact or law. penalty. 7135 are modified and replaced by the

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provisions in this subpart with respect who formulates or effectuates Supervisor means an individual to that category, except as otherwise management policies in the field of employed by the Department having specified in this subpart. Implementing labor-management relations. authority in the interest of the issuances may be prescribed to carry out Consult means to consider the Department to hire, direct, assign, the provisions of this subpart. interests, opinions, and promote, reward, transfer, furlough, recommendations of a recognized labor layoff, recall, suspend, discipline, or § 9901.903 Definitions. organization in rendering decisions. remove employees; to adjust their In this subpart: This can be accomplished in face-to-face grievances; or to effectively recommend Authority means the Federal Labor meetings or through other means, e.g., such action, if the exercise of the Relations Authority described in 5 teleconferencing, e-mail, and written authority is not merely routine or U.S.C. 7104(a). communications. clerical in nature but requires the Board means the National Security Dues means dues, fees, and consistent exercise of independent Labor Relations Board established by assessments. judgment, except that, with respect to this subpart. Exclusive representative means any any unit which includes firefighters or Collective bargaining means the labor organization which is recognized nurses, the term ‘‘supervisor’’ includes performance of the mutual obligation of as the exclusive representative of only those individuals who devote a a management representative of the employees in an appropriate unit preponderance of their employment Department and an exclusive consistent with the Department’s time to exercising such authority. It also representative of employees in an organizational structure, pursuant to 5 means an individual employed by the appropriate unit in the Department to U.S.C. 7111 or as otherwise provided by Department who exercises supervisory meet at reasonable times and to bargain § 9901.911. authority over military members of the FMCS means Federal Mediation and in a good faith effort to reach agreement, armed services, such as directing or pursuant to 5 U.S.C. 9902 and this Conciliation Service. Grade means a level of work under a assigning work or evaluating or subpart, with respect to the conditions recommending evaluations. of employment affecting such position classification or job grading employees and to execute, if requested system. § 9901.904 Coverage. by either party, a written document Grievance means any complaint— (a) Employees covered. This subpart (1) By any employee concerning any incorporating any collective bargaining applies to eligible DoD employees, matter relating to the conditions of agreement reached, but the obligation subject to a determination by the referred to in this paragraph does not employment of the employee; (2) By any labor organization Secretary under § 9901.102(b)(1), except compel either party to agree to a concerning any matter relating to the as provided in paragraph (b) of this proposal or to make a concession. conditions of employment of any section. DoD employees who would Collective bargaining agreement otherwise be eligible for bargaining unit means an agreement entered into as a employee; or (3) By any employee, labor membership under 5 U.S.C. chapter 71, result of collective bargaining pursuant organization, or the Department as modified by § 9901.912, are eligible to the provisions of 5 U.S.C. 9902 and concerning— for bargaining unit membership under this subpart. (i) The effect or interpretation, or a this subpart. In addition, this subpart Component means an organizational claim of breach, of a collective applies to an employee whose unit so prescribed and designated by the bargaining agreement; or employment in the Department has Secretary in his or her sole and (ii) Any claimed violation, ceased because of any unfair labor exclusive discretion, such as, for misinterpretation, or misapplication of practice under § 9901.916 of this example, the Office of the Secretary of any law, rule, regulation, or issuance subpart and who has not obtained any Defense, a Military Department, a issued for the purpose of affecting other regular and substantially Defense Agency, or a DoD Field conditions of employment. equivalent employment. Activity. Implementing issuance or issuances (b) Employees excluded. This subpart Conditions of employment means has the meaning given that term in does not apply to— personnel policies, practices, and § 9901.103. (1) An alien or noncitizen of the matters affecting working conditions— Issuance or issuances means a United States who occupies a position whether established by rule, regulation, document issued by the Secretary, outside the United States; or otherwise—except that such term Deputy Secretary, Principal Staff (2) A military member of the armed does not include policies, practices, and Assistants (as authorized by the services; matters relating to— Secretary), or Secretaries of the Military (3) A supervisor or a management (1) Political activities prohibited Departments to carry out a policy or official; under 5 U.S.C. chapter 73, subchapter procedure of the Department other than (4) Any person who participates in a III; those issuances implementing this part. strike in violation of 5 U.S.C. 7311; or (2) The classification of any position, Labor organization has the meaning (5) Any employee excluded pursuant including any classification given that term in § 9901.103. to § 9901.912 or any other legal determinations under subpart B of this Management official means an authority. part; individual employed by the Department (3) The pay of any employee or for in a position the duties and § 9901.905 Impact on existing agreements. any position, including any responsibilities of which require or (a) Any provision of a collective determinations regarding pay or authorize the individual to formulate, bargaining agreement that is adjustments thereto under subpart C of determine, or influence the policies of inconsistent with this part and/or this part; or the Department. implementing issuances is (4) Any matters specifically provided Person has the meaning given that unenforceable on the effective date of for by Federal statute. term in 5 U.S.C. 7103(a)(1). the applicable subpart(s) or such Confidential employee means an Professional employee has the issuances. The exclusive representative employee who acts in a confidential meaning given that term in 5 U.S.C. may appeal a determination that a capacity with respect to an individual 7103(a)(15). provision is unenforceable to the

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National Security Labor Relations Board Board members will be for terms of 1, appoint the member whose position was in accordance with the procedures and 2, and 3 years, respectively. The vacated. time limits pursuant to § 9901.908 and Secretary may extend the term of any (g)(1) The Board will establish the Board’s regulations. However, the member beyond 3 years when necessary procedures for the fair, impartial, and Secretary, in his or her sole and to provide for an orderly transition and/ expeditious assignment and disposition exclusive discretion, may continue all or appoint the member for up to two of cases, including standards for or part of a particular provision(s) with additional 1-year terms. The Secretary, asserting or declining jurisdiction. respect to a specific category or in his or her sole and exclusive (2) To the extent practicable, the categories of employees and may cancel discretion, may appoint additional Board will use a single, integrated such continuation at any time; such members to the Board; in so doing, he process to address all matters associated determinations are not precedential. or she will make such appointments to with a negotiations dispute, including (b) Upon request by an exclusive ensure that the Board consists of an odd unfair labor practices, negotiability representative, the parties will have 60 number of members. disputes, and bargaining impasses. The days after the effective date of coverage (2) Members of the Board will be Board may, pursuant to its regulations, under the applicable subpart and/or independent, distinguished citizens of use a combination of mediation, implementing issuance to bring into the United States who are well known factfinding, and any other appropriate conformance those remaining negotiable for their integrity, impartiality, and dispute resolution methods to resolve collective bargaining agreement expertise in labor relations, and/or the all such disputes at the earliest provisions directly affected by the DoD mission and/or other related practicable time and with a minimum collective bargaining agreement national security matters, and will be administrative burden. provisions rendered unenforceable by able to acquire and maintain an (3) A vote of the majority of the Board the applicable subpart and/or appropriate security clearance. Members (or a three-person panel of the Board) implementing issuance. During that may be removed by the Secretary only will be final. A vacancy on the Board period, the parties may utilize the for inefficiency, neglect of duty, or does not impair the right of the negotiation impasse provisions of malfeasance in office. remaining members to exercise all of the § 9901.920 to assist in resolving any (3) An individual chosen to fill a powers of the Board. The vote of the impasses. vacancy on the Board will be appointed Chair will be dispositive in the event of (c) Any provision of a collective for the unexpired term of the member a tie. bargaining agreement that is who is replaced and, at the Secretary’s (h) Decisions of the Board are final inconsistent with an issuance remains option, an additional term or terms. and binding. in effect until the expiration, renewal, or (c) Appointment of the Chair. The extension of the term of the agreement, Secretary, at his or her sole and § 9901.908 Powers and duties of the whichever occurs first. exclusive discretion, will appoint one Board. (a) Section 9902(m)(6) of title 5, U.S. § 9901.906 Employee rights. member to serve as Chair of the NSLRB. (d) Appointment procedures for non- Code, requires that the labor relations Each employee has the right to form, Chair NSLRB members. (1) The system established under this subpart join, or assist any labor organization, or appointments of the two non-Chair provide for an independent third party to refrain from any such activity, freely NSLRB members will be made by the review of labor relations issues set out and without fear of penalty or reprisal, Secretary, at his or her sole and in § 9901.908(b), including defining the and each employee will be protected in exclusive discretion, after he or she third party to provide the review. the exercise of such right. Except as considers any lists of nominees Notwithstanding § 9901.907 and otherwise provided under this subpart, submitted by labor organizations that pending establishment of the Board, the such right includes the right— represent employees in the Department. Secretary, in consultation with the (a) To act for a labor organization in (2) The submission of lists of Director, may designate a third party to the capacity of a representative and the recommended nominees by labor exercise the authority of the Board in right, in that capacity, to present the organizations must be in accordance accordance with this subpart. views of the labor organization to heads with timelines and requirements set (b) The Board may to the extent of agencies and other officials of the forth by the Secretary, who may provide provided in this subpart and in executive branch of the Government, the for consultation in order to obtain accordance with regulations prescribed Congress, or other appropriate further information about a by the Board— authorities; and (1) Conduct investigations and (b) To engage in collective bargaining recommended nominee. The ability of hearings, and resolve allegations of with respect to conditions of the Secretary to appoint NSLRB unfair labor practices, including employment through representatives members may not be delayed or allegations concerning strikes, work chosen by employees under this otherwise affected by the failure of any stoppages, slowdowns, and picketing, or subpart. labor organization to provide a list of nominees that meets the timeframe and condoning such activity by failing to § 9901.907 National Security Labor requires established by the Secretary. take action to prevent or stop such Relations Board. (e) Appointment of additional non- activity; (a) The Secretary has sole, exclusive, Chair NSLRB members. If the Secretary (2) Resolve issues relating to the scope and unreviewable authority to determines that additional members are of bargaining and the duty to bargain in determine the effective date for the needed, he or she may, subject to the good faith under § 9901.917; establishment of the National Security criteria set forth in paragraph (b)(2) of (3) Resolve exceptions to arbitration Labor Relations Board. this section, appoint the additional awards. In doing so, the Board will (b)(1) The National Security Labor members according to the procedures conduct any review of an arbitral award Relations Board is composed of at least established by paragraph (d) of this in accordance with 5 U.S.C. 7122(a) as three members who are appointed by section. modified in § 9901.923; the Secretary for terms of 3 years, except (f) A Board vacancy will be filled (4) Resolve negotiation impasses in that the appointments of the initial according to the procedure used to accordance with § 9901.920;

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(5) Conduct de novo review involving jurisdiction, that party will timely raise § 9901.910 Management rights. all matters within the Board’s the issue with the Authority and (a) Subject to paragraphs (b) through jurisdiction; and simultaneously file a copy of its (e) of this section, nothing in this (6) Have discretion to evaluate the response with the Board in accordance subpart may affect the authority of any evidence presented in the record and with regulations established by the management official or supervisor of the reach its own independent conclusions Authority. The Authority will promptly Department— with respect to the matters at issue, but transfer the case to the Board, which (1) To determine the mission, budget, in no case may the Board issue status will determine whether the matter is organization, number of employees, and quo ante remedies, where such remedies within the Board’s jurisdiction. If the internal security practices of the are not intended to cure egregious Board determines that the matter is not Department; violations of this subpart or where such within its jurisdiction, the Board will (2) To hire, assign, and direct an award would impose an economic return the matter to the Authority for a employees in the Department; to assign hardship or interfere with the efficiency decision on the merits of the case. The work, make determinations with respect or effectiveness of the Department’s Board’s determination with regard to its to contracting out, and to determine the mission or impact national security. jurisdiction in a particular matter is personnel by which Departmental (c) In any case in which the Board or final and not subject to review by the operations may be conducted; to its authorized agent, in the Board’s or Authority. The Authority will promptly determine the numbers, types, pay the agent’s unreviewable discretion, decide those cases that the Board has schedules, pay bands and/or grades of declines to adjudicate any unfair labor determined are within the jurisdiction employees or positions assigned to any practice allegation(s) because the of the Authority. organizational subdivision, work project allegation(s) was not timely filed, fails (c)(1) To obtain review by the or tour of duty, and the technology, to state an unfair labor practice, or for Authority of a Board decision, a party methods, and means of performing other appropriate reasons, the Board or will request a review of the record of a work; to assign employees to meet any the agent, as applicable, will provide the Board decision by the Authority by operational demand; and to take person making the allegation(s) a filing such a request in writing within whatever other actions may be written statement of the reasons for such 15 days after the issuance of the necessary to carry out the Department’s determination. decision. A copy of the request will be mission; and (3) To lay off and retain employees, or (d) Upon the request of a DoD served on all parties. Within 15 days to suspend; remove; reduce in pay, pay Component or a labor organization after service of the request, any response band, or grade; or take other concerned, the Board may issue will be filed. The Authority will disciplinary action against such guidance for matters within its establish, in conjunction with the employees or, with respect to filling jurisdiction. Board, standards for the sufficiency of positions, to make selections for (e) The Board’s decisions will be the record and other procedures, written and published. appointments from properly ranked and including notice to the parties. The certified candidates for promotion or § 9901.909 Powers and duties of the Authority will accept the findings of from any other appropriate source. Federal Labor Relations Authority. fact and interpretations of this part (b) Management is prohibited from made by the Board and sustain the (a) To the extent provided in this bargaining over the exercise of any Board’s decision unless the requesting subpart (pursuant to the authority in 5 authority under paragraph (a) of this party shows that the Board’s decision U.S.C. 9902), the Federal Labor section or the procedures that it will was— Relations Authority, in accordance with observe in exercising the authorities set conforming regulations prescribed by (i) Arbitrary, capricious, an abuse of forth in paragraphs (a)(1) and (a)(2) of the Authority, may— discretion, or otherwise not in this section. (1) Determine the appropriateness of accordance with law; (c) Notwithstanding paragraph (b) of bargaining units pursuant to the (ii) Caused by harmful error in the this section, the Secretary in his or her provisions of § 9901.912; application of the Board’s procedures in sole, exclusive, and unreviewable (2) Supervise or conduct elections to arriving at such decision; or discretion, may authorize bargaining determine whether a labor organization (iii) Unsupported by substantial over the procedures that will be has been selected as an exclusive evidence. observed in exercising the authorities representative by a majority of the (2) The Authority will complete its set forth in paragraphs (a)(1) and (a)(2) employees in an appropriate unit and review of the record and issue a final of this section. This authorization will otherwise administer 5 U.S.C. 7111 decision within 30 days after receiving be based on a determination by the (relating to the according of exclusive the party’s response to such request for Secretary, in his or her sole, exclusive, recognition to labor organizations), review. If the Authority does not issue and unreviewable discretion, that which is not waived for the purpose of a final decision within this mandatory bargaining is necessary to advance the this subpart; time limit, the Authority will be Department’s mission or promote (3) Resolve disputes regarding the considered to have denied the request organizational effectiveness. Any granting of national consultation rights; for review of the Board’s decision, specific authorization remains in effect and which will constitute a final decision of until an agreement is reached or (4) Upon request of a party, review the Authority and is subject to judicial management withdraws from only those Board decisions on— review in accordance with 5 U.S.C. negotiations, whichever occurs first. (i) Unfair labor practices, except those 7123. (d) Unless the Secretary elects to issued under § 9901.908(c); (d) Judicial review of any Authority bargain under paragraph (c) of this (ii) Arbitral awards under § 9901.908; decision is as prescribed in 5 U.S.C. section, management will consult at the and 7123(a). The references in 5 U.S.C. request of an exclusive representative as (iii) Negotiability disputes. 7123(a) to other provisions in 5 U.S.C. required under § 9901.917 over the (b) In any matter filed with the chapter 71 are considered to be procedures that will be observed in Authority, if the responding party references to those particular provisions exercising the authorities set forth in believes that the Authority lacks as modified by this subpart. paragraphs (a)(1) and (a)(2) of this

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section. Consultation does not require (g) Where a proposal falls within the the professional employees vote for that the parties reach agreement on any coverage of both paragraph (a)(1) and inclusion in the unit; covered matter. The parties may, upon (a)(3) of this section or paragraph (a)(2) (6) Any employee engaged in mutual agreement, provide for FMCS or and (a)(3) of this section, the matter will intelligence, counterintelligence, another third party to assist in this be determined to be covered by investigative, or security work which process. Neither the Board nor the paragraph (a)(1) or (a)(2) of this section directly affects national security; or Authority may intervene in this process. for the purpose of collective bargaining. (7) Any employee primarily engaged (e) If an obligation exists under (h) Any mid-term agreements, reached in investigation or audit functions § 9901.917 to bargain or consult with respect to paragraphs (c), (f)(1)(ii), relating to the work of individuals regarding any authority under paragraph or (f)(2) of this section will not be employed by the Department whose (a) of this section, management will precedential or binding on subsequent duties directly affect the internal provide notice to the exclusive acts, or retroactively applied, except at security of the Department, but only if representative concurrently with the the Secretary’s sole, exclusive, and the functions are undertaken to ensure exercise of that authority. However, at unreviewable discretion. that the duties are discharged honestly its sole, exclusive, and unreviewable (i) Nothing will delay or prevent the and with integrity. discretion, management may provide Secretary from exercising his or her (c) Any employee who is engaged in notice to an exclusive representative of authority under this subpart. administering any provision of law or its intention to exercise an authority this subpart relating to labor- under paragraph (a) of this section as far § 9901.911 Exclusive recognition of labor organizations. management relations may not be in advance as practicable. Further, represented by a labor organization— nothing in paragraph (e) of this section Exclusive recognition will be (1) Which represents other establishes an independent right to accorded to a labor organization if the individuals to whom such provision or bargain or consult. organization has been selected as the (f) When an obligation exists under representative, in a secret ballot subpart applies; or § 9901.917, management will provide election, by a majority of the employees, (2) Which is affiliated directly or notice to the exclusive representative in an appropriate unit as determined by indirectly with an organization which and an opportunity to present its views the Authority, who cast valid ballots in represents other individuals to whom and recommendations regarding the the election. such provision or subpart applies. exercise of an authority under paragraph (d) Two or more units in the (a) of this section, and the parties will § 9901.912 Determination of appropriate Department for which a labor bargain at the level of recognition units for labor organization representation. organization is the exclusive (unless otherwise delegated below that (a) The Authority will determine the representative may, upon petition by the level, at their mutual agreement, or as appropriateness of any unit. The Secretary or labor organization, be provided for in §§ 9901.917 and Authority will determine in each case consolidated with or without an 9901.918) over otherwise negotiable— whether, in order to ensure employees election into a single larger unit if the (1)(i) Appropriate arrangements for the fullest freedom in exercising the Authority considers the larger unit to be employees adversely affected by the rights guaranteed under this subpart, the appropriate. The Authority will certify exercise of any authority under appropriate unit should be established the labor organization as the exclusive paragraph (a)(3) of this section and on a Department, plant, installation, representative of the new larger unit. procedures which management officials functional, or other basis and will § 9901.913 National consultation. and supervisors will observe in determine any unit to be an appropriate exercising any authority under unit only if the determination will (a) If, in connection with the paragraph (a)(3) of this section; and ensure a clear and identifiable Department or Component, no labor (ii) Appropriate arrangements for community of interest among the organization has been accorded employees adversely affected by the employees in the unit and will promote exclusive recognition on a Department exercise of any authority under effective dealings with, and efficiency of or Component basis, a labor paragraphs (a)(1) and (a)(2) of this the operations of the Department, organization that is the exclusive section. Appropriate arrangements consistent with the Department’s representative of a substantial number within the duty to bargain include mission and organizational structure of the employees of the Department or proposals on matters such as personal and § 9901.107(a). Component, as determined in hardships and safety measures. (b) A unit may not be determined to accordance with criteria prescribed by (2) Appropriate arrangements within be appropriate under this section solely the Authority, will be granted national the duty to bargain do not include on the basis of the extent to which consultation rights by the Department or proposals on matters such as the routine employees in the proposed unit have Component. National consultation assignment to specific duties, shifts, or organized, nor may a unit be determined rights will terminate when the labor work on a regular or overtime basis to be appropriate if it includes— organization no longer meets the criteria except when the Secretary in his or her (1) Except as provided under 5 U.S.C. prescribed by the Authority. Any issue sole, exclusive, and unreviewable 7135(a)(2), which is not waived for the relating to any labor organization’s discretion authorizes such bargaining. purpose of this subpart, any eligibility for, or continuation of, This authorization will be based on a management official or supervisor; national consultation rights will be determination by the Secretary, in his or (2) A confidential employee; subject to determination by the her sole, exclusive, and unreviewable (3) An employee engaged in personnel Authority. discretion, that bargaining is necessary work in other than a purely clerical (b)(1) Any labor organization having to advance the Department’s mission or capacity; national consultation rights in promote organizational effectiveness. (4) An employee engaged in connection with any Department or Any specific authorization remains in administering the provisions of this Component under subsection (a) of this effect until an agreement is reached or subpart; section will— management withdraws from (5) Both professional employees and (i) Be informed of any substantive negotiations, whichever occurs first. other employees, unless a majority of change in conditions of employment

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proposed by the Department or policies, practices, or working (3) To meet at reasonable times and Component; and conditions; convenient places as frequently as may (ii) Be permitted reasonable time to (B) Is incidental or otherwise be necessary, and to avoid unnecessary present its views and recommendations peripheral to the announced purpose of delays; regarding the changes. the meeting; or (4) If agreement is reached, to execute (2) If any views or recommendations (C) Does not result in an on the request of any party to the are presented under paragraph (b)(1) of announcement of a change to, or a negotiation, a written document this subsection to the Department or promise to change, an existing embodying the agreed terms, and to take Component by any labor organization— personnel policy(s), practice(s), or such steps as are necessary to (i) The Department or Component will working condition(s); implement such agreement; and consider the views or recommendations (ii) Any discussion between one or (5) In the case of the Department or before taking final action on any matter more Department representatives and appropriate Component(s) of the with respect to which the views or one or more bargaining unit employees Department, to furnish information to recommendations are presented; and concerning any grievance filed under an exclusive representative, or its (ii) The Department or Component the negotiated grievance procedure; authorized representative, when— will provide the labor organization a (iii) Any examination of a bargaining (i) Such information exists, is written statement of the reasons for unit employee by a representative of the normally maintained in the regular taking the final action. Department in connection with an course of business, and is reasonably available; (c) Section 9901.913(b) does not apply investigation if the employee reasonably (ii) The exclusive representative has where the proposed change is bargained believes that the examination may result requested such information and at the national level or where in disciplinary action against the demonstrated a particularized need for continuing collaboration procedures employee and the employee requests the information in order to perform its under § 9901.106 apply. such representation; or (iv) Any discussion between one or representational functions in grievance (d) Nothing in this section precludes or unfair labor practice proceedings, or the Department or the Component from more Department representatives and one or more bargaining unit employees in negotiations; and seeking views and recommendations (iii) Disclosure is not prohibited by from labor organizations having in connection with a formal complaint of discrimination only if the law. exclusive representation within the (c) Disclosure of information in employee(s), in his or her sole and Department or Component which do not paragraph (b)(5) of this section does not exclusive discretion, requests such have national consultation rights. include the following: representation. (e) Nothing in this section will be (1) Disclosure prohibited by law or construed to limit the right of the (3) Bargaining unit employees will be regulations, including, but not limited agency or exclusive representative to informed annually of their rights under to, the regulations in this part, engage in collective bargaining. paragraph (a)(2)(iii) of this section. Governmentwide rules and regulations, (4) Employee representatives Departmental implementing issuances § 9901.914 Representation rights and employed by the Department are subject duties. and other policies and regulations, and to the same expectations regarding Executive orders; (a)(1) A labor organization which has conduct as any other employee, whether (2) Disclosure of information if been accorded exclusive recognition is they are serving in their representative adequate alternative means exist for the exclusive representative of the capacity or not. obtaining the requested information, or employees in the unit it represents and (5) Except in the case of grievance if proper discussion, understanding, or is entitled to act for, and negotiate procedures negotiated under this negotiation of a particular subject collective bargaining agreements subpart, the rights of an exclusive within the scope of collective bargaining covering, all employees in the unit. An representative under this section may is possible without recourse to the exclusive representative is responsible not be construed to preclude an information; for representing the interests of all employee from— (3) Internal Departmental guidance, employees in the unit it represents (i) Being represented by an attorney or counsel, advice, or training for managers without discrimination and without other representative of the employee’s and supervisors relating to collective regard to labor organization own choosing, other than the exclusive bargaining; membership. representative, in any grievance or (4) Any disclosures where an (2) An exclusive representative of an appeal action; or authorized official has determined that appropriate unit will be given the (ii) Exercising grievance or appellate disclosure would compromise the opportunity to be represented at— rights established by law, rule, or Department’s mission, security, or (i) Any formal discussion between a regulation. employee safety; and Department management official(s) and (b) The duty of the Secretary or (5) Personal addresses, personal bargaining unit employees, the purpose appropriate Component(s) of the telephone numbers, personal e-mail of which is to discuss and/or announce Department and an exclusive addresses, or any other information not new or substantially changed personnel representative to negotiate in good faith related to an employee’s work. policies, practices, or working under paragraph (a) of this section (d)(1) An agreement between the conditions. This right does not apply to includes the obligation— Department or appropriate meetings between a management (1) To approach the negotiations with Component(s) of the Department and official(s) and bargaining unit a sincere resolve to reach a collective the exclusive representative is subject to employees for the purpose of discussing bargaining agreement; approval by the Secretary. operational matters where any (2) To be represented at the (2) The Secretary will approve the discussion of personnel policies, negotiations by duly authorized agreement within 30 days after the date practices or working conditions— representatives prepared to discuss and the agreement is executed if the (A) Constitutes a reiteration or negotiate on any condition of agreement is in accordance with the application of existing personnel employment; provisions of these regulations and any

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other applicable law, rule, regulation, (2) The employee is suspended or bargaining agreement if the agreement issuance, or implementing issuance. expelled from membership by the was in effect before the issuance or (3) If the Secretary does not approve exclusive representative. regulation was prescribed. or disapprove the agreement within the (c)(1) Subject to paragraph (c)(2) of (8) To fail or refuse otherwise to 30-day period specified in paragraph this section, if a petition has been filed comply with any provision of this (d)(2) of this section, the agreement will with the Authority by a labor subpart. take effect and is binding on the organization alleging that 10 percent of (b) For the purpose of this subpart, it Department or Component(s), as the employees in an appropriate unit in is an unfair labor practice for a labor appropriate, and the exclusive the Department have membership in the organization— representative, but only to the extent it labor organization, the Authority will (1) To interfere with, restrain, or is consistent with Federal law, investigate the petition to determine its coerce any employee in the exercise by Presidential issuance (e.g., Executive validity. Upon certification by the the employee of any right under this order), Governmentwide regulations, Authority of the validity of the petition, subpart; (2) To cause or attempt to cause the issuances and implementing issuances, the Department has a duty to negotiate Department to discriminate against any or the regulations in this part. with the labor organization solely concerning the deduction of dues of the employee in the exercise by the (4) A local agreement subject to a labor organization from the pay of the employee of any right under this national or other controlling agreement members of the labor organization who subpart; at a higher level may be approved under are employees in the unit and who make (3) To coerce, discipline, fine, or the procedures of the controlling a voluntary allotment for such purpose. attempt to coerce a member of the labor agreement or, if none, under (2)(i) The provisions of paragraph organization as punishment, reprisal, or Departmental regulations. Bargaining (c)(1) of this section do not apply in the for the purpose of hindering or will be at the level of recognition except case of any appropriate unit for which impeding the member’s work where delegated. there is an exclusive representative. performance or productivity as an (5) Provisions in existing collective (ii) Any agreement under paragraph employee or the discharge of the bargaining agreements are (c)(1) of this section between a labor member’s duties as an employee; unenforceable if they are contrary to organization and the Department or (4) To discriminate against an Federal law, Presidential issuance (e.g., Department Component with respect to employee with regard to the terms and Executive order), the regulations in this an appropriate unit becomes null and conditions of membership in the labor part, or implementing issuances. void upon the certification of an organization on the basis of race, color, Provisions in existing collective exclusive representative of the unit. creed, national origin, sex, age, bargaining agreements that are preferential or nonpreferential civil inconsistent with Governmentwide § 9901.916 Unfair labor practices. service status, political affiliation, regulations or issuances (other than (a) For the purpose of this subpart, it marital status, or handicapping implementing issuances), are is an unfair labor practice for the condition; unenforceable upon expiration, Department— (5) To refuse, as determined by the extension, renewal, or renegotiation of (1) To interfere with, restrain, or Board, to negotiate in good faith or to the collective bargaining agreement, coerce any employee in the exercise by consult with the Department as required whichever occurs first. the employee of any right under this by this subpart; subpart; (6) To fail or refuse, as determined by § 9901.915 Allotments to representatives. (2) To encourage or discourage the Board, to cooperate in impasse (a) If the Department has received membership in any labor organization procedures and impasse decisions as from an employee in an appropriate unit by discrimination in connection with required by this subpart; a properly executed written or hiring, tenure, promotion, or other (7)(i) To call, or participate in, a electronic assignment which authorizes conditions of employment; strike, work stoppage, or slowdown, or the Department to deduct from the pay (3) To sponsor, control, or otherwise picketing of the Department in a labor- of the employee amounts for the assist any labor organization, other than management dispute if such picketing payment of regular and periodic dues to furnish, upon request, customary and interferes with an agency’s operations; and other financial assessments of the routine services and facilities on an or exclusive representative of the unit, the impartial basis to other labor (ii) To condone any activity described Department will honor the assignment organizations having equivalent status; in paragraph (b)(7)(i) of this section by and make an appropriate allotment (4) To discipline or otherwise failing to take action to prevent or stop pursuant to the assignment. Any such discriminate against an employee such activity; or allotment will be made at no cost to the because the employee has filed a (8) To otherwise fail or refuse to exclusive representative or the complaint or petition, or has given any comply with any provision of this employee. Except as provided under information or testimony under this subpart. (c) Notwithstanding paragraph (b)(7) paragraph (b) of this section, any such subpart; of this section, informational picketing assignment may not be revoked for a (5) To refuse, as determined by the which does not interfere with the period of 1 year. Board, to negotiate in good faith or to consult with a labor organization, as Department’s operations will not be (b) An allotment under paragraph (a) required by this subpart; considered an unfair labor practice. of this section for the deduction of dues (6) To fail or refuse, as determined by (d) For the purpose of this subpart, it with respect to any employee terminates the Board, to cooperate in impasse is an unfair labor practice for an when— procedures and impasse decisions, as exclusive representative to deny (1) The agreement between the required by this subpart; membership to any employee in the Department or Department Component (7) To enforce any issuance (other appropriate unit represented by the and the exclusive representative than an implementing issuance), or labor organization, except for failure to involved ceases to be applicable to the Governmentwide regulation, which is in meet reasonable occupational standards employee; or conflict with an applicable collective uniformly required for admission or to

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tender dues uniformly required as a begins, the parties may mutually agree (3) Be subject to impasse resolution by condition of acquiring and retaining to continue bargaining, or either party the Board under procedures prescribed membership. This does not preclude may refer the matter to the Board for by the Board. In resolving impasses, the any labor organization from enforcing resolution in accordance with Board will ensure that agreement discipline in accordance with procedures established by the Board. At provisions are consistent with regard to procedures under its constitution or any time prior to going to the Board, all similarly situated employees. The bylaws to the extent consistent with the either party may refer the matter to determination as to which organizations provisions of this subpart. FMCS for assistance. are covered under multi-unit bargaining (e) The Board will not consider any (c) If the parties bargain during the is not subject to review by the Board. allegation of an unfair labor practice term of an existing collective bargaining (c) When agreement is reached under filed more than 6 months after it agreement, or in the absence of a this section, individual bargaining units occurred, unless the Board determines, collective bargaining agreement, over a cannot opt out of or veto the agreement. pursuant to its regulations, that there is proposed change affecting bargaining (d) Any party may request the services good cause for the late filing. unit employees’ conditions of of FMCS to assist with these (f) Unfair labor practice issues which employment, and no agreement is negotiations. can properly be raised under an appeals reached within 30 days after such (e) Labor organizations may request procedure may not be raised as unfair bargaining begins, the parties may multi-unit bargaining, as appropriate. labor practices prohibited under this mutually agree to continue bargaining, The Secretary has sole and exclusive section. Except where an employee has or either party may refer the matter to authority to grant the labor an option of using the negotiated the Board for resolution in accordance organizations’ request. grievance procedure or an appeals with procedures established by the (f) The Department will prescribe procedure in connection with an Board. Either party may refer the matter implementing issuances on the adverse action, issues which can be to FMCS for assistance at any time. procedures and constraints associated raised under a grievance procedure may, (d)(1) Management may not bargain with multi-unit bargaining. in the discretion of the aggrieved party, over any matters that are inconsistent be raised under the grievance procedure § 9901.919 Collective bargaining above the with law or the regulations in this part, level of recognition. or as an unfair labor practice under this Governmentwide rules and regulations, section, but not under both procedures. issuances and implementing issuances, (a) Negotiations can occur at the DoD (g) The expression of any personal or Executive orders. or Component level with labor view, argument, opinion, or the making (2) Except as otherwise provided in organization(s) at an organizational level of any statement which publicizes the § 9901.910(d), management has no above the level of exclusive recognition. fact of a representational election and obligation to bargain or consult over a The decision to negotiate at a level encourages employees to exercise their change to a condition of employment above the level of recognition as well as right to vote in such an election, unless the change is otherwise the unions involved, is within the sole corrects the record with respect to any negotiable pursuant to these regulations and exclusive discretion of the Secretary false or misleading statement made by and is foreseeable, substantial, and to determine and will not be subject to any person, or informs employees of the significant in terms of both impact and review. Government’s policy relating to labor- duration on the bargaining unit, or on (b) Any such agreement reached in management relations and those employees in that part of the these negotiations will— representation, will not, if the bargaining unit affected by the change. (1) Be binding on all subordinate expression contains no threat of reprisal (3) Nothing in paragraphs (b) or (c) of bargaining units of the labor or force or promise of benefit or was not this section prevents management from organization(s) afforded the opportunity made under coercive conditions— exercising the rights enumerated in to bargain above the level of recognition, (1) Constitute an unfair labor practice § 9901.910. and on DoD and its Components, under any provision of this subpart; or (e) If a management official involved without regard to levels of recognition; (2) Constitute grounds for the setting in collective bargaining with an (2) Supersede all conflicting aside of any election conducted under exclusive representative alleges that the provisions of other collective bargaining any provision of this subpart. duty to bargain in good faith does not agreements of the labor organization(s), extend to any matter, the exclusive including collective bargaining § 9901.917 Duty to bargain and consult. representative may appeal the allegation agreements negotiated with an exclusive (a) The Department or appropriate to the Board in accordance with representative at the level of Component(s) of the Department and procedures established by the Board. recognition, except as otherwise any exclusive representative in any determined by the Secretary; appropriate unit in the Department, § 9901.918 Multi-unit bargaining. (3) Not be subject to further through appropriate representatives, (a) Negotiations can occur at negotiations with the labor will meet and negotiate in good faith as geographical or organizational levels organizations for any purpose, including provided by this subpart for the purpose within DoD or a Component with the bargaining at the level of recognition, of arriving at a collective bargaining local exclusive representatives impacted except as the Secretary may decide, in agreement. In addition, the Department by the proposed change. his or her sole and exclusive discretion; or appropriate Component(s) of the (b) Any such negotiations will— and Department and the exclusive (1) Be binding on all parties afforded (4) Be subject to review by the Board representative may determine the opportunity to bargain with only to the extent provided by this appropriate techniques, consistent with representatives of DoD or the subpart. the operational rules of the Board, to Component; (c) When agreement is reached under assist in any negotiation. (2) Supersede all conflicting this section, individual labor (b) If bargaining over an initial provisions of applicable collective organizations or bargaining units cannot collective bargaining agreement or any bargaining agreements of the labor opt out of or veto the agreement. successor agreement is not completed organization(s) affected by the (d) Negotiations will be subject to within 90 days after such bargaining negotiations; and impasse resolution by the Board under

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procedures prescribed by the Board. In the application of the grievance (d) To the extent not already excluded resolving impasses, the Board will procedures which are provided for in by existing collective bargaining ensure that agreement provisions are the agreement. agreements, the exclusions contained in consistent with regard to all similarly (b)(1) Any negotiated grievance paragraph (c) of this section apply upon situated employees. The determination procedure referred to in paragraph (a) of the effective date of this subpart, as as to which organizations are covered this section will be fair and simple, determined under § 9901.102(b)(1). under national level bargaining is not provide for expeditious processing, and (e)(1) An aggrieved employee affected subject to review by the Board; include procedures that— by a prohibited personnel practice (e) The National Guard Bureau and (i) Assure an exclusive representative under 5 U.S.C. 2302(b)(1) which also the Army and Air Force National Guard the right, in its own behalf or on behalf falls under the coverage of the are excluded from coverage under this of any employee in the unit represented negotiated grievance procedure may section. Where National Guard by the exclusive representative, to raise the matter under the applicable employees are impacted, negotiations at present and process grievances; statutory procedures, or the negotiated the level of recognition are authorized. (ii) Assure such an employee the right procedure, but not both. (f) The Secretary may require and a to present a grievance on the employee’s (2) An employee is deemed to have labor organization or organizations may own behalf, and assure the exclusive exercised his or her option under request bargaining above the level of representative the right to be present paragraph (e)(1) of this section to raise recognition, as appropriate. The during the grievance proceeding; and the matter under the applicable Secretary has sole and exclusive (iii) Provide that any grievance not statutory procedures, or the negotiated authority to grant such requests; and satisfactorily settled under the procedure, at such time as the employee (g) The Department will prescribe negotiated grievance procedure is timely initiates an action under the implementing issuances on the subject to binding arbitration, which applicable statutory or regulatory procedures and constraints associated may be invoked by either the exclusive procedure or timely files a grievance in with collective bargaining above the representative or the Department. writing in accordance with the level of recognition. (2) The provisions of a negotiated provisions of the parties’ negotiated grievance procedure, whichever event § 9901.920 Negotiation impasses. grievance procedure providing for binding arbitration in accordance with occurs first. (a) If the Department and exclusive paragraph (b)(1)(iii) of this section will, (3) Selection of the negotiated representative are unable to reach an to the extent that an alleged prohibited grievance procedure in no manner agreement under §§ 9901.905, 9901.914, personnel practice is involved, allow prejudices the right of an aggrieved 9901.917, 9901.918, or 9901.919, either the arbitrator to order a stay of any party to request the Merit Systems party may submit the disputed issues to personnel action in a manner similar to Protection Board to review the final the Board for resolution. the manner described in 5 U.S.C. decision pursuant to 5 U.S.C. 7702 in (b) The Board may take whatever 1221(c) with respect to the Merit the case of any personnel action that action is necessary and not inconsistent Systems Protection Board and order the could have been appealed to the Board, with this subpart to resolve the impasse, Department to take any disciplinary or, where applicable, to request the to include use of settlement efforts. Equal Employment Opportunity (c) Pursuant to §§ 9901.907 and action identified under 5 U.S.C. Commission to review a final decision 9901.926, the Board’s regulations will 1215(a)(3) that is otherwise within the in any other matter involving a provide for a single, integrated process authority of the Department to take. complaint of discrimination of the type to address all matters associated with a (3) Any employee who is the subject prohibited by any law administered by negotiations dispute, including unfair of any disciplinary action ordered under the Equal Employment Opportunity labor practices, negotiability disputes, paragraph (b)(2) of this section may appeal such action to the same extent Commission. and negotiation impasses. (f)(1) For appealable matters, except (d) Notice of any final action of the and in the same manner as if the for mandatory removal offenses under Board under this section will be Department had taken the disciplinary § 9901.712, an aggrieved employee may promptly served upon the parties. The action absent arbitration. raise the matter under an applicable action will be binding on such parties (c) The preceding paragraphs of this appellate procedure or under the during the term of the agreement, unless section do not apply with respect to any negotiated grievance procedure, but not the parties agree otherwise. matter concerning— (1) Any claimed violation of 5 U.S.C. both. An employee will be deemed to § 9901.921 Standards of conduct for labor chapter 73, subchapter III (relating to have exercised his or her option under organizations. prohibited political activities); this section when the employee timely Standards of conduct for labor (2) Retirement, life insurance, or files an appeal under the applicable organizations are those prescribed under health insurance; appellate procedures or a grievance in 5 U.S.C. 7120, which is not modified. (3) Any examination, certification, or accordance with the provisions of the appointment; parties’ negotiated grievance procedure, § 9901.922 Grievance procedures. (4) A removal taken under mandatory whichever occurs first. (a)(1) Except as provided in paragraph removal authority as defined in (2) An arbitrator hearing a matter (a)(2) of this section, any collective § 9901.712; appealable under 5 U.S.C. 7701 or bargaining agreement will provide (5) Any subject not within the subpart H of this part is bound by the procedures for the settlement of definition of grievance in § 9901.903 applicable provisions of this part. grievances, including questions of (e.g., the classification or pay of any (g)(1) This paragraph applies with arbitrability. Except as provided in position), except for an adverse action respect to a prohibited personnel paragraphs (e), (f) and (h) of this section, under applicable authority, including practice other than a prohibited the procedures will be the exclusive subpart G of this part, which is not personnel practice to which paragraph procedures for grievances which fall otherwise excluded by paragraph (c) of (e) of this section applies. within its coverage. this section; or (2) An aggrieved employee affected by (2) Any collective bargaining (6) A suspension or removal taken a prohibited personnel practice agreement may exclude any matter from under 5 U.S.C. 7532. described in paragraph (g)(1) of this

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section may elect not more than one of for that of the supervisor or pay pool labor organization officials, and the procedures described in paragraph panel. collection of dues, will be performed (g)(3) of this section with respect (i) An arbitrator or panel hearing a during the time the employee is in a thereto. A determination as to whether matter under this subpart is bound by nonduty status. a particular procedure for seeking a all applicable laws, rules, regulations, (c) Except as provided in paragraph remedy has been elected will be made including applicable provisions of this (a) of this section, the Authority or the as set forth under paragraph (g)(4) of part, issuances, and implementing Board, as appropriate, will determine this section. issuances. whether an employee participating for, (3) The procedures for seeking or on behalf of, a labor organization in § 9901.923 Exceptions to arbitration remedies described in this paragraph are awards. any phase of proceedings before the as follows: Authority or the Board will be (i) An appeal under 5 U.S.C. 7701 or (a) Either party to arbitration under authorized official time for such under subpart H of this part; this subpart may file with the Board an purpose during the time the employee exception to any arbitrator’s award, (ii) A negotiated grievance under this would otherwise be in a duty status. except an award issued in connection section; and (d) Except as provided in the with an appealable matter under (iii) Corrective action under 5 U.S.C. preceding paragraphs of this section, § 9901.922(f) or matters similar to those chapter 12, subchapters II and III. any employee representing an exclusive covered under 5 U.S.C. 4303 and 7512 (4) For the purpose of this paragraph, representative or, in connection with arising under other personnel systems, an employee is considered to have any other matter covered by this which will be adjudicated under elected one of the following, whichever subpart, any employee in an appropriate procedures described in § 9901.807(g) election occurs first: unit represented by an exclusive and (h). Such procedures are adopted in (i) The procedure described in representative, will be granted official this subpart for these purposes. time in any amount the agency and the paragraph (g)(3)(i) of this section if such (b) In addition to the bases contained employee has timely filed a notice of exclusive representative involved agree in 5 U.S.C. 7122, exceptions may also be to be reasonable, necessary, and in the appeal under the applicable appellate filed by the parties based on the procedures; public interest. arbitrator’s failure to properly consider (e) Official time for representational (ii) The procedure described in the Department’s national security paragraph (g)(3)(ii) of this section if activities will not extend to the mission or to comply with applicable representation of employees outside the such employee has timely filed a issuances and implementing issuances. grievance in writing in accordance with representative’s bargaining unit, except The Board may take such action for multi-unit bargaining and/or the provisions of the parties’ negotiated concerning the award as is consistent procedure; or bargaining above the level of with this subpart. recognition, in accordance with (iii) The procedure described in (c) If no exception to an arbitrator’s §§ 9901.918 and 9901.919 and mutual paragraph (g)(3)(iii) of this section if award is filed under paragraph (a) of agreement of the agency and the such employee has sought corrective this section during the 30-day period exclusive representatives involved. action from the Office of Special beginning on the date of such award, the Counsel by making an allegation under award is final and binding. Either party § 9901.925 Compilation and publication of 5 U.S.C. 1214(a)(1). will take the actions required by an data. (h)(1) An employee may challenge a arbitrator’s final award. The award may (a) The Board will maintain a file of rating of record issued under subpart D include the payment of back pay (as its proceedings. of this part, through either the provided under 5 U.S.C. 5596 and 5 (b) All files maintained under negotiated grievance procedure or an CFR part 550, subpart H). paragraph (a) of this section will be administrative reconsideration process (d) Nothing in this section prevents open to inspection and reproduction in under § 9901.409(h), but not both, so the Board from determining its own accordance with 5 U.S.C. 552 and 552a. long as the rating of record has not been jurisdiction without regard to whether The Board will establish rules in raised in connection with an appeal any party has raised a jurisdictional consultation with the Department for under the provisions of 5 U.S.C. 7701 or issue. maintaining and making available for subpart H of this part. Once an inspection sensitive information. employee raises an issue on his or her § 9901.924 Official time. rating of record issue in an appeal under (a) Any employee representing an § 9901.926 Regulations of the Board. 5 U.S.C. 7701 or subpart H of this part, exclusive representative in the The Department may issue initial any pending grievance, arbitration, or negotiation of a collective bargaining interim rules for the operation of the request for administrative agreement under this subpart will be Board and will consult with labor reconsideration under § 9901.409(h), authorized official time for such organizations granted national will be dismissed with prejudice. purposes, including attendance at consultation rights on the rules. The (2) Final decision authority in the impasse proceedings, during the time Board will prescribe and publish rules negotiated grievance procedure may rest the employee otherwise would be in a for its operation in the Federal Register. with— duty status. The number of employees (i) An independent arbitrator; or for whom official time is authorized § 9901.927 Continuation of existing laws, (ii) A panel consisting of an under this section may not exceed the recognitions, agreements, and procedures. independent arbitrator, a union number of individuals designated as (a) Except as otherwise provided by representative, and a management representing the Department for such §§ 9901.905 or 9901.912, nothing representative. purposes. contained in this subpart precludes the (3) An arbitrator or panel may not (b) Any activities performed by any renewal or continuation of an exclusive conduct an independent evaluation of employee relating to the internal recognition, certification of an exclusive the employee’s performance, determine business of the labor organization, representative, or an agreement that is the appropriate share payout, or including but not limited to the otherwise consistent with law, the otherwise substitute his or her judgment solicitation of membership, elections of regulations in this part and DoD or

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Component issuances between the effect on the effective date of this proceedings already pending on the date Department or a Component thereof and subpart (as determined under of coverage of this subpart, as an exclusive representative of its § 9901.102(b)(1)), will remain in full determined under § 9901.102(b)(1). Any employees, which is entered into before force and effect until revised or revoked remedy that applies after the date of the effective date of this subpart, as by the President, or unless superseded coverage under any provision of this determined under § 9901.102(b)(1). by specific provisions of this subpart or part and that is in conflict with by implementing issuances or decisions applicable provisions of this part is not (b) Policies, regulations, and issued pursuant to this subpart. procedures established under and enforceable. decisions issued under Executive § 9901.928 Savings provisions. [FR Doc. 05–21494 Filed 10–27–05; 8:45 am] Orders 11491, 11616, 11636, 11787, and This subpart does not apply to BILLING CODE 6325–39–P; 5001–06–P 11838 or any other Executive order, in grievances or other administrative

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