September 14, 2005 Department of Defense NSPS Overview Presented to the 21st APEX Orientation Program Mary E. Lacey Program Executive Officer

September What is NSPS? A flexible, agile, and responsive personnel system to manage DoD civilians in today's environment Provides the Department with tools to shape a more effective and efficient workforce Performance management that values performance, rewards contribution and promotes excellence Streamlined and more responsive hiring process Flexibility in assigning work Preservation of employee benefits, rights and protections

September How We Got Here November 2003, Congress granted DoD broad authority to establish a new human resources management system to support its critical national security mission Early 2004, DoD adopted acquisition management model for NSPS program Program Executive Office established for design and implementation (“build and buy”) MAJCOMs and SYSCOMs operate, maintain and incrementally improve Oversight and guidance from senior leadership Partnership with OPM Issued proposed NSPS regulations on February 14, 2005

September How We Got Here (cont’d.) Received ~58,000 comments from citizens, employees, unions, DoD organizations, other Federal agencies, public interest groups, & members of Congress Testified before: Senate Subcommittee on Oversight of Government Management, the Federal Workforce and the District of Columbia, Committee on Homeland Security and Governmental Affairs, March 15, 2005 House Subcommittee on Federal Workforce and Agency Organization, Committee on Government Reform, April 12, 2005 Senate Committee on Armed Services, April 14, 2005 Engaged in “meet and confer” (April 18 – June 16) with employee unions to attempt to find common ground Over 40 changes in Federal Register Notice

September What NSPS Does Not Change Merit System Principles Rules against prohibited personnel practices Whistleblower protection Veterans Preference Benefits (retirement, health, life, etc.) Anti-discrimination laws Fundamental due process Allowances and travel/subsistence expenses Training Leave and work schedules Other personnel systems in law Lab Demo organizations (until FY 08)

September What’s Changing? System ElementCurrentProposed Performance-based payWithin-grade step increases based on longevity Individual increases based on performance Market-based payBased on location; one size fits allBased on location, tailored to occupations Disciplinary actionsMerit Systems Protection Board can lessen penalties MSPB can lessen penalties only in most extreme circumstances Mandatory Removal OffensesNone todaySecretary may define list of offenses that require termination Employee appealsMerit Systems Protection Board adjudicates employee appeals MSPB AJ’s hear appeals using NSPS rules Changes to work assignmentsMust bargain with local unions prior to acting Scope of collective bargaining limited with no delay in acting Labor-management disputesFederal Labor Relations Authority decides disputes Agency board appointed by Secretary decides disputes Work changes based on preparing or preventing emergencies Must bargain with unions prior to acting Scope of collective bargaining limited with no delay in acting Determine performance-based pay rules Must bargain with unionsNo bargaining required Pay Disciplinary Actions Collective Bargaining

September LR Changes Under NSPS NSPS provides an opportunity for greater union involvement in workforce issues Unions are encouraged to take advantage of these processes and benefits they offer Authority to bargain at national level, multi-unit Scope of bargaining narrowed Content of DoD and Military Department implementing issuances are no longer bargainable Unions may still bargain impact Implementing issuances subject to continuing collaboration

September Adverse Actions Changes Under NSPS Designed to recognize need for workplace accountability, provide efficient tools for dealing with performance and conduct issues, and protect rights of employees Single process for taking adverse actions based on performance and/or conduct Streamlined 15-day notice/10-day reply period Ensures due process Allows Secretary to designate Mandatory Removal Offenses (MROs)

September Appeals Changes Under NSPS Provides for streamlined, efficient appeals process that provides deference to DoD’s critical national security mission, while preserving employee protections and due process. Expedited appeals process, using MSPB administrative judges (AJ), with improved procedures Provides for DoD review of decisions Single burden of proof standard: preponderance Mitigation by MSPB permitted only with proper consideration of mission impact Judicial review retained

September HR Design Highlights Staffing—the right person, in the right place, at the right time DoD Hiring Authorities Ability to streamline the hiring process Pay setting flexibilities DoD qualification requirements Veterans’ Preference rights protected RIF—streamlined, mission responsive Less Disruption More Emphasis on Performance Bump and retreat combined into displacement Veterans’ Preference rights protected

September HR Design Highlights Classification— simple, flexible Career Groups Pay Schedules Broad Pay Bands Simplified Classification Guidance DoD Series Compensation— performance based, market sensitive Rate range adjustments Performance pay out Local market supplement No change to incentive awards Performance Management— linked to Agency mission High Performing workforce Pay increases Includes conduct and professional demeanor Standard performance factors

September Performance Management Performance management system designed to: Foster high-performing culture; Encourage employee engagement and robust communication, and Enhance overall effectiveness of DoD Supervisors work with employees to establish performance goals and expectations, aligned with mission-related goals Performance objectives need to be specific, measurable, acceptable, realistic and timely. Ongoing feedback and communication between supervisor and employees

September Who is Affected by NSPS? NSPS Human Resources System (Pay, performance, hiring, RIF, adverse actions, and appeals provisions) Vast majority of DoD employees eligible for coverage: initially apply only to selected General Schedule employees in Spiral One organizations with certain categories excluded (e.g., intelligence personnel, Defense Labs) Employees in special pay/classification systems (e.g., wage grade) will be phased in later NSPS Labor Relations System Applies to all employees and labor organizations currently covered by Chapter 71 of title 5 Will be implemented across entire Department when final regulations are effective

September NSPS Training Target audiences Employees Senior leaders, managers, supervisors, pay pool managers/administrators HR and LR practitioners Dual focus Functional training on NSPS system Soft Skills Learning objectives Educate employees about NSPS Teach skills and behaviors necessary to implement and sustain NSPS Promote a culture that focuses on results, values performance, rewards contributions, and promotes excellence

September Implementation Plan Spiral One Rollout – GS, GM, AcqDemo employees; CONUS only Spiral 1.1 – 69,000 Spiral 1.2 – 48,000 Spiral 1.3 – 152,000 Total Spiral One – 269,000 Spiral Two – rest of workforce including WG employees Spiral Three – DoD laboratories should legislative restrictions be eliminated

September Conversion Adjustment – WGI Buyout January 2006 Pay Adjustment for Spiral 1.1 Protection of Pay Pool Funding Department Financial Policy Decisions

September Next Steps Publish Regulations and move into Continuing Collaboration on Implementing Issuances Roll out training to key audiences Support Components with implementation activities Prepare for integration of additional Spirals

September Summary A modern, flexible, and agile human resource system Responsive to the national security environment Preserves employee protections and benefits “ NSPS is a win-win-win system … a win for our employees, a win for our military and a win for our Nation.” Honorable Gordon R. England NSPS Senior Executive January 2005

September Questions ?

September Most Frequently Asked Questions Will employees lose pay under NSPS? No Employees will not lose pay upon conversion to NSPS; some will have a pay increase What happens to the January (general) pay adjustment (GPI)? Funds will be paid out as a result of: Performance payout process Rate range adjustments Local market supplements Advancement in developmental positions What about the January 06 GPI for Spiral 1.1 employees? Spiral 1.1 employees will receive the January 06 GPI Employees must have been under the new system long enough to be evaluated properly before GPI can be placed at risk

September Most Frequently Asked Questions (Cont’d) What about within grade increases? Under proposed regulations Employees will receive a prorated buy-out for within grade increases when they are placed into the system After that, those funds will become part of the monies available for performance payouts or the other increases mentioned above How will DoD insure the money is really paid out to the employees? DoD is currently developing a financial policy to insure these funds are protected

September Most Frequently Asked Questions (Cont’d) Will veterans’ preference for RIF and hiring go away? No NSPS preserves veterans’ preference. Will seniority and veterans’ preference count in the event of a reduction in force (RIF)? Yes Seniority is still a factor in RIF. Veterans’ preference eligibles are still retained over non-veterans in RIF Greater emphasis on performance in RIF retention Performance ahead of length of service Tenure group Veterans’ preference Performance Length of service

September Most Frequently Asked Questions (Cont’d) Will there be a process for employees to challenge their performance rating? Yes Administrative reconsideration process in implementing issuances Bargaining unit employees may use either the administrative reconsideration process or a negotiated grievance procedure. Will there be a process where employees can exercise their fundamental rights to grieve or appeal unfair decisions or adverse actions? Yes Employees will continue to retain critical rights such as merit systems principles, due process, whistleblower protections, and protection against prohibited discrimination and prohibited personnel practices.

September Most Frequently Asked Questions (Cont’d) Is the proposed appeal system an impartial process? Yes It retains MSPB administrative judges as initial adjudicators of employee appeals and adverse actions Employees retain right to petition full MSPB for review of the record of a final DoD decision Will DoD continue to have bargaining units and employee unions? Yes The implementation of the NSPS labor relations system will not eliminate unions or bargaining units. Employees will still be able to participate in labor organizations and to bargain collectively.

September Back Up Slides

September Compensation Architecture Notional Career Groups Standard Career Group Engineering and Scientific Career Group Medical Career Group Investigative and Protective Services Career Group Pay Schedules Professional and Analytical Technician/Support Supervisory Pay Bands Entry Journey Expert

September Pay Band Illustration Sample NSPS Pay Band Structure Career Group A Pay Schedule 1 (nonsupervisory) Level 3 – Senior Expert Level 2 – Full Performance Level Level 1 - Entry/Developmental  Levels represent rate ranges associated with ranges of work in career group  Rates (minimum/maximum) may be set and adjusted based on market factors  Separate pay schedules may be established for certain occupations, where market or other conditions warrant $$$$$

September Notional NSPS Pay Schedules and Career Groups Professional and Administrative 174,052 (56%) Technical and Support 102,428 (33%) Supervisor 35,129 (11%) Standard Pay Schedules Total Population 311,609 Technician and Support 19,663 (25%) Supervisor 8,556 (11%) Engineering and Scientific Career Group Total Population 79,338 Professional 51,119 (64%) Physician 742 (3%) Technician and Support 14,151 (61%) Supervisor 1,155 (5%) Medical Career Group Total Population 23,031 Professional 6,983 (30%) Protective Services 17,208 (68%) Supervisor 3,326 (13%) Investigative and Protective Services Career Group Total Population 25,377 Investigative 4,843 (19%) 439,355 (DoD white collar workforce)

September Standard Career Group

September Engineering and Scientific Career Group

September Medical Career Group

September Investigative and Protective Services Career Group

September Investigative and Protective Services Career Group (cont.)

September Local Market Supplements Absorb Special Salary Rates Special Salary Rate Strategy Sunset as many as possible without distorting pay ranges Basic pay bands will accommodate many special salary rates “Tailored” local market supplements will be set to accommodate residual special rates

September Hypothetical Example Engineering and Scientific Career Group World Wide Base Rate + Market Pay = Total Pay Professional Engineer and Scientist San Francisco Market Rate 25% Mechanical Engineer San Francisco Market Rate 32% Electronic Engineer San Francisco Market Rate 42% Engineer Technician San Francisco Market Rate 22%