The Coalition offered several "options" during the past year and here again in these comments. These options will change and enhance current procedures without sacrificing important employee rights intended to be safeguarded by the law. We continue to hope that these options will be included in the final regulations.

For example, we have a mutual interest in improving the discipline and adverse action process. While we have very strong concerns about a pay for performance system, we have offered to negotiate over pay and a new pay system that would provide for 1) a nationwide component to keep all employees comparable with the private sector; 2) a locality component to keep all employees comparable with the private sector and living costs; and 3) a performance component with fixed percentages tied to performance levels and 4) collective bargaining for bargaining unit employees over ongoing decisions that must be made once the system is in place. We have offered to speed up the timeframes for bargaining, consider the new concept of post-implementation bargaining when necessary to protect national security and defense, and the introduction of quick mediation-arbitration processes by mutually selected independent arbitrators to quickly resolve any bargaining disputes. We believe these changes alone would allow DOD to succeed in implementing new processes that would enhance the mission of the agency.

Through a process which includes collaboration and collective bargaining, employee representatives expect to work with the Agencies to create a personnel system described in the statute. Once the system is developed and implemented, the new personnel system will be subject to the collective bargaining process. In submitting the following recommendations, we do not waive any right(s) concerning procedural and/or substantive violations by the Department and/or OPM in the planning, development, and drafting of the proposed National Security Personnel System (NSPS) Regulations to implement 5 U.S.C. Chapter 99.

In addition to the substantive arguments made in the body of this document, the Coalition believes that the procedures for generating changes in the Labor Management Relations system have, thus far, been contrary to the statutory scheme described in National Defense Authorization Act for Fiscal Year 2004, Section 9902 (m), LABOR MANAGEMENT RELATIONS IN THE DEPARTMENT OF DEFENSE.

This portion of the law describes a very specific manner of statutory collaboration with time lines, which has not been followed. The law requires that employee representatives participate in, not simply be notified of, the development of the system.

Public Law 108-136 protects the right of employees to organize, bargain collectively, and to participate through labor organizations of their own choosing in decisions that affect them. Specifically, the Coalition has reiterated that we believe NSPS preserves the protections of Title 5, Chapter 71, which your proposals attempt to eliminate. Despite this congressional mandate, the proposed regulations will:

1. Restrict bargaining over procedures and appropriate arrangements for employees adversely affected by the exercise of core operational management rights.
2. Eliminate bargaining over otherwise negotiable matters that do not significantly affect a substantial portion of the bargaining unit.
3. Unduly restrict a union’s right to participate in formal discussions between bargaining unit employees and managers.
4. Unduly restrict the situations during which an employee may request the presence of a union representative during an investigatory examination.
5. Eliminate the requirement to preserve the status quo pending completion of bargaining and impasse resolution.
6. Set and change conditions of employment and void collectively bargained provisions through the issuance of non-negotiable departmental and component wide regulations.
7. Assign authority for resolving many labor-management disputes to an internal Labor Relations Board, composed exclusively of members appointed by the Secretary.
8. Grant broad new authority to establish an entirely new pay system, and to determine each employee’s base pay and locality pay, and each employee’s annual increase in pay, without requiring any bargaining with the exclusive representative.
9. Mandate non-reviewable national level bargaining without consideration of the hundreds of local and regional certifications by the Federal Labor Relations Authority.

If there is any doubt, we herein restate our objection to your total abandonment of Chapter 71 as well as the law associated with the statute’s interpretation. Chapter 71 should be the "floor" of any labor relations system you design. The apparent design of your plan is to minimize the influence of collective bargaining so as to undermine the statutory right of employees to organize and bargain collectively. When it enacted provisions to protect collective bargaining rights, Congress did not intend those rights to be eviscerated in the manner that your concepts envision. Congress expressly specified only two modifications to Chapter 71 – bargaining above the level of unit recognition and independent third party review of decisions. All Chapter 71 provisions not directly inconsistent with these two changes remain fully applicable to DOD. Any regulation reflecting any of the issues listed above is unacceptable and unfounded in the legislation and the law.

The law requires any new system to be "contemporary." Your labor relations and performance management concepts are, however, remarkably regressive. By proposing to silence frontline employees and the unions that represent them, the Agencies appear to have decided that employees and their unions can make no contributions to the accomplishment of the essential mission of protecting the national security and defense. This approach is at odds with contemporary concepts of labor relations. As the General Accountability Office recognized in congressional testimony concerning the Department of Homeland Security’s proposed regulations on human capital:

The performance management system breaks no new ground. Except for the elimination of employee procedural safeguards, the proposed system repeats many of the current system’s themes, such as providing on-going employee feedback regarding performance and consistent and continual acknowledgment and reward of high performance and good conduct. Federal agencies have been struggling to attain credible performance systems for decades. Nothing in this proposal suggests that DOD will be able to avoid the credibility problems that have plagued federal employers. These problems are even more pronounced in view of the proposal to link employee pay more closely to their performance ratings.

We expect to engage in the full statutory collaboration process mandated by Congress to develop a new and improved performance management system. We recommend that it use collective bargaining for bargaining unit employees over the ongoing decisions that must be made once the system is in place.

Public Law 108-13 also reflects Congress’s determination that DOD employees

When it mandated that employees be treated fairly, afforded the protections of due process, and authorized only limited changes to current appellate processes, Congress could not have envisioned the drastic reductions in employee rights that your proposed regulations set forth.

No significant statistical evidence shows that current employee due process protections or the decisions of arbitrators or the MSPB jeopardize national security and defense. While we believe in an expeditious process for employee appeals, we cannot support biasing the process in favor of management or otherwise reducing the likelihood of fair and accurate decisions. You have provided no research that shows that the drastic changes proposed to Chapters 75 and 77 of Title 5 will further the agency mission.

Ideally, a new human resource management system would promote esprit-de-corps so as to enhance the effectiveness of the workforce. These proposed regulations fall far short of that ideal. Instead, they will result in a demoralized workforce composed of employees who feel as if they have been relegated to second-class citizenship. This system will encourage experienced employees to seek employment elsewhere and will deter qualified candidates from considering a career at DOD. It will put DOD at a competitive disadvantage.

We expect to engage in the full statutory collaboration process mandated by Congress to develop a new and improved employee appeals process. We recommend that this include negotiated grievance and appeals processes for bargaining unit employees.

Your proposed regulations indicate that you desire radical change to the pay and classification systems, and, as the law requires, creating a pay-for-performance system "to better link individual pay to performance, and provide an equitable method for appraising and compensating employees." No reliable information exists to show that this proposed system will enhance the efficiency of DOD operations and promote national security and defense. As with the proposed system at the Department of Homeland Security, most of the key components of the system have yet to be determined.

One thing, however, is clear. The design, creation and administration of your concept would be complex and costly. A new bureaucracy would be created, and it would be dedicated to making the myriad, and yet-to-be identified, pay-related decisions that the new system would require. Our country would be better served if the resources associated with implementing and administering these regulations were dedicated more directly to protecting national security and defense.

As we stated to you during our meetings last year, until these and other important details of the new system have been determined and piloted, the undefined changes cannot be evaluated in any meaningful way. The unions are now forced to exercise their statutory collaboration rights on vague outlines, with no fair opportunity to consult on the "real" features of the new classification, pay and performance system. This circumvents the congressional intent for union involvement in the development of any new systems, as expressed in Public Law 108-136.

Accordingly, we recommend that the pay, performance, and classification concepts be withdrawn in their entirety and published for comment and recommendations only when: 1) the Agencies are willing to disclose the entire system to DOD employees, affected unions, Congress, and the American public; and 2) the Agencies devise a more reasonable approach to testing any radical new designs before they are implemented on any wide-spread basis. We simply cannot accept systems that establish so few rules and leave so much to the discretion of current and future officials. As the representatives of DOD employees, it is our responsibility to protect them from vague systems, built on discretionary authority that is subject to abuse.

Regardless of the ultimate configuration of the pay proposal, we believe that any system must contain the transparency and objectivity of the General Schedule. We expect to engage in the full statutory collaboration process mandated by Congress to develop a new and improved pay and pay administration system. We believe the resulting system must contain the transparency and objectivity of the General Schedule, which includes involvement of Congress and the Federal Salary Council.

We recommend that the ongoing decisions, such as pay rates for each band, annual increases for employees in these bands and locality pay supplements be made through collective bargaining for bargaining unit employees. We object to these decisions being made behind closed doors by a group of DOD managers (sometimes in coordination with OPM) and their consultants.

Critical decisions on pay rates for each band, annual adjustments to these bands and locality pay supplements and adjustments must be made in public forums like the U.S. Congress or the Federal Salary Council, where employees and their representatives can witness the process and have the opportunity to influence its outcome. We are concerned that these decisions would now be made behind closed doors by a group of DOD managers (sometimes in coordination with OPM) and their consultants. Not only will employees be unable to participate in or influence the process, there is not even any guarantee that these decisions will be driven primarily by credible data, or that any data used in the decision-making process will be available for public review and accountability, as the data from the Bureau of Labor Statistics is today.

If the system DOD/OPM has proposed is implemented, employees will have no basis to accurately predict their salaries from year to year. They will have no way of knowing how much of an annual increase they will receive, or whether they will receive any annual increase at all, despite having met or exceeded all performance expectations identified by DOD. The "pay-for-performance" element of the proposal will pit employees against each other for performance-based increases.² Making DOD employees compete against each other for pay increases will undermine the spirit of cooperation and teamwork needed to keep our country safe at home and abroad.

It is also unclear from the current state of the deficit that funds will be available for performance based increases, a fact that has many DOD employees concerned about this proposal. As a practical matter, the Coalition has voiced its concern that your ambitious goal to link pay for occupational clusters to market conditions fails to address the reality that pay for DOD employees is tied to Congressional funding, not market conditions.

E. Conversion

As of this date, the unions have had little or no discussion with the agencies on how DOD will convert from the current pay, performance, appeals and labor relations system into NSPS. With respect to the new pay and classification systems, employees’ conversion should include pay adjustments for time already accrued toward a within grade increase or career ladder promotion. With respect to appeals, any grievances, complaints, cases, etc. already filed in the current system must retain the protections of the current system until final adjudication under the current system.

§ 9901.101 - Purpose

"This part contains regulations governing the establishment of a new human resources management system within the Department of Defense, as authorized by 5 U.S.C. 9902... These regulations are prescribed jointly by the Secretary of Defense and the Director of the Office of Personnel Management (OPM)."

In fact, the proposal does not contain regulations governing the establishment of a new pay, performance management, and classification system. These proposed regulations merely lay out some extremely broad parameters and note that the Secretary "may" actually develop the systems in the future with or without OPM, and with an undefined process to involve employees and their representatives.

In § 9902(a) of the National Security Personnel System (NSPS) Law, Congress explicitly allowed the new personnel system to be established by "…regulations prescribed jointly with the Director [of OPM]." § 9902(f) requires the Secretary and Director to provide employee representatives with a written description of the proposed new or modified HR system. The employee representatives then must be given 30 calendar days to review and make recommendations regarding the proposal. If the Secretary and Director do not accept one or more recommendations, they must notify Congress of the disagreement and then meet and confer with employee representatives for at least 30 calendar days in an effort to reach agreement.

Congress allowed DOD to have a personnel system that deviated from certain chapters of 5 U.S.C., but only if the systems would be jointly created and promulgated by DOD and OPM, and the systems would be created through a specific collaboration process with employee representatives that was mandated by Congress. Contrary to the NSPS law, DOD has made it clear that it does not intend to develop these systems through the process mandated by Congress. Instead, DOD intends to develop these systems at its sole and exclusive discretion, perhaps in coordination with OPM, at some time in the future.

§ 9901.102 (b)(1) says that the Secretary, at his sole discretion, may establish the effective date for applying subpart I (Labor Relations) to all eligible employees. This is in direct conflict with 5 U.S.C. 9902(l)(1), which prohibits the application of NSPS to more than 300,000 civilian employees until the conditions in § 9902(l)(2) are met, namely that the Secretary must first determine that the Department has in place a performance management system that meets criteria spelled out in subsection (b) of the law. We recommend that this section be stricken from the regulations as it is contrary to law.

§9901.102(f) provides that the DOD Secretary may apply one or more subparts of NSPS to employees not covered by Title 5 of the Code. We object to this section and to the supplemental information under "Eligibility and Coverage" on page 7557 which states, "Other categories of employees, including those covered by other systems outside of title 5, will be phased in as appropriate." There is no statutory authority in the NSPS law that allows DOD to apply NSPS to employees covered by anything other than the waivable or modifiable chapters of Title 5. This is an unlawful overreach on the part of DOD.

We object to many of the definitions in this section because there are too few details or descriptions of the actual system DOD intends to establish for us to adequately assess and comment on their meanings. This includes such words and phrases as "Career group," "Competencies," "Pay band," and others. We especially object to "Implementing issuances," and "Mandatory removal offense." Our objection to "Implementing issuances" is described below. By relegating the development of the NSPS to internal issuances, DOD has delegated to itself far more power than Congress intended. Our objection to the whole concept of mandatory removal offenses is described in our comments to subpart G. We recommend that both of these definitions be removed.

§ 9901.105 - Coordination with OPM

"Coordination" has a special meaning in these proposed regulations. It is described in §9901.105 as follows:

In other words, DOD is saying that the actual design of the system will not be done jointly with OPM but through a process in which DOD unilaterally designs the details, notifies OPM, and OPM intervenes only if it believes that what DOD wants to do could have a significant impact on other Federal agencies or the Federal civil service as a whole. This is not the new personnel system established by regulations jointly prescribed by DOD and OPM that Congress intended.

Similarly, DOD is signaling the start of the statutory collaboration process while providing the employee representatives with far too little detail to make meaningful comments and recommendations. We have been told that our 30 days to comment on the new personnel system has started, yet we have never received the "written description of the proposed system" required by §9902(f)(1)(a). It is hard to imagine a productive mediation process over what the Secretary might decide to do in the future, but is not going to tell us now. How do we "meet and confer in an effort to reach agreement" about details DOD has not revealed to us and plans to develop unilaterally outside of the statutory process?

Rather, the proposed regulations repeat, over and over again, that the actual details of the systems may be determined in the future through "implementing issuances" developed internally, outside of both the public’s right to comment and the statutory collaboration process required by the NSPS Law. "Implementing issuances, as defined in §9901.103, means:

In other words, DOD merely has to produce a document, not necessarily a directive or regulation, that the Secretary deems to be an "implementing issuance," and thereby relegate the union to the position of merely being allowed to comment and only if invited by the Secretary, as described in § 9901.106.

This falls far short of the statutory mandate that the personnel system be designed in collaboration with the unions. The statutory collaboration process was to include the provision of a written description of the proposed system, a 30-day opportunity for the unions to review and make recommendations, notification to Congress of the unions’ recommendations including which ones DOD chooses not to accept, and a period of at least 30 days to meet and confer, with FMCS assistance if requested, in order to attempt to reach agreement on whether or how to proceed with those parts of the proposal. We have not yet received a written description of the proposed system, but are being asked to squander our collaboration efforts on speculation about what the actual systems might be.

§ 9901.106 - Continuing collaboration

In this section, DOD spells out how it is actually going to involve its employees’ exclusive representatives in the planning, development, and implementation of NSPS as required by law. It will not subject the actual development of the system to the statutory procedure described above, but rather, it proposes that the Secretary, entirely at his discretion, will decide how many union representatives to involve and how much time to give them to submit written comments and discuss final draft implementing issuances.

If the Secretary thinks it is necessary, he may involve the employees’ exclusive representatives in commenting and discussing these issuances before they have become "final" drafts. There will be no meet and confer process with an outside mediator. There will be no public or congressional scrutiny of the process. The Secretary will decide who to involve, how much time to give them, and whether or not to involve them before it is essentially a "done deal." This is nothing like what Congress intended when it required union participation in the planning, development, and implementation of the NSPS and spelled out specific steps in that participation.

We expect to engage in the full statutory collaboration process mandated by Congress to develop a new and improved human resource system. DOD is required to engage in collective bargaining for bargaining unit employees over the ongoing decisions that must be made once the system is implemented.

The NSPS law calls for the involvement of employee representatives in evaluating the regulations and implementation of the program. The proposed regulations say that DOD will establish procedures for this evaluation, and that designated employee representatives will be given an opportunity to be briefed and to comment on the design and results of program evaluation. We believe that it is not enough for certain employee representatives to be designated by DOD to sit through a briefing of what DOD wants us to know about the program. DOD employees’ representatives must have access to information, the ability to meet with and survey employees, and other means to conduct an independent evaluation of the success of NSPS.

The preamble states that the Department "may" phase in coverage of "specific categories" of employees, or it "may" use OPM-approved occupational series and titles to identify and assign positions to a particular career group. See 70 Fed. Reg. at 7558. Yet no guidance is provided as to the process of the phase-in, where it may occur, and the criteria for establishing occupational series other than those approved and established by OPM. Also left out is any detail whatsoever as to how the Department plans to group any particular occupations or positions, or how it plans to assign certain pay bands to groups or subgroups.

Abandoning objective standards with established criteria, as the Department appears committed to doing, defies the core principles of fairness and uniformity inherent in a true merit and civil service system. Without using objective criteria, established across agencies, the opportunity for employees to receive disparate pay or job responsibilities increases, and the quality of working life for employees suffers. The Department will simply trade one perceived problem (inflexibility in occupational groupings or classifications) for another, more concrete one (a haphazard classification system lacking transparency and even the appearance of fairness).

A better approach is to focus more closely on how the Department’s mission differs from other federal entities and tailor individual occupational series accordingly. Such a process would rest first and foremost on the painstaking work already accomplished by OPM in establishing government-wide classifications, but allow the Department to tailor an occupational series to the Department’s specific needs.

Such an approach has the benefit of allowing the Department to make specific improvements to the personnel system by targeting concrete inadequacies without having to reinvent the wheel. We would note that OPM appears to believe that its present classification standards largely accomplish the same goals touted by the Department in this proposed rule. In its "Introduction to the Position Classification Standards", OPM stated that its standards program

Office of Personnel Management, Workforce Compensation and Performance Service, Introduction to the Position Classification Standards, at 10 (August 2002).

The Department’s dismissal of "lengthy" classification standards flies in the face of the gathered wisdom of OPM, which has concluded that classification standards, even "lengthy" ones, have the very fairness and consistency benefits which employees demand:

Introduction to the Position Classification Standards, at 7 (emphasis added).

With proper training and oversight by OPM, the Department can accomplish the goals it has set forth in the preamble to the proposed regulation, without sacrificing employee rights. Obviously, OPM’s Workforce Compensation and Performance Service think so too. If the Department disagrees, we hope that before promulgating new regulations on the matter it would provide evidence and reasoning as to why it cannot accomplish its goals within the existing classification system. Since the Department has failed to explain, beyond generalities, why it wishes to introduce an entirely new classification system and abandon the existing one, we object to this proposed subpart in its entirety.

We recommend that no changes be made to the classification systems used by DOD agencies until the full statutory collaboration process has been completed. DOD is required to engage in collective bargaining for bargaining unit employees for the ongoing decisions that must be made once the new system is implemented.

A personnel system without fair and appropriate classification structures and rules will be rejected by employees, and will result in distrust of management, decreased morale, and lower productivity, ultimately harming national security.

The language setting forth the purpose of this Subpart largely emulates that stated in the Civil Service Reform Act, except for the very important principle stated in 5 U.S.C. § 5101(2). That provision states that positions are to be classified and graded according to their duties, responsibilities, and qualification requirements and so described in published standards.

Fairness requires that, as far as is feasible, positions be grouped uniformly throughout the Department, and that the process and applied standards be transparent and uniform. As will be discussed below, § 9901.211 does not preserve this principle because it does not require that the classifications and grades be "published," and uses the permissive word "may," presumably so that the Department may exclude one or more, or all, factors as it alone deems appropriate.

In accordance with the NSPS law, the actual planning, development, and implementation of, or future adjustments to the NSPS must be done through the collaboration process described in §9902(f), not through internal, unilateral issuances. Upon implementation of the system, DOD is required to engage in collective bargaining for the ongoing decisions addressed in this section.

A crucial element of any civil service system is that personnel decisions be made with reference to general standards that all parties can feel are fair and uniform in light of the mission and function of the employer. We recommend that the Department demonstrate that these regulations are not solely intended to undermine employee rights by crafting regulations that actually inform employees of their own rights and establish bona fide limitations on management action. Language in the regulations should be mandatory, not permissive, and should include specific standards by which management action may be held accountable. At present, the Department’s proposed regulations do not even closely resemble those of a true "merit system".

We also object, for reasons stated in our comments to § 9901.202, to establishment of any new classification system "in conjunction" with the pay system set forth in subpart C. Our recommendation, as described below, is to implement subparts of the system (after sufficient changes have been made to correct the various severe defects in those subparts) in a cumulative fashion so that employees have an opportunity to adjust to the new system.

The Department has apparently reserved for itself the power to apply this new classification system to the entirety of the civilian workforce. We note, however, that managers and supervisors have not been provided with training nor has the Department apparently devised a system by which to transition employees from the old to the new system. The likelihood of confusion and mistake is unnecessarily heightened by the Department’s urge to rush into an untested system that is a radical departure from the existing one.

Moreover, as is implied in § 9901.102(b)(2), none of the subparts B, C, E, F, G, or H should be applied to employees without first being covered by subpart D (pertaining to performance management). Employees should be subject only to the new performance management system for several evaluation cycles before the radical changes in this and other subparts are imposed.

Such an approach will allow employees the opportunity to adjust to the new performance management system with a lessened possibility that the inevitable confusion and mistakes caused by transitioning to a new system would cause irreparable and unjust harm to an employee.

The approach will also allow for a more efficient adjustment period once the other subparts are imposed. Similar efficiency gains would arise from imposition of this subpart for several evaluation cycles before imposition of the other subparts C, E, F, G, or H. We therefore recommend that the Department not impose those subparts C, E, F, G, or H, with modifications, on "specific category or categories of eligible civilian employees" until first imposing subparts B and D, as modified, for several evaluation cycles. We recommend that the appraisal system be tested for several cycles before being certified as a proper system.

Finally, we recommend that, as in chapter 51, the decision of applicability of this subpart (and all other subparts) to an employee or category of employees be at any time grievable for bargaining unit members.

We have set forth elsewhere in these comments why we believe the Department has exceeded its statutory authority and Congress’ intent by waiving rights of Department employees. We object to the waivers of chapter 51 and replacement of that chapter with unspecified, vague regulatory language as found in this subpart. We object to the waiver of that chapter in light of the fact that the Department has chosen to do so while reserving for itself the power to "document in implementing issuances" a replacement to that statutory system. Even assuming arguendo that Congress wished for the Department to abandon in whole the principles of uniformity and fairness to employees (as the Department clearly has done in the subpart) in establishing a new classification system, it plainly did not intend that the Department would do so through as yet unpublished "implementing issuances." Any "waiver" truly and lawfully authorized by 5 U.S.C. § 9902 would, at the very least, require that it be replaced with standards or rules of substance, not self-aggrandizing promises to fill in the gaps later.

The Department is required, furthermore, to provide a "written description of the proposed system or adjustment" under collaboration provisions of the statute. It is hard to believe that Congress intended or expected that the Department’s proposed subpart B would fit any reasonable interpretation of 5 U.S.C. § 9902(f). The Department has proposed language that only comically resembles "regulations" by any common understanding of the term: they are replete with "may," but never "shall," aggrandize the fullest possible authority to the Department, offer only platitudes to employee rights, and repeatedly inform the reader that the Department "will document in implementing issuances" various critical features of its new classification system. The Department has overreached and should revise its approach.

We strongly recommend that the Department not waive any measure without first proposing, through the regulatory and meet-and-confer process prescribed by applicable statutes, a specific and detailed written description of the system the Department wishes to impose on its employees. That description should include the actual proposals for applicable standards and procedures and substantially inform the reader as to the nature of the Department’s proposed system.

Other than to reiterate our objections set forth as recommendations to this subpart, we have no comments for this section.

The Department reserves for itself the power to establish career groups but does not commit even to general principles of how it will establish those groups. The language suggests that the Department may pick and choose what "factors" will be applied to any single career group. We strongly recommend that the regulation be re-written so that the Department shall be obligated to apply the factors as agreed through the collective bargaining process.

We add one further comment regarding the stated factors. Although the Department makes no promises, it does list "relevant labor-market features" as one factor of many in establishing career groups. It is impossible to know precisely the Department’s meaning given the overall lack of definition or clarity in the section. Notably absent in this section is any reference to OPM and its own expertise in developing classification structures for this Department and other federal agencies. The Department avoids accountability for its actions in devising new classifications. For employees to have confidence that positions have been grouped properly, the Department should commit to objective, uniform, and fair standards.

The contrast between this section and chapter 51 of Title 5, which the Department presumes to replace, is striking. For example, section 5106 sets forth objective criteria guiding and informing the establishment of classifications:

5 U.S.C. §5106 (emphasis added). Absent from this statute, which was originally drafted in 1949 and remained largely unchanged since then, is any of the vague, self-aggrandizing language of § 9901.211. (This is to say nothing of the contrast, in terms at least of specificity, detail, and clarity, between OPM’s own classification regulations, in 5 C.F.R. Part 511, and the Department’s proposed ones.) It is entirely unclear why the Department feels that abandoning specific, concrete and well-established standards for vague and undefined ones serves the nation’s security. It is clear, however, that doing so severely impacts employee rights. A personnel system without fair and appropriate classification structures and rules will be rejected by employees, and will result in distrust of management, decreased morale, and lower productivity, ultimately harming national security.

The grouping of positions is a key first step in establishing the new pay system, and employees must have full confidence that positions have been grouped properly.

We recommend that the career groups are published and that they are subject to the collaborative process of 5 U.S.C. § 9902(f) and collective bargaining before implementation.

We object to the Department’s failure to provide sufficient detail for the public or employee representatives to comment on the new classification system and request that the Department provide that detail in its proposed regulations. At a minimum, we recommend that the Department clarify that the establishment of pay schedules and pay bands are subject to the collaborative process of 5 U.S.C. § 9902(f) and that collective bargaining is used for the ongoing decisions for bargaining unit employees once the system is in place. The establishment of these pay schedules and bands, and the distinctions between them, are key elements of the new pay system, and the involvement of employee representatives through collective bargaining is essential to provide credibility, transparency and accountability for these determinations.

As with section 9901.211 above, this section does not mention oversight by OPM. We recommend that this section require that newly-established or modified pay schedules be reviewed and approved by OPM before going into effect.

Moreover, although our comments on the proposed pay banding system can be found elsewhere, we do object to allowing the Department to set forth different pay schedules for similar career groups. This flies in the face of the statutory requirement that the new personnel system uphold the merit system principle of "equal pay for equal work" as required in 5 U.S.C. § 9902(b)(3). There is an enormous potential for claims by employees alleging violation of the equal pay requirements of 5 U.S.C. section 2301(b)(3), if employees do not believe that those in similar jobs are treated fairly with respect to the establishment of career groups, pay schedules and pay bands.

In paragraph (d), the Department’s reference to § 9901.514 is confusing. The paragraph states that the Department will designate standards for each group, series, pay schedule, and/or pay band, "as provided in § 9901.514." That section of the Department’s proposed regulations pertains to "Non-citizen hiring." It may be that the Department intended to reference § 9901.513 (which addresses "Qualification Standards").

We object to the Department’s failure to provide sufficient detail for the public or employee representatives to comment on the classification requirements and request that the Department provide that detail in its proposed regulations. Subparagraph (b)(2) obligates the Department to apply the criteria and definitions "required by §§ 9901.211 and 9901.212" in assigning jobs to career groups, pay schedules and pay bands. Unfortunately, the Department expressly avoided listing any requirements in establishing career groups, pay schedules, or pay bands in § 9901.211 and .212. Reiterating our objections and recommendations set forth above, we strongly urge that the Department take the time to establish uniform, objective, and fair standards for assigning jobs to career groups, pay schedules and pay bands.

We recommend that subsection (b)(2) be modified to indicate that the assignment of positions to appropriate career groups, pay schedules and pay bands, using the criteria of 9901.211 and 9901.212, would be accomplished as part of the collective bargaining process. This will ensure credibility, transparency and accountability for these determinations, which will be lacking if these decisions are made unilaterally by management representatives.

As with most other portions of these regulations, this section is wholly without detail or specificity, therefore, it is impossible to comment knowledgeably on the procedure for reconsideration of classification decisions. This section does not provide time periods for different appeals, or whether employees may seek retroactive lost pay or merely a prospective adjustment. It is unclear who within the Department is authorized to consider classification appeals, the format for conducting them, the procedures for performing a desk audit, the ability of an employee to obtain a representative to assist in conducting the appeal, or the right of an employee to information concerning the status of his or her appeal.

It is unstated what issues may be appealed and what issues may not be appealed. It is further impossible to comment on appeals because, as stated above, the criteria used to establish a classification system or category are not published in these regulations. We recommend that the Department incorporate directly the well-established regulations in 5 C.F.R. Part 511 for conducting classification appeals. Under any system, employees should be allowed to grieve classification decisions.

Paragraph (a) only proposes that an employee "may request" either the Department or OPM reconsider a classification. Notably absent is any guarantee that the request shall be considered, as is found in OPM regulations. See 5 C.F.R. § 511.603 (entitled "Right to appeal").

Also in contrast to OPM regulations, employees are apparently not entitled to prompt written notification of a reclassification decision or an explanation of the reasons for the reclassification, so that employees may learn of a reclassification after the fact, on receipt of a reduced paycheck. See 5 C.F.R. § 511.602 (Notification of classification decision). Since they do not have a guarantee of a written notification, it appears that employees will not even be informed of a right to appeal a reclassification decision. Employees should have a right to appeal a classification or reclassification.

The absence of an independent review and appeal procedure will undermine the credibility and accountability of such determinations for affected employees. Employees should be notified of their right to appeal both to the employing agency and to OPM, and the procedures and time limits for doing so. In addition, we recommend that this section be modified to provide that bargaining unit employees may elect to challenge any classification determination through the negotiated grievance procedure. This is consistent with our recommendation that the definition of "conditions of employment" be expanded, which would also make these matters grievable.

OPM has created an Office of Classification Appeals so employees can turn to an objective body with expertise and thorough knowledge of classification standards. See 5 C.F.R. § 511.613 ("Classification Appeals Office"). We strongly recommend that the Department’s regulations create, in conjunction with OPM, a similar central office. We also recommend that the regulations provide that if a decision has been reached that is favorable to an employee; a personnel action implementing the decision must take place within a reasonable period of time following the decision but shall be effective as of the date of the decision. See 5 C.F.R. § 511.701(a).

In addition, 9901.222(e) states that reconsideration determinations made under this section will be based on criteria issued by DOD, unless DOD has adopted an applicable OPM classification standard. The use of criteria issued solely by DOD in lieu of an OPM standard or criteria will likely be considered unfair by employees. We recommend that only criteria and standards issued by OPM be used in reconsideration determinations made by DOD under this section.

We recommend that this section be modified to provide that the policies and procedures for converting bargaining unit positions to a career group, occupational series, pay system, pay schedule or pay band, upon initial implementation of the new NSPS classification system, are subject to collective bargaining. This will ensure credibility, transparency and accountability for these policies and procedures.

We recommend that where an employee is transferred or reassigned from a non-covered position to a position already covered by the NSPS system, that employee be provided with a copy of the new classification, position or series description, occupational group or subgroup, and pay schedule, and any other relevant documentation before entering service in the position.

We are recommending that the definition of "Conditions of employment" in 9901.903 be modified, so that matters pertaining to classification (among other things) would not be excluded. In order for the new classification program to have any credibility with employees, and to maximize transparency and accountability, it is crucial that employee representatives be directly involved in designing this new system. Collective bargaining of job evaluation systems is common throughout the private sector, and should occur in the DOD as well.

A pay system such as this, which takes DOD out of the government wide system and leaves to its sole discretion determinations as vital to employees as their annual increases, their locality adjustments, and other pay setting decisions must have oversight.

We recommend that the pay system developed through collaboration, inasmuch as it will take DOD out of the government-wide system and give it discretion for determinations as vital to employees as their annual increases, their locality supplements, and other pay setting decisions, be a system that uses collective bargaining for pay and pay administration decisions for bargaining unit employees.

Even the definitions in § 9901.304 are difficult to comment about effectively because they depend upon policies that are not revealed to us. For example, take the definition of "Local market supplement." It states, "Local market supplement means a geographic- and occupation-based supplement to basic pay, as described in §9901.332." §9901.332 says, "For each band rate range, DOD may establish local market supplements that apply in specified local market areas." In other words, the promise of a description of "local market supplements" instead turns out to be a statement that DOD may actually establish them, presumably with internal rules and procedures, at some point in the future. When DOD does provide us with the descriptions necessary to comment on the definitions in this section, the statutory collaboration process should begin.

This subsection tells us, "Through the issuance of implementing issuances, DOD will establish a pay system that governs the setting and adjusting of covered employees’ rates of pay and the setting of covered employees’ rates of premium pay." It goes on to say that the system will include the following features:

(a) "A structure of rate ranges linked to various pay bands for each career group, in alignment with the classification structure described in subpart B of this part..." Subpart B does not lay out the structure of rate ranges or the classification structure, but merely states that DOD will do it in the future. This is circular logic at its best (or worst).

(b) Policies regarding the setting and adjusting of band rate ranges based on mission requirements, labor market conditions, and other factors, as described in §§ 9901.321 and 9901.322..." As we have seen before, these sections referred to merely say that DOD may or will do these things at some time, but do not contain descriptions. We are not actually given the details that would allow us to comment or collaborate effectively.

(c) Policies regarding the setting and adjusting of local market supplements to basic pay based on local labor market conditions and other factors, as described in §§ 9901.331 through 9901.333..." Once again, these subsections do not actually describe the policies; they say that DOD will unilaterally develop them.

(d) Policies regarding employees’ eligibility for pay increases based on adjustments in rate ranges and supplements, as described in §§ 9901.323 and 9901.334. These sections of the proposed regulations do set out some details of the system DOD has in mind, for example that employees with a current rating above "unacceptable" will receive increases, but leave most to be determined by DOD at a later date.

(e) Policies regarding performance-based pay increases, as described in §§ 9901.341 through 9901.34. Once again, these sections do not actually describe the performance-based pay system, just mention certain elements the system may contain, and leave it to DOD to develop the system unilaterally in the future.

(f) Policies on basic pay administration, including movement between career groups, as described in §§9901.351 through 9901.356. Those sections do not describe these policies but say they may be developed in the future.

(g) Linkages to employees’ performance ratings of record, as described in subpart D of this part; and

(h) Policies regarding the setting of and limitations on premium payments, as described in §9901.361. This section merely states that DOD will issue implementing issuances regarding premium pay.

When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin to develop the system. DOD is required to engage in collective bargaining for ongoing decisions addressed in this section.

§ 9901.312 - Maximum rates

The Secretary will establish limitations on maximum rates of basic pay and aggregate pay for covered employees. When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin. Upon implementation of the system, DOD is required to engage in collective bargaining for the ongoing decisions addressed in this section.

§ 9901.313 - National security compensation comparability

As required by §9902(e)(4) of the NSPS law, DOD says that for fiscal years 2004 through 2008 it will try to prevent slippage in, "…the overall amount allocated for compensation of the DOD civilian employees who are included in the NSPS…" so that it does not fall to "…less than the amount that would have been allocated for compensation of such employees for such fiscal years if they had not been converted to the NSPS…." This is to be based at a minimum on the number and mix of employees in the pre-NSPS organizations and the pre-NSPS expected adjustments for step increases and promotions.

§ 9902(e)(5) of the NSPS law requires that, to the maximum extent practicable, the regulations implementing the NSPS provide a formula for calculating the overall amount to be allocated after FY 2008 for compensating civilian employees, so that, in the aggregate, such employees are not disadvantaged by the conversion to NSPS, while allowing the Department to accommodate changed circumstances that might impact pay levels. Yet, the proposed regulations do not contain any formula for calculating the overall amount for compensating employees after FY 2008. Instead, DOD says in § 9901.312(b) that it will, to the maximum extent practicable, provide such a formula in its later implementing issuances, after and outside of the regulatory process.

This lies at the heart of DOD employees’ deep concerns about their future employment and compensation under NSPS. DOD reserves to itself the right to lower overall payroll costs and divert such funds elsewhere if it unilaterally decides to do so. Under NSPS, DOD civilian employee compensation is left to the Executive branch to decide. It no longer will be worked out in negotiations between the Executive and Legislative branches of government.

This takes away an important right DOD workers have now – to influence their members of Congress to take into consideration their needs and their value in determining annual pay increases. NSPS would remove that. And, by making this formula something DOD does through implementing issuances in the future, DOD would effectively keep the employees’ exclusive representatives from having any meaningful role in ensuring that their bargaining unit members are respected and protected. We do not believe that Congress intended DOD to go behind closed doors to develop policies so important to employee morale and the ability to recruit talent in the future.

When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin to develop the system. Upon implementation of the system, DOD is required to engage in collective bargaining for the ongoing decisions addressed in this section.

This subsection states that DOD may establish ranges of basic pay for pay bands and will establish a common rate range for each pay band within a career group that applies in all locations. When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin to develop the system. Upon implementation of the system, DOD is required to engage in collective bargaining for the ongoing decisions addressed in this section.

Within its sole discretion, DOD, after coordination with OPM, may set and adjust the rate ranges established under §9901.321 and may consider mission requirements, labor market conditions, availability of funds, pay adjustments received by employees of other Federal agencies, and any other relevant factors. The rate ranges and adjustments may be different for different pay bands. The adjustment of the maximum rate may be a different percentage than the minimum.

We are concerned that the ability of DOD to raise the maximum rate of a band by an amount different from the minimum rate could allow the Department to benefit a few favorite employees at the expense of the rest of the good employees in a particular band. In a situation in which a few favorites are at the top of their band, DOD could raise the maximum rate by, for example, 6%. This would give room for managers to give those few employees, large performance increases to their basic pay rather than cash bonuses. In order to afford this, DOD might raise the minimum rate of the band by a much smaller amount, say 2% or even zero%, thereby giving the good employees in that band a very small annual increase or even no increase, in accordance with §9901.323. We believe that the ability to manipulate the annual increase that all good employees would get adds to the insecurity, confusion and real or perceived unfairness in the system.

When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin to develop the system. Upon implementation of the system, DOD is required to engage in collective bargaining for the ongoing decisions addressed in this section.

§9901.323 - Eligibility for pay increases associated with a rate range adjustment

(a) As stated above, we believe there is too much opportunity for manipulation, confusion, and inequity in allowing DOD to adjust the minimum and maximum rates of a band by different amounts.

(b) We object to withholding the annual increase from an employee who receives an unacceptable rating. This is especially unconscionable if employees are denied the ability to grieve or appeal the rating to an external, neutral adjudicator who is able to overturn the rating based on the facts.

(c). We oppose the idea that an employee, who for whatever reason does not have a rating of record at the time the annual increase is given, will have his or her pay increase determined by future unilateral issuances. If management has not fulfilled its obligation to provide the employee with a rating of record, or other circumstances preclude issuing a rating, the employee should at least be credited with the modal rating for the purpose of receiving the annual increase received by other employees in the band.

DOD has been telling employees and others that all acceptable employees will get the annual increase. This is not exactly true. DOD leaves to its sole discretion the determination of the minimum and maximum rate ranges of the clusters and bands. (See §§ 9901.321 through 9901.322). The determination of the minimum rate range increase governs what will be the annual increase for acceptable employees in a particular band. So, for example, employees in one band could get an annual increase of 1 percent, or even no percent even though Congress and the President approved an increase of 4.1 percent for non-DOD employees. At the same time, employees in another band could get a 6 percent increase. This could happen because DOD might, based on as yet unrevealed issuances, determine, for example, that the first band is being paid more than the labor market requires while the second band is being paid under market, or because one career group is considered to be more important than another at a particular point in time.

We object to this unfettered authority by DOD. We also object to DOD and OPM misleading employees into thinking that all good workers will get an annual increase. In reality, DOD has retained for itself the right to give no increase or a smaller increase than non-DOD employees are getting to a particular band, while giving another band an amount higher than other federal employees are getting. This decision would have nothing to do with the relative performance of individual employees.

When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin to develop the system. Upon implementation of the system, DOD is required to engage in collective bargaining for the ongoing decisions addressed in this section.

This subsection says that the pay ranges may be supplemented by local market supplements as described in §§9901.332 through 9901.334. Those subsections do not actually describe or set out the regulations and policies governing these supplements. When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin. We recommend that the decisions discussed in this section be determined through collective bargaining for bargaining unit employees.

(a) DOD may establish local market supplements for employees whose official duty station is located in the given area. The supplements may be different for different career groups, occupations, or different pay bands within the same career group. There is a great potential for errors and inequities to develop over time.

(b) This subsection says that DOD may set the boundaries of locality pay areas. If it decides to use locality pay areas established by the President’s Pay Agent under 5 U.S.C. 5304, no regulations are required and the decision is not subject to judicial review. If DOD establishes locality areas different from those established under 5 U.S.C. 5304, DOD may make boundary changes by regulation. Judicial review of any regulation on boundary changes is limited to whether or not any regulation was promulgated in accordance with 5 U.S.C. 553.

(c) We believe local market supplements should be basic pay for at least all of the purposes locality pay under the GS System is considered basic pay.

When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin. We recommend that the decisions discussed in this section be determined through collective bargaining for bargaining unit employees.

Within its sole discretion, DOD may set and adjust local market supplements and determine their effective dates. DOD says it will base these determinations on mission requirements, labor market conditions, availability of funds, pay adjustments received by employees of other Federal agencies, allowances and differentials under 5 U.S.C., chapter 59, and any other relevant factors. The labor market is notoriously volatile – the skills that are in demand today are a dime a dozen tomorrow. Witness the pay incentives to attract Information Technology workers a few years ago and the relative surplus today. The ups and downs of market-based decisions will be hard for employees to understand or trust.

This will be even worse unless DOD makes the major investment of money, people, and time to do the ongoing studies, analyses, and validations necessary to keep up with the labor market. And remember, decisions would have to be made about adjustments for each locality and each band within each career group within that locality. DOD says it will review these supplements at least annually. Is this the best use of time and resources in the dangerous world we face? We support and want to help in doing strategic and long-range planning to anticipate the skills needs of the future and prepare current and future employees to meet those needs. We do not support the notion that time and resources should be spent plotting the variations in pay from one year to the next for every occupation and withholding or granting small increases based on these fluctuations.

When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin. We recommend that the decisions discussed in this section be determined through collective bargaining for bargaining unit employees.

§9901.334 - Eligibility for pay increase associated with a supplement adjustment

(a) We are concerned that the decisions to vary the local market supplements from one career band to another, and from one pay band to another within a career band, is subject to error and inequity. We believe that employees will begin to see a confusing array of different pay rates that will be neither understandable nor credible to them.

(b) We object to withholding the local market supplement from an employee who receives an unacceptable rating. This is especially unconscionable if employees are denied the ability to grieve or appeal the rating to an external, neutral adjudicator who is able to overturn the rating based on the facts.

(c) We oppose the idea that an employee, who for whatever reason does not have a rating of record at the time the local market supplement is given, will have his or her pay increase determined by future unilateral issuances. If management has not fulfilled its obligation to provide the employee with a rating of record, or other circumstances preclude issuing a rating, the employee should at least receive the modal rating for the purpose of receiving the supplement received by other employees in the band.

When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin. We recommend that the decisions discussed in this section be determined through collective bargaining for bargaining unit employees.

This section says that §§ 9901.342 through 9701.345 describe the performance-based pay system that is part of the pay system established under this subpart. In fact, once again, these sections merely mention some concepts and state that DOD may or will issue issuances actually describing them in the future. When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin. We recommend that the decisions discussed in this section be determined through collective bargaining for bargaining unit employees.

(a)(1) gives a broad overview of the system, saying that NSPS will be a pay-for-performance system that will distribute available performance pay funds based upon individual performance, individual contribution, organizational performance, or a combination of these. The proposed regulations further state that DOD will use a pay pool concept to manage, control, and distribute performance-based pay increases and bonuses. The actual performance payout any employee might receive will depend on how much money was put into his or her particular pay pool and how many performance shares were given to employees in that pool.

(2) DOD says it will use the rating of record for the most recent rating period for making payout decisions. But even here, DOD wants to give itself the option to pull the rug out from under an employee at any time. The proposed regulations allow the Department to substitute another rating that will determine the employee’s pay if an appropriate rating official believes that an employee’s current performance is inconsistent with that rating. What are we talking about here? Do we really want to create an environment in which employees fear every time they have a bad day? We object to giving managers this excessive power to manipulate ratings and payout decisions. Employees should have a reasonable expectation that their rating, which will affect their pay, will be based on their performance over an entire rating cycle and not on their performance at any current moment.

Performance appraisal systems are notoriously bad at accurately and objectively evaluating performance. This becomes a crucial weakness when pay-for-performance is involved. If DOD is not even willing to stand behind the ratings managers give employees under its new NSPS performance management system, but reserves the right to change that rating when it comes time for the payout, there is no possibility for credibility, trust or stability in the proposed system.

(b) Performance pay pools. (1) DOD says it will issue implementing issuances for the establishment and management of pay pools for performance payouts; and that

(2) it may determine a percentage of pay to be included in pay pools and paid out in accordance with future issuances as performance-based pay increases, bonuses or a combination of the two. The supplemental information, under "Performance Pay Pools" on page 7560, states that each pay pool will have a pay pool manager, who will manage "in concert with appropriate management officials," as a pay pool panel. The supplemental information goes on to say that the pay pool manager, "…is the individual charged with the overall responsibility for rating determinations and distribution of the payout funds in a given pay pool."

If the NSPS performance management system is working as DOD says it should, all year long employees would be getting feedback about what their performance expectations are and how well they are meeting them. Maybe a supervisor thinks an employee is doing a great job and making that extra contribution to the mission. The supervisor may have laid out various assignments or directions to make the best use of that employee’s skills and contribution to the mission. At the end of the rating period, the supervisor may have given the employee a high rating and a high number of performance shares. What happens when the supervisor’s recommendation comes to the pay pool manager and pay pool panel?

The pay pool panel and manager may disagree with the supervisor. In fact, they may actually agree with the supervisor’s assessment, but believe that the finite amount of money in the pay pool would be better used elsewhere. Pay pool managers and pay pool panels, in reality, are additional layers between an employee’s supervisor and the actual payout the employee receives.

According to the supplemental information, the pay pool manager is charged with the overall responsibility for rating determinations and distribution of the payout funds in a given pay pool. What will go into deciding whose supervisor’s rating and share determination will win out? Some supervisors are more assertive and persuasive than others. Some are better liked. In some cases, pay pool managers and panels have had to make hard decisions about who, among equally outstanding employees, should get higher performance-based pay and who should not. Setting aside the very real potential for discrimination and favoritism in such decisions, there are other reasons that one employee might get more than another equally qualified employee.

A pay pool manager might decide that one outstanding employee is more likely to leave than another and therefore needs a higher payout as an incentive to stay. Maybe one outstanding employee is in her forties and is considered not likely to leave for another job, while another is young and is believed to have other options. Maybe one employee is in a job that is easy to fill, while another is in a job considered hard to fill in the market at this moment. Perhaps there are two equally outstanding and valuable employees, but one recently was promoted to a higher band while the other hasn’t had a large increase for a while.

The pay pool manager, who has the overall responsibility for rating determinations and distribution of the payout funds in a given pay pool, might decide to give one employee a lower number of shares (or even a lower rating) in order to give more money to another employee. We object to the concept and legality of pay pool panels and pay pool managers with authority to manipulate the system. These concepts should be eliminated.

(c) Performance shares. The proposed regulations say that; (1) DOD will issue implementing issuances setting up a range of shares that supervisors (and later pay pool managers) will be able to assign for the various performance ratings that may be assigned to employees. Once again, DOD is expecting employees’ exclusive representatives to go through the statutory collaboration process, in an area vital to our bargaining unit members, strictly on speculation without any actual details. In this case, it is about how much leeway DOD will give supervisors and pay pool managers to pay different performance payouts to employees with the same performance rating in the same pay pool.

The current GS system allows managers to reward employees for superior performance. For many reasons, including funding, management training, and an unwillingness to spend the time necessary on performance management, the Federal government does a terrible job of rewarding performance now. We are deeply concerned about the amount of discretion given to supervisors to affect their employees’ pay under NSPS. They will not only assign performance ratings, but will decide how much that rating will be worth for one employee and how much the same rating will be worth for another employee. Now supervisors will be able not only to reward exemplary performance, but to cause the pay of good employees to drop below what it would have been without NSPS. We have no confidence that the managers operating under NSPS will be so different from the managers operating under the GS system that they will do a good job of carrying out these increased responsibilities. We have no confidence that NSPS will receive the funding necessary for there to be even a chance of a successful performance-based pay system.

(2) We can accept the idea that an employee who receives an unacceptable rating does not get a performance increase, but only if that employee has the ability to appeal or grieve the rating to an external, neutral adjudicator who is able to overturn the rating based on the facts.

(d) Performance payouts. The proposed regulations say (1) that DOD will establish a methodology that authorized officials will use to determine the value of a performance share, which may be expressed either as a percentage of an employee’s rate of basic pay (exclusive of local market supplements under § 9901.332) or as a fixed dollar amount, or both.

(2) DOD will determine an individual employee’s performance payout by multiplying the share value by the number of performance shares assigned to the employee.

DOD offers no written description of the methodology it says it will establish in the future that would allow us to participate in the statutory collaboration process as envisioned by Congress. The supplemental information ("Performance-Based Pay" page 7560) says, "The performance payout is a function of the amount of money in the performance pay pool and the number of shares assigned to individual employees." This appears to be describing a system in which the amount of money in the pay pool is divided by the number of shares assigned to employees in that pool to arrive at the value of each share. That value is then multiplied by the number of shares assigned to an individual employee to determine the performance payout amount.

This type of performance share process would set up a dysfunctional system in which one employee does better if more of his or her co-workers do poorly. The more ratings given out in a pay pool that exceed acceptable, the lower the value of each performance share. The more ratings of acceptable or lower given out in a pay pool, the more valuable is each performance share. The lower the performance of the employees in the pay pool as a whole, the bigger the raise an employee judged to be a high performer will receive. Someone motivated to work hard for the promise of a big raise will only achieve the goal if management judges the majority of his or her coworkers to be losers. Of course, we are only guessing that this is the method of determining a share value that DOD is planning to use.

There are many unanswered questions that make it impossible to comment adequately. For example, is it expected that all of the money assigned to a pay pool will be paid out, or will managers be able to divert some to other uses or save some for the following year? If the share value is derived as described above, by dividing the total number of shares into the amount of money in the pay pool, then it only makes sense that the entire pool is distributed. Our objection to a system that makes the value of a share dependent upon how many superior employees are in a pay pool is described above. But we also strongly oppose any system that would allow managers to withhold or divert any of the money budgeted for performance pay pools.

(3) The proposed regulations say that DOD may provide for the establishment of control points within a band that limit increases in the rate of basic pay. It goes on to say that DOD may require that certain criteria be met for increases above a control point.

Control points are like invisible barriers that prevent most employees from ever reaching the top of their band. DOD could require, for example, that employees have at least two "Outstanding" ratings in order to get beyond the control point. It could set other criteria, including retention needs or hard to define and communicate "contributions," or "competencies," that might keep employees from reaching the rate in the band they thought "pay-for-performance" would let them attain as long as they were high performers. In fact, the regulations would allow DOD to establish control points that could prevent or make it more difficult for good DOD employees to reach the levels they would have reached had NSPS not been created.

We oppose the use of control points. There is no need and no justification for them. Control points are cost control devices. Pay pools are cost control devices. It makes no sense to have both. We believe that so-called "pay-for-performance" is the wrong system for most organizations, and certainly for DOD, whose mission requires employees to support each other rather than try to grandstand each other. Experience has shown time and time again that pay-for-performance without enough investment of time, money and resources is doomed to failure.

If we are correct in our guess at how DOD intends to determine the value of shares and performance payouts, management will only be responsible for paying out what is in the pay pool. If DOD manages properly, it will budget only what it can afford and believes is appropriate for performance pay. If it has a large number of high performers, the value of each share will be lower – the total amount will never be more than DOD budgeted for that purpose. Control points are an unnecessary and confusing addition to an already confusing system. They also add the potential for manipulation and abuse by managers and frustration for employees.

(4) The proposed regulations say that performance pay may be in the form of an increase to basic pay, a cash bonus, or a combination of the two. An employee’s basic pay may not exceed the maximum rate of the band or applicable control point. Once again, we believe that control points are redundant – there are enough cost control mechanisms. Without the details DOD says it will provide later in implementing issuances, we cannot comment adequately.

(5) DOD says it will determine the effective dates of increases in basic pay made under this section.

(6) DOD says it will issue implementing issuances addressing retained rates.

(e) Proration of performance payouts. DOD says it will issue implementing issuances regarding proration of performance payouts for employees who were hired or reassigned during the rating period, were in a leave without pay status, or for other circumstances.

(f) Adjustments for employees returning after performing honorable service in the uniformed services. Once again, DOD says it will issue implementing issuances with the details. The proposed regulations do say that the returning employee will be credited with his or her last DOD rating of record or the modal rating, whichever is more advantageous to the employee. We agree that every effort should be made to ensure that employees who return from performing honorable service on their nation’s behalf should not be disadvantaged in any way, and certainly not in their pay. We do note, however, that the proposed regulations do not address the flexibility managers will have to assign a returning service member the low end or the high end of the share range allowed for the rating.

(g) Adjustments for employees returning to duty after being in workers’ compensation status. Once again, DOD says it will issue implementing issuances with the details. The proposed regulations do say that the returning employee will be credited with his or her last DOD rating of record or the modal rating, whichever is more advantageous to the employee. We agree that every effort should be made to ensure that employees who return after recovering from an injury suffered on the job should not be disadvantaged in any way, and certainly not in their pay. We do note, however, that the proposed regulations do not address the flexibility managers will have to assign a returning employee the low end or the high end of the share range allowed for the rating.

In NSPS, DOD makes no promise to employees that they can expect a particular performance reward if they receive a certain performance rating. Instead, DOD may decide to put less money in one pay pool and more in another, thus affecting the size of the payout. An employee’s rating will not translate into a fixed number of performance shares – there will be a range and the supervisor will decide the number.

The value of a performance share cannot be determined until the ratings have been assigned, and the distribution of ratings will cause the value to be higher or lower. This could be a small amount of actual money, hardly worth the disruption and demoralization the research shows that pay-for-performance systems create when they tell some good and valuable employees that they are losers while failing to give top performers enough to make a difference. We do not want to create a system in which some people are supposed to feel rewarded by feeling superior to their co-workers, and other good employees are supposed to feel inferior.

We believe that pay-for-performance has more problems than benefits. We believe that a dedicated work force of employees committed to keeping this country safe can be demoralized by attempts to fulfill misguided political agendas to impose pay-for-performance. We believe that DOD cannot promise that it will adequately fund a pay-for-performance system into the future because it does not control its budgets. DOD, like other federal agencies, depends upon Congress for its appropriations. Even if it wanted to, today’s Congress cannot bind future Congresses to adequately fund a pay-for-performance system. An inadequately funded pay-for-performance system is almost guaranteed to create work place tensions, disruptions, and inequities that this nation simply cannot afford in these dangerous times.

When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin. We recommend that the decisions discussed in this section be determined through collective bargaining for bargaining unit employees.

§9901.343 - Pay reduction based on unacceptable performance and/or conduct

The proposed regulations say that a pay reduction for unacceptable performance or conduct, essentially a demotion, may be no more than 10% for a within-band reduction. The proposal does allow for a greater reduction if the employee is being demoted to a lower band and the maximum rate of that band is more than 10% lower than the employee’s current rate of pay. We agree that there must be limits to a reduction in pay. We would have less concern if we believed that the adverse action procedures and methods for challenging performance ratings that are proposed in these regulations were adequate. When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin. We recommend that the decisions discussed in this section be determined through collective bargaining for bargaining unit employees.

§9901.344 Other performance payments.

(a) The proposed regulations say that there will be implementing issuances describing how authorized officials can give some employees or teams extraordinary performance increases (EPI).

(b) These payments will be in addition to performance payouts under §9901.342 and the future performance of the employee will be expected to continue at an extraordinarily high level. Or what? We assume that an EPI is an increase to basic pay, but the regulations don’t say that.

We do not fully understand the need for these special increases. Employees are eligible for performance increases and management could ensure that the extraordinary employee gets the highest possible rating and shares. Where will the money for these additional increases be? Will they come out of the performance pay pool or be separately funded? We fear that this could be a license to siphon money from high-performing employees to pay favorites, or cronies, or management "lap dogs" large increases.

When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin. We recommend that the decisions discussed in this section be determined through collective bargaining for bargaining unit employees.

§9901.345 - Treatment of developmental positions

The proposed regulations say that DOD may issue implementing issuances regarding pay increases for developmental positions. We agree that it can make sense to link progression through the Entry and Developmental band to the demonstration of the required competencies, skills and knowledge necessary to advance to the full performance level. This is very similar to the current career ladder system. We also believe that it is very important to set standard timeframes, perhaps call them "Opportunity Points," that move an employee through the band at a pace similar to what a GS employee might expect in a career ladder. Our members have expressed concern that favoritism and cronyism could result in one employee getting the training and assignments needed to demonstrate competency while another is denied or delayed.

When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin. We recommend that the decisions discussed in this section be determined through collective bargaining for bargaining unit employees.

§9901.351 - Setting an employee's starting pay

This section says that, subject to DOD implementing issuances, DOD may set the starting rate of pay for individuals who are newly appointed or reappointed anywhere within the assigned pay band. We believe that any Government employee entering a new DOD pay system, either from another agency or from a non-covered DOD position into a covered position, should receive no reduction in basic pay. When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin. We recommend that the decisions discussed in this section be determined through collective bargaining for bargaining unit employees.

§9901.352 - Setting pay upon reassignment.

This proposed section says that DOD may set pay anywhere within an assigned band when an employee is reassigned voluntarily or involuntarily to a comparable pay band. If the reassignment results in a reduction in pay, that reduction may be no more than 10% and is subject to the adverse action procedures. We agree that there must be limits to a reduction in pay. We would have less concern if we believed that the adverse action procedures and methods for challenging performance ratings that are proposed in these regulations were adequate. When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin. We recommend that the decisions discussed in this section be determined through collective bargaining for bargaining unit employees.

§9901.353 - Setting Pay Upon Promotion

This section says that, subject to DOD implementing issuances, DOD may set pay anywhere within the assigned pay band when an employee is promoted to a position in a higher pay band. The supplemental information ("Pay Administration" page 7561) states:

First, what is the magic percent of an employee’s pay that will be roughly equivalent to a higher grade within the GS system? It is impossible for us to comment without this most basic of facts. Second, what is a "cluster"? We assume you mean "career group." In order to be credible and acceptable to employees, the new DOD pay system must leave employees at least as well off as they would have been had the NSPS not been created.

When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin to develop the system. Upon implementation of the system, DOD is required to engage in collective bargaining for the ongoing decisions addressed in this section.

§9701.354 - Setting pay upon reduction in band.

(a) The proposed regulations say that DOD may set pay anywhere within the band when an employee is reduced in band, either voluntarily or involuntarily, subject to pay retention provisions.

(b) Subject to adverse action procedures, DOD may assign an employee to a lower pay band and reduce his or her pay for unacceptable performance or conduct. The reduction may not be more than 10% unless more is required to bring the employee to the top of the lower band.

(c) DOD will issue issuances covering reductions in pay for employees involuntarily reduced for other than adverse actions, such as terminations or temporary promotions.

We agree that there must be limits to a reduction in pay. We would have less concern if we believed that the adverse action procedures and methods for challenging performance ratings that are proposed in these regulations were adequate.

When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin. We recommend that the decisions discussed in this section be determined through collective bargaining for bargaining unit employees.

§9901.355 - Pay retention

The proposed regulations say that DOD will issue issuances regarding pay retention. When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin. We recommend that the decisions discussed in this section be determined through collective bargaining for bargaining unit employees.

§9901.356 - Miscellaneous

While we have no specific objections to any of these provisions, we recommend that the decisions discussed in this section be determined through collective bargaining for bargaining unit employees. When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin.

§ 9901.361 - General

This section says that DOD will issue implementing issuances regarding additional payments for several categories of work and employees that currently receive premium pay. Employees under NSPS should receive at least as much in the way of premium pay as non-NSPS employees – they should not be disadvantaged by their coverage under NSPS. When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin. We recommend that the decisions discussed in this section be determined through collective bargaining for bargaining unit employees.

§9901.371 - General

While it is essential that provisions such as those in §§ 9901.372-373 be part of any set of regulations governing the DOD pay system, without the significant details such as the rate ranges, pay bands, and career groups, it is impossible to make complete comments. When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin. We recommend that the decisions discussed in this section be determined through collective bargaining for bargaining unit employees.

§9901.372 - Creating Initial Pay Ranges

This section merely states that DOD will set the initial band rate ranges for the NSPS pay system. When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin. We recommend that the decisions discussed in this section be determined through collective bargaining for bargaining unit employees.

§9901.373 - Conversion of Employees to the NSPS Pay System

We agree that employees who are converted to NSPS should suffer no reduction in their rate of pay. We also believe that employees, who have already served some portion of their waiting period for their next within-grade increase or career ladder promotion, should receive prorated amounts of these increases as part of basic pay. This should not be left to the Secretary’s discretion. When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin. We recommend that the decisions discussed in this section be determined through collective bargaining for bargaining unit employees.

The proposed regulations suggest elements of a system that promises to be complex, confusing, constantly fluctuating, and lacking in credibility for employees. DOD employees have been told this will be a system that will reward them for their performance. In reality, the system sketched out in the proposed regulations might give an employee, let’s say even an outstanding performer, a small or large performance payout depending upon how much money is in that employee’s pay pool, how many shares his or her supervisor assigns, how many other superior ratings are given employees in the pay pool, and what the pay pool manager and panel ultimately determine. That same employee may be in a band that gets little or no annual increase because DOD determines that the minimum rate of the band should have little or no adjustment. Our outstanding employee might be in a career group, or pay band in a career group that DOD determines is overpaid in the local market and so gets no local market supplement, while other co-workers in the same local area might get those supplements.

Our outstanding employee may get a small or large performance payout due to circumstances beyond his or her control. That employee may get little or no annual increase due to circumstances beyond his or her control. And, that employee may or may not get a local market supplement due to circumstances beyond his or her control. NSPS will demoralize employees, create instability in their compensation that makes it difficult for them to plan for their future, foster inequities, and make it hard to attract and keep the talent this nation needs for its defense.

In its rhetoric, DOD paints NSPS as a "modern, flexible and agile human resource system that can be more responsive to the national security environment, while enhancing employee involvement, protections and benefits." We believe the proposed NSPS is regressive, rather than modern, and so complex as to call into question how flexible and agile it can be. And, in almost every section of these proposed regulations, employees lose – they lose pay stability; employment stability; protections from erroneous, discriminatory, or vengeful management actions; and a meaningful voice in their work place through collective bargaining.

We are concerned that the broad discretion provided supervisors and other management officials under Subpart D of the proposed regulations, particularly as it pertains to evaluating employee behavior, may result in retaliatory actions taken against Department employees who form or participate in labor organizations. As set forth in the preamble of the proposed rule:

70 Fed. Reg. at 7562 (emphasis Added).

The Federal Labor Relations Authority has long acknowledged that the freedom of union representatives and activists to speak freely in the workplace and to engage in robust debate with management officials and supervisors is central to the effective representation of employees. See Veterans Administration Medical Center, Bath, New York and American Fed’n. of Gov’t. Employees Local 491, 12 FLRA 552, 576 (1983) (noting that "when an employee who is also a Union official is acting in an official capacity as a union official, he is entitled to greater latitude in speech and action"); see also Internal Revenue Service and Nat’l Treasury Employees Union, 6 FLRA 96, 106 (1981) (finding that an employee’s right to engage in protected activity permits leeway for impulsive behavior, balanced against the employer’s right to maintain order and respect for its supervisory staff on the job site, and that to remove conduct from the ambit of protected activity, the employee must have engaged in flagrant misconduct); Internal Revenue Service, North Atlantic Service Center, and Nat’l Treasury Employees Union, Local 69, 7 FLRA 596, 603 - 604 (1982) (finding that inclusion of insulting and derogatory references to management officials in the context of specific complaints does not remove union literature from protection); Dep’t of Air Force, Grissom Air Force Base and American Fed’n of Gov’t Employees, 51 FLRA 7 (1995) (holding that management improperly suspended a union official who used vulgar language toward a management representative after the union representative was angered by what he thought was an unjustified change in management’s negotiating tactics); Dep’t of Navy, Naval Facilities Engineering Command, San Bruno, CA and Nat’l Fed’n of Fed’l Employees, Local 2096, 45 FLRA 138, 155 (1992) (holding that a union representative has the right to use "intemperate, abusive, or insulting language without fear of restraint or penalty" if he or she believes such rhetoric to be an effective means to make the union’s point).

The proposed regulations fail to address what constitutes acceptable employee behavior and conduct for purposes of performance management, instead providing supervisors and other management officials with unfettered discretion to make ad hoc determinations without specific guidance from objective regulations and without allowing employees to hold managers accountable for abuse of the new system. We therefore recommend that the introduction to Subpart D, "Performance and Behavior Accountability," be revised to include the following language: "Union representatives and bargaining unit employees shall not be negatively appraised for ‘poor behavior or misconduct’ to the extent that the behavior or conduct appraised is related to the exercise of their rights to organize, bargain collectively, participate in a labor organization of their choosing, and engage in other representational activities."

We object to the waiver of 5 U.S.C. chapter 43 and 5 CFR part 430, which provide important criteria, standards and procedures governing the performance management system. DOD has provided no evidence that there is a compelling need to "waive" these provisions, which have long protected employees from arbitrary and unfair treatment in the evaluation of their job performance. Waiving the standards and criteria set forth in 5 U.S.C. chapter 43 and 5 CFR part 430 will not promote greater "flexibility" and efficiency, as intended by the drafters of the proposed regulations. Rather, the proposed performance management system will lead to greater uncertainty among DOD employees about supervisor and management performance expectations, which will result in workplace disruptions, confusion, lowered employee morale and, ultimately, organizational inefficiencies and performance deficiencies.

The Department asserts that its proposed rule "builds in the flexibility to modify, amend, and change performance and behavioral expectations during the course of a performance year . . . "70 Fed. Reg. at 7561. Such ad hoc modifications, amendments and changes to performance and behavioral expectations during the course of a performance year will make it difficult for employees to understand the criteria upon which they are being rated. As a result, fewer employees will be able to meet the performance and behavioral expectations of their supervisors and other management officials.

The Merit Systems Protection Board and the federal courts have long recognized the importance of objectivity and foreseeability in the application of performance standards, to enable affected employees to understand the criteria upon which they are to be evaluated. See, e.g., Melnick v. Dep’t of Housing and Urban Development, 42 MSPR 93, 98 (1989) ("standards may be more or less objective depending upon the job measured, but must be sufficiently specific to provide a firm benchmark toward which the employee must aim her performance"); Smith v. Dep’t of Energy, 49 MSPR 110 (1991) (finding that the agency failed to properly explain a performance standard that was inappropriately vague and that therefore the agency failed to present substantial evidence that, in practice and/or by the agency instruction, the employee was on notice as to what performance was required to achieve the marginal level); O’Neal v. Dep’t of Army, 47 MSPR 433 (1991) (holding agency’s performance standard was impermissibly vague and that the agency failed to prove that it had given content and specificity to the standard in its communications with appellant); Callaway v. Dep’t of Army, 23 MSPR 592, 601 (1984) (discouraging the use of performance standards to measure traits such as dependability, interest, reliability, and initiative, unless such traits are clearly job-related and capable of being documented and measured).

In accordance with the NSPS law, the actual planning, development, and implementation of, or future adjustments to the NSPS must be done through the collaboration process described in §9902(f), not through internal, unilateral issuances. We recommend that the performance management system developed through collaboration, inasmuch as it will take DOD out of the government-wide system and give it discretion for determinations vital to employees, be a system that uses collective bargaining for ongoing performance decisions for bargaining unit employees.

The performance management system proposed in this section has not been defined, so there is no way to determine if it will be a fair, effective and credible process. This process should have been defined in these regulations.

When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin to develop the system. Upon implementation of the system, DOD is required to engage in collective bargaining for the ongoing decisions addressed in this section.

A system without a fair and credible performance management procedure will be rejected by employees, and will result in distrust of management, decreased morale, and lower productivity, ultimately harming national security.

We recommend that subsection (a) be modified to add the following: "Performance expectations must, to the maximum extent feasible, permit the accurate evaluation of job performance based on objective criteria." This recommendation incorporates a current requirement for performance standards under 5 U.S.C. 4302(b)(1).

We recommend that the first sentence of subsection (b) be modified to read as follows: "Performance expectations will be provided to employees in writing and discussed with employees at the beginning of the rating period. When performance expectations are amended, modified or clarified, such additions, modifications or clarifications must be captured in writing and provided to affected employees within a reasonable time period."

The proposed regulations are seriously flawed in that they do not appear to require that performance expectations be provided to employees in writing. While it may be true that performance expectations can take many forms, some of which may already be set forth in existing standard operating procedures, regulations or manuals, there should never be a need to rely on performance expectations that are not provided in writing.

To the extent that performance expectations are only conveyed orally, and not provided in writing, this loose process will likely lead to a great number of misunderstandings and disputes between supervisors and employees as to how the expectation was expressed or understood, or whether it was even expressed as a performance expectation. If only as a means of self-protection, employees are likely to want to memorialize these conversations in a written document, and seek the supervisors' confirmation of the accuracy of this account, so there is not likely to be a reduction in paperwork or an increase in efficiency through adoption of these more "flexible" performance standards. Supervisors should be trained to expect these inquiries, and to understand the importance of timely responding to them.

Fairness requires that all performance expectations be clearly communicated to employees in advance, and some form of written document or instruction is the most efficient and effective way to convey these expectations. To the greatest extent possible, we should try to keep performance management (and pay determinations based on performance) from being a game of "he said/she said." Subsection (b), unless modified, will only foster such disputes. We expect to negotiate over procedures that communicate performance expectations for bargaining unit employees.

We recommend that subsection (c) be modified to add the following:

"Supervisor and managers are always accountable for demonstrating professionalism and standards of appropriate conduct and behavior, such as civility and respect for others. Supervisors and managers must set the standard of behavior for employees to follow. Therefore, professionalism, civility, respect for others, and similar exemplary behavior will be an absolute requirement for management, and will directly impact their performance ratings and pay."

This language is necessary to ensure that the language set forth in subsection (b) specifying these behavioral and conduct requirements for employees is clearly applied to supervisors and managers as well, recognizing the need for management to set the standard for conduct in the workplace.

We recommend that subsection (e) be modified to read as follows: "Supervisors must involve employees, and their exclusive representatives, insofar as practicable, in the development of their performance expectations. In this regard, supervisors shall solicit input and feedback from employees as to the appropriate performance expectations for each position, and shall fully consider such input and discuss it with the affected employee(s). However, final decisions regarding performance expectations are within the discretion of the agency, subject to the requirement that performance expectations for employees in the same occupational series and pay band will be equivalent or comparable. Employees will not be held responsible for performance expectations unless and until they have been clearly and expressly communicated by management."

These recommended changes will provide an appropriate level of employee involvement in developing performance expectations. The change in the last quoted sentence recognizes the agency’s authority to assign work and identify associated performance expectations, while at the same time ensuring fairness and eliminating possible favoritism in the development and application of performance expectations. This is especially important if/when evaluation of employee performance against these expectations is used as a determining factor in providing pay increases. To ensure fairness and credibility, the bar needs to be set at the same level for all employees in the same occupational group and pay band, so that all employees have an equal chance to earn performance-based pay increases.

We recommend that supervisors be required to meet with the employees they supervise at the beginning of the appraisal period and at scheduled times thereafter during the appraisal period. At these meetings, performance expectations must be communicated. We also recommend that, should priorities or expectations change during the appraisal year, such new priorities and expectations be communicated to employees pursuant to collectively bargained procedures.

"Periodic" feedback, as proposed in the regulations, is not sufficient, as it is too amorphous and allows large gaps of time and numerous instances of performance between periodic updates. Regular, ongoing, and timely feedback on performance is not only the most effective way to properly manage employee performance, but it is the only fair and credible way to do so when the results are being used as a central component of the Department’s pay system. Procedures for monitoring performance should be negotiated with the unions.

The procedures that supervisors will use to develop employee performance and address poor performance have not been defined, so there is no way to determine if they will be fair, effective and credible to employees. This process should have been defined in these regulations to allow for a meaningful review and comment period, as required by law.

When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin to develop the system. Upon implementation of the system, DOD is required to engage in collective bargaining for the ongoing decisions addressed in this section.

A system without a fair and credible performance management procedure will be rejected by employees, and will result in distrust of management, decreased morale, and lower productivity, ultimately harming national security.

We recommend that a subsection (b)(3) be added, which would read as follows: "An employee will be provided a reasonable opportunity to improve performance before an adverse action is proposed or initiated, except in the most extreme case of a performance deficiency which endangers national security or the safety of personnel." Adopting this language preserves the protections afforded employees under 5 U.S.C. chapter 43 and Merit Systems Protection Board precedent. See, e.g., Betters v. Federal Emergency Management Agency, 57 MSPR 405 (1993) (reversing a removal action on the basis of the agency’s failure to provide the employee with a reasonable opportunity to improve); Gromley v. Dep’t of Navy, 48 MSPR 181 (1991) (same).

Giving supervisors the authority to take actions ranging from remedial training to such drastic measures as adverse actions and demotions, without providing specific criteria to make such decisions, is unfair to employees and supervisors. Only fair and effective rules prescribing appropriate actions to be taken by management to address poor performance will be accepted by employees. Otherwise, the resulting distrust of management and decreased morale and productivity will harm national security.

When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin to develop the system. Upon implementation of the system, DOD is required to engage in collective bargaining for the ongoing decisions addressed in this section.

The multi-level rating system proposed in this subsection has not been defined, so there is no way to determine if it will be an effective and appropriate process to rate employees. This rating system should have been defined in these regulations to allow for a meaningful review and comment period, as required by law.

When DOD does develop regulations and policies for the matters discussed in this section, the statutory collaboration process should begin to develop the system. Upon implementation of the system, DOD is required to engage in collective bargaining for the ongoing decisions addressed in this section.

A process without a fair and cr