SUPPLEMENTARY INFORMATION:

1. Background

OPM approved the Department of Commerce Demonstration Project and published the final plan in the Federal Register on Wednesday, December 24, 1997, Volume 62, Number 247, part II. The project was implemented on March 29, 1998, and modified in the Federal Register on Thursday, September 30, 1999, Volume 64, Number 189 [Notices] [Page 52810-52812]. On February 14, 2003, OPM authorized an extension of the demonstration project to March 28, 2008, to provide time to test and evaluate the large number of innovations implemented under this project.

Table of Contents

I. Executive Summary

II. Basis for Project Plan Modification

III. Changes to the Project Plan

I. Executive Summary

The Department of Commerce Demonstration Project utilizes many features similar to those implemented by the National Institute of Standards and Technology (NIST) Demonstration Project in 1988. The key features of the project involve increased delegation of authority and accountability to line managers, simplified classification and broad banding, pay for performance, hiring and pay-setting flexibilities, and modified reduction-in-force procedures. The DoC project is designed to test whether the innovations of the NIST project, which is now a permanent system, can be successful in other DoC environments. The participating organizations include the Technology Administration, the Bureau of Economic Analysis, the Institute for Telecommunication Sciences, and three units of the National Oceanic and ( printed page 47949) Atmospheric Administration: Office of Oceanic and Atmospheric Research, National Marine Fisheries Service, and the National Environmental Satellite, Data, and Information Service.

II. Basis for Project Plan Modification

There are two types of ratings of record that may be assigned to employees within the DoC Demonstration Project: eligible and unsatisfactory. Eligible is a rating indicating an acceptable level of performance. Unsatisfactory is a rating indicating an unacceptable level of performance.

Currently the demonstration project provides additional service retention credit only to those employees with a rating of record of eligible and whose overall performance score ranks within the top 30 percent of all scores within their pay pool. These employees are credited with 10 years of additional service retention credit in the event of a reduction-in-force. The total additional service retention credit that may be awarded to an employee is based on each of the employee's three most recent annual performance scores received during the 4-year period immediately prior to an established cutoff date. The potential additional service retention credit, therefore, totals 30 years. No additional service retention credit is awarded to employees who have not received a score in the top 30 percent of their pay pool. In accordance with the demonstration project, DoC also does not provide any performance-related retention credit to employees who are hired or transfer into the demonstration project from any other performance appraisal system.

Project evaluations and comments received from employees and employee groups ( e.g., unions) indicate that the current policy of limiting additional service retention credit to employees within the top 30 percent of all scores in their pay pool is unfairly weighted against other employees who have achieved an acceptable level of performance but who did not score within the top 30 percent.

To address this issue, the DoC Departmental Personnel Management Board (DPMB) has approved a modification to the project plan to provide additional service retention credit to all employees rated eligible within the demonstration project, even if their scores do not fall within the top 30 percent of their pay pool. All employees rated eligible, other than the top 30 percent, will be awarded an additional 5 years of service retention credit for each eligible rating of record in the event of a reduction-in-force. The total additional service retention credit that may be awarded to an employee is based on each of the employee's three most recent annual performance scores received during the 4-year period immediately prior to an established cutoff date.

The Department of Commerce plans to expand the demonstration project to include other organizations within the Department. Various officials expressed concern that the current policy places new employees at a disadvantage because no prior performance-related retention credit is permitted. In response to these concerns, the DPMB approved a new policy of awarding performance-related retention credit for Federal employees who are hired or transfer into the demonstration project.

III. Changes to the Project Plan

The following discussion refers readers to the substantive changes to the project plan. The referenced page number refers to the page in the final plan, published in the Federal Register on December 24, 1997, and the notice of modification to that plan published in the Federal Register on September 30, 1999.

Page 67451. Replace Paragraph C.3 “Link between Performance and Retention” in its entirety as follows: An employee rated eligible with an overall performance score within the top 30 percent of scores within a pay pool (See Performance Evaluation and Rewards) will be credited with 10 additional years of service for retention credit. An employee rated eligible with an overall performance score that does not fall within the top 30 percent of scores within a pay pool will be credited with 5 additional years of service for retention credit. The total credit will be based on the employee's three most recent annual performance scores received during the 4-year period prior to an established cutoff date.

Employees who convert to this system from any other performance appraisal system within the Federal Government will receive 5 additional years of service for retention credit for each performance rating of record equivalent to an eligible rating in the demonstration project. Just as with other employees in the project, the total credit will be based on the employee's three most recent annual performance scores received during the 4-year period prior to an established cutoff date. Career status and veteran preference will continue to have the same effect on retention standing as they now have under current regulations.