June 23, 2009

The House is expected to vote this week on the 2010 defense authorization bill including an amendment that could mean the end of the pay-for-performance system within one year -- a change affecting approximately 200,000 federal employees.

If enacted, the amendment -- which was unanimously approved last week by the House Armed Services Committee --  would:

• restore full nationwide adjustment to those federal employees working under National Security Personnel System (NSPS) -- which is currently 60% vs. 100% for General Schedule (GS); 
• prohibit new hires from being put into NSPS;    
• prohibit any reclassification of positions to NSPS as of June 16, 2009 (DoD has suspended conversion of current DoD employees from GS into NSPS but is continuing to place new employees into NSPS), and   
• mandate that within one year of enactment the Secretary of Defense shall convert all NSPS employees back to the General Schedule.

"NSPS has been a failure," said Congresswoman Carol Shea-Porter, D-N.H., the amendment's sponsor.   "The majority of employees in NSPS prefer the prior system, and numerous studies have shown that the implementation of NSPS has been plagued by inequities in how employees are compensated and rated."

The National Federation of Federal Employees (NFFE) and other unions representing employees in DoD have sought to repeal NSPS since it was first authorized by Congress in 2003.

"Since its implementation, NSPS has dramatically undermined both the strategic interests of the DoD and the wellbeing of its workforce," said NFFE National President Richard N. Brown.  ""With worker morale reaching an unprecedented low, the time has come to abandon this ill-conceived plan, which has wasted billions of taxpayers' dollars."

Many of the employees in NSPS do not believe that the system rates and compensates them fairly for their job performance.  There has also been concern that race is still a factor in NSPS to determine compensation.  FederalTimes.com recently produced an interactive chart which allows readers to use any combination of demographic criteria to find the average rating, pay raise, bonus and total payout for different groups in NSPS.

The Debate Continues

While President Obama has previously stated he wanted to review and even perhaps alter or repeal NSPS, administration officials have also indicated as recently as May 29 that the White House wants to implement a pay-for-performance system for all federal employees.

In today's Washington Post, Federal Diary columnist Joe Davison describes how performance pay for federal employees is still a matter of debate: 

Office of Management and Budget Director Peter Orszag "hinted that current pay-for-performance systems may not survive the Obama administration review in their present form. 'The Administration will not support any pay system that is unfair or has the effect of suppressing wages or discriminating against employees,' Orszag wrote."