Uncertainty clouds DOD pay plan

Pentagon's new salary rules could create sharper pay differences

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Federal information technology employees might fare better financially under the Defense Department's new pay system than they did under the old system of pay grades. But no one knows for certain if that will be true.

Pentagon officials designed the new system to more closely resemble the way in which businesses pay their employees.

DOD systems engineers, data architects, Web programmers and others with sought-after skills will do well under a system that uses market-based pay rates and salary increases to reward exceptional job performance, said Marjorie Bynum, vice president of workforce issues at the IT Association of America.

"We think that anything that's going to allow a government agency to broaden opportunities for skill development, better identify talent and help employees move up the career ladder is a very good thing," Bynum said.

Others, including officials at employee unions, are less certain that IT workers or managers will be better off under the new pay system. In a competitive labor market, skilled IT employees should be able to count on raises.

But in places such as San Diego, where the IT labor market is tight and DOD has a high employee-retention rate, employees might not receive the same performance raises as workers in other markets under the new plan.

"There is just no assurance that IT people will do any better than they're doing now," said Mark Roth, general counsel at the American Federation of Government Employees (AFGE), which represents 260,000 civilian DOD workers.

One reason for uncertainty about how the new pay system will affect IT employees is a lack of specifics in the regulations for the National Security Personnel System (NSPS).

DOD officials must still work out the details for how pay bands, or broadly defined pay ranges, and other features of the new system will operate. Pay bands will replace the General Schedule pay and job classification system, which DOD officials say lacks flexibility.

Pay bands could lead to sharp disparities in pay for federal employees in similar occupations, Roth said, adding that such situations are found mainly in unhealthy companies.

"A tiered pay system is usually an indication that a company is in trouble and is spiraling downward," he said.

Pay pools are another feature of DOD's new pay system that union officials criticize but Bush administration officials defend. Pay pools refer to the payroll funds that DOD will allocate to reward high-performing employees.

In hundreds of comments that DOD officials received regarding the new pay system, critics said they doubt that DOD will have enough money to put into the pay pools to reward the best performers.

Others said that DOD might be tempted to divert money from pay pools to cover other expenses. Critics said they suspect that most of the pay pool money would go to high- performing supervisors and managers, leaving less for rewarding lower-level high performers.

In response to those criticisms, Navy Secretary Gordon England, senior executive of NSPS, said DOD is taking steps to ensure that pay pool funding is protected and managed fairly.

Roth said he doubts that the new pay system will work, even if DOD wins a lawsuit that AFGE and other unions have filed against it.

"It's going to end up going away much like merit pay did in the 1980s," he said. That's when the government instituted a merit pay system for federal managers, but it never provided adequate funding.

"Managers didn't get bonuses for 10 years, regardless of their evaluations, so finally everyone threw up their hands and said, 'It doesn't work.'"

Winners and losers

The Defense Department's new pay system was designed to reward high-performing employees with higher pay. Here are additional facts about the National Security Personnel System (NSPS).

  • For fiscal 2004 through 2008, DOD will allocate about the same aggregate amount for paying civilian employees as it did before converting to NSPS. The NSPS regulations do not address funding levels beyond 2008.

  • Individual employees are not guaranteed to receive the same pay increases under NSPS that they would have received under the General Schedule systems.

Source: National Security Personnel System regulations

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