DOD’s pay-for-performance system may be near end

Congress is closing the door on the National Security Personnel System (NSPS) in the conference report on the fiscal 2010 National Defense Authorization Act.

NSPS is the pay-for-performance compensation system used by several organizations in the Defense Department. The system consists of a performance management process used to evaluate employees, flexible job classifications and a pay system based on performance.

Labor unions have criticized the program, saying it weakens workplace rights of DOD civilian employees, including the right to collective bargaining.

Lawmakers want the program gone by Jan. 1, 2012, under the terms of the authorization bill. Civilian employees would move to existing personnel systems. About 205,000 of DOD's 865,000 civilian employees are in NSPS. Employees under NSPS will be shifted to the statutory pay system, although an employee’s salary won’t decrease if there is a difference between the pay levels, the report released Oct. 7 states.

However, the report by a conference committee still must clear some hurdles before it becomes law. Both houses of Congress must accept it, and President Barack Obama must sign it.

“By this action, the conferees have declared NSPS to be a failure,” said Colleen Kelley, president of the National Treasury Employees Union. “As long as NSPS was in place there was a danger that such flawed practices could be adopted throughout government.”

As NSPS is ended, the defense authorization bill requires DOD officials to develop more regulations related to performance management and workforce incentives as well as hiring practices and training of supervisors.

Officials from DOD and the Office of Personnel Management recently recommended that the government not abolish NSPS, but instead restructure it by addressing its flaws. They recommended redesigning the system with input from the workforce about how to change the system and how to implement those changes, according to a report released in August.