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Bush Aims to Expand System of Merit Pay
Unions Criticize Plan Based on DHS Model

By Christopher Lee
Washington Post Staff Writer
Tuesday, July 19, 2005

The administration wants to abolish the General Schedule pay system by 2010 and require that at least part of every pay raise for the government's 1.8 million civilian employees hinge on an annual performance evaluation, President Bush's top management guru said yesterday.

Clay Johnson III, a deputy director of the Office of Management and Budget, laid out a proposal to expand government-wide the kind of pay-for-performance systems being implemented at the departments of Defense and Homeland Security as part of the recent restructuring of civil service rules at those agencies.

"The federal government, as a rule, is pretty bad about managing people," Johnson said yesterday in a meeting with Washington Post reporters and editors. "We tend to treat people and manage our people as if they are bureaucrats. 'They are all the same, let's treat them all the same.' The goal is to treat them, and to think of them, as professional public servants, not as bureaucrats. . . . Until we can tie some small portion of pay to it, it will never happen."

The administration's draft bill, which it is circulating on Capitol Hill, was criticized by federal employee unions. They have complained that the changes at DHS and Defense undermine employee rights and strengthen the hand of political appointees.

The proposal "is meant to erode federal pay and future retirement security for middle-class federal workers over time," said Brian DeWyngaert, chief of staff to John Gage, president of the American Federation of Government Employees. "They have no data whatsoever to indicate that this will improve organizational performance."

Bush officials argue that the civil service system rewards employees for longevity rather than performance. White House officials signaled earlier this year that they would ask Congress to grant all agencies authority to rewrite their civil service rules along the lines of the changes taking place at DHS and Defense. Those changes have included new curbs on the powers of federal unions and worker appeals, and they will be phased in over the next several years.

The administration's initiative faces significant hurdles on Capitol Hill. Key lawmakers have said the White House should not consider such broad measures until results are in from Homeland Security and Defense. The congressional calendar this year also is crowded with potential changes to Social Security, military base closures and at least one Supreme Court nomination.

The Government Accountability Office also has said that many agencies are not ready to carry out meaningful evaluations of their employees, a crucial component of the proposed system.

But Johnson said many agencies are ready and the government-wide changes would be easier to implement because they deal chiefly with revamping the pay system.

"This is not DOD and DHS," he said. "This is not significant changes in collective bargaining. It's not significant changes in adverse actions and appeals process, which is the controversial part."

Under the proposed system, to be tailored to each agency, Congress would continue to authorize an average pay raise for all employees that varies slightly by the geographic area in which they work. But the raise also would vary by occupation, reflecting labor-market realities that workers in some jobs are harder to hire and retain than are others, Johnson said. The General Schedule, the decades-old 15-grade pay system, would be replaced by broad salary ranges known as pay bands, making it easier for federal managers to offer higher starting salaries to talented newcomers and to give employees pay raises without necessarily giving them a promotion.

Gone would be within-grade increases and step increases, elements of the current system that move employees up the salary scale the longer they remain in their jobs. That money would be redirected to raises based on annual performance evaluations, but it was unclear how much of an employee's overall pay raise it would account for.

The proposal would retain the Merit Systems Protection Board in hearing employees' appeals of disciplinary actions, and the Federal Labor Relations Authority in resolving labor disputes, but would craft a faster process for both. It also wouldremove requirements that management bargain with unions in preparing for emergencies, making minor changes in working conditions and crafting pay-for-performance rules.

Agencies would have to submit plans for their new personnel systems to the Office of Personnel Management for approval.

Colleen M. Kelley, president of the National Treasury Employees Union, said she had not seen the details of the plan but was skeptical of its value. "I continue to disagree with this rush to take this government-wide," Kelley said. "The agencies are not ready."

House Government Reform Committee Chairman Thomas M. Davis III (R-Va.) has agreed to hold hearings on the proposal, said spokesman Dave Marin. Susan Collins (R-Maine), chairman of the Senate Committee on Homeland Security and Governmental Affairs, and George V. Voinovich (R-Ohio), chairman of the panel's civil service subcommittee, said through spokeswomen that they were reviewing the details of the legislation.

© 2005 The Washington Post Company