New Policy in Place for Civilian Pay Raises at Defense

By Stephen Barr
Friday, January 4, 2008

It's a new year and there's a new pay policy at the Defense Department.

About 100,000 civil service employees covered by a new performance-based pay system will receive 60 percent of the base salary increase that most other government workers get this month, and the remaining 40 percent of their raise will hinge on their job evaluation, defense personnel officials said yesterday.

The pay policy is what Congress prescribed in the fiscal 2008 defense authorization bill, and should clear up confusion in Defense agencies about how to handle pay raises for civilians in the National Security Personnel System, or NSPS.

The department's plans for the NSPS raise snagged late last month when President Bush rejected the bill because of an unrelated issue: Iraq's concerns that some provisions could hinder its redevelopment efforts by entangling the country's assets in court claims by victims of Saddam Hussein.

Pay and other provisions in the bill reflected a House-Senate compromise aimed at ending four years of controversy over the new personnel system, especially its rules on collective bargaining. Congress restored union rights and modified other parts of the NSPS, including its pay policy.

Until that happened, the Pentagon had planned to provide NSPS employees with 50 percent of the government-wide raise for 2008 and then, in subsequent years, phase out across-the-board increases. The goal was to link annual raises to job performance, with the highest ranked workers receiving the biggest raises.

That plan had created angst inside the department, in part because many federal employees see the raise provided by Congress as a cost-of-living adjustment that should be automatically provided every year. Other Defense employees were concerned they might not keep pace with federal workers elsewhere.

Deputy Defense Secretary Gordon England made the decision to change the NSPS pay policy on Monday, officials said.

Most federal employees, covered by the General Schedule, will receive an average raise of 3.5 percent -- a 2.5 percent increase in their base salary and a 1 percent locality pay supplement.

Yesterday, in a Web site posting, officials said NSPS employees will be eligible for a 1.5 percent raise, a 1 percent raise tied to their job performance, and a 1 percent locality pay supplement that will mirror the General Schedule geographic-based payments.

NSPS employees who are rated "unacceptable" by their managers will get no raise and those who are deemed "fair" performers will not be eligible for a performance-based raise, according to the Web posting.

In keeping with the intent of Congress, the pay raises will go into salaries and will count toward retirement credits. NSPS employees remain eligible for bonuses from other funds that have historically been spent on performance-based bonuses, an official said.

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