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.

About 30,000 Defense employees who have been converted to the new system in recent months and do not have a final job rating will receive the equivalent of the General Schedule raise, the NSPS posting said.


Mick Blair, an assistant director at the Government Accountability Office specializing in health care issues, retired Jan. 3 after almost 35 years at GAO.

Cecelia Livingston, a housing program specialist at the Department of Housing and Urban Development, retired Jan. 3 after more than 40 years at HUD. She worked in the Office of Public and Indian Housing and worked on Hurricane Katrina recovery and relief efforts.

William R. Molzahn, deputy general counsel at the Navy, retired Jan. 3 after 33 years of federal service. He was the Navy's senior career lawyer, helping oversee more than 600 Navy civilian and military lawyers, and received several honors, including presidential rank awards.

Betty Perloff, a supervisory nutritionist at the Agriculture Department's Food Surveys Research Group, retired Jan. 3 after 41 years of federal service. Her work included monitoring the diets of Americans and providing data to guide food and nutrition policies and programs.

Daliza Salas, director of human resources at the Labor Department, retired Jan. 3 after 32 years of federal service. She helped streamline the department's performance management system and led efforts to update the department's personnel operations.

Talk Shows

Ross O. Swimmer, special trustee for American Indians at the Interior Department, will be the guest on "FEDtalk" at 11 a.m. today on and WFED radio (1050 AM).

Marcus Peacock, deputy administrator at the Environmental Protection Agency, will be the guest on the IBM "Business of Government Hour" at 9 a.m. Saturday on WJFK radio (106.7 FM).

Stephen Barr's e-mail address is

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