Pentagon's Pay-for-Performance Program Facing Fresh Round of Scrutiny

By Joe Davidson
Tuesday, May 19, 2009

What does Uncle Sam do when he's thrown a hot potato?

He appoints a committee to decide if he should eat it, throw it away or find some other half measure to please diverse constituencies.

The latest example of this is the announcement by the Defense Department and the Office of Personnel Management that they will form a "task group" to review the Pentagon's much-maligned pay-for-performance operation, also known as the National Security Personnel System.

On another front, Dennis C. Blair, director of national intelligence, and James R. Clapper, undersecretary of defense for intelligence, have urged the Obama administration to push ahead with pay-for-performance programs for intelligence agency employees, despite congressional urgings to suspend them. More on that later.

The task group was formed by Deputy Defense Secretary William J. Lynn 3d and Office of Personnel Management Director John Berry. It will function as part of the Defense Business Board, an advisory panel on effective Pentagon management.

The group's recommendations could have a significant impact beyond the Pentagon. NSPS is the signature stamp of the Bush administration on the federal workforce. If it goes under, other government pay-for-performance systems could be endangered.

Lynn and Berry requested the formation of the group "due to recent concerns raised by Congress and the U.S. Government Accountability Office regarding NSPS," says a memo from Lynn to the Business Board.

"Concerns" is a neutral word for what, in reality, were pretty strong criticisms from Congress and the GAO. And those criticisms were muted compared with the stinging rebukes from federal union leaders and many employees under NSPS.

Some of the congressional concerns were outlined in an April 3 letter to Office of Management and Budget Director Peter Orszag from eight House committee and subcommittee chairmen. They told him that GAO "found that employees do not trust these systems to compensate them fairly.

"Many fear that the government has adopted these systems in an attempt to curtail the long-term growth of personnel costs," the letter said. "Employees have complained about discriminatory pay practices in Federal organizations that have moved to these types of systems. The discretion given to managers to set performance metrics and to pay employees accordingly means these systems lack transparency and accountability, and could pose a disparate impact on minorities."

Just yesterday, GAO said the Pentagon "did not have the necessary infrastructure in place" when it implemented NSPS.

Lynn's memo lays out a broad canvas for task group members, allowing them to offer recommendations that range from simply tinkering at the edges to much more dramatic changes.

The abolition of NSPS is the change union leaders would like to see.

"We don't need to study it any more. We've seen enough," said John Gage, president of the American Federation of Government Employees. "It should die."

He said he has urged members of the task group to move expeditiously because the rights of employees "are being trampled" in the meantime.

The task group will be led by Rudy deLeon, senior vice president of the Center for American Progress, a think tank with close ties to the Obama White House; Robert Tobias, an American University professor who is a past president of the National Treasury Employees Union; and Michael Bayer, the Bush administration appointed chairman of the Defense Business Board.

DeLeon said he hopes his group will have its recommendations ready by mid-July. And although as a candidate President Obama said he would "strongly consider a complete repeal" or substantial overhaul of NSPS, deLeon said there is no preconceived outcome for the panel.

Tobias echoed that, even though his former union is an outspoken opponent of pay-for-performance. "I don't know what the facts are going to yield," he said.

Although pay-for-performance programs have many vocal critics, there are others who back them.

Blair and Clapper strongly supported pay-for-performance systems in an April 23 letter to Orszag. They said they want no further delay in implementation of the Defense Civilian Intelligence Personnel System and the National Intelligence Civilian Compensation Program, as Reps. Silvestre Reyes (D-Tex.), chairman of the House Permanent Select Committee on Intelligence, and Ike Skelton (D-Mo.), chairman of the House Armed Services Committee, had urged in March.

Yesterday, Reyes and Skelton said the program should not be implemented until a careful evaluation of it has been completed. "We stand by our position that nothing should be done to advance this system until we receive the results of a thorough review," Skelton said.

Staff writer Eric Yoder and researcher Julie Tate contributed to this report. Contact Joe Davidson at

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