The 1,217 members of the Senior Executive Service in the Defense Department are at risk of falling behind on pay raises.
Other large departments -- including Homeland Security, Health and Human Services and Veterans Affairs -- have won approval of new SES performance standards required by a 2003 law and offer salaries as high as $162,100.
But not the Pentagon. Defense career executives can earn no more than $149,200 until the department obtains provisional certification of its performance management system. The Pentagon hopes that will happen this month -- more than a year after most large agencies got their new SES systems approved by the Office of Personnel Management.
Certification of the new performance pay system, however, will not lead to quick raises for most Defense executives. Defense officials expect to make performance pay decisions after Sept. 30, 2006, and perhaps as late as December 2006.
Defense executives also cannot assume that they will share in the January pay raise that goes to all federal employees. SES members could receive a raise of 2.6 percent in January, but the raise hinges on their performance and contribution to the agency's performance.
Until Congress changed the law on SES pay, senior executives were guaranteed the same pay raise each year. Now, raises are left to agency discretion, and executives do not receive locality pay.
The Pentagon's rollout of performance pay for a relatively small number of career executives seems likely to raise questions about whether the department can set pay in a timely manner for hundreds of thousands of rank-and-file employees. Starting this year, Defense plans to convert its first wave of employees to a personnel system that, much like the SES system, emphasizes more rigorous job performance standards.
The Pentagon experience also might shape perceptions on Capitol Hill about the Bush administration's proposal to spread the concept of performance-based pay throughout government. Agencies converting to pay-for-performance would be required to undergo OPM certification, according to the administration.
A House federal workforce subcommittee hearing, chaired by Rep. Jon Porter (R-Nev.), has been scheduled for today on the administration's government-wide plan. Sen. George V. Voinovich (R-Ohio), chairman of the Senate federal workforce subcommittee, has announced plans for a hearing on OPM's ability to oversee systemic change.
"We don't understand why DOD didn't apply for certification last year, and we don't understand why it has not been possible for DOD and OPM to reach a point this year where the department's system could be certified," said Carol A. Bonosaro, president of the Senior Executives Association.
She called it "unacceptable" that about 20 percent of all senior executives in government "are still left in limbo in DOD, unable to benefit from the new system."
William L. Bransford, general counsel at the association, called Defense's failure to obtain certification "representative of the disparity and delay that has occurred throughout government with the implementation of the new SES pay system. This disparity and delay threatens the acceptance and credibility of the SES pay system at the agency that has the largest contingent of senior executives."
A Pentagon spokeswoman said OPM approved the design of the new Defense system in April. But in August, after the department submitted a sample of 2005 performance plans, OPM said it wanted improvements in two of six performance management areas, the spokeswoman said.
The OPM notification came just weeks before Sept. 30, the end of the performance rating cycle at Defense, the spokeswoman said.
As a result, the spokeswoman said, the Pentagon decided not to revise the performance plans of SES members because the modifications could have resulted in changes in their performance expectations.
At OPM, a spokeswoman said the agency would have no comment on the Pentagon's effort to seek provisional certification of its new management system.
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