House approves agreement on Pentagon pay-for-performance, sick leave benefit

The House on Thursday approved the fiscal 2010 Defense authorization conference report containing several provisions affecting federal employees, including one that eliminates the Pentagon's pay-for-performance system.

The conference agreement repeals the law authorizing the National Security Personnel System, and mandates the return of all NSPS employees to their previous pay system by Jan. 1, 2012. It also includes a provision, phased in over a four-year period, that allows workers in the Federal Employees Retirement System to count unused sick leave toward their retirement. In addition, the report contains language that would make it easier for agencies to rehire federal retirees without forcing them to take a cut in their annuity checks, and that moves federal employees who live and work outside the continental United State to the locality pay system,

The Senate could vote on the agreement next week. The two chambers passed their versions of the fiscal 2010 Defense authorization bill this summer and released the conference committee report on Wednesday.

Several lawmakers praised the language axing NSPS.

"This system, as implemented by the Department of Defense, has been a near-total failure, and I support making a fresh start," said Rep. Edolphus Towns, D-N.Y., chairman of the House Oversight and Government Reform Committee.

Bob Tobias, the former National Employee Treasury Union president and member of a task force that called for the reconstruction of NSPS, said the legislation didn't follow the panel's suggestion, but the same result could be achieved.

"We didn't recommend that NSPS be eliminated, but we did recommend that it be significantly changed," Tobias said. "My guess is that they will significantly change it."

The conference report also gives the Defense secretary the ability to propose new personnel flexibilities, but would subject those to congressional approval.

The provision allowing FERS employees to count unused sick time toward their retirement annuity survived because of a compromise the conference committee brokered. Some lawmakers were concerned by the provision's potential price tag, so the final version allows employees to count their sick time but only at 50 percent of its value for the next four years, when more than 180,000 employees are expected to retire, according to projections from the Office of Personnel Management.

"It was a question of compromising, or walking away with nothing," said Daniel Adcock, legislative director of the National Active and Retired Federal Employee Association, which has supported the provision.

"Especially with the current state of the economy, the budget was the biggest obstacle," said Randy Erwin, legislative director for the National Federation of Federal Employees. "Certainly, the way we look at it, we'd like to have the full benefit. In the end, even the people who are retiring in the next four years, that's a benefit they wouldn't have gotten otherwise."

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