Pentagon performance management transition faulted

The Defense Department does not have a clear plan for evaluating the performance of employees transitioned out of the controversial National Security Personnel System, according to a new audit.

In a report issued on Thursday to the House Armed Services Committee, the Government Accountability Office found that the Pentagon has failed to set clear goals or a timeline for developing a new performance management system to replace NSPS, the George W. Bush administration's merit-based pay system that was repealed through a provision in the fiscal 2010 Defense authorization law. Defense has begun working with unions to design a new system, but officials told GAO that plans still are in the early stages.

"We agree that it may be too early to define what DoD's final goals are for a new performance management system; however, by not having interim goals and a timeline that are linked to funding, DoD is not positioned to determine whether it is making progress or if resources are appropriate for the near-term efforts," wrote Brenda Farrell, director of defense capabilities and management issues at GAO.

According to the report, Defense also has failed to track costs associated with the termination of NSPS, thus limiting Congress's ability to track progress. The department estimated that the transition would cost $238.6 million in fiscal 2011 but did not provide documentation to support that number, GAO said. The audit also found inconsistencies in cost data.

Matt Biggs, legislative and political director at the International Federation of Professional and Technical Engineers, said Defense deserves credit for making the transition out of NSPS as smooth as possible. The department early on failed to account for the cost of NSPS' creation, which was in part intentional but also a result of insufficient tracking, he said, noting that GAO's findings are not surprising.

"I don't think the failure to track costs for this post-NSPS transition has anything to do with malfeasance, but is merely reflective of a larger problem at the DoD to properly account for how much this is costing," Biggs said. "It is a larger problem over there that screams for more scrutiny from Congress, particularly in these very tight budgetary years."

In its response to a draft of the report, Defense agreed in part with GAO's recommendations that it improve documentation of transition costs and develop a plan for the new performance management system. It noted it will develop detailed goals and timelines in the future.

Congress last year repealed NSPS and gave the department until Jan. 1, 2012, to roll back the pay-for-performance system completely. Defense transferred nearly 172,000 employees, or 76 percent, back to the General Schedule in fiscal 2010, in keeping with department estimates. As of April 22, 197,547 employees have transitioned out of NSPS.