Pentagon cleared to move senior execs to pay-for-performance

The Defense Department announced Monday that it has received a green light to award performance-based raises to its Senior Executive Service members in 2006.

The Office of Personnel Management granted the Pentagon provisional certification of its performance appraisal system for senior executives, allowing the department to raise its SES pay cap from $149,200 to $162,100.

Agencies across the government are dropping the six levels of pay that have been designated for senior executives in favor of a single payband with raises tied to performance evaluations. The switch comes after Congress passed a law eliminating regular cost-of-living adjustments and locality pay for SES members, in favor of pay for performance.

Each agency is required to receive OPM certification of its performance evaluations before implementing the single band.

The Defense Department, which employs 1,217 SES members, is one of the last agencies to receive this certification. In September, OPM Director Linda Springer said that about 5,000 of the 7,000 eligible SES members worked in departments with pay-for-performance certification.

The State Department is now the only Cabinet-level agency without SES performance appraisal certification, according to OPM's count. But, according to a spokesperson for State, the department's performance review cycle is different from other agencies and State is on track to be certified in time for their cycle.

The Pentagon's undersecretary of defense for personnel and readiness, David Chu, said SES certification is key to the success of the National Security Personnel System, which seeks to disband the General Schedule for all civilian Defense employees and replace across-the-board, locality and step increases with performance- and market-based pay raises.

"Provisional certification for the SES pay system ensures that our cadre of senior executives is positioned to lead the way in the department's transformation to a performance-based pay system under the new National Security Personnel System," Chu said.

The department published its final regulations for the NSPS on Nov. 1 and was quickly sued by a coalition of 10 unions attempting to halt the reforms. A judge has set a Jan. 24 court date to hear arguments in the lawsuit.

OPM notified the Pentagon of its SES certification on Nov. 17, stating in a letter that the department received "provisional certification for 2006, because the system, as designed and implemented, complies with the certification requirements."

Agencies that can demonstrate that their current systems meet the standards set by OPM can apply for a two-year full certification, while agencies that have developed systems but haven't yet implemented them can apply for one-year provisional certifications. They can later apply for full certification.

The General Services Administration and the Pension Benefit Guarantee Corporation are the only two agencies with full certification.