Pentagon limits executives’ pay raises

Pentagon officials are reducing the pool of money available for performance-based awards for senior executives, in a move that has disheartened the advocacy group that represents the executives.

Deputy Defense Secretary Gordon England sent a memorandum in October capping the amount for raises and bonuses at 10 percent of the payroll for Senior Executive Service employees. Officials can raise this to 12 percent if necessary. During the last cycle, the limit was 15 percent. But England said a "significant portion of the performance budget was not spent."

Bert Subrin, agency liaison for the Senior Executives Association, a nonprofit professional association that advocates for members of the SES, said this might have been because the Defense Department failed to receive certification on its executive pay-for-performance system in time for the last round of raises.

Until the Office of Personnel Management and Office of Management and Budget certify agencies as able to properly assess SES employees under the new evaluation schemes, they cannot give executives achievement-based raises or increase caps on their pay. Congress instituted this requirement when it moved senior executives onto a pay-for-performance scheme in November 2003.

"We were surprised and disappointed that DoD decided to shrink the size of its pay pool," Subrin said. "With this decision, DoD missed an excellent opportunity to allow its executives' compensation to catch up to that enjoyed by their counterparts."

In his memo, England said that since the department's executive performance system has been certified, it now will be able to raise its executive pay cap, which should "help relieve some of the long-standing pay compression for executives who may be at or near the top of the pay range." But he warned that officials "must exercise discipline to avoid a rush to the new pay cap," prompting the decrease in available funds.

Meanwhile, Defense executives are ushering in a series of new performance-based compensation systems for the employees they manage.

The biggest of those -- the National Security Personnel System -- is designed to cover all 700,000 civilian employees at the department. Much of it was delayed by a labor union lawsuit, but the first 11,000 nonbargaining unit employees to enter are receiving their first NSPS paychecks this month.

The first payout will look exactly like it does under the General Schedule, however, with 1.7 percent in across-the-board raises and an average 0.5 percent locality raise. Employees need only be rated above "unacceptable" to receive the raises in this first go-round. The Pentagon also adjusted the ranges of its new pay bands by 1.7 percent.

The new pay ranges are posted on a Defense Department Web site.