Beginning in 2012, Defense Department employees no longer will have their pay raises determined by a combination of the evaluation and pay pool distribution system established by the recently repealed National Security Personnel System. While that is a significant change for the 200,000 workers NSPS covers, the law abolishing the system also gives the Pentagon flexibility to modify how it rewards and evaluates employees. Because of that flexibility, even as former NSPS employees return to their previous pay systems, they soon could face a different personnel system.
Last week, when Defense officials tapped career executive John James to unwind NSPS, they also gave him other responsibilities. Those duties include designing a new performance management system, not just for former NSPS employees, but also for the entire Pentagon. That system will not necessarily be tied to pay.
Defense must begin moving former NSPS employees back to their old pay systems within six months of the law's enactment, which is in April. At the time of the law's enactment in October, some analysts predicted that the six-month window could prompt Defense and the Office of Personnel Management to craft a governmentwide pay-for-performance system within that time frame so they could move Defense employees into the new system. But it seems unlikely that, three months into the transition period, a new personnel system will be ready before Pentagon workers begin returning to their old pay systems in April.
The law repealing NSPS does require the Pentagon and OPM to collaborate on a new Defense personnel system and James is tasked with establishing an enterprisewide performance management system. Once that system is in place, Defense employees could receive pay raises in the same way as before, but also go through a rigorous process to assess their performance and to set goals -- similar to the framework under NSPS.
While future pay raises could be less generous than they were under NSPS, Defense is not ignoring exceptional performers. James also is responsible for establishing the DoD Workforce Incentive Fund, a bonus fund created by the fiscal 2010 Defense Authorization Act, which eliminated NSPS. Questions remain about funding, however, and how to award the bonuses.
But the existence of such a fund means that Defense still can provide financial incentives to outstanding performers, even if it can't give them significantly higher base pay raises than employees who do not perform as well.
And there's still the prospect that a governmentwide reform of the federal personnel system could upend the systems NSPS employees return to. Too much time has elapsed for the federal pay landscape to stay as it was pre-NSPS. The truth is, when it comes to federal pay, you can't go home again, no matter how much you want to.