Labor group opposes Senate pay-for-performance language

A coalition of 36 labor unions have rejected a Senate provision to repeal the Pentagon's National Security Personnel System, claiming that it wouldn't do enough to ensure that employees are paid fairly.

The language, included in the Senate's 2010 Defense authorization bill (S. 1390), would eliminate the NSPS within a year. But it also would give the Defense Department the opportunity to make the case for improving the pay-for-performance system as long as any new version is "fair, credible and transparent."

"We don't want a refried version of what they've proposed in the NSPS," Byron Charlton, a lobbyist for the American Federation of Labor and Congress of Industrial Organizations and chairman of the United DoD Workers Coalition, told Government Executive. The United DoD Workers Coalition includes the American Federation of Government Employees.

Charlton sent a Sept. 8 letter to both the House and Senate Armed Services Committees, outlining the coalition's opposition to the proposal.

"The language of the Senate version would result in the same impact as the original language that was in the NSPS plan at its inception in 2003," Charlton wrote. "It does not provide any meaningful congressional involvement, oversight or authority to define 'fair, credible and transparent,' nor does it provide any checks and balances to ensure that DoD will comply with even those vague and subjective terms."

The controversial pay-for-performance system was implemented in 2003, and salary increases are determined by performance reviews. Critics have claimed that it allows for cronyism and discrimination, and the pay pool system used to distribute raises is unfair. A recent study from the Defense Business Board advised the administration to "reconstruct" the NSPS, but labor organizations opposed the recommendation, claiming that the system should be eliminated altogether.

Charlton argues the Senate provision includes loopholes that would keep in place some kind of pay-for-performance system. The language gives the Defense secretary more flexibility to preserve the NSPS by submitting a report "certifying" that its abolition would be detrimental to the department. If the NSPS is dismantled, then the law would give Defense the ability to create a new system in its place, with a "Department of Defense Civilian Incentive Fund," as long as it is "fair, credible and transparent."

Charlton said the provision didn't specify how Congress or the Pentagon would determine whether a new system followed those guidelines.

The letter expressed support for the House version of the 2010 Defense authorization bill (H.R. 2647), which contains similar though not exact language dismantling NSPS within one year. The House provision, however, would convert all current employees under NSPS back to the General Schedule within 12 months, while the Senate version lays the groundwork for the creation of another pay-for-performance system. Both versions of the legislation allow the Defense secretary to defend the system before Congress, if he decides it is necessary to retain. Under the House version, however, Congress would have to pass new legislation to keep NSPS.

In a Sept. 4 report to Congress listing its appeals regarding the 2010 Defense authorization bill, the Pentagon said it opposed both versions of the NSPS repeal language, but prefers the Senate provision over the House proposal. A conference committee is hashing out the differences between the two versions of the legislation.

Among other criticisms, Defense claimed that dismantling the NSPS would create confusion and disruption among the civilian ranks, and could potentially hurt the department's efforts to turn contractors into government employees through insourcing.