NSPS repeal could lead to new performance management system, observers say

The Defense Department's controversial pay-for-performance system is headed for repeal, and there are several ways the dismantling of the National Security Personnel System could proceed, say advocates and employee groups.

The fiscal 2010 Defense authorization legislation, which is on its way to President Obama, requires the Pentagon to begin returning the 200,000 employees covered by NSPS to their previous pay systems within six months of the law's enactment. All affected employees must be back in their previous pay systems by Jan. 1, 2012.

But Robert Tobias, director of the Institute for the Study of Public Policy Implementation at American University, and one of the members of a panel appointed by the Defense Business Board to study NSPS this summer, said that timeline gave Defense and the Office of Personnel Management six months to come up with a new governmentwide performance evaluation and pay structure. The Defense Business Board report released in August recommended that the Pentagon maintain a commitment to performance management established by NSPS, while also suggesting major overhauls to the system.

The conference report passed by both chambers requires the Defense secretary and OPM director to work together on a new personnel system for Defense. But if they can design a new system before the six-month deadline to begin moving Defense employees into their prior pay systems, the department could simply move them into a new performance management system.

"I don't think it's an impossible time period. I think it can be done. And I think it should be done," Tobias said.

Max Stier, president of the nonprofit Partnership for Public Service, said he hoped the six-month deadline for the transition would give both the Pentagon and OPM a sense of urgency about moving forward with a new comprehensive performance evaluation system.

"Change is already hard, and the transaction costs are huge," Stier said. "There should be a strong premium placed on minimizing the disruptions involved in moving people from system to system. NSPS clearly didn't work, but I don't think the General Schedule does either. Simply settling for the status quo is not an option."

Beth Moten, legislative director for the American Federation of Government Employees, said a new system could be compatible with the General Schedule, and reinvigorate it.

"We believe they could develop a new performance management system that would have a lot of credibility with employees, and [would clarify] what managers need to be doing to encourage the best possible product," she said.

Moten said her union had not received clear guidance from Defense about how a rollback of NSPS would proceed. And Tobias and Stier acknowledged that the six-month timeline was tight for developing a new system. But Moten said repealing NSPS had cleared the air considerably for future discussions about performance management.

"We have been pretty public about our unwillingness to dig into a question of governmentwide performance management until NSPS was killed," she said. "If they weren't going to kill a pay system that was clearly discriminatory, it made it much harder for us to talk to them about anything."