Administration continues quest to tie pay to performance across government

The Bush administration is pushing ahead with its plan to reform the personnel system for all federal workers, releasing an updated draft of legislation Tuesday that would do so.

The Office of Management and Budget released a draft of the Working for America Act, previously known as the 2005 Civil Service Modernization Act of 2005. Government Executive obtained an earlier draft of the proposal in June.

On Tuesday, Clay Johnson, deputy director for management at the Office of Management and Budget, said there was "lots of misunderstanding" surrounding the previous draft.

For one thing, Johnson said it was a misconception that the bill would simply take the new Defense and Homeland Security departments' personnel systems and apply them governmentwide. Johnson said that agencies other than Defense and DHS "don't have the same need for urgent action" in their decision-making and so would not need to curtail unions' collective bargaining rights.

For that reason, Johnson said the government should not wait to see how the implementation of those two systems play out before enacting governmentwide reforms, as some members of Congress have suggested. He gave the examples of the Labor and Health and Human Services departments as agencies "better equipped" to handle personnel changes sooner than the Pentagon or DHS.

A major pillar of both drafts is replacing the General Schedule pay structure with a pay-for-performance system phased in by 2010. But Johnson called the term "pay-for-performance" an "incorrect shorthand." He said that unlike the systems at the Pentagon and DHS, agencies will not be allowed to implement such merit-based pay systems until the Office of Personnel Management certifies the agency as capable of doing so.

The new draft legislation replaces Title II of the bill's title "Pay For Performance" with the title "Results-Driven, Market-Based Compensation." However, it retains the phrase -- "the core compensation system is designed to provide contemporary and flexible position classification and performance-based pay" -- almost verbatim to describe the system, as well as much of the other language defining it.

The National Treasury Employees Union, which represents about 150,000 federal workers, called the proposed legislation "counterproductive and fatally flawed." In a statement released Tuesday, NTEU President Colleen Kelley challenged the idea that the proposed reforms are substantially different from the new DHS system.

"The broad pay proposal the administration wants to impose would largely mimic that which has been suggested for DHS," Kelley said. She said NTEU is "strenuously opposed to expanding this still unproven system."

Despite OMB's assertion that collective bargaining rights will not be significantly altered, Kelley said the proposal includes "serious restrictions on collective bargain as it exists today, and there is absolutely no need for any of it because these agencies are not Homeland Security or Defense."

Johnson stressed that employees' job performance would only affect one part of their annual pay increase and would not be a factor in national and locality-based salary adjustments passed by Congress each year, except for employees who receive a rating of "less than fully successful." The only part of the pay raise that would be tied to performance is the approximately 2 percent of federal spending on salary increases each year that is devoted to step increases in the GS system.

The legislation will be available online starting tomorrow, according to an OMB spokesperson. Johnson said he would wait to get the bill introduced in Congress until "people have time to turn attention to this," but hoped to get it done during the 109th Congress.