Course Correction

In March, Sen. Carl Levin, D-Mich., arrived late for a hearing of the Senate Armed Services Subcommittee on Personnel, then asked his colleagues for their forbearance before unleashing a brutal reprimand at Defense Undersecretary for Personnel and Readiness David Chu, sitting feet away at the witness table.

Congress had taken great care in working out "a very hard-fought compromise" to allow the Defense Department to set up a new civilian personnel system, Levin said, adding, "It now appears that the department is ignoring the limited protections that we wrote for DoD employees."

Pentagon decision-makers are hoping for a friendlier reception on Capitol Hill when they announce preliminary regulations for the new National Security Personnel System later this year. After an all-out effort during the past several months to better communicate their plans and gather employee input, Defense officials have nearly completed the design process for a system that ultimately will replace the decades-old General Schedule for the Pentagon's 650,000 civilian employees. But labor union leaders say the department has shared few details with them about where the new system is headed.

In mid-October, Defense will announce which employees will be in the group of 15,000 to 100,000 workers who will become the first to enter the new personnel system in July 2005. The next big announcement should come before the end of this year, when Defense releases the preliminary regulations for public comment.

In February, Navy Secretary Gordon England took over the design process, and Mary Lacey, a senior executive and former technical director of the Naval Surface Warfare Center, was named program executive officer, overseeing day-to-day planning. In April, England announced that controversial proposals released in February (and cited by Levin) to revamp collective bargaining and the disciplinary appeals process had been sent back to the drawing board. And rather than rush the system into existence by the end of 2004, as originally planned, he said the Pentagon would roll it out in stages over several years, with the final workers to be incorporated in 2008. The Office of Personnel Management, left out of the initial planning phase, was asked to take a hands-on role in drafting the regulations.

During the summer, the military services began to host town hall meetings and focus groups to gather employee input. At one recent session at Fort Belvoir, Va., employee questions centered on how pay-banding and pay-for-performance systems will work. Defense officials offered few details, but said they believed pay for performance was the only way the department could keep its best workers from going to the private sector.

Defense's meetings with union leaders-which have continued even as Lacey and her staff draft regulations-have been more contentious. Ron Ault, who has participated in the meetings as president of the Metal Trades Department of the AFL-CIO, says they haven't involved much give-and-take. "We're just meeting for the sake of meeting and have been since January," he says. "They haven't shared anything with us." Leaders from 35 out of 41 unions at Defense have formed the United DoD Workers Coalition to pressure the Pentagon to be more forthcoming.

Lacey defends the department's approach. She notes that the 120 employees assigned to working groups to develop options for the different parts of the new system-from pay and labor relations to employee discipline-only recently finished their work. Regulation-writing has just begun, and several layers of Defense, OPM and Office of Management and Budget officials will need to review the rules before they are released for comment.

Lacey, however, doesn't shy away from criticizing the existing rules. "We feel strongly that today's system is inadequate," she says, arguing that the seniority-based pay approach is demoralizing to high-performing employees, who are leaving for the private sector instead of waiting their turn to climb the organizational ladder. She says the hiring process takes too long and disciplinary rules are sometimes too lenient. Defense managers often feel compelled to assign tasks to uniformed military personnel or contractors, rather than navigate the civilian personnel rules.

The new rules will make it easier for Defense managers to trim the red tape that slows the hiring process. In some cases, Lacey says, the Pentagon may limit job openings to candidates in a specific region. In other cases, Defense may use direct-hire authority, which allows managers to waive competition and veterans preference rules when job applicants are scarce.

Lacey says the department also will propose limits on union bargaining akin to those under development at the Homeland Security Department, which is creating its own personnel system. DHS is seeking to define the assignment of work, deployment of personnel and use of technology as management prerogatives outside the scope of bargaining.

Defense will set its own rules for the adjudication of employee disciplinary appeals. In some cases, these regulations will be less favorable to employees than those currently enforced by the Merit Systems Protection Board, an independent federal agency that oversees employee discipline across government.

Initially, Lacey admits, Defense officials had gone "blindly down the path of writing regulations" before consulting employees and Congress. An "uproar" of disapproval sparked a "strategic pause" and a more thoughtful approach. "We are conducting the process in a significantly more open way than when we started," she says.

Union leaders, however, say Defense has not replied to a detailed list of inquiries asking Pentagon officials to provide examples of when the current system has hindered department goals. "They want to see our cards, but they don't want to do anything on the other side," says Matt Biggs, legislative director of the International Federation of Professional and Technical Engineers.

Even so, Lacey is confident that members of Congress are now happy with the Pentagon's work. She and England have made regular trips to Capitol Hill, and Lacey's 10-person staff is in constant communication with congressional staffers. "I'm comfortable they are pleased," she says.