New Rules, New Boss for Defense Personnel System

This month, the NSPS, one of the largest pay and personnel projects ever undertaken by the government, recorded two more events in its four-year history.

The first was the departure of Mary Lacey, the program executive officer for the NSPS, on May 11. Deputy Defense Secretary Gordon England named Brad Bunn, the program's deputy and director of the Defense Civilian Personnel Management Service, to succeed her.

The second was the publication of new proposed regulations for the NSPS just before Memorial Day weekend. The regulations modify key features of the system, as ordered by Congress after a couple of years of controversy, including litigation by federal unions that represent Defense Department civilians.

The proposed regulations bring the NSPS back under government-wide rules that permit collective bargaining and ensure that employees can continue to appeal major disciplinary actions to the independent Merit Systems Protection Board.

The centerpiece of the NSPS, "pay for performance," remains despite objections from unions and some employees. Congress, as part of a defense bill authorizing weapons and other programs, decided to let the Pentagon continue moving Defense Department civilians from the General Schedule, the government's primary pay system, into the NSPS, which features broader salary ranges than the General Schedule.

But Congress placed a limit on how much of an employee's pay raise can hinge on job performance ratings. Except for those employees deemed "unacceptable," NSPS-covered workers will receive at least 60 percent of the annual government-wide pay raise, with the balance allocated to employees based on their job performance.

Union representatives and some Defense Department employees were concerned that all pay raises would be linked to job ratings or that the raises might not keep pace with the GS raises elsewhere in the government. The 60-40 split ensures that almost all NSPS employees will automatically get a raise every year, while permitting the Pentagon to claim that the NSPS remains true to its original goal of putting bigger raises in the pockets of the best workers.

The Defense Department has converted about 181,000 employees to the NSPS and will probably add 25,000 more to the system this fall. Congress exempted blue-collar employees from the system, so it seems unlikely that the Pentagon will reach its initial goal of converting almost 700,000 employees.

Many department employees remain wary of the NSPS, not convinced that it can be fairly administered and fearful that it could end up making for more, not less, cronyism.

But numerous complaints are based on misinformation or come from employees who have not had their training on NSPS, Lacey said in a recent interview.

"There is confusion about the terminology, and I think there is confusion about how the process works," Lacey said. "By the same token, management always has had a certain amount of flexibility on the bonus side -- how much do you put in -- and that hasn't changed. I don't think people realized those were management decisions prior to NSPS. Some people did, but a lot didn't."

Training and leadership are important, in part because they help build trust in the system as employees learn how it works and feel they can trust it, she said.

"Any change is difficult, and unfortunately many leaders still don't pay enough attention to that human side of the change process," she said.

"It is not unusual to find some of them approach it as a one-and-done. In other words, we ran up to this, we did the training we had to do. We trained and we implemented. And therefore it is, and it is all done, and I don't have to continue to pay a lot of attention."

That attitude among Defense Department managers, Lacey said, is "the exception, but even if we've got a handful of them not paying attention, it is problematic."

In announcing Lacey's departure, England said she "has led the most significant transformation of the civil service in a generation." Lacey, he said, "will now return to her roots, in engineering," as deputy program director for the Aegis Ballistic Missile Defense, in the Missile Defense Agency.

Lacey, a member of the Senior Executive Service since 1996, has spent most of her career working for the Navy. Before her selection as NSPS chief, she was the technical director of the Naval Surface Warfare Center at the Washington Navy Yard. Her four years at the NSPS gave her a chance to work with other agencies, such as the Office of Personnel Management and the Office of Management and Budget, and with members of Congress and their key aides, she said.

Although some personnel officials at the Pentagon wanted a relatively quick implementation of the NSPS, England decided the system would be what he called "event driven," with Defense Department agencies and components converting when training had been completed or when they were ready to make the transition.

"Would I have liked to see more [agencies brought] in faster? Yes," Lacey said.

But, she added, the NSPS is not the only change confronting Defense Department employees. "We are a department at war. People are busy. People are stressed. People are working at a tempo that is pretty fast-paced. And this required some thought, some leadership time."

Stephen Barr's e-mail address isbarrs@washpost.com.