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Department of Defense Special Briefing on the National Security Personnel System

Presenters: Acting Deputy Secretary of Defense Gordon England and Office of Personnel Management Director Linda Springer
October 26, 2005
Department of Defense Special Briefing on the National Security Personnel System

SEC. ENGLAND: Good afternoon. Good to be with you all again. In case we haven't met -- I believe I have met all of you, but in case we haven't met, I'm Gordon England, the secretary of the Navy, the acting deputy secretary of Defense, and also the senior executive for the National Security Personnel System. And today I am wearing my third hat as the senior executive of the National Security Personnel System.


Before I start, I want to say first of all thanks -- I'm going to say thanks to all the men and women who serve in our military and who voluntarily -- voluntarily -- defend our nation's liberty and freedom around the world. We owe them and all the generations before them who wore the cloth of our nation our very deepest appreciation.

Now today I'd like to talk about other great Americans, the great Americans who are not in uniform but who support those who are the warfighters, those behind the lines who support those who are on the front lines, the more than 650,000 invaluable civilians in the Department of Defense.


As many of you know, two years ago the Congress gave the DOD the authority to design a new and a vastly better personnel system for all of these civilians for the post-9/11 era, and it's called the National Security Personnel System, NSPS. Now for the past 18 months, the department has been working very hard to develop this system as a win- win-win; a win for our employees, a win for the department and a win for our nation. And during these past 18 months, we've met a number of times to talk about the status as we have developed a system.

I would remind you that this has been, I believe, an extraordinarily collaborative process. It's involved our employees, managers, unions, elected officials, congressional staff, advisory group and others. Frankly, whoever could help us has been consulted.


We're now at the end of this phase of the design process. Tomorrow the final NSPS regulations will be available on the DOD website and filed with the Federal Register. The formal notification went to the Congress two hours ago, 1:00 today.


Now, our partner in this design effort has been OPM. Since the very beginning, they have worked closely with us, the Office of Personnel Management. And with me here today is the director of OPM, Linda Springer. She joins with me today in initiating the next phase of NSPS.


Now, by law, 1:00 today -- by law, the Congress has 30 days after today to review the final regulations, after which the labor relations portions of the NSPS will take effect for all employees. The human resources portion -- the new pay grades, the pay-for-performance system, et cetera -- is scheduled to progressively begin in February. Initially, about 60,000 employees will be brought into NSPS at that time, and then more progressively added over time.

Now, DOD has made a number of changes to the regulations that were proposed last February. They were called the proposed regulations. We then went into meet-and-confer periods with our unions. We went into a lot of discussion periods. And Mary Lacey is with us today. Mary Lacey is the NSPS program executive officer, and she is here today to discuss those changes with you and to answer any specific, detailed questions you may have. I do want to thank Mary. This has been a very challenging assignment for her. And it's because of her leadership and professionalism that we are where we are today, about to publish the final regulations. So my special thanks to Mary Lacey. I also want to thank George Nesterczuk from OPM, who has also been working with us on a daily basis, and he's also here today to answer any of your questions.


Now at this time, Linda Springer, the director of OPM, would also like to offer a few remarks. I want to thank Linda, and I want to thank the whole team at OPM for partnering with us. This has been a partnership. We're grateful for Linda for her leadership, and we look forward to continuing to work with OPM. They will continue to be our partner as we now go into the final design phase and start implementing the program. So on behalf of all the men and women in DOD, Linda, I thank you, and thanks for being with us today.


MS. SPRINGER: Thank you.


Well, thank you, Secretary England, and I want to compliment you and thank you for your leadership, particularly at a very crucial point earlier in the process, and I think that was a turning point in our work, and your steady hand has been very important to us. We thank Secretary Rumsfeld as well, and your entire team, Mary and many others who have been instrumental in really crafting what we believe is a fine set of regulations that will serve the men and women of the department very well now and in the years to come. I also want to add my thanks to George Nesterczuk of OPM for carrying out the principal role of OPM in this process up 'till now and making sure that OPM's part has been carried out effectively.


As you know, OPM has a sort of assurance role assigned to us by the Congress with respect to NSPS. Our role is to make sure that all of the principles -- merit systems principles, due process, prohibitive practices of prohibition, veteran's preference -- all of those -- to make sure that all of those are preserved throughout the development of regulations and their implementation. I can tell you today that all of those have been preserved and have been adequately maintained in these regulations that will be released today. OPM will be continuing to be involved through the implementation, as it is our role, and we will make sure that not only in the regulation, but also in the implementation that those protections still are maintained.


I want to comment on DOD's experience in this round. We have looked at OPM, at all of the programs over the years that have been demonstration projects and others that have helped us to get valuable experience as we've crafted regulations and candidly the legislation and worked with the Congress. DOD has decades of experience in this area. To date, over 45,000 Department of Defense employees have been covered by demonstration programs, and we've learned lessons from those with respect to occupational pay bands, occupational groupings. And all of those lessons have helped and formed the development of these regulations. I feel very confident that DOD has the knowledge and the experience on which they can build to make this a successful implementation.


We're anxious for DOD to succeed. We know they will succeed. And we'll be confident as they proceed, and we'll be participating with them as they execute and implement with the first 60,000 and then beyond. OPM will be there to support that process and to make sure that it's a smooth implementation.


Obviously, all of us through the government are watching how this goes. There's a lot at stake. And we will be very involved, and -- but we are very confident of the success of this implementation.


So thank you again, Secretary England.


SEC. ENGLAND: You're welcome, Linda.


Mary and George, if you would join us, please?


Ladies and gentlemen, this is Mary Lacey and George Nesterczuk who are here, and between the four of us, we would be pleased to answer any questions you may have today.


Okay. Well, Steve, how about -- we'll start in the back here. You've been patiently waiting.


Q: Thank you, Mr. England. I'm going to -- I'll be the skunk at the party here today.




Q: The Department of Homeland Security issued regulations, and a union immediately filed a lawsuit to stop them and has prevailed in the first round in the federal courts. I think it's no surprise that the same thing's going to happen here at Defense. Have you tried to reach out to the unions and make an effort not to go down the road of litigation and slow down these changes?


SEC. ENGLAND: Well, I don't know if we'll go down the road of litigation or not. I mean, look, obviously people can file if they feel that's appropriate.


On the other hand, we have been reaching out, in my judgment, Steve, for the last 18 months. We have had a lot of meetings with the union officials. Last night we had dinner together. But look, they're independent organizations.

Regarding Department of Homeland Security, in my judgment, we have a different program, a different law, and I believe that we have met the spirit and the intent of what the Congress wanted us to do. This is a very balanced program. As Linda Springer said, it provides all the protections. It also provides opportunity. I mean, I -- when I said this is a win-win-win, I believe that is exactly the case. In my judgment, I mean, from day one, NSPS is not an end unto itself. NSPS provides us, the department, the opportunity to provide an environment for our people to excel, to be challenged and to be rewarded. And that is a very dynamic and satisfying environment for all of our employees.


I continue to believe that the vast, vast majority of our people will embrace NSPS because of the opportunities it provides them and the challenges that they will have under NSPS.


So look, if there is a suit filed, obviously it's up to the court system to decide. I would hope that that doesn't happen. I would hope that the employees are given an opportunity quickly to become part of this much, much better personnel system. But obviously whatever happens, we will deal with and proceed accordingly.

Yes, ma'am?


Q: Lolita Baldor with AP. If I can just sort of follow up on that -- I mean clearly one of the problems that the courts had with the Homeland Security system was provisions that would allow senior managers to -- what they said -- nullify portions of the contract. What is it that you have done with this that addresses some of the legal problems that DHS has had, and how does it differ?


SEC. ENGLAND: I'll let -- I'll let Mary and perhaps George address the specifics. Why don't I let you do it completely rather than me do an overview, George?


GEORGE NESTERCZUK (OPM senior adviser on NSPS): The statutory authorities that we have to establish a new labor relations system are different than DHS's, so some of the argumentation will obviously be different.

As far as the sanctity of contracts, it is a federal environment and not the private sector, and federal contracts come under different precepts. The fact that agencies have needs that sometimes permit them to pierce provisions of contracts is kind of an accepted practice in the federal sector. So I think the court will have to take that into consideration. But basically, we do have a different statutory construct with different authority to create a new labor relations system.


MARY LACEY (DOD program executive officer on NSPS): There's a second piece to this answer that's also equally important. We have the ability, in the Department of Defense, as part of our regular course of doing business, to issue internal policy, procedures, ways that we are going to do business in the Department of Defense to carry out our assigned mission. Those documents and procedures and policies are called issuances. Leave it to the federal government to design a wonderful term of art, but they are indeed called issuances. If those issuances are implementing NSPS, specifically around NSPS, they can override the provisions of existing collective bargaining agreements out there in the 1,550 different units. That was a big concern of the union -- our union partners as well as some of our managers. We have assured, in the final regulation, that the ability to put out an implementing issuance that overrides the collective bargaining agreement is restricted to the very highest levels in the Department of Defense -- the secretary of Defense, the deputy secretary of Defense, the undersecretaries of Defense. And in the components -- in the Army, Navy and Air Force -- it is limited to the secretary of the service only. So we believe that also provides significant protection for the situation that you raised.




Q: Vicky O'Hara from NPR. Do you anticipate having to renegotiate significant portions of contracts, significant numbers of contracts?


MS. LACEY: There's not a single answer to that question because the contracts vary across the Department of Defense in terms of their detail and their coverage. Every contract will have to be looked at, and there will be provisions in some of the existing contracts that will be nullified by the new regulation. There's others that will not, and there'll be situations where it'll be in the best interest of the unions, as well as management, to reopen those contracts for some negotiation to fix the holes that might have been pierced in it as a result of the new regulation.

Q: Any idea what that might cost -- renegotiating all those contracts?


MS. LACEY: We renegotiate contracts all the time. We have 1,550 bargaining units. We reopen them all the time as a normal course of doing business as procedures and policies change, so.


Q: Eric Yoder from The Post. The draft regulations were characterized, at least on the union side, as effectively replacing collective bargaining with quote, unquote "collaboration." And I'm wondering, is that a fair characterization of it? And if you are still bargaining, what areas have you -- are you saying that you will no longer bargain over?

MR. NESTERCZUK: It's not a fair characterization because there is still collective bargaining. There is an added dimension to that in the continuing collaboration that anticipates a new role for the unions that they haven't played in the past, and that is to look at policies and issues before they're issued, before they're final, get their views into consideration before they're issued, and that's the continuing collaboration process. That will allow them input into areas that they hadn't been involved in in the past. So that's an up side to the relationship.


As far as where we've narrowed the scope of bargaining, it's over operational issues, procedures that would implement operational decisions within the department. It's in those areas. But there's still collective bargaining, very much so.


Q: Wendy Wang with Talk Radio News Service. The Air Force Promotion Board is taking --


SEC. ENGLAND: I'm sorry, I missed the first. The what?


Q: The Air Force Promotion Board -- excuse me, I have a cold -- is taking into account break in service when promoting officers. And given the number of recalls after 9/11, this is particularly disturbing because many of these recalls are returning to active duty as a display of patriotism, and they're being penalized because of their break in service. Is there any move to look into this, to address this?


SEC. ENGLAND: NSPS does not deal with the military side, so NSPS is only a civilian system.


Q: But from the DOD point of view, will the DOD look into this?


SEC. ENGLAND: I'd rather address NSPS today. The topic today is NSPS. If you have something on NSPS, I'd be happy to address it. That's not the topic of today. But thank you.


Q: Sir, I guess the devil is in the details. This is October. It's a month before this comes into play, and you're talking about February '06 to start it up and to implement all of this for 60,000 people. Are the human resources people set to do it that quickly?


SEC. ENGLAND: Let me make a comment. Originally, if you go back to the original program, it was going to implement October of last year. And we said we would not be driven by the schedule, we would only proceed when we were ready to proceed. So we have proceeded on a very deliberate path. We made sure that we accomplished every phase before we moved to the next phase. And we have kept that. I mean, that has been our mantra and that is the way we are still proceeding. So we have people who have been in training, we have people in training today, we are proceeding along that path. If we reach a point where we're not ready to proceed because just we run into difficulties, we will slow down the program.


So this is not a schedule-driven program. This is event-driven. That is, when we're ready for the next event, we'll proceed. But we have been very deliberate in this process. We are ready to proceed. People are well-trained. So in 30 days, we'll be ready to stand up the labor relations. Again, we're not going to -- I mean -- yeah, the labor relations. We won't stand up the human resources, though, until February.


And when we stand up the human resources in February, we will go through a six month what we call "mock period"; that is at the end of six months, we will evaluate, we will act as if this was for real, but it will be a mock exercise in terms of the results that we can learn. So next year is first and foremost, a learning process, and no one will actually be in the system in terms of actual pay, real evaluations, until January of the following year. So not this January, January a year. So we have all of next year to implement the system before it really counts. And we will then progressively put people in, and each time learn from those experiences and improve the system.

So my judgment is, is that, again, it's very deliberate, it's well-planned, and it will be well-executed. And if we have problems, we'll stop and adjust at that time. We want the system to work right for everyone.


MS. LACEY: It's not just the human resource folks, though, that need to be trained and need to be ready. This is not just a human resource system, this is part of a business management system for the entire Department of Defense. It also involves the training of line managers who are actually going to operate the system and have an increased role in the system than they've had in the past in making determinations and decisions, as well as every employee. So there is training for all of those stakeholders in the process.


Q: Mr. Secretary, could you tell us a little bit about how the system is going to be phased in? Is it going to be a geographic phase-in? Are you phasing it in by levels of employment?


MS. LACEY: There's a couple of dimensions to the phasing. The first phase will be what are now General Schedule, General Management, the GS, GM, and acquisition demo employees. We will phase them in in what's called Spiral 1. That has three pieces to it. The first group is about 60,000 next February, the next group is about 48,000 in the March-April time frame, and the third group is -- probably next September, October, is another 120,000.


Spiral 2 will be additional career groups, work groups, our blue- collar workforce, some of the other speciality systems that we operate within the department -- very important speciality systems, such as the National Guard, civilian employees and things like that. That will be called Spiral 2. They won't start until at least a year and a half, two years from now.


Now, within those categories of employees, we are deploying NSPS through the chain of command, and each of the services and components has a slightly different way that they're approaching it. Some of them are doing it starting at the very highest echelons in their organization for the first group, and then adding the lower- level command units. Others are doing it by base. So we've left that choice to the chain of command, what works best for them from a management and leadership point of view.


Q: Sir, to follow up on that, how many employees total will be covered by the system. I've heard 750(000), 700(000), and 650(000). What's the best number?


MS. LACEY: There's approximately 650,000 that are coverable, which is not to say that they will all be covered instantaneously. There are a number of employee groups that cannot be brought into NSPS because they exist outside of Title 5. And there's others where they can be partly brought into NSPS because while they exist under Title V, they may have restrictions on them that exist in other places, such as the National Guard is a good example where they exist under Title 5, but they also exist under Title 32. So the adverse actions will not apply to them because that's restricted to the state adjutant generals. So we're looking at up to 650,000 to be in the system by 2008 under human resources.


Q: Out of 750,000 -- (inaudible)?


MS. LACEY: Seven hundred and fifty thousand, plus or minus, that fluctuates quite a bit in the department.


Q: Thank you.


Q: Julie Dennison (sp) from LRP. Can you explain the role of the FLRA and MSPB that they'll have under the new system?


MR. NESTERCZUK: FLRA will play a review --


Q: I'm sorry. Could you -- (off mike)?


MR. NESTERCZUK: Federal Labor Relations Authority will play a review role. We're creating a national security labor relations board that'll adjudicate labor disputes for the department, and their decisions would be reviewable by FLRA and then subsequently judicial review would be applicable.


In the case of MSPB, they too have an appeal role -- a Merit Systems Protection Board. (Laughter, laughs.) We are utilizing the administrative law judges of the MSPB to adjudicate employee appeals. The department will subsequently perform a review of those decisions and then employees will get to appeal the decisions of that process to the MSPB and subsequently to the courts.


Q: (Name and affiliation inaudible.) What do you estimate the cost of implementation to be?

SEC. ENGLAND: Well, let me address it. I'm not sure there's a defined number for this, because our training -- I mean, we are constantly training our people. And we train both our civilians and our military people all the time. As a matter of fact, what gives me confidence about this system is that the core competency, a core competency of the Department of Defense's training -- and training is vitally important for this program to work correctly. So we will do this within our existing training budgets. And we train -- so we will train our people within our budgets. We have allocated special monies for the program office, for the top level management. But the training budgets will be part of our normal training budgets that we have throughout the Department of Defense.


Q: What about the --


SEC. ENGLAND: Next one -- (inaudible).


Q: What about the systems and all that?


SEC. ENGLAND: Pardon me?


Q: What about the new systems, or -- ?


SEC. ENGLAND: We have modified our IT systems. So we've been doing that for the last 18 months, and we have all those systems now in place.


Q: The Defense Department has been unable to acquire provisional certification from OPM for its senior executives appraisal system. And I'm wondering, what confidence will employees have that the department will be able to do this for 650,000?


SEC. ENGLAND: Well, we will get certification. I mean, we have, and we sort of ran out of time with that time line. But that's still in process, and so we will get certification. I don't think that's the real issue. It was sent back for us to provide some additional information. I'll be happy to have Linda make it -- because they -- OPM certifies us in this regard. So if they ask for additional information, that certification period ran out. But we were in the process of doing that, and we will, indeed, get certified.


Linda, to you want to add to that?


MS. SPRINGER: Yeah, just to say that you're aware that there's a provisional certification that comes first. And we did ask for a little more information, but it was just because of where the time line was, it had to sort of re-start again for the next year.


So, we're in the process of reviewing that. We think it's well underway.


SEC. ENGLAND: Probably time for one more question.


Q: As I understood it, when this system first came into being, one of the things that Secretary Rumsfeld wanted to accomplish was to make it easier to move employees around from job to job, hire people when he needed to. There was a complaint that too many uniformed people were having to be put into jobs because you couldn't get a civilian into them fast enough, and uniformed people were doing things, really, that had nothing to do with trigger-pulling or what we normally expect uniforms to do. Is there a number that you hope by the end of this -- when this system is finally implemented, that a number of uniformed people who are now doing, quote-unquote, "civilian jobs" who will be pulled out of those jobs and civilians will actually be in them?


SEC. ENGLAND: There's not a number. I will tell you there's a continuing process in this regard. So we have already been converting military to civilian: that is, jobs where it was convenient in the past to have a military person do that job, it was not really a military job. So we have already been in the process of doing that. And that will continue. I mean, again, I -- my judgment, again, is that one of the benefits of this program, we will actually increase in some areas, at least, the civilian workforce because we will be -- I mean, if we can convert military jobs to civilian jobs, we effectively increase the effective size of the military. I mean -- and we increase our military effective size if we get the military doing military jobs and then replace the jobs they were doing with civilians. And we are about that. I mean, that's a very important attribute for the Department of Defense is to continue that transition. There's not a number. It's a continuous process. And we'll just keep doing that until we have it the right balance.

Q: Is there a number that you've done to date?


SEC. ENGLAND: Well, there is, but we'll have to follow up. I'll be pleased to provide you a number; I just don't have the exact number, but we will get you the exact number, because we do have it; I just don't want to give something I'm not sure of. But we'll provide you that.


I thank you. Thanks very much. Appreciate the opportunity to be with you today, and thank you all for being here today. Thanks very much.



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