[Federal Register: February 20, 2004 (Volume 69, Number 34)]
[Proposed Rules]
[Page 8029-8071]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20fe04-14]
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Part III
Department of Homeland Security
Office of Personnel Management
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5 CFR Chapter XCVII and Part 9701
Department of Homeland Security Human Resources Management System;
Proposed Rule
[[Page 8030]]
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DEPARTMENT OF HOMELAND SECURITY
OFFICE OF PERSONNEL MANAGEMENT
5 CFR Chapter XCVII and Part 9701
RIN 3206-AK31/1601-AA-19
Department of Homeland Security Human Resources Management System
AGENCY: Department of Homeland Security; Office of Personnel
Management.
ACTION: Proposed rule.
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SUMMARY: The Department of Homeland Security (DHS) and the Office of
Personnel Management are issuing proposed regulations to establish a
new human resources management system within DHS, as authorized by the
Homeland Security Act of 2002. The affected subsystems include the
systems governing basic pay, classification, performance management,
labor relations, adverse actions (e.g., disciplinary actions), and
employee appeals. These changes are designed to ensure that DHS' human
resources management system aligns with the Department's critical
mission requirements and protects the civil service rights of its
employees.
DATES: Comments must be received on or before March 22, 2004.
ADDRESSES: You may submit comments, identified by docket number DHS-
2004-001 and/or RIN number 3206-AK31, by any of the following methods:
E-Docket Web Site: http://www.epa.gov/edocket.
Follow the instructions for submitting comments at that web site.
Mail: DHS/OPM HR System Public Comments, P.O.
Box 14474, Washington, DC 20044-4474.
Hand delivery/Courier: OPM Resource Center, Room
B469, Office of Personnel Management, 1900 E Street, NW., Washington,
DC. Delivery must be made between 10 a.m. and 2 p.m., Monday through
Friday, except Federal holidays.
Federal Rulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Instructions: All submissions must include the agency name and
docket number or Regulation Identifier Number (RIN) for this
rulemaking. The online e-docket system is DHS/OPM's preferred method
for receiving comments. Mailed or hand-delivered comments must be in
paper form. No mailed or hand-delivered comments in electronic form
(CDs, floppy disk, or other media) will be accepted. All comments
received, whether mailed, hand-delivered, or submitted online, will be
posted without change or omission to the e-docket at: http://www.epa.gov/edocket.
For detailed instructions on submitting comments
and additional information on the rulemaking process, see the "Public
Participation" and "Electronic Access and Filing" headings in the
Supplementary Information section of this document.
Docket: For access to the e-docket to read background documents,
submit comments, and read comments received, go to http://www.epa.gov/edocket.
To read the hard-copy originals of mailed and hand-delivered
comments, visit the OPM Resource Center, Room B469, Office of Personnel
Management, 1900 E Street, NW., Washington, DC, between 10 a.m. and 2
p.m., Monday through Friday, except Federal holidays.
FOR FURTHER INFORMATION CONTACT: At OPM: Ronald P. Sanders, (202) 606-
9150; at DHS: Melissa Allen, (202) 692-4272.
SUPPLEMENTARY INFORMATION: The Department of Homeland Security (DHS or
"the Department") and the Office of Personnel Management (OPM) are
proposing to establish a new human resources (HR) management system
within DHS under 5 U.S.C. 9701, as enacted by section 841(a)(2) of the
Homeland Security Act of 2002 (Public Law 107-296, November 25, 2002).
The following information is intended to provide interested parties
with relevant background material about (1) the Homeland Security Act,
(2) the process used to design options for a new HR system, (3) a
summary of the options developed and the review of those options by the
DHS Human Resource Management System Senior Review Advisory Committee,
(4) an evaluation of the design process, (5) a description of the
proposed new HR system, and (6) an analysis of the costs and benefits
of the proposed system.
The Homeland Security Act of 2002
Background
On November 25, 2002, President George W. Bush signed Public Law
107-296, the Homeland Security Act, which established DHS. On March 1,
2003, more than 20 organizations and functions previously assigned to
other Federal agencies were merged officially into the new Department,
making this the most significant reorganization in the executive branch
of the Federal Government in more than 50 years. DHS was created with
the overriding mission of protecting the Nation against further
terrorist attacks. DHS analyzes threats and intelligence, guards our
borders and airports, protects our critical infrastructure, coordinates
the response of our Nation to emergencies, and implements other
security measures. DHS also is committed to enhancing public services
such as natural disaster assistance.
Authority To Establish a New HR System
In creating the new Department, Congress provided a historic
opportunity to design a 21st century HR management system that is
mission-centered, fair, effective, and flexible. One of the most
important features of the Homeland Security Act was the authority
granted jointly to the Secretary of Homeland Security and the Director
of OPM under 5 U.S.C. 9701(a) to establish a new HR management system
within the Department. By law, this authority is to be exercised
through the issuance of regulations prescribed jointly by the Secretary
and the Director.
Through this authority, DHS may establish a modern, flexible HR
system to support its mission and improve employee and organizational
performance. In granting this authority, Congress gave DHS flexibility
to create an HR system that supports the agency's primary mission of
protecting Americans from terrorist attack without compromising
fundamental employee rights. In so doing, DHS has the authority to
waive or modify the following provisions of title 5, United States
Code:
The rules governing performance appraisal
systems established under chapter 43;
The General Schedule classification system
established under chapter 51;
The pay systems for General Schedule employees,
Federal Wage System employees, Senior Executive Service members, and
certain other employees, as set forth in chapter 53;
The labor relations system established under
chapter 71;
The rules governing adverse actions taken under
chapter 75; and
The rules governing the appeal of adverse
actions and certain other actions under chapter 77.
The "section 9701 authority" does not extend to systems or rules
established under an authority outside the above-listed title 5
chapters. (See 5 U.S.C. 9701(b) and (c).) For example, the authority
does not reach to DHS employees covered by a basic pay system
authorized by an authority outside title 5 (e.g., Secret Service
Uniformed Division officers, Coast Guard military personnel, Coast
Guard
[[Page 8031]]
Academy faculty members, Transportation Security Administration
employees, and employees of the DHS Emergency Preparedness and Response
Directorate appointed under the Robert T. Stafford Disaster Relief and
Emergency Assistance Act).
In some cases, however, laws authorizing separate pay and
classification systems for certain DHS employees not covered by title 5
provide considerable administrative discretion for modification of
those systems. For example, the Transportation Security Administration
(TSA) generally must adopt the system established for Federal Aviation
Administration (FAA) employees, but the Administrator of TSA is
authorized to modify that system consistent with 49 U.S.C. 40122.
Similar discretionary authority applies to the pay systems for Stafford
Act employees and to employees of the U.S. Coast Guard Academy. Thus,
it is possible for DHS to extend a new pay system designed for
employees currently covered by title 5 to TSA employees, Stafford Act
employees, and/or employees of the Coast Guard Academy by
administrative action. In contrast, the basic pay system established
under the DC Code for Secret Service Uniformed Division (SSUD) officers
cannot be altered administratively. Legislative action would be
required to modify the basic pay system for SSUD officers.
Also, the section 9701 authority does not cover systems or rules in
other title 5 chapters, such as the employment provisions in chapters
31 and 33, the premium pay provisions in chapter 55, or the retirement
systems in chapters 83 and 84. However, section 881 of the Homeland
Security Act does require DHS to review the pay and benefits plans
applicable to its employees, identify possible disparities, and submit
a plan for eliminating any unwarranted disparities. DHS provided a
preliminary report to Congress on possible pay and benefits disparities
on March 5, 2003, and continues to review these issues.
DHS' authority to modify or waive the six chapters of title 5 cited
above (and the associated implementing regulations) is subject to
certain limitations set forth in section 9701 of title 5 and elsewhere
in the Homeland Security Act. These limitations are designed to ensure
that fundamental merit system principles and employee protections are
preserved. The limitations include the following:
Any new or modified system must be consistent
with the merit system principles in 5 U.S.C. 2301. Similarly,
protections against prohibited personnel practices (e.g., reprisal
against whistleblowing or discrimination) remain in force.
The section 9701 regulations may not modify
regulations implementing nonwaivable laws.
DHS may not modify the pay system for Executive
Schedule officials, even though that system is authorized under chapter
53.
DHS employees remain subject to the aggregate
limitation on pay established under 5 U.S.C. 5307, and the annual rate
of pay for employees covered by the pay system proposed here may not
exceed the rate for level I of the Executive Schedule.
DHS must ensure that employees may organize,
bargain collectively, and participate through labor organizations of
their own choosing in decisions which affect them, subject to any
exclusion from coverage or limitation on negotiability established by
law.
Any modification of chapter 77 appeals
procedures must be consistent with the requirements of due process,
must provide for expeditious handling of DHS cases to the maximum
extent practicable, and must make modifications only insofar as those
modifications are designed to further the fair, efficient, and
expeditious resolution of DHS cases.
DHS and OPM may not issue new regulations under
the section 9701 authority after the 5-year period following the 12-
month transition period beginning on the effective date of the Homeland
Security Act. Since the Act became effective on January 24, 2003, the
section 9701 regulatory authority sunsets on January 23, 2009. Any
section 9701 regulations issued before that date will remain in effect.
Collaboration With Employee Representatives
Section 9701 also prescribes certain procedural requirements in
connection with the exercise of the joint DHS/OPM regulatory authority.
Section 9701(e) sets forth provisions to ensure collaboration with
employee representatives in the planning, development, and
implementation of any new or modified HR system. These provisions are
described in detail in the "Next Steps" section of this Supplementary
Information.
In addition to the procedural requirements related to consultation
with employee representatives, the Homeland Security Act also requires
the Secretary and the Director to consult with the Merit Systems
Protection Board (MSPB) before issuing regulations modifying the
appeals procedures under chapter 77.
Designing Options for a New HR System
Design Team Membership and Purpose
With the enactment of the Homeland Security Act of 2002, DHS
Secretary Tom Ridge and OPM Director Kay Coles James made a commitment
that the Department's new HR system would be the result of a
collaborative and inclusive process involving managers, employees, the
Department's largest unions, and a broad array of stakeholders and
experts from the Federal sector and private industry. This commitment
went far beyond the strict requirements of the Homeland Security Act,
as described above, because the Secretary and the Director felt it was
critical to involve employees, the unions that represent them, and DHS
managers in a direct and meaningful way throughout the entire design
process--not just at the end of the process, as required by law.
In April 2003, the Secretary and the Director established a DHS/OPM
HR Systems Design Team composed of DHS managers and employees, HR
experts from DHS and OPM, and professional staff from the agency's
three largest Federal employee unions (the American Federation of
Government Employees, the National Treasury Employees Union, and the
National Association of Agriculture Employees). The 48 team members
were assigned to one of two sub-teams: (1) pay, performance, and
classification or (2) labor and employee relations. Each sub-team had
two co-leaders, one from DHS and one from OPM.
The team was not asked to reach agreement on a single solution or
the best approach in any of the six areas where DHS was given
flexibility. Instead, the team's mission was to develop a wide-ranging
set of options for a new HR system at DHS. To help in this effort, the
team conducted extensive research into human capital practices in the
public and private sectors, talked with many leading human resources
experts, heard directly from DHS employees and managers through a
series of town hall meetings and focus groups, and gathered insights
from a Field Team composed of DHS managers and local union officials
who were asked to provide feedback and a front-line perspective to the
Design Team. The lessons learned through these outreach and research
efforts helped the Design Team develop a total of 52 options that
addressed one or more of the six HR areas under consideration. The
options were presented to the DHS Human Resource Management Senior
Review Advisory
[[Page 8032]]
Committee on October 20-22, 2003. (The Senior Review Committee and its
review of the options are described in detail below.)
Guiding Principles
During the Design Team's inaugural meeting in April 2003, Secretary
Ridge, Director James, and the presidents of the three largest Federal
employee unions at DHS discussed the fundamental elements of a model HR
system for the Department. They stated, for example, that any new
system must be responsive to the mission of the agency, that it must be
performance-based, that it must be a 21st century system agile enough
to respond to 21st century threats, and that it must be credible and
fair.
Building on these requirements, the Design Team developed a set of
"guiding principles" that were reviewed by the Field Team and
approved by the Senior Review Committee. The Senior Review Committee
agreed that options for a new HR system must, first and foremost, be
mission-centered. The new system must be performance-focused,
contemporary, and excellent. It must generate respect and trust; it
must be based on the principles of merit and fairness embodied in the
statutory merit system principles; and it must comply with all other
applicable provisions of law. In addition, the Design Team and the
Senior Review Committee agreed that the process for developing HR
options must be collaborative, reflecting the input of managerial and
non-managerial employees at all levels in DHS and of employee unions.
These guiding principles served as the basis for conducting research
and outreach activities and, later, for evaluating options for a new HR
system.
Research and Outreach Activities
The research phase of the design process took place from April
until July 2003. The pay, performance, and classification (PPC) sub-
team focused its work on those chapters of title 5 which cover pay
systems, performance management, and classification. The labor
relations/employee relations (LR/ER) sub-team focused its research on
those chapters of title 5 dealing with labor relations, adverse
actions, and appeals. Both sub-teams researched promising and
successful practices and systems in their respective areas. Both also
sought to understand the reasons for less-than-successful practices and
systems. The two sub-teams followed the same methodology in conducting
research by identifying sources of information and devising and
implementing methods of collecting, categorizing, and storing the
information so that it was available to the entire team. In addition,
the Design Team collected and analyzed statistical information about
the DHS workforce. To understand what employees thought about the
current systems, team members also attended DHS town hall meetings and
employee focus groups at various locations around the country, as
described in greater detail below.
The PPC sub-team identified 25 areas of interest and assigned
groups to research each area. The areas of interest included the
structure of pay ranges, methods for categorizing types of work, and
different appraisal and rating methods. The PPC sub-team identified
research sources from State and local governments, international
organizations, non-profit organizations, other Federal agencies with
different pay systems, and private sector organizations. These sources
were asked to give presentations to the sub-team or full team, as
appropriate. Some sources, who could not meet with the Design Team,
were interviewed by team members.
The LR/ER sub-team followed similar practices and identified
similar groups. However, since Federal sector labor relations are
conducted differently than in the private sector and in State and local
governments, few outside sources were identified by the LR/ER sub-team
as suitable models in the labor relations area. Instead, the LR/ER sub-
team identified experts in the field of Federal sector labor relations
to be interviewed or to give presentations to the sub-team. There were,
however, a number of sources in the private sector and in State and
local governments that had innovative or promising processes for
handling adverse actions and appeals.
Both sub-teams made an effort to ensure that their fact-finding and
data-gathering activities were balanced. For instance, in the labor
relations area, the LR/ER sub-team identified organizations with strong
labor relations programs, as well as those with restricted programs or
no labor relations programs at all. The Design Team also conducted a
literature review to identify articles, reports, and other
publications, which added to the body of information on current HR
practices. Altogether, the Design Team contacted and received
information from almost 200 individuals. A summary of the research
conducted by the Design Team can be found at http://www.epa.gov/edocket">http://www.epa.gov/edocket
.
Town Hall Meetings and Focus Groups
As noted above, Design Team members, along with senior DHS and OPM
officials, attended a series of town hall meetings and focus groups
sponsored by DHS. Consistent with the team's collaborative approach,
these meetings were planned jointly with employee representatives and
were conducted to inform employees about the design process and to
solicit employees' perceptions of current HR policies.
To ensure that each town hall meeting and focus group meeting was
attended by a diverse group of DHS employees, careful consideration was
given to participant selection methodology. Diverse representation was
sought and achieved by DHS component; geographic location; job/series;
bargaining unit and non-bargaining unit status; and age, gender, and
ethnicity demographics.
Town hall meetings with DHS employees were held between May and
July 2003 in El Paso, Texas; Los Angeles, California; Seattle,
Washington; Detroit, Michigan; New York, New York; Norfolk, Virginia;
Miami, Florida; and Atlanta, Georgia. Senior DHS and OPM officials,
including Janet Hale, DHS' Under Secretary for Management, Asa
Hutchinson, Under Secretary for Border and Transportation Security, and
Mike Brown, Under Secretary for Emergency Preparedness and Response,
presided over each town hall meeting, with senior union officials
joining them in some locations. Concurrent with the town hall meetings,
54 focus groups--44 with non-supervisory employees and 10 with
supervisors--were held in the same 8 locations, as well as in Baltimore
and Washington, DC. One of the Baltimore focus groups was composed
entirely of blue-collar ("wage grade") employees. In addition, two
focus groups were conducted with DHS HR professionals. In total, more
than 2,000 DHS employees participated in these town hall meetings and
focus groups.
Each focus group was professionally facilitated and included
several Design Team members as observers, note takers, and/or technical
experts. For each of the six HR areas under review, focus group
participants were asked, among other things, what they thought worked
well in the current HR systems and what they thought should be changed.
The information received from focus group participants was summarized
and made a part of the Design Team's research. A comprehensive and
detailed report on the focus group process and findings can be found at
http://www.epa.gov/edocket.
Communications Strategy
A comprehensive communications strategy is essential for designing
and implementing a new HR system. DHS
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therefore developed a communications strategy in order to build and
sustain high levels of respect and trust among DHS employees--one of
the guiding principles for the design process--and to gain insight and
support and address the concerns of stakeholders inside and outside of
DHS. The objectives of DHS' communications strategy were to (1) raise
awareness, disseminate information, and promote a clear understanding
of the purpose for designing a new HR system; (2) manage stakeholder
expectations and address their concerns; (3) provide opportunities for
two-way dialogue between the Design Team and the stakeholders; and (4)
generate a flow of timely, accurate, and consistent messages.
DHS identified channels for disseminating relevant, timely, and
consistent information (including a wide variety of print and
electronic media, e-mail, town hall meetings, focus groups, speeches,
and briefings) and developed an action plan for communicating with each
stakeholder. The Design Team also developed key messages to include in
stakeholder communications to reinforce the guiding principles of the
DHS HR systems design process. Finally, the Design Team developed
mechanisms for providing feedback to ensure an on-going two-way
dialogue between the design team and its stakeholders and to evaluate
the effectiveness of communication activities in meeting the
communication strategy objectives.
Outreach to Stakeholders
In addition to reaching out to DHS employees and to organizations
and individuals of interest to the Design Team as part of its research
activity, the Design Team reached out to stakeholders who were thought
to be keenly interested in the design of new HR systems for DHS. As
part of the communications strategy developed by DHS, the Design Team
invited selected stakeholders to participate in two stakeholder
briefings held at OPM in late August 2003.
The first stakeholder briefing was for Federal employee unions not
represented on the Design Team. Seven individuals representing six
employee unions attended this briefing. The second stakeholder briefing
was for other stakeholders identified by DHS through its communications
strategy. About 20 individuals representing 13 organizations or other
Federal agencies participated in the second briefing. Attendees at both
briefings received background information about the Homeland Security
Act, an update on the Design Team's work plan, a presentation on the
guiding principles developed by the Design Team, and updates on the
research activities of the team, including town hall meetings and focus
groups. Attendees were afforded an opportunity to participate in a
question-and-answer session following these presentations.
Both before and after the stakeholder briefings, the Design Team
also responded to requests from other stakeholders, including the
General Accounting Office and the Coalition for Effective Change (an
umbrella organization consisting of more than 30 Federal management
associations), to bring them up to date on the team's activities.
Design Team leaders also briefed the staff of key congressional
committees regarding the progress of the design process, and officials
from DHS and OPM testified before the House Committee on Government
Reform's Subcommittee on Civil Service and Agency Organization and the
Senate Committee on Governmental Affairs.
Options Development Process
The options development process was grounded in the extensive
research described above. The resulting product was a set of 52 options
that cover a broad range of variations on the six areas of focus.
The options development process was collaborative and inclusive,
with ample opportunity for input from employees and their
representatives. To ensure that the options reflected the wide range of
views and concerns expressed by various entities, the Design Team did
not attempt to reach consensus regarding the merits of the options.
Consequently, none of the 52 options presented represents a consensus
view of the Design Team.
Some of the options integrate approaches to developing new HR
systems across two or more of the six subject matter areas under
consideration. This is especially true of many of the pay, performance,
and classification options, which were intended to illustrate how
various pay, performance, and classification system elements might work
in combination. The pay, performance, and classification options also
tended to cluster around several distinct themes, such as "time-
focused" options, "performance-focused" options, and "competency-
focused" options.
The initial draft options were reviewed by the Field Team to
capture feedback prior to finalizing them for submission to the Senior
Review Committee. The options presented to the Senior Review Committee
do not exhaust all of the possible combinations of subsystems, nor were
the options intended to imply that there might not be other possible
ways of combining the approaches incorporated in the different options.
In addition, the Secretary and the Director remain free to suggest and
adopt other ways of combining various design elements to establish a
new HR system for DHS.
Summary and Review of Options
Overview of Pay, Performance Management, and Classification Options
The pay, performance, and classification sub-team developed a total
of 27 options. The majority of these options attempted to present an
integrated set of proposals across the pay, performance management, and
classification areas. Among these options, four were traditional, time-
focused graded systems under which pay progression would be based
primarily on time in grade. Under these options, any general
adjustments to the pay structure would be passed on automatically to
all employees whose performance is at least acceptable. (The status quo
General Schedule option provides across-the-board and locality pay
increases to all employees, regardless of performance.)
The eight performance-focused options would link individual base
pay and bonuses to individual, team, and/or organizational performance.
Several of these options do not provide for any automatic pay
increases. They usually (but not always) make use of a streamlined
classification and paybanding system that groups similar occupations
together in "clusters" that contain up to four pay bands each.
The four competency-focused options would make use of a set of
competencies (i.e., knowledge, skills, and abilities) developed for
specific positions or occupations as a key component in classifying
jobs, setting basic pay, and managing performance. Each of these
options would use competencies to some degree, but most also would have
a strong performance component, with pay progression based on the
acquisition and application of competencies or the evaluation of
performance.
Among the remaining pay, performance management, and classification
options, there was one "rank-in-person" option that would make use of
a person-based, rather than position-based, pay and classification
system (similar to military or Foreign Service systems) and one
collective bargaining option, under which all aspects of pay,
performance
[[Page 8034]]
management, and classification systems would be subject to collective
bargaining for all DHS bargaining unit employees. Finally, the pay,
performance, and classification sub-team developed five "stand-alone"
performance management or classification options and four "plug-and-
play" options. A "stand-alone" option is one that provides a self-
contained alternative to one of the three major components of an
integrated pay/performance management/classification option. For
example, a "stand-alone" performance management option could be
substituted in its entirety for the performance management portion of
an integrated option. A "plug-and-play" option, in contrast,
generally addresses only one feature or aspect of a pay/performance
management/classification system and cannot be substituted in its
entirety for any of the major components of an integrated option. For
example, a gainsharing/goalsharing program could be added to an
integrated pay/performance management/classification option without
altering the basic character of that option
Overview of Labor Relations, Adverse Action, and Appeals Options
Labor Relations
The labor and employee relations sub-team developed seven labor
relations options that describe, among other things, the parties'
bargaining obligations and how the labor relations program would be
administered. One of the options would retain the status quo as
codified in chapter 71 of title 5, United States Code, which sets out
the rights and obligations of labor and management and authorizes the
three-member Federal Labor Relations Authority (FLRA) to administer the
labor relations program.
Some of the labor relations options proposed to narrow the scope of
bargaining and/or place additional limitations on when the duty to
bargain would arise. Some also would place time limits on bargaining
over term and mid-term agreements. All of the options (except for the
status quo) would replace FLRA and the Federal Service Impasses Panel
with an internal DHS labor relations panel or administrator that would
assume all or some of the functions performed by those two bodies. All
of the options also would, for homeland security reasons or to meet
operational needs, permit DHS management to act quickly with no
bargaining at all or bargaining only after the action is taken.
Adverse Actions and Appeals
The sub-team developed 16 adverse action and/or appeals options,
including a status quo option. The current adverse action process is
found in chapter 75 of title 5, U.S. Code, which identifies the
procedures for proposing and taking adverse actions against certain
categories of employees. The current appeals process is found in
chapter 77 of title 5, which identifies the procedure that covered
employees must follow to appeal certain adverse actions to MSPB.
Some of the adverse action options would provide protections to
more employees than are covered today under chapter 75, while others
would narrow employee coverage. Similarly, some options would expand
the range of matters that would be considered adverse actions (e.g.,
any suspension) while others would narrow that range (e.g., adverse
actions limited to removals and suspensions of more than 30 days). All
options (except the status quo) would replace the two current statutory
processes for handling misconduct and poor performance with a single
process.
Some of the appeals options would provide appeal rights to more
employees than have such protections today (e.g., appeal rights for
probationary employees), while other options provide appeals rights to
fewer employees (e.g., appeal rights only for employees who complete 2
years or more of Federal service). Some of the options would replace
MSPB with an internal DHS panel that would adjudicate adverse action
appeals. Some options would raise management's burden or standard of
proof required to win an appeal, while other options would lower that
burden.
There were also two "plug-and-play" LR/ER options. One provides
for a bargaining impasse standard that third parties would use to
resolve impasse disputes between management and labor, and the other
would establish alternative dispute resolution programs to address
employee claims arising from adverse actions.
Review of Options by Senior Review Committee
In June 2003, DHS appointed 13 individuals to the DHS Human
Resource Management System Senior Review Advisory Committee, which was
chartered as a Federal advisory committee under the Federal Advisory
Committee Act (FACA). Members included six top officials from DHS, four
top officials from OPM, and the presidents of the three largest
employee unions representing DHS employees. In addition, five non-
Federal experts in public administration were designated as technical
advisors to the Senior Review Committee. A complete listing of Senior
Review Committee members and technical advisors follows:
Members From the Department of Homeland Security:
Janet Hale, Under Secretary for Management (Co-Chair);
Robert Bonner, Commissioner of Customs and Border Protection;
James Loy, Administrator, Transportation Security Administration;
Eduardo Aguirre, Director, Bureau of Citizenship and Immigration
Services;
J. Michael Dorsey, Chief of Administrative Services;
Ralph Basham, Director, United States Secret Service.
Members From the Office of Personnel Management:
Steven R. Cohen, Senior Advisor for Homeland Security (Co-Chair);
Doris L. Hausser, Senior Policy Advisor to the Director and Chief
Human Capital Officer;
Ronald P. Sanders, Associate Director for Strategic Human Resources
Policy;
Marta B. Perez, Associate Director for Human Capital Leadership and
Merit System Accountability.
Members From Unions:
John Gage, President, American Federation of Government Employees;
Colleen Kelley, President, National Treasury Employees Union;
Michael Randall, President, National Association of Agricultural
Employees.
Technical Advisors:
Robert Tobias, Distinguished Adjunct Professor, American
University;
Patricia Ingraham, Professor of Public Administration, Maxwell
School, Syracuse University;
Maurice McTigue, Visiting Scholar, Mercatus Center, George Mason
University;
Bernard Rosen, Distinguished Adjunct Professor in Residence
Emeritus, American University;
Pete Smith, President and Chief Executive, Private Sector Council.
The Senior Review Committee held its first meeting on July 25,
2003, in Washington, DC. The meeting was open to the public and was
conducted in accordance with FACA rules and regulations. At this
meeting, the Committee heard presentations from Design Team leaders
about the team's research strategy and methods, the guiding principles
developed by the
[[Page 8035]]
Design Team, and the options development process. The Committee agreed
to a slightly modified version of the guiding principles and an options
template developed by the Design Team for the purpose of presenting
options in a consistent fashion.
The Senior Review Committee held its second and last meeting on
October 20-22, 2003, in Washington, DC. Once again, this meeting was
open to the public and conducted in accordance with FACA rules and
regulations. The purpose of the meeting was to discuss possible options
for new HR systems in the areas of pay, performance management,
classification, labor relations, adverse actions, and appeals and to
express views that would inform decisions to be made subsequently by
DHS Secretary Ridge and OPM Director James regarding which systems
should be implemented within DHS.
The October 2003 meeting, in downtown Washington, DC, was
professionally facilitated and well-attended. Following opening
statements on the first day, the Committee members and technical
advisors received a presentation from Design Team leaders about the
pay, performance management, and classification options developed by
the Design Team. The facilitator then asked Committee members for their
views on the various categories of options presented. The second day
followed a similar pattern, with presentations by Design Team leaders
on the labor relations, adverse actions, and appeals options developed
by the Design Team, followed by a facilitated discussion of those
options. On the final day of the meeting, Committee members and
technical advisors were afforded an opportunity to summarize their
views for the benefit of the Secretary and the Director.
Over the course of this 3-day meeting, discussion and debate
centered on the best design for DHS' HR system. Several topics evoked
wide-ranging perspectives, but core areas and principles related to
system design and the design process drew a great deal of consensus
among the members. For example, the members agreed that--
Above all else, any new HR system for DHS must
be mission-focused, and its design must facilitate mission performance;
the future system should be fair, transparent,
and credible;
establishing broad general principles as a
foundation for the future system will be important to ensure
integration, but HR options might have to be tailored to specific parts
of DHS;
employee and union participation, as well as
effective communication, will be critical to creating, implementing,
and operating a successful HR management system;
creating a new system will take time and require
a substantial investment of resources, including training and
development, particularly for managers who must implement the changes
in a manner that is seen by employees and the public as fair and
credible.
Discussion of the various Design Team options revealed a wide range
of opinions, with some options evoking greater discussion than others.
A comprehensive summary of the October Senior Review Committee meeting
can be found at http://www.epa.gov/edocket.
Summary of Public Comments on Options
Comments regarding the options discussed at the October Senior
Review Committee meeting were received from a total of 16 organizations
and individuals, including 5 employee organizations and 1 organization
representing senior executives. Some of these comments were presented
orally during the public comment period on October 21. Other comments
were submitted to the Senior Review Committee in writing.
The comments reflected a range of views that included strong
support for flexibility, as well as some concern for preserving due
process for employees. It was suggested that inequities should not be
permitted under the guise of national security and that it is not
necessary to "fix" systems that are working well. At the same time,
some comments stressed that DHS would need considerable HR flexibility
to carry out its mission efficiently.
Comments also addressed the importance of recognizing and rewarding
excellence. Some commenters expressed trepidation about implementing a
pay-for-performance system, noting a potential for favoritism which can
discourage teamwork. Others expressed support for the concept, while
urging that such a system be adequately funded and ample training be
provided. The importance of good communication with employees
throughout the design and implementation of the new system was also
noted.
Evaluation of Design Process
The creation of DHS is the largest undertaking of its kind since
the creation of the Department of Defense in the late 1940s. The
success of merging more than 20 agency components and more than 180,000
employees into a single organization with a clear mission and focus
will depend to a considerable degree on how effectively and efficiently
the Department addresses its human capital issues.
Accordingly, the General Accounting Office (GAO) evaluated the DHS/
OPM HR systems design process. GAO's findings and recommendations are
found in GAO report GAO-03-1099 (September 2003).
The report praises the collaborative and inclusive process
developed for designing new DHS HR systems and for "reflecting
important elements of effective transformation." Specifically, the
report indicates that the design process incorporated the following
essential ingredients to successful transformation:
Leadership--on-going commitment of both DHS and
OPM leadership to stimulate and support the design effort.
Key Principles--the guiding principles of the
design process reflected support for the mission and the employees of
the new department, protection of basic merit system principles, and
the commitment to incorporate employee accountability for performance.
Employee Involvement--collaboration with
employee representatives and employee involvement through the focus
group interviews, town hall meetings, and Field Team participation.
The report further states that the analysis of DHS' effort to
design a human capital system "can be particularly instructive in
light of legislative requests for agency-specific human capital
flexibilities at the Department of Defense and the National Aeronautics
and Space Administration."
The report also includes some valuable recommendations for ensuring
effective implementation of the new system. These recommendations
include effective communication characterized by two-way dialogue,
integration of the human capital policy into the strategic plan and
programmatic goals, and continued employee feedback.
Summary of Proposed HR System for DHS
The Department of Homeland Security was created in recognition of
the paramount responsibility to safeguard the American people from
terrorist attack and other threats to homeland security. Congress
stressed that any HR system established by DHS and OPM must be
"flexible" and "contemporary" (5 U.S.C. 9701(b)(1) and (2)). The
Secretary of Homeland Security and the Director of OPM are
[[Page 8036]]
determined to create a new HR system for DHS that is, first and
foremost, mission-centered. In other words, the most important
objective of the new system must be to serve and advance the
Department's critical homeland security mission. At the same time, DHS
and OPM remain committed to ensuring that the new DHS HR system
generates respect and trust and that it is based on the principles of
merit and fairness embodied in the statutory merit system principles.
Secretary Ridge and Director James have determined that the best
way to achieve these goals is to create a system that is performance-
focused, flexible, and contemporary, since these qualities are critical
to freeing the DHS workforce to focus on the Department's mission. For
example--
The proposal to establish a pay-for-performance
system for DHS is designed to ensure that employees have a clear
understanding of their expected performance and to reinforce and reward
high-performing employees who advance and support the Department's
mission by, for example, guarding our Nation's borders, protecting our
Nation's critical infrastructure, and enhancing the security of air
travel.
Providing for greater flexibility in collective
bargaining within DHS allows the Department to take action against
terrorist threats, secure the Nation's borders and ports of entry, and
meet other critical mission needs without unnecessary delay. We have
narrowed the duty to bargain over core management rights where
flexibility and swift implementation are most critical to achieving the
mission, while preserving the right to bargain over important HR
polices.
Authorizing the Secretary to designate offenses
that merit mandatory removal and establishing a special independent DHS
panel to review such actions is designed to recognize both the harm
certain acts of misconduct can inflict on the Department's critical
mission and to permit DHS to move quickly to address and resolve very
serious misconduct.
The adoption of a single, lower standard of
proof ("substantial evidence" rather than "preponderance of the
evidence") for all adverse actions, whether based on performance or
conduct, is designed to recognize the appropriate deference that should
be granted to DHS officials responsible for overseeing the Department's
critical operations and to ensure consistency in the review of all
adverse actions involving DHS employees, thus reinforcing the single
overarching mission of the new Department.
The streamlined process for adverse action
appeals and the creation of a DHS Labor Relations Board will balance
employee rights with critical mission needs.
As explained previously, the Secretary of Homeland Security and the
Director of OPM are authorized by the Homeland Security Act of 2002 to
waive specified chapters of title 5, United States Code, to create a
new HR system for DHS. The Secretary and the Director have reviewed and
given full consideration to all of the options developed by the DHS/OPM
HR Systems Design Team. In addition, they have given due weight to the
views and opinions expressed by DHS employees in the town hall meetings
and focus groups hosted by DHS from May to July 2003. They have given
special consideration to the thoughtful review of the options conducted
by the DHS HRMS Senior Review Advisory Committee in October 2003 and to
all public comments received in connection with that meeting. Finally,
as required by law, they have consulted with MSPB regarding possible
changes in the appeals procedures established under chapter 77 of title
5, United States Code. They also consulted with many other Federal
officials and external stakeholders.
The proposed regulations reflect authorities that are extended to
the Secretary and the Director through January 23, 2009. During that
period, DHS and OPM are committed to conducting an ongoing evaluation
of the HR system described here--overall, as well as with regard to its
separate elements--to ensure that it is achieving its intended
purposes. Further, DHS and OPM are committed to making appropriate
modifications to that system as circumstances warrant, particularly
with respect to any unanticipated consequences that may emerge during
its implementation. To that end, these regulations will be issued in
interim final form, so as to provide the Secretary and the Director
with sufficient flexibility (subject to appropriate consultation with
stakeholders) to make additional changes to the HR system that may
result from initial evaluations. Subsequent evaluations may result in
further changes in the regulations.
The proposed regulations in part 9701 of title 5, Code of Federal
Regulations, are organized into six subparts that correspond to the
specific chapters in title 5, United States Code, which DHS and OPM are
authorized to waive, plus an opening subpart (subpart A) that sets
forth general provisions applicable throughout part 9701. Subpart B
sets forth a new job evaluation (classification) system for DHS that
waives chapter 51 of title 5 for most purposes. Subpart C sets forth a
new pay and pay administration system that waives substantial portions
of chapter 53. Subpart D sets forth new performance management
provisions that replace chapter 43. Subpart E sets forth new labor-
management relations provisions that replace chapter 71. Subpart F sets
forth new rules for adverse actions that replace the rules set forth in
chapter 75. And subpart G sets forth new rules governing appeals that
replace the rules set forth in chapter 77.
General Provisions--Subpart A
Subpart A of the proposed regulations sets forth their purpose,
establishes general provisions governing coverage under the new DHS HR
system, and defines terms that are used throughout the new part 9701.
Part 9701 will apply to DHS employees who are identified under the
regulations as eligible for coverage and who are approved for coverage,
as of a specified date, by the Secretary of Homeland Security. This
will enable DHS to phase in coverage of particular groups of employees
or components of the Department. Subpart A also allows DHS to issue
internal Departmental regulations that further define the design
characteristics of the new HR system. (See the "Next Steps" section
at the end of this Supplementary Information.) Finally, subpart A
clarifies the relationship of these regulations to other provisions of
law and regulation outside those that are being waived with respect to
DHS.
A New Job Evaluation, Pay, and Performance Management System for DHS
DHS and OPM have determined that a performance-focused job
evaluation and pay system best meets the critical operations and
mission-focused needs of DHS and that changes are needed in the current
performance management provisions to support a new, performance-focused
job evaluation and pay system.
DHS and OPM have concluded that the current GS classification and
pay system, as a whole, does not focus sufficiently on creating and
sustaining a high performance culture within DHS and that other "time-
focused" options considered during the design process rely too much on
longevity and not enough on recognizing and rewarding high performance
at all levels of the workforce. DHS and OPM found some aspects of
"competency-focused" options to be attractive, particularly for
employees early in their careers, who are still acquiring the
competencies,
[[Page 8037]]
skills, and knowledge needed to make significant contributions to the
mission of DHS. DHS and OPM agree that a new job evaluation and pay
system should focus primarily on encouraging the development of a high
performance culture.
All DHS employees currently covered by the job evaluation and pay
systems established under chapter 51 or 53 of title 5, United States
Code, are eligible for coverage under this job evaluation and pay
system at the discretion of DHS, in coordination with OPM, except for
(1) Executive Schedule officials (who, by law, remain covered by
subchapter II of chapter 53) and (2) administrative law judges paid
under 5 U.S.C. 5372. At present, DHS plans to cover only GS employees
and employees in senior-level (SL) and scientific or professional (ST)
positions.
SES members employed by DHS will be eligible for coverage under the
new DHS pay system. However, the proposed regulations provide that any
new pay system covering SES members must be consistent with the
performance-based features of the new Governmentwide SES pay-for-
performance system authorized by section 1125 of the National Defense
Authorization Act for Fiscal Year 2004 (Public Law 108-136, November
24, 2003). If DHS wishes to establish an SES pay system that varies
substantially from the new Governmentwide SES pay-for-performance
system, DHS and OPM will issue joint authorizing regulations consistent
with all of the requirements of the Homeland Security Act, as set forth
in 5 U.S.C. 9701. In addition, DHS and OPM will involve SES members and
other interested parties in the design and implementation of any new
pay system for SES members employed by DHS.
As explained in the "Background" section, above, the new job
evaluation and pay system proposed in these regulations cannot apply
directly to DHS employees covered by a basic pay system authorized by
an authority outside title 5. However, it is possible for DHS to extend
this job evaluation and pay system by administrative action to
Transportation Security Administration (TSA), Stafford Act, Coast Guard
Academy, and other similarly situated employees under authorities
provided to the Secretary or other DHS officials.
The transitional provisions in subparts B and C include a special
authority to deal with the possibility that DHS may transfer Federal
Air Marshal Service positions from TSA to another DHS component before
a new DHS job evaluation and pay system is in place. This special
authority allows DHS to establish a temporary job evaluation and pay
system for any such transferred Federal Air Marshal Service positions
that parallels the system established for TSA employees. Absent this
authority, these transferred positions generally would be covered by
the GS classification and pay system. Thus, without the transitional
authority in subparts B and C, this would mean that Air Marshals could
be moved from the TSA job evaluation and pay system to the GS system,
and then to the new DHS system, all in a relatively short period of
time. This would be far too disruptive to these critical employees, and
the proposed regulations minimize this disruption. The regulations
authorize DHS to modify the TSA-parallel system after coordination with
OPM. For example, DHS may adjust the rate ranges to be more consistent
with the ranges that apply to other employees in the same DHS
component.
By necessity and design, the proposed regulations on job
evaluation, pay, and performance management provide considerable
discretion to design many of the detailed features of the new system,
by DHS at its sole and exclusive discretion and/or in coordination with
OPM. What follows, therefore, is intended to provide a general
description of the system DHS and OPM will establish under the
authority provided by 5 U.S.C. 9701 and the regulations set forth in
the proposed 5 CFR part 9701. DHS is committed to a high degree of
employee involvement in developing the details of the new job
evaluation, pay, and performance management system.
Throughout the development and implementation of the new DHS job
evaluation, pay, and performance management system, DHS will coordinate
with OPM to ensure the flexibilities afforded by the Homeland Security
Act are exercised in a manner that takes Governmentwide impact into
account. This coordination role is consistent with OPM's institutional
responsibility, as codified in 5 U.S.C. chapter 11 and Executive Order
13197 of January 18, 2001, to provide Governmentwide oversight in human
resources management programs and practices.
Job Evaluation (Classification)--Subpart B
Subpart B will provide DHS with the authority to replace the
current 15-grade structure of the GS classification and qualifications
system with a new method of evaluating or classifying jobs to determine
their relative value to the organization by grouping them into
occupational categories and levels of work for pay and other related
purposes. Under this new "job evaluation" system, DHS will have the
authority to establish qualifications for positions and to assign
occupations and positions to broad occupational "clusters" and pay
levels (or "bands"). (Note: "Job evaluation" is a common term of
art used among HR professionals. It is separate and distinct from the
evaluation or appraisal of an employee's performance, which is
addressed as part of the performance management system established
under subpart D of the proposed regulations.)
In coordination with OPM, DHS will establish broad occupational
clusters by grouping occupations and positions that are similar in
terms of type of work, mission, developmental/career paths,
competencies, and/or skill sets. These occupational clusters will serve
as the basic framework for the DHS job evaluation system. DHS may elect
to phase in the coverage of specific categories of employees or
occupations under the new job evaluation and pay system established
under these proposed regulations. Within each occupational cluster, DHS
(in coordination with OPM) will establish broad salary ranges, commonly
referred to as "bands." DHS may use OPM-approved occupational series
and titles to identify and assign positions to a particular cluster and
band. Occupational clusters typically will include the following bands,
each with progressively higher pay ranges:
Entry/Developmental--Employees in positions
assigned to this band focus on gaining the competencies and skills
needed to perform successfully at the full performance level.
Full Performance--Employees in positions
assigned to this band have completed all necessary entry-level training
and/or developmental activities and have demonstrated they are capable
of performing the full range of non-supervisory work required for
positions in that occupation. Employees assigned to positions in this
band will be evaluated primarily on their contributions to the mission
of DHS.
Senior Expert--Positions assigned to this band
will be reserved for a relatively small number of non-supervisory
employees who possess an extraordinary level of technical knowledge or
expertise upon which DHS relies for the accomplishment of critical
mission goals and objectives. Typically, entry will be controlled and/
or competitive.
Supervisory--Positions assigned to this band
will be reserved primarily for first-level supervisors of employees in
[[Page 8038]]
the same occupational cluster. Typically, entry will be competitive.
This typical structure will provide a clearly-defined career path
for each occupation within a cluster. DHS also will establish a
separate cluster for higher-level managers. The accompanying table
(table 1) illustrates the occupational cluster structure concept.
[GRAPHIC] [TIFF OMITTED] TP20FE04.011
Employees will be permitted to request reconsideration as to
whether their job has been placed in the appropriate series or whether
their job is covered by the system itself. An employee's assignment to
a particular cluster or band within a cluster will not be subject to
this reconsideration process.
The new job evaluation system for DHS will result in a streamlined
method of evaluating jobs that no longer relies on lengthy
classification standards and position descriptions or requires fine
distinctions among closely related levels of work, as is now required
under the GS classification system, without compromising internal
equity and the merit system principle of equal pay for work of equal
value. In addition, the system described here, together with the new
DHS pay system described below, will provide DHS with greater
flexibility to adapt the Department's job and pay structure to meet
present and future DHS mission requirements.
Pay and Pay Administration--Subpart C
DHS, in coordination with OPM, will set the minimum and maximum
rates for each band in each occupational cluster based on factors such
as labor market rates, recruitment and retention information, mission
requirements, operational needs, and overall budgetary constraints. The
bands will have open pay ranges, with no fixed step rates. OPM will
manage cross-agency consistency, competition, and movement within the
Federal Government.
Pay adjustments under the new system will fall into three general
categories: market-related adjustments comprising annual rate range
adjustments and locality pay supplements, annual performance-based pay
increases, and other individual adjustments. In keeping with the desire
of the Secretary and the Director to achieve and sustain a culture of
high performance, the proposed regulations provide that these pay
adjustments will be provided only to employees who meet or exceed
performance expectations. Under criteria to be developed by DHS, an
employee whose performance is unacceptable and who does not receive
annual market adjustments may have those adjustments granted
prospectively if performance improves to the fully successful level or
better.
Annual rate range adjustments and locality pay supplements will be
determined by DHS, considering mission requirements, labor market
conditions, availability of funds, pay adjustments received by
employees in other Federal agencies, and other relevant factors. Annual
rate range adjustments and locality pay supplements may differ by
occupational cluster or band. DHS will determine locality pay areas in
coordination with OPM. DHS will determine the timing of these annual
pay adjustments. If DHS finds that recruitment and/or retention efforts
are, or are likely to become, significantly handicapped for particular
subcategories of employees within a band or cluster because of
insufficient pay, DHS may, in coordination with OPM, establish special
basic pay supplements that provide higher pay levels for those
subcategories of employees.
Employees also will receive annual performance-based pay increases.
For employees in a Full Performance or higher band, this pay increase
will be based on their rating of record. The performance-based pay
increase for a given rating of record will be expressed as a dollar
amount or percentage of basic pay, and that amount or percentage will
be the same for all employees assigned to a given "performance pay
pool." A performance pay pool consists of the money allocated for
performance-based pay increases for a defined group of employees.
Generally speaking, performance pay pools will be established by
occupational cluster and by band within each cluster, but may also be
further divided by organizational unit and/or location.
In response to concerns expressed by employees and employee
representatives during the DHS HR system design process, managers will
not have complete discretion regarding the amount of performance-based
pay
[[Page 8039]]
increases. Instead, performance-based pay increases will be a function
of the amount of money in the performance pay pool, the relative point
value placed on performance ratings, and the distribution of
performance ratings within that performance pay pool. The relative
point value of a performance rating will be established in advance
through DHS implementing regulations or instructions.
A performance-based pay increase may be calculated as a dollar
amount or as a percentage of basic pay. For example, consider a group
of 100 employees for whom the performance pay pool is determined to be
$84,390. If 30 employees receive a "fully successful" rating valued
at 1 point, 46 employees receive an "exceeds fully successful" rating
valued at 2 points, and 24 employees receive an "outstanding" rating
valued at 3 points, then the total number of points for this group
would be 194: (30 x 1) + (46 x 2) + (24 x 3) = 194. Therefore, the
value of 1 point is $435 ($84,390/194 = $435). In this example, a
"fully successful" rating would result in a $435 performance-based
pay increase ($435 x 1), an "exceeds fully successful" rating would
result in an $870 pay increase ($435 x 2), and an "outstanding"
rating would result in a $1,305 pay increase ($435 x 3).
A similar calculation could be made to determine the amount of
performance-based pay increases in terms of a percentage of salary.
Under this method, employees who receive a specific rating of record
would receive the same percentage increase in basic pay, though the
actual dollar amount of that increase would vary in proportion to each
employee's rate of basic pay. The proposed regulations allow DHS to
adopt either of these methods. In addition, DHS could adopt different
point values for ratings of record than those used in this example.
If a performance-based pay increase would cause an employee's
salary to exceed the band maximum, the proposed regulations allow DHS
to grant a lump-sum payment in lieu of that portion of the pay increase
that otherwise would exceed the band maximum. In addition, the proposed
regulations allow DHS to establish a "control point" within a band,
beyond which basic pay increases may be granted only for meeting
criteria established by DHS, such as an "outstanding" performance
rating. If a performance-based pay increase would cause an employee's
salary to exceed such a control point, DHS could grant a lump-sum
payment in lieu of that portion of the pay increase that otherwise
would exceed the control point. Lump-sum payments in lieu of a basic
pay increase generally will be granted at the same time as performance-
based pay increases.
Employees in a Senior Expert band generally will move through the
band range by means of the performance-based pay increases described
above. In addition to those pay increases, however, DHS reserves the
discretion to grant additional pay increases to those employees having
specified mission-critical skills or those who make exceptional
contributions to the DHS mission. Such additional payments will be
limited to employees in the Senior Expert band and will not affect the
performance pay pool associated with that band.
Employees in an Entry/Developmental band will receive pay
adjustments as they acquire the competencies, skills, and knowledge
necessary to advance to the target Full Performance band. The training
program and competencies required for a given occupation will not
change as a result of the new DHS pay system. Under the new system, DHS
will be able to advance an employee through the Entry/Developmental
band to the target Full Performance band without regard to the limits
and constraints of the GS system, such as time-in-grade restrictions
and rigid salary setting rules.
Other individual pay adjustments may be granted by DHS. These
payments will not be considered part of basic pay. They include special
skills payments for specializations for which the incumbent is trained
and ready to perform at all times, such as proficiency in foreign
languages or dog-handling; special assignment payments for assignments
of greater difficulty or complexity within the same cluster and band;
and special staffing payments to address recruitment and retention
difficulties in particular occupations and/or locations. Some of these
payments may require that employees enter into a service agreement as a
condition of receiving additional pay.
Promotion pay increases (from a lower band to a higher band in the
same cluster or to a higher band in a different cluster) generally will
be fixed at 8 percent of the employee's rate of basic pay or the amount
necessary to reach the minimum rate of the higher band, whichever is
greater. (This amount is roughly equivalent to the value of a promotion
to a higher grade within the GS system.) As with the current system, in
the case of a demotion to a lower band for performance or conduct
reasons, pay may be set at any lower rate within the lower band at
management's discretion. Where pay retention is applicable (e.g.,
following a reduction in force), the employee's pay will be frozen
until such time as the maximum rate of the applicable band catches up
to the frozen rate.
Upon implementation of the new system, employees will be converted
based on their official position of record. Employees on temporary
promotions will be returned to their official position of record prior
to conversion. GS employees will be converted at their current rate of
basic pay, including any locality payment, adjusted on a one-time, pro-
rata basis for the time spent towards their next within-grade increase.
Employees in career-ladder positions below the full performance level
generally will be placed in the Entry/Developmental band in the
appropriate cluster.
The new DHS pay system will provide DHS with an enhanced ability to
establish and adjust overall pay levels in keeping with changes in
national and local labor markets. It is designed to adjust individual
pay levels based on the acquisition and assessment of competencies,
skills, and knowledge for employees below the Full Performance band and
on the basis of performance or contribution to mission for employees in
the Full Performance band or higher. Above all, the new DHS pay system
will be capable of adapting to changing circumstances and mission
requirements.
Performance Management--Subpart D
DHS and OPM have decided to waive the provisions of chapter 43 of
title 5, United States Code, in order to design a performance
management system that will complement and support the Department's
proposed performance-based pay system described above. The proposed
system will also ensure greater employee accountability with respect to
individual performance expectations, as well as organizational results.
Over the past 25 years, legal interpretations of the current
chapter 43 have produced a system that is procedurally complex,
inflexible, and paper-intensive, requiring a manager to set an
employee's specific written elements and standards at the beginning of
an annual appraisal period. In so doing, the manager must anticipate
the myriad work assignments (each potentially with its own unique
performance expectations) the employee will receive during the course
of that appraisal period. These static, often generic standards make it
difficult for managers to adjust performance requirements and
expectations in response to the Department's rapidly
[[Page 8040]]
changing work environment, hold individual employees accountable for
those general and/or assignment-specific work requirements and
expectations, and make meaningful distinctions in employee performance
as they accomplish those assignments.
The proposed regulations are designed to address these
deficiencies. They continue to require that managers establish and
communicate performance expectations to employees; however, they no
longer require that this be accomplished exclusively through written
performance elements and standards set at the beginning of the
appraisal period. Instead, they give managers the option of
establishing and communicating performance expectations during the
course of the appraisal period through specific work assignments or
other means (including standard operating procedures, organizational
directives, manuals, and other generally established job requirements
that apply to employees in a particular occupation and/or unit).
However, managers may also continue to use performance plans, elements,
and standards.
By providing managers more realistic alternatives for setting
employee expectations and assessing their performance against those
expectations, the Department will be better able to hold its employees
accountable and to recognize and reward those who exceed expectations.
By the same token, managers will also be held accountable for clearly
and effectively communicating those expectations, giving employees
feedback regarding their performance in relation to those expectations,
making meaningful performance distinctions in support of the
Department's new performance-based pay system, and identifying and
addressing unacceptable performance.
Finally, in order to enable managers to make meaningful
distinctions in performance, the regulations provide for a single level
of unacceptable performance, a fully successful level, and at least one
level above fully successful. The regulations do not permit two-level
("pass/fail") ratings for employees above the entry/developmental
level, nor do they allow any type of rating quotas or forced ratings
distribution. The regulations also provide for DHS to appoint
Performance Review Boards to provide oversight and ensure consistent
application of the performance management system.
Further, the regulations provide managers with a broad range of
options for dealing with poor performance, including remedial training,
an improvement period, reassignment, verbal warnings, letters of
counseling, written reprimands, and/or adverse actions as defined in
subpart F of the regulations. Adverse actions will include the
reduction of an employee's pay within a band, giving managers another
means of dealing with poor performance, short of demotion or removal.
The proposed regulations also streamline and simplify the procedures
involved in taking an adverse action without compromising an employee's
right to due process (described below and in subpart F). In this
regard, the proposed regulations require a manager to take the nature
and consequences of the poor performance into account in deciding among
these options.
As provided in subpart C of the proposed regulations, performance
ratings of record will be used to make individual pay adjustments under
the new DHS pay system. In recognition of these pay consequences, the
regulations permit employees to grieve their ratings of record. Non-
bargaining unit employees may grieve such ratings through the
Department's internal administrative grievance procedure; bargaining
unit employees will have access to negotiated grievance procedures. In
the latter case, an exclusive representative may seek arbitration of an
appraisal grievance, but the rating of record will be sustained unless
the union is able to prove that it was arbitrary or capricious. Either
party may file exceptions to an arbitration award with the DHS Labor
Relations Board established under subpart E of these proposed
regulations.
Generally, DHS employees who are currently covered by chapter 43 of
title 5, U.S. Code, are eligible for coverage under the new performance
management provisions in subpart D of the proposed regulations.
Therefore, administrative law judges and Presidential appointees will
not be eligible for coverage, because they are currently excluded from
chapter 43 of title 5. However, certain categories of employees are
currently excluded from chapter 43 by OPM administrative action, as
authorized by 5 CFR 430.202(d), such as those hired under the Stafford
Act; these employees are eligible for coverage under the new DHS
performance management provisions. DHS will decide which of those
categories of otherwise eligible employees will be covered by the
Department's new performance management system or systems. The proposed
regulations also allow DHS to develop, implement, and administer
performance management systems tailored to specific organizations and/
or categories of employees (for example, in a particular occupational
cluster).
These proposed regulations lay the foundation for a performance
management system that is fair, credible, and transparent, and that
holds employees and managers accountable for results. However, a
performance management system is only as effective as its
implementation and administration. To that end, DHS is committed to
providing its employees and managers with extensive training on the new
performance management system and its relationship to other HR policies
and programs, as well as on effective performance management generally.
A New Labor Relations, Adverse Actions, and Appeals System for DHS
Labor-Management Relations--Subpart E
As noted previously, the Department of Homeland Security was
created in recognition of the paramount responsibility to safeguard the
American people from terrorist attack and other threats to homeland
security. In enacting the Homeland Security Act, Congress stressed that
any HR system established by DHS and OPM must be "flexible" and
"contemporary," enabling a swift response to the ever-evolving
threats to our homeland. The labor-management regulations in this part
are designed to meet these compelling concerns.
1. Purpose
DHS has a unique mission not duplicated elsewhere in the Federal
Government. When Congress passed the Homeland Security Act and created
DHS, it could have relied upon the current labor-management relations
statute at 5 U.S.C. chapter 71 with respect to the Department's labor
relations obligations. However, Congress chose not to maintain the
status quo and gave the Secretary and the Director of OPM clear
authority to waive or modify the provisions of chapter 71. (See 5
U.S.C. 9701(c).) In so doing, Congress provided DHS the option of
exploring and implementing new and innovative human resources
management systems that would be more responsive to the unique and
critical mission of DHS. (See 5 U.S.C. 9701(a) and (c).)
These regulations define the purpose of the labor relations system.
They implement the requirements of 5 U.S.C. 9701(b) by ensuring the
right of employees to organize, bargain collectively, and participate
through labor organizations of their own choosing in decisions which
affect
[[Page 8041]]
them, subject to the limitations on negotiability established in law,
including the authority that Congress delegated to OPM and DHS to
promulgate these regulations.
Chapter 71 of title 5, United States Code, enacted in 1978,
recognizes that the "special requirements and needs of the
Government" demand special procedures and that its provisions must be
interpreted in a manner consistent with the requirement of "an
effective and efficient Government." These regulations state that
every provision of this subpart must be interpreted in a way that
recognizes the critical mission of the Department, and each must be
interpreted to promote the swift, flexible, effective, and efficient
day-to-day accomplishment of that mission as defined by the Secretary.
2. Definitions
Unless otherwise provided, these regulations leave intact many of
the definitions contained in chapter 71 of title 5. The regulations
adopt the following terms and their associated definitions from that
chapter and apply them to DHS: "employee," "labor organization,"
"exclusive representative," "supervisor," "collective
bargaining," and "management official." The term "agency," as
referenced in chapter 71, will be replaced by the term "Department"
and refers to the Department of Homeland Security. The term
"components" applies to the major entities under the Department,
e.g., Customs and Border Protection.
The regulations revise other definitions from chapter 71 as they
would apply to DHS. The term "conditions of employment" has been
redefined to exclude matters specifically provided for by Department-
wide personnel regulations and to exclude pay, pay adjustments, and job
evaluation under subparts B and C. The term "grievance" has been
modified somewhat to mean any claimed violation, misinterpretation, or
misapplication of any law, rule, or regulation only if the law, rule,
or regulation was issued for the purpose of affecting the working
conditions of employees--not one that does so indirectly or
incidentally. To this extent, DHS and OPM adopt the D.C. Circuit's
interpretation of what constitutes a "grievance."
Chapter 71 of title 5, U.S. Code, defines employees who are
excluded from coverage in a bargaining unit. In addition to managers
and supervisors, "confidential employees" are excluded from coverage
under chapter 71 if the employee acts in a confidential capacity with
respect to an individual who "formulates or effectuates management
policies in the field of labor relations." We believe this definition
is drawn too narrowly. There are many management officials who do not
formulate labor relations policy but who have labor-management
relations responsibilities. For example, officials who resolve
grievances at the second or third step of a negotiated grievance
procedure or who serve on negotiating teams or help decide the position
management takes in negotiating labor agreements. We propose to exclude
from coverage any employees who work for such managers in a
confidential capacity because of the sensitive nature of the
information they might be privy to and the potential for real or
perceived conflicts of interest.
3. Administration
The Department will create a Homeland Security Labor Relations
Board (Board) composed of three external members appointed to fixed
terms. These three members will be appointed by the Secretary, and one
member will be nominated by the Chair of the Federal Labor Relations
Authority (FLRA) from among the current members of FLRA. Members will
be chosen not only for their background in labor-management relations,
but also for their knowledge of the DHS mission and their leadership
experience in comparable organizations. The Board must interpret the
regulations in subpart E and related decisions and policies in a way
that recognizes the critical mission of the Department and the need for
flexibility.
The Board will issue decisions in the following types of cases:
bargaining unit determinations; unfair labor practice claims arising
out of the duty to bargain; information request disputes; bargaining
impasses and negotiability disputes; and exceptions to arbitration
awards. In order to maintain the integrity of the Governmentwide labor
relations program and preserve DHS resources, FLRA will continue to
supervise and conduct representation elections and retain jurisdiction
over the processing of unfair labor practice charges concerning the
rights and obligations of individual employees and labor organizations
(i.e., 5 U.S.C. 7116 (a)(1)-(4) and (b)(1)-(4)).
In evaluating the merits of a separate Homeland Security Labor
Relations Board that would largely replace FLRA, DHS and OPM put a high
premium on the Board members' understanding of and appreciation for the
unique challenges the Department faces in carrying out its homeland
security mission. Given its responsibilities to administer a
Governmentwide labor relations program for over 1 million Federal
employees, FLRA is less likely than an independent DHS Labor Relations
Board to develop the mission-focus and homeland security expertise that
the Department and its unions will need, nor will it be as able to
dedicate its resources to prioritize DHS cases. However, to ensure
independence and impartiality, the DHS Labor Relations Board will not
report to the Secretary; rather, its members will be appointed to fixed
terms and subject to removal only for inefficiency, neglect of duty, or
malfeasance.
DHS and OPM also gave great weight to the benefits of a unified,
expeditious process to resolve bargaining issues and disputes. Under
the current system, a bargaining dispute can be investigated and
pursued by FLRA's Office of General Counsel to determine whether there
was an obligation to bargain; by FLRA itself to determine whether the
matter is within the scope of bargaining; and by the Federal Service
Impasses Panel to resolve the bargaining issue on its merits. This
division of critical adjudicatory functions causes excessive delays and
repeated litigation and contributes significantly to the cost of
collective bargaining. OPM and DHS concluded that there are significant
advantages to be gained from "one-stop shopping" to resolve
bargaining disputes.
In sum, we determined that the Department should establish a
separate Labor Relations Board focused on the DHS mission but
completely independent. In addition, we concluded that the Board should
oversee a unified dispute resolution process that will decide
bargaining disputes more efficiently and effectively than is possible
today under FLRA and chapter 71. However, the fragmentation and
overlapping jurisdiction that makes resolving bargaining disputes so
complex and protracted is not a problem in the way employee appeals are
adjudicated by MSPB. As a single forum with a unified statutory
process, MSPB already employs the "one-stop shop" approach to adverse
action appeals that OPM and DHS will apply to bargaining disputes. That
is why OPM and DHS are creating the DHS Labor Relations Board to
resolve bargaining matters while preserving MSPB for deciding most
employee appeals, subject to streamlined rules and new substantive
standards, discussed more fully in the "Appeals" section of this
Supplementary Information.
OPM and DHS also concluded that an understanding of the
Department's mission is essential to resolving bargaining disputes,
which involve
[[Page 8042]]
general conditions of employment affecting most or all bargaining unit
employees. Except for offenses designated as "mandatory removal
offenses" under subpart G, which will be resolved by an independent
DHS panel, an appreciation for the Department's unique mission, while
important, is not as essential for resolving individual employee
appeals to MSPB.
Both the DHS Labor Relations Board and FLRA must interpret the
regulations in subpart E in a way that promotes the swift, flexible,
effective, and efficient day-to-day accomplishment of the Department's
mission as defined by the Secretary. In addition, the Board is
authorized to promulgate its own operating procedures and issue
advisory opinions on important issues of law. These opinions will help
both labor and management understand how key provisions of the
regulations will be interpreted without the time and expense of years
of litigation.
Matters that come before the DHS Labor Relations Board may be
reviewed de novo, which means that the Board will have the discretion
to reevaluate the evidence presented by the record and reach its own
independent conclusions with respect to the matters at issue. Under
chapter 71, FLRA reviews issues of law de novo. The Board will have the
same authority, but it may also employ a de novo review to factual
findings and contract interpretation. Given the inherently executive
branch nature of decisions relating to homeland security and the
Department's unique responsibilities in this area, the Board is
authorized to conduct a thorough review of all matters, including
factual determinations by its adjudicators or arbitrators, to safeguard
the Department's homeland security mission.
Under 5 U.S.C. 7123, the United States courts of appeals have
jurisdiction over appeals filed from final orders of FLRA, with limited
exceptions. Similar judicial review in the U.S. Court of Appeals for
the Federal Circuit exists for MSPB pursuant to 5 U.S.C. 7703. Ideally,
these regulations would have applied the same standards and procedures
as set forth in 5 U.S.C. 7123 and 7703 to the decisions of the DHS
Labor Relations Board and the DHS Panel that will decide "mandatory
removal offenses." This would have been the most efficient way in
which to accord the right of judicial review to individuals adversely
affected or aggrieved by a decision of the Board or the Panel. However,
DHS and OPM currently lack the statutory authority to confer
jurisdiction to hear such appeals in the United States courts of
appeals or the U.S. Court of Appeals for the Federal Circuit. In light
of these issues, the proposed regulatory language is silent on judicial
review of decisions of the Board or the Panel. DHS and OPM seek
comments on available options, including (1) remaining silent on
judicial review and (2) retaining the current statutory judicial review
provisions by permitting FLRA and MSPB to review decisions of the Board
and the Panel.
Option 1. Under this option, DHS and OPM would not include appeal
language in the regulation addressing any form of judicial review, but
would allow existing governing legal principles to determine the
circumstances under which there would be judicial review.
Option 2. Under 5 U.S.C. 7123, the United States courts of appeals
have jurisdiction over appeals filed from final orders of FLRA, with
limited exceptions. Under this option the final regulations would
provide that Board decisions are appealable to the three-member FLRA
but with a deferential standard of review appropriate for an appellate
procedure of this type. FLRA would be required to decide an appeal from
a final decision of the Board within 20 days. All decisions of FLRA,
including those decisions on appeals from the Board, would be subject
to judicial review in accordance with 5 U.S.C. 7123. Under this option,
judicial deference would be given to the decisions of the Board because
the Board is charged by regulation with interpreting and implementing
the Homeland Security Act and was created to apply its specialized
expertise in homeland security matters.
4. Employee Rights
The regulations retain the statement of employee rights enumerated
in chapter 71. Employees, as defined in the regulations, will have the
right to form, join, or assist any labor organization, or to refrain
from any such activity. Each employee will be protected in the exercise
of any rights under the regulations through existing FLRA procedures.
5. Union Rights and Obligations
As in chapter 71, these regulations provide that recognized unions
are the exclusive representatives of the employees in the unit and act
for and negotiate on their behalf, consistent with law and regulation.
This section also preserves what has come to be known as the
"Weingarten" right, which permits union representation at the
employee's request when management examines an employee during an
investigation and the employee reasonably believes that discipline will
follow. The proposed regulations provide that representatives of the
Office of the Inspector General, Office of Security, and Office of
Internal Affairs are not representatives of the Department for this
purpose.
Under current law, a union has the right to send a representative
to a "formal meeting" called by management to discuss general working
conditions with employees. Determining what is and is not a "formal
meeting" as the FLRA and courts have interpreted that term requires
managers to balance numerous factors concerning the relative formality
of the meeting and the precise subject matter discussed. Front-line
managers and supervisors are expected to be familiar with and know how
to apply these complicated, nuanced criteria, and they get it wrong at
their legal peril. This can have a chilling effect on discussions
between management and employees concerning everyday workplace issues
and can inhibit creative thinking and problem solving. This is
particularly disruptive to the mission at ports of entry, where there
are often multiple unions.
The rights associated with "formal meetings" were intended to
safeguard against management efforts to bypass the union and deal
directly with employees in ways that undermine the union's status as
exclusive representative. We agree that such protections are needed,
but these regulations eliminate the concept of a formal meeting.
Instead, the regulations treat management efforts to bypass the union
as a breach of the duty to bargain in good faith and an unfair labor
practice. This change does not affect or limit the union's right to
attend meetings at which an employee's grievance is discussed.
In conjunction with the regulation concerning grievances, this
regulation resolves any uncertainty resulting from litigation about
whether unions are entitled to participate in EEO proceedings,
including mediation, after a formal EEO complaint has been filed. Under
these regulations, unions do not have such a right unless the
complainant requests union representation. This change will preserve
the informality and confidentiality of the entire EEO complaint
process.
Under these regulations, the Department will hold employee
representatives to the same conduct requirements as any other DHS
employees. The intent is to not bind the Department to FLRA's
"flagrant
[[Page 8043]]
misconduct" standard or any other test developed through case
decisions which may immunize union representatives engaged in otherwise
actionable misconduct. The regulations clarify that the Department may
address the misconduct of any employee, including employees acting as
union representatives, as long as the agency does not treat employees
more severely because they are engaging in union activity. The
regulation is not intended to target the content of ideas; rather, it
applies to misconduct in any manner expressed.
6. Information Disclosure
Under chapter 71, a union has the right to information maintained
by the agency if the information is necessary and relevant to the
union's representational responsibilities. This right is maintained
with some modifications under these regulations.
Under the regulations, disclosure of information is not required if
adequate alternative means exist for obtaining the requested
information, or if proper discussion, understanding, or negotiation of
a particular subject within the scope of collective bargaining is
possible without recourse to the information. This change was made to
relieve management of the administrative burden of producing
information that can readily be obtained some other way or information
that the union does not really need to fulfill its representational
obligations. The regulations further provide that information may not
be disclosed if the Secretary or his designee determines that
disclosure would compromise the Department's mission, security, or
employee safety.
The proposed regulations specify that sensitive information such as
home addresses, home telephone numbers, e-mail addresses, and other
personal identifiers, may not be disclosed to unions without employees'
express written consent. While this is not a change in existing
statutory interpretation, it is necessary to specify these limitations
in the regulations, given the extremely sensitive nature of the
Department's mission and the serious consequences if such information
fell into the wrong hands.
7. Management Rights
The Department's ability to respond rapidly to a variety of
critical challenges, ranging from terrorist threats to natural
disasters, is vital. To carry out its wide ranging mission, the
Department must have the authority to move employees quickly when
circumstances demand; it must be able to develop and rapidly deploy new
technology to confront threats to security; and it must be able to act
without unnecessary delay to properly secure the Nation's borders and
ports of entry.
Actions such as these involve the exercise of management's reserved
rights and lie at the very core of how DHS carries out its mission.
Under chapter 71 of title 5, the obligation to notify the union well
ahead of any changes in the workplace and complete all negotiations
before making any changes could seriously impede the Department's
ability to meet mission demands. For example, before the Department
could redeploy personnel from one border to another, it could be
required to bargain over the procedures it would have to follow in
deciding how assignments are made, who gets deployed, and for how long.
Based on these negotiations, the Department may have to spend valuable
time canvassing for volunteers or considering seniority before moving
people from one location to another. In the face of a committed and
unpredictable enemy, these excessive limitations on the Department's
authority to act where and when needed would significantly impede the
Department's ability to accomplish its mission.
To ensure that the Department has the flexibility it needs, we
propose to revise the management rights provisions of chapter 71. We
will expand the list of nonnegotiable subjects in section 7106 to
include what are now permissive subjects of bargaining--the numbers,
types, and grades of employees and the technology, methods, and means
of performing work. The Department will not be required to bargain over
the Department's exercise of these rights or over most of the other
rights enumerated in chapter 71, including the right to determine
mission, budget, organization, and internal security practices, and the
right to hire, assign and direct employees, and contract out. The
Department can take action in any of these areas without advance notice
to the union and without bargaining. After the Department acts, it will
have discretion to bargain over procedures and appropriate
arrangements. The regulations also provide for consultation with
employee representatives both before and after implementation when
circumstances permit.
The Department will have the same bargaining obligation it has
today concerning the exercise of the remaining management rights in
chapter 71. These include the right to lay-off and retain employees, to
take disciplinary action, and to promote. With respect to these rights,
management will be obligated to bargain over procedures and
arrangements prior to implementation, as provided under chapter 71.
These changes were carefully crafted to meet the operational needs
of DHS. We focused on those areas where flexibility and swift
implementation are most critical to preserving and safeguarding our
Nation. We concluded that the Department's mission could not be met
merely by setting time limits on how long the Department would have to
bargain before taking action or by streamlining the system in other
ways. DHS must have flexibility in these core management right areas to
respond without delay to an evolving and ever changing threat. We
believe these proposed rules accommodate the collective bargaining
rights provided by the Homeland Security Act without compromising the
Department's paramount responsibility to protect the lives and security
of the American people.
8. Bargaining Unit Determinations
In determining bargaining units, the Board will continue to apply
the same factors set forth under chapter 71 (i.e., do the employees in
a proposed unit have a clear and identifiable community of interest,
and does the unit promote effective and efficient dealings with the
Department?). However, in applying these criteria, the Board will give
the most weight to effectiveness and efficiency and determine
bargaining units based on what is "an appropriate unit consistent with
the Department's organizational structure." Using this standard will
help align the Department's bargaining units as closely as possible
with the agency's mission and organizational structure, reduce the
threat of fragmented bargaining units, provide for more uniform
conditions of employment, and facilitate contract administration, all
of which contribute to more efficient and effective agency operations.
9. Duty To Bargain
In order to ensure a consistent approach to managing the Department
within a multi-union, multi-bargaining unit environment, the proposed
regulations specify that there is no duty to bargain over DHS-wide
personnel policies and regulations including the human resources
management system established by OPM and DHS (management must bargain
over personnel policies and regulations issued by the Department's
components). In addition, proposals that do not significantly impact a
substantial portion of the bargaining unit are
[[Page 8044]]
outside the duty to bargain. This will focus bargaining on those
matters that are of significant concern and relieve the parties of
potentially lengthy negotiations over matters that are limited in scope
and effect.
If parties bargain over an initial term agreement or its successor
and do not reach agreement within 60 days, the parties will be able to
agree to continue bargaining or either party may refer the matter to
the Board for resolution. Mid-term bargaining over proposed changes in
conditions of employment must be completed within 30 days or management
will be able to implement the change after notifying the union.
As is currently the case, collective bargaining provisions that are
contrary to law, regulation, or the exercise of reserved management
rights cannot be enforced; the Secretary may disapprove any collective
bargaining provision whenever he determines that a provision is
contrary to law, regulation, or management rights; and matters reserved
to the sole and exclusive discretion of the Secretary or his designee
will be non-negotiable.
10. Grievance/Arbitration
DHS' grievance and arbitration process generally follows the
contours of chapter 71. Under DHS' system, matters excluded from the
grievance procedure under 5 U.S.C. 7121(c) will remain excluded from
coverage in the DHS system. However, in order to enhance consistency,
discourage forum shopping, and provide for faster and more consistent
resolution of appeals, the regulations propose to eliminate those
adverse actions that are appealable to MSPB (e.g., removals,
suspensions of more than 14 days, and demotions) from the scope of the
grievance procedure. To ensure fairness, these actions will be
appealable under subpart G. Lesser disciplinary and adverse actions
will still be covered by the negotiated grievance procedure. Employees
alleging discrimination may file a grievance under a negotiated
grievance procedure or a complaint with the Equal Employment
Opportunity Commission (EEOC), but not both.
Performance appraisal grievances will be handled in a similar
manner. An employee can file a grievance and the union can pursue
arbitration regarding a performance rating. However, if management
subsequently takes an appealable adverse action based on the rating and
the employee files an appeal with MSPB under subpart G, any grievance
or arbitration will be merged with the MSPB appeal and adjudicated
under subpart G.
Finally, subpart E includes a savings provision to make clear that
the procedures established under these regulations will not apply to
grievances and other administrative proceedings that were already in
progress when the affected employee(s) became covered by subpart E.
Adverse Actions--Subpart F
The regulations propose several revisions and additions to the
current adverse actions system. These changes are directed at the
cumbersome and restrictive requirements for addressing and resolving
unacceptable performance and misconduct. The proposed changes
streamline the rules and procedures for taking adverse actions, to
better support the mission of the Department while ensuring that
employees receive due process and fair treatment guaranteed by the
Homeland Security Act.
The following sections identify the major changes proposed by this
subpart and briefly describe the purpose of each change.
1. Employees Covered
All DHS employees are eligible for coverage under subpart F of the
proposed regulations, except where specifically excluded by law or
regulation. For example, employees of the Transportation Security
Administration are not eligible for coverage under subpart F because
they are excluded from coverage under 5 U.S.C. chapter 75, and 5 U.S.C.
9701 does not allow the joint regulations issued by DHS and OPM to
cover such employees.
The regulations provide an "initial service period" of one-to-two
years for all employees upon appointment to DHS. Prior Federal service
counts toward this requirement. Employees who are on time-limited
appointments and those serving in an "initial service period" are not
covered by this subpart. However, so as to ensure that the rights
currently granted preference eligible employees are not diminished, all
preference eligible employees are covered by the adverse action
protections of subpart F after completing one year of an "initial
service period." Furthermore, employees who are in the competitive
service and who are removed during an "initial service period" are
covered by the adverse action protections of 5 CFR 315.804 and 315.805.
The specific length of the "initial service period" will be tied to
specific occupations to reflect varying job demands and training needs.
For example, certain occupations have long periods of formalized
training which impact the ability of management to assess employee job
performance. Other occupations require employees to demonstrate skills
and competencies that also cannot be adequately measured or assessed
within 1 year.
2. Actions Covered
Adverse actions will continue to be defined as they are now in
chapter 75 of title 5, U.S. Code, to include removals, suspensions of
any length, demotions, and reductions in pay. These regulations propose
to change the coverage from furloughs for 30 days or less to furloughs
for 90 days or less.
A small number of Federal agencies are covered under the national
security provisions of 5 U.S.C. 7532. Under these provisions, an
employee may be immediately suspended without pay or removed if the
agency head considers the action "necessary in the interests of
national security." Before taking such an action, however, the agency
head must afford the employee procedural rights as set forth in the
statute. An agency head's decision in these cases is not subject to
appeal or judicial review. This regulation incorporates the current
provisions of the law and makes them applicable to DHS.
3. Mandatory Removal Offenses
This subpart permits the Secretary or designee to identify offenses
that have a direct and substantial impact on the ability of the
Department to protect homeland security" for example, accepting or
soliciting a bribe that would compromise border security or willfully
disclosing classified information. These offenses carry a mandatory
penalty of removal from Federal service. This change allows management
to act swiftly to address and resolve misconduct or unacceptable
performance that would be most harmful to the Department's critical
mission. These mandatory removal offenses will be identified in advance
and made known to all employees. Employees alleged to have committed
these offenses will have the right to advance notice, an opportunity to
respond, a written decision, a review by an adjudicating official, and
a further appeal to an independent DHS panel, as set forth in subpart G
of this part. However, only the Secretary or his or her designee can
mitigate the penalty for committing a mandatory removal offense.
The regulations do not list the infractions that will constitute
mandatory removal offenses. DHS has not yet identified a list of such
offenses, and it is important to preserve the Secretary's flexibility
to carefully and narrowly determine the offenses that
[[Page 8045]]
will fall into this category and to make changes over time. The absence
of this flexibility has been problematic at the Internal Revenue
Service (IRS) where the IRS Restructuring Act codified mandatory
disciplinary offenses in law and limited the agency's ability to make
needed changes. The Department will identify mandatory removal offenses
well in advance and make sure that employees know what these offenses
are. The Department invites public comment on the best and most
effective way to provide such notice to employees.
4. Adverse Action Procedures
This subpart retains an employee's right to representation and a
written decision but provides shorter advance notice periods and reply
periods than are currently required for appealable adverse actions.
Except where a mandatory removal offense is involved, employees are
entitled to a minimum of 15 days advance notice. In cases involving a
mandatory removal offense, the advance notice period is a minimum of 5
days. In all cases, employees are granted a minimum of 5 days to reply,
which runs concurrently with these notice periods. These changes
facilitate timely resolution of adverse actions while preserving
employee rights.
5. Single Process and Standard for Action for Unacceptable Performance
and Misconduct
This subpart establishes a single system for taking adverse actions
based on misconduct or unacceptable performance. This change represents
a return to a simplified approach that existed prior to the 1978
passage of the Civil Service Reform Act and chapter 43 of title 5, U.S.
Code.
Congress enacted chapter 43 in part to create a simple, dedicated
process for agencies to use in taking adverse actions based on
unacceptable performance. Since that time, however, chapter 43 has not
worked as Congress intended. In particular, interpretations of chapter
43 have made it difficult for agencies to take actions against poor
performers and to have those actions upheld. As a result, agencies have
consistently preferred to use the procedures available under chapter 75
of title 5 rather than chapter 43 when taking actions for unacceptable
performance.
The regulations eliminate the requirement for a formal, set period
for an employee to improve performance before management can take an
adverse action. Management selects employees for their positions
because the employees are well qualified. In addition, employees must
complete an "initial service period" during which they will have
learned the specific requirements of their positions. As set forth in
subpart D, management must explain to employees what is expected of
them when it comes to performance. If an employee fails to perform at
an acceptable level, management may use a variety of measures,
including training, regular feedback, counseling and, at management's
discretion, an improvement period, to address and resolve performance
deficiencies. If an employee is still unable or unwilling to perform as
expected, it is reasonable for management to take an action against the
employee.
We revised the standard for taking an adverse action to require
that the Department establish a factual basis for any adverse action
and a connection between the action and a legitimate Departmental
interest. We replaced the current title 5 "efficiency of the service"
standard for action to allay any confusion that might arise from case
law linking this standard with the authority to review and mitigate
penalties, an authority we generally do not provide third parties in
adjudicating DHS cases. We intend no substantive change to the
efficiency of the service standard.
Appeals--Subpart G
Subpart G of part 9701 covers employee appeals of certain adverse
actions taken under subpart F. As is currently the case, these
appealable adverse actions include removals, suspensions of 15 days or
more, demotions, and reductions in pay. In addition, the regulations
provide for appeals of reductions in pay band and substantially
increase the length of furloughs that may be appealed. Suspensions
shorter than 15 days and other lesser disciplinary measures are not
appealable to MSPB, but may be grieved through a negotiated grievance
procedure or agency administrative grievance procedure, whichever is
applicable. Furthermore, employees who are in the competitive service
and who are removed during the first year of an "initial service
period" are provided the appeal rights found in 5 CFR 315.806.
Section 9701 of title 5, U.S. Code, requires that these new appeal
regulations provide DHS employees fair treatment, are consistent with
the protections of due process, and, to the maximum extent practicable,
provide for the expeditious handling of appeals. The law also specifies
that modifications to the current chapter 77 of title 5 should further
the fair, efficient, and expeditious resolution of appeals.
This subpart establishes procedures and timeframes for filing
appeals with MSPB and modifies rules that MSPB will use to process
appeals from DHS employees. These regulations are intended to ensure
appropriate deference to the adverse actions taken by DHS and to
streamline the way MSPB cases are handled while continuing to preserve
and safeguard employee due process protections. In addition, they
provide for an internal appeals process for "mandatory removal
offenses."
As noted earlier in the Supplementary Information, the Secretary
and the Director will conduct an ongoing evaluation of the DHS HR
system to ensure that it is achieving its intended purposes. As part of
this evaluation, the Department and OPM will pay particular attention
to the proposed adverse action and appeal procedures established by
these regulations. As noted (and discussed in more detail below), those
proposed procedures continue to permit employees to appeal most adverse
actions to MSPB, despite the fact that DHS and OPM could have
established a separate appellate body for all such actions.
In proposing these appellate procedures, the Secretary and the
Director were especially mindful of 5 U.S.C. 9701(f)(2), which requires
that they consult with MSPB on changes to chapter 77 of title 5. This
requirement was met through extensive consultations between members and
staffs of MSPB, DHS, and OPM. During those consultations, DHS and OPM
officials described specific concerns with existing procedures and
discussed the range of appellate options and alternatives that were
under consideration. For their part, MSPB officials were particularly
constructive in responding to those concerns, offering numerous
suggestions to address them, including several modifications to their
own rules and regulations.
The appellate procedures proposed below reflect many of those
suggestions, as well as the constructive dialogue that gave rise to
them. Indeed, the proposal to retain MSPB was predicated on the results
of that dialogue. However, the cumulative effect of these changes can
be assessed only as they are actually implemented and administered by
MSPB. Accordingly, DHS and OPM, with MSPB, intend to conduct a formal
evaluation of these appellate procedures after they have been in effect
for 2 years in order to determine whether the procedures have given the
Department's critical mission due weight and deference and whether
additional
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modifications to 5 U.S.C. chapter 77 and/or these regulations need to
be proposed.
1. Appeals to MSPB
The proposed regulations retain MSPB as the adjudicator of employee
appeals of adverse actions, except as described below for mandatory
removal offenses. At the same time, the regulations propose new
substantive standards that MSPB will apply to DHS cases to improve the
appeals process and accommodate and support the agency's critical
homeland security mission. The regulations also propose new case-
handling procedures to facilitate the efficient and expeditious
resolution of appeals.
We gave serious consideration to establishing a DHS internal
appeals board to replace MSPB. However, we concluded that the
advantages of creating an internal DHS appeals board--greater
efficiency of decisionmaking and deference to agency mission and
operations among them--could be achieved if MSPB were retained as the
appeals body for adverse actions but with substantive and significant
procedural modifications. However, for mandatory removal offenses, we
decided to establish an internal appeals process that fully preserves
due process because we believe that, for these offenses, it is critical
that the adjudicator of the appeal be intimately familiar with the
mission of DHS in order to understand the particular impact of these
offenses on the Department's ability to carry out its mission.
2. Appeals of Mandatory Removal Offenses
An employee will be able to appeal a DHS removal action based on a
mandatory removal offense to an adjudicating official, who may conduct
a full evidentiary hearing and will issue a written decision. Either
party may appeal that decision to an independent DHS Panel.
Option 1
Under this option, DHS and OPM would not include appeal language in
the regulation addressing any form of judicial review, but would allow
existing governing legal principles to determine the circumstances
under which there would be judicial review.
Option 2
We are proposing to adopt the same procedures and standards for
review of Panel decisions that we developed for Board decisions.
Specifically, under 5 U.S.C. 7703, the United States Court of Appeals
for the Federal Circuit has jurisdiction over appeals filed from final
orders of MSPB. Under this option the final regulations would provide
that Panel decisions are appealable to the three-member MSPB but with a
deferential standard of review appropriate for an appellate procedure
of this type. MSPB would be required to decide an appeal from a final
decision of the Panel within 20 days. All decisions of MSPB, including
those decisions on appeals from the Panel, would be subject to judicial
review in accordance with 5 U.S.C. 7703. Under this option, judicial
deference would be given to the decisions of the Panel because the
Panel is charged by regulation with interpreting and implementing the
Homeland Security Act and was created to apply its specialized
expertise in homeland security matters.
3. MSPB Appellate Procedures
MSPB will continue to have the authority to review and adjudicate
actions covered by this subpart (except for mandatory removal offenses)
as prescribed in chapter 12 of title 5, U.S. Code. However, these
regulations propose to modify certain case processing rules and
substantive standards. The initial review and adjudication of adverse
action appeals will be governed by current title 5 provisions and MSPB
regulations, as well as the modifications identified in this section.
The modifications being made to current MSPB requirements will further
the mission of DHS without impairing fair treatment and due process
protections. Key procedural modifications include the following:
When there are no material facts in dispute, the
adjudicating official must grant a motion for summary judgment without
an evidentiary hearing. Currently, appellants are entitled to a
hearing.
The appeal filing deadline, including the
deadline for class appeals, is decreased from 30 days to 20 days.
The adjudicating official's initial decision
must be made no later than 90 days after the date on which the appeal
is filed. Moreover, if MSPB reviews an initial decision, MSPB must
render its final decision no later than 90 days after the close of
record. Also, if OPM seeks reconsideration of a final MSPB decision or
order, MSPB must render its decision no later than 60 days after
receipt of the opposition to OPM's petition in support of such
reconsideration.
Currently, the parties to an appeal may submit
unilateral requests for additional time to pursue discovery or
settlement. The ability of the parties to unilaterally submit a request
for case suspension is eliminated.
The parties may seek discovery regarding any
matter that is relevant to any of their claims or defenses. However, by
motion to MSPB, either party can seek to limit any discovery being
sought because it is privileged; not relevant; unreasonably cumulative
or duplicative; or can be secured from some other source that is more
convenient, less burdensome, or less expensive. Discovery can also be
limited through such a motion if the burden or expense of providing a
response outweighs its benefit. Prior to filing such a motion with
MSPB, the parties must confer and attempt to resolve any pending
objections. Further, when engaging in discovery, either party can
submit only one set of interrogatories, requests for production, and
requests for admissions. Additionally, the number of interrogatories or
requests for production or admissions may not exceed 25 per pleading,
including subparts, and each party may not conduct more than two
depositions. However, either party may file a motion requesting MSPB to
allow more discovery. A motion will be granted only if MSPB determines
that good cause has been shown to justify additional discovery.
All of these modifications will expedite and streamline the appeals
process so that both employees and the Department will be able to
resolve appeals more quickly and efficiently than is possible today.
The proposed regulations also retain due process protections--notice,
an opportunity to respond, and a post-action review, either in person
or on the record--for removal actions. We provide the same procedural
protections for all actions covered in subpart F. Further, these
regulations retain the statutory requirement that the appealability of
a removal be unaffected by the individual's status under any retirement
system.
Section 7701 of title 5, U.S. Code, currently authorizes the
Director of OPM to intervene in an MSPB proceeding or to petition MSPB
for review of a decision if the Director believes that an erroneous
decision will have a substantial impact on a civil service law, rule,
or regulation under OPM's jurisdiction. Given OPM's responsibility for
Governmentwide personnel management, these regulations authorize OPM to
intervene in such situations regardless of whether the law, rule or
regulation is one that falls under OPM jurisdiction. A similar
authority is provided to OPM with
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respect to decisions of the independent Panel that will decide appeals
of removals based on mandatory removal offenses.
4. Standard of Proof
Currently, actions taken under chapter 75 are sustained if
supported by a preponderance of the evidence, and performance actions
taken under chapter 43 are sustained if supported by substantial
evidence, a lower standard of proof than preponderance. In all cases
arising under this subpart, dealing either with performance or conduct,
the Department's decision will be sustained if it is supported by
substantial evidence. Changing the standard of proof to a single, lower
standard regardless of the nature of the action simplifies the appeal
process, grants appropriate deference to DHS officials in recognition
of the critical nature of the agency mission, and assures consistency
without compromising fairness.
5. Affirmative Defenses
The Department's action will not be sustained if MSPB (as is
currently the case) determines that (1) a harmful procedural error
occurred; (2) the decision was based on any prohibited personnel
practice; or (3) the decision was not otherwise in accordance with law.
The Board/Panel will defer to OPM and DHS in their interpretation of
these regulations and the Homeland Security Act, and will defer to OPM
in its interpretation of civil service law.
These regulations require the Department to prove by substantial
evidence the factual basis of the charge brought against an employee,
but do not permit MSPB or the Panel to reverse the charge based on the
way in which the charge is labeled or the conduct is characterized.
This will eliminate excessively technical pleading requirements in
adverse action proceedings imposed by MSPB and the U.S. Court of
Appeals for the Federal Circuit in King v. Nazelrod, 43 F.3d 663, and
similar cases. As long as the employee is on fair notice of the facts
sufficient to respond to the allegations of a charge, the Department
will have complied with the notice and due process requirements of
these regulations.
6. Penalty Review
In all cases arising under this subpart, the penalty selected by
the Department may not be reduced or otherwise modified by MSPB or the
Panel. This is a significant but necessary departure from current rules
permitting MSPB to mitigate penalties in certain circumstances. We have
modified the current practice because DHS management is in the best
position to determine the penalty that most effectively supports the
Department's mission. That decision should not be subject to MSPB or
Panel review. However, nothing in these regulations would limit the
Secretary or designee's sole and exclusive authority to mitigate any
penalty imposed on, or rescind any action taken against, a DHS employee
pursuant to subpart F.
7. Attorney Fees
OPM and DHS have simplified the current standard for recovering
attorney fees. Under the current two-pronged test set forth in 5 U.S.C.
7701(g), appellants may recover fees if (1) they are prevailing parties
and (2) if an award is "in the interest of justice." Much judicial
ink has been spilled interpreting both elements of this imprecise
standard. Accordingly, in an attempt to clarify the test for recovering
attorney fees, the regulations specify that an appellant may recover
fees if the action is reversed in its entirety and the Department's
action constituted a prohibited personnel practice or was taken in bad
faith or without any basis in fact and law. Requiring the Department to
pay attorney fees simply because some of its charges were not sustained
would deter the Department from taking action in appropriate cases and
have a chilling effect on the Department's ability to carry out its
mission.
8. Alternative Dispute Resolution
These regulations encourage the use of alternative dispute
resolution procedures (ADR) and provide for DHS, OPM, and MSPB to
jointly develop expedited appeals procedures. However, because ADR and
settlement efforts are most successful when voluntary, the regulations
prohibit MSPB from requiring ADR or settlement in connection with any
action taken under this subpart. Once either party decides that
settlement is not desirable, the matter will proceed to adjudication.
Eliminating settlement efforts that are contrary to the expressed
wishes of one or both of the parties will speed up the adjudication
process and strengthen management decisionmaking authority.
Where the parties agree to engage in settlement discussions, the
case will be assigned to an official specifically designated for that
sole purpose, rather than the official responsible for adjudication.
This is necessary to avoid actual or perceived conflicts of interest on
the part of MSPB adjudicating officials.
9. Discrimination Allegations
We have decided to retain the current statutory provisions dealing
with the processing of mixed cases, i.e., cases involving allegations
of discrimination which are also appealable to MSPB. However, we
revised those provisions to reflect the establishment of the DHS Panel.
10. Judicial Review
Decisions of MSPB are subject to review by the U.S. Court of
Appeals for the Federal Circuit based on the same standard currently
provided for in 5 U.S.C. 7703.
Next Steps
The Homeland Security Act provides that the development and
implementation of a new HR system for DHS will be carried out with the
participation of, and in collaboration with, employee representatives.
The DHS Secretary and OPM Director must provide employee
representatives with a written description of the proposed new or
modified HR system. The description contained in this Federal Register
notice satisfies this requirement. The Act further provides that