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110th Congress                                                   Report
                                 SENATE                          
 1st Session                                                     110-79
_______________________________________________________________________

                                     

                                                       Calendar No. 196

TO EXTEND THE DATE ON WHICH THE NATIONAL SECURITY PERSONNEL SYSTEM WILL 
              FIRST APPLY TO CERTAIN DEFENSE LABORATORIES

                               __________

                              R E P O R T

                                 of the

        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                          UNITED STATES SENATE

                              to accompany

                                 S. 457

TO EXTEND THE DATE ON WHICH THE NATIONAL SECURITY PERSONNEL SYSTEM WILL 
              FIRST APPLY TO CERTAIN DEFENSE LABORATORIES




                 June 11, 2007.--Ordered to be printed
        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TED STEVENS, Alaska
THOMAS R. CARPER, Delaware           GEORGE V. VOINOVICH, Ohio
MARK L. PRYOR, Arkansas              NORM COLEMAN, Minnesota
MARY L. LANDRIEU, Louisiana          TOM COBURN, Oklahoma
BARACK OBAMA, Illinois               PETE V. DOMENICI, New Mexico
CLAIRE McCASKILL, Missouri           JOHN WARNER, Virginia
JON TESTER, Montana                  JOHN E. SUNUNU, New Hampshire
                  Michael L. Alexander, Staff Director
                   Lawrence B. Novey, Senior Counsel
  Jennifer L. Tyree, Counsel, Subcommittee on Oversight of Government 
    Management, the Federal Workforce, and the District of Columbia
     Brandon L. Milhorn, Minority Staff Director and Chief Counsel
                     Amanda Wood, Minority Counsel
  Theresa Prych, Minority Professional Staff Member, Subcommittee on 
  Oversight of Government Management, the Federal Workforce, and the 
                          District of Columbia
                  Trina Driessnack Tyrer, Chief Clerk


                                                       Calendar No. 196
110th Congress                                                   Report
                                 SENATE
 1st Session                                                     110-79

======================================================================



 
TO EXTEND THE DATE ON WHICH THE NATIONAL SECURITY PERSONNEL SYSTEM WILL 
              FIRST APPLY TO CERTAIN DEFENSE LABORATORIES

                                _______
                                

                 June 11, 2007.--Ordered to be printed

                                _______
                                

Mr. Lieberman, from the Committee on Homeland Security and Governmental 
                    Affairs, submitted the following

                              R E P O R T

                         [To accompany S. 457]

    The Committee on Homeland Security and Governmental 
Affairs, to which was referred the bill (S. 457) to extend the 
date on which the National Security Personnel System will first 
apply to certain defense laboratories, having considered the 
same reports favorably thereon without amendment and recommends 
that the bill do pass.

                                CONTENTS

                                                                   Page
  I. Purpose and Summary..............................................1
 II. Background and Need for the Legislation..........................2
III. Legislative History..............................................3
 IV. Section-by-Section Analysis......................................3
  V. Evaluation of Regulatory Impact..................................3
 VI. Congressional Budget Office Cost Estimate........................3
VII. Changes in Existing Law Made by the Bill, as Reported............4

                         I. Purpose and Summary

    The purpose of S. 457 is to extend from October 1, 2008, to 
October 1, 2011, the earliest date on which the National 
Security Personnel System (NSPS) may become applicable with 
respect to certain Department of Defense (DOD) laboratories. On 
and after that date, if S. 457 is enacted, existing statute 
would subject the laboratories to the NSPS only to the extent 
that the Secretary determines that the flexibilities provided 
by the NSPS are greater than the flexibilities provided to the 
laboratories under other authorities.

              II. Background and Need for the Legislation

    The National Defense Authorization Act (NDAA) for Fiscal 
Year 2004 established the NSPS,\1\ which is a new personnel 
management system under which the DOD was granted substantial 
authorities for managing its civilian workforce. However, that 
legislation also expressed a recognition of the work that the 
Defense laboratories had invested into developing alternative 
personnel systems under separate statutory authority, by 
excluding the laboratories from being covered by NSPS at least 
until that new system is implemented and evaluated. 
Specifically, the 2003 statute stated that the Defense 
laboratories would continue being governed by their separate 
statutory authorities before October 1, 2008, and on and after 
that date would come under the NSPS only to the extent that the 
Secretary of Defense ``determines that the flexibilities 
provided by the National Security Personnel System are greater 
than the flexibilities provided'' to the laboratories.\2\
---------------------------------------------------------------------------
    \1\ Title XI of Public Law 108-136 (Nov. 24, 2003), adding 5 U.S.C. 
Sec. Sec. 9901 et seq.
    \2\ 5 U.S.C. Sec. 9902(c).
---------------------------------------------------------------------------
    However, the Department of Defense has implemented NSPS 
more slowly than was originally planned.\3\ The Department 
converted the first group of employees, approximately 11,000, 
into NSPS in April 2006, and those employees received their 
first pay adjustment in January 2007. A second group, of 
approximately 66,000 employees, referred to as Spiral 1.2, were 
converted to the NSPS performance management system between 
October 2006 and February 2007. Further slowing the 
Department's implementation is a lawsuit filed by federal 
employee unions against provisions of the final NSPS 
regulations.\4\ As a result of the lawsuit, the Department has 
not converted any employees in bargaining units to the new 
system, further delaying Department-wide implementation of 
NSPS.
---------------------------------------------------------------------------
    \3\ The Department's original plan for implementation was described 
in testimony delivered on March 15, 2005, by the Honorable Charles 
Abell, Principle Deputy Under Secretary of Defense, testified before 
the Subcommittee on Oversight of Government Management, the Federal 
Workforce and the District of Columbia of the Senate Committee on 
Homeland Security and Governmental Affairs. Under the proposed plan 
that he described, the first Spiral of NSPS, including up to 300,000 
employees, would be implemented as early as July 2005, and the NSPS 
would be fully implemented by 2008.
    \4\ The most recent decision in this litigation was AFGE v. Gates, 
No. 06-5113 (D.C. Cir., May 18, 2007).
---------------------------------------------------------------------------
    Furthermore, even after this partial implementation of the 
NSPS, an additional number of years will be needed to assess 
the program. In analogous situations, Congress has established 
through the demonstration project authority of title 5, United 
States Code, a five-year time period to test and evaluate new 
personnel practices.\5\ GAO also has reported that major change 
management takes between five and seven years.\6\ Evaluations 
of Defense Department demonstration projects conducted by the 
Office of Personnel Management, including the original Navy 
project at China Lake, have found that such projects require 
more than five years before employee approval has reached a 66 
percent threshold.\7\
---------------------------------------------------------------------------
    \5\ 5 U.S.C. Sec. 4703.
    \6\ GAO-03-669, Results-Oriented Cultures: Implementation Steps to 
Assist Mergers and Organizational Transformations.
    \7\ U.S. Office of Personnel Management, ``Summative evaluation 
2002-DoD S&T; Reinvention Laboratory Demonstration Program,'' 2002.
---------------------------------------------------------------------------
    Accordingly, S. 457 would provide the Secretary of Defense 
with the necessary years of data on NSPS to make a thorough and 
informed comparison of the flexibilities in NSPS and the 
laboratories personnel authority. Under the bill, the earliest 
date on which the NSPS might be made applicable to the Defense 
laboratories is extended from the current statutory date of 
October 1, 2008 to October 1, 2011. Even then, the laboratories 
may be made subject to NSPS on and after that date only to the 
extent that the personnel flexibilities provided under the NSPS 
are greater than the personnel flexibilities provided to the 
laboratories under their existing statutory authorities. In 
this way, the Committee seeks to ensure the Department has a 
complete understanding of NSPS before evaluating and comparing 
it to the personnel systems in place at its laboratories.

                        III. Legislative History

    On January 31, 2007, S. 457 was introduced by Senator 
Voinovich. Senators Bayh, Bingaman, Brown, Clinton, Domenici, 
Kennedy, Lieberman, Lott, Reed, and Sessions are cosponsors of 
S. 457. The legislation was referred to the Committee on 
Homeland Security and Governmental Affairs.
    On February 15, 2007, by voice vote, the Committee on 
Homeland Security and Governmental Affairs ordered S. 457 
reported favorably without amendment.

                    IV. Section-by-Section Analysis


Section 1. Extension of date of application of National Security 
        Personnel System to Defense Laboratories

    This section amends section 9902 of title 5, United States 
Code by replacing ``October 1, 2008'' with ``October 1, 2011.''

                   V. Evaluation of Regulatory Impact

    Pursuant to the requirement of paragraph 11(b)(1) of rule 
XXVI of the Standing Rules of the Senate the Committee has 
considered the regulatory impact of this bill. CBO states that 
there are no intergovernmental or private-sector mandates as 
defined in the Unfunded Mandates Reform Act and no costs on 
State, local, or tribal governments. The legislation contains 
no other regulatory impact.

                   VI. Estimated Cost of Legislation


S. 457--A bill to extend the date on which the National Security 
        Personnel System will first apply to certain defense 
        laboratories

    S. 457 would delay the implementation of the National 
Security Personnel System (NSPS) at certain defense 
laboratories until October 1, 2011. Under current law, the 
employees at those laboratories may not be brought into the 
NSPS before October 1, 2008.
    The NSPS was authorized as part of the National Defense 
Authorization Act for Fiscal Year 2004 (Public Law 108-136), 
and the new system is currently in the process of being 
implemented by the Department of Defense (DoD). In general, 
NSPS provides greater flexibility in the award of civilian pay 
raises and bonuses than the General Schedule. The original 
authority for the NSPS prohibits implementation of the new 
personnel system at certain defense laboratories until October 
1, 2008, in part because those laboratories already possess 
flexible hiring and compensation systems. The original delay in 
implementing the NSPS at those organizations was meant to allow 
time to study the flexibilities offered under the NSPS as 
compared to their current personnel systems. Based on 
information from DoD, those laboratories employ about 38,000 
civilians.
    Because the NSPS is supposed to be implemented in a manner 
that would not affect the total payroll of the compensation 
system it is designed to replace, CBO expects that enacting S. 
457 would have no significant budgetary effect.
    S. 457 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    The CBO staff contact for this estimate is Matt Schmit. 
This estimate was approved by Peter H. Fontaine, Deputy 
Assistant Director for Budget Analysis.

       VII. Changes in Existing Law Made by the Bill, As Reported

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, the following changes in existing 
law made by the bill, as reported, are shown as follows: 
(existing law proposed to be omitted is enclosed in black 
brackets, new matter is printed in italic, existing law in 
which no change is proposed is shown in roman):

                           UNITED STATES CODE


             TITLE 5. GOVERNMENT ORGANIZATION AND EMPLOYEES


                        Subpart I--Miscellaneous


  CHAPTER 99. DEPARTMENT OF DEFENSE NATIONAL SECURITY PERSONNEL SYSTEM


SEC. 9902. ESTABLISHMENT OF HUMAN RESOURCES MANAGEMENT SYSTEM

           *       *       *       *       *       *       *


    (c) Personnel Management at Defense Laboratories.--(1) The 
National Security Personnel System shall not apply with respect 
to a laboratory under paragraph (2) before [October 1, 2008] 
October 1, 2011, and shall apply on or after [October 1, 2008] 
October 1, 2011, only to the extent that the Secretary 
determines that the flexibilities provided by the National 
Security Personnel System are greater than the flexibilities 
provided to those laboratories pursuant to section 342 of the 
National Defense Authorization Act for Fiscal Year 1995 (Public 
Law 103-337; 108 Stat. 2721) and section 1101 of the Strom 
Thurmond National Defense Authorization Act for Fiscal Year 
1999 (5 U.S.C. 3104 note), respectively.

           *       *       *       *       *       *       *