Minahan and Shapiro, P.C.

Attorneys at Law Daniel Minahan Barrie M. Shapiro

MINAHAN AND SHAPIRO, P.C. Attorneys at Law

Phone: 303.986.0054

FAX:   303.986.1137

165 S. Union Blvd. Suite 366 Lakewood, CO 80228


 December 2, 2005  (Revised)


TO:                 Our Union Clients and Friends


FROM:           Dan Minahan and Barrie Shapiro


RE:                 NSPS:  'The Parable of the Caboose'


Now that the Department of Defense (DOD) has issued its final regulations on the 'National Security Personnel System' (NSPS) (which basically said 'we are going to issue ‘implementing issuances' later on telling everybody what's really going to happen'), DOD has issued some 'draft' implementing issuances.  They can be found online at www.cpms.osd.mil/nsps/issuances.html.  If you have a hard drive as big as the ones they use in laboratory research on particle physics, you can download all 6 of them.


We checked out the one called 'compensation' to see (at last) how DOD employees are going to get paid.  Except for the 'pay for performance' part, the rest of it is pretty much the same as the existing pay laws for federal employees in title 5 of the U.S. Code.  Why would the Secretary of Defense go to all this trouble to issue a whole new compensation system if it still contains Sunday pay, holiday pay, night pay, compensatory time, hazard pay and other familiar concepts from Title 5?  To find out, read The Parable of the Caboose, at the end of this memo.


The pay for performance section of the draft is at 'SC300.5.'  For now, it would apply just to GS employees (or more accurately, employees who used to be GS employees).


It is your worst nightmare, whether you are a bargaining unit employee, a supervisor or a manager.  Two fundamental facts set the stage:  all employees will be in WIDE pay bands.  For example, Pay Band 2 for 'Technician/ Support' employees would range from GS-7, step 1 to GS-10, step 10.  (Remember, that doesn't mean the General Schedule pay system applies to you; only that DOD has decided, for now, to use the GS pay scales as a benchmark).  If you work for DOD in the Denver area, Pay Band 2 (using the 2005 GS pay scale) is $36,087 at the low end and $63,200 at the high end.  Your 'base pay' will be set somewhere in that range (most likely, to match the exact dollar amount you are making in salary as of the date of your conversion to NSPS).  You will not know what your 'performance payout' is going to be until after the end of each year, after you have been given your annual performance rating.  The performance payout is figured like this:


(1)   multiply your base salary X your 'shares.'  Your shares depend on your overall performance rating.  Although there are 5 possible ratings, the supervisor can give an employee with a rating of 5: five or six shares; an employee with a rating of 4: three or four shares; an employee with a rating of 3: 1-2 shares; and an employee with a rating of 2 or 1: zero shares.  It is reassuring to see, in section SC300.5.6, that 'share assignments may not be influenced by personal bias or favoritism.'  Almost as comforting as the road signs that say 'litter may not be thrown out of cars.'


(2)       take all the figures earned by all the employees in the unit (which could be a single office, an entire Base or a whole region of the country, or something else) and add them up.  The result is the 'total salary share product (TSSP).' 


(3)       identify the dollar amount in the pay pool.  It can be zero; it can be $5 billion; it can be anything.


(4)       take the dollar amount in the pay pool and divide it by the TSSP.  The result is the 'share factor.'


(5)       Multiply your base salary X your number of shares X the share factor.  The result is your performance payout for last year (which you don't get until this year, because you must first get your annual performance rating for last year).


Now let's play with some numbers.  Assume there are 4 employees in your unit:

Employee A, Employee B, Employee C and Employee D.  Assume each employee's base salary is $40,000 per year.  Assume Supervisor Joe, based on the employees' annual performance ratings, gives Employee A six shares, Employee B two shares, Employee C one share, and Employee D zero shares.  Assume DOD decides to put $40,000 in the pay pool for this unit (pretty generous!).  Here are the performance payouts for our alphabetical co-workers:


Employee A:  $17,136  (total salary for the year: $40,000 + $17, 136 =  $57,136).


Employee B:  $  5,712  (total salary for the year: $40,000 +  $ 5,712 = $45,712). 


Employee C:  $  2,856   (total salary for the year: $40,000 +  $ 2,856 =  $42,856).


Employee D:  $   -0-       (total salary for the year: $40,000 + $0  =  $40,000). 


If you are Employee A, do you really think you're worth $17,000 more than Employee D, who holds the same job as you?  If you are Employee C, does anything bother you about the fact that Employee A earns more than $15,000 more than you?  If you are Joe Supervisor, are you really going to give one employee 6 shares and another employee 1 share, if one of them is a man and the other one is a woman?  If you are Mary Manager, where do you think employee morale is going to be after five years of this, when the 'A type' employees have now been paid $71,000 more than the 'C type' employees ?


Wanna know what's really gonna happen?  Either the pay pools will have little or no dollars in them, or the supervisors will give all employees the same shares.


But DOD employees should take comfort that this draft NSPS 'implementing issuance' retains so many 'title 5' pay features, like Sunday pay, night pay, compensatory time and hazard pay; and that they are computed the same or almost the same way as they are under the title 5 pay laws (the ones that the Secretary of Defense can now waive).  It almost makes you feel like you'll still get within-grade increases, that you'll still get at least a 2-step pay increase when you are promoted, that you'll still get 'saved grade' and 'saved pay' if you are demoted in a reduction in force, and that you'll still be able to earn an unlimited amount of sick leave over a long career so that it becomes something like a disability insurance policy.


DOD employees who know The Parable of the Caboose will take no comfort.


There once was a long choo-choo train built by all the people together and the people were so happy with their train that they hooked the engine and all the cars together and hooked a caboose to the end, and they headed for the place they all wanted to go.  After a while, some of the people decided they preferred to ride in the cars in the front.  They made the other people move to the cars in the back.  The other people didn't think much about it because a train car is a train car, and they believed it when the people who wanted to be in front said they would be just fine if they moved back there.  'We all believe in freedom and equality,' the people in the front told them. After a while, the people up front got more selfish and wanted most of the train cars for themselves, even though the people in the back outnumbered them 2-1.  The people in the back went along.


Finally, the people in the front got all the people in the back to move to the caboose.  The people in the back grumbled about it but they didn't do anything but cram themselves tighter into the caboose.  'Its no big deal,' said one of them.  'We're all going to the same place anyway.'  Then the people in the caboose saw the other train cars pulling away from them, faster and faster.  The caboose rolled to a dead stop, and then it started rolling backwards.  The people in the caboose then realized that the train had been coasting downhill the all the while that the people in the front were making them move to the back, and the people in the front, who wanted to have all the other train cars for themselves, had unhooked the caboose while the entire train was coasting downhill.  Now the rest of the train- the train built mostly by the people in the caboose- was chugging steadily uphill, toward the place everyone wanted to go.  The people in the caboose were rolling backwards, faster and faster. . . .