Obama signs bill that kills DOD pay-for-performance system

 President Barack Obama today signed the National Defense Authorization Act for fiscal 2010 that will eventually kill the controversial National Security Personnel System, designed to link pay raises to job performance for Defense Department employees.

More than 200,000 DOD employees under the NSPS will revert to the General Schedule system by 2012 under the bill’s provisions.

The law's passage pleased some critics of the NSPS.

“There is evidence that pay-for-performance was discriminatory and used as a way to take money from lower-paid employees and routed to higher-paid employees," said Randy Erwin, legislative director at the National Federation of Federal Employees. DOD "tried to do too much, too fast. Pay for performance was supposed to motivate, but instead it’s done the opposite.”

The American Federation of Government Employees, in a statement responding to the news, said NSPS the program is “costly, unwieldy, discriminatory, complicated, opaque and mistrusted by DOD civilian employees at all levels.”

The system's proponents had championed it for being flexible and giving managers more freedom to reward their best employees. In 2008, Mary Lacey -- then the program executive officer for NSPS -- reported that the highest-rated employees in the system got raises averaging 10 percent under NSPS. Across the board, she said, raises under NSPS averaged 5.4 percent.

Still, eliminating the NSPS will not solve major problerms with DOD's personnel system, insiders speaking on background said. In addition to fixing a lack of trust among DOD's employees, a new pay system will need to be established within about six months, and will likely need to include some measures to rate performance, they said.