DOD: Budget will support performance pay

Congressional leaders are concerned that the Defense Department may not have enough money to provide merit pay increases as envisioned under the department's new personnel system.

A key tenet of the National Security Personnel System is that top performers should be rewarded beyond the government's standard pay scale. But such increases could be difficult if agencies have not built them into their budgets.

"Pay for performance has a hollow ring to it if you can’t get additional compensation, if the money isn’t there,” said Sen. Susan Collins (R-Maine), chairman of the Senate Homeland Security and Governmental Affairs Committee.

This is a familiar scenario, said Sen. George Voinovich (R-Ohio). "Too often we ask agencies to do the job, but we don't give them the money to get the job done," he said. Voinovich previously introduced legislation to begin annual evaluations of federal employees in anticipation of a governmentwide pay-for-performance system.

But Deputy Defense Secretary Gordon England said there was no cause for concern.

"We do not have a budget issue,” he said. "We’re fully funding all aspects of this program.”

England said that agency was committed to funding NSPS and insisted that expenditures for the pay system currently “track with expectations.”

Darryl Perkinson, national president of the Federal Managers Association, emphasized the importance of proper funding.

"The replacement of the standard general schedule pay system with a proposed pay banding system creates a devastating problem" if Congress does not appropriate enough money, Perkinson said. “The integrity of pay for performance will be severely hindered if all high performers are not rewarded accordingly.”

Funding has been a problem with other pay-for-performance initiatives.

A recent pilot program at the Bureau of Alcohol, Tobacco, Firearms and Explosives ran into problems when agency officials were unable to award base-pay increases to all deserving employees. The ATF ended up switching to a combination of lump-sum payments and base-pay increases for participants, violating a deal negotiated with the union.