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PROPOSED FINAL PBO BILL

A BILL

To improve the operation of the NAME OF THE PBO as a Performance Based Organization (PBO) in the Department of ______, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled --

SHORT TITLE

Sec.1. This Act may be cited as the ________ Act of 1998.

TITLE I -- MANAGEMENT AND CHIEF OPERATING OFFICER

MANAGEMENT OF THE [NAME OF THE PBO]; CHIEF OPERATING OFFICER

Sec. 2. (a) The management of [name of PBO] is vested in a Chief Operating Officer who shall be appointed by the Secretary of _________ to a [3 to 5]-year term and compensated without regard to chapters 33, 51, and 53 of title 5, United States Code. The appointment shall be made on the basis of demonstrated ability in management. The Secretary may reappoint the Chief Operating Officer to subsequent terms so long as performance, as set forth in the annual performance agreement, is satisfactory. The Chief Operating Officer shall be removable---

(1) by the President; or

(2) by the Secretary, for misconduct or failure to meet performance goals set forth in the performance agreement described in subsection (b).

(b) The Secretary of _______ and the Chief Operating Officer shall enter into an annual performance agreement which shall set forth measurable organization and individual goals for the Chief Operating Officer in key operational areas. The agreement shall be subject to review and renegotiation on at least an annual basis.

(c) The Chief Operating Officer is authorized to be paid at an annual rate of basic pay not to exceed the maximum rate of basic pay for the Senior Executive Service under section 5382 of title 5, United States Code, including any applicable locality-based comparability payment that may be authorized under section 5304 (h) (2) (C) of such title 5. In addition, the Chief Operating Officer may receive a bonus in an amount up to, but not in excess of, 50 percent of such annual rate of basic pay, based upon the Secretary's evaluation of the Chief Operating Officer's performance in relation to the performance goals set forth in the performance agreement described in subsection (b). Payment of a bonus under this subsection may be made to the Chief Operating Officer only to the extent that such payment does not cause the Chief Operating Officer's total aggregate compensation in a calendar year to equal or exceed the amount of the President's salary under section 102 of title 3, United States Code.

(d) The Chief Operating Officer shall prepare and submit to the Secretary and the Congress an annual management report containing such information as the Director of the Office of Management and Budget shall prescribe.

TITLE II -- PERSONNEL PROVISIONS

PERSONNEL FLEXIBILITIES; GENERAL

Sec. 3. (a) [Name of PBO] shall not be subject to any ceiling relating to the number or grade of its employees.

(b)(1) Any flexibilities provided by sections 4 through 6 shall be exercised in a manner consistent with the following provisions of title 5, United States Code:

(A) chapter 23, relating to merit system principles and prohibited personnel practices;

(B) provisions relating to preference eligibles;

(C) section 5307, relating to the aggregate limitation on pay; and (D) chapter 71, relating to labor-management relations, except to the extent provided by subsection (c).

(2) The exercise of any authorities provided by sections 4 through 6 shall be subject to subsections (b) and (c) of section 1104 of title 5, United States Code, as though such authorities were delegated to [name of PBO] under subsection (a)(2) of such section 1104. [Name of PBO] shall provide the Office of Personnel Management with any information the Office requires in carrying out its responsibilities under this paragraph.

(c)(1) Except as provided in paragraph (2), employees within a unit to which a labor organization is accorded exclusive recognition under chapter 71 of title 5, United States Code, shall not be subject to any flexibility provided by sections 4 through 6 unless the exclusive representative and [name of PBO] have entered into a written agreement which specifically provides for the exercise of that flexibility.

(2) Notwithstanding paragraph (1)--

(A) if the exercise of any flexibility provided in sections 4 through 6 would affect employees who are in more than one bargaining unit affiliated with the same national labor organization and who are covered by more than one collective bargaining agreement, such flexibility may be exercised if there is a written agreement permitting such exercise between [name of PBO] and the national labor organization; and

(B) if the exercise of any flexibility provided in sections 4 through 6 would affect employees who are in more than one bargaining unit and whose exclusive representatives are affiliated with more than one national labor organization, such flexibility may be exercised if there is a written agreement permitting such exercise between [name of PBO] and all of such national labor organizations.

(3) The written agreements referred to in paragraphs (1) and (2) may not be imposed by the Federal Services Impasses Panel under section 7119 of title 5, United States Code.

(d)(1) [Name of PBO] may exercise any of the flexibilities provided by sections 4, 5(a), 5(b), and 6 without prior approval of the Office of Personnel Management.

(2) [Name of PBO] may exercise the flexibilities described in section 5(c) - (e) only after a specific plan for implementation of those flexibilities is submitted to and approved by the Director of the Office of Personnel Management.

(e)(1) The exercise of any flexibilities under sections 4 through 6 does not affect the authority of [name of PBO] to implement a demonstration project, subject to chapter 47 of title 5, United States Code, and as provided in paragraph (2).

(2)(A) In applying section 4701(a)(1) of such title 5 to a demonstration project referred to in paragraph (1), subparagraph (A) of such section 4701(a)(1) shall be disregarded. [ONLY PBO'S THAT ARE GOVERNMENT CORPORATIONS WILL NEED THIS PROVISION.]

(B) In applying section 4703 of such title 5 to a project described in paragraph (1)--

(i) subsection (b)(1) shall be deemed to read as follows:

"(1) develop a plan for such project which describes its purpose, the employees to be covered, the project itself, its anticipated outcomes, and the method of evaluating the project;"

(ii) subsection (b)(3) shall be disregarded;

(iii) in subsection (b)(4) "180 days" shall be deemed to be "30 days";

(iv) subsection (b)(6) shall be deemed to read as follows:

"(6) provide each House of the Congress with the final version of the plan.";

(v) subsection (c)(1) shall be deemed to read as follows: "(1) subchapter V of chapter 63 or subpart G of part III of this title;"

(vi) subsection (d) shall be disregarded; and

"(vii) subsection (f)shall be disregarded and, in lieu thereof, subsection (c) of this section shall apply as though the demonstration project were a flexibility authority by section 4 through 6 of this Act."

PERFORMANCE MANAGEMENT

Sec. 4. (a) [Name of PBO] shall establish a performance management system which--

(1) maintains individual accountability by--

(A) establishing one or more retention standards for each employee related to the work of the employee and expressed in terms of individual performance, and communicating such retention standards to employees;

(B) making periodic determinations of whether each employee meets or does not meet the employee's established retention standards; and

(C) with respect to any employee whose performance does not meet established retention standards--

(i) in accordance with applicable provisions of law and regulation, denying any increases in basic pay, promotions, and credit for performance under section 3502 of title 5, United States Code; and

(ii) taking one or more of the following actions:

(I) reassignment;

(II) an action under chapter 43 or chapter 75 of title 5, United States Code; or

(III) any other appropriate action to resolve the performance problem; and

(2) strengthens its effectiveness by providing for--

(A) establishing goals or objectives for individual, group, or organizational performance (or any combination thereof), consistent with the annual performance agreement described in section 2(b) and [name of PBO] performance planning procedures, including those established under the Government Performance and Results Act of 1993, and communicating such goals or objectives to employees;

(B) using such goals and objectives to make performance distinctions among employees or groups of employees; and

(C) using performance assessments as a basis for granting employee awards, adjusting an employee's rate of basic pay, and other appropriate personnel actions, in accordance with applicable provisions of law and regulation. For purposes of this subparagraph, "performance assessment" means a determination of whether or not retention standards established under paragraph (1)(A) are met, and any additional performance determination made on the basis of performance goals and objectives established under subparagraph (A) of this paragraph.

For purposes of title 5, United States Code, "unacceptable performance" with respect to an employee of [name of PBO] means performance of the employee which fails to meet a retention standard established under paragraph (1)(A) of this subsection.

(b)(1) [Name of PBO] shall establish an awards program designed to provide incentives for and recognition of organizational, group, and individual achievements by providing for granting awards to employees who, as individuals or members of a group, contribute to meeting the performance goals and objectives established under this section by such means as a superior individual or group accomplishment, a documented productivity gain, or sustained superior performance.

(2) Notwithstanding section 4502(b) of title 5, United States Code, [name of PBO] may grant a cash award in an amount not exceeding $25,000, with the approval of the Chief Operating Officer.

(c) (1) In applying sections 4303(b)(1)(A) and 7513(b)(1) of title 5, United States Code, to employees of [name of PBO], "30 days'" may be deemed to be "15 days'".

(2) Notwithstanding the second sentence of section 5335(c) of title 5, United States Code, an employee of [name of PBO] shall not have a right to appeal the denial of a periodic step increase under such section 5335 to the Merit Systems Protection Board.

CLASSIFICATION AND PAY FLEXIBILITIES

Sec. 5. (a)(1) [Name of PBO] may, subject to criteria to be prescribed by the Office of Personnel Management, establish one or more broad-banded systems covering all or any portion of its workforce. For purposes of this subsection, "broad-banded system" means a system for grouping positions for pay, job evaluation, and other purposes that is different from the system established under chapter 51 and subchapter III of chapter 53 of title 5, United States Code, as a result of combining grades and related ranges of rates of pay in one or more occupational series. The Office may require [name of PBO] to submit to the Office such information relating to its broad-banded systems as the Office may require. Except to the extent provided under subsections (d) and (e), laws and regulations pertaining to General Schedule employees (other than chapter 51 and subchapter III of chapter 53 of title 5, United States Code) shall continue to be applicable to employees under a broad-banded system.

(2) The criteria to be prescribed by the Office of Personnel Management shall, at a minimum--

(A) ensure that the structure of any broad-banded system maintains, through linkage to the General Schedule, the principle of equal pay for substantially equal work;

(B) establish the minimum and maximum number of grades that may be combined into pay bands;

(C) establish requirements for adjusting the pay of an employee within a pay band;

(D) establish requirements for setting the pay of a supervisory employee whose position is in a pay band or who supervises employees whose positions are in pay bands; and

(E) establish requirements and methodologies for setting the pay of an employee upon conversion to a broad-banded system, initial appointment, change of position or type of appointment (including promotion, demotion, transfer, reassignment, reinstatement, placement in another pay band, or movement to a different geographic location), and movement between a broad-banded system and another pay system.

(b) [Name of PBO] may determine that, with respect to its employees who remain subject to chapter 51 and subchapter III of chapter 53 of title 5, United States Code, rather than being under a broad-banded system established under subsection (a), the General Schedule does not have 10 fixed rates of pay for each grade. On and after the date such a determination is made, an employee who is otherwise subject to subchapter III of chapter 53 of title 5, and who is promoted or transferred to a position in a higher grade, shall be entitled to basic pay at a rate determined under criteria prescribed by the Office of Personnel Management. In lieu of periodic step-increases under section 5335 of title 5, United States Code, such employees who meet retention standards established under section 4(a)(1)(A) shall be entitled to performance increases under criteria prescribed by the Office. A performance increase shall be equal to one-ninth of the difference between the minimum and maximum rates of pay for the applicable grade of the General Schedule. In lieu of additional step-increases under section 5336 of title 5, such employees shall be eligible for exceptional performance increases under criteria prescribed by the Office. An exceptional performance increase shall be equal to any amount up to, but not in excess of, a performance increase.

(c)(1) With the approval of the Office of Personnel Management in accordance with section 3(d)(2), [name of PBO] may establish one or more alternative job evaluation systems that include any positions or groups of positions that the [name of PBO] determines, for reasons of effective administration--

(A) should not be classified under chapter 51 of title 5, United States Code, or paid under the General Schedule;

(B) should not be classified or paid under subchapter IV of chapter 53 of such title 5; or

(C) should not be paid under section 5376 of such title 5.

(2)(A) An alternative job evaluation system established under this subsection that includes positions described in subparagraph (A) or (B), or both, of paragraph (1) may not provide a rate of basic pay for any employee in excess of the maximum rate of pay under the General Schedule.

(B) An alternative job evaluation system established under this subsection that includes positions described in subparagraph (C) of paragraph (1) may not provide a rate of basic pay for any employee in excess of the annual rate of basic pay of the Chief Operating Officer under the first sentence of section 2(c).

(3) An alternative job evaluation system established under this subsection shall be implemented in such a way as to ensure the maintenance of the principle of equal pay for substantially equal work.

(4) Except as otherwise provided under this section, employees under an alternative job evaluation system shall continue to be subject to the laws and regulations covering employees under the pay system that would otherwise apply to them. If the alternative job evaluation system combines employees from different pay systems into a single system, the plan submitted under section 3(d)(2) shall address the applicability of the laws and regulations for the different pay systems.

(d) With the approval of the Office of Personnel Management in accordance with section 3(d)(2), [name of PBO] may, with respect to employees who are covered by a broad-banded system established under subsection (a) or an alternative job evaluation system established under subsection (c), provide for variations from the provisions of subchapter VI of chapter 53 of title 5, United States Code.

(e) With the approval of the Office of Personnel Management in accordance with section 3(d)(2), [name of PBO] may, with respect to its employees, provide for variations from the provisions of sections 5753 and 5754 of title 5, United States Code.

STAFFING FLEXIBILITIES

Sec. 6. (a)(1) Except as otherwise provided by this subsection, an employee of [name of PBO] may be selected for a permanent appointment in the competitive service in [name of PBO] through internal competitive promotion procedures when the following conditions are met:

(A) the employee has completed, in the competitive service, 2 years of current continuous service under a term appointment or any combination of term appointments;

(B) such term appointment or appointments were made under competitive procedures prescribed for permanent appointments;

(C) the employee's performance under such term appointment or appointments met established retention standards; and

(D) the vacancy announcement for the term appointment from which the conversion is made stated that there was a potential for subsequent conversion to a permanent appointment.

(2) An appointment under this subsection may be made only to a position in the same line of work as a position to which the employee received a term appointment under competitive procedures.

(b)(1) Notwithstanding subchapter I of chapter 33 of title 5, United States Code, [name of PBO] may establish category rating systems for evaluating job applicants for positions in the competitive service, under which qualified candidates are divided into two or more quality categories on the basis of relative degrees of merit, rather than assigned individual numerical ratings. Each applicant who meets the minimum qualification requirements for the position to be filled shall be assigned to an appropriate category based on an evaluation of the applicant's knowledge, skills, and abilities relative to those needed for successful performance in the job to be filled.

(2) Within each quality category established under paragraph (1), preference eligibles shall be listed ahead of individuals who are not preference eligibles. For other than scientific and professional positions at or higher than GS-9 (or equivalent), preference eligibles who have a compensable service-connected disability of 10 percent or more, and who meet the minimum qualification standards, shall be listed in the highest quality category.

(3) An appointing authority may select any applicant from the highest quality category or, if fewer than three candidates have been assigned to the highest quality category, from a merged category consisting of the highest and second highest quality categories. Notwithstanding the preceding sentence, the appointing authority may not pass over a preference eligible in the same or higher category from which selection is made, unless the requirements of section 3317(b) or 3318(b) of title 5, United States Code, as applicable, are satisfied. (c) The Chief Operating Officer of [name of PBO] may detail employees among the offices of the [name of PBO] without regard to the 120-day limitation in section 3341(b) of title 5, United States Code.

(d) Notwithstanding any other provision of law or regulation, [name of PBO] may establish a probationary period under section 3321 of title 5, United States Code, of up to 3 years for positions where the [name of PBO] determines that the nature of the work is such that a shorter period is insufficient to demonstrate complete proficiency in the position.

(e) Notwithstanding the preceding subsections, no provision of this section exempts [name of PBO] from--

(1) any employment priorities established under direction of the President for the placement of surplus or displaced employees; or

(2) its obligations under any court order or decree relating to the employment practices of [name of PBO] or [name of PBO's parent agency].

TITLE III -- PROCUREMENT PROVISIONS

ACQUISITIONS

Sec. 7. (a) In General. -- Except as provided in this section, the [Name of PBO] shall abide by all applicable federal procurement laws and regulations when procuring property and services.

(b) Additional Authorities. -- When procuring property or services, the [Name of PBO] may use any of the following authorities, consistent with guidance provided by the Administrator for Federal Procurement Policy pursuant to subsection (c) of this section:

(1) Two-phase selection procedures. -- (A) The [Name of PBO] may, subject to the requirements in paragraphs (B) and (C), conduct a competition, which shall be considered to be a competitive procedure for purposes of this or any other Act, in which:

(i) sources submit basic information, such as the offeror's qualifications, the proposed conceptual approach, costs likely to be associated with the proposed conceptual approach, past performance information, and such additional information requested by the contracting officer in the first phase; and

(ii) a limited number of sources are selected to participate in a competition in the second phase in accordance with section 2305 of title 10, United States Code, or with sections 303A and 303B of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253a and 253b), as applicable.

(B) Prior to the first-phase competition, a notice shall be published in accordance with section 18 of the Office of Federal Procurement Policy Act (41 U.S.C. 416) and sections 8(e), (f) and (g) of the Small Business Act (15 U.S.C. 637(e), (f), and (g)), except that, in lieu of section 18(b) of the Office of Federal Procurement Policy Act and section 8(f) of the Small Business Act, the notice need only include --

(i) a general description of the scope or purpose of the procurement that is sufficient for sources to make an informed business decision whether to participate in the procurement;

(ii) a description of the basis on which sources will be selected to submit offers in the second phase; and

(iii) and any additional information the contracting officer determines is appropriate.

(C) Only those sources selected in the first-phase competition shall be eligible to compete in the second phase. The number of sources selected to compete in the second phase shall be limited to that number of sources as the contracting officer determines is appropriate and in the best interests of the government.

(D) The second phase may include a single procurement or multiple procurements within the general scope or for the purpose stated in the notice.

(2) Application of Simplified Procedures to Commercial Items. -- Whenever the [name of PBO] anticipates that commercial items will be offered, the [name of PBO] may acquire commercial items by using the special simplified procedures authorized by section 2304(g)(1)(B) of title 10, United States Code, and section 303(g)(1)(B) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253(g)(1)(B)) and consistent with section 31(g) of the Office of Federal Procurement Policy Act (41 U.S.C. 427(g)) without regard to any dollar limitations set forth in those sections and without regard to the expiration date of the test of such procedures set forth in section 4202 of the Clinger-Cohen Act of 1996.

(3) Flexible Wait Periods and Deadlines for Submission of Offers. -- Consistent with international agreements, whenever the [name of PBO] is acquiring property or services that do not meet the definition of commercial item set forth in section 4(12) of the Office of Federal Procurement Policy Act (41 U.S.C. 403(12)), the [Name of PBO] may --

(A) reduce the minimum period of time specified in section 18(a)(3)(A) of that Act (41 U.S.C. 416(a)(3)(A))that an agency must wait after publication of notice by the Secretary of Commerce before a solicitation is issued; and

(B) establish flexible deadlines for the submission of bids or proposals notwithstanding any deadlines set forth in section 18(a)(3) of that Act (41 U.S.C. 416(a)(3)). Deadlines shall afford potential offerors a reasonable opportunity to respond.

(4) Modular Contracting. -- (A) The [Name of PBO]'s system needs may be satisfied in successive acquisitions of modules, each of which must be useful in itself or in combination with other completed modules without the completion of subsequent modules.

(B) If the initial module was awarded using competitive procedures, the [Name of PBO] may award a contract for an additional module by one of the following procedures, subject to the requirements in paragraphs (C), (D), and (E), or by any other procedure authorized by law:

(i) Make an award on a sole-source basis to a contractor who was awarded a contract for an earlier module on the basis of a competition conducted pursuant to subparagraph (ii) or other competitive procedures; or

(ii) Make an award on the basis of adequate competition between a contractor who was awarded a contract for an earlier module on the basis of a competition conducted pursuant to this subparagraph or other competitive procedures and at least one offeror that has previously participated in competitions for either the initial module or any subsequent follow-on module and is expected to be competitive based on that participation.

(C) The [name of PBO] may exercise the authority provided in paragraph (B) to award a contract for a module only if the solicitation for the initial module included --

(i) a general description of the entire system to be acquired that was sufficient to put potential offerors on notice of the general scope of future modules and to enable them to make an informed business judgement whether to submit a bid or a proposal for the initial module; and

(ii) a statement that the head of the agency reserves the right to award subsequent modules pursuant to the authority provided in paragraph (B).

(D)(i) Except as provided in subparagraph (ii), the [name of PBO] shall publish a notice stating the [name of PBO]'s intent to award a contract pursuant to the authority provided in paragraph (B)(i) or (B)(ii) in the Commerce Business Daily not less than 30 days prior to the issuance of a solicitation for the contract. The notice shall contain the information required by Section 18(b) of the Office of Federal Procurement Policy Act (41 U.S.C. 416(b)), with the exception of the statement required by clause (4) of such section, and shall invite persons who believe that the proposed procurement approach is not in the best interest of the government to submit information supporting that view.

(ii) Notice is not required pursuant to subparagraph (i)if the contractor referred to in paragraph (B) performed on a module that contained cost, schedule, and performance goals and the contractor met those goals.

(E) The basis for award shall be documented. However, a justification pursuant to section 2304(f) of title 10, United States Code, or section 303(f) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 253(f)) or section 8(h) of the Small Business Act (15 U.S.C. 637(h)) is not required.

(F) The [Name of PBO] may prescribe simplified source selection procedures for the acquisition of modules, other than the initial module, that are not to be acquired on a sole source basis.

(5) Streamlined Acquisition of Services from Small Businesses. -- (A) Whenever the [Name of PBO] is acquiring services that do not meet the definition of commercial item set forth in section 4(12) of the Office of Federal Procurement Policy Act (41 U.S.C. 403(12)), the [Name of PBO] may use the special simplified procedures applicable to procurements below the simplified acquisition threshold as set forth in the Federal Acquisition Regulation if --

(i) the procurement is in an amount not greater than $1,000,000;

(ii) the procurement is conducted as a small business set-aside pursuant to section 15(a) of the Small Business Act (15 U.S.C. 644(a)); and (iii) supply items are expected to constitute less than 20 percent of the total value of the contract.

(B) The authority set forth in this paragraph:

(i) may not be used to make an award on a sole source basis; and

(ii) does not apply to the procurement of construction.

(c) Implementation. -- The head of the [name of PBO], in consultation with the Administrator for Federal Procurement Policy, shall issue guidance to implement the authorities set forth in this section. As part of the consultation, the Administrator shall provide guidance to the [name of PBO], which shall be designed to ensure, to the maximum extent practicable, consistent implementation of these authorities by other performance-based organizations with the same authorities.

(d) Limitation on Multiagency Contracting. -- No agency may purchase property and services under contracts entered into or administered by the [name of PBO] using any authority provided in subsection (b) unless the purchase is approved in advance by the senior procurement official responsible for purchasing by the ordering agency.

(e) Provisions Not Affected. -- Nothing in this section shall be construed to waive civil rights or labor standards laws applicable to federal contracts. Sec. 7. (a) In General. -- Except as provided in this section, the [name of PBO] shall abide by all applicable federal procurement laws and regulation when procuring property and services.

TITLE IV - - SPECIAL PROVISIONS FOR [NAME OF PBO]

TITLE V - - CONFORMING AMENDMENTS [IF NEEDED]

TITLE VI - - ASSESSMENT AND SUNSET PROVISIONS

Not later than five years after the effective date of this section, the Secretary of ______ shall provide to the President and the Congress a report on the operation and effectiveness of the provisions of this Act and the costs associated therewith. As part of the report, the Secretary shall include any recommendations for legislation the Secretary deems necessary or appropriate as a result of his or her analysis of the operation and effectiveness of the Act and the costs associated therewith.

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