Federal Demonstration Projects

Demonstration projects provide a structure for testing change in the government’s personnel management system. The Office of Personnel Management is authorized to develop and evaluate demonstration projects that test new ideas in human resource management.

A demonstration project is the vehicle by which an agency or organization obtains the authority to waive existing personnel law and regulations in order to propose and test interventions for its own personnel management system. A prospective agency first needs to determine what its organizational needs and problems are based on its mission and strategic plan. Then, the agency can determine the best path to achieve desired changes to its personnel management system—through existing flexibilities, demonstration projects, or, in some cases, legislation.

Employees working at sites in which demonstration projects are in operation—or who may transfer to one—work under rules that can be very different from those applying to civil service positions in general. No waivers of law are permitted in areas of employee leave, employee benefits, equal employment opportunity, political activity, merit system principles, or prohibited personnel practices. However, waivers may be granted in areas including: qualification requirements, recruitment, and appointment to positions; classification and compensation; assignment, reassignment, or promotions; disciplinary actions; incentives; hours of work; involving employees and labor organizations in personnel decisions; and reducing overall agency staff and grade levels.

Several demonstration projects have been made permanent, while others were allowed to expire.

In addition to the general authority, a separate authority applies to Defense Department research laboratories, including streamlined hiring procedures, pay-for-performance in a pay banding framework and contribution-based compensation systems.

Demonstration Projects Made Permanent

China Lake

At this Navy facility in California managers have increased control over classification, pay, and other personnel matters. Pay increases within broad pay bands are linked closely to performance ratings. Starting salaries are more flexible.

National Institute of Standards and Technology

The project introduced a simplified and automated classification system, with classification authority delegated to line managers. NIST received expanded hiring authority and flexibility in setting starting salaries. The original five-level rating system was changed to a two-level system that was linked to ranking for pay purposes using a 100-point scale.

Department of Agriculture

This was the first demonstration project testing a comprehensive simplification of the hiring system. Applicants meeting minimum qualification standards are placed in one of two groups (quality and eligible) on the basis of their education, experience and ability. All candidates in the quality group are available for selection, with preference given to veterans.

Commerce Department

This project incorporates pay for performance in a pay banding framework, supervisory pay differential, and extended probationary period for research scientists in several Commerce subcomponents, primarily the National Oceanic and Atmospheric Administration.

Ongoing Demonstration Projects

Defense Acquisition Workforce

The only demonstration project to cover an occupational group rather than an organization, this features a contribution based compensation system, pay banding, and alternative hiring and appointment authorities.

National Nuclear Security Administration

The National Nuclear Security Administration, a semi-autonomous agency within the Energy Department, moved about 2,000 employees into a pay-for-performance system as part of a pilot project. The pay banding-based system gives managers the ability to reward performance with higher pay, as well as provide more flexibility to set higher pay for their employees through initial appointments, promotions, and performance evaluations. The structure features comprehensive career paths covering professional, technical, administrative, and support occupations with three or four pay bands in each career path.

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