WASHINGTON - The Defense Department is set to implement a new merit pay system for about 650,000 of its civilian workers that mirrors a Homeland Security Department program that has been blocked by the courts.

Union officials with the American Federation of Government Employees said Wednesday they will sue the department over the new system, which would essentially reward high-performing employees, give management more flexibility in work assignments, and streamline hiring and discipline procedures. AFGE general counsel Mark Roth said the union expects to file its lawsuit in mid-November, unless the Defense Department delays the implementation of the new labor rules.

Acting Deputy Defense Secretary Gordon England told Pentagon reporters Wednesday that the department has been meeting with union leaders, but added that if a lawsuit is filed it will be up to the courts to decide if the new system has the same legal problems as the DHS program.

"In my judgment we have a different program, a different law, and I believe that we have met the spirit and the intent of what the Congress wanted us to do," said England. "Obviously whatever happens we will deal with, and proceed accordingly."

Under the new system, Defense Department leaders, including Secretary Donald H. Rumsfeld and the secretaries of the various branches of the armed services, would be able to override provisions of the collective bargaining agreements. It would give Rumsfeld greater flexibility to change workers' assignments, allowing him to put civilians in some administrative jobs currently held by armed services members, who could then move to military positions.

Rumsfeld has said the changes are critical to improving the management of the department's civilian work force, which totals about 750,000. Some would not be affected by the changes.

Training and initial implementation will begin next month, and the new job evaluation procedures would start for a trial period for about 60,000 workers next February. Other workers will be phased in after that. England said he did not know how much the move to the new system will cost. It will require that some contracts be renegotiated.

Roth and other union officials said the changes would give Pentagon leaders unprecedented authority to override arbitration decisions and violate employee rights.

A federal judge in August blocked DHS from implementing similar workplace rules, saying they would erode employee bargaining rights and allow agency officials to unilaterally declare contract terms null and void. Earlier this month, the court rejected a revised DHS proposal to move ahead with portions of the new system.