Affiliated with the AFL-CIO

80 F St NW, Washington, DC 20001-1583


MEMORANDUM: 7h/126350 April 21, 2003


TO: Beth Moten

Director, Legislation

FROM: Mark Roth

General Counsel

SUBJECT: The Defense Transformation for the 21st Century Act

This is in response to your request for a preliminary review of the personnel provisions of the proposed "Defense Transformation for the 21st Century Act." The Act would amend current subpart I of part III of title 5, by adding chapter 99 establishing a new Department of Defense National Security Personnel System. With some notable exceptions, these provisions are consistent with the analogous provisions in the previously enacted Homeland Security Act.

Like DHS, the Secretary of Defense is given authority to establish, by regulations prescribed jointly with the Office of Personnel Management ("OPM"),

a human resources management system for some or all of the organizational units of DoD. The Secretary of Defense is given the additional authority, however, to waive the requirement that regulatory changes be issued jointly, "subject to the direction of the President." It is not clear what "subject to the direction of" means, i.e., whether it implies that the authority may be exercised "subject to the approval of " or whether the Secretary may undertake such unilateral action only when directed to do so by the President.

The DoD Act specifies that any regulations established thereby are considered "internal rules of departmental procedure" consistent with 5 U.S.C. §553. That section comprises the Administrative Procedure Act ("APA") "notice and comment" requirements and expressly excludes from its scope "matters relating to agency management or personnel or to public property, loans, grants, benefits, or contracts," or to "interpretive rules, general statements of policy or rules of agency organization, procedures or practice." Consequently, any rules promulgated pursuant to the proposed 5 U.S.C. §9902(a) are likely to be deemed excluded from the notice and comment requirements of §553 regardless of the explicit exclusion noted here.


Like Homeland Security, the DoD Transformation Act mandates that the newly created personnel system must preserve certain enumerated provisions of title 5. These nonwaivable provisions include:

- 5 U.S.C. § 2301: Defining merit system prinicples

- 5 U.S.C. §2302: Defining prohibited personnel practices

- "Any provision of law referred to in §2302(b)(1), (8), and (9)"

- Civil Rights Act, 42 U.S.C. 2000e-16: §2301 (b)(1)(A)

- Age Discrimination in Employment Act (ADEA), 29 U.S.C. §631and 633a §2301 (b)(1)(B)

- Fair Labor Standards Act, 29 U.S.C. 206(d) relating to sex


- Rehabilitation Act, 29 U.S.C. §791

- any law, rule, or regulation prohibiting discrimination on the basis of marital status or political affiliation

- "Any provision of implementing any provision of law referred to in §2302(b)(1),

(8), and (9)"

Like Homeland Security, the DoD Act further identifies entire subparts of Part III of title 5 as nonwaivable. These are:

- Subpart A of Part III (Employees) of Title 5: General Provisions

- Ch. 21: Definitions

- Ch. 29: Commissions, oaths, records and reports

- Subpart E: Attendance and Leave

-Ch.61: Hours of Work (including 40-hr. workweek/holidays/flex and compressed schedules)

-Ch. 63: Leave/Leave transfers and banks

- Subpart G: Insurance and Annuities

- Ch. 81: Workers’ Comp.

- Ch. 83: Retirement

- Ch. 84: FERS

- Ch. 85: Unemployment Compensation

- Ch. 87: Life Insurance

- Ch. 89: Health Insurance

- Ch. 90: Long term Care Insurance

Subpart H: Access to Criminal History Record Information

-Ch. 91: Access to Criminal History Records For National Security and

Other Purposes

Unlike Homeland Security, the DoD Act does not make Subpart B, relating to "Employment and Retention," nonwaivable in its entirety. Rather, it identifies discrete provisions of that Subpart as nonwaivable, with the clear implication that those not identified are waivable. The only nonwaivable chapter (i.e., nonwaivable in its entirety) of Subpart B is Ch. 34 (§3401-3408), dealing with "Part Time Employment Opportunities." Otherwise, the following sections of Subpart B are also nonwaivable:

§3131: Authority for creation of SES

§3132(a): Definitions for ch. dealing with SES. Waivable §3132(b)-(f)

§3305(b): Examination requirement in the event of a preference eligible


§3309 - 3320: Preference eligible hiring provisions

§3351 –3352: Preference eligible transfers

§3363: Preference eligible - promotion

§3501: RIF Definitions

§3502(b): Retention rating of preference eligible

§3504: Retention qualifications of preference eligible

Like Homeland Security, the DoD Act further identifies certain chapters of title 5 as nonwaivable. These are

Ch. 45: Incentive Awards

Ch. 47: Personnel Research Programs and Demonstration Projects

Ch. 57: Travel, Transportation and Subsistence

Ch. 72: Employees’ Right To Petition Congresss

Ch. 73: Suitability, Security and Conduct (Ethical and Political Restrictions)

Ch. 79 : Services to Employees (Health, safety, protective clothing and

equipment, EAPs, commuting incentives

The following chapters are nonwaivable for DHS employees but would be waivable for DoD employees under the Transformation Act:

Ch. 41: Training

Ch. 55: Pay Administration (Including backpay, severance pay)

Ch. 59: Allowances (Uniform, Housing, Post differentials)

The DoD Act, like Homeland Security, authorizes the Secretary to waive the following important chapters:

Ch. 43: Performance appraisal system

Ch. 51: Position Classification

Ch. 53: Pay rates and systems (GS/WG/grade and pay retention)

Ch. 71: Collective Bargaining rights

Ch. 75: Due process

Ch. 77: Appeal rights/judicial review

With regard to collective bargaining, the DoD Act ostensibly ensures the right of employees to organize and bargain collectively, while concomitantly making the exercise of that right explicitly subject to any limitations provided in the Act as well as those exclusions from coverage and limitation on negotiability established pursuant to law. The restrictions contemplated by the Act are substantial. For example, instead of bargaining, the Act primarily talks in terms of "collaboration." Moreover, it stipulates that the Secretary may disregard levels of recognition and undertake, at his discretion, to engage in collaborative activities at any organizational level above the level of recognition. To the extent that the Act does address "bargaining," it provides that the Secretary may undertake "at his sole and exclusive discretion" to bargain without regard to the level of exclusive recognition. Any agreement negotiated pursuant to this authority supersedes all other agreements "except as otherwise determined by the Secretary" and is not subject to further negotiation except as provided by the Secretary.

More importantly, the Bill prohibits any bargaining impasses, no matter how trivial or unrelated to national security, from going to a third party dispute resolution mechanism like the Federal Service Impasses Panel (a seven member board selected entirely by the current President). The Bill specifically states: "Any such bargaining shall… not be subject to review or to statutory third-party dispute resolution outside the Department of Defense." This is totally unprecedented and ultimately makes the whole process a sham.

The remaining content of the DoD Transformation Act is directed at hiring contract personnel, with the exception of hiring "older Americans" which is plainly intended to permit reemployment of "cronies" such as retired military without any diminution to pension currently imposed on so-called "double dippers."