When the President signed the 2004 Defense Authorization Act Monday, the Defense Department got approval to change how officials manage, pay and promote about 746,000 civilian employees.

The National Security Personnel System included in the act allows managers to remove civilian employees from the annual pay-setting process the rest of the government uses. Instead, the Defense Department will be able to evaluate and pay employees based on individual performance.

Under the new plan, civilian employees will not get automatic general pay raises, even though non-defense federal employees will.

"This bill also advances the vital work of transforming the personnel system for civilian defense workers, so we can place the right person in the right job to meet the challenges we face," said President George W. Bush in a White House press release Monday. "Civilian defense workers have been laboring under a cumbersome, inefficient system designed for another century. The bill I sign today reforms this system.

"It gives managers the flexibility to place civilian workers where they are most needed, without needless delay," he continued. "It speeds up the hiring process so new employees will not have to face a wait of many months before beginning their service to our country. It introduces pay-for-performance bonuses and streamlines the promotion process, making a career at the Defense Department more attractive to talented workers."

The Defense Department will continue to base blue-collar pay on wage surveys, but will consider moving to a pay-for-performance system similar to that used for white-collar employees under the National Security Personnel System.

There will be a single pay-for-performance system in the Defense Department and a single performance cycle.

Employees will be provided performance standards and evaluated against those standards in accomplishing their assigned responsibilities. Supervisors will discuss performance accomplishments with employees and their evaluation will be received as their annual rating.

Defense civilians will get raises based on their numerical ranking in a one to 100 performance system. The amount of the raises will depend on how employees rank and how the bonus and pay raise money is divided up. Those scoring 51 might get a one percent adjustment while those who ranked above 90 could get as much as 10 percent.

Civilians rated lower than 51 on the 1 to 100 performance scale will not get any general increase and will receive job counseling. If they rate 50 percent, or lower, two years in a row, they could be given a less-demanding job or be urged to leave.

The bill will also let the department create new rules for employee appeals to disciplinary actions and union grievances. While nothing changes with discrimination complaints, officials will build an internal appeal system to review cases involving performance and conduct. The new personnel system does not change the equal opportunity discrimination complaints and appeals process.