Report - Government Executive

DCIPS FUNDING
PRINCIPLE
Adequate funding is necessary to ensure success of a performance-based pay system.
When performance-based compensation systems operate properly, superior performers receive
the greater rewards, while average performers receive substantially smaller ones. Adequate
funding is critical as insufficient funding is a primary reason why these systems fail. To provide
meaningful rewards, MSPB guidance advises that agencies use greater budget creativity and
additional sources of revenue to ensure adequate funding for performance-based pay increases. 83
OUSD(I) policy for funding pay pools conforms to IC-wide policy guidance for pay
modernization, which requires that newly-implemented performance-based compensation
systems remain budget neutral. Under current policy, separate budget recommendations are
established annually to fund salary and bonus pools 84 In accordance with USD(I) funding
guidance, DoD intelligence components allocate money to salary increase pools by choosing and
multiplying a funding percentage by the sum of the base salaries of those employees eligible for
payouts. The policy requires that salary increase budgets be no less than the total funds that
would have been available for step increases, quality step increases, and within-band promotions
had there been no conversion to DCIPS. Similarly, the bonus budgets cannot be less than the
cash awards available had DoD not converted. Pools can only be increased under special
circumstances; one common reason is outstanding organizational performance or contribution to
the component’s mission. Pay pools also may reserve a portion of their budget for unanticipated
requirements, exceptional performance, market anomalies, or other circumstances.
Although DCIPS funding conforms to IC pay modernization policy, current pay pool funding
will not prove adequate over the long term to sustain meaningful payouts for all deserving
employees. Consequently, the system likely will limit rewards for satisfactory (Successful level
rating) employees to ensure more substantial payouts for top performers. Experts who attended
the Academy’s colloquia characterize this as an unintended “win-lose” situation for most
employees. MSPB’s guidance affirms that funding performance-based compensation systems
based on money from existing sources typically results in some employees obtaining more than
they otherwise would have and others less. MSPB notes that this discrepancy seems most
problematic for the “good, solid employees” who may no longer receive regular, albeit modest,
increases to recognize their contributions. 85 The alternative is to reduce awards for high
performers to spread available funds more broadly; this is not desirable either as the premise of
performance-based compensation is that top performers should receive greater salary increases
and bonuses.
83 2006 MSPB Design Report, pp. 20-21.
84 Department of Defense Instruction Number 1400.25-V2012, DoD Civilian Personnel Management System:
Defense Civilian Intelligence Personnel System (DCIPS) Performance-Based Compensation, dated January 15,
2010.
85 2006 MSPB Design Report, pp. 20-21.
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