Landmark Reforms

Legislation granting Defense Secretary Donald Rumsfeld authority to set up new rules governing hiring, pay and promotions of civilian employees swept through

With the Homeland Security Department also putting a new personnel system in place, the bill's approval leaves less than a quarter of government workers under the standard civil service system.

Under the new Defense system, employee performance, rather than seniority, will determine annual salary increases. The General Accounting Office has criticized Defense's performance appraisal system in the past. That worries many agency managers.

"The changes are going to be swift and we're going to go into this thing blind," says Daryl Perkinson, a Defense Department supervisor and board member of the Federal Managers Association. "The worst thing we can do to the employees of the DoD . . . is to come in and demoralize them by putting in new pay systems that can't be financed or executed."

Other sections of the legislation allow Defense to negotiate only with national union offices; offer early retirement incentives to up to 25,000 employees a year; use special pay rates to hire up to 2,500 "highly qualified experts" each year; rehire retirees without reducing their annuities; and raise pay for Senior Executive Service members.

-Shawn Zeller