Conversion of Department of Defense Nonappropriated Fund Employees and Other Employees to Civil Service Positions

Certain pay and benefit problems can occur when personnel employed by nonapproprated fund instrumentalities (NAFI's) are converted to positions within the federal civil service. While NAFI's receive some appropriated fund support, by and large they are self-sustaining. Salaries and wages paid employees come primarily from the sale of authorized goods and services, dues, assessments, and fees. NAFI employees are excluded from the operation of civil service laws and regulations which govern the employment, removal, classification, pay, retirement, leave, and disability and death compensation of federal officers and employees, except under special circumstances where employees serve in excepted civil service positions but are otherwise considered federal emplo yees in transferring to the civil service. The integration of the Smithsonian Science Information Exchange into the National Technical Information Service presents similar but different problems. The Exchange's financial support comes from the federal government, either by way of appropriated funds transferred under contracts, or from user fees received from federal agencies. The employees of the Exchange could lose substantial employment rights and other accumulated benefits if they were federalized under present law. Because of this, the governing congressional committee denied funds to cover the integration costs. There are three possible ways to avoid the adverse effects which conversions would have on NAFI employees. The employees could retain their NAFI employment status, and their positions would be converted to the civil service only when they retired or separated from employment. The activities could be operated as NAFI's, but supported with appropriated funds on a reimbursable basis. Laws could be changed to allow NAFI employees, converting to civil service positions, to transfer their accrued sick and annual leave and salary rates. The only possible remedy available for Smithsonian Science Information Exchange employees would be to enact legislation granting them special treatment, in terms of pay and benefits. Consideration should be given to the precedent such legislative action might establish. Any legislative action to resolve these problems should be limited to pay and leave problems and not attempt to address problems relating to retirement benefits.