The Defense Department and Office of Personnel Management are looking for ways to lift the pay caps for thousands of employees transitioning out of the National Security Personnel System.

An estimated 4,000 to 40,000 employees who received large raises under NSPS are expected to now earn more than their respective General Schedule grades allow. So after they are transferred back to GS this year, they will be placed on retained pay status. That means they will only earn half the pay raise other GS employees receive each year until GS salaries catch up with their pay.

Marilee Fitzgerald, acting deputy undersecretary of Defense for civilian personnel policy, told lawmakers April 29 that she hopes a solution will be included in OPM's planned overhaul of federal employees' pay system. Fitzgerald also said affected employees could move up to a higher grade, which would allow them to receive their full pay raises.

The Federal Managers Association, which represents thousands of Defense managers, objects to the retained pay plans and is pushing the Pentagon to reclassify affected employees in higher GS grades.

Sen. George Voinovich, R-Ohio, said he wants Fitzgerald and OPM Director John Berry to send him a plan on how they will address this issue.

"Do you think you're going to be able to hold those people?" Voinovich said.

Voinovich also expressed his frustration at the impending cancellation of NSPS, which Congress ordered last fall. Fitzgerald said the department was working to retain the strong parts of its performance management system.

"I worked my head off to get NSPS working," Voinovich said. "You're here today telling me you're going to capture all those good things that were in the program. What in the devil do you think we wanted to go to the system for in the first place?"