Washington, D.C. – The final conference agreement on the National Defense Authorization Act for Fiscal Year 2010 (NDAA) released today contains important Federal workforce provisions, including the Non-Foreign Area Retirement Equity Assurance Act (S. 507), sponsored by Senator Daniel K. Akaka and cosponsored by Senators Daniel K. Inouye (D-Hawaii), Lisa Murkowski (R-Alaska), and Mark Begich (D-Alaska), which would provide fairness in retirement pay for the roughly 50,000 Federal workers in Hawai‘i, Alaska, and the Territories.  After sponsoring the original legislation, Senator Akaka spoke in support of the provision on the Senate floor and advocated for it during the Armed Services Committee conference. 

“Federal employees in Hawai‘i, Alaska, and the Territories would have begun losing pay this year if Congress did not act,” said Senator Akaka.  “This bill will correct a long-standing inequity in retirement pay between Federal workers in these areas and their mainland counterparts.  As a member of the Armed Services Committee and Chairman of the Senate Federal Workforce Subcommittee, I fought to include these important Federal workforce provisions in the final bill.”

Senator Inouye said: “We have long faced a dilemma on how to ensure equity for federal employees in Hawaii, Alaska, and the Territories.  The solution included in the National Defense Authorization Act for Fiscal Year 2010 conference report represents the hard work and difficult choices that were made.  By coming together in a spirit of cooperation, I believe that we have forged legislation to address what is at its heart, an issue of parity.  I salute our federal workforce, and trust that our actions honor their commitment to public service with equitable compensation.”

Federal employees in Hawaii, Alaska and the U.S. Territories currently receive a non-foreign cost of living allowance (COLA), which is not taxed but is not figured into retirement calculations, resulting in lower retirement pay compared to mainland workers.  The majority of these employees – roughly 27,000 – are Department of Defense (DoD) employees.  Federal employees in the contiguous 48 states receive locality pay, which is factored in for retirement.  The NDAA agreement would transition the employees in Hawaii, Alaska, and the Territories from COLA to locality pay over three years.

Now that the provision has been included in the final NDAA conference report from the Senate and House Armed Services Committees, it will come before the full Senate and House for votes on final passage.

In addition to S. 507, the NDAA will repeal the National Security Personnel System, giving DoD and the Office of Personnel Management flexibility to create a robust performance management system and new hiring processes. 

“I am pleased my fellow Armed Services conferees agreed that it is time to end this shortsighted policy which threatens the rights and protections of the DoD civilian workforce,” said Senator Akaka.  “Employees throughout the federal government, especially those charged with defending the nation, deserve a fair personnel system.  I believe this agreement will more appropriately protect DoD employee rights while giving DoD the additional performance management and hiring flexibility it needs.”

Senator Akaka Chaired a subcommittee hearing on July 22, 2008 to examine the pay-for-performance systems across the federal government, including NSPS at DoD.  Witnesses testified to the problems with the NSPS pay-for-performance system, including a lack of transparency, fairness, and communication, as well as the use of quotas. 

The NDAA conference report also includes several other Federal workforce provisions that Senator Akaka introduced when the Senate took up the measure and strongly advocated for during the NDAA conference, including: