SUPPLEMENTARY INFORMATION:

1. Background

Through the USD(R&E), the Secretary of Defense exercises the authorities granted to the Office of Personnel Management (OPM) under title 5 of United States Code (U.S.C.) section 4703 to conduct personnel demonstration projects at DoD laboratories designated as STRLs. All STRLs authorized pursuant to 10 U.S.C. 4121(a) and (b) may use the provisions described in this FRN. STRLs implementing these flexibilities must have an approved personnel demonstration project plan published in an FRN. Each STRL will establish internal operating procedures (IOPs) as appropriate.

The 24 current STRLs are:

• Defense Health Agency Research and Development ( printed page 61213)
• Air Force Research Laboratory
• Joint Warfare Analysis Center
• Transformation and Training Command
• Army Research Institute for the Behavioral and Social Sciences
• Combat Capabilities Development Command Armaments Center
• Combat Capabilities Development Command Army Research Laboratory
• Combat Capabilities Development Command Aviation and Missile Center
• Combat Capabilities Development Command Chemical Biological Center
• Combat Capabilities Development Command—Command, Control, Communications, Computers, Cyber, Intelligence, Surveillance, and Reconnaissance Center
• Combat Capabilities Development Command Ground Vehicle Systems Center
• Combat Capabilities Development Command Soldier Center
• Communications—Electronics Command Software Engineering Center
• Engineer Research and Development Center
• Medical Research and Development Command
• Technical Center, U.S. Army Space and Missile Defense Command
• Marine Corps Tactical Systems Support Activity
• Naval Air Systems Command Warfare Centers
• Naval Facilities Engineering Command Engineering and Expeditionary Warfare Center
• Naval Information Warfare Centers, Atlantic and Pacific
• Naval Medical Research Center
• Naval Research Laboratory
• Naval Sea Systems Command Warfare Centers
• Office of Naval Research

2. Summary of Comments

On January 9, 2026, the DoD published a notice (91 FR 985-990) concerning a new flexibility, SBTM, for a 30-day public comment period. The public comment period ended on February 9, 2026. Three comments were received and are addressed as follows.

Comment: One commenter expressed concern over the requirement that SBTMs typically report to an SES or an SES equivalent-level position and stated that it could pose a conflict with Navy regulations that direct a comptroller to report to the head of the activity, who may or may not be an SES or equivalent.

Response: No changes were made to the notice based on this comment. The FRN language was intentionally crafted to reflect the significant variety in reporting structures across STRLs and their Components. In recognition of these differences in organizational frameworks and externally imposed grade-level restrictions, the FRN specifies that SBTMs “typically” report to an SES or SES equivalent-level position. This provides flexibility rather than imposing a rigid requirement for SES-level reporting.

Comment: One commenter expressed several concerns about the creation of SBTM positions:

1. Exceeds DoD's statutory authority under 10 U.S.C. 4121.

2. Is inconsistent with the requirement that STRL projects be “generally similar” to the China Lake demonstration project.

3. Circumvents established statutory frameworks for senior federal positions.

4. Lacks the reasoned analysis required under the Administrative Procedure Act.

5. Lacks adequate safeguards.

6. Poses substantial risks to the integrity and mission of STRLs.

Response: No changes were made to the notice based on these comments. While 10 U.S.C. 4121 designates STRLs, 5 U.S.C. 4703 is the authorizing statute for demonstration projects. The notice waives all necessary statutory requirements in title 5 U.S.C. and title 5 Code of Federal Regulations (CFR) sections to implement the SBTM authority. The phrase “generally similar” in 10 U.S.C. 4121, as it relates to the China Lake model, is language Congress intentionally left flexible. It does not mean “identical,” nor does it require STRLs to replicate China Lake feature-for-feature. The SBTM authority does not establish a new category of executive positions. These positions are not classified as SES or equivalent and will be classified appropriately under the STRLs' delegated classification authority. Regarding safeguards and risks to the integrity of the STRL missions, Congress directed oversight of the STRL demonstration projects to the Secretary of Defense, through the USD(R&E), who follows the evaluation and review requirements in 5 U.S.C. 4703.

Comment: One commenter stated the notice should specify that SBTMs will be classified into the appropriate career track/path for business and technical/professional positions.

Response: Two sentences were changed to clarify the appropriate career track/path for SBTMs. The second to last sentence of the last paragraph in Section 3.I.A. and Section 3.II.A.2.(b) are modified to clarify that SBTMs will be classified under the appropriate career track/path for business and technical/professional positions.

3. Overview

I. Introduction

A. Purpose

This FRN grants a new authority to establish SBTM positions, above the GS-15 level, for STRL senior business administration, operations, and technology functions that support and enable the laboratories' research and development missions. A strong business and operations support framework and staff are essential to ensuring the STRLs are prepared and able to advance military technology and capability in accordance with the National Defense Strategy. The SBTM category encompasses positions that would exceed the GS-15 classification criteria of the GS and contain characteristics of SES and Senior Level (SL).

The SL classification designation would not be appropriate because SBTM positions may direct the work of an organizational unit; be held accountable for the success of one or more specific programs; monitor the progress toward organizational goals and objectives and periodically evaluate and make appropriate adjustments to such goals; supervise the work of employees other than administrative assistants; or otherwise exercise important policy-development and implementation, or other executive level functions. SES classification designation would also not be appropriate because SBTMs do not exercise the full scope of managerial authority and impact required of SES positions. The SBTMs establish a separate pay band level in the business and technical/professional career track. This notice implements the SBTM authority.

B. Required Waivers to Law and Regulation

Waivers and adaptations of certain title 5 U.S.C. and title 5 CFR provisions are required only to the extent that these statutory and regulatory provisions limit or are inconsistent with the actions authorized under this demonstration project.

Appendix A lists waivers needed to enact authorities described in this FRN. Nothing in this plan is intended to preclude the demonstration project from adopting or incorporating any law or regulation enacted, adopted, or amended after the effective date of this FRN.

C. Expected Benefits

The SBTM authority is expected to: ( printed page 61214)

(1) Allow proper classification of positions that are engaged in operationalizing laboratory management functions, recognizing the exceptionally high level of expertise required to oversee enterprise-wide business and technical operations, such as financial management, information technology and information assurance, contract management, facilities and infrastructure management, and human capital management.

(2) Attract, retain, and appropriately compensate highly qualified business and technology professionals with significant experience and expertise managing the supporting business elements of highly complex and technology-focused organizations.

(3) Provide the opportunity for career development and expand the pool of experienced, prominent business and technical candidates meeting the levels of proficiency and leadership essential for enabling the operation of world-class DoD laboratories.

II. Personnel System Changes

All current STRL demonstration project plans are hereby amended to add the following:

A. Description and Implementation of SBTM Positions

1. Authorized Positions

The number of authorized SBTM positions in each STRL shall not exceed one percent of the number of civilian and military positions employed at such laboratory, inclusive of positions both within and outside the STRL's personnel demonstration project, which are filled as of the close of the preceding fiscal year. If one percent of authorized positions does not equate to a whole number, the STRL shall round down to the next lower number; however, each STRL shall be authorized at least one SBTM position regardless of the number of positions employed at such laboratory. Though the authorized number of SBTM positions may increase or decrease as the overall civilian and military workforce increases or decreases, no SBTM employees will have their classification as a SBTM changed or their pay reduced, because the size of the STRL's civilian and military workforce has decreased. In such circumstances, an STRL may temporarily exceed its new SBTM authorized number until attrition occurs.

2. Position Classification

(a) Position Requirements

At a minimum, all SBTM positions require senior manager up to executive level knowledge, skills, and abilities in competencies related to STRL business and operations of highly complex technical organizations or business units. SBTMs have a crucial role in driving strategic direction, supporting research and development in defense planning, ensuring operational excellence, and fostering a culture of integrity and innovation to achieve sustainable success. Incumbents will typically possess extensive knowledge and experience in one or more business or technical requirements below or another area determined by the STRL director:

• Implementing and managing major policies and programs and advising senior officials on programs such as human capital, contracting, financial management, operations, facility management, or environmental policy and their impact on research programs.
• Managing defense acquisition policy and familiarity with policies concerning contracting for services.
• Managing information technology, including policy formulation and technical expertise across all aspects of information management at the STRL, with a special focus on creating visionary plans for future mission and business information systems.
• Managing defense cyber competencies that support science and technology initiatives to contribute to the development of cyber resilient transformation and readiness technologies.

Examples of other requirements may include strategic and operational leadership, configuration management, quality assurance, stakeholder engagement, laboratory governance, leadership development, strategic partnership, regulatory compliance, crisis management, and innovation and adaptation.

SBTMs typically report to an SES or an SES equivalent-level position. Since all SBTM positions will typically be administrative supervisors, they may be eligible for a supervisory pay differential at the discretion of the STRL director.

(b) Pay Bands/Career Track

This FRN authorizes STRLs to modify the existing career track for business and technical/professional positions to accommodate the SBTM category and broadband level. Specific details will be included in STRL IOPs.

3. Designated Classification Officials for SBTM Positions

STRL directors are designated as the classification officials for SBTM positions. Each STRL's IOP will provide specific details on each STRL's classification process, control, and management of these positions.

4. Staffing and Recruitment

(a) Positions may be filled on a temporary, flexible term, or permanent basis utilizing appropriate internal or external competitive recruitment procedures, direct hire authority, or through accretion-of-duties promotions. Positions may also be filled temporarily using noncompetitive procedures ( e.g., detail and temporary promotions).

(b) In addition to permanent appointments, the following appointment types may be used:

(1) Flexible-Length and Renewable Term Appointments

This appointment authority may be used to fill SBTM positions for a period of more than one year but not more than five years. The flexible term appointment may be made for a period up to five years, and the STRL director may extend the appointment in up to five-year increments. Prior to extending a term appointment, management will determine if the work or services continue to be temporary in nature, or if they should be made permanent. Candidates selected from outside the Federal government may be hired using the flexible term appointment authority and may be eligible for extension or conversion to career or career-conditional appointment if services are deemed permanent. To be converted, the employee must: (1) have been notified in writing at the time of the initial appointment of the possibility for conversion to a permanent SBTM position at a later date; (2) have served a minimum of one year of continuous service; and (3) have at least a fully successful or equivalent SBTM performance rating applicable to the STRL demonstration project. Additionally, to be eligible for conversion, when positions being filled using the flexible term appointment authority are announced, whether via competitive or merit promotion procedures, the vacancy announcement must contain a statement notifying applicants that the position may be eligible for extension or conversion to a permanent appointment. The probationary or trial period specified in each STRL's FRN in Appendix B will apply to individuals appointed under the Flexible Term Appointment. Personnel appointed under the Flexible-Length and Renewable Term authority described in this section shall be provided with benefits comparable to those provided to status or permanent employees at the STRL concerned, ( printed page 61215) including professional development opportunities, eligibility for all awards programs, and designation as “status applicants” for the purposes of eligibility for positions in the Federal service.

(2) Flexible Temporary Promotions

STRLs may use flexible temporary promotions to SBTM positions for not more than five years, with the ability to extend in five-year increments for candidates who are current Federal employees. Prior to extending a temporary promotion, management will determine if the work or services continue to be temporary in nature or should be made permanent. If not extended or made permanent, the employee will return to a position for which the employee is qualified that is the same grade as previously held before the assignment. Upon termination of temporary promotion, pay will be set in accordance with the STRLs' IOP. Candidates may be eligible for conversion to a permanent SBTM position if the position requirements are deemed permanent by the STRL director. To be converted, the employee must: (1) have been notified in writing at the time of the initial action of the possibility for conversion to a permanent SBTM position at a later date; (2) have served a minimum of one year of continuous service in the temporary assignment; and (3) have at least a fully successful or equivalent SBTM performance rating applicable to the STRL demonstration project.

(c) STRL directors have the discretion to select the recruitment and staffing method most appropriate based on the specialized position requirements and available candidate pool. Each STRL will further describe recruitment and staffing methodologies in its respective IOP.

STRLs must establish recruitment and staffing methodologies that include:

(1) an internal process that incorporates an impartial, rigorous, and demanding assessment of candidates to evaluate the breadth of their expertise;

(2) an external recruitment process which incorporates an impartial, rigorous, and demanding assessment of candidates to evaluate the breadth of their expertise; or

(3) the creation of panels to assist in filling positions or other comparable recruitment or staffing mechanisms.

5. Basic Pay Range

The minimum basic pay for SBTM positions is 115 percent of the minimum rate of basic pay for GS-15. Maximum SBTM basic pay with locality pay is limited to Executive Level III (EX-III), and maximum salary without locality pay may not exceed EX-IV.

6. Performance Management

Each STRL will determine the appropriate performance or contribution management system, non-SES/SL/ST or SES/SL/ST program, to be used to evaluate an SBTM employee's performance or contribution. The selected method will be documented in each STRL's IOP.

7. Pay Retention

Pay retention may be provided to SBTM members under criteria established by each STRL if they are impacted by a reduction in force, work realignment, or other planned management action that would necessitate moving the incumbent to a position in a lower pay band within the STRL. Pay retention may also be provided under criteria established by each STRL when an SES/ST/SL employee is placed in a SBTM position as a result of a reduction in force or other management action. Grade retention is not authorized for SBTM positions.

8. SBTM Supervisory Pay Differential

A supervisory pay differential may be used by STRL directors to provide an incentive to appropriately compensate SBTM personnel. This pay differential is a pay incentive that may range up to 5 percent of basic pay (excludes locality pay) for SBTM personnel. It is paid on a pay period basis and must be reviewed annually. This pay differential is not included as part of basic pay for any purpose. Criteria to be considered in determining the amount of the pay differential are:

(a) needs of the organization;

(b) budgetary constraints;

(c) years and quality of related experience;

(d) relevant training;

(e) performance appraisals;

(f) experience as a supervisor or manager;

(g) organizational level of the position; and

(h) impact on the organization.

The pay differential may be terminated or reduced at the discretion of the STRL director based on legitimate business reasons; however, the pay differential must be terminated if the employee is removed from a position for which a pay differential is approved, regardless of cause. Each STRL will document in its IOP the method used for determining payment, reduction, or discontinuation of the pay differential. All personnel actions involving a supervisory pay differential will require a statement signed by the employee acknowledging that the pay differential may be terminated or reduced at the discretion of the STRL director. The termination or reduction of the pay differential is not an adverse action and is not subject to appeal. The total pay (including locality pay) may not exceed the midpoint between the maximum rate of basic pay of EX-III and the maximum rate of basic pay of EX-II, (for example, for 2024 $213,000; the calculation is rounded up to the next thousand). SBTM employees are subject to the aggregate limitation on pay pursuant to 5 U.S.C. 5307 and 5 CFR subpart 530.203.

9. SBTM Program Oversight

The program shall be managed and administered by the STRL director in compliance with the provisions of this FRN and any IOPs developed by each STRL.

10. Evaluation

Procedures for evaluating this authority will be incorporated into the STRL personnel demonstration project evaluation process conducted by the STRLs in conjunction with the USD(R&E) Science and Technology Workforce Office.

Appendix A: Required Waivers to Laws and Regulations ( printed page 61216)

Appendix B. Authorized STRLs and Federal Register Notices

91 FR 61212