How could any person in a work unit be "Outstanding" if the work unit didn't successfully accomplish 100% of their objectives? It happens ALL THE TIME!!!!
I abhor the idea of "Pay for Performance" -- individual performance and individual pay being attached at the hip. I prefer the broader view of "merit"-based pay because of the broader connotations. "Merit" can be tailored to to unit, organization and agency needs (Value of person and occupation to organizational performance, standing with peers, standing with customers, initiative in increasing personal value to the organization, turnover risk of person in local/national labor market, consideration of agency and unit performance as well as individual performance.)