Performance Management

SUMMARY: The Office of Personnel Management (OPM) is issuing proposed

regulations to deregulate performance management and incentive awards,

including provisions allowing agencies to use as few as two levels for

critical element appraisals and summary ratings for non-SES employees,

and to make conforming changes to related regulations. These changes

are proposed to provide agencies additional flexibility as called for

by the National Performance Review.

DATES: Comments must be submitted on or before March 28, 1995.

ADDRESSES: Comments may be sent or delivered to: Allan D. Heuerman,

Assistant Director for Labor Relations and Workforce Performance, U.S.

Office of Personnel Management, Room 7412, 1900 E Street NW.,

Washington, DC 20415.

FOR FURTHER INFORMATION CONTACT: Barbara Colchao, (202) 606-2720.

SUPPLEMENTARY INFORMATION: To pursue the flexibility and

decentralization called for by the National Performance Review (NPR),

OPM proposes amending its regulations to remove many of the current

regulatory requirements and permit agencies to implement performance

management systems and programs for non-SES employees that better fit

their organizational climate and needs. (OPM is conducting a separate

review of SES performance appraisal regulations.) These proposed

changes are intended to increase system flexibility and not to suggest

the superiority of the newly available options. OPM advises agencies to

examine their individual circumstances carefully before making any

major changes to their performance management systems and programs.

Partnership and Successful Performance Management

Agencies are strongly urged to develop their performance management

systems and programs in partnership with their employees and union

representatives in accordance with law. Many studies have shown that

the success of a performance management system in achieving its goals

is dependent upon acceptance by the management and employees who use

it. There is no better way to garner support for a system than by

giving all stakeholders a role in developing it. Further, the National

Performance Review stated in its accompanying report, Reinventing Human

Resource Management, that under the ideal performance management system

``Employees and their representatives will be involved in design and

implementation of performance management programs and in development of

performance expectations.'' Consequently, OPM advises agencies that

these regulatory changes in performance management should be

implemented through full partnership with employees and their union

representatives.

Performance Management Systems and Programs

The recommendations of the National Performance Review for

reforming the Government's performance management system contemplated a

policy environment that would permit ``complete decentralization of

performance management within a framework of broad, governmentwide

principles.'' OPM is establishing that framework in these proposed

regulations for appraisal and awards, which would remove many previous

regulatory constraints and implement flexible Governmentwide systems

for appraisal and awards. This approach will permit the implementation

of the NPR recommendation for the development of agency-based

performance management and incentive award programs tailored to meet

each agency's unique needs.

The law governing performance appraisal provides that agencies must

establish one or more appraisal systems, and that OPM must review and

approve an agency's system(s). OPM is proposing to define an agency

appraisal system as the agency's framework of policies and parameters

(i.e., guidelines, boundaries, limits) for the administration of

performance appraisal. (See Sec. 430.204.) Although an agency would be

authorized to establish more than one system, OPM anticipates that most

agencies will not find it necessary to do so. OPM goes on to propose

that within that OPM-approved framework, an agency would be free to

establish and adapt one or more appraisal programs of specific

procedures and requirements. (See Sec. 430.205.)

Consequently, when an agency has determined it can more effectively

meet the objectives for performance management to improve individual

and organizational performance by establishing different specific

performance appraisal procedures and requirements tailored to the

mission, work technology, and/or employees of its organizational

subcomponents or for subsets of positions, the proposed regulations

would authorize the agency to develop appropriate, separate appraisal

programs under the framework of its appraisal system.

Deregulating Performance Management

OPM is proposing implementation of NPR recommendations for

flexible, decentralized performance management through deregulation of

appraisal and awards. That deregulation would be achieved in at least

three ways.

First, the regulations have been reviewed to eliminate unnecessary

or redundant requirements. A number of requirements had been set forth

in regulation, but were not required by statute. Many of these that

have come to be unnecessarily constraining or burdensome (e.g.,

specifying required procedures for employees on details, requiring an

SF-50 for a time-off award) would be eliminated. On the other hand,

several regulations that merely repeat requirements that are already

clearly stated in statute would also be eliminated. In these instances,

of course, the statutory requirements will still be in effect.

Second, a number of regulatory requirements would be removed, not

because they were necessarily ineffective or redundant, but because

agencies should be free to use them without being required to use them.

For example, the proposal to eliminate the requirement for second-level

review of performance plans should not be taken as an indication that

OPM has concluded that second-level review is a bad idea. In many

instances, the reverse is true. However, OPM is proposing to achieve a

shift in policy perspective under which an agency's use of second-level

review in its performance management programs would reflect the

agency's program design choice rather than compliance with a

Governmentwide regulatory requirement. A similar situation can be found

in OPM's proposal to eliminate most restrictions on the use of time-off

awards. Many agencies may choose to retain some limits, and they would

be free to do so.

Another example of this form of deregulation that would implement

an authority without establishing a requirement is OPM's proposal to

delete subpart E (Performance Awards) of part 430 and integrate

provisions for rating-based cash awards into part 451

[[Page 5543]] (Awards). This would consolidate the regulatory structure

and clarify that rating-based cash performance award programs are an

option that agencies are authorized--but not required--to use.

Finally, deregulation would result from modifying OPM's review of

agency systems. An agency's appraisal system, or overall policy

framework, would still be reviewed and approved, as required by law,

for compliance with regulatory requirements. However, the scope of that

review would be limited to that required by law, and there would be

fewer regulatory requirements to review. The proposed regulation

returns the Governmentwide regulatory scheme for performance management

to the decentralized approach initially taken in implementing the Civil

Service Reform Act of 1978. The highly detailed regulatory requirements

that OPM is proposing to modify date to the mid-1980's, a time when

there was a strong policy interest in achieving Governmentwide

uniformity. Experience has provided substantial evidence that the ``one

size fits all'' approach does not support effective performance

management and needs to be changed.

Reinventing Performance Management

In addition to reducing the amount of regulation, OPM is proposing

regulatory revisions to facilitate applying performance management

regulations to improving individual and organizational performance. The

language and context of existing regulation is centered strongly in a

model of individual performance and recognition. The language, context,

and focus of effective performance management practice have altered

substantially in recent years. Many organizations have benefitted from

a shift to focusing on the group or team performance level. Such a

shift can greatly improve the credibility and utility of appraisal and

award processes and outcomes for achieving the objective of improving

organizational performance and mission accomplishment.

The current regulations stem from a model of appraisal based more

on process inputs and the duties and responsibilities in an employee's

individual position description and less on the results and

accomplishments for which that employee is accountable. Experience has

shown that those results and accomplishments are often more reasonably

and meaningfully described, and certainly measured, at the group or

team level. One objective in OPM's revision of appraisal and award

regulations is to ensure that they could be applied to managing group

performance. Consequently, many proposed revisions would remove

language (e.g., ``employee'' and ``position'') that narrowed the

regulation's focus to individual performance. Several appraisal-related

terms would be retained (e.g., appraisal, critical element,

performance), but their definitions modified to accommodate this

broader context.

OPM's goal is to establish a regulatory scheme that would operate

effectively at the individual and the team or group level. An agency

would still be able to design and operate its programs entirely at the

individual level. Establishing and maintaining individual

accountability and taking appropriate actions to deal with poor

performers must remain significant aspects of the Government's

performance management system. Therefore, the regulations would

continue to require that each employee have a performance plan, and OPM

is proposing to require that each plan must include at least one

critical element that addresses individual performance. (See

Sec. 430.206(b)(4).)

In addition to making changes to accommodate group performance, OPM

is proposing some revisions to the regulatory structure that are

intended to refocus attention away from the once-a-year summary rating

aspects of performance appraisal procedures and back toward the

processes involved in communicating performance expectations and

providing ongoing feedback. To that end, OPM is proposing to establish

separate sections within the appraisal subpart of part 430 that focus

on:

--Planning performance, (See Sec. 430.206.)

--Monitoring performance, (See Sec. 430.207.)

and

--Rating performance at the end of an appraisal period or cycle. (See

Sec. 430.208.)

The definition and requirements for a performance plan would be

broad enough to accommodate including other expressions of performance

expectations in addition to establishing elements and standards. (See

Sec. 430.203 and Sec. 430.206(b)(5).) This would facilitate agencies

integrating other performance planning processes with their appraisal

programs (for example, by including factors from performance contracts,

performance goals and targets, published customer service standards,

organization-level performance plans established under the Government

Performance and Results Act of 1993, etc.). The proposed regulations

seek only to establish clearly that agencies would be free to integrate

such planning tools and products and do not establish specific

requirements or procedures for doing so. Such factors could be

considered, for example, in designing incentive award schemes and

distributing rewards and recognition. However, such factors could not

be used as the basis for initiating a performance-based action, which

requires a determination that performance on a critical element is

``Unacceptable.''

Another area where OPM is proposing a broader context is the

process for deriving a summary rating. Although OPM is proposing to

permit as few as two summary rating levels (see below), it is also

anticipated that agencies will continue to have an interest in making

and recording further distinctions among the vast majority of employees

who meet basic performance expectations. OPM is proposing regulations

that would give agencies more flexibility in deriving and assigning

summary rating levels. For example, agencies would be able to--but not

required to--consider other performance-related factors beyond

appraisal of employee or group performance on critical elements. (See

Sec. 430.208(b).) Examples of such other factors include:

--Components from a performance plan such as meeting work plan

objectives or group performance goals that had not been specifically

framed as critical elements,

--A record of receiving awards for superior performance,

--A record of documented productivity gains,

--A non-critical element included in the performance plan to

communicate an expectation and standards that, if met, could raise a

summary rating above Level 3 (``Fully Successful'' or equivalent).

In addition, OPM is proposing to give agencies the flexibility to

use forced distributions of summary ratings above Level 3 (``Fully

Successful'' or equivalent), but only where those summary ratings above

that level are not derived solely based on a comparison of performance

against predetermined standards. An example of such a scheme would be

to use performance-related criteria to rank the employees whose

critical elements are all appraised as at least ``Fully Successful''

and assign the highest rating level to a limited number of employees.

It should be noted that the effectiveness and acceptance of such a

scheme would rest largely on the credibility and equity of the

processes and criteria used to rank the employees.

[[Page 5544]] Nevertheless, OPM is proposing to offer agencies this

flexibility. If performance standards defining the higher levels had

been established, an agency would be prohibited from prescribing a

distribution of ratings. (See Sec. 430.208(c).)

Within the awards arena of performance management, reinventing the

system of Governmentwide policies for recognition and reward programs

would be achieved by integrating rating-based cash performance award

provisions into the same regulatory part as other awards and by

simplifying those regulatory provisions. This would have the effect of

giving agencies a framework of broad, flexible principles for designing

and administering decentralized award programs, consistent with NPR

recommendations. Within those broad principles, agencies would be free

to design and operate a wide variety of tailor-made incentive and

recognition programs at the individual and group level, including most

of the alternative reward, variable pay, and pay-for-performance

schemes that can contribute to improving individual and organizational

performance.

Number of Summary Rating Levels

OPM is proposing to permit agencies to use as few as two levels for

summary performance ratings. Among summary rating levels, agencies

would be required to include a Level 1 (``Unacceptable'') and a Level 3

(``Fully Successful'' or equivalent). If more than two summary rating

levels were used, the agency could choose any combination from the

remaining three levels (i.e., Level 2, Level 4, and Level 5). Agencies

also would continue to be permitted to use equivalent terms for ``Fully

Successful'' and/or ``Outstanding.'' (See Sec. 430.208(d).)

Using the five possible summary rating-level designators

established at Sec. 430.208(d), the following table illustrates the

various patterns of levels available.

----------------------------------------------------------------------------------------------------------------

Summary rating level designator from new Sec. 430.208(d)

-----------------------------------------------------------------------

Number of summary rating levels in Level 3

program Level 1 Level 2 (``fully Level 4 Level 5

(``unacceptable'') successful'') (``outstanding'')

----------------------------------------------------------------------------------------------------------------

Two..................................... X ....... X ....... .................

Three:

Option 1.............................. X ....... X ....... X

Option 2.............................. X ....... X X .................

Option 3.............................. X X X ....... .................

Four:

Option 1.............................. X ....... X X X

Option 2.............................. X X X ....... X

Option 3.............................. X X X X .................

Five X X X X X

----------------------------------------------------------------------------------------------------------------

Permitting the use of only two summary rating levels would not

require a change in the rules governing additional service credit for

performance in determining an employee's retention standing for RIF

purposes since an appraisal program with only two summary rating levels

would be required to use Level 3 (``Fully Successful'' or equivalent)

to summarize acceptable performance. As set forth in 5 CFR

351.504(d)(3), an employee would receive ``Twelve additional years of

service credit for each performance rating of fully successful (Level

3) or equivalent.''

Number of Levels for Appraising Elements

OPM is proposing to permit agencies to use as few as two levels at

which to appraise performance on the elements in employee performance

plans. At a minimum, it must be determined whether performance is

``Fully Successful'' (or equivalent) or ``Unacceptable'' when appraised

against established performance standards. Agencies would still be

required to establish performance standards at the ``Fully Successful''

(or equivalent) level for critical and non-critical elements. Also,

agencies would continue to be permitted to determine performance to be

at a level that has no established performance standard but which has

been provided for by the applicable performance appraisal program. (See

Sec. 430.206(b)(6).)

Regulatory Changes in Awards

OPM is also proposing to revise regulations so that the

requirements governing all types of awards for non-SES employees would

be in part 451 of chapter 5 of the Code of Federal Regulations. The

proposed regulations provide for a few basic requirements within which

agencies can design award programs to meet their individual cultures

and needs.

The language throughout these regulations has been reviewed for its

use of the term ``incentive award(s).'' For many years since the

inception of the consolidated awards authority for Federal employees in

1954, the term ``incentive'' was used broadly to cover all types of

awards including those that are granted retrospectively at management

discretion to recognize past contributions, such as special acts or

suggestions. As awards theory and practice have developed in recent

years, however, ``incentive'' typically is applied somewhat more

restrictively to award programs, such as productivity gainsharing and

performance goalsharing schemes, that are designed to specify clearly

in advance what recognition and reward will be granted based on a given

contribution. Programs such as these have demonstrated their

effectiveness for improving performance. At the same time, awards that

recognize past contributions not specified in advance beyond some

general criteria remain an appropriate and effective use of the

authority to grant awards.

There is no strict definition or distinction for the term

``incentive'' that can be established or applied. Nevertheless, to

recognize trends in awards theory and practice, OPM is proposing to use

only the term ``award(s)'' in the broad regulations that cover both the

prespecified and the retrospective uses of the awards authority and

limit use of the term [[Page 5545]] ``incentive'' in the regulations to

situations where the relationship between contribution and award is

clearly specified in advance.

OPM is proposing to remove the separate subpart (subpart E) within

part 430 governing the use of rating-based cash performance awards and

to integrate a minimum number of essential provisions into subpart A of

part 451. (See Secs. 451.104(a)(3), 451.104(b) & (g), and 451.106(b),

(f) & (g).) OPM is also proposing to delete the separate subpart

(subpart C) within part 451 governing the use of time-off awards and to

integrate time-off awards within the more general award provisions.

(See Secs. 451.104(a) and 451.104(e).)

OPM is proposing new regulations to implement new statutory

provisions at 5 U.S.C. 4508 and 4509 concerning restrictions on awards

for senior political appointees. (See Sec. 451.105.) In addition, OPM

is proposing a new regulation that alerts agencies that when designing

award programs under this authority, they must ensure that award

schemes, especially those based on achievements other than those

directly related to an employee's performance plan, will not violate

any other statute or Governmentwide regulation. (See Sec. 451.106(a).)

Within-Grade Increase Flexibilities

OPM is proposing an agency-requested flexibility to permit the

delay of the acceptable level of competence (ALOC) determination

required for granting a within-grade increase when an employee has

begun an opportunity period or has been given a notice of a proposed

performance-based action. This option to delay an ALOC in no way

restrains an agency from establishing a policy to deny a within-grade

increase to an employee whose performance or rating of record supports

such a denial. Furthermore, in those agencies that choose to continue

using a Level 2 (``Minimally Successful'' or equivalent) summary rating

level, exercising the delay option would create an inequity between the

minimally acceptable and unacceptable employee in that the unacceptable

employee would be given additional time to achieve ALOC. (See

Sec. 531.409(c)(2).)

Another proposed flexibility would cover situations where agencies

have employees who are authorized to perform activities of official

interest to the agency (e.g., labor-management partnership activities

under section 2 of Executive Order 12871, serving as a representative

of a labor organization, etc.), but are not able to perform under

elements and standards (and, therefore, the agency is unable to provide

a rating of record). OPM is proposing to permit the agency to waive the

requirement for an ALOC determination and grant within-grade increases

upon completion of the applicable waiting period. This waiver option

recognizes that such employees have not had a sufficient opportunity to

perform under their assigned elements and standards due to the other

authorized activities and supposes that such performance would have

been at least ``Fully Successful'' had it occurred. (See

Sec. 531.409(d)(5).)

Eligibility for Quality Step Increases

Agencies are required by Executive Order 11721 to establish plans

for granting additional step increases to employees on the basis of

high quality performance. Current regulation at Sec. 531.504

establishes that a Level 5 (``Outstanding'' or equivalent) rating is

required for granting such a quality step increase (QSI). OPM

recognizes that agencies that choose to adopt two summary rating levels

or to not include a Level 5 summary rating level would not be able to

grant a QSI under current regulation, and thereby satisfy the

requirements of Executive Order 11721. Consequently, OPM proposes to

amend its pay regulations to permit an employee under an appraisal

program without a Level 5 summary rating level to be eligible for a QSI

based on demonstrating sustained performance that is significantly

higher than that expected at the ``Fully Successful'' level. Agencies

would be required to establish performance-related criteria for QSI

eligibility consistent with this requirement. (See Sec. 531.504.)

Appraisal System Transition

OPM is proposing a regulatory provision that would assist agencies

as they develop and implement new appraisal systems and programs under

new regulatory flexibilities. At the time that new regulatory

requirements and provisions become effective, it is essential to

support a smooth transition especially for agencies that might be

pursuing a pending administrative action initiated under the systems

that exist now. The regulatory provision would clarify that any

appraisal system that had been reviewed and officially approved by OPM

as of the effective date of the revised regulations would be considered

an approved system under the revised regulations until such time as

changes to the system are approved. This will permit agencies to pursue

pending actions and to continue to operate their existing appraisal

systems and initiate other actions based on appraisal results. (See

Sec. 430.201(b).)

Agencies should note that these regulatory changes establish no

requirements or deadlines to make appraisal system changes. The

flexibility the proposed regulations would achieve includes the

flexibility to continue agency appraisal policies, procedures, and

requirements that are already in use. OPM is proposing no regulatory

provision that would create a regulatory conflict for any appraisal

system already approved under current regulation.

OPM would provide guidance to agencies on requirements and

procedures for submitting system descriptions to OPM for review and

approval.

Major Proposed Changes to Performance Management Regulations

OPM also is proposing to amend its regulations in other ways to

provide additional flexibilities, eliminate burdensome requirements,

establish new provisions, and make conforming and editorial changes.

The following list summarizes the substantive changes, including those

discussed above.

Added Flexibilities and Reduced Requirements

1. Permits agencies to use as few as two performance levels for

appraising elements.

2. Permits agencies to use as few as two levels for summary

performance ratings.

3. Removes the requirement for OPM approval of plans for awards,

quality step increases, and within-grade increases, but retains

statutory requirement that OPM approve performance appraisal systems.

4. Permits recording of performance plans, ratings, etc., in

formats other than paper.

5. Deletes the requirement for higher-level review of performance

plans.

6. Replaces the requirement that agencies assist employees with

performance below Fully Successful with the statutory requirement to

assist with performance that is Unacceptable.

7. Replaces the total prohibition on forced distributions of

summary ratings with prohibitions limited to summary ratings below

Level 3 or situations where summary ratings are based solely on

appraisal against pre-established performance standards.

8. Deletes the requirement that a rating of record under one pay

system be used as the rating of record under a new system when there is

no change in duties or responsibilities.

9. Deletes the requirement for agencies to prepare a summary rating

when an employee changes position and [[Page 5546]] to specify how such

a rating is to be taken into account when preparing a rating of record.

10. Deletes fixed limits (90 to 120 days) on the length of the

minimum appraisal period, and replaces them with a requirement that a

minimum period be established.

11. Deletes specific requirements for rating employee performance

while on detail and replaces them with a requirement that an agency

appraisal program address appraisal while on detail.

12. Deletes the general requirement for higher-level approval of a

rating of record and replaces it with a requirement that only

``Unacceptable'' summary ratings be approved at a higher level.

13. Replaces the requirement for training supervisors and employees

on the appraisal process with a requirement to communicate about

relevant parts of the system and programs.

14. Deletes subpart E (Performance Awards) of part 430 and

incorporates some performance awards provisions into part 451 (Awards).

15. Deletes the recommendation to make maximum use of awards

authority.

16. Replaces the requirement to document awards in the OPF with a

provision for agencies to establish criteria to determine which awards

to document in the OPF.

17. Replaces the requirement for higher-level review of awards with

a requirement to follow agency financial management control procedures.

18. Deletes the requirements for an SF-50 for a time-off award and

for annual reports on performance awards and awards program activity,

and replaces them with a requirement to report data on all cash and

time-off awards to the CPDF.

19. Deletes the provision that awards cannot be used as substitutes

for pay or other personnel actions.

20. Deletes most regulatory provisions and requirements regarding

time-off awards, but retains the provision that prohibits converting a

time-off award to cash.

New Provisions

1. A distinction is made between an agency system (agencywide

policy and parameters) and an agency program (specific procedures,

forms, standards, etc.).

2. Agencies are encouraged to involve employees and their

representatives in the development of award and appraisal systems and

programs.

3. Key definitions and provisions have been broadened to explicitly

include teams.

4. Provision to maintain applicability of appraisal systems already

reviewed and approved by OPM is added.

5. At least one element in a performance plan must address

individual performance.

6. Agencies are to ensure that any award program they develop does

not conflict with any other applicable law or regulation.

7. OPM is authorized to grant agency requests to extend 5 U.S.C.

4505a to non-General Schedule employees as provided by Executive Order

12828.

8. The provision that a rating-based cash performance award cannot

be appealed is clarified to include all awards.

9. The statutory restrictions on granting awards to senior

political officials is added.

10. Agencies are to use the OPM Guide to Federal Workforce

Reporting Systems when reporting data.

11. OPM is authorized to evaluate agency award programs.

12. A provision permitting an agency to delay an ALOC determination

if the employee is in an opportunity period or notice period is added.

13. A provision permitting an agency to waive the ALOC

determination for employees who have been unable to perform under

elements and standards because they spent 100% of their time on

activities of official interest to the agency is added.

14. An agency that does not use the ``Outstanding'' (Level 5)

summary rating level will be permitted to establish performance-related

criteria and grant a quality step increase to an employee who

demonstrates significantly high quality performance.

Table of Changes

The following table lists all the proposed changes to the current

regulation, including those discussed above.

--In the left column, the table lists all current regulations in parts

430 and 451 and current regulations in parts 432 and 531 that are

impacted by the proposed regulations.

--In the middle column, the table lists the proposed regulations that

track the provisions of the current regulations in the left column.

--In the right column, the table explains the changes in provisions

from the current regulation in the left column to the proposed

regulation in the middle column.

----------------------------------------------------------------------------------------------------------------

Current rule Proposed rule Description of change

----------------------------------------------------------------------------------------------------------------

Sec. 430.101................ Sec. 430.101................ Proposed rule removes citation of incentive award

and pay statutes because they no longer apply.

Sec. 430.102................ Sec. 430.102(a)............. Proposed rule redefines performance management to

reorient the definition to team settings and goals

of the National Performance Review (NPR).

Sec. 430.103................ Sec. 430.102(c)............. Proposed rule redescribes the Performance Management

Plan; removes the requirement for OPM approval of

plans for awards, quality step increases, and

within-grade increases; the requirement for final

approval of component plans by OPM; and reference

to the Performance Management Plan Checklist to

provide greater agency flexibility and to reflect

OPM's scope of review.

Sec. 430.209 (a) & (f)...... Proposed rule revises and redesignates the provision

requiring submission of appraisal system(s), system

changes, and records to OPM to reflect OPM's scope

of review.

Sec. 430.201(a)............. Sec. 430.201(a)............. Proposed rule makes editorial changes to section

addressing statutory authority to eliminate

nonessential information.

Sec. 430.201(b)............. Proposed rule adds provision to maintain

applicability of performance appraisal systems

already reviewed and approved by OPM.

Sec. 430.201(b)............. Sec. 430.102(b)............. Proposed rule revises language that specifies

objectives of performance appraisal systems to

specify objectives of performance management and to

add references to teams.

Sec. 430.202(a)............. Sec. 430.202(a)............. Proposed rule attaches to ``General Schedule'' a

parenthetical reference to ``GS/GM'' to accommodate

termination of the Performance Management and

Recognition System.

Sec. 430.202(b)............. Sec. 430.202(b)............. Proposed rule deletes requirements regarding the

statutory authority under which agencies may

exclude temporary employees to increase agency

flexibility.

[[Page 5547]]

Sec. 430.202(c)............. Sec. 430.202(c)............. Proposed rule substitutes a ``minimum period

established by the agency'' for the fixed ``120

calendar days'' as the minimum period of time a

position is not reasonably expected to exceed to be

excluded from coverage for the purpose of

increasing agency flexibility.

Sec. 430.202(d)............. Sec. 430.202(d)............. No change.

Sec. 430.203................ Sec. 430.203................ Appraisal is broadened to allow more flexibility.

Appraisal period is revised to reinforce the

expectation that appraisal periods generally last

one year and to establish them as the basis for

ratings of record.

Appraisal program is added to distinguish specific

appraisal procedures and requirements from

agencywide appraisal policies and parameters

established for the administration of performance

appraisal within the agency.

Appraisal system is revised to clarify that it

refers only to an agencywide framework for

appraisal policy and to remove references to

various system requirements that would no longer

apply.

Critical element is broadened to facilitate using

performance planning to communicate expectations,

especially in team settings, by removing

classification-centered references to duties and

responsibilities of the position.

Non-critical element is deleted because it is not

needed.

Performance is revised to broaden the definition, to

reference work responsibilities as well as

assignments, and to remove the classification-

centered reference to a position to better

accommodate team settings.

Performance Appraisal System is retained without

change.

Performance Management Plan is deleted because it is

described in subpart A already.

Performance plan is revised to reorient the

definition to team settings and NPR goals and to

permit the performance plan to be recorded in

formats other than paper.

Performance rating is added to replace the

definition of ``summary rating'' which is no longer

needed, to permit the performance rating to be

recorded in formats other than paper, and to

acknowledge that non-critical elements are

optional.

Performance standard is revised to remove language

that implies that management should develop

standards without employee input and to improve

clarity.

Progress review is revised to emphasize

communication and the legitimacy of team elements

and standards.

Rating is deleted because it is not needed.

Rating of record is revised to refer to

``performance rating'' instead of ``summary

rating,'' to include the assignment of a summary

rating level, to remove reference to the

Performance Management Plan, to specify that the

rating of record generally applies to performance

over the entire appraisal period, and to specify

that all references to official ratings,

performance ratings, and ratings of record in title

5 of the Code of Federal Regulations refer to this

definition. The purpose of these changes is to

clarify the rating process and provide greater

flexibility.

Summary rating is deleted and replaced by a new

term, ``performance rating,'' and language in the

``rating of record'' definition (see above) to

clarify the rating process and provide greater

flexibility.

Sec. 430.204(a)............. Sec. 430.204(a)............. No change.

Sec. 430.204(b)............. Proposed rule adds new provision to require agencies

to establish agencywide policies and parameters and

sets forth minimum requirements for a system to

reflect OPM's scope of review.

Sec. 430.204(c),............ Proposed rule adds new provision to encourage

Sec. 430.204(d)............. employee involvement in system and program

development to reflect team settings and NPR goals.

Sec. 430.205(a)............. Proposed rule adds new provision that requires

agencies to develop at least one appraisal program

within the scope of agency systems to specify

procedures and requirements to operate the

performance appraisal system.

Sec. 430.205(c)............. Proposed rule adds new provision that permits the

development of separate appraisal programs to

implement decentralized performance appraisal.

Sec. 430.204(b)............. Sec. 430.206(b)(3), Sec. Proposed rule revises and redesignates provisions

430.207(b), Sec. 430.208(a) requiring performance plans, appraisals, and

summary ratings; and permits formats other than

paper for recording performance plans to clarify

the rating process and provide greater flexibility.

Sec. 430.204(c)............. Sec. 430.206(b)(1).......... Proposed rule retains provision for employee

participation in establishing performance plans,

deletes reference to examples of employee

participation in establishing performance plans to

eliminate nonessential information, and deletes the

provision that supervisory officials have ultimate

authority to establish such plans to accommodate

team settings and support NPR goals.

Sec. 430.204(d)(1).......... Sec. 430.206(b)(2)&(3)...... Proposed rule revises and redesignates the

provisions for job-related performance plans

provided at the beginning of the appraisal period

to clarify the rating process.

(b)(4)...................... Proposed rule adds new provision to ensure that at

least one element addresses individual performance.

Sec. 430.204(d)(2).......... Sec. 430.206(b)(5).......... Proposed rule revises and redesignates the provision

for the inclusion of organizational objectives in

performance plans to provide for team setting and

support NPR goals.

Sec. 430.204(e)............. Sec. 430.206(b)(6).......... Proposed rule permits agencies to use as few as two

levels to appraise elements to provide greater

flexibility (see section in supplementary

information above), and continues requirement for

Fully Successful standard and ability to appraise

at levels without explicit standards.

Sec. 430.204(f)............. Sec. 430.206(b)(6)(ii)...... Proposed rule revises and redesignates requirement

for written performance standard and deletes

requirement for higher-level review of performance

plans to provide greater flexibility.

[[Page 5548]]

Sec. 430.204(g)............. Sec. 430.208(b)............. Proposed rule revises and redesignates the

requirement for a summary rating method and

provides added flexibility in deriving summary

rating levels.

Sec. 430.204(h)............. Sec. 430.208(d)............. Proposed rule permits agencies to use as few as two

summary rating levels (Unacceptable and Fully

Successful) (see section in supplementary

information above) and permits use of other levels

to provide greater flexibility.

Sec. 430.204(i)............. Sec. 430.208(d) Sec. Proposed rule simplifies regulatory text and

430.209(3). replaces the outdated reference to the Federal

Personnel Manual with a reference to the current

OPM Guide to Federal Workforce Reporting Systems.

Sec. 430.204(j)............. Sec. 430.207(c)(1).......... Proposed rule clarifies that agencies are required

to assist employees with ``Unacceptable''

performance and deletes examples of assistance to

remove nonessential information.

Sec. 430.204(k)............. Sec. 430.207(c)()........... Proposed rule simplifies language addressing

unacceptable performance to delete information

stated elsewhere in regulation (performance-based

action can be taken either under procedures

established in part 432 or part 752, subpart D).

Sec. 430.204(1)............. ............................ Proposed rule deletes provision requiring ratings of

record under one pay system to be used as ratings

of record under a new pay system when there is no

change in the duties and responsibilities of the

position to provide greater flexibility.

Sec. 430.204(a)............. Sec. 430.206(a)............. Proposed rule revises and redesignates the

requirement for appraisal period and removes the

requirement for agencies to prepare a summary

rating when an employee changes position and to

specify how these are taken into account when

preparing ratings of record to clarify the rating

process and provide greater flexibility.

Sec. 430.205(b)............. Sec. 430.207(a)............. Proposed rule deletes fixed limits on the length of

minimum appraisal periods to provide greater

flexbility.

Sec. 430.205(c)............. Sec. 430.207(b)............. Proposed rule makes editorial changes to provisions

regarding appraising performance on each element

and progress reviews to increase emphasis on

communication.

Sec. 430.205(d)............. Sec. 430.205(b)............. Proposed rule replaces requirement to rate employee

performance while on detail with requirement that

programs address the issue to provide greater

flexibility.

Sec. 430.205(e)............. Sec. 430.207(b)............. Proposed rule revises and redesignates the

requirement for a progress review to increase

emphasis on communication.

Sec. 430.205(f)............. Sec. 430.208(f)............. Proposed rule revises the redesignates and provision

regarding rating disabled veterans to clarify

rating process.

Sec. 430.206(a)............. Sec. 430.208(a)............. Proposed rule revises and redesignates requirement

for rating of record to eliminate repeating

information in the definition and permits agencies

to use formats other than paper to give ratings of

record to employees.

Sec. 430.206(b)............. ............................ Proposed rule deletes a provision repeated in

current Sec. 430.205(c) and proposed Sec.

430.207(b) (see above).

Sec. 430.206(c)............. Sec. 430.208(e)............. Proposed rule limits requirement for higher-level

approval to ``Unacceptable'' ratings of record to

provide greater flexibility.

Sec. 430.206(d)............. Sec. 430.208(c)............. Proposed rule revises and redesignates the

prohibition of forced distribution, but limits it

to ratings below Level 3 or to situations where

employees are rated only against pre-established

standards, and removes the requirement that

agencies establish procedures to ensure that only

those employees who exceed normal expectations

receive ratings above Fully Successful. These

changes are made to provide greater flexibility.

Sec. 430.206(e)............. Sec. 430.208(g)............. Proposed rule makes editorial changes to provision

regarding extension of appraisal period to clarify

the rating process and provide greater flexibility.

Sec. 430.206(f)............. Sec. 430.209(b)............. Proposed rule revises and redesignates the

requirements to transfer ratings of record when

employees go to a new agency or organization to

clarify the rating process.

Sec. 430.207................ ............................ Proposed rule deletes reserved secton for

performance appraisal advisory committees that is

not needed.

Sec. 430.208................ Sec. 430.209 (c) & (d)...... Proposed rule replaces the requirement for training

supervisors and employees on the appraisal process

with requirement to communicate about the relevant

parts of the system(s) and programs to reflect

emphasis on communication and provide graeter

flexibility, and retains the requirement to

evaluate system(s) and programs.

Sec. 430.209................ Sec. 430.209(g)............. Proposed rule moves the requirement for agencies to

take corrective actions to clarify

responsibilities.

Sec. 430.210................ Proposed rule revises and redesignates OPM role to

reflect OPM's authority to review, evaluate, and

direct corrective action.

Sec. 430.210................ Sec. 430.209(a)............. Proposed rule clarifies that each agency must submit

its performance appraisal system(s) for OPM

approval.

Subpart E Performance Awards ............................ Proposed rule deletes this subpart and combines the

provision for performance awards into other

sections of part 451 to integrate awards policy and

support NPR goals.

Sec. 430.501(a)............. Sec. 451.101................ Proposed rule revises and redesignates the reference

to chapter 43, United States Code to accommodate

relocation of information.

Sec. 430.501(b)............. Sec. 451.101(c)............. Proposed rule makes editorial changes to provision

regarding definition of employees to accommodate

relocation of information.

Sec. 430.501(c)............. Sec. 451.101(c)............. Proposed rule makes editorial changes to provision

regarding definition of agencies to accommodate

relocation of information.

Sec. 430.501(d)............. ............................ Proposed rule deletes reference to part 451 for

regulatory requirements for granting superior

accomplishment awards that is no longer needed.

Sec. 430.502................ ............................ Proposed rule deletes definitions for performance

award, performance award budget, Performance

Management Plan, and rating of record that are no

longer needed.

Sec. 430.503(a)............. ............................ Proposed rule deletes purpose section for

performance awards that is no longer needed.

Sec. 430.503(b)............. Sec. 451.104(a)(3).......... Proposed rule revises and redesignates the provision

to permit use of a rating of record as the basis

for granting an award to accommodate relocation of

information.

[[Page 5549]]

Sec. 430.503(c)............. Sec. 451.106(g)............. Proposed rule replaces requirement to document

awards in OPF with provision for agencies to

establish criteria to determine which awards to

document in OPF to provide greater flexibility.

Sec. 430.503(d)............. Sec. 451.106(h)............. Proposed rule redesignates provision for giving due

weight to awards in promotions without change.

Sec. 430.503(e)............. ............................ Proposed rule deletes recommendation to make maximum

use of awards authority to remove nonessential

information.

Sec. 430.504(a)............. ............................ Proposed rule deletes repetition of the statutory

percentage limits for performance-based cash awards

at 5 U.S.C. 4505a(a)(2)(A).

Sec. 430.504(b)............. Sec. 451.104(b)............. Proposed rule revises and redesignates the provision

that cash awards are paid as lump sums to

accommodate relocation of information.

Sec. 430.504(c)............. Sec. 451.104(g)............. Proposed rule makes editorial changes regarding

application of locality pay to clarify language.

Sec. 430.504(d)............. Sec. 451.103(c)............. Proposed rule replaces higher level review of awards

based on a rating of record with requirement to

follow agency financial management control

procedures to give flexibility while maintaining

necessary levels of control.

Sec. 430.504(e)............. Sec. 451.104(h)............. Proposed rule moves the provision that a performance-

based cash award and its amount cannot be appealed

(5 U.S.C. 4505a (b)(2)). Resulting rule covers all

awards under this subpart. This change is made to

accommodate relocation of information and to

reflect that appeal rights are granted specifically

by statute.

Sec. 430.505................ ............................ Proposed rule deletes this section requiring OPM

approval of award plans to ease administrative

burden.

Sec. 430.506(a)............. Sec. 451.103(a)............. Proposed rule revises and redesignates the provision

to establish award programs to support NPR goals.

Sec. 430.506(b)(1) & (2).... ............................ Proposed rule deletes requirement for OPM approval

of agency award plans and changes to them to ease

administrative burden.

Sec. 430.506(b)(3).......... Sec. 451.106(b)............. Proposed rule revises and redesignates the

requirement for submitting awards in excess of

$10,000 to OPM to clarify the approval process.

Sec. 430.506(b)(4).......... Sec. 451.106(e)............. Proposed rule replaces required reports with

requirement to report cash and time off awards to

CPDF to reduce reporting requirements.

Sec. 432.103(b)............. Sec. 432.103(b)............. Critical element is revised to conform with its new

definition in Sec. 430.203.

Sec. 451.101................ Sec. 451.101(a)............. Proposed rule makes editorial changes to section

addressing statutory authority to accommodate

relocated rating-based award information.

Sec. 451.101(b)............. Proposed rule adds existing requirement for OPM to

prescribe procedures governing payment of certain

types of awards recommended by more than one agency

for a member of the armed forces as provided by

Executive Order 11438, and existing authority for

OPM approval of requests to extend 5 U.S.C. 4505a

to non-General Schedule employees as provided by

Executive Order 12828.

Sec. 451.101(c)............. Proposed rule combines location of statutory

definitions currently in Sec. 451.101(b) & (c).

Sec. 451.101(d)............. Proposed rule deletes reference to Part 430, subpart

E (performance awards) that no longer applies.

Sec. 451.102................ ............................ Proposed rule deletes description of superior

accomplishment awards because it is not needed.

Sec. 451.103................ Sec. 451.102................ Award or superior accomplishment award is replaced

and revised by Award to accommodate team settings;

Contribution, Intangible benefits, Non-monetary

award, Performance Management Plan, Special act or

service (including requirement that contribution be

non-recurring), Superior accomplishment award, and

Tangible benefits are deleted to increase

flexibility and because they are not needed to give

meaning to the provisions of part 451; and a

definition for award program is added to support

NPR goals.

Sec. 451.104(a)............. Sec. 451.103(a)............. Proposed rule revises and redesignates reference to

agency developed program(s) to provide greater

flexibility.

Sec. 451.103(b)............. Proposed rule adds new provision to encourage

employee involvement in system and program

development to support NPR goals.

Sec. 451.104(a)............. Proposed rule combines the various bases for

granting awards into one section to reflect

relocated information and support NPR goals.

Sec. 451.104(b)............. ............................ Proposed rule deletes an emphasis on determining a

contribution's value to the Government instead of

to the agency to increase flexibility.

Sec. 451.104(c)............. ............................ Proposed rule deletes explicit permission to grant

different awards and/or quality step increases

simultaneously for the same contribution(s) because

it is not needed.

Sec. 451.104(d)............. ............................ Proposed rule deletes provision that awards cannot

be used as substitutes for pay or other personnel

actions because it is not needed.

Sec. 451.104(e)(1).......... ............................ Proposed rule deletes repetition of statutory

requirement regarding contributions made while a

Government employee (5 U.S.C. 4505).

Sec. 451.104(e)(2).......... Sec. 451.103(c)(2).......... Proposed rule revises and redesignates the provision

for justification of awards to protect integrity of

award programs.

Sec. 451.104(e)(3).......... Sec. 451.103(c)(1).......... Proposed rule replaces requirement for higher-level

review of awards with requirement to follow agency

financial management control procedures to give

flexibility while maintaining necessary levels of

control.

Sec. 451.104(f)............. Sec. 451.104(e)............. Proposed rule redesignates provision for granting

awards to heirs or estates, and deletes the

repetition of a statutory requirement (5 U.S.C.

4502 (c)) that acceptance of an award releases the

Government from further claim.

Sec. 451.105................ Proposed rule adds new section regarding statutory

restrictions on granting awards to senior political

officials (5 U.S.C. 4508 and 4509) to clarify

coverage.

[[Page 5550]]

Sec. 451.106(a)............. Proposed rule rule adds new provision that requires

agencies to ensure that an award program does not

conflict with any other applicable law or

Governmentwide regulation to protect the integrity

of award programs.

Sec. 451.104(g)............. Sec. 451.106(i)............. Proposed rule revises and redesignates the provision

permitting agencies to determine which awards are

to be documented in the OPF to provide greater

flexibility.

Sec. 451.104(h)............. Sec. 451.106(h)............. Proposed rule revises and redesignates the provision

for giving due weight to awards in promotions to

reflect more accurately the statutory provision.

Sec. 451.104(i)............. Sec. 451.106(c)............. Proposed rule replaces the requirement for agencies

to provide training to supervisors and employees on

its award program(s) with requirement to provide

for communicating about award program(s) to reflect

emphasis on communication and provide greater

flexibility.

Sec. 451.106(d)............. Proposed rule revises and redesignates the provision

requiring agencies to evaluate award programs to

provide greater flexibility.

Sec. 451.104(j)............. Sec. 451.103(c)(1).......... Proposed rule replaces requirement for higher-level

approval of awards with requirement to follow

agency financial management control procedures to

give flexibility while maintaining necessary levels

of control.

Sec. 451.105(a)............. Sec. 451.104 (b)&(c)........ Proposed rule revises and redesignates the

provisions regarding award payments and taxation to

accommodate relocation of information and to

clarify requirements.

Sec. 451.105(b)............. Sec. 451.104(d)(1).......... Proposed rule makes editorial changes to paragraph

addressing agency responsibility for award payment

when the award is approved for an employee of

another agency to streamline regulatory text.

Sec. 451.105(c)............. Sec. 451.104(d)(2).......... Proposed rule makes editorial changes to paragraph

regarding payment of an award approved for a member

of the armed forces for a suggestion, invention, or

scientific achievement to streamline regulatory

text.

Sec. 451.106(a)............. ............................ Proposed rule deletes OPM approval of superior

accomplishment awards component of Performance

Management Plans to ease administrative burden.

Sec. 451.106(b)............. Sec. 451.107(a)............. Proposed rule clarifies that the limits established

for award payments apply to individuals only to

provide greater flexibility.

Sec. 451.107(b)............. Proposed rule establishes explicitly that

Presidential approval is required for award

payments over $25,000 that OPM has approved to

clarify the award approval process.

Sec. 451.107(a)............. ............................ Proposed rule deletes the requirement to submit a

superior accomplishment awards component of a

Performance Management Plan to OPM for approval to

ease administrative burden.

Sec. 451.107(a)(3).......... Sec. 451.106(b)............. Proposed rule makes editorial changes to provision

that agencies shall submit to OPM for approval all

award recommendations that would grant an

individual more than $10,000 to clarify the award

approval process.

Sec. 451.107(a)(4).......... Sec. 451.106(e)............. Proposed rule replaces requirement for an annual

report on the program's activities and expenditures

with a requirement to report all cash and time off

awards to the CPDF to reduce reporting

requirements.

Sec. 451.106(f)............. Proposed rule adds provision for agencies to use OPM

Guide to Federal Workforce Reporting Systems when

reporting award data to ensure proper reporting.

Sec. 451.106(g)............. Proposed rule permits OPM to define the records it

requires to meet the information needs of agencies

and other stakeholders.

Sec. 451.106(j)............. Proposed rule adds provision requiring agencies to

take corrective actions prescribed by OPM to ensure

compliance with law and regulation.

Sec. 451.107(b)............. ............................ Proposed rule deletes requirement that agencies

consider adopted ideas for wider application both

within the agency and Governmentwide to provide

greater flexibility.

Sec. 451.107(c)............. Proposed rule adds requirement for OPM to review and

determine whether to approve requests to extend the

provisions of 5 U.S.C. 4505a to non-General

Schedule employees to implement Executive Order

12828.

Sec. 451.107(d)............. Proposed rule adds new provision that permits OPM to

evaluate the application and operation of agency

award program(s) to support OPM's oversight

responsibilities.

Sec. 451.201................ Sec. 451.201................ Proposed rule adds new sentence to end of paragraph

(a) that cautions that Presidential awards under

this paragraph are subject to the restrictions as

specified in Sec. 451.105 (the statutory

restrictions at 5 U.S.C. 4508 and 4509) to

implement statute.

Subpart C Time Off Awards... ............................ Proposed rule deletes this subpart and combines the

provisions for time-off awards into other sections

of part 451 to integrate awards policy and support

NPR goals.

Sec. 451.306(d)............. Sec. 451.104(f)............. Proposed rule redesignates the provision prohibiting

the conversion of time off to cash with no change.

Sec. 531.401(c)&(d)......... Sec. 531.401(c)&(d)......... Proposed rule includes the title of Executive Order

11721 and Public Law 103-89 for easier reference.

Sec. 531.402(a)............. Sec. 531.402(a)............. Proposed rule replaces reference to maximum step

with maximum rate to accommodate GM employees.

Sec. 531.403................ Sec. 531.403................ Acceptable level of competence is revised to remove

reference to duties of the position to conform with

definition of critical element at Sec. 430.203 and

to include agency head in setting requirements to

provide greater flexibility.

Critical element is revised to update reference to

the redesignated definition section in performance

appraisal regulation.

Equivalent increase is revised to include reference

to higher rate of the grade to accommodate GM

employees.

Sec. 531.404................ Sec. 531.404................ Proposed rule replaces step 10 with maximum rate of

the grade to accommodate GM employees.

[[Page 5551]]

Sec. 531.404(a)............. Sec. 531.404(a)............. Proposed rule deletes reference to duties of the

position to conform with definition of critical

element at Sec. 430.203 and replaces reference to

the locus of the rating of record definition from

the agency Performance Management Plan to the

regulation at Sec. 430.204 to accommodate

regulatory changes.

Sec. 531.408................ Sec. 531.409(b)............. Proposed rule revises and redesignates provisions

for communicating performance requirements by

including a reference to subpart B, replacing

appraisal requirements by OPM for systems not under

part 430 with agency-established requirements, and

making other editorial changes to conform with

revised terms in part 430 to provide greater

flexibility.

Sec. 531.409(c)(2).......... Proposed rule adds new provision to permit

opportunity period and notice period as reasons for

delay of an ALOC (acceptable level of competence)

determination to provide greater flexibility.

Sec. 531.409(c)(2) (i) & Sec. 531.409(c)(3) (i) & Proposed rule redesignates provisions regarding

(iii). (iii). within-grade increase delays with no change.

Sec. 531.409(c)(2)(ii)...... Sec. 531.409(c)(3)(ii)...... Proposed rule makes editorial changes to conform

with the revised terms in part 430 and to reference

opportunity period.

Sec. 531.409(c)(3)(iv)...... Proposed rule adds requirement that within-grade

increase is not granted if performance is not at an

acceptable level of competence and references

follow-up procedures to clarify the within-grade

increase process.

Sec. 531.409(d)............. Sec. 531.409(d)............. Proposed rule makes editorial changes to conform

with the revised terms in part 430.

Sec. 531.409(d)(5).......... Proposed rule adds new provision that includes 100%

time spent on authorized activities of official

interest to the agency as a reason to waive an ALOC

determination to grant greater flexibility.

Sec. 531.409(d)(5).......... Sec. 531.409(d)(6).......... Proposed rule redesignates provision regarding long-

term training with no change.

Sec. 531.501................ Sec. 531.501................ Proposed rule includes the title of Executive Order

11721 for easier reference and removes partial

content of the Executive Order from regulation

because it is not needed.

Sec. 531.503................ Sec. 531.503................ Proposed rule establishes a merit system principle

rather than referencing recognition of outstanding

performance as the context for granting QSI's to

accommodate regulatory change at Sec. 531.504.

Sec. 531.504................ Sec. 531.504................ Proposed rule revises the provision to permit

agencies that choose not to have a Level 5 rating

in their appraisal programs to establish

performance-related criteria to grant QSI's to

provide greater flexibility.

Sec. 531.506................ Sec. 531.506................ Proposed rule removes reference to completion of

rating of record and ties effective date to

approval of QSI to provide greater flexibility.

Sec. 531.507................ ............................ Proposed rule removes requirement to include QSI

plan as part of Performance Management Plan to ease

administrative burden.

Sec. 531.507(a)-(e)......... Sec. 531.507(a)............. Proposed rule references rather than repeats the

requirements of Executive Order 11721 because they

are not needed.

Sec. 531.508(a)............. Sec. 531.507(b)............. Proposed rule revises and redesignates requirement

for reporting QSI usage to clarify responsibility.

Sec. 531.507(c)............. Proposed rule requires use of OPM's Guide to Federal

Workforce Reporting Systems for CPDF reporting to

ensure proper reporting.

Sec. 531.508(b)............. Sec. 531.508................ Proposed rule redesignates the provision for OPM

evaluation with no change in text.

----------------------------------------------------------------------------------------------------------------

E.O. 12866, Regulatory Review

This rule has been reviewed by the Office of Management and Budget

in accordance with E.O. 12866.

Regulatory Flexibility Act

I certify that these regulations will not have a significant

economic impact on a substantial number of small entities because they

apply only to Federal agencies and employees.

List of Subjects

5 CFR Parts 430 and 451

Decorations, medals, awards, Government employees.

5 CFR Part 432

Administrative practice and procedure, Government employees.

5 CFR Part 531

Government employees, Law enforcement officers, Wages.

U.S. Office of Personnel Management.

James B. King,

Director.

Accordingly, OPM is proposing to amend parts 430, 432, 451 and 531

of title 5, Code of Federal Regulations, as follows:

PART 430--PERFORMANCE MANAGEMENT

1. The authority citation for part 430 is revised to read as

follows:

Authority: 5 U.S.C. chapter 43.

2. Subpart A is revised to read as follows:

Subpart A--Performance Management

Sec.

430.101 Authority.

430.102 Performance management.

Subpart A--Performance Management

Sec. 430.101 Authority.

Chapter 43 of title 5, United States Code, provides for performance

appraisal of Federal employees. This subpart supplements and implements

this portion of the law.

Sec. 430.102 Performance management.

(a) Performance management is the systematic process by which an

agency involves its employees, as individuals and members of a group,

in improving organizational effectiveness in the accomplishment of

agency mission and goals.

(b) Performance management integrates the processes an agency uses

to--

(1) Communicate and clarify organizational goals to employees;

(2) Identify individual and, where applicable, team accountability

for accomplishing organizational goals;

(3) Identify and address developmental needs for individuals and,

where applicable, teams;

(4) Assess and improve individual and organizational performance;

[[Page 5552]]

(5) Use appropriate measures of performance as the basis for

recognizing and rewarding accomplishments; and

(6) Use the results of performance appraisal as a basis for

appropriate personnel actions.

(c) A Performance Management Plan is the description of an agency's

framework for implementing all aspects of performance management and

shall include, but not be limited to, the agency performance appraisal

system(s) (as defined in Secs. 430.203 and 430.303) and the agency

award program(s) (as defined in Sec. 451.102).

3. Subpart B, consisting of Secs. 430.201 through 430.210, is

revised to read as follows:

Subpart B--Performance Appraisal for General Schedule, Prevailing Rate,

and Certain Other Employees

Sec.

430.201 General.

430.202 Coverage.

430.203 Definitions.

430.204 Agency performance appraisal system(s).

430.205 Agency performance appraisal program(s).

430.206 Planning performance.

430.207 Monitoring performance.

430.208 Rating performance.

430.209 Agency responsibilities.

430.210 OPM responsibilities.

Subpart B--Performance Appraisal for General Schedule, Prevailing

Rate, and Certain Other Employees

Sec. 430.201 General.

(a) Statutory authority. Chapter 43 of title 5, United States

Code, provides for the establishment of agency performance appraisal

systems and requires the Office of Personnel Management (OPM) to

prescribe regulations governing such systems. The regulations in this

subpart in combination with statute set forth the requirements for

agency performance appraisal system(s) and program(s) for employees

covered by subchapter I of chapter 43.

(b) Savings provision. The performance appraisal system portion of

an agency's performance management plan approved by OPM as of the

effective date of these regulations shall constitute an approved

performance appraisal system under these regulations until such time

changes to the system are approved. No provision of these regulations

shall be applied in such a way as to affect any administrative

proceeding related to any action taken under regulations in this

chapter pending at the effective date of the regulations in this

subpart.

Sec. 430.202 Coverage.

(a) Employees and agencies covered by statute. (1) Section 4301(1)

of title 5, United States Code, defines agencies covered by this

subpart.

(2) Section 4301(2) of title 5, United States Code, defines

employees covered by statute by this subpart. Besides General Schedule

(GS/GM) and prevailing rate employees, coverage includes, but is not

limited to, senior-level and scientific and professional employees paid

under 5 U.S.C. 5376.

(b) Statutory exclusions. This subpart does not apply to agencies

or employees excluded by 5 U.S.C. 4301(1) and (2), the United States

Postal Service, or the Postal Rate Commission.

(c) Administrative exclusions. OPM may exclude any position or

group of positions in the excepted service under the authority of 5

U.S.C. 4301(2)(G). This regulation excludes excepted service positions

for which employment is not reasonably expected to exceed the minimum

period established by the agency under Sec. 430.207(a) in a consecutive

12-month period.

(d) Agency requests for exclusions. Heads of agencies or their

designees may request the Director of OPM to exclude positions in the

excepted service. The request must be in writing, explaining why the

exclusion would be in the interest of good administration.

Sec. 430.203 Definitions.

In this subpart, terms are defined as follows:

Appraisal means the process under which performance is reviewed and

evaluated.

Appraisal period means the period of time (generally 1 year)

established by an agency for which performance will be reviewed and a

rating of record will be prepared.

Appraisal program means the specific procedures and requirements

established by an agency or the components of an agency within the

policies and parameters covered by the agency appraisal system(s).

Appraisal system means the framework of agencywide policies and

parameters for the administration of performance appraisal programs

established under subchapter I of chapter 43 of title 5, United States

Code, and this subpart within an agency as defined at 5 U.S.C. 4301(1).

Critical element means a work assignment or responsibility of such

importance that unacceptable performance on the element would result in

a determination that overall performance is unacceptable.

Performance means accomplishment of work assignments or

responsibilities.

Performance appraisal system: see Appraisal system.

Performance plan means all of the written, or otherwise recorded,

individual, team, or organizational performance factors that lead to

the assignment of an employee's summary rating level. A plan contains

the critical elements based on employee assignments and

responsibilities, and their related performance standard(s), and may

contain other performance-related factors including, but not limited

to, non-critical elements.

Performance rating means the written, or otherwise recorded,

appraisal of performance compared to the performance standard(s) for

each critical element (and non-critical element, where applicable) on

which there has been an opportunity to perform for the minimum period.

Performance standard means the management-approved expression of

the performance threshold(s), requirement(s), or expectation(s) for an

element that must be met to be appraised at a particular level of

performance (as specified in Sec. 430.206(b)(6)(i) of this subpart). A

performance standard may include, but is not limited to, factors such

as quality, quantity, timeliness, and manner of performance.

Progress review means communicating with the employee about

performance on individual and, where applicable, team elements and

standard(s).

Rating of record means the performance rating prepared at the end

of an appraisal period (under provisions specified by the agency) for

performance over the entire period and the assignment of a summary

rating level (as specified in Sec. 430.208(d)). This constitutes the

official rating of record referenced in this chapter.

Sec. 430.204 Agency performance appraisal system(s).

(a) Each agency as defined at section 4301(1) of title 5, United

States Code, shall develop one or more performance appraisal systems

for employees covered by this subpart.

(b) The agency system(s) shall establish agencywide policies and

parameters for the application and operation of performance appraisal

within the agency. At a minimum, an agency system shall--

(1) Provide for--

(i) Establishing employee performance plans, including, but not

limited to, critical elements and performance standards; [[Page 5553]]

(ii) Communicating performance plans to employees at the beginning

of an appraisal period;

(iii) Evaluating each employee during the appraisal period on the

employee's elements and standards;

(iv) Recognizing and rewarding employees whose performance so

warrants;

(v) Assisting employees in improving unacceptable performance; and

(vi) Reassigning, reducing in grade, or removing employees who

continue to have unacceptable performance, but only after an

opportunity to demonstrate acceptable performance.

(2) Identify employees covered by the system;

(3) Establish the permissible values (including, but not limited

to, number of days and number of levels) that an agency program may use

for--

(i) The appraisal period (as specified in Sec. 430.206(a));

(ii) The minimum period (as specified in Sec. 430.207(a));

(iii) The number(s) of performance levels at which elements shall

be appraised (as specified in Sec. 430.206(b)(6)); and

(iv) The number of summary rating levels that may be assigned in a

rating of record (as specified in Sec. 430.208(d)); and

(4) Include, where applicable, criteria and procedures for

establishing separate appraisal programs within the agency; and

(5) Require that an agency appraisal program shall conform to

statute and the regulations of this chapter.

(c) Agencies are encouraged to involve employees and their

representatives in developing and implementing their system(s).

Sec. 430.205 Agency performance appraisal program(s).

(a) Each agency shall establish at least one appraisal program of

specific procedures and requirements to be implemented in accordance

with the agency's appraisal system(s). At a minimum, each appraisal

program shall include procedures and requirements for planning

performance as specified in Sec. 430.206, monitoring performance as

specified in Sec. 430.207, and rating performance as specified in

Sec. 430.208.

(b) An agency program shall establish criteria and procedures to

address employee performance for employees who are on detail, who are

transferred, or for other special circumstances as established by the

agency.

(c) An agency may permit the development of separate appraisal

programs under the framework of its appraisal system(s).

(d) Agencies are encouraged to involve employees and their

representatives in developing and implementing their program(s).

Sec. 430.206 Planning performance.

(a) Appraisal period. (1) An appraisal program shall designate an

official appraisal period for which a performance plan shall be

prepared, during which performance shall be monitored, and for which a

rating of record shall be prepared.

(2) The appraisal period shall generally be designated so that

employees shall be provided a rating of record on an annual basis. An

appraisal program may provide that longer appraisal periods may be

designated when work assignments and responsibilities so warrant or

performance management objectives can be achieved more effectively.

(b) Performance plan. (1) Agencies shall encourage employee

participation in establishing performance plans.

(2) Performance plans shall be provided to employees at the

beginning of each appraisal period (normally within 30 days).

(3) An appraisal program shall require that each employee be

covered by an appropriate written, or otherwise recorded, performance

plan based on work assignments and responsibilities.

(4) Each performance plan shall include at least one critical

element that addresses individual performance.

(5) When appropriate, performance plans may also include

accomplishment of team, group, or organizational objectives by

incorporating elements, objectives, goals, program plans, work plans,

or by other similar means that account for program results.

(6) (i) An appraisal program shall provide for establishing the

number of levels at which performance on an element may be appraised.

At a minimum, two levels shall be used, with one level being ``Fully

Successful'' or its equivalent and another level being

``Unacceptable.''

(ii) A performance standard shall be established at the ``Fully

Successful'' level for each element and may be established at other

levels.

(iii) The absence of an established standard at a level specified

in the program shall not preclude a determination that performance is

at that level.

Sec. 430.207 Monitoring performance.

(a) Minimum period. An appraisal program shall establish a minimum

period before any performance determination can be made.

(b) Ongoing appraisal. An appraisal program shall include methods

for appraising each element in the performance plan during the

appraisal period, unless there has been insufficient opportunity to

demonstrate performance on the element. Such methods shall include, but

not be limited to, conducting one or more progress reviews during each

appraisal period.

(c) Unacceptable performance. At any time during the appraisal

period that performance is determined to be unacceptable in one or more

critical elements, an appraisal program shall provide for--

(1) Assisting employees in improving unacceptable performance; and

(2) Taking action based on unacceptable performance.

Sec. 430.208 Rating performance.

(a) As soon as practicable after the end of the appraisal period, a

written, or otherwise recorded, rating of record shall be given to each

employee.

(b) Rating of record procedures for each appraisal program shall

include a method for deriving a summary rating and assigning a summary

rating level as specified in paragraph (d) of this section based at a

minimum on appraisal of performance on critical elements, and, at

agency discretion, consideration of other performance-related factors

including, but not limited to, appraisal of performance on non-critical

elements.

(1) A summary rating above Level 1 (``Unacceptable'') shall not be

assigned if performance on any critical element has been appraised as

``Unacceptable.''

(2) Consideration of other performance-related factors shall not

result in assigning a summary rating of Level 1 (``Unacceptable'') if

each critical element has been appraised at least ``Fully Successful''

(or equivalent).

(c) An appraisal program shall not establish a forced distribution

of summary ratings--

(1) Below Level 3 (``Fully Successful'' or equivalent); or

(2) If those summary ratings are derived solely from an appraisal

of performance against pre-established standards.

(d) Summary rating levels. (1) An appraisal program shall provide

for--

(i) At least two and not more than five summary rating levels;

(ii) A Level 1 (``Unacceptable'') summary rating level; and

(iii) A Level 3 (``Fully Successful'' or equivalent) summary rating

level.

(2) If more than two summary rating levels are used, agencies may

provide for any combination of additional summary rating levels (Level

2, Level 4, and Level 5) provided that--

(i) Level 2, if used, is a rating level above Level 1 and below

Level 3; and [[Page 5554]]

(ii) Level 4, if used, is a rating level above Level 3 and below

Level 5 (``Outstanding'' or equivalent), if used.

(3) The term ``Outstanding'' shall be used only to describe a Level

5 summary rating level.

(4) The summary rating level designator (Level 1 through Level 5)

shall be used to provide consistency in describing ratings of record

and in referencing other related regulations (including, but not

limited to, Sec. 351.504 of this chapter).

(e) A rating of record of ``Unacceptable'' (Level 1) shall be

reviewed and approved by a higher level management official.

(f) The rating of record or performance rating for a disabled

veteran shall not be lowered because the veteran has been absent from

work to seek medical treatment as provided in Executive Order 5396.

(g) When a rating of record cannot be prepared at the time

specified, the appraisal period shall be extended. Once the conditions

necessary to complete a rating of record have been met, a rating of

record shall be prepared as soon as practicable.

(h) A performance rating may be prepared at such other times as an

appraisal program may specify for special circumstances including, but

not limited to, transfers and performance on details.

Sec. 430.209 Agency responsibilities.

An agency shall--

(a) Submit to OPM for approval a description of its appraisal

system(s) as specified in Sec. 430.204(b) of this subpart, and any

subsequent changes that modify any element of the agency's system(s)

that is subject to a regulatory requirement in this part;

(b) Transfer the employee's most recent rating of record, and any

subsequent performance ratings, when an employee transfers to another

agency or is assigned to another organization within the agency;

(c) Require communication with supervisors and employees about

relevant parts of its performance appraisal system(s) and program(s);

(d) Evaluate the performance appraisal system(s) contained in its

Performance Management Plan and performance appraisal program(s) in

operation in the agency;

(e) Use OPM's Guide to Federal Workforce Reporting Systems to

report ratings of record data to the CPDF;

(f) Maintain and submit such records as OPM may require; and

(g) Take any action required by OPM to ensure conformance with

applicable law, regulation, and OPM policy.

Sec. 430.210 OPM responsibilities.

(a) OPM shall review and approve an agency's performance appraisal

system(s).

(b) OPM may evaluate the operation and application of an agency's

performance appraisal system(s) and program(s).

(c) If OPM determines that an appraisal system or program does not

meet the requirements of applicable law, regulation, or OPM policy, it

shall direct the agency to implement an appropriate system or program

or to take other corrective action.

4. Subpart D [Reserved] and Subpart E, consisting of Secs. 430.501

through 430.506, are removed.

PART 432--PERFORMANCE BASED REDUCTION IN GRADE AND REMOVAL ACTIONS

5. The authority citation for part 432 continues to read as

follows:

Authority: 5 U.S.C. 4303, 4305.

6. In Sec. 432.103, paragraph (b) is revised to read as follows:

Sec. 432.103 Definitions.

* * * * *

(b) Critical element means a work assignment or responsibility of

such importance that unacceptable performance on the element would

result in a determination that overall performance is unacceptable.

* * * * *

PART 451--AWARDS

7. The heading of part 451 is revised to read as follows:

PART 451--AWARDS

8. The authority citation for part 451 is revised to read as

follows:

Authority: 5 U.S.C. 4302, 4501-4507; E.O. 11438, 12828.

9. Subpart A, consisting of Secs. 451.101 through 451.107, is

revised to read as follows:

Subpart A--Agency Awards

Sec.

451.101 Authority and Coverage.

451.102 Definitions.

451.103 Agency award program(s).

451.104 Awards.

451.105 Award restrictions.

451.106 Agency responsibilities.

451.107 OPM responsibilities.

Subpart A--Agency Awards

Sec. 451.101 Authority and coverage.

(a) Chapter 45 of title 5, United States Code authorizes agencies

to pay a cash award to, grant time-off to, and incur necessary expense

for the honorary recognition of, an employee (individually or as a

member of a group) and requires the Office of Personnel Management to

prescribe regulations governing such authority. Chapter 43 of title 5,

United States Codes provides for recognizing and rewarding employees

whose performance so warrants. The regulations in this subpart, in

combination with the chapters 43 and 45, United States Code, and any

other applicable law, establish the requirements for agency award

programs.

(b) Section 4 of E.O. 11438 (Prescribing Procedures Governing

Interdepartmental Cash Awards to the Members of the Armed Forces,

December 3, 1968) requires the Office of Personnel Management to

prescribe procedures for covering the cost of a cash award recommended

by more than one agency for a member of the armed forces for the

adoption or use of a suggestion, invention, or scientific achievement.

Section 1 of E.O. 12828 (Delegation of Certain Personnel Management

Authorities, January 5, 1993) delegates to the Office of Personnel

Management the authority of the President to permit performance-based

cash awards under 5 U.S.C. 4505a to be paid to categories of employees

who would not be eligible otherwise.

(c) This subpart applies to employees as defined by section 2105

and agencies as defined by section 4501 of title 5, United States Code,

except as provided in Secs. 451.105 and 451.201(a).

(d) For the regulatory requirements for granting performance awards

to Senior Executive Service (SES) employees based on an employee's

performance appraisal and rating of record, refer to Sec. 534.403 of

this chapter.

Sec. 451.102 Definitions.

Award means something bestowed or an action taken to recognize and

reward individual or team achievement that contributes to meeting

organizational goals or improving the efficiency, effectiveness, and

economy of the Government or is otherwise in the public interest. Such

awards include, but are not limited to, employee incentives (e.g.,

agency productivity gainshares), which are based on predetermined

criteria such as productivity standards, performance goals, measurement

systems, award formulas, or payout schedules.

Award program means the specific procedures and requirements

established by an agency or a component of an agency for granting

awards under subchapter I of chapter 43 and of chapter 45 of title 5,

United States Code, and this subpart. [[Page 5555]]

Sec. 451.103 Agency award program(s).

(a) Agencies shall develop one or more award programs for employees

covered by this subpart.

(b) Agencies are encouraged to include employees and their

representatives in developing such programs.

(c) An agency award program shall provide for--

(1) Obligating funds consistent with applicable agency financial

management controls and delegations of authority; and

(2) Documenting justification for awards that are not based on a

rating of record (as defined in Sec. 430.203 of this chapter).

Sec. 451.104 Awards.

(a) An agency may grant a cash, honorary, or informal recognition

award, or grant time-off without charge to leave or loss of pay

consistent with chapter 45 of title 5, United States Code, and this

part to an employee, as an individual or member of a group, on the

basis of--

(1) A suggestion, invention, superior accomplishment, or other

personal effort that contributes to the efficiency, economy, or other

improvement of Government operations or achieves a significant

reduction in paperwork;

(2) A special act or service in the public interest in connection

with or related to official employment; or

(3) Performance as reflected in the employee's most recent rating

of record (as defined in Sec. 430.203 of this chapter), except that

such awards may be paid to SES employees only under Sec. 534.403 of

this chapter and not on the basis of this subpart.

(b) A cash award under this subpart is a lump sum in addition to

regular pay and does not increase an employee's rate of basic pay.

(c) An award is subject to the withholding of taxes.

(d) When an award is approved for--

(1) An employee of another agency, the benefiting agency shall make

arrangements to transfer funds to the employing agency to cover the

award. If the administrative costs of transferring funds would exceed

the amount of the award, the employing agency shall absorb the award

costs and pay the award; and

(2) A member of the armed forces for a suggestion, invention, or

scientific achievement, arrangements shall be made to transfer funds to

the agency having jurisdiction over the member in accordance with E.O.

11438, ``Prescribing Procedures Governing Interdepartmental Cash Awards

to the Members of the Armed Forces''.

(e) An award may be granted to the legal heirs or estates of

deceased employees.

(f) A time-off award granted under this subpart shall not be

converted to a cash payment under any circumstances.

(g) When granting an award on the basis of a rating of record that

is paid as a percentage of basic pay under 5 U.S.C. 4505a(a)(2)(A), the

rate of basic pay used shall be determined without taking into account

any locality-based comparability payment under 5 U.S.C. 5304 or an

interim geographic adjustment or special law enforcement adjustment

under section 302 or 404 of the Federal Employees Pay Comparability Act

of 1990, respectively.

(h) Employees may not appeal an agency's decision not to grant an

award or the amount of such an award. This does not affect any right or

remedy under subchapter II of chapter 12, chapter 71, or section

2302(d) of title 5, United States Code.

Sec. 451.105 Award restrictions.

(a) Agencies shall not grant awards under this subpart during a

Presidential election period (as defined at 5 U.S.C. 4508) to employees

who are--

(1) In the Senior Executive Service and not career appointees

(i.e., non-career or limited appointees), or

(2) In an excepted service position of a confidential or policy-

determining character (schedule C).

(b) Agencies shall not grant cash awards under this subpart to

employees appointed by the President with Senate confirmation who serve

in--

(1) An Executive Schedule position, or

(2) A position for which pay is set in statute by reference to a

section or level of the Executive Schedule.

Sec. 451.106 Agency responsibilities.

(a) In establishing and operating its award program(s), an agency

shall assure that a program does not conflict with or violate any other

law or Governmentwide regulation.

(b) When a recommended award would grant over $10,000 to an

individual employee, the agency shall submit the recommendation to OPM

for approval.

(c) Agencies shall provide for communicating with employees and

supervisors about the relevant parts of their award program(s).

(d) Agencies shall evaluate their award program(s).

(e) Agencies shall report all cash and time off awards to the CPDF.

(f) Agencies shall use OPM's Guide to Federal Workforce Reporting

Systems to report award data to the CPDF.

(g) Agencies shall maintain and submit such records as OPM may

require.

(h) Agencies shall give due weight to an award granted under this

part in qualifying and selecting an employee for promotion as provided

in 5 U.S.C. 3362.

(i) Agencies shall establish criteria for identifying which awards

to document in the Official Personnel Folder in conformance with OPM's

Guide to Personnel Recordkeeping.

(j) Agencies shall take any corrective action required by OPM to

ensure conformance with applicable law, regulation, and OPM policy.

Sec. 451.107 OPM responsibilities.

(a) OPM shall review and approve or disapprove each agency

recommendation for an award that would grant over $10,000 to an

individual employee.

(b) When a recommended award would grant over $25,000 to an

individual employee, OPM shall review the recommendation and submit it

(if approved) to the President for final approval.

(c) OPM shall review and approve or disapprove a request from the

head of an Executive agency to extend the provisions of 5 U.S.C. 4505a

to any category of employees within that agency that would not be

covered otherwise.

(d) OPM may evaluate the operation and application of an agency's

award program(s).

10. In Sec. 451.201, the second introductory paragraph (a) is

removed, paragraph (b), (c), and (d) are redesignated as paragraphs

(c), (d), and (e) respectively, and a new paragraph (b) is added to

read as follows:

Sec. 451.201 Authority and coverage.

* * * * *

(b) Awards granted under paragraph (a) are subject to the

restrictions as specified in Sec. 451.105.

* * * * *

11. Subpart C, consisting of Secs. 451.301 through 451.307, is

removed.

PART 531--PAY UNDER THE GENERAL SCHEDULE

12. The authority citation for part 531 is revised to read as

follows:

Authority: 5 U.S.C. 5115, 5307, and 5338; sec. 4 of Pub. L. 103-

89, 107 Stat. 981; and E.O. 12748, 56 FR 4521, February 4, 1991, 3

CFR 1991 Comp., p. 316;

Subpart A also issued under 5 U.S.C. 5304, 5305, and 5553; section

302 of the Federal Employees Pay Comparability Act of 1990 (FEPCA),

Pub. L. 101-509, 104 Stat. 1462; and E.O. 12786, 56 FR

[[Page 5556]] 67453, December 30, 1991, 3 CFR 1991 Comp., p. 376;

Subpart B also issued under 5 U.S.C. 5303(g), 5333, 5334(a), and

7701(b)(2);

Subpart C also issued under 5 U.S.C. 5304, 5305, and 5553; sections

302 and 404 of FEPCA, Pub. L. 101-509, 104 Stat. 1462 and 1466; and

section 3(7) of Pub. L. 102-378, 106 Stat. 1356;

Subpart D also issued under 5 U.S.C. 5335(g) and 7701(b)(2);

Subpart E also issued under 5 U.S.C. 5336;

Subpart F also issued under 5 U.S.C. 5304, 5305(g)(1), and 5553;

and E.O. 12883, 58 FR 63281, November 29, 1993, 3 CFR 1993 Comp., p.

682.

13. In Sec. 531.401, paragraphs (c) and (d) are revised to read as

follows:

Sec. 531.401 Principal authorities.

* * * * *

(c) Section 402 of E.O. 11721 (Providing for Federal Pay

Administration, May 23, 1973), as amended, provides that ``The Civil

Service Commission (Office of Personnel Management) shall issue such

regulations and standards as may be necessary to ensure that only those

employees whose work is of an acceptable level of competence receive

periodic step-increases under the provisions of section 5335 of title

5, United States Code.''

(d) Section 4 of Public Law 103-89 (Performance Management and

Recognition System Termination Act of 1993) provides that ``the Office

of Personnel Management shall prescribe regulations necessary for the

administration of this section.''

14. In Sec. 531.402, paragraph (a) is revised to read as follows:

Sec. 531.402 Employee coverage.

(a) Except as provided in paragraph (b) of this section, this

subpart applies to employees who occupy permanent positions classified

and paid under the General Schedule and who are paid at less than the

maximum rate of their grades.

* * * * *

15. In Sec. 531.403, the definitions of acceptable level of

competence, critical element, and equivalent increase are revised to

read as follows:

Sec. 531.403 Definitions.

* * * * *

Acceptable level of competence means performance by an employee

that warrants advancement of the employee's rate of basic pay to the

next higher step of the grade (or, in the case of a GM employee, the

next higher rate within the grade) of his or her position, subject to

the requirements of Sec. 531.404 of this subpart, as determined by the

head of the agency.

* * * * *

Critical element has the meaning given that term in Sec. 430.203 of

this chapter.

* * * * *

Equivalent increase means an increase or increases in an employee's

rate of basic pay equal to or greater than the difference between the

employee's rate of basic pay and the rate of pay for the next higher

step of that grade (or, in the case of a GM employee, the next higher

rate within the grade).

* * * * *

16. In Sec. 531.404, the introductory text, and the introductory

text of paragraph (a) are revised to read as follows:

Sec. 531.404 Earning within-grade increase.

An employee paid at less than the maximum rate of the grade of his

or her position shall earn advancement in pay to the next higher step

of the grade or the next higher rate within the grade (as defined in

Sec. 531.403) upon meeting the following three requirements established

by law:

(a) The employee's performance must be at an acceptable level of

competence, as defined in this subpart by authority of section 402 of

E.O. 11721, as amended. To be determined at an acceptable level of

competence, the employee's most recent rating of record (as defined in

Sec. 430.203 of this chapter) shall be at least Level 3 (``Fully

Successful'' or equivalent).

* * * * *

17. Section 531.408 is removed and reserved.

Sec. 531.408 [Reserved].

18. In Sec. 531.409, paragraph (b) is revised, paragraph (c)(2) is

redesignated as paragraph (c)(3) and revised, a new paragraph (c)(2) is

added, the introductory text to paragraph (d) is revised, paragraph

(d)(4) is revised, paragraph (d)(5) is redesignated as paragraph

(d)(6), a new paragraph (d)(5) is added, and the concluding text at the

end of paragraph (d) is revised to read as follows:

Sec. 531.409 Acceptable level of competence determinations.

* * * * *

(b) Basis for determination. When applicable, an acceptable level

of competence determination shall be based on a current rating of

record made under part 430, subpart B, of this chapter. For those

agencies not covered by chapter 43 of title 5, United States Code, and

for employees in positions excluded from 5 U.S.C. 4301, an acceptable

level of competence determination shall be based on performance

appraisal requirements established by the agency. If an employee has

been reduced in grade because of unacceptable performance and has

served in one position at the lower grade for at least the minimum

period established by the agency, a rating of record at the lower grade

shall be used as the basis for an acceptable level of competence

determination.

(c) * * *

(2) An acceptable level of competence determination may be delayed

during an employee's opportunity to demonstrate acceptable performance

(as defined at Sec. 432.103(d)) of this chapter or during a notice

period for a proposed performance-based action under part 432 or 752 of

this chapter.

(3) When an acceptable level of competence determination has been

delayed under this subpart:

(i) The employee shall be informed that his or her determination is

postponed and, where applicable, the rating period extended and shall

be told of the specific requirements for performance at an acceptable

level of competence.

(ii) An acceptable level of competence determination shall then be

made upon completion of either the minimum period established by the

agency or the opportunity to demonstrate acceptable performance.

(iii) If, following the delay, the employee's performance is

determined to be at an acceptable level of competence, the within-grade

increase shall be granted retroactively to the beginning of the pay

period following completion of the applicable waiting period.

(iv) If, following the delay, the employee's performance is

determined not to be at an acceptable level of competence, the within-

grade increase shall not be granted. The provisions of Sec. 531.411

govern the determination of an employee's acceptable level of

competence following the withholding of a within-grade increase.

(d) Waiver of requirement for determination. An acceptable level of

competence determination shall be waived and a within-grade increase

granted when an employee has not served in any position for the minimum

period under an applicable agency performance appraisal program during

the final 52 calendar weeks of the waiting period for one or more of

the following reasons:

* * * * *

(4) Because of details to another agency or employer for which no

rating has been prepared; [[Page 5557]]

(5) Because the employee has had insufficient time to demonstrate

an acceptable level of competence due to authorized activities of

official interest to the agency not subject to appraisal under part 430

of this chapter (including, but not limited to, labor-management

partnership activities under section 2 of Executive Order 12871 and

serving as a representative of a labor organization); or

* * * * *

In such a situation, there shall be a presumption that the employee

would have performed at an acceptable level of competence had the

employee performed the duties of his or her position of record for the

minimum period under the applicable agency performance appraisal

program.

19. Section 531.501 is revised to read as follows:

Sec. 531.501 Applicability.

This subpart contains regulations of the Office of Personnel

Management to carry out section 5336 of title 5, United States Code,

which authorizes the head of an agency, or another official to whom

such authority is delegated, to grant quality step increases, and to

carry out section 403 of Executive Order 11721 (Providing for Federal

Pay Administration, May 23, 1973), as amended.

20. Section 531.503 is revised to read as follows:

Sec. 531.503 Purpose of quality step increases.

The purpose of quality step increases is to provide appropriate

incentives and recognition for excellence in performance by granting

faster than normal step increases.

21. Section 531.504 is revised to read as follows:

Sec. 531.504 Level of performance required for quality step increase.

A quality step increase shall not be required but may be granted

only to--

(a) An employee who receives a rating of record at Level 5

(``Outstanding'' or equivalent), as defined in part 430, subpart B, of

this chapter; or

(b) An employee who is covered by a performance appraisal program

that does not have a Level 5 rating and who demonstrates sustained

performance of high quality significantly above that expected at the

``Fully Successful'' level in the type of position concerned, as

determined under performance-related criteria established by the

agency.

22. Section 531.506 is revised to read as follows:

Sec. 531.506 Effective date of a quality step increase.

The quality step increase should be made effective as soon as

practicable after it is approved.

23. Section 531.507 is revised to read as follows:

Sec. 531.507 Agency responsibilities.

(a) Agencies shall develop and implement a plan(s) for granting

quality step increases in accordance with Executive Order 11721.

(b) Agencies shall maintain and report such records as the Office

may require.

(c) Agencies shall use OPM's Guide to Federal Workforce Reporting

Systems to report quality step increases to the CPDF.

24. Section 531.508 is revised to read as follows:

Sec. 531.508 Evaluation of quality step increase authority.

The Office of Personnel Management may evaluate an agency's use of

the authority to grant quality step increases. The agency shall take

any corrective action required by the Office.

[FR Doc. 95-2109 Filed 1-26-95; 8:45 am]

BILLING CODE 6325-01-P