Cost-of-Living Allowances (Nonforeign Areas); Partnership Pilot Project

SUMMARY: The Office of Personnel Management (OPM) is proposing a pilot

project to establish a partnership with agencies and employees in

administering the nonforeign area cost-of-living allowance (COLA)

program. Under the project, COLA partnership committees would be

established in Alaska, Hawaii, Puerto Rico, Guam, and the U.S. Virgin

Islands to assist OPM in reviewing and improving the COLA program.

Involvement in the committees should help OPM, affected agencies, and

their employees better understand issues relating to the compensation

of Federal employees in these areas. The proposed regulations would

also make a technical amendment to clarify the term `'agency'' as it

applies to the COLA program.

DATES: Comments must be received on or before September 11, 1996.

ADDRESSES: Send or deliver comments to Donald J. Winstead, Assistant

Director for Compensation Policy, Human Resources Systems Service,

Office of Personnel Management, Room 6H31, 1900 E Street NW.,

Washington, DC 20415, or FAX to (202) 606-4264.

FOR FURTHER INFORMATION CONTACT:

Donald L. Paquin, (202) 606-2838.

SUPPLEMENTARY INFORMATION: Under section 5941 of title 5, United States

Code, and Executive Order 10,000, as amended, certain Federal employees

in nonforeign areas outside the 48 contiguous States are eligible for

cost-of-living allowances when local living costs are substantially

higher than those in the Washington, DC, area. Nonforeign area COLA's

are paid in Alaska, Hawaii, Puerto Rico, the U.S. Virgin Islands, and

Guam and the Commonwealth of the Northern Mariana Islands.

OPM conducts living-cost surveys in these areas annually and

compares the results with surveys conducted in the Washington, DC,

area, as required by 5 U.S.C. 5941 and E.O. 10000. A cost-of-living

allowance rate is then derived for each allowance area, which by law

cannot exceed 25 percent of the rate of basic pay for eligible

employees.

OPM publishes the results of these surveys in the Federal Register.

(The most recent survey, for Alaska areas only, was published on

February 2, 1996 (61 FR 4070).) Because of the interest in employee

involvement shown in comments on the surveys, OPM believes increasing

agency and employee participation in the survey process could greatly

enhance the COLA program. This coincides with OPM's own desire to

introduce partnership into the allowance-setting process in the COLA

areas and is responsive to National Performance Review objectives on

forming management/employee partnerships.

COLA Partnership Pilot Project

OPM proposes to initiate a COLA Partnership Pilot Project that

would provide for greater agency and employee involvement in the

nonforeign area cost-of-living allowance program. Under this proposal,

OPM would establish COLA partnership committees, composed of

representatives of OPM, other agencies, and labor organizations in

Alaska, Hawaii, Puerto Rico, Guam, and the U.S. Virgin Islands. The

committees would--

(1) Advise and assist OPM in planning COLA surveys;

(2) Observe data collection during the surveys;

(3) Advise and assist OPM in the review of survey data;

(4) Advise OPM on the COLA program and other compensation issues

relating to the allowance areas; and

(5) Assist OPM in the dissemination of information to affected

employees about the COLA surveys and the COLA program.

Committee Membership

Under the proposed pilot project, OPM would invite the largest

Federal agencies and labor organizations in each of the areas to

participate on the COLA partnership committees. There may also be

subcommittees, particularly in Alaska and Hawaii, where it might be

advantageous to involve employees from each of the allowance areas. All

committee and subcommittee members would be current full-time Federal

employees performing official business of the Federal Government.

Therefore, the Federal Advisory Committee Act is inapplicable.

Committees would be composed of up to five agency representatives

and five labor organization representatives from the local area, as

well as one or more OPM representatives. The agency and employee

representatives would be invited from the four agencies and four labor

organizations with the largest number of COLA recipients in each area,

as determined by OPM. OPM would further invite one additional agency

selected from among the other agencies in each area to designate a

representative to serve on the committee on a 1-year rotating basis.

Similarly, one additional labor organization would be asked to nominate

a representative to serve on a 1-year rotating basis. Alternatively,

affected agencies and labor organizations may agree to select committee

members using other means.

Each participating agency shall provide the necessary support

(including staff time and travel expenses, if needed) for its committee

member(s). OPM anticipates that all agency and employee representatives

would reside in the immediate area, so non-local travel expenses and

per diem should not be necessary. Agencies may have to reimburse

employees for local travel. OPM would provide appropriate

administrative support and coordination among the committees.

Committee Activities

The partnership committees would be involved in survey design and

preparation and in survey operation and review. Approximately 3 months

prior to the survey, the committees would be asked to review the survey

specifications that OPM would provide and assist OPM in planning for

the survey. Survey specifications would include the items and outlets

to be surveyed and the communities in which data are to be collected.

Planning would include deciding when and how to contact outlets to

obtain permission to collect prices and who should accompany OPM during

data collection activities.

[[Page 41747]]

At the time of the survey, the committees would convene to help

coordinate survey activities, observe data collection and/or discuss

data collection with the observers, and assist OPM in reviewing the

survey data. To avoid the appearance of a conflict of interest, OPM

staff from outside the area would collect the data. After the survey,

the committees may meet again to assess the data collection effort,

plan for providing information on the survey to affected employees, and

formulate a preliminary schedule of committee activities for the next

survey.

The committees would most likely meet at least three times a year.

OPM anticipates that, from time to time, the committees would also

consider broader issues relating to the COLA surveys and methodology

and other issues relating to the compensation of Federal employees in

the allowance areas. Some meetings may be via telephone conference or

other means, rather than face-to-face. There would be no required

committee reports, but the committees may, at their discretion, provide

written recommendations to OPM's Assistant Director for Compensation

Policy.

Project Commencement

OPM plans to have the COLA partnership committees in operation no

later than November 1, 1996, in order to prepare for the COLA surveys

to be conducted in January through March 1997. Many of the affected

agencies and labor organizations have attended preliminary briefings

held by OPM on the pilot project. The proposed regulations reflect

several of the comments OPM has received. OPM will continue to

coordinate with agencies and labor organizations in the allowance areas

to prepare for the project.

Definition of ``Agency''

The proposed regulations would also make a technical amendment to

define ``agency'' under the definitions section of 5 CFR part 591,

subpart B, and remove a corresponding reference in Sec. 591.203 to

agencies covered by the subpart.

Regulatory Flexibility Act

I certify that this regulation would not have a significant

economic impact on a substantial number of small entities because it

would affect only Federal agencies and employees.

List of Subjects in 5 CFR Part 591

Government employees, Travel and transportation expenses, Wages.

U.S. Office of Personnel Management.

James B. King,

Director.

Accordingly, OPM proposes to amend 5 CFR part 591 as follows:

PART 591--ALLOWANCES AND DIFFERENTIALS

Subpart B--Cost-of-Living Allowance and Post Differential--

Nonforeign Areas

1. The authority citation for subpart B of part 591 continues to

read as follows:

Authority: 5 U.S.C. 5941; E.O. 10000, 3 CFR, 1943-1948 Comp., p.

792; E.O. 12510, 3 CFR, 1985 Comp., p. 338.

2. Section 591.201 is amended by adding a definition of ``agency''

in alphabetical order to read as follows:

Sec. 591.201 Definitions.

* * * * *

Agency means an Executive agency as defined in section 105 of title

5, United States Code, but does not include Government-controlled

corporations. For the purposes of Sec. 591.212, ``agency'' also

includes the United States Postal Service.

* * * * *

3. Section 591.203 is amended by revising the section heading and

the introductory text to paragraph (a) to read as follows:

Sec. 591.203 Employees covered.

(a) This subpart applies to civilian employees whose rates of basic

pay are fixed by statute and who are employed by an agency. The

following pay plans are covered by this subpart:

* * * * *

4. Section 591.212 is added to read as follows:

Sec. 591.212 COLA Partnership Pilot Project.

(a) Purpose and duration of COLA Partnership Pilot Project. The

COLA Partnership Pilot Project is designed to assess the efficacy of a

plan to increase agency and employee involvement in the allowance

program. The pilot project shall be in effect for a period not to

exceed 2 years from [the effective date of the final rule.]

(b) Purpose and establishment of committees. To assist OPM in

reviewing and improving the allowance program and to help OPM, affected

agencies, and their employees better understand issues relating to the

compensation of Federal employees in the allowance areas, OPM may

establish one or more COLA partnership committees. Committees

established under this section function at the discretion of OPM and

may be disestablished at any time. A committee may represent agencies

and employees in more than one allowance area and will meet from time

to time as requested by OPM.

(c) Composition of committees. Each committee shall be composed of

one or more representatives of Federal agencies and labor

organizations. All committee members shall be current full-time Federal

employees performing official business of the Federal Government and

will serve at their agencies' and OPM's discretion. All committee

members, except the OPM members, shall be from the area represented by

the committee. The representatives shall be selected as follows:

(1) Agency representatives. (i) OPM will identify the largest

agencies (in terms of allowance recipients) in the area represented by

the committee. OPM will invite up to four agencies each to designate a

representative to serve on the committee. OPM will further invite one

additional agency selected from among the other agencies in each

committee area to designate a representative to serve on the committee

on a 1-year rotational basis. To select this agency, OPM will use

sampling with probability proportional to the size of the agency. If

mutually agreeable among the agencies, they may select representatives

using other means and may rotate committee positions among agencies on

other than a 1-year rotational basis.

(ii) OPM will appoint one or more of its employees to serve on each

COLA partnership committee.

(2) Employee representatives. OPM will identify the largest labor

organizations (in terms of allowance recipients) in the area

represented by the committee. OPM will invite up to four labor

organizations each to nominate a representative to serve on the

committee. OPM will further invite one additional labor organization

selected from among the other labor organizations in each committee

area to nominate a representative to serve on the committee on a 1-year

rotational basis. To select this labor organization, OPM will use

sampling with probability proportional to the size of the labor

organization. If mutually agreeable among the labor organizations, they

may select representatives using other means and may rotate committee

positions among labor organizations on other than a 1-year rotational

basis. OPM will select committee members from among the nominations in

consultation with the nominees' employing agencies. However, no

committee shall have more than one employee representative from United

States Postal Service labor organizations.

[[Page 41748]]

(3) Other members. In consultation with the committee members, OPM

may invite other current full-time Federal employees to serve on the

committee. OPM will coordinate such invitations with the employing

agencies.

(d) Functions of committees. COLA partnership committees may--

(1) Advise and assist OPM in planning living-cost surveys;

(2) Provide or arrange for observers for data collection during

living-cost surveys;

(3) Advise and assist OPM in the review of survey data;

(4) Advise OPM on its administration of the COLA program, including

survey methodology and other issues relating to the compensation of

Federal employees in the allowance areas; and

(5) Assist OPM in the dissemination of information to affected

employees about the living-cost surveys and the COLA program.

(e) Data collection observers. In consultation with the committees,

OPM will determine the number of observers required to accompany OPM

officials during the collection of living-cost data. All observers

shall be from the local area and shall be full-time Federal employees

performing official business of the Federal Government. The committees

will nominate observers, and OPM will select from among these

nominations in consultation with the nominees' employing agencies.

(f) Subcommittees. In consultation with the committees, OPM may

establish one or more subcommittees to advise the committee on issues

relating to the allowance areas and survey areas within the geographic

area represented by the committee. If such subcommittees are

established, they shall be composed of up to two agency representatives

and two employee representatives from the local area, as well as one or

more OPM representatives. OPM may, in consultation with the committee

and subcommittee, invite additional Federal employees to serve on the

subcommittee. Subcommittee agency and employee representatives shall be

nominated and appointed in the same manner as committee members. All

subcommittee members shall be current full-time Federal employees

performing official business of the Federal Government.

[FR Doc. 96-20445 Filed 8-9-96; 8:45 am]

BILLING CODE 6325-01-M