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Proposed Rule

Awards

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AGENCY:

Office of Personnel Management.

ACTION:

Proposed rule.

SUMMARY:

The Office of Personnel Management is issuing proposed regulations regarding the employee awards program. These revisions clarify the use of performance-based cash awards by providing that such awards programs, as designed and applied, must make meaningful distinctions based on levels of performance. This proposed change is designed to ensure that better performers receive greater recognition.

DATES:

Comments must be received on or before July 21, 2006.

ADDRESSES:

Send or deliver written comments to Jerome D. Mikowicz, Acting Deputy Associate Director for Pay and Performance Policy, Office of Personnel Management, Room 7H31, 1900 E Street, NW., Washington, DC 20415; FAX: (202) 606-4264; or e-mail: pay-performance-policy@opm.gov.

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FOR FURTHER INFORMATION CONTACT:

Barbara Colchao, (202) 606-2720, FAX: (202) 606-4264, or e-mail: pay-performance-policy@opm.gov.

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SUPPLEMENTARY INFORMATION:

OPM is proposing to amend the incentive awards regulations in part 451 of title 5, Code of Federal Regulations, to ensure effective application of the merit system principles and related appraisal and incentive awards requirements and authorities. This amendment would clarify that agencies using the incentive awards authorities in chapter 45 of title 5, United States Code, to grant employees performance-based cash awards on the basis of a summary rating of record of “fully successful” or above must ensure that such cash awards reflect meaningful distinctions based on levels of performance. In other words, when agencies grant rating-based awards, employees with higher performance ratings must be granted larger cash awards, as a percentage of basic pay, than those with lower ratings.

This amendment is consistent with the merit system principle at 5 U.S.C. 2302(b)(3), which states, in part, “appropriate incentives and recognition should be provided for excellence in performance.” Further, the requirements in 5 U.S.C. chapter 43 regarding appraisal of employee performance state that the results of performance appraisal shall be used as a basis for rewarding employees “whose performance so warrants.” Taken together, these requirements are not reasonably met by providing uniform amounts as performance-based cash awards irrespective of differences in summary performance ratings.

OPM is mindful that many agencies already use established performance-based awards programs that fully comport with the proposed regulatory requirement. Nonetheless, the importance of linking rating-based rewards to measured performance in a way that supports the merit system principle warrants this amendment to the awards regulations.

In addition, OPM is proposing to clarify that a rating of record used as the basis for a performance-based cash award must be at the fully successful level (or equivalent) or higher. The statute at 5 U.S.C. 4505a already establishes this threshold for rating-based cash awards granted to General Schedule employees and to other employees in certain circumstances.

These amendments to the incentive awards regulations would make no changes in regulations governing Senior Executive Service performance awards granted under 5 U.S.C. 5384 and 5 CFR 534.405.

Waiver of 60-Day Comment Period for Proposed Rulemaking

Pursuant to 5 U.S.C. 553(b)(3)(B), I find that good cause exists to waive the 60-day comment period for general notice of proposed rulemaking. Limiting the comment period for the proposed regulations to 30 days will enable OPM to issue final regulations at the time when most agencies are making their awards decisions, which will give practical effect to these regulations.

E.O. 12866, Regulatory Review

This rule has been reviewed by the Office of Management and Budget as a significant regulatory action in accordance with E.O. 12866.

Regulatory Flexibility Act

I certify that these regulations would not have a significant economic impact on a substantial number of small entities because they would apply only to Federal agencies and employees.

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List of Subjects in 5 CFR Part 451

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Office of Personnel Management.

Linda M. Springer,

Director.

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Accordingly, OPM is proposing to revise part 451 of title 5 of the Code of Federal Regulations as follows:

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PART 451—AWARDS

1. The authority citation for part 451 continues to read as follows:

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Authority: 5 U.S.C. 4302, 4501-4509; E.O. 11438, 33 FR 18085, 3 CFR, 1966-1970 Comp., p. 755; E.O. 12828, 58 FR 2965, 3 CFR, 1993 Comp., p. 569.

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Subpart A—Agency Awards

2. In § 451.101, paragraph (e) is revised to read as follows:

Authority and coverage.
* * * * *

(e) An agency may grant performance-based cash awards on the basis of a rating of record at the fully successful level (or equivalent) or above under the authority of 5 U.S.C. 4505a and the provisions of this part to eligible non-GS employees who are covered by 5 U.S.C. chapter 45 and this part and who are not otherwise covered by an explicit statutory authority for the payment of such awards, including 5 U.S.C. 5384 (SES performance awards).

3. In § 451.104, paragraph (a)(3) is revised and a new paragraph (h) is added to read as follows:

Awards.

(a) * * *

(3) Performance as reflected in the employee's most recent rating of record (as defined in § 430.203 of this chapter), provided that the rating of record is at the fully successful level (or equivalent) or above, except that performance Start Printed Page 35562awards may be paid to SES members only under § 534.405 of this chapter and not on the basis of this subpart.

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(h) Programs for granting performance-based cash awards on the basis of a rating of record at the fully successful level (or equivalent) or above, as designed and applied, must make meaningful distinctions based on levels of performance.

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[FR Doc. E6-9797 Filed 6-20-06; 8:45 am]

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