[Federal Register Volume 60, Number 163 (Wednesday, August 23, 1995)]
[Rules and Regulations]
[Pages 43936-43948]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-20745]
[[Page 43935]]
_______________________________________________________________________
Part V
Office of Personnel Management
_______________________________________________________________________
5 CFR Parts 430 et al.
Deregulation of Performance Management and Incentive Awards: Final Rule
Federal Register / Vol. 60, No. 163 / Wednesday, August 23, 1995 /
Rules and Regulations
[[Page 43936]]
OFFICE OF PERSONNEL MANAGEMENT
5 CFR Parts 430, 432, 451 and 531
RIN 3206-AG34
Performance Management
AGENCY: Office of Personnel Management.
ACTION: Final rule.
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SUMMARY: The Office of Personnel Management (OPM) is issuing final
regulations to deregulate performance management and incentive awards,
including provisions allowing agencies to use as few as two levels for
critical element appraisals for and summary performance assessments of
non-SES employees, and to make conforming changes to related
regulations. These changes provide agencies additional flexibility as
called for by the National Performance Review.
EFFECTIVE DATE: September 22, 1995.
FOR FURTHER INFORMATION CONTACT:
Barbara Colchao, (202) 606-2720.
SUPPLEMENTARY INFORMATION: OPM published for comment in the Federal
Register on January 27, 1995, at 60 FR 5542-5557, proposed revisions to
the regulations on performance management systems. A total of 52
comments and/or suggestions were received: 37 from agencies, 6 from
unions, 6 from individuals, and 3 from management associations. The
comments generally supported the proposed changes. On some topics,
commenters suggested additional changes. In other instances, commenters
either suggested that no change be made to the current regulations or
suggested some modification to the proposed changes. Comments and
suggestions, along with the rationale for and explanation of revisions
to the final regulations, are discussed below.
I. Background
Following several years of study and recommendations for ways to
improve the Federal Government's performance management system for non-
Senior Executive Service (SES) employees, OPM reviewed the regulatory
structure for appraisal and awards for opportunities to implement the
various recommendations. OPM concluded that the regulations
implementing the basic statutory requirements could be made much more
flexible and constructive for managing and recognizing group as well as
individual performance. Consequently, OPM proposed a variety of changes
to the regulations covering performance appraisal (part 430) and
incentive awards (part 451), as well as related regulations that
referenced appraisal results (e.g., granting within-grade and quality
step increases).
OPM's intent in deregulating performance management was to give
agencies a great deal of flexibility for both appraisal and awards so
that the working organizations of the Federal Government could operate
in a decentralized environment where the performance management
procedures for planning, monitoring, evaluating, and rewarding
individual, team, and organizational performance were tailored to fit
local work technologies and cultures. A chief means of achieving this
flexibility was to remove a great deal of regulatory language. As a
result of comments received, OPM is restoring language in several
instances that had been deleted in the proposed regulations (e.g.,
restoring a reference to ``employee'' in the definition of critical
element). Whenever reasonable, the restoration is establishing a
permissive authority, rather than a Governmentwide requirement. OPM's
original strategy was to adopt a ``permissive silence'' approach to
many issues. That is, by leaving the regulations silent, agencies would
not be constrained from designing and implementing a variety of
procedures and mechanisms. However, the comments clearly indicated that
in some cases, agencies believe a direct reference to certain
permissible techniques, such as permitting the assigning of a summary
level as part of a performance rating, is needed to permit their use.
Consequently, OPM is reinserting some broad language in certain cases.
Even with these additions, however, OPM believes that our goal of
creating a deregulated Governmentwide policy framework in which
performance management can be revitalized and reinvented is being
achieved, without sacrificing agency accountability and adequate
employee protections. OPM encourages agencies to seize these
flexibilities and work to make performance appraisal and awards an
integral part of their general efforts to address the serious
challenges Government is facing to create and sustain high performance
organizations.
II. Statutory Limitations
OPM's proposals for regulatory changes to performance management
implemented specific National Performance Review recommendations which
were achievable within the limits of existing statute and which we
believe substantially reform performance management in the Federal
Government. However, there were several requests made by commenters to
take actions that are outside OPM's authority. For example, a few
commenters suggested that the regulations be further modified to
require mandatory collective bargaining of aspects of performance
appraisal and awards such as performance standards. Several other
commenters made suggestions that also would require changes to statute;
for example--
integrate sections from different chapters of title 5,
United States Code;
eliminate the requirement that OPM approve performance
appraisal systems;
require that agencies take a chapter 43 action against
employees whose performance is less than fully successful, but better
than unacceptable as defined in statute;
lift the prohibition on granting honorary, nonmonetary
awards to political officers during a Presidential election period;
modify regulations to permit that within-grade increases
that are delayed do not have to be granted retroactively; and
eliminate the connection between performance appraisal and
retention standing in a reduction in force.
OPM does not have the authority under existing statute to take these
actions. Therefore, they are not being adopted.
III. Employee Involvement and Labor Relations Issues
As OPM stated when publishing the proposed regulations, 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.
Several comments pointed out that the elimination of a
Governmentwide
[[Page 43937]]
regulation could affect the negotiability of a particular aspect of an
appraisal or award program. OPM is aware of this potential implication
of removing such regulations. In balancing among the interests of
establishing flexibility for effective program design, decentralizing
programs to facilitate their being properly tailored to local work
settings and cultures, achieving meaningful employee involvement to
increase program acceptance, and maintaining an appropriate framework
of Governmentwide regulation to ensure that statutory requirements are
met, OPM is deciding more often than not to remove regulatory
constraints.
A number of comments focused on OPM's objective of providing for
involving employees in the design and implementation of performance
management programs and the implications of the proposed regulations
for how that involvement could and should be achieved. The principle
that successful performance management approaches are best served by
the involvement of the employees that will be affected by them is well
established. In the Federal Government, under the Federal Service
Labor-Management Relations Statute (chapter 71 of title 5, United
States Code), for employees in bargaining units where a labor
organization has been given exclusive recognition, employee involvement
must be through that exclusive representative for subject matters that
are within the statutory duty to bargain. As well as striving to
develop performance management systems and programs in partnership,
agencies must be mindful of the requirements of chapter 71 as they
implement these final regulations.
Several comments raised questions about the means and methods of
involving employees who are not in recognized bargaining units. One
commenter suggested that OPM mandate that agencies use representatives
of professional and management associations to involve employees who
make up their memberships. OPM has no authority to set such a
requirement. OPM strongly encourages agencies to involve all employees,
including managers and supervisors, in the design and implementation of
performance management programs. Where appropriate, this should include
the involvement of representatives of professional and managerial
associations, OPM, however, does not have the authority to require such
involvement.
Also, agency officials are reminded that 18 U.S.C. 201-216 place
restrictions on a wide range of activities by Federal employees,
including representational activities on behalf of organizations that
are not labor organizations. OPM therefore advises agency officials to
consult with their designated agency ethics official for guidance
regarding any conflicts of interest that may arise. Accordingly, OPM is
revising text to clarify that agencies are free to choose appropriate
forms of employee involvement in accordance with law. (See
Sec. 430.204(c), Sec. 430.205(d), and Sec. 451.103(b).)
Several comments raised related labor relations issues concerning
employees who serve as representatives of labor organizations in their
agencies under chapter 71 of title 5, United States Code. For example,
one commenter suggested adding a requirement that union officials be
granted presumptive ratings at the ``Fully Successful'' (or equivalent)
level. Under performance appraisal provisions in part 430, the
performance to be planned, monitored, and rated covers the work,
duties, and responsibilities that accomplish the agency mission and for
which the employee is accountable to the employing organization. When
an employee is serving as the representative of a labor organization,
he or she is performing duties for that labor organization. To
intermingle performance of the representational duties into the
appraisal program would be inappropriate because appraisal of the
employee's performance must be based solely upon the employee's
performance of agency duties. For employees who spend 100 percent of
their time as labor representatives, and for employees who spend a
significant amount of time as determined by the agency, this means that
they cannot, and should not, be given performance appraisal ratings of
record. In the interest of preserving the distinction between the
agency-assigned duties of an official position and union duties and
responsibilities, OPM is not adopting this suggestion. The regulations
at part 430 continue to preclude a ``presumptive'' or ``assumed''
rating of record and such employees are considered ``unratable.'' The
only place in regulations where an ``assumed'' rating is used is in the
regulations at Sec. 351.504 for granting addition service credit based
on performance in a reduction in force.
Other commenters asked whether the waiver of an acceptable level of
competence (ALOC) determination at Sec. 531.409(d) is discretionary or
mandatory. OPM is clarifying that waiving the ALOC determination for
labor representatives is not discretionary for representatives who are
unratable based upon the fact that ALOC must be based on a performance
determination.
An additional comment stated that the provision addressing the ALOC
waiver for union officials should also refer to representational
duties. OPM is adopting the suggestion to clarify the representational
duties are performed under the authority of chapter 71 of title 5,
United States Code. (See Sec. 531.409(d)(1)(v).)
One commenter suggested that where the proposed regulations at
Sec. 451.104(h) clarified that employees do not have appeal rights with
respect to awards, language be added concerning the right to grieve an
award. In considering this suggestion, OPM has concluded that it is not
necessary to promulgate a Governmentwide regulation in this subpart
that reminds employees about matters where they do and do not have
appeal or grievance rights. Consequently, OPM is eliminating all
reference to appealing awards by deleting Sec. 451.104(h). Because
appeal rights to the Merit Systems Protection Board must be granted
specifically by law or regulation, deletion of this regulatory language
does not have the effect of creating such an appeal right. (See
Sec. 541.104 (paragraph (h) as proposed, removed).)
IV. OPM Role Examined
Several comments raised questions that concern OPM's role in
administering the Federal Government's performance management system
under the provisions of chapters 43 and 45 of title 5, United States
Code. One commenter asked whether these regulatory changes would affect
the administrative exclusions that OPM had already granted some
agencies for some excepted service employees under its authority at 5
U.S.C. 4301(2)(G). OPM has concluded that all existing administrative
exclusions the Director of OPM has already granted will remain in
effect and that agencies need not reapply for those exclusions.
One commenter suggested that OPM seek a reinterpretation of the
statutory requirement that OPM review and approve agency appraisal
systems in advance of program implementation. OPM believes that case
law and established practice are sufficiently clear in this regard and
that appraisal system approval must still be required in advance of
program implementation.
One commenter expressed concern about the distinctions OPM is
making between appraisal system and appraisal program. The commenter
suggested that OPM would not be carrying out our
[[Page 43938]]
review and approval responsibilities properly if only a framework of
parameters that an agency's programs must comply with were to be
reviewed. OPM believes that the system descriptions that agencies will
submit to OPM will provide sufficient information about the policies
under which appraisals will be conducted to permit an adequate
determination of whether the agency meets the requirements of
subchapter I of chapter 43 of title 5, United States Code, which is
OPM's responsibility under the law. As a consequence, the final
regulations at Secs. 430.203-205 continue to distinguish agency
appraisal systems from appraisal programs and require at Secs. 430.209-
210 the submission and review of agency systems. (See Sec. 430.203
(appraisal program, appraisal system) and Secs. 430.205 (a) and (c).)
Other commenters asked about what documents agencies would be
required to submit for OPM review. OPM will be distributing specific
guidance and instructions, providing models, holding informational
meetings, and supplying technical assistance to the agencies to
facilitate the submission and approval of their systems and to support
the design and implementation of revised appraisal and award programs.
One commenter suggested that the definition of ``Performance
Management Plan'' be removed as paragraph Sec. 430.102(c) and grouped
with other definitions in Sec. 430.203. OPM is taking this suggestion
one step further by removing the provision and all references to
``Performance Management Plan'' in part 430, subparts A and B, which
cover non-SES employees. Also, OPM is making conforming changes in
subpart C by removing references to subpart A as a source of the
continued SES requirement for a Performance Management Plan. From a
Governmentwide regulatory perspective, reference to a document (e.g., a
Performance Management Plan) that serves as the repository for an
agency's non-SES performance management systems is no longer necessary
because the regulations are clear in requiring agencies only to submit
appraisal systems for OPM review and approval. However, agencies are
free to continue to use a Performance Management Plan for internal
purposes. The requirements for submitting appraisal systems for SES
employees and for non-SES employees are spelled out separately in their
respective subparts. (See Sec. 430.102 (paragraph (c) as proposed,
removed), Sec. 430.209(d), Sec. 430.303 (Performance Management Plan),
and Sec. 430.310.)
On OPM's evaluation responsibilities, one commenter suggested the
wording ``must evaluate'' and another suggested the wording ``will
evaluate'' to replace the wording ``may evaluate'' systems and programs
at Sec. 430.210(b) and Sec. 451.107(d). Another commenter suggested
that OPM include in the regulations at Sec. 430.209(d) the criteria
against which programs would be evaluated. OPM is fully committed to
executing our evaluation role in a meaningful way. Moreover, OPM
believes that agencies will be in the best position to establish
criteria for evaluating their programs against the specific objectives
that program design features were intended to achieve. Consequently,
the suggested changes are not being adopted.
V. More Flexibility Requested
Some commenters did not feel that OPM had gone far enough in our
proposals and urged OPM to consider providing further flexibilities. By
far, the most commonly raised concern addressed the fact that OPM had
not proposed any changes to the regulations at Sec. 351.504 governing
how additional service credit is granted during a reduction in force
(RIF) on the basis of performance appraisal ratings of record. Most
commenters noted that OPM's proposal to provide flexibility about the
number of summary levels used in an appraisal program was a highly
desirable system improvement. However, 27 of the 52 commenters
suggested that OPM revisit the issue of crediting performance in a RIF.
A few commenters urged that the connection between appraisal and
retention be completely eliminated. Others suggested particular
approaches for dealing with situations where employees in the same
competitive area in a RIF were given ratings of record under programs
that use different patterns of summary levels. To respond to the
concerns expressed, OPM will review the RIF regulations in part 351 and
consider whether any changes to the RIF retention provisions would be
beneficial and appropriate. As part of this review, OPM will confer
with stakeholders to assure that a full range of interests is
considered.
In four other instances, changes were suggested that would have
lifted regulatory requirements beyond what OPM had proposed. One
commenter requested that the required progress review in the regulation
at Sec. 430.207(b) about monitoring performance during the appraised
period be eliminated on grounds that agencies ``should not be required
to conduct a formalized review.'' OPM had maintained the requirement
for a progress review as a reasonable implementation of the specific
statutory requirement that employees be evaluated during (and not just
at the end of) their appraisal period. Given the more flexible
definition of progress review, which could now be much simpler than a
formally conducted or written review, OPM is preserving the
requirement.
Another commenter suggested that after one appraisal period,
journey-level employees should not be required under Sec. 430.206(b)(2)
to receive performance plans at the start of each subsequent period.
Instead, a performance plan would be provided upon reaching the journey
level and ``carry over'' after that. OPM understands that situations
may continue where performance plans are constructed in such a way that
they need not change from period to period. However, OPM believes that
the statutory requirement for employees to be evaluated during each
appraisal period on their standards is reasonably implemented by the
current requirement. Also, eliminating the current requirement would
strongly suggest that such plans are by their nature unchanging, at
least at the journey level. One of OPM's goals in deregulating
performance management is to reemphasize the value and importance of
effective planning and goal setting. Consequently, OPM is not adopting
the suggestion.
Two commenters sought greater flexibility with respect to assigning
summary levels. One thought that the regulations at Sec. 430.208(d)(1)
should allow an appraisal program to use more than five summary levels.
Other personnel systems and actions, including granting quality step
increases, granting within-grade increases, and granting additional
service credit in a reduction in force, are regulated to operate with
reference to the five numerically-designated summary levels. The
proposed regulations offered the flexibility for an appraisal program
to assess performance at more than five levels, so long as the program
included some method of translating such assessments to one of the
patterns of summary levels that programs are permitted to use to
designate their official ratings of record that the other personnel
systems use. Given that flexibility, OPM is not adopting the suggestion
to permit more than five summary levels.
The other commenter suggested that the proposed deregulation at
Sec. 430.208(e) to eliminate the Governmentwide requirement that all
assigned summary levels be reviewed by a reviewing official should be
extended
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to Level 1 (``Unacceptable'') ratings of record. OPM has proposed
maintaining the requirement for reviewing Level 1 ratings as an
appropriate employee protection in cases where the assigned rating of
record could affect an employee's retention in the Federal service. OPM
believes such a measure of protection is still justified and is not
adopting the suggestion.
VI. Restoring or Adding Restrictions and Requirements
A considerable number of comments requested that Governmentwide
restrictions or requirements be restored or that new ones be
established. OPM considered each of these suggestions carefully,
attempting to implement the National Performance Review recommendation
to eliminate unnecessary regulation consistent with our responsibility
to regulate the Governmentwide implementation of chapters 43 and 45 of
title 5, United States Code, as required by law.
A. Team and Organizational Performance
A number of commenters wanted OPM to restore language that we had
proposed be removed from the regulations. For example, in the provision
dealing with performance plans, OPM had proposed to eliminate the
language referring to supervisor. Several commenters suggested that OPM
restore the language that referred to supervisors. Current regulation
at Sec. 430.204(c)(4) states that ``Final authority for establishing
such plans rests with the supervising officials.'' By proposing the
removal of this type of language, OPM had hoped to broaden the coverage
of the regulations to the management of team and organizational
performance in other than traditional hierarchical organizations, as
well as individual performance, without detracting from the management
rights preserved by law.
The deletion of the reference to supervisors was not intended to,
and cannot have the effect of, subtracting from management's inherent
rights because those rights are preserved elsewhere in the law. For
example, 5 U.S.C. 7106(a)(2) (A) and (B) protect management's right to
direct employees and to assign work. Therefore, reference to the
supervisor did not confer upon management any rights that did not
already exist. Consequently, OPM is not adopting the suggestion to
restore the reference to the supervisor establishing a performance
plan.
The requirement for higher-level review of awards had been proposed
for removal to accommodate restructured organizational environments.
Several commenters suggested that the requirement be restored because
its removal could have the effect of making award programs negotiable.
OPM is not adopting this suggestion because of our focus on eliminating
unnecessary layers of review to create flatter, more effective
organizations. Such delayering could be used to establish more
effective recognition systems.
Four commenters suggested OPM restore an exclusive reference to the
performance of ``an employee.'' One of these suggestions applied to the
definition of performance rating and another to the provision for
ongoing appraisal at Sec. 430.207(b). OPM is not adopting either change
because each would limit performance to the individual, excluding the
use of team or organizational performance from the appraisal process. A
third commenter wanted to restore classification-centered references to
duties and responsibilities in the definition of critical element. The
third proposed change could result in limiting critical elements by
tying them to position descriptions that are frequently outdated rather
than allowing them to reflect the employee responsibilities needed by
the organization. Accordingly, OPM is not adopting this suggestion. The
fourth commenter, however, suggested restoring reference to ``an
employee's'' overall performance in the definition of critical element
as that which is found unacceptable if performance on one or more
critical elements is unacceptable. OPM is adopting this suggestion
because it emphasizes the necessary connection in the law between
critical elements and the individual employee for retention purposes.
(See Sec. 430.203 (critical element) and Sec. 432.103(b).)
B. Meaning and Use of Terms
1. Critical Elements and Other Performance Factors. OPM received a
number of comments about the meaning and use of terms such as ``other
performance factors'' and ``non-critical elements'' and the
relationships among those and ``critical elements,'' especially with
respect to their use in performance plans and their impact on summary
ratings of record. Two commenters requested OPM to restore the
definition of ``non-critical element.''
In response to these comments, OPM is amending definitions and
provisions to establish three distinct kinds of performance elements:
critical, non-critical, and additional. The concept of ``other
performance factors'' that the proposed regulations had included has
been replaced and refined by using ``non-critical elements'' and
``additional performance elements.''
The meaning and use of a ``critical element'' cannot change; as set
forth in 5 U.S.C. 4301(3), failure to meet established performance
standards on one or more critical elements means unacceptable
performance. Because an appraisal system must be able to identify
unacceptable performance, an appraisal program must use at least one
critical element, and any critical element must have an established
performance standard and be appraisable as ``Unacceptable.'' Critical
elements must be used in deriving a summary level, and they form the
only basis for taking a performance-based action under 5 CFR part 432
or 752.
The definition of non-critical element is being adjusted to reflect
a new, broader meaning. (This change renders moot another commenter's
suggestion to remove all references to noncritical elements.) As in
current regulation, establishing a non-critical element is optional. If
used, it must be included in the employee's performance plan. It cannot
be used as a basis for taking a performance-based action under 5 CFR
part 432 or 752. However, a non-critical element would be used in
deriving a summary level. As in the proposed regulations and because it
must be factored into the summary level, it must be appraisable at a
minimum of two levels with a performance standard established for at
least one level, which need not be the ``Fully Successful'' level. This
change is being made in recognition of 5 U.S.C. 4302(b)(3), which
requires that employees be evaluated against their performance
standards.
OPM is changing the definition and use of non-critical elements to
permit them to focus on levels of performance other than individual and
on a standard other than that required for retention. Critical elements
are designed to be focused on individual performance and an established
performance standard for retention because of the definition of
unacceptable performance at 5 U.S.C. 4301(3). Agencies may continue to
use non-critical elements as they are used now under current
regulation, provided they are used to derive a summary level.
Under these regulations, an optional ``additional performance
element'' gives agencies additional flexibility for communicating
performance expectations important to the organization. This kind of
performance element differs from the other two in that it may not be
used in deriving a summary level. However, it may be used for other
purposes, such as making award determinations. Therefore, as was
[[Page 43940]]
proposed for ``other performance factors'' in general in the proposed
regulations, an additional performance element need not include a
performance standard, be appraised at any particular level, or
necessarily be included in the employee performance plan. Also, by
making clear that performance on an additional performance element may
not be used in assigning a summary level, this change addresses one
commenter's concerns that summary level derivations could be affected
by performance expectations (``other performance factors'') not
expressed at the beginning of the appraisal period in the performance
plan.
Accordingly, OPM is adding definitions of additional performance
element and non-critical element; revising procedures at
Sec. 430.206(b) required to establish performance plans to clarify
options and requirements; and making conforming changes in other
definitions and provisions. (See Sec. 430.203) (additional performance
element, non-critical element, performance plan, performance rating,
progress review), Sec. 430.204(b)(3)(iii), Secs. 430.206 (b)(4) through
(b)(7), Sec. 430.207(b), and Sec. 430.208(b).)
2. Summary Rating. Two commenters suggested that the definition of
``summary rating'' be retained. Another commenter suggested that either
the definition be retained or all references to summary rating be
removed. In current regulation at Sec. 430.203, the definition of
summary rating requires a label describing an employee's overall level
of performance. In practice, the term ``summary rating'' frequently
means the label only, without reference to the appraisal process or
documentation that generated it. OPM proposed to replace summary rating
with performance rating, which requires only the appraisal of critical
and non-critical elements in an employee's performance plan. To help
minimize confusion in this area, OPM is removing references to summary
rating. OPM also is replacing references to ``summary rating level''
with ``summary level.'' A summary level must be assigned with a
performance rating is prepared as part of a rating of record. At other
times, assigning a summary level is optional. (See Sec. 430.203
(performance plan, rating of record); Sec. 430.204(b)(3)(iv);
Secs. 430.208 (b), (c), and (d); and Sec. 531.504(b).)
3. Other Terms. In several instances, commenters requested that
definitions of terms such as ``team,'' ``informal recognition item,''
and the performance and summary levels themselves be provided in the
regulations. Commenters also requested that--
the regulations include precise requirements for
performance standards;
``as soon as practicable'' be defined;
the proposed provision at Sec. 531.409(d)(1)(v) for
waiving the acceptable level of competence (ALOC) determination for
labor representatives be permitted only for employees who are
performing representational duties a full 100 percent of their time;
and
``performance-based'' be added to modify ``actions based
on unacceptable performance'' that must be provided for under
Sec. 430.207(d)(2), which would have restricted the actions an agency
could take to deal with a poor performer.
OPM is committed to emphasizing flexibility for the performance
appraisal and award programs that will be established under these
regulations. Accordingly, OPM is not adopting these suggestions.
C. Appraisal Program Procedures
A number of commenters suggested restoring or adding procedural
requirements within an appraisal program, such as--
requiring paper copies of performance plans and ratings of
record;
requiring a minimum appraisal period of at least 90 days;
requiring close-out ratings;
specifying how to treat employees on detail;
coordinating the assignment of summary levels between
programs to assure equitable distribution of rewards; and
establishing specific requirements and criteria for
granting quality step increases under appraisal programs that do not
use a Level 5 summary.
OPM believes that agencies should have the flexibility and authority to
design their own means of addressing these procedures so that they fit
their work technologies or cultures well. Consequently, OPM is not
adopting these suggestions.
Five commenters urged OPM to reconsider removing the requirement to
assist employees whose performance is better than ``Unacceptable,'' but
not ``Fully Successful'' (or equivalent). OPM had removed the
requirement on the basis that it went further than the statute required
and that agencies would have the full discretion to provide such
assistance without a Governmentwide regulation. However, OPM agrees
that a commitment to improving performance includes assisting a
marginal performer. Accordingly, OPM is adding language to emphasize
that agencies should offer assistance to employees whose performance is
less than ``Fully Successful'' (or equivalent). (See Sec. 430.207(c).)
Some commenters suggested that the proposed provision to permit the
delay of an acceptable level of competence (ALOC) determination for
employees completing an opportunity to improve or under notice of a
performance-based action to be taken under 5 CFR part 432 or 752 is
unfair to employees whose performance is less than ``Fully Successful''
but better than ``Unacceptable.'' These marginal performers would not
have access to such a delay and, upon improvement to the ``Fully
Successful'' level, to a retroactive within-grade increase. Thus, those
whom management deemed to be performing at an unacceptable level would
be endowed with greater rights than those whose performance is somewhat
better, thereby creating an inequity in the application of the law.
OPM agrees. The proposed regulation does not further our policy
objectives. All employees whose performance is deemed less than ``Fully
Successful'' should be treated equally for ALOC determinations. No
group of less than ``Fully Successful'' performers should be granted
advantage over any others. Accordingly, these final regulations do not
include the provision at Sec. 531.409(c) as described above for
delaying the ALOC determination. (See Sec. 531.409 (amendments to
paragraphs (c)(2) through (c)(3) as proposed, withdrawn).)
Four commenters addressed the provision requiring agencies to
communicate to employees about relevant parts of applicable performance
management systems and programs. All stressed, to varying degrees, the
importance of training and the concern that OPM's omitting specific
mention of it would send inappropriate signals about its importance, if
not necessity, in implementing effective systems and programs. One
commenter specifically recommended that OPM re-insert the training
requirement. OPM is not adopting this suggestion because we had
proposed to remove the training requirement to allow agencies the
flexibility to use resources in addition to formal training funds to
communicate system and program operations to supervisors and employees.
OPM recognizes, however, that while formal training is rarely
sufficient, it often is necessary to ensure adequate communication.
Accordingly, OPM is adding a specific reference to formal training as
an example of communicating to employees and supervisors about the
relevant parts of applicable appraisal systems and programs and award
programs. (See Sec. 430.209(c) and Sec. 451.106(c).)
[[Page 43941]]
D. Forced Distributions of Ratings
Several commenters questioned OPM's proposal at Sec. 430.208(c) to
permit agency appraisal programs to use ``forced distributions'' of
summary levels for ratings of record and urged that OPM restore the
existing prohibition on their use. These commenters believed that
forced distributions were incompatible with effective performance
management. OPM is persuaded by the arguments that criticized the use
of forced distributions and is adopting the suggestions that the
regulations continue to prohibit forced distributions, as the current
regulations do at Sec. 430.206(d). Therefore, the proposed language at
Sec. 430.208(c) is being changed from being a permissive authority.
Under these final regulations, no limitations on ratings at any level
used by an appraisal program are permitted. The regulations still
require that a summary level be derived solely from comparing
performance to the pre-established standards required for critical and
non-critical elements and not be based at all on additional performance
elements. Definitions of additional performance element and non-
critical element are added or restored as outlined above to clarify
this issue. OPM is permitting more flexibility to use non-critical
elements to derive a summary level and in making performance
distinctions above a Level 3 summary (``Fully Successful'' or
equivalent), while heeding the commenters' calls for not permitting
quotas for summary levels. However, OPM is also adding language to
clarify that using methods where relative comparisons are made among
individuals or groups, such as rank ordering or categorizing employees,
may be used for purposes outside appraisal and assigning a summary
level, such as making decisions about distributing rewards. (See
Sec. 430.208(c).)
VII. Performance and Awards Data
Nine commenters requested additional information and OPM guidance
regarding how to report award and performance data to the Central
Personnel Data File (CPDF) and clarification of the transfer of rating
requirements when employees change agencies or leave Federal service.
The inclusion of these reporting requirements in the performance
management and award regulations is intended to reinforce their
mandatory nature. However, official OPM policy on how agencies are to
comply with these reporting requirements is contained in three OPM
Operating Manuals. Policy and instructions on how to submit data to the
CPDF are contained in FEDERAL WORKFORCE REPORTING SYSTEMS. Policy and
instructions on how to process personnel actions, including appropriate
nature-of-action codes (NOAC's) for awards, within-grade increases, and
quality step increases, are in THE GUIDE TO PROCESSING PERSONNEL
ACTIONS. Finally, policy and instructions on the transfer of
performance records are addressed in the regulations at 5 CFR part 293
and, along with records documentation requirements for the Official
Personnel Folder (OPF), in THE GUIDE TO PERSONNEL RECORDKEEPING.
The new regulations in part 451 remove the specific requirement to
prepare an SF-50 for a time-off award. This is consistent with OPM's
intent to review the data collection and reporting and documentation
requirements for appraisal and awards in the coming months with the
objective of simplifying requirements to the extent possible, given
OPM's responsibilities for maintaining Governmentwide data in these
areas. In the meantime, agencies are reminded that they should follow
the reporting and documentation requirements specified in the relevant
OPM Operating Manuals, which at this point still require SF-50's for
all cash and time-off awards. Accordingly, the regulations are amended
to clarify that transfer, documentation, and reporting of records must
be done in compliance with these OPM Operating Manuals. Further,
language is added to indicate where they can be obtained. (See
Secs. 430.209(b) and (e); Secs. 451.106(e), (f), and (g); and
Sec. 531.507(b).)
VIII. Miscellaneous, Technical, and Editorial Changes
OPM is incorporating two structural changes in these final
regulations. OPM is replacing text describing the summary levels
available for program use with a table of permissible patterns of
summary levels and explanatory text. In addition to providing a clearer
presentation of what combinations of summary levels may be used, this
table establishes a convenient pattern label (A through H) for possible
reference in future data reporting instructions in the OPM Operating
Manual, FEDERAL WORKFORCE REPORTING SYSTEMS. A conforming change
requires agencies to specify in their systems which patterns, not
levels, programs are permitted to adopt. (See Sec. 430.204(b)(3)(iv)
and Secs. 430.208(d)(1) and (2).)
OPM is revising the definitions of appraisal period and rating of
record to accommodate their establishment under programs in accordance
with an agency system. (See Sec. 430.203 (appraisal period, rating of
record).)
One commenter found it confusing that the definition of performance
rating makes no mention of deriving a summary level. OPM had intended
that silence on the derivation of a summary level would be taken to
imply consent. To make our intent clearer, however, OPM is revising the
definition of performance rating to specify explicitly that assigning a
summary level is permitted. A summary level is required only for a
rating of record. (See Sec. 430.203 (performance rating).)
The definition of performance rating is being revised to include
the new flexibility to use additional performance elements. (See
Sec. 430.203 (Performance standard).)
The provision requiring an appraisal program to establish a minimum
period is being revised so that the minimum period applies to
performance ratings only, rather than a more general performance
determination. This change accommodates a commenter's suggestion to
ensure that agencies retain the flexibility to make a determination
about performance at any time, as permitted, for example, in an
unacceptable performance determination. (See Sec. 430.207(a).)
The provision prohibiting the assignment of a Level 1
(``Unacceptable'') summary if all critical elements are rated ``Fully
Successful'' (or equivalent) or better is being corrected to align with
statute, which links unacceptable performance overall with an
``Unacceptable'' (not just ``less than `Fully Successful' '') appraisal
on one or more critical elements. (See Sec. 430.208(b)(1).)
One commenter asserted that OPM must, but does not, allow itself to
disapprove an appraisal system at Sec. 430.210. OPM does not
contemplate such disapproval because an agency must have an approved
appraisal system under which it can manage performance, take
performance-based actions under 5 CFR part 432 or 752, and make other
personnel decisions. In this respect, an appraisal system is unlike an
award, which OPM may disapprove in some cases. This does not mean that
OPM cannot withhold approval of a proposed appraisal system until it is
made to conform to regulatory requirements; it only means that
ultimately an appraisal system must be approved. Of course, OPM would
work with the agency to ensure that such approval could be given.
Accordingly, OPM is not adopting the suggestion.
The provisions cross-referencing current regulation at Sec. 534.403
are being revised to clarify that Senior Executive
[[Page 43942]]
Service (SES) performance awards are authorized by 5 U.S.C. 5384, not
subchapter I of chapter 45, United States Code. Awards to SES members
for goals, objectives, and accomplishments attained through sustained
superior performance of regular job duties and responsibilities are
properly made under 5 U.S.C. 5384. (See Secs. 451.101(d) and
451.104(a)(3).)
One commenter suggested that the reference to ``productivity
gainshares'' be removed from the definition of award proposed at
Sec. 451.102. OPM is adopting this suggestion and is including
``productivity gain'' among the contributions that can form the basis
for granting an award. (See Sec. 451.102 (award) and
Sec. 451.104(a)(1).)
One commenter asked whether time-off and honorary awards should be
excluded from tax withholding. OPM does not have the authority to
determine the applicability of tax withholding or any other tax rules.
The provision specifying that awards are subject to tax withholding has
always been intended to serve as a reminder to agencies of their
obligations to the Internal Revenue Service and other tax collecting
authorities. Accordingly, it is being broadened to reflect the fact
that non-cash awards may be considered supplemental wages and subject
to applicable tax rules (See Sec. 451.104(c).)
One commenter suggested that the awards regulations be amended to
permit giving awards to private citizens and former Federal employees.
OPM addressed a similar comment in the final regulations on incentive
awards, pay, and leave published on June 27, 1995, at 60 FR 33097-
33098. In the supplementary information published with those
regulations, OPM explained that awards authorized by chapter 45 of
title 5, United States Code, may be granted only to Federal employees
or former Federal employees for contributions made while in the Federal
service. To accord with current regulation (as amended June 27, 1995)
and statutory intent, OPM is extending the provision permitting
agencies to grant awards to the legal heirs or estates of deceased
employees to include former employees, but not private citizens. (See
Sec. 451.104(e).)
To protect the integrity of quality step increases (QSI's), OPM is
adding a provision that requires an employee covered by an appraisal
program not using a Level 5 (``Outstanding, or equivalent) summary to
receive the highest rating of record that the program does use as well
as to meet whatever eligibility criteria the agency establishes before
the employee can receive a QSI. QSI's are intended to recognize or
provide incentives for sustained, extraordinary performance. Granting
one to an employee who has not demonstrated both by receiving the
highest rating of record that can be achieved would be inconsistent
with that intent. (See Sec. 531.504(b).)
OPM is amending Sec. 531.507 to eliminate the requirement that
agencies establish plans for granting quality step increases. Executive
Order 11721 (Providing for Federal Pay Administration, May 23, 1973),
as amended, which required that OPM establish such an agency
responsibility, has been revoked. Accordingly, OPM may now deregulate
further in this area and will no longer require these plans. Of course,
agencies may continue to establish such plans. Additional references to
Executive Order 11721 are also being removed. (See Sec. 531.404(a),
Sec. 531.501, and Sec. 531.507 (paragraph (a) as proposed, removed).)
OPM is not revising, as was proposed, the authority citation for
part 531 and two of the provisions establishing principal authorities
for regulating within-grade increases. The authority citation and the
provision at Sec. 531.401(c) need not be revised because of final
regulations on incentive awards, pay, and leave published on June 27,
1995, at 60 FR 33097-33098. Those regulations corrected references in
the authority citation and revised Sec. 531.401(c) to replace
references to 5 U.S.C. 5335 and E.O. 11721 (revoked) with a general
reference to 5 U.S.C. 5338. The provision at Sec. 531.401(d) need not
be revised because the title of Public Law 103-89 is already identified
properly. Accordingly, the authority citation as proposed is being
revised to match current regulation (as amended June 27, 1995), and its
instruction line revised to indicate no change. Also, the entire
instruction to revise paragraphs (c) and (d) in Sec. 531.401 is being
removed. (See part 531 (authority citation) and Sec. 531.401
(amendments to paragraphs (c) and (d) as proposed, withdrawn).)
The undesignated provision at the end of Sec. 531.409(d) is being
designated, which requires redesignation of the rest of
Sec. 531.409(d). (See Secs. 531.409 (d)(1) through (d)(2).)
Finally, OPM received several comments suggesting minor editorial
changes to improve understanding and readability of regulatory text.
OPM is adopting many of them and making conforming changes. Also, minor
editorial changes are being made to correct typographical errors or to
clarify text: (See Sec. 430.102(b)(4); Sec. 430.201(b);
Sec. 430.202(c); Secs. 430.204 (b) and (b)(3) through (b)(5);
Sec. 430.205(b); Sec. 430.206(b)(6); Sec. 430.207(d); Sec. 430.208(b);
part 451 (authority citation); Secs. 451.101 (a) and (c); Sec. 451.102
(award program); Sec. 451.104(b); Secs. 451.105 (a) and (b),
Secs. 451.106 (b) and (h); Secs. 451.107 (a) and (b); Sec. 451.201(b);
Sec. 531.402(a); Sec. 531.403 (acceptable level of competence,
equivalent increase) Sec. 531.409(d)(2); and Secs. 531.507 (a) and
(b).)
IX. Requests for Guidance
Fourteen commenters requested that OPM provide additional guidance
on a variety of topics, including:
how to proceed from a centralized to a decentralized
approach to systems and programs;
model appraisal and award programs and information about
agency experience;
examples of what the phrase ``or otherwise recorded''
might cover and how agencies can appropriately move to a paperless
format;
examples of Governmentwide regulations with compliance
implications for designing an award program; and
examples of criteria and procedures that could be used to
identify ``sustained performance of high quality'' when determining
eligibility for quality step increases under appraisal programs that do
not use a Level 5 summary.
OPM will issue additional guidance in various formats on all of these
issues. In particular, agency personnel directors will receive specific
guidance for submitting agency system descriptions. OPM will also
provide program designers with examples of the wide variety of programs
that can be designed under a single, flexible agency appraisal system.
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.
[[Page 43943]]
5 CFR Part 531
Government employees, Law enforcement officers, Wages.
U.S. Office of Personnel Management.
James B. King,
Director.
Accordingly, OPM is amending 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 the
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 in 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, team, and organizational
performance;
(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.
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 August
23, 1995 shall constitute an approved performance appraisal system
under the regulations in this subpart until such time changes to the
system are approved. No provision of the regulations in this subpart
shall be applied in such a way as to affect any administrative
proceeding related to any action taken under regulations in this
chapter pending on August 23, 1995.
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). The regulations in this subpart exclude excepted
service positions for which employment is not reasonably expected to
exceed the minimum period established 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:
Additional performance element means a dimension or aspect of
individual, team, or organizational performance that is not a critical
or non-critical element. Such elements are not used in assigning a
summary level but, like critical and non-critical elements, are useful
for purposes such as communicating performance expectations and serving
as the basis for granting awards. Such elements may include, but are
not limited to, objectives, goals, program plans, work plans, and other
means of expressing expected performance.
Appraisal means the process under which performance is reviewed and
evaluated.
Appraisal period means the established period of time for which
performance will be reviewed and a rating of record will be prepared.
Appraisal program means the specific procedures and requirements
established under the policies and parameters of an agency appraisal
system.
Appraisal system means a framework of policies and parameters
established by an agency as defined at 5 U.S.C. 4301(1) for the
administration of performance appraisal programs under subchapter I of
chapter 43 of title 5, United States Code, and this subpart.
Critical element means a work assignment or responsibility of such
importance that unacceptable performance on the element would result in
a determination that an employee's overall performance is unacceptable.
Non-critical element means a dimension or aspect of individual,
team, or organizational performance, exclusive of a critical element,
that is used in assigning a summary level. Such elements may include,
but are not limited to, objectives, goals, program plans, work plans,
and other means of expressing expected performance.
Performance means accomplishment of work assignments or
responsibilities.
Performance appraisal system: See Appraisal system.
Performance plan means all of the written, or otherwise recorded,
[[Page 43944]]
performance elements that set forth expected performance. A plan must
include all critical and non-critical elements and their performance
standards.
Performance rating means the written, or otherwise recorded,
appraisal of performance compared to the performance standard(s) for
each critical and non-critical element on which there has been an
opportunity to perform for the minimum period. A performance rating may
include the assignment of a summary level (as specified in
Sec. 430.208(d)).
Performance standard means the management-approved expression of
the performance threshold(s), requirement(s), or expectation(s) that
must be met to be appraised at a particular level of performance. A
performance standard may include, but is not limited to, quality,
quantity, timeliness, and manner of performance.
Progress review means communicating with the employee about
performance compared to the performance standards of critical and non-
critical elements.
Rating of record means the performance rating prepared at the end
of an appraisal period for performance over the entire period and the
assignment of a summary 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) An agency appraisal system shall establish agencywide policies
and parameters for the application and operation of performance
appraisal within the agency for the employees covered by the system. At
a minimum, a agency system shall--
(1) Provide for--
(i) Establishing employee performance plans, including, but not
limited to, critical elements and performance standards;
(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) Specify the flexibilities an agency program established under
the system has for setting--
(i) The length of the appraisal period (as specified in
Sec. 430.206(a));
(ii) The length of the minimum period (as specified in
Sec. 430.207(a));
(iii) The number(s) of performance levels at which critical and
non-critical elements may be appraised (as specified in
Sec. 430.206(b)(7) (i)(A) and (ii)(A)); and
(iv) The pattern of summary levels that may be assigned in a rating
of record (as specified in Sec. 420.208(d));
(4) Include, where applicable, criteria and procedures for
establishing separate appraisal programs under an appraisal system; and
(5) Require that an appraisal program shall conform to statute, the
regulations of this chapter, and the requirements established by the
appraisal system.
(c) Agencies are encouraged to involve employees in developing and
implementing their system(s). When agencies involve employees, the
method of involvement shall be in accordance with the law.
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 applicable agency appraisal system. At a minimum, each
appraisal program shall specify the employees covered by the program
and include the 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, and for other special circumstances as established by the
agency.
(c) An agency may permit the development of separate appraisal
programs under an appraisal system.
(d) Agencies are encouraged to involve employees in developing and
implementing their program(s). When agencies involve employees, the
method of involvement shall be in accordance with law.
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 all elements which are used
in deriving and assigning a summary level, including--
(i) At least one critical element that addresses individual
performance; and
(ii) Any non-critical element(s).
(5) Each performance plan may include one or more additional
performance elements, which--
(i) Are not used in deriving and assigning a summary level, and
(ii) Are used to support performance management processes as
described at Sec. 430.102(b).
(6) An appraisal program shall establish how many and which
performance levels may be used to appraise critical and non-critical
elements.
(7) Elements and standards shall be established as follows--
(i) For a critical element--
(A) At least two levels for appraisal shall be used with one level
being ``Fully Successful'' or its equivalent and another level being
``Unacceptable,'' and
(B) A performance standard shall be established at the ``Fully
Successful'' level and may be established at other levels.
(ii) For non-critical elements, when established,--
(A) At least two levels for appraisal shall be used, and
(B) A performance standard(s) shall be established at whatever
level(s) is appropriate.
(iii) The absence of an established performance standard at a level
specified in the program shall not preclude a determination that
performance is at that level.
[[Page 43945]]
Sec. 430.207 Monitoring performance.
(a) Minimum period. An appraisal program shall establish a minimum
period of performance that must be completed before a performance
rating may be prepared.
(b) Ongoing appraisal. An appraisal program shall include methods
for appraising each critical and non-critical element during the
appraisal period. Performance on each critical and non-critical element
shall be appraised against its performance standard(s). Ongoing
appraisal methods shall include, but not be limited to, conducting one
or more progress reviews during each appraisal period.
(c) Marginal performance. Appraisal programs should provide
assistance whenever performance is determined to be below ``Fully
Successful'' or equivalent but above ``Unacceptable.''
(d) Unacceptable performance. An appraisal program shall provide
for--
(1) Assisting employees in improving unacceptable performance at
any time during the appraisal period that performance is determined to
be unacceptable in one or more critical elements; 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 and assigning a summary level as
specified in paragraph (d) of this section based on appraisal of
performance on critical elements and, as applicable, non-critical
elements.
(1) A Level 1 summary (``Unacceptable'') shall be assigned if and
only if performance on one or more critical elements is appraised as
``Unacceptable.''
(2) Consideration of non-critical elements shall not result in
assigning a Level 1 summary (`` Unacceptable'').
(c) The method for deriving and assigning a summary level may not
limit or require the use of particular summary levels (i.e., establish
a forced distribution of summary levels). However, methods used to make
distinctions among employees or groups of employees such as comparing,
categorizing, and ranking employees or groups on the basis of their
performance may be used for purposes other than assigning a summary
level including, but not limited to, award determinations and promotion
decisions.
(d) Summary levels. (1) An appraisal program shall use one of the
following patterns of summary levels:
------------------------------------------------------------------------
Summary level
Pattern -------------------------------------------------
1 2 3 4 5
------------------------------------------------------------------------
A..................... X ........ X ........ ........
B..................... X ........ X ........ X
C..................... X ........ X X ........
D..................... X X X ........ ........
E..................... X ........ X X X
F..................... X X X ........ X
G..................... X X X X ........
H..................... X X X X X
------------------------------------------------------------------------
(2) Summary levels shall comply with the following requirements:
(i) Level 1 through Level 5 are ordered categories, with Level 1 as
the lowest and Level 5 as the highest;
(ii) Level 1 is ``Unacceptable'';
(iii) Level 3 is ``Fully Successful'' or equivalent; and
(iv) Level 5 is ``Outstanding'' or equivalent.
(3) The term ``Outstanding'' shall be used only to describe a Level
5 summary.
(4) Summary levels (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 ratings of record, and any
subsequent performance ratings, when an employee transfers to another
agency or is assigned to another organization within the agency in
compliance with part 293 of this chapter and instructions in the OPM
Operating Manual, THE GUIDE TO PERSONNEL RECORDKEEPING, for sale by the
U.S. Government Printing Office, Superintendent of Documents;
(c) Communicate with supervisors and employees (e.g., through
formal training) about relevant parts of its performance appraisal
system(s) and program(s);
(d) Evaluate the performance appraisal system(s) and performance
appraisal program(s) in operation in the agency;
(e) Report ratings of record data to the Central Personnel Data
File in compliance with instructions in the OPM Operating Manual,
FEDERAL WORKFORCE REPORTING SYSTEMS, for sale by the U.S. Government
Printing Office, Superintendent of Documents;
(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
[[Page 43946]]
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. In Sec. 430.303, the last sentence of the definition of
Performance Management Plan is revised to read as follows:
Sec. 430.303 Definitions.
* * * * *
Performance Management Plan * * * The Performance Management Plan,
which includes the SES performance appraisal plan, must be submitted to
OPM for review and approval as required in Sec. 430.310 of this
subpart.
* * * * *
5. Section 430.310 is revised to read as follows:
Sec. 430.310 SES Performance appraisal systems.
Agencies must submit proposed SES performance appraisal plans to
OPM for approval as part of Performance Management Plans in accordance
with provisions of this subpart.
6. 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
7. The authority citation for part 432 continues to read as
follows:
Authority: 5 U.S.C. 4303, 4305.
8. 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 an employee's overall performance is
unacceptable.
* * * * *
PART 451--AWARDS
9. The title of part 451 is revised to read as follows:
PART 451--AWARDS
10. The authority citation for part 451 is revised to read as
follows:
Authority: 5 U.S.C. 4302, 4501-4509; E.O. 11438, 12828.
11. 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 Code, provides for recognizing and rewarding employees
whose performance so warrants. The regulations in this subpart, in
combination with chapters 43 and 45 of title 5, 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 title 5, United States Code,
except as provided in Secs. 451.105 and 451.201(b).
(d) For the regulatory requirements for granting performance awards
to Senior Executive Service (SES) employees under 5 U.S.C. 5384, 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 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 subchapter I of chapter 45
of title 5, United States Code, and this subpart.
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 involve employees in developing such
programs. When agencies involve employees, the method of involvement
shall be in accordance with law.
(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. 430.20 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, productivity
gain, 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
performance 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 payment and is
not basic pay for any purpose.
(c) An award is subject to applicable tax rules, such as
withholding.
[[Page 43947]]
(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 a separated employee or the legal
heir(s) or estate of a deceased employee.
(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.
Sec. 451.105 Award restrictions.
(a) In accordance with 5 U.S.C. 4508, agencies shall not grant
awards under this subpart during a Presidential election period to
employees who are--
(1) In a Senior Executive Service position and not a career
appointee as defined under 5 U.S.C. 3132(a)(4); or
(2) In an excepted service position of a confidential or policy-
determining character (schedule C).
(b) In accordance with 5 U.S.C. 4509, 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 more than $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 (e.g., through formal training) about the relevant parts of
their award program(s).
(d) Agencies shall evaluate their award program(s).
(e) Agencies shall document all cash and time off awards in
compliance with instructions in the OPM Operating Manual, THE GUIDE TO
PROCESSING PERSONNEL ACTIONS, for sale by the U.S. Government Printing
Office, Superintendent of Documents.
(f) Agencies shall file award documents in the Official Personnel
Folder in compliance with instructions in the OPM Operating Manual, THE
GUIDE TO PERSONNEL RECORDKEEPING, for sale by the U.S. Government
Printing Office, Superintendent of Documents.
(g) Agencies shall report award data to the Central Personnel Data
File in Compliance with instructions in the OPM Operating Manual,
FEDERAL WORKFORCE REPORTING SYSTEMS, for sale by the U.S. Government
Printing Office, Superintendent of Documents.
(h) Agencies shall maintain and submit to OPM such records as OPM
may require.
(i) 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.
(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 more than $10,000 to an
individual employee.
(b) When a recommended award would grant more than $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).
12. 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) of this section are subject
to the restrictions as specified in Sec. 451.105.
* * * * *
13. Subpart C, consisting of Secs. 451.301 through 451.307, is
removed.
PART 531--PAY UNDER THE GENERAL SCHEDULE
14. The authority citation for part 531 continues 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, 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
67453, 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, 3 CFR, 1993 Comp., p. 682.
15. 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 less than the
maximum rate of their grades.
* * * * *
16. 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 the next higher rate within the grade
(as defined in this section) of his or her position, subject to the
requirements of Sec. 531.404 of this subpart, as determined by the head
of the agency.
* * * * *
[[Page 43948]]
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 the next higher rate within the grade (as defined
in this section).
* * * * *
17. 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. 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).
* * * * *
18. Section 531.408 is removed and reserved.
Sec. 531.408 [Reserved].
19. In Sec. 531.409, paragraphs (b) and (d) are 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.
* * * * *
(d) Waiver of requirement for determination. (1) 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:
(i) Because of absences that are creditable service in the
computation of a waiting period or periods under Sec. 531.406 of this
subpart;
(ii) Because of paid leave;
(iii) Because the employee received service credit under the back
pay provisions of subpart H of part 550 of this chapter;
(iv) Because of details to another agency or employer for which no
rating has been prepared;
(v) 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 under chapter 71 of
title 5, United States Code); or
(vi) Because of long-term training.
(2) When an acceptable level of competence determination has been
waived and a within-grade increase granted under paragraph (d)(1) of
this section, 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.
* * * * *
20. 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.
21. 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.
22. 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, when covered by a performance appraisal
program that does not use a Level 5 summary--
(1) Receives a rating of record at the highest summary level used
by the program; and
(2) 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.
23. 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.
24. Section 531.507 is revised to read as follows:
Sec. 531.507 Agency responsibilities.
(a) Agencies shall maintain and submit to OPM such records as OPM
may require.
(b) Agencies shall report quality step increases to the Central
Personnel Data File in compliance with instructions in the OPM
Operating Manual, FEDERAL WORKFORCE REPORTING SYSTEMS, for sale by the
U.S. Government Printing Office, Superintendent of Documents.
25. 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. 95-20745 Filed 8-22-95; 8:45 am]
BILLING CODE 6325-01-M
