[Congressional Bills 104th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3841 Reported in House (RH)]





                                                 Union Calendar No. 455

104th CONGRESS

  2d Session

                               H. R. 3841

                          [Report No. 104-831]

_______________________________________________________________________

                                 A BILL

  To amend the civil service laws of the United States, and for other 
                               purposes.

_______________________________________________________________________

                           September 24, 1996

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed





                                                 Union Calendar No. 455
104th CONGRESS
  2d Session
                                H. R. 3841

                          [Report No. 104-831]

  To amend the civil service laws of the United States, and for other 
                               purposes.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             July 17, 1996

  Mr. Mica (for himself, Mr. Moran, and Mrs. Morella) introduced the 
   following bill; which was referred to the Committee on Government 
                          Reform and Oversight

                           September 24, 1996

                     Additional sponsor: Mr. Davis

                           September 24, 1996

  Reported with an amendment, committed to the Committee of the Whole 
       House on the State of the Union, and ordered to be printed
 [Strike out all after the enacting clause and insert the part printed 
                               in italic]
 [For text of introduced bill, see copy of bill as introduced on July 
                               17, 1996]

_______________________________________________________________________

                                 A BILL


 
  To amend the civil service laws of the United States, and for other 
                               purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This Act may be cited as the ``Omnibus Civil 
Service Reform Act of 1996''.
    (b) Table of Contents.--The table of contents for this Act is as 
follows:

Sec. 1. Short title; table of contents.

                    TITLE I--DEMONSTRATION PROJECTS

Sec. 101. Demonstration projects.

              TITLE II--PERFORMANCE MANAGEMENT ENHANCEMENT

Sec. 201. Increased weight given to performance for order-of-retention 
                            purposes in a reduction in force.
Sec. 202. No appeal of denial of periodic step-increases.
Sec. 203. Performance appraisals.
Sec. 204. Amendments to incentive awards authority.
Sec. 205. Due process rights of managers under negotiated grievance 
                            procedures.
Sec. 206. Collection and reporting of training information.

    TITLE III--ENHANCEMENT OF THRIFT SAVINGS PLAN AND CERTAIN OTHER 
                                BENEFITS

  Subtitle A--Additional Investment Funds for the Thrift Savings Plan

Sec. 301. Short title.
Sec. 302. Additional investment funds for the Thrift Savings Plan.
Sec. 303. Acknowledgement of investment risk.
Sec. 304. Effective date.

              Subtitle B--Thrift Savings Account Liquidity

Sec. 311. Short title.
Sec. 312. Notice to spouses for in-service withdrawals; de minimus 
                            accounts; Civil Service Retirement System 
                            participants.
Sec. 313. In-service withdrawals; withdrawal elections, Federal 
                            Employees' Retirement System participants.
Sec. 314. Survivor annuities for former spouses; notice to Federal 
                            Employees' Retirement System spouses for 
                            in-service withdrawals.
Sec. 315. De minimus accounts relating to the judiciary.
Sec. 316. Definition of basic pay.
Sec. 317. Eligible rollover distributions.
Sec. 318. Effective date.

    Subtitle C--Other Provisions Relating to the Thrift Savings Plan

Sec. 321. Percentage limitations on contributions.
Sec. 322. Loans under the Thrift Savings Plan for furloughed employees.
Sec. 323. Immediate participation in the Thrift Savings Plan.

Subtitle D--Resumption of Certain Survivor Annuities That Terminated by 
                           Reason of Marriage

Sec. 331. Resumption of certain survivor annuities that terminated by 
                            reason of marriage.

                  Subtitle E--Life Insurance Benefits

Sec. 341. Domestic relations orders.
Sec. 342. Exception from provisions requiring reduction in additional 
                            optional life insurance.

                  TITLE IV--REORGANIZATION FLEXIBILITY

Sec. 401. Voluntary reductions in force.
Sec. 402. Nonreimbursable details to Federal agencies before a 
                            reduction in force.

                    TITLE V--SOFT-LANDING PROVISIONS

Sec. 501. Temporary continuation of Federal employees' life insurance.
Sec. 502. Continued eligibility for health insurance.
Sec. 503. Priority placement programs for Federal employees affected by 
                            a reduction in force.
Sec. 504. Job placement and counseling services.
Sec. 505. Education and retraining incentives.

                        TITLE VI--MISCELLANEOUS

Sec. 601. Reimbursements relating to professional liability insurance.
Sec. 602. Employment rights following conversion to contract.
Sec. 603. Debarment of health care providers found to have engaged in 
                            fraudulent practices.
Sec. 604. Conversion of certain excepted service positions in the 
                            United States Fire Administration to 
                            competitive service positions.
Sec. 605. Eligibility for certain survivor annuity benefits.
Sec. 606. Amendment to Public Law 104-134.
Sec. 607. Miscellaneous amendments relating to the health benefits 
                            program for Federal employees.
Sec. 608. Pay for certain positions formerly classified at GS-18.
Sec. 609. Repeal of section 1307 of title 5 of the United States Code.
Sec. 610. Mandatory internal alternative dispute resolution procedures.

                    TITLE I--DEMONSTRATION PROJECTS

SEC. 101. DEMONSTRATION PROJECTS.

    (a) Definitions.--Paragraph (1) of section 4701(a) of title 5, 
United States Code, is amended by striking subparagraph (A) and by 
redesignating subparagraphs (B) and (C) as subparagraphs (A) and (B), 
respectively.
    (b) Pre-Implementation Procedures.--Subsection (b) of section 4703 
of title 5, United States Code, is amended to read as follows:
    ``(b) Before an agency or the Office may conduct or enter into any 
agreement or contract to conduct a demonstration project, the Office--
            ``(1) shall develop or approve a plan for such project 
        which identifies--
                    ``(A) the purposes of the project;
                    ``(B) the methodology;
                    ``(C) the duration; and
                    ``(D) the methodology and criteria for evaluation;
            ``(2) shall publish the plan in the Federal Register;
            ``(3) may solicit comments from the public and interested 
        parties in such manner as the Office considers appropriate;
            ``(4) shall obtain approval from each agency involved of 
        the final version of the plan; and
            ``(5) shall provide notification of the proposed project, 
        at least 30 days in advance of the date any project proposed 
        under this section is to take effect--
                    ``(A) to employees who are likely to be affected by 
                the project; and
                    ``(B) to each House of the Congress.''.
    (c) Nonwaivable Provisions.--Section 4703(c) of title 5, United 
States Code, is amended--
            (1) by striking paragraph (1) and inserting the following:
            ``(1) any provision of subchapter V of chapter 63 or 
        subpart G of part III of this title;''; and
            (2) by striking paragraph (3) and inserting the following:
            ``(3) any provision of chapter 15 or subchapter II or III 
        of chapter 73 of this title;''.
    (d) Limitations.--Subsection (d) of section 4703 of title 5, United 
States Code, is amended to read as follows:
    ``(d)(1) Each demonstration project shall terminate before the end 
of the 5-year period beginning on the date on which the project takes 
effect, except that the project may continue for a maximum of 2 years 
beyond the date to the extent necessary to validate the results of the 
project.
    ``(2)(A) Not more than 15 active demonstration projects may be in 
effect at any time, and of the projects in effect at any time, not more 
than 5 may involve 5,000 or more individuals each.
    ``(B) Individuals in a control group necessary to validate the 
results of a project shall not, for purposes of any determination under 
subparagraph (A), be considered to be involved in such project.''.
    (e) Evaluations.--Subsection (h) of section 4703 of title 5, United 
States Code, is amended by adding at the end the following: ``The 
Office may, with respect to a demonstration project conducted by 
another agency, require that the preceding sentence be carried out by 
such other agency.''.
    (f) Provisions for Termination of Project or Making It Permanent.--
Section 4703 of title 5, United States Code, is amended--
            (1) in subsection (i) by inserting ``by the Office'' after 
        ``undertaken''; and
            (2) by adding at the end the following:
    ``(j)(1) If the Office determines that termination of a 
demonstration project (whether under subsection (e) or otherwise) would 
result in the inequitable treatment of employees who participated in 
the project, the Office shall take such corrective action as is within 
its authority. If the Office determines that legislation is necessary 
to correct an inequity, it shall submit an appropriate legislative 
proposal to both Houses of Congress.
    ``(2) If the Office determines that a demonstration project should 
be made permanent, it shall submit an appropriate legislative proposal 
to both Houses of Congress.''.

              TITLE II--PERFORMANCE MANAGEMENT ENHANCEMENT

SEC. 201. INCREASED WEIGHT GIVEN TO PERFORMANCE FOR ORDER-OF-RETENTION 
              PURPOSES IN A REDUCTION IN FORCE.

    (a) In General.--Section 3502 of title 5, United States Code, is 
amended--
            (1) in subsection (a)(4) by striking ``ratings.'' and 
        inserting ``ratings, in conformance with the requirements of 
        subsection (g).''; and
            (2) by adding at the end the following:
    ``(g)(1) The regulations prescribed to carry out subsection (a)(4) 
shall be the regulations in effect, as of January 1, 1996, under 
section 351.504 of title 5 of the Code of Federal Regulations, except 
as otherwise provided in this subsection.
    ``(2) For purposes of this subsection--
            ``(A) subsections (b)(4) and (e) of such section 351.504 
        shall be disregarded;
            ``(B) subsection (d) of such section 351.504 shall be 
        considered to read as follows:
    ```(d)(1) The additional service credit an employee receives for 
performance under this subpart shall be expressed in additional years 
of service and shall consist of the sum of the employee's 3 most recent 
(actual and/or assumed) annual performance ratings received during the 
4-year period prior to the date of issuance of reduction-in-force 
notices or the 4-year period prior to the agency-established cutoff 
date (as appropriate), computed in accordance with paragraph (2) or (3) 
(as appropriate).
    ```(2) Except as provided in paragraph (3), an employee shall 
receive--
            ```(A) 5 additional years of service for each performance 
        rating of fully successful (Level 3) or equivalent;
            ```(B) 7 additional years of service for each performance 
        rating of exceeds fully successful (Level 4) or equivalent; and
            ```(C) 10 additional years of service for each performance 
        rating of outstanding (Level 5) or equivalent.
    ```(3)(A) If the employing agency uses a rating system having only 
1 rating to denote performance which is fully successful or better, 
then an employee under such system shall receive 5 additional years of 
service for each such rating.
    ```(B) If the employing agency uses a rating system having only 2 
ratings to denote performance which is fully successful or better, then 
an employee under such system shall receive--
            ```(i) 5 additional years of service for each performance 
        rating at the lower of those 2 ratings; and
            ```(ii) 7 additional years of service for each performance 
        rating at the higher of those 2 ratings.
    ```(C) If the employing agency uses a rating system having more 
than 3 ratings to denote performance which is fully successful or 
better, then an employee under such system shall receive--
            ```(i) 5 additional years of service for each performance 
        rating at the lowest of those ratings;
            ```(ii) 7 additional years of service for each performance 
        rating at the next rating above the rating referred to in 
        clause (i); and
            ```(iii) 10 additional years of service for each 
        performance rating above the rating referred to in clause (ii).
    ```(D) For purposes of this paragraph, a rating shall not be 
considered to denote performance which is fully successful or better 
unless, in order to receive such rating, such performance must satisfy 
all requirements for a fully successful rating (Level 3) or equivalent, 
as established under part 430 of this chapter (as in effect as of 
January 1, 1996).'; and
            ``(C) subsection (c) of such section shall be considered to 
        read as follows:
    ```(c)(1) Service credit for employees who do not have 3 actual 
annual performance ratings of record received during the 4-year period 
prior to the date of issuance of reduction-in-force notices, or the 4-
year period prior to the agency-established cutoff date for ratings 
permitted in subsection (b)(2) of this section, shall be determined in 
accordance with paragraph (2).
    ```(2) An employee who has not received 1 or more of the 3 annual 
performance ratings of record required under this section shall--
            ```(A) receive credit for performance on the basis of the 
        rating or ratings actually received (if any); and
            ```(B) for each performance rating not actually received, 
        be given credit for 5 additional years of service.'.''.
    (b) Equitable Treatment of Employees.--For purposes of determining 
the order of retention of employees in a reduction in force taking 
effect on or after October 1, 1999, the Office of Personnel Management 
shall prescribe such regulations as may be necessary to ensure that--
            (1) in the case of any agency having more than 1 
        performance evaluation system, employees subject to different 
        systems are treated equitably; and
            (2) with respect to employees in the same competitive area 
        who have been subject to different performance evaluation 
        systems with dissimilar summary levels, no such employee shall 
        suffer as a result of having been covered by more than 1 such 
        system.
    (c) Report.--Not later than 270 days after the date of the 
enactment of this Act, the General Accounting Office shall submit to 
the Committee on Government Reform and Oversight of the House of 
Representatives and the Committee on Governmental Affairs of the Senate 
a report analyzing and assessing the following:
            (1) Based on performance-ratings statistics in the 
        executive branch of the Government over the past 15 years, the 
        correlation (if any) between employees' ratings of record and 
        the following:
                    (A) Promotions.
                    (B) Awards.
                    (C) Bonuses.
                    (D) Quit rates.
                    (E) Removals.
                    (F) Disciplinary actions (other than removals).
                    (G) The filing of grievances, complaints, and 
                charges of unfair labor practices.
                    (H) Appeals of adverse actions.
            (2) The impact of performance ratings on retention during 
        reductions in force over the past 5 years.
            (3) Whether ``pass/fail'' performance systems are 
        compatible with the statutory requirement that efficiency or 
        performance ratings be given due effect during reductions in 
        force.
            (4) The respective numbers of Federal agencies, 
        organizational units, and Federal employees that are covered by 
        the different performance evaluation systems.
            (5) The potential impact of this section on employees in 
        different performance evaluation systems.
            (6) Whether there are significant differences in the 
        distribution of ratings among or within agencies and, if so, 
        the reasons therefor.
Based on the findings of the General Accounting Office, the report 
shall include recommendations to improve the effectiveness of Federal 
performance evaluation systems.
    (d) Effective Date.--The amendments made by this section shall 
apply with respect to reductions in force taking effect on or after 
October 1, 1999.

SEC. 202. NO APPEAL OF DENIAL OF PERIODIC STEP-INCREASES.

    (a) In General.--Section 5335(c) of title 5, United States Code, is 
amended--
            (1) by striking the second sentence;
            (2) in the third sentence by striking ``or appeal''; and
            (3) in the last sentence by striking ``and the entitlement 
        of the employee to appeal to the Board do not apply'' and 
        inserting ``does not apply''.
    (b) Performance Ratings.--Section 5335 of title 5, United States 
Code, as amended by subsection (a), is further amended--
            (1) in subsection (a)(B) by striking ``work of the employee 
        is of an acceptable level of competence'' and inserting 
        ``performance of the employee is at least fully successful'';
            (2) in subsection (c)--
                    (A) in the first sentence by striking ``work of an 
                employee is not of an acceptable level of competence,'' 
                and inserting ``performance of an employee is not at 
                least fully successful,''; and
                    (B) in the last sentence by striking ``acceptable 
                level of competence'' and inserting ``fully successful 
                work performance''; and
            (3) by adding at the end the following:
    ``(g) For purposes of this section, the term `fully successful' 
denotes work performance that satisfies the requirements of section 
351.504(d)(3)(D) of title 5 of the Code of Federal Regulations (as 
deemed to be amended by section 3502(g)(2)(B)).''.

SEC. 203. PERFORMANCE APPRAISALS.

    (a) In General.--Section 4302 of title 5, United States Code, is 
amended--
            (1) in subsection (b) by striking paragraphs (5) and (6) 
        and inserting the following:
            ``(5) assisting employees in improving unacceptable 
        performance, except in circumstances described in subsection 
        (c); and
            ``(6) reassigning, reducing in grade, removing, or taking 
        other appropriate action against employees whose performance is 
        unacceptable.''; and
            (2) by adding at the end the following:
    ``(c) Upon notification of unacceptable performance, an employee 
shall be afforded an opportunity to demonstrate acceptable performance 
before a reduction in grade or removal may be proposed under section 
4303 based on such performance, except that an employee so afforded 
such an opportunity shall not be afforded any further opportunity to 
demonstrate acceptable performance if the employee's performance again 
is determined to be at an unacceptable level.''.
    (b) Effective Date.--
            (1) In general.--Subject to paragraph (2), this section and 
        the amendments made by this section shall take effect 180 days 
        after the date of the enactment of this Act.
            (2) Exception.--The amendments made by this section shall 
        not apply in the case of any proposed action as to which the 
        employee receives advance written notice, in accordance with 
        section 4303(b)(1)(A) of title 5, United States Code, before 
        the effective date of this section.

SEC. 204. AMENDMENTS TO INCENTIVE AWARDS AUTHORITY.

    Chapter 45 of title 5, United States Code, is amended--
            (1) by amending section 4501 to read as follows:
``Sec. 4501. Definitions
    ``For the purpose of this subchapter--
            ``(1) the term `agency' means--
                    ``(A) an Executive agency;
                    ``(B) the Library of Congress;
                    ``(C) the Office of the Architect of the Capitol;
                    ``(D) the Botanic Garden;
                    ``(E) the Government Printing Office; and
                    ``(F) the United States Sentencing Commission;
        but does not include--
                    ``(i) the Tennessee Valley Authority; or
                    ``(ii) the Central Bank for Cooperatives;
            ``(2) the term `employee' means an employee as defined by 
        section 2105; and
            ``(3) the term `Government' means the Government of the 
        United States.'';
            (2) by amending section 4503 to read as follows:
``Sec. 4503. Agency awards
    ``(a) The head of an agency may pay a cash award to, and incur 
necessary expense for the honorary recognition of, an employee who--
            ``(1) by his suggestion, invention, superior 
        accomplishment, or other personal effort, contributes to the 
        efficiency, economy, or other improvement of Government 
        operations or achieves a significant reduction in paperwork; or
            ``(2) performs a special act or service in the public 
        interest in connection with or related to his official 
        employment.
    ``(b)(1) If the criteria under paragraph (1) or (2) of subsection 
(a) are met on the basis of the suggestion, invention, superior 
accomplishment, act, service, or other meritorious effort of a group of 
employees collectively, and if the circumstances so warrant (such as by 
reason of the infeasibility of determining the relative role or 
contribution assignable to each employee separately), authority under 
subsection (a) may be exercised--
            ``(A) based on the collective efforts of the group; and
            ``(B) with respect to each member of such group.
    ``(2) The amount awarded to each member of a group under this 
subsection--
            ``(A) shall be the same for all members of such group, 
        except that such amount may be prorated to reflect differences 
        in the period of time during which an individual was a member 
        of the group; and
            ``(B) may not exceed the maximum cash award allowable under 
        subsection (a) or (b) of section 4502, as applicable.''; and
            (3) in subsection (a)(1) of section 4505a by striking ``at 
        the fully successful level or higher'' and inserting ``higher 
        than the fully successful level''.

SEC. 205. DUE PROCESS RIGHTS OF MANAGERS UNDER NEGOTIATED GRIEVANCE 
              PROCEDURES.

    (a) In General.--Paragraph (2) of section 7121(b) of title 5, 
United States Code, is amended to read as follows:
    ``(2) The provisions of a negotiated grievance procedure providing 
for binding arbitration in accordance with paragraph (1)(C)(iii) shall, 
if or to the extent that an alleged prohibited personnel practice is 
involved, allow the arbitrator to order a stay of any personnel action 
in a manner similar to the manner described in section 1221(c) with 
respect to the Merit Systems Protection Board.''.
    (b) Effective Date.--The amendment made by subsection (a)--
            (1) shall take effect on the date of the enactment of this 
        Act; and
            (2) shall apply with respect to orders issued on or after 
        the date of the enactment of this Act, notwithstanding the 
        provisions of any collective bargaining agreement.

SEC. 206. COLLECTION AND REPORTING OF TRAINING INFORMATION.

    (a) Training Within Government.--The Office of Personnel Management 
shall collect information concerning training programs, plans, and 
methods utilized by agencies of the Government and submit a report to 
the Congress on this activity on an annual basis.
    (b) Training Outside of Government.--The Office of Personnel 
Management, to the extent it considers appropriate in the public 
interest, may collect information concerning training programs, plans, 
and methods utilized outside the Government. The Office, on request, 
may make such information available to an agency and to Congress.

    TITLE III--ENHANCEMENT OF THRIFT SAVINGS PLAN AND CERTAIN OTHER 
                                BENEFITS

  Subtitle A--Additional Investment Funds for the Thrift Savings Plan

SEC. 301. SHORT TITLE.

    This subtitle may be cited as the ``Thrift Savings Investment Funds 
Act of 1996''.

SEC. 302. ADDITIONAL INVESTMENT FUNDS FOR THE THRIFT SAVINGS PLAN.

    Section 8438 of title 5, United States Code, is amended--
            (1) in subsection (a)--
                    (A) by redesignating paragraphs (5) through (8) as 
                paragraphs (6) through (9), respectively;
                    (B) by inserting after paragraph (4) the following:
            ``(5) the term `International Stock Index Investment Fund' 
        means the International Stock Index Investment Fund established 
        under subsection (b)(1)(E);'';
                    (C) in paragraph (8) (as redesignated by 
                subparagraph (A) of this paragraph) by striking ``and'' 
                at the end;
                    (D) in paragraph (9) (as redesignated by 
                subparagraph (A) of this paragraph)--
                            (i) by striking ``paragraph (7)(D)'' each 
                        place it appears and inserting ``paragraph 
                        (8)(D)''; and
                            (ii) by striking the period and inserting a 
                        semicolon and ``and''; and
                    (E) by adding at the end the following:
            ``(10) the term `Small Capitalization Stock Index 
        Investment Fund' means the Small Capitalization Stock Index 
        Investment Fund established under subsection (b)(1)(D).''; and
            (2) in subsection (b)--
                    (A) in paragraph (1)--
                            (i) in subparagraph (B) by striking ``and'' 
                        at the end;
                            (ii) in subparagraph (C) by striking the 
                        period and inserting a semicolon; and
                            (iii) by adding at the end the following:
            ``(D) a Small Capitalization Stock Index Investment Fund as 
        provided in paragraph (3); and
            ``(E) an International Stock Index Investment Fund as 
        provided in paragraph (4).''; and
                    (B) by adding at the end the following:
    ``(3)(A) The Board shall select an index which is a commonly 
recognized index comprised of common stock the aggregate market value 
of which represents the United States equity markets excluding the 
common stocks included in the Common Stock Index Investment Fund.
    ``(B) The Small Capitalization Stock Index Investment Fund shall be 
invested in a portfolio designed to replicate the performance of the 
index in subparagraph (A). The portfolio shall be designed such that, 
to the extent practicable, the percentage of the Small Capitalization 
Stock Index Investment Fund that is invested in each stock is the same 
as the percentage determined by dividing the aggregate market value of 
all shares of that stock by the aggregate market value of all shares of 
all stocks included in such index.
    ``(4)(A) The Board shall select an index which is a commonly 
recognized index comprised of stock the aggregate market value of which 
is a reasonably complete representation of the international equity 
markets excluding the United States equity markets.
    ``(B) The International Stock Index Investment Fund shall be 
invested in a portfolio designed to replicate the performance of the 
index in subparagraph (A). The portfolio shall be designed such that, 
to the extent practicable, the percentage of the International Stock 
Index Investment Fund that is invested in each stock is the same as the 
percentage determined by dividing the aggregate market value of all 
shares of that stock by the aggregate market value of all shares of all 
stocks included in such index.''.

SEC. 303. ACKNOWLEDGEMENT OF INVESTMENT RISK.

    Section 8439(d) of title 5, United States Code, is amended by 
striking ``Each employee, Member, former employee, or former Member who 
elects to invest in the Common Stock Index Investment Fund or the Fixed 
Income Investment Fund described in paragraphs (1) and (3),'' and 
inserting ``Each employee, Member, former employee, or former Member 
who elects to invest in the Common Stock Index Investment Fund, the 
Fixed Income Investment Fund, the International Stock Index Investment 
Fund, or the Small Capitalization Stock Index Investment Fund, defined 
in paragraphs (1), (3), (5), and (10),''.

SEC. 304. EFFECTIVE DATE.

    This subtitle shall take effect on the date of enactment of this 
Act, and the Funds established under this subtitle shall be offered for 
investment at the earliest practicable election period (described in 
section 8432(b) of title 5, United States Code) as determined by the 
Executive Director in regulations.

              Subtitle B--Thrift Savings Account Liquidity

SEC. 311. SHORT TITLE.

    This subtitle may be cited as the ``Thrift Savings Plan Act of 
1996''.

SEC. 312. NOTICE TO SPOUSES FOR IN-SERVICE WITHDRAWALS; DE MINIMUS 
              ACCOUNTS; CIVIL SERVICE RETIREMENT SYSTEM PARTICIPANTS.

    Section 8351(b) of title 5, United States Code, is amended--
            (1) in paragraph (5)--
                    (A) in subparagraph (B)--
                            (i) by striking ``An election, change of 
                        election, or modification (relating to the 
                        commencement date of a deferred annuity)'' and 
                        inserting ``An election or change of 
                        election'';
                            (ii) by inserting ``or withdrawal'' after 
                        ``and a loan'';
                            (iii) by inserting ``and (h)'' after 
                        ``8433(g)'';
                            (iv) by striking ``the election, change of 
                        election, or modification'' and inserting ``the 
                        election or change of election''; and
                            (v) by inserting ``or withdrawal'' after 
                        ``for such loan''; and
                    (B) in subparagraph (D)--
                            (i) by inserting ``or withdrawals'' after 
                        ``of loans''; and
                            (ii) by inserting ``or (h)'' after 
                        ``8433(g)''; and
            (2) in paragraph (6)--
                    (A) by striking ``$3,500 or less'' and inserting 
                ``less than an amount that the Executive Director 
                prescribes by regulation''; and
                    (B) by striking ``unless the employee or Member 
                elects, at such time and otherwise in such manner as 
                the Executive Director prescribes, one of the options 
                available under subsection (b)''.

SEC. 313. IN-SERVICE WITHDRAWALS; WITHDRAWAL ELECTIONS, FEDERAL 
              EMPLOYEES' RETIREMENT SYSTEM PARTICIPANTS.

    (a) In General.--Section 8433 of title 5, United States Code, is 
amended--
            (1) by striking subsections (b) and (c) and inserting the 
        following:
    ``(b) Subject to section 8435 of this title, any employee or Member 
who separates from Government employment is entitled and may elect to 
withdraw from the Thrift Savings Fund the balance of the employee's or 
Member's account as--
            ``(1) an annuity;
            ``(2) a single payment;
            ``(3) 2 or more substantially equal payments to be made not 
        less frequently than annually; or
            ``(4) any combination of payments as provided under 
        paragraphs (1) through (3) as the Executive Director may 
        prescribe by regulation.
    ``(c)(1) In addition to the right provided under subsection (b) to 
withdraw the balance of the account, an employee or Member who 
separates from Government service and who has not made a withdrawal 
under subsection (h)(1)(A) may make one withdrawal of any amount as a 
single payment in accordance with subsection (b)(2) from the employee's 
or Member's account.
    ``(2) An employee or Member may request that the amount withdrawn 
from the Thrift Savings Fund in accordance with subsection (b)(2) be 
transferred to an eligible retirement plan.
    ``(3) The Executive Director shall make each transfer elected under 
paragraph (2) directly to an eligible retirement plan or plans (as 
defined in section 402(c)(8) of the Internal Revenue Code of 1986) 
identified by the employee, Member, former employee, or former Member 
for whom the transfer is made.
    ``(4) A transfer may not be made for an employee, Member, former 
employee, or former Member under paragraph (2) until the Executive 
Director receives from that individual the information required by the 
Executive Director specifically to identify the eligible retirement 
plan or plans to which the transfer is to be made.'';
            (2) in subsection (d)--
                    (A) in paragraph (1) by striking ``Subject to 
                paragraph (3)(A)'' and inserting ``Subject to paragraph 
                (3)'';
                    (B) by striking paragraph (2) and redesignating 
                paragraph (3) as paragraph (2); and
                    (C) in paragraph (2) (as redesignated by 
                subparagraph (B) of this paragraph)--
                            (i) in subparagraph (A) by striking 
                        ``(A)''; and
                            (ii) by striking subparagraph (B);
            (3) in subsection (f)(1)--
                    (A) by striking ``$3,500 or less'' and inserting 
                ``less than an amount that the Executive Director 
                prescribes by regulation''; and
                    (B) by striking ``unless the employee or Member 
                elects, at such time and otherwise in such manner as 
                the Executive Director prescribes, one of the options 
                available under subsection (b), or'' and inserting a 
                comma;
            (4) in subsection (f)(2)--
                    (A) by striking ``February 1'' and inserting 
                ``April 1'';
                    (B) in subparagraph (A)--
                            (i) by striking ``65'' and inserting 
                        ``70\1/2\''; and
                            (ii) by inserting ``or'' after the 
                        semicolon;
                    (C) by striking subparagraph (B); and
                    (D) by redesignating subparagraph (C) as 
                subparagraph (B);
            (5) in subsection (g)--
                    (A) in paragraph (1) by striking ``after December 
                31, 1987, and''; and
                    (B) by striking paragraph (2) and redesignating 
                paragraphs (3) through (5) as paragraphs (2) through 
                (4), respectively; and
            (6) by adding after subsection (g) the following:
    ``(h)(1) An employee or Member may apply, before separation, to the 
Board for permission to withdraw an amount from the employee's or 
Member's account based upon--
            ``(A) the employee or Member having attained age 59\1/2\; 
        or
            ``(B) financial hardship.
    ``(2) A withdrawal under paragraph (1)(A) shall be available to 
each eligible participant one time only.
    ``(3) A withdrawal under paragraph (1)(B) shall be available only 
for an amount not exceeding the value of that portion of such account 
which is attributable to contributions made by the employee or Member 
under section 8432(a) of this title.
    ``(4) Withdrawals under paragraph (1) shall be subject to such 
other conditions as the Executive Director may prescribe by regulation.
    ``(5) A withdrawal may not be made under this subsection unless the 
requirements of section 8435(e) of this title are satisfied.''.
    (b) Invalidity of Certain Prior Elections.--Any election made under 
section 8433(b)(2) of title 5, United States Code (as in effect before 
the effective date of this title), with respect to an annuity which has 
not commenced before the implementation date of this title as provided 
by regulation by the Executive Director in accordance with section 318, 
shall be invalid.

SEC. 314. SURVIVOR ANNUITIES FOR FORMER SPOUSES; NOTICE TO FEDERAL 
              EMPLOYEES' RETIREMENT SYSTEM SPOUSES FOR IN-SERVICE 
              WITHDRAWALS.

    Section 8435 of title 5, United States Code, is amended--
            (1) in subsection (a)(1)(A)--
                    (A) by striking ``may make an election under 
                subsection (b)(3) or (b)(4) of section 8433 of this 
                title or change an election previously made under 
                subsection (b)(1) or (b)(2) of such section'' and 
                inserting ``may withdraw all or part of a Thrift 
                Savings Fund account under subsection (b) (2), (3), or 
                (4) of section 8433 of this title or change a 
                withdrawal election''; and
                    (B) by adding at the end ``A married employee or 
                Member (or former employee or Member) may make a 
                withdrawal from a Thrift Savings Fund account under 
                subsection (c)(1) of section 8433 of this title only if 
                the employee or Member (or former employee or Member) 
                satisfies the requirements of subparagraph (B).'';
            (2) in subsection (c)--
                    (A) in paragraph (1)--
                            (i) by striking ``An election, change of 
                        election, or modification of the commencement 
                        date of a deferred annuity'' and inserting ``An 
                        election or change of election''; and
                            (ii) by striking ``modification, or 
                        transfer'' and inserting ``or transfer''; and
                    (B) in paragraph (2) in the matter following 
                subparagraph (B)(ii) by striking ``modification,'';
            (3) in subsection (e)--
                    (A) in paragraph (1)--
                            (i) in subparagraph (A)--
                                    (I) by inserting ``or withdrawal'' 
                                after ``A loan'';
                                    (II) by inserting ``and (h)'' after 
                                ``8433(g)''; and
                                    (III) by inserting ``or 
                                withdrawal'' after ``such loan'';
                            (ii) in subparagraph (B) by inserting ``or 
                        withdrawal'' after ``loan''; and
                            (iii) in subparagraph (C)--
                                    (I) by inserting ``or withdrawal'' 
                                after ``to a loan''; and
                                    (II) by inserting ``or withdrawal'' 
                                after ``for such loan''; and
                    (B) in paragraph (2)--
                            (i) by inserting ``or withdrawal'' after 
                        ``loan''; and
                            (ii) by inserting ``and (h)'' after 
                        ``8344(g)''; and
            (4) in subsection (g)--
                    (A) by inserting ``or withdrawals'' after 
                ``loans''; and
                    (B) by inserting ``and (h)'' after ``8433(g)''.

SEC. 315. DE MINIMUS ACCOUNTS RELATING TO THE JUDICIARY.

    (a) Justices and Judges.--Section 8440a(b)(7) of title 5, United 
States Code, is amended--
            (1) by striking ``$3,500 or less'' and inserting ``less 
        than an amount that the Executive Director prescribes by 
        regulation''; and
            (2) by striking ``unless the justice or judge elects, at 
        such time and otherwise in such manner as the Executive 
        Director prescribes, one of the options available under section 
        8433(b)''.
    (b) Bankruptcy Judges and Magistrates.--Section 8440b(b) of title 
5, United States Code, is amended--
            (1) in paragraph (7) in the first sentence by inserting 
        ``of the distribution'' after ``equal to the amount''; and
            (2) in paragraph (8)--
                    (A) by striking ``$3,500 or less'' and inserting 
                ``less than an amount that the Executive Director 
                prescribes by regulation''; and
                    (B) by striking ``unless the bankruptcy judge or 
                magistrate elects, at such time and otherwise in such 
                manner as the Executive Director prescribes, one of the 
                options available under subsection (b)''.
    (c) Federal Claims Judges.--Section 8440c(b) of title 5, United 
States Code, is amended--
            (1) in paragraph (7) in the first sentence by inserting 
        ``of the distribution'' after ``equal to the amount''; and
            (2) in paragraph (8)--
                    (A) by striking ``$3,500 or less'' and inserting 
                ``less than an amount that the Executive Director 
                prescribes by regulation''; and
                    (B) by striking ``unless the judge elects, at such 
                time and otherwise in such manner as the Executive 
                Director prescribes, one of the options available under 
                section 8433(b)''.

SEC. 316. DEFINITION OF BASIC PAY.

    (a) In General.--(1) Section 8401(4) of title 5, United States 
Code, is amended by striking ``except as provided in subchapter III of 
this chapter,''.
    (2) Section 8431 of title 5, United States Code, is repealed.
    (b) Technical and Conforming Amendments.--(1) The table of sections 
for chapter 84 of title 5, United States Code, is amended by repealing 
the item relating to section 8431.
    (2) Section 5545a(h)(2)(A) of title 5, United States Code, is 
amended by striking ``8431,''.
    (3) Section 616(f) of the Treasury, Postal Service, and General 
Government Appropriations Act, 1996 (Public Law 104-52; 109 Stat. 500; 
5 U.S.C. 5343 note) is amended by striking ``section 8431 of title 5, 
United States Code, and''.

SEC. 317. ELIGIBLE ROLLOVER DISTRIBUTIONS.

    Section 8432 of title 5, United States Code, is amended by adding 
at the end the following:
    ``(j)(1) For the purpose of this subsection--
            ``(A) the term `eligible rollover distribution' has the 
        meaning given such term by section 402(c)(4) of the Internal 
        Revenue Code of 1986; and
            ``(B) the term `qualified trust' has the meaning given such 
        term by section 402(c)(8) of the Internal Revenue Code of 1986.
    ``(2) An employee or Member may contribute to the Thrift Savings 
Fund an eligible rollover distribution from a qualified trust. A 
contribution made under this subsection shall be made in the form 
described in section 401(a)(31) of the Internal Revenue Code of 1986. 
In the case of an eligible rollover distribution, the maximum amount 
transferred to the Thrift Savings Fund shall not exceed the amount 
which would otherwise have been included in the employee's or Member's 
gross income for Federal income tax purposes.
    ``(3) The Executive Director shall prescribe regulations to carry 
out this subsection.''.

SEC. 318. EFFECTIVE DATE.

    This subtitle shall take effect on the date of the enactment of 
this Act, and withdrawals, loans, rollovers, and elections as provided 
under the amendments made by this subtitle shall be made at the 
earliest practicable date as determined by the Executive Director in 
regulations.

    Subtitle C--Other Provisions Relating to the Thrift Savings Plan

SEC. 321. PERCENTAGE LIMITATIONS ON CONTRIBUTIONS.

    (a) Amendments Relating to FERS.--
            (1) In general.--Subsection (a) of section 8432 of title 5, 
        United States Code, is amended by striking ``10 percent of''.
            (2) Justices and judges.--Subsection (b) of section 8440a 
        of title 5, United States Code, as amended by section 315(a), 
        is further amended--
                    (A) by striking paragraph (2) and by redesignating 
                paragraphs (3) through (7) as paragraphs (2) through 
                (6), respectively; and
                    (B) in paragraph (6) (as so redesignated by 
                subparagraph (A)) by striking ``paragraphs (4) and 
                (5)'' and inserting ``paragraphs (3) and (4)''.
            (3) Bankruptcy judges and magistrates.--Subsection (b) of 
        section 8440b of title 5, United States Code, as amended by 
        section 315(b), is further amended--
                    (A) by striking paragraph (2) and by redesignating 
                paragraphs (3) through (8) as paragraphs (2) through 
                (7), respectively;
                    (B) in paragraph (4) (as so redesignated by 
                subparagraph (A)) by striking ``paragraph (4)(A), (B), 
                or (C)'' and inserting ``paragraph (3)(A), (B), or 
                (C)''; and
                    (C) in paragraph (7) (as so redesignated by 
                subparagraph (A)) by striking ``Notwithstanding 
                paragraph (4),'' and inserting ``Notwithstanding 
                paragraph (3),''.
            (4) Court of federal claims judges.--Subsection (b) of 
        section 8440c of title 5, United States Code, as amended by 
        section 315(c), is further amended--
                    (A) by striking paragraph (2) and by redesignating 
                paragraphs (3) through (8) as paragraphs (2) through 
                (7), respectively;
                    (B) in paragraph (4) (as so redesignated by 
                subparagraph (A)) by striking ``paragraph (4)(A) or 
                (B)'' and inserting ``paragraph (3)(A) or (B)''; and
                    (C) in paragraph (7) (as so redesignated by 
                subparagraph (A)) by striking ``Notwithstanding 
                paragraph (4),'' and inserting ``Notwithstanding 
                paragraph (3),''.
            (5) Judges of the united states court of veterans 
        appeals.--Paragraph (2) of section 8440d(b) of title 5, United 
        States Code, is amended to read as follows:
    ``(2) For purposes of contributions made to the Thrift Savings 
Fund, basic pay does not include any retired pay paid pursuant to 
section 7296 of title 38.''.
    (b) Amendments Relating to CSRS.--Paragraph (2) of section 8351(b) 
of title 5, United States Code, is amended by striking ``5 percent 
of''.
    (c) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        take effect 6 months after the date of the enactment of this 
        Act or such earlier date as the Executive Director may by 
        regulation prescribe.
            (2) Coordination with election periods.--The Executive 
        Director shall by regulation determine the first election 
        period in which elections may be made consistent with the 
        amendments made by this section.
            (3) Definitions.--For purposes of this subsection--
                    (A) the term ``election period'' means a period 
                afforded under section 8432(b) of title 5, United 
                States Code; and
                    (B) the term ``Executive Director'' has the meaning 
                given such term by section 8401(13) of title 5, United 
                States Code.

SEC. 322. LOANS UNDER THE THRIFT SAVINGS PLAN FOR FURLOUGHED EMPLOYEES.

    Section 8433(g) of title 5, United States Code, as amended by 
section 313(a)(5)(B), is further amended by adding at the end the 
following:
    ``(5) An employee who has been furloughed due to a lapse in 
appropriations may not be denied a loan under this subsection solely 
because such employee is not in a pay status.''.

SEC. 323. IMMEDIATE PARTICIPATION IN THE THRIFT SAVINGS PLAN.

    (a) Elimination of Certain Waiting Periods for Purposes of Employee 
Contributions.--Paragraph (4) of section 8432(b) of title 5, United 
States Code, is amended to read as follows:
    ``(4) The Executive Director shall prescribe such regulations as 
may be necessary to carry out the following:
            ``(A) Notwithstanding subparagraph (A) of paragraph (2), an 
        employee or Member described in such subparagraph shall be 
        afforded a reasonable opportunity to first make an election 
        under this subsection beginning on the date of commencing 
        service or, if that is not administratively feasible, beginning 
        on the earliest date thereafter that such an election becomes 
        administratively feasible, as determined by the Executive 
        Director.
            ``(B) An employee or Member described in subparagraph (B) 
        of paragraph (2) shall be afforded a reasonable opportunity to 
        first make an election under this subsection (based on the 
        appointment or election described in such subparagraph) 
        beginning on the date of commencing service pursuant to such 
        appointment or election or, if that is not administratively 
        feasible, beginning on the earliest date thereafter that such 
        an election becomes administratively feasible, as determined by 
        the Executive Director.
            ``(C) Notwithstanding the preceding provisions of this 
        paragraph, contributions under paragraphs (1) and (2) of 
        subsection (c) shall not be payable with respect to any pay 
        period before the earliest pay period for which such 
        contributions would otherwise be allowable under this 
        subsection if this paragraph had not been enacted.
            ``(D) Sections 8351(a)(2), 8440a(a)(2), 8440b(a)(2), 
        8440c(a)(2), and 8440d(a)(2) shall be applied in a manner 
        consistent with the purposes of subparagraphs (A) and (B), to 
        the extent those subparagraphs can be applied with respect 
        thereto.
            ``(E) Nothing in this paragraph shall affect paragraph 
        (3).''.
    (b) Technical and Conforming Amendments.--(1) Section 8432(a) of 
title 5, United States Code, is amended--
            (A) in the first sentence by striking ``(b)(1)'' and 
        inserting ``(b)''; and
            (B) by amending the second sentence to read as follows: 
        ``Contributions under this subsection pursuant to such an 
        election shall, with respect to each pay period for which such 
        election remains in effect, be made in accordance with a 
        program of regular contributions provided in regulations 
        prescribed by the Executive Director.''.
    (2) Section 8432(b)(1)(B) of such title is amended by inserting 
``(or any election allowable by virtue of paragraph (4))'' after 
``subparagraph (A)''.
    (3) Section 8432(b)(3) of such title is amended by striking 
``Notwithstanding paragraph (2)(A), an'' and inserting ``An''.
    (4) Section 8432(i)(1)(B)(ii) of such title is amended by striking 
``either elected to terminate individual contributions to the Thrift 
Savings Fund within 2 months before commencing military service or''.
    (5) Section 8439(a)(1) of such title is amended by inserting ``who 
makes contributions or'' after ``for each individual'' and by striking 
``section 8432(c)(1)'' and inserting ``section 8432''.
    (6) Section 8439(c)(2) of such title is amended by adding at the 
end the following: ``Nothing in this paragraph shall be considered to 
limit the dissemination of information only to the times required under 
the preceding sentence.''.
    (7) Sections 8440a(a)(2) and 8440d(a)(2) of such title are amended 
by striking ``subject to'' and all that follows and inserting ``subject 
to this chapter.''.
    (c) Effective Date.--This section shall take effect 6 months after 
the date of the enactment of this Act or such earlier date as the 
Executive Director (within the meaning of section 8401(13) of title 5, 
United States Code) may by regulation prescribe.

Subtitle D--Resumption of Certain Survivor Annuities That Terminated by 
                           Reason of Marriage

SEC. 331. RESUMPTION OF CERTAIN SURVIVOR ANNUITIES THAT TERMINATED BY 
              REASON OF MARRIAGE.

    (a) Civil Service Retirement System.--Section 8341(e) of title 5, 
United States Code, is amended by adding at the end the following:
    ``(4) If the annuity of a child under this subchapter terminates 
under paragraph (3)(E) because of marriage, then, if such marriage ends 
(whether by death of the spouse, divorce, or annulment), such annuity 
shall resume on the first day of the month in which the marriage ends, 
but only if--
            ``(A) any lump sum paid is returned to the Fund; and
            ``(B) that individual is not otherwise ineligible for such 
        annuity.''.
    (b) Federal Employees' Retirement System.--Section 8443(b) of such 
title is amended by adding at the end the following: ``If the annuity 
of a child under this subchapter terminates under subparagraph (E) 
because of marriage, then, if such marriage ends (whether by death of 
the spouse, divorce, or annulment), such annuity shall resume on the 
first day of the month in which the marriage ends, but only if any lump 
sum paid is returned to the Fund, and that individual is not otherwise 
ineligible for such annuity.''.
    (c) Health Benefits Program.--Section 8908 of title 5, United 
States Code, is amended by adding at the end the following:
    ``(d) An individual--
            ``(1) whose survivor annuity under section 8341(e) is 
        terminated, and then later restored under paragraph (4) 
        thereof, or
            ``(2) whose survivor annuity under section 8443(b) is 
        terminated, and then later restored under the last sentence 
        thereof,
may, under regulations prescribed by the Office, enroll in a health 
benefits plan described by section 8903 or 8903a if such individual was 
covered by any such plan immediately before such annuity so 
terminated.''.
    (d) Applicability.--The amendments made by this section shall apply 
with respect to any termination of marriage taking effect before, on, 
or after the date of the enactment of this Act, except that no amount 
shall be payable by reason of the amendments made by subsections (a) 
and (b), respectively, except to the extent of any amounts accruing for 
periods beginning on or after the first day of the first month 
beginning on or after the later of--
            (1) the date of the enactment of this Act; or
            (2) the date as of which termination of marriage takes 
        effect.

                  Subtitle E--Life Insurance Benefits

SEC. 341. DOMESTIC RELATIONS ORDERS.

    (a) In General.--Section 8705 of title 5, United States Code, is 
amended--
            (1) in subsection (a) by striking ``(a) The'' and inserting 
        ``(a) Except as provided in subsection (e), the''; and
            (2) by adding at the end the following:
    ``(e)(1) Any amount which would otherwise be paid to a person 
determined under the order of precedence named by subsection (a) shall 
be paid (in whole or in part) by the Office to another person if and to 
the extent expressly provided for in the terms of any court decree of 
divorce, annulment, or legal separation, or the terms of any court 
order or court-approved property settlement agreement incident to any 
court decree of divorce, annulment, or legal separation.
    ``(2) For purposes of this subsection, a decree, order, or 
agreement referred to in paragraph (1) shall not be effective unless it 
is received, before the date of the covered employee's death, by the 
employing agency or, if the employee has separated from service, by the 
Office.
    ``(3) A designation under this subsection with respect to any 
person may not be changed except--
            ``(A) with the written consent of such person, if received 
        as described in paragraph (2); or
            ``(B) by modification of the decree, order, or agreement, 
        as the case may be, if received as described in paragraph (2).
    ``(4) The Office shall prescribe any regulations necessary to carry 
out this subsection, including regulations for the application of this 
subsection in the event that 2 or more decrees, orders, or agreements, 
are received with respect to the same amount.''.
    (b) Directed Assignment.--Section 8706(e) of title 5, United States 
Code, is amended--
            (1) by striking ``(e)'' and inserting ``(e)(1)''; and
            (2) by adding at the end the following:
    ``(2) A court decree of divorce, annulment, or legal separation, or 
the terms of a court-approved property settlement agreement incidental 
to any court decree of divorce, annulment, or legal separation, may 
direct that an insured employee or former employee make an irrevocable 
assignment of the employee's or former employee's incidents of 
ownership in insurance under this chapter (if there is no previous 
assignment) to the person specified in the court order or court-
approved property settlement agreement.''.

SEC. 342. EXCEPTION FROM PROVISIONS REQUIRING REDUCTION IN ADDITIONAL 
              OPTIONAL LIFE INSURANCE.

    (a) In General.--Subsection (c) of section 8714b of title 5, United 
States Code, is amended by adding at the end the following:
    ``(3)(A) The amount of additional optional insurance continued 
under paragraph (2) shall be continued, without any reduction under the 
last two sentences thereof, if--
            ``(i) at the time of retirement, there is in effect a 
        designation under section 8705 under which the entire amount of 
        such insurance would be paid to an individual who is 
        permanently disabled; and
            ``(ii) an election under subsection (d)(3) on behalf of 
        such individual is made in timely fashion.
    ``(B) Notwithstanding subparagraph (A), any reduction required 
under paragraph (2) shall be made if--
            ``(i) the additional optional insurance is not in fact paid 
        in accordance with the designation under section 8705, as in 
        effect at the time of retirement;
            ``(ii) the Office finds that adequate arrangements have not 
        been made to ensure that the insurance provided under this 
        section will be used only for the care and support of the 
        individual so designated; or
            ``(iii) the election referred to in subparagraph (A)(ii) 
        terminates at any time before the death of the individual who 
        made such election.
    ``(C) For purposes of this paragraph, the term `permanently 
disabled' shall have the meaning given such term under regulations 
which the Office shall prescribe based on subparagraphs (A) and (C) of 
section 1614(a)(3) of the Social Security Act, except that, in applying 
subparagraph (A) of such section for purposes of this subparagraph, 
`which can be expected to last permanently' shall be substituted for 
`which has lasted or can be expected to last for a continuous period of 
not less than twelve months'.''.
    (b) Continued Withholdings.--Subsection (d) of such section 8714b 
is amended by adding at the end the following:
    ``(3)(A) To be eligible for unreduced additional optional insurance 
under subsection (c)(3), the insured individual shall be required to 
elect, at such time and in such manner as the Office by regulation 
requires (including procedures for demonstrating compliance with the 
requirements of subsection (c)(3)), to have the full cost thereof 
continue to be withheld from the former employee's annuity or 
compensation, as the case may be, beginning as of when such 
withholdings would otherwise cease under the second sentence of 
paragraph (1).
    ``(B) An election made by an insured individual under subparagraph 
(A) (and withholdings pursuant thereto) shall terminate in the event 
that--
            ``(i) the insured individual--
                    ``(I) revokes such election; or
                    ``(II) makes any redesignation or other change in 
                the designation under section 8705 (as in effect at the 
                time of retirement); or
            ``(ii) the Office finds, upon the application of the 
        insured individual or on its own initiative, that any of the 
        requirements or conditions for unreduced additional optional 
        insurance under subsection (c)(3) are, at any time, no longer 
        met.''.
    (c) Effective Date.--
            (1) In general.--The amendments made by this section shall 
        take effect on the date of the enactment of this Act.
            (2) Election for certain individuals not otherwise 
        eligible.--The Office of Personnel Management shall prescribe 
        regulations under which an election under section 
        8714b(d)(3)(A) of title 5, United States Code (as amended by 
        this section) may be made, within 1 year after the date of the 
        enactment of this Act, by any individual not otherwise eligible 
        to make such an election, but only if such individual--
                    (A) separated from service on or after the first 
                day of the 50-month period ending on the date of 
                enactment of this Act; and
                    (B) would have been so eligible had the amendments 
                made by this section (and implementing regulations) 
                been in effect as of the individual's separation date 
                (or, if earlier, the last day for making such an 
                election based on that separation).
            (3) Withholdings.--
                    (A) Prospective effect.--If an individual makes an 
                election under paragraph (2), withholdings under 
                section 8714b(d)(3)(A) of such title 5 shall thereafter 
                be made from such individual's annuity or compensation, 
                as the case may be.
                    (B) Earlier amounts.--If, pursuant to such 
                election, benefits are in fact paid in accordance with 
                section 8714b(c)(3) of such title 5 upon the death of 
                the insured individual, an appropriate reduction 
                (computed under regulations prescribed by the Office) 
                shall be made in such benefits to reflect the 
                withholdings that--
                            (i) were not made (before the commencement 
                        of withholdings under subparagraph (A)) by 
                        reason of the cessation of withholdings under 
                        the second sentence of section 8714b(d)(1) of 
                        such title; but
                            (ii) would have been made had the 
                        amendments made by this section (and 
                        implementing regulations) been in effect as of 
                        the time described in paragraph (2)(B).
            (4) Notice.--The Office shall, by publication in the 
        Federal Register and such other methods as it considers 
        appropriate, notify current and former Federal employees as to 
        the enactment of this section and any benefits for which they 
        might be eligible pursuant thereto. Included as part of such 
        notification shall be a brief description of the procedures for 
        making an election under paragraph (2) and any other 
        information that the Office considers appropriate.

                  TITLE IV--REORGANIZATION FLEXIBILITY

SEC. 401. VOLUNTARY REDUCTIONS IN FORCE.

    Section 3502(f) of title 5, United States Code, is amended to read 
as follows:
    ``(f)(1) The head of an Executive agency or military department 
may, in accordance with regulations prescribed by the Office of 
Personnel Management--
            ``(A) separate from service any employee who volunteers to 
        be separated under this subparagraph even though the employee 
        is not otherwise subject to separation due to a reduction in 
        force; and
            ``(B) for each employee voluntarily separated under 
        subparagraph (A), retain an employee in a similar position who 
        would otherwise be separated due to a reduction in force.
    ``(2) The separation of an employee under paragraph (1)(A) shall be 
treated as an involuntary separation due to a reduction in force, 
except for purposes of priority placement programs and advance notice.
    ``(3) An employee with critical knowledge and skills (as defined by 
the head of the Executive agency or military department concerned) may 
not participate in a voluntary separation under paragraph (1)(A) if the 
agency or department head concerned determines that such participation 
would impair the performance of the mission of the agency or department 
(as applicable).
    ``(4) The regulations prescribed under this section shall 
incorporate the authority provided in this subsection.
    ``(5) No authority under paragraph (1) may be exercised after 
September 30, 2001.''.

SEC. 402. NONREIMBURSABLE DETAILS TO FEDERAL AGENCIES BEFORE A 
              REDUCTION IN FORCE.

    (a) In General.--Section 3341 of title 5, United States Code, is 
amended to read as follows:
``Sec. 3341. Details; within Executive agencies and military 
              departments; employees affected by reduction in force
    ``(a) The head of an Executive agency or military department may 
detail employees, except those required by law to be engaged 
exclusively in some specific work, among the bureaus and offices of the 
agency or department.
    ``(b) The head of an Executive agency or military department may 
detail to duties in the same or another agency or department, on a 
nonreimbursable basis, an employee who has been identified by the 
employing agency as likely to be separated from the Federal service by 
reduction in force or who has received a specific notice of separation 
by reduction in force.
    ``(c)(1) Details under subsection (a)--
            ``(A) may not be for periods exceeding 120 days; and
            ``(B) may be renewed (1 or more times) by written order of 
        the head of the agency or department, in each particular case, 
        for periods not exceeding 120 days each.
    ``(2) Details under subsection (b)--
            ``(A) may not be for periods exceeding 90 days; and
            ``(B) may not be renewed.
    ``(d) The 120-day limitation under subsection (c)(1) for details 
and renewals of details does not apply to the Department of Defense in 
the case of a detail--
            ``(1) made in connection with the closure or realignment of 
        a military installation pursuant to a base closure law or an 
        organizational restructuring of the Department as part of a 
        reduction in the size of the armed forces or the civilian 
        workforce of the Department; and
            ``(2) in which the position to which the employee is 
        detailed is eliminated on or before the date of the closure, 
        realignment, or restructuring.
    ``(e) For purposes of this section--
            ``(1) the term `base closure law' means--
                    ``(A) section 2687 of title 10;
                    ``(B) title II of the Defense Authorization 
                Amendments and Base Closure and Realignment Act; and
                    ``(C) the Defense Base Closure and Realignment Act 
                of 1990; and
            ``(2) the term `military installation'--
                    ``(A) in the case of an installation covered by 
                section 2687 of title 10, has the meaning given such 
                term in subsection (e)(1) of such section;
                    ``(B) in the case of an installation covered by the 
                Act referred to in subparagraph (B) of paragraph (1), 
                has the meaning given such term in section 209(6) of 
                such Act; and
                    ``(C) in the case of an installation covered by the 
                Act referred to in subparagraph (C) of paragraph (1), 
                has the meaning given such term in section 2910(4) of 
                such Act.''.
    (b) Clerical Amendment.--The table of sections for chapter 33 of 
title 5, United States Code, is amended by striking the item relating 
to section 3341 and inserting the following:

``3341. Details; within Executive agencies and military departments; 
                            employees affected by reduction in 
                            force.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect 30 days after the date of the enactment of this Act.

                    TITLE V--SOFT-LANDING PROVISIONS

SEC. 501. TEMPORARY CONTINUATION OF FEDERAL EMPLOYEES' LIFE INSURANCE.

    Section 8706 of title 5, United States Code, is amended by adding 
at the end the following:
    ``(g)(1) Notwithstanding subsections (a) and (b) of this section, 
an employee whose coverage under this chapter would otherwise terminate 
due to a separation described in paragraph (3) shall be eligible to 
continue basic insurance coverage described in section 8704 in 
accordance with this subsection and regulations the Office may 
prescribe, if the employee arranges to pay currently into the Employees 
Life Insurance Fund, through the former employing agency or, if an 
annuitant, through the responsible retirement system, an amount equal 
to the sum of--
            ``(A) both employee and agency contributions which would be 
        payable if separation had not occurred; plus
            ``(B) an amount, determined under regulations prescribed by 
        the Office, to cover necessary administrative expenses, but not 
        to exceed 2 percent of the total amount under subparagraph (A).
    ``(2) Continued coverage under this subsection may not extend 
beyond the date which is 18 months after the effective date of the 
separation which entitles a former employee to coverage under this 
subsection. Termination of continued coverage under this subsection 
shall be subject to provision for temporary extension of life insurance 
coverage and for conversion to an individual policy of life insurance 
as provided by subsection (a). If an eligible employee does not make an 
election for purposes of this subsection, the employee's insurance will 
terminate as provided by subsection (a).
    ``(3)(A) This subsection shall apply to an employee who, on or 
after the date of enactment of this subsection and before the 
applicable date under subparagraph (B)--
            ``(i) is involuntarily separated from a position due to a 
        reduction in force, or separates voluntarily from a position 
        the employing agency determines is a `surplus position' as 
        defined by section 8905(d)(4)(C); and
            ``(ii) is insured for basic insurance under this chapter on 
        the date of separation.
    ``(B) The applicable date under this subparagraph is October 1, 
2001, except that, for purposes of any involuntary separation referred 
to in subparagraph (A) with respect to which appropriate specific 
notice is afforded to the affected employee before October 1, 2001, the 
applicable date under this subparagraph is February 1, 2002.''.

SEC. 502. CONTINUED ELIGIBILITY FOR HEALTH INSURANCE.

    (a) Continued Eligibility After Retirement.--Section 8905 of title 
5, United States Code, is amended--
            (1) in the first sentence of subsection (b) by striking 
        ``An'' and inserting ``Subject to subsection (g), an''; and
            (2) by adding at the end the following:
    ``(g)(1) The Office shall waive the requirements for continued 
enrollment under subsection (b) in the case of any individual who, on 
or after the date of the enactment of this subsection and before the 
applicable date under paragraph (2)--
            ``(A) is involuntarily separated from a position, or 
        voluntarily separated from a surplus position, in or under an 
        Executive agency due to a reduction in force,
            ``(B) based on the separation referred to in subparagraph 
        (A), retires on an immediate annuity under subchapter III of 
        chapter 83 or subchapter II of chapter 84, and
            ``(C) is enrolled in a health benefits plan under this 
        chapter as an employee immediately before retirement.
    ``(2) The applicable date under this paragraph is October 1, 2001, 
except that, for purposes of any involuntary separation referred to in 
paragraph (1)(A) with respect to which appropriate specific notice is 
afforded to the affected employee before October 1, 2001, the 
applicable date under this paragraph is February 1, 2002.
    ``(3) For purposes of this subsection, the term `surplus position', 
with respect to an agency, means any position determined in accordance 
with regulations under section 8905a(d)(4)(C) for such agency.''.
    (b) Temporary Continued Eligibility After Being Involuntarily 
Separated.--Section 8905a(d)(4) of title 5, United States Code, is 
amended--
            (1) in subparagraph (A) by striking ``the Department of 
        Defense'' and inserting ``an Executive agency''; and
            (2) by amending subparagraph (C) to read as follows:
    ``(C) For purposes of this paragraph, the term `surplus position' 
means a position that, as determined under regulations prescribed by 
the head of the agency involved, is identified during planning for a 
reduction in force as being no longer required and is designated for 
elimination during the reduction in force.''.

SEC. 503. PRIORITY PLACEMENT PROGRAMS FOR FEDERAL EMPLOYEES AFFECTED BY 
              A REDUCTION IN FORCE.

    (a) In General.--Subchapter I of chapter 33 of title 5, United 
States Code, is amended by adding at the end the following:
``Sec. 3330a. Priority placement programs for employees affected by a 
              reduction in force
    ``(a) Not later than 3 months after the date of the enactment of 
this section, each Executive agency shall establish an agencywide 
priority placement program, to facilitate employment placement for 
employees who--
            ``(1) are scheduled to be separated from service due to a 
        reduction in force under--
                    ``(A) regulations prescribed under section 3502; or
                    ``(B) procedures established under section 3595;
            ``(2) are separated from service due to such a reduction in 
        force; or
            ``(3) have received a rating of at least fully successful 
        (or the equivalent) as the last performance rating of record 
        used for retention purposes (except for employees in positions 
        excluded from a performance appraisal system by law, 
        regulation, or administrative action taken by the Office of 
        Personnel Management).
    ``(b)(1) Each agencywide priority placement program under this 
section shall include provisions under which a vacant position shall 
not (except as provided in this subsection or any other statute 
providing the right of reemployment to any individual) be filled by the 
appointment or transfer of any individual from outside of that agency 
(other than an individual described in paragraph (2)) if--
            ``(A) there is then available any individual described in 
        paragraph (2) who is qualified for the position; and
            ``(B) the position--
                    ``(i) is at the same grade or pay level (or the 
                equivalent) or not more than 3 grades (or grade 
                intervals) below that of the position last held by such 
                individual before placement in the new position;
                    ``(ii) is within the same commuting area as the 
                individual's last-held position (as referred to in 
                clause (i)) or residence; and
                    ``(iii) has the same type of work schedule (whether 
                full-time, part-time, or intermittent) as the position 
                last held by the individual.
    ``(2) For purposes of an agencywide priority placement program, an 
individual shall be considered to be described in this paragraph if 
such individual is--
            ``(A) an employee of such agency who is scheduled to be 
        separated, as described in subsection (a)(1); or
            ``(B) an individual who became a former employee of such 
        agency as a result of a separation, as described in subsection 
        (a)(2), excluding any individual who separated voluntarily 
        under section 3502(f).
    ``(c)(1) If after a reduction in force the agency has no positions 
of any type within the local commuting areas specified in this section, 
the individual may designate a different local commuting area where the 
agency has continuing positions in order to exercise reemployment 
rights under this section. An agency may determine that such 
designations are not in the interest of the Government for the purpose 
of paying relocation expenses under subchapter II of chapter 57.
    ``(2) At its option, an agency may administratively extend 
reemployment rights under this section to include other local commuting 
areas.
    ``(d)(1) In selecting employees for positions under this section, 
the agency shall place qualified present and former employees in 
retention order by veterans' preference subgroup and tenure group.
    ``(2) An agency may not pass over a qualified present or former 
employee to select an individual in a lower veterans' preference 
subgroup within the tenure group, or in a lower tenure group.
    ``(3) Within a subgroup, the agency may select a qualified present 
or former employee without regard to the individual's total creditable 
service.
    ``(e) An individual is eligible for reemployment priority under 
this section for 2 years from the effective date of the reduction in 
force from which the individual will be, or has been, separated under 
section 3502.
    ``(f) An individual loses eligibility for reemployment priority 
under this section when the individual--
            ``(1) requests removal in writing;
            ``(2) accepts or declines a bona fide offer under this 
        section or fails to accept such an offer within the period of 
        time allowed for such acceptance; or
            ``(3) separates from the agency before being separated 
        under section 3502.
A present or former employee who declines a position with a 
representative rate (or equivalent) that is less than the rate of the 
position from which the individual was separated under section 3502 
retains eligibility for positions with a higher representative rate up 
to the rate of the individual's last position.
    ``(g) Whenever more than one individual is qualified for a position 
under this section, the agency shall select the most highly qualified 
individual, subject to subsection (d).
    ``(h) The Office of Personnel Management shall issue regulations to 
implement this section.''.
    (b) Clerical Amendment.--The table of sections for chapter 33 of 
title 5, United States Code, is amended by adding after the item 
relating to the section 3330 the following:

``3330a.    Priority placement programs for employees affected by a 
                            reduction in force.''.

SEC. 504. JOB PLACEMENT AND COUNSELING SERVICES.

    (a) Authority for Services.--The head of each Executive agency may 
establish a program to provide job placement and counseling services to 
current and former employees.
    (b) Types of Services Authorized.--A program established under this 
section may include such services as--
            (1) career and personal counseling;
            (2) training in job search skills; and
            (3) job placement assistance, including assistance provided 
        through cooperative arrangements with State and local 
        employment service offices.
    (c) Eligibility for Services.--Services authorized by this section 
may be provided to--
            (1) current employees of the agency or, with the approval 
        of such other agency, any other agency; and
            (2) employees of the agency or, with the approval of such 
        other agency, any other agency who have been separated for less 
        than 1 year, if the separation was not a removal for cause on 
        charges of misconduct or delinquency.
    (d) Reimbursement for Costs.--The costs of services provided to 
current or former employees of another agency shall be reimbursed by 
that agency.

SEC. 505. EDUCATION AND RETRAINING INCENTIVES.

    (a) Non-Federal Employment Incentive Payments.--
            (1) Definitions.--For purposes of this subsection--
                    (A) the term ``eligible employee'' means an 
                employee who is involuntarily separated from a 
                position, or voluntarily separated from a surplus 
                position, in or under an Executive agency due to a 
                reduction in force, except that such term does not 
                include an employee who, at the time of separation, 
                meets the age and service requirements for an immediate 
                annuity under subchapter III of chapter 83 or chapter 
                84 of title 5, United States Code, other than under 
                section 8336(d) or 8414(b) of such title;
                    (B) the term ``non-Federal employer'' means an 
                employer other than the Government of the United States 
                or any agency or other instrumentality thereof;
                    (C) the term ``Executive agency'' has the meaning 
                given such term by section 105 of title 5, United 
                States Code; and
                    (D) the term ``surplus position'' has the meaning 
                given such term by section 8905(d)(4)(C) of title 5, 
                United States Code.
            (2) Authority.--The head of an Executive agency may pay 
        retraining and relocation incentive payments, in accordance 
        with this subsection, in order to facilitate the reemployment 
        of eligible employees who are separated from such agency.
            (3) Retraining incentive payment.--
                    (A) Agreement.--The head of an Executive agency may 
                enter into an agreement with a non-Federal employer 
                under which the non-Federal employer agrees--
                            (i) to employ an individual referred to in 
                        paragraph (2) for at least 12 months for a 
                        salary which is mutually agreeable to the 
                        employer and such individual; and
                            (ii) to certify to the agency head any 
                        costs incurred by the employer for any 
                        necessary training provided to such individual 
                        in connection with the employment by such 
                        employer.
                    (B) Payment of retraining incentive payment.--The 
                agency head shall pay a retraining incentive payment to 
                the non-Federal employer upon the employee's completion 
                of 12 months of continuous employment by that employer. 
                The agency head shall prescribe the amount of the 
                incentive payment.
                    (C) Proration rule.--The agency head shall pay a 
                prorated amount of the full retraining incentive 
                payment to the non-Federal employer for an employee who 
                does not remain employed by the non-Federal employer 
                for at least 12 months, but only if the employee 
                remains so employed for at least 6 months.
                    (D) Limitation.--In no event may the amount of the 
                retraining incentive payment paid for the training of 
                any individual exceed the amount certified for such 
                individual under subparagraph (A), subject to 
                subsection (c).
            (4) Relocation incentive payment.--The head of an agency 
        may pay a relocation incentive payment to an eligible employee 
        if it is necessary for the employee to relocate in order to 
        commence employment with a non-Federal employer. Subject to 
        subsection (e), the amount of the incentive payment shall not 
        exceed the amount that would be payable for travel, 
        transportation, and subsistence expenses under subchapter II of 
        chapter 57 of title 5, United States Code, including any 
        reimbursement authorized under section 5724b of such title, to 
        a Federal employee who transfers between the same locations as 
        the individual to whom the incentive payment is payable.
            (5) Duration.--No incentive payment may be paid for 
        training or relocation commencing after June 30, 2002.
            (6) Source.--An incentive payment under this subsection 
        shall be payable from appropriations or other funds available 
        to the agency for purposes of training (within the meaning of 
        section 4101(4) of title 5, United States Code).
    (b) Educational Assistance.--
            (1) Definitions.--For purposes of this subsection--
                    (A) the term ``eligible employee'' means an 
                eligible employee, within the meaning of subsection 
                (a), who--
                            (i) is employed full time on a permanent 
                        basis;
                            (ii) has completed at least 3 years of 
                        current continuous service in any Executive 
                        agency or agencies; and
                            (iii) is admitted to an institution of 
                        higher education within 1 year after 
                        separation;
                    (B) the term ``Executive agency'' has the meaning 
                given such term by section 105 of title 5, United 
                States Code;
                    (C) the term ``educational assistance'' means 
                payments for educational assistance as provided in 
                section 127(c)(1) of the Internal Revenue Code of 1986 
                (26 U.S.C. 127(c)(1)); and
                    (D) the term ``institution of higher education'' 
                has the meaning given such term by section 1201(a) of 
                the Higher Education Act of 1965 (20 U.S.C. 1141(a)).
            (2) Authority.--Under regulations prescribed by the Office 
        of Personnel Management, and subject to the limitations under 
        subsection (c), the head of an Executive agency may, in his or 
        her discretion, provide educational assistance under this 
        subsection to an eligible employee for a program of education 
        at an institution of higher education after the separation of 
        the employee.
            (3) Duration.--No educational assistance under this 
        subsection may be paid later than 10 years after the separation 
        of the eligible employee.
            (4) Source.--Educational assistance payments shall be 
        payable from appropriations or other funds which would have 
        been used to pay the salary of the eligible employee if the 
        employee had not separated.
            (5) Regulations.--The Office of Personnel Management shall 
        prescribe regulations for the administration of this 
        subsection. Such regulations shall provide that educational 
        assistance payments shall be limited to amounts necessary for 
        current tuition and fees only.
    (c) Limitations.--
            (1) Aggregate limitation.--No incentive payment or 
        educational assistance payment may be paid under this section 
        to or on behalf of any individual to the extent that such 
        amount would cause the aggregate amount otherwise paid or 
        payable under this section, to or on behalf of such individual, 
        to exceed $10,000.
            (2) Limitation relating to educational assistance.--The 
        total amount paid under subsection (b) to any individual--
                    (A) may not exceed $6,000 if the individual has at 
                least 3 but less than 4 years of qualifying service; 
                and
                    (B) may not exceed $8,000 if the individual has at 
                least 4 but less than 5 years of qualifying service.
            (3) Qualifying service.--For purposes of paragraph (2), the 
        term ``qualifying service'' means service performed as an 
        employee, within the meaning of section 2105 of title 5, United 
        States Code, on a permanent full-time or permanent part-time 
        basis (counting part-time service on a prorated basis).

                        TITLE VI--MISCELLANEOUS

SEC. 601. REIMBURSEMENTS RELATING TO PROFESSIONAL LIABILITY INSURANCE.

    (a) Authority.--Notwithstanding any other provision of law, any 
amounts appropriated, for fiscal year 1997 or any fiscal year 
thereafter, for salaries and expenses of Government employees may be 
used to reimburse any qualified employee for not to exceed one-half the 
costs incurred by such employee for professional liability insurance. A 
payment under this section shall be contingent upon the submission of 
such information or documentation as the employing agency may require.
    (b) Qualified Employee.--For purposes of this section, the term 
``qualified employee'' means--
            (1) an agency employee whose position is that of a law 
        enforcement officer;
            (2) an agency employee whose position is that of a 
        supervisor or management official; or
            (3) such other employee as the head of the agency considers 
        appropriate
    (c) Definitions.--For purposes of this section--
            (1) the term ``agency'' means an Executive agency, as 
        defined by section 105 of title 5, United States Code;
            (2) the term ``law enforcement officer'' means an employee, 
        the duties of whose position are primarily the investigation, 
        apprehension, prosecution, or detention of individuals 
        suspected or convicted of offenses against the criminal laws of 
        the United States, including any law enforcement officer under 
        section 8331(20) or 8401(17) of such title 5;
            (3) the terms ``supervisor'' and ``management official'' 
        have the respective meanings given them by section 7103(a) of 
        such title 5; and
            (4) the term ``professional liability insurance'' means 
        insurance which provides coverage for--
                    (A) legal liability for damages due to injuries to 
                other persons, damage to their property, or other 
                damage or loss to such other persons (including the 
                expenses of litigation and settlement) resulting from 
                or arising out of any tortious act, error, or omission 
                of the covered individual (whether common law, 
                statutory, or constitutional) while in the performance 
                of such individual's official duties as a qualified 
                employee; and
                    (B) the cost of legal representation for the 
                covered individual in connection with any 
                administrative or judicial proceeding (including any 
                investigation or disciplinary proceeding) relating to 
                any act, error, or omission of the covered individual 
                while in the performance of such individual's official 
                duties as a qualified employee, and other legal costs 
                and fees relating to any such administrative or 
                judicial proceeding.
    (d) Policy Limits.--
            (1) In general.--Reimbursement under this section shall not 
        be available except in the case of any professional liability 
        insurance policy providing for--
                    (A) not to exceed $1,000,000 of coverage for legal 
                liability (as described in subsection (c)(4)(A)) per 
                occurrence per year; and
                    (B) not to exceed $100,000 of coverage for the cost 
                of legal representation (as described in subsection 
                (c)(4)(B)) per occurrence per year.
            (2) Adjustments.--The head of an agency may from time to 
        time adjust the respective dollar amount limitations applicable 
        under this subsection to the extent that the head of such 
        agency considers appropriate to reflect inflation.

SEC. 602. EMPLOYMENT RIGHTS FOLLOWING CONVERSION TO CONTRACT.

    (a) In General.--An employee whose position is abolished because an 
activity performed by an Executive agency (within the meaning of 
section 105 of title 5, United States Code) is converted to contract 
shall receive from the contractor an offer in good faith of a right of 
first refusal of employment under the contract for a position for which 
the employee is deemed qualified based upon previous knowledge, skills, 
abilities, and experience. The contractor shall not offer employment 
under the contract to any person prior to having complied fully with 
this obligation, except as provided in subsection (b), or unless no 
employee whose position is abolished because such activity has been 
converted to contract can demonstrate appropriate qualifications for 
the position.
    (b) Exception.--Notwithstanding the contractor's obligation under 
subsection (a), the contractor is not required to offer a right of 
first refusal to any employee who, in the 12 months preceding 
conversion to contract, has been the subject of an adverse personnel 
action related to misconduct or has received a less than fully 
successful performance rating.
    (c) Limitation.--No employee shall have a right to more than 1 
offer under this section based on any particular separation due to the 
conversion of an activity to contract.
    (d) Regulations.--Regulations to carry out this section may be 
prescribed by the President.

SEC. 603. DEBARMENT OF HEALTH CARE PROVIDERS FOUND TO HAVE ENGAGED IN 
              FRAUDULENT PRACTICES.

    (a) In General.--Section 8902a of title 5, United States Code, is 
amended--
            (1) in subsection (a)(2)(A) by striking ``subsection (b) or 
        (c)'' and inserting ``subsection (b), (c), or (d)'';
            (2) in subsection (b)--
                    (A) by striking ``may'' and inserting ``shall'' in 
                the matter before paragraph (1); and
                    (B) by amending paragraph (5) to read as follows:
            ``(5) Any provider that is currently suspended or excluded 
        from participation under any program of the Federal Government 
        involving procurement or nonprocurement activities.'';
            (3) by redesignating subsections (c) through (i) as 
        subsections (d) through (j), respectively, and by inserting 
        after subsection (b) the following:
    ``(c) The Office may bar the following providers of health care 
services from participating in the program under this chapter:
            ``(1) Any provider--
                    ``(A) whose license to provide health care services 
                or supplies has been revoked, suspended, restricted, or 
                not renewed, by a State licensing authority for reasons 
                relating to the provider's professional competence, 
                professional performance, or financial integrity; or
                    ``(B) that surrendered such a license while a 
                formal disciplinary proceeding was pending before such 
                an authority, if the proceeding concerned the 
                provider's professional competence, professional 
                performance, or financial integrity.
            ``(2) Any provider that is an entity directly or indirectly 
        owned, or with a 5 percent or more controlling interest, by an 
        individual who is convicted of any offense described in 
        subsection (b), against whom a civil monetary penalty has been 
        assessed under subsection (d), or who has been excluded from 
        participation under this chapter.
            ``(3) Any provider that the Office determines, in 
        connection with claims presented under this chapter, has 
        charged for health care services or supplies in an amount 
        substantially in excess of such provider's customary charges 
        for such services or supplies (unless the Office finds there is 
        good cause for such charge), or charged for health care 
        services or supplies which are substantially in excess of the 
        needs of the covered individual or which are of a quality that 
        fails to meet professionally recognized standards for such 
        services or supplies.
            ``(4) Any provider that the Office determines has committed 
        acts described in subsection (d).'';
            (4) in subsection (d), as so redesignated by paragraph (3), 
        by amending paragraph (1) to read as follows:
            ``(1) in connection with claims presented under this 
        chapter, that a provider has charged for a health care service 
        or supply which the provider knows or should have known 
        involves--
                    ``(A) an item or service not provided as claimed;
                    ``(B) charges in violation of applicable charge 
                limitations under section 8904(b); or
                    ``(C) an item or service furnished during a period 
                in which the provider was excluded from participation 
                under this chapter pursuant to a determination by the 
                Office under this section, other than as permitted 
                under subsection (g)(2)(B);'';
            (5) in subsection (f), as so redesignated by paragraph (3), 
        by inserting ``(where such debarment is not mandatory)'' after 
        ``under this section'' the first place it appears;
            (6) in subsection (g), as so redesignated by paragraph 
        (3)--
                    (A) by striking ``(g)(1)'' and all that follows 
                through the end of paragraph (1) and inserting the 
                following:
    ``(g)(1)(A) Except as provided in subparagraph (B), debarment of a 
provider under subsection (b) or (c) shall be effective at such time 
and upon such reasonable notice to such provider, and to carriers and 
covered individuals, as shall be specified in regulations prescribed by 
the Office. Any such provider that is excluded from participation may 
request a hearing in accordance with subsection (h)(1).
    ``(B) Unless the Office determines that the health or safety of 
individuals receiving health care services warrants an earlier 
effective date, the Office shall not make a determination adverse to a 
provider under subsection (c)(4) or (d) until such provider has been 
given reasonable notice and an opportunity for the determination to be 
made after a hearing as provided in accordance with subsection 
(h)(1).'';
                    (B) in paragraph (3)--
                            (i) by inserting ``of debarment'' after 
                        ``notice''; and
                            (ii) by adding at the end the following: 
                        ``In the case of a debarment under paragraphs 
                        (1) through (4) of subsection (b), the minimum 
                        period of exclusion shall not be less than 3 
                        years, except as provided in paragraph 
                        (4)(B)(ii).''; and
                    (C) in paragraph (4)(B)(i)(I) by striking 
                ``subsection (b) or (c)'' and inserting ``subsection 
                (b), (c), or (d)'';
            (7) in subsection (h), as so redesignated by paragraph (3), 
        by striking ``(h)(1)'' and all that follows through the end of 
        paragraph (2) and inserting the following:
    ``(h)(1) Any provider of health care services or supplies that is 
the subject of an adverse determination by the Office under this 
section shall be entitled to reasonable notice and an opportunity to 
request a hearing of record, and to judicial review as provided in this 
subsection after the Office renders a final decision. The Office shall 
grant a request for a hearing upon a showing that due process rights 
have not previously been afforded with respect to any finding of fact 
which is relied upon as a cause for an adverse determination under this 
section. Such hearing shall be conducted without regard to subchapter 
II of chapter 5 and chapter 7 of this title by a hearing officer who 
shall be designated by the Director of the Office and who shall not 
otherwise have been involved in the adverse determination being 
appealed. A request for a hearing under this subsection must be filed 
within such period and in accordance with such procedures as the Office 
shall prescribe by regulation.
    ``(2) Any provider adversely affected by a final decision under 
paragraph (1) made after a hearing to which such provider was a party 
may seek review of such decision in the United States District Court 
for the District of Columbia or for the district in which the plaintiff 
resides or has his principal place of business by filing a notice of 
appeal in such court within 60 days from the date the decision is 
issued and simultaneously sending copies of such notice by certified 
mail to the Director of the Office and to the Attorney General. In 
answer to the appeal, the Director of the Office shall promptly file in 
such court a certified copy of the transcript of the record, if the 
Office conducted a hearing, and other evidence upon which the findings 
and decision complained of are based. The court shall have power to 
enter, upon the pleadings and evidence of record, a judgment affirming, 
modifying, or setting aside, in whole or in part, the decision of the 
Office, with or without remanding the cause for a rehearing. The 
district court shall not set aside or remand the decision of the Office 
unless there is not substantial evidence on the record, taken as a 
whole, to support the findings by the Office of a cause for action 
under this section or unless action taken by the Office constitutes an 
abuse of discretion.''; and
            (8) in subsection (i), as so redesignated by paragraph 
        (3)--
                    (A) by striking ``subsection (c)'' and inserting 
                ``subsection (d)''; and
                    (B) by adding at the end the following: ``The 
                amount of a penalty or assessment as finally determined 
                by the Office, or other amount the Office may agree to 
                in compromise, may be deducted from any sum then or 
                later owing by the United States to the party against 
                whom the penalty or assessment has been levied.''.
    (b) Effective Date.--
            (1) In general.--Except as provided in paragraph (2), this 
        section shall take effect on the date of the enactment of this 
        Act.
            (2) Exceptions.--(A) Paragraphs (2) and (4) of section 
        8902a(c) of title 5, United States Code, as amended by 
        subsection (a), shall apply only to the extent that the 
        misconduct which is the basis for debarment thereunder occurs 
        after the date of the enactment of this Act.
            (B) Section 8902a(d)(1)(B) of title 5, United States Code, 
        as amended by subsection (a), shall apply only with respect to 
        charges which violate section 8904(b) of such title 5 for items 
        and services furnished after the date of the enactment of this 
        Act.
            (C) Section 8902a(g)(3) of title 5, United States Code, as 
        amended by subsection (a), shall apply only with respect to 
        debarments based on convictions occurring after the date of the 
        enactment of this Act.

SEC. 604. CONVERSION OF CERTAIN EXCEPTED SERVICE POSITIONS IN THE 
              UNITED STATES FIRE ADMINISTRATION TO COMPETITIVE SERVICE 
              POSITIONS.

    (a) In General.--No later than the date described under subsection 
(d)(1), the Director of the Federal Emergency Management Agency and the 
Director of the Office of Personnel Management shall take such actions 
as necessary to convert each excepted service position established 
before the date of the enactment of this Act under section 7(c)(4) of 
the Federal Fire Prevention and Control Act of 1974 (15 U.S.C. 
2206(c)(4)) to a competitive service position.
    (b) Effect on Employees.--Any employee employed on the date of the 
enactment of this Act in an excepted service position converted under 
subsection (a)--
            (1) shall remain employed in the competitive service 
        position so converted without a break in service;
            (2) by reason of such conversion, shall have no--
                    (A) diminution of seniority;
                    (B) reduction of cumulative years of service; and
                    (C) requirement to serve an additional probationary 
                period applied; and
            (3) shall retain their standing and participation with 
        respect to chapter 83 or 84 of title 5, United States Code, 
        relating to Federal retirement.
    (c) Prospective Competitive Service Positions.--Section 7(c)(4) of 
the Federal Fire Prevention and Control Act of 1974 (15 U.S.C. 
2206(c)(4)) is amended to read as follows:
            ``(4) appoint faculty members to competitive service 
        positions and with respect to temporary and intermittent 
        services, to make appointments of consultants to the same 
        extent as is authorized by section 3109 of title 5, United 
        States Code;''.
    (d) Effective Date.--(1) Except as provided under paragraph (2), 
this section shall take effect on the first day of the first pay 
period, applicable to the positions described under subsection (a), 
beginning after the date of the enactment of this Act.
    (2)(A) The Director of the Federal Emergency Management Agency and 
the Director of the Office of Personnel Management shall take such 
actions as directed under subsection (a) on and after the date of the 
enactment of this Act.
    (B) Subsection (c) shall take effect on the date of the enactment 
of this Act.

SEC. 605. ELIGIBILITY FOR CERTAIN SURVIVOR ANNUITY BENEFITS.

    For the purpose of determining eligibility for survivor annuity 
benefits for a former spouse under section 8341 of title 5, United 
States Code, an application of any former spouse shall be approved if--
            (1) the annuitant is deceased;
            (2) the former spouse was living as of January 1, 1992;
            (3) the former spouse has not received Social Security 
        benefits based on eligibility as the spouse of the annuitant;
            (4) such application was filed on or after January 1, 1989;
            (5) the annuitant rendered at least 25 years of creditable 
        service to the Federal Government;
            (6) at the time of the annuitant's retirement, the 
        annuitant and the former spouse had been married at least 25 
        years;
            (7) at the time of the annuitant's retirement, the 
        annuitant designated the former spouse to receive survivor 
        annuity benefits;
            (8) the annuitant and the former spouse were divorced prior 
        to September 14, 1978, and after the annuitant retired;
            (9) neither at the time of the divorce nor at any time 
        thereafter was a joint waiver of survivor annuity benefits 
        executed between the annuitant and the former spouse;
            (10) the divorce decree was silent as to survivor annuity 
        benefits or designated the former spouse to receive survivor 
        annuity benefits;
            (11) subsequent to the divorce of the annuitant and the 
        former spouse, the annuitant advised the Office of Personnel 
        Management of the divorce;
            (12) neither the annuitant nor the former spouse married 
        any other individual after their divorce from each other;
            (13) no direct notice outlining or defining the former 
        spouse's survivor annuity benefits election rights was 
        delivered to the former spouse by the Office of Personnel 
        Management; and
            (14) the former spouse has exhausted all judicial remedies 
        up to and including remedies available through the United 
        States Court of Appeals.

SEC. 606. AMENDMENT TO PUBLIC LAW 104-134.

    Paragraph (3) of section 3110(b) of the Omnibus Consolidated 
Rescissions and Appropriations Act of 1996 (Public Law 104-134; 110 
Stat. 1321-343) is amended to read as follows:
    ``(3) The Corporation shall pay to the Thrift Savings Fund such 
employee and agency contributions as are required by sections 8432 and 
8351 of title 5, United States Code, for those employees who elect to 
retain their coverage under the Civil Service Retirement System or the 
Federal Employees' Retirement System pursuant to paragraph (1).''.

SEC. 607. MISCELLANEOUS AMENDMENTS RELATING TO THE HEALTH BENEFITS 
              PROGRAM FOR FEDERAL EMPLOYEES.

    (a) Definition of a Carrier.--Paragraph (7) of section 8901 of 
title 5, United States Code, is amended by striking ``organization;'' 
and inserting ``organization and the Government-wide service benefit 
plan sponsored by an association of organizations described in this 
paragraph;''.
    (b) Service Benefit Plan.--Paragraph (1) of section 8903 of title 
5, United States Code, is amended by striking ``plan,'' and inserting 
``plan, underwritten by participating affiliates licensed in any number 
of States,''.
    (c) Preemption.--Section 8902(m) of title 5, United States Code, is 
amended by striking ``(m)(1)'' and all that follows through the end of 
paragraph (1) and inserting the following:
    ``(m)(1) The terms of any contract under this chapter which relate 
to the nature, provision, or extent of coverage or benefits (including 
payments with respect to benefits) shall supersede and preempt any 
State or local law, or any regulation issued thereunder, which relates 
to health insurance or plans.''.

SEC. 608. PAY FOR CERTAIN POSITIONS FORMERLY CLASSIFIED AT GS-18.

    Notwithstanding any other provision of law, the rate of basic pay 
for positions that were classified at GS-18 of the General Schedule on 
the date of the enactment of the Federal Employees Pay Comparability 
Act of 1990 shall be set and maintained at the rate equal to the 
highest rate of basic pay for the Senior Executive Service under 
section 5382(b) of title 5, United States Code.

SEC. 609. REPEAL OF SECTION 1307 OF TITLE 5 OF THE UNITED STATES CODE.

    (a) In General.--Section 1307 of title 5, United States Code, is 
repealed.
    (b) Clerical Amendment.--The table of sections for chapter 13 of 
title 5, United States Code, is amended by repealing the item relating 
to section 1307.

SEC. 610. MANDATORY INTERNAL ALTERNATIVE DISPUTE RESOLUTION PROCEDURES.

    (a) In General.--Notwithstanding any other provision of law, each 
agency, in consultation with the Federal Mediation and Conciliation 
Service, may develop mandatory internal alternative dispute resolution 
procedures covering--
            (1) any complaint of discrimination described in clauses 
        (i) through (v) of section 7702(a)(1)(B) of title 5, United 
        States Code;
            (2) any matter appealable to the Merit Systems Protection 
        Board (other than any matter arising under subchapter III of 
        chapter 83 or chapter 84 of title 5, United States Code); and
            (3) any matter reviewable by the Office of Special Counsel.
    (b) Guidelines.--The Federal Mediation and Conciliation Service, in 
conjunction with the Merit Systems Protection Board, the Equal 
Employment Opportunity Commission, the Federal Labor Relations 
Authority, the Office of Special Counsel, and the Office of Personnel 
Management, shall issue guidelines to assist agencies in the 
formulation of appropriate alternative dispute resolution procedures. 
Such guidelines shall include protections against undue influence on 
either part to settle, identification of circumstances in which use of 
such procedures may be inappropriate, suggested time frames for all 
steps in such procedures and for extensions of time frames by mutual 
consent, and procedures for agreements to stipulate to issues of fact 
or law if no resolution is reached.
    (c) Definition.--For purposes of this section, the term ``agency'' 
means an Executive agency, as defined by section 105 of title 5, United 
States Code.