[House Report 104-831]
[From the U.S. Government Publishing Office]



104th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES

 2d Session                                                     104-831
_______________________________________________________________________


 
                OMNIBUS CIVIL SERVICE REFORM ACT OF 1996
                                _______
                                

 September 24, 1996.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

  Mr. Clinger, from the Committee on Government Reform and Oversight, 
                        submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 3841]

     [Including cost estimate of the Congressional Budget Office]5

    The Committee on Government Reform and Oversight, to whom 
was referred the bill (H.R. 3841) to amend the civil service 
laws of the United States, and for other purposes, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.

                                CONTENTS

                                                                   Page
  I. Background and Need for the Legislation.........................26
 II. Legislative Hearings and Committee Actions......................30
III. Committee Hearings and Written Testimony........................30
 IV. Explanation of the Bill.........................................34
  V. Compliance with Rule XI.........................................51
 VI. Budget Analysis and Projections.................................51
VII. Cost Estimate of the Congressional Budget Office................51
VIII.Inflationary Impact Statement...................................56

 IX. Changes in Existing Law.........................................56
  X. Committee Recommendation........................................96
 XI. Congressional Accountability Act; Public Law 104-1..............96

The amendment is as follows:.....................................
Strike out all after the enacting clause and insert in lieu 
  thereof the following:.........................................

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 be 
        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.

                      Short Summary of Legislation

     H.R. 3841, the Omnibus Civil Service Reform Act of 1996, 
revises the Executive Branch's ability to conduct demonstration 
projects under Chapter 47 of Title 5, U.S. Code, and enhances 
the role of performance management in several employee 
evaluation activities. The bill expands the array of benefits 
available under the Thrift Savings Plan, including enabling new 
employees to begin contributing to their retirement accounts 
when they enter the workforce, allowing entering employees to 
roll their individual 401(k) retirement accounts into their 
Thrift Savings Plan accounts, and liberalizing the terms under 
which employees can borrow or withdraw their contributions.
     The bill also authorizes agencies to exercise additional 
flexibility in reducing their workforces by allowing employees 
to volunteer for RIFs and by authorizing employees to enter 
into nonreimbursable details as a means of demonstrating their 
skills for potential new employers. The bill creates a variety 
of ``soft-landing'' options to ease the transition between 
federal and private sector employment. These include allowing 
employees to continue their Federal Employees Group Life 
Insurance coverage by paying the premiums after leaving federal 
service, extending for up to eighteen months the period during 
which agencies may continue to pay the employer share of 
premium in the Federal Employees Health Benefits Program, and 
creating a combination of within-agency priority placement 
programs, education, retraining, and relocation assistance 
programs that will ease post-federal employment transitions.
     The bill enables agencies to reimburse federal employees 
for the costs of certain forms of liability insurance, 
authorizes disbarment of health care providers who have 
committed fraud against the Federal Employees Health Benefits 
Program, and will ensure that FBI personnel have access to the 
same Merit System Protection Board personnel appeals system as 
other federal employees.

               I. Background and Need for the Legislation

     Laws governing the federal civil service have not had a 
major revision since the Civil Service Reform Act of 1978. 
Federal human resources management policies were a prime target 
of the Clinton Administration's National Performance Review, 
and the Administration proposed a ``Federal Human Resources 
Management Reinvention Act of 1995'' to address deficiencies 
that were identified in agencies' examination of human resource 
laws and regulations. The Civil Service Subcommittee conducted 
nearly twenty hearings throughout 1995 and the beginning of 
1996, into various aspects of federal human resource management 
policies. The Subcommittee identified a number of problem areas 
in need of reform.

                       a. demonstration projects

     One leading element of the Administration's proposal was a 
broad capacity to expand current provisions of Chapter 47 of 
Title 5, U.S. Code. These provisions restrict demonstration 
projects to a total of ten government wide, require that 
demonstration projects cover no more than 5,000 people, impose 
extensive approval processes and reporting on the agencies 
conducting them, but do not provide for effective evaluation 
and resolution of demonstration projects. As a result, OPM 
reported at the Subcommittee's July 16 hearing that only one 
demonstration project is in progress, but the agency 
anticipates that several more could be approved quickly under 
more workable provisions of law.
     While the Civil Service Subcommittee initiated this review 
of federal law, the Congress authorized the Federal Aviation 
Administration to establish an alternative personnel management 
system (in the Transportation Appropriations Bill for FY-1996), 
and authorized the Department of Defense to conduct a 
demonstration project with its acquisitions workforce. That 
provision of the Department of Defense Authorization Act of 
1995 enabled the Department to exceed the 5,000 employee 
ceiling established for demonstration projects in Title 5, U.S. 
Code. Neither of these activities would count within the 10 
project limit in Chapter 47 because they are authorized by 
separate legislation. The Congress encountered human resources 
management problems in issues related to workforce reductions 
at the National Security Agency, during deliberations related 
to proposals to eliminate Cabinet Departments and other 
agencies, and in the course of other efforts to consolidate 
functions currently performed in different agencies. At several 
hearings, the Civil Service Subcommittee heard witnesses 
emphasize the importance of flexibility for managers who would 
have to exercise responsibility for reducing agency staff. 
These factors all contributed to the Subcommittee's desire to 
provide legislation to resolve some of the crucial issues 
facing the federal workforce.

                   B. Performance and Accountability

    The Subcommittee's initial hearings (October 12, 13, and 
25, 1995) provided opportunities for the Administration, 
employee organizations, officials from previous 
administrations, scholars, and other organizations to describe 
the deficiencies of current personnel management systems. 
Witnesses agreed that agencies faced different issues as a 
result of efforts to reduce the size and scope of government 
than they had experienced in recruiting, hiring, training, 
promoting, and retaining personnel for large agencies. When new 
technologies were introduced, and required changes in 
employees' skills, or when functions were changed in agencies, 
agencies often could not adapt to new requirements. OPM 
authorized agencies to institute new personnel evaluation and 
rating systems, including options for ``pass/fail'' systems, 
and many agencies appeared eager to move toward less rigorous 
evaluation procedures. Mrs. Morella, during hearings, expressed 
strong reservations about ``pass/fail'' ratings, and several 
witnesses agreed that such systems worked contrary to efforts 
to improve links between performance and accountability. With 
the repeal of the Performance Management and Recognition System 
in 1993 agencies encounter growing challenges rewarding those 
who excel and achieving accountability for failures of 
government operations.

               C. Enhancement of the Thrift Savings Plan

    The Subcommittee's hearings identified that the key 
obstacles to providing employees the flexibility needed to move 
between positions in the private sector and public service 
center on the portability of benefits. Employees are less 
likely to move between positions if they fear that they would 
lose pension rights, insurance benefits, access to and coverage 
for health care needs, or other concerns. Several Members 
introduced legislation to ease transitions, with many of the 
proposals initially centered upon the Department of Defense 
base closures, but with the concerns shared widely among 
Members and affected organizations.
    One critical factor in increasing the portability of 
retirement funds is the ability of employees to control funds 
that are contributed toward retirement accounts. Since its 
introduction in 1986, the Thrift Savings Plan (TSP) component 
of the Federal Employees Retirement System (FERS) has increased 
participation among federal employees and gained market 
confidence to the extent that its three investment options now 
contain more than $30 billion in assets. Mrs. Morella 
introduced a bill to increase the investment options available 
under the Thrift Savings Plan. As a result of borrowing 
problems identified during the government shutdowns of November 
and December, 1995, the Subcommittee added provisions that 
would reduce restrictions on employees either borrowing from or 
withdrawing savings that they had deposited into TSP accounts. 
The Subcommittee also addressed portability concerns by 
including provisions that would enable employees entering 
federal service to deposit funds into TSP accounts that had 
accumulated in 401(k) plans or other private retirement 
accounts.

                     D. Reorganization Flexibility

    During the Subcommittee's May 23, 1996, hearing, the 
General Accounting Office testified that it had incorporated 
provisions into its new reduction-in-force regulations that 
allowed employees to volunteer for a RIF if that might serve 
the agency's requirements for staff reduction. The Subcommittee 
had previously approved similar voluntary RIF provisions in FY 
1996 authorizing legislation for the Department of Defense. By 
allowing employees not otherwise affected by a RIF to volunteer 
the jobs of non-retirement eligible employees can be spared.
    The Subcommittee also concluded that greater flexibility to 
detail employees to other agencies might be used to facilitate 
the exchange of personnel within government. Current law 
permits temporary assignments of employees between agencies 
only when the receiving agency assumes payroll costs. By the 
elimination of the requirement for reimbursement donor agencies 
could facilitate the placement of their surplus employees on a 
trial in other agencies.

                            E. Soft Landings

    In addition to pension portability, several other concerns 
dominate the attention of federal employees who face potential 
loss of positions during downsizing. Options for continuation 
of life and health insurance, measures that would strengthen 
the portability of pensions, and assistance with costs 
associated with education, professional training, or relocation 
were combined into legislation introduced by Mr. Wolf and co-
sponsored by several other Members. H.R. 2751, as introduced, 
gained considerable support, and was endorsed broadly by 
several Members at a hearing conducted May 8, 1996.
    The bill would provide federal employees the ability to 
continue life insurance coverage after separation from service 
by paying premiums. It would authorize agencies to continue 
payment of the government's portion of health insurance 
premiums for as long as eighteen months after separation. Under 
this authority, federal agencies would be required to establish 
internal priority placement programs, and could provide 
employees with outplacement counseling services. The bill also 
contains incentives that would enable agencies to reimbursement 
for the costs associated with retraining, additional education, 
or relocation associated with taking a position outside of 
federal service.

                          F. Other Provisions

    The Subcommittee included in this bill provisions that can 
address a series of proposed improvements in federal human 
resources management practices. The Senior Executives 
Association recommended that agencies be authorized to purchase 
liability insurance for federal employees who might be subject 
to litigation for actions undertaken in the course of official 
duties, but whose agencies might be unwilling to provide full 
defense counsel for them.
    When activities performed by federal agencies are converted 
to contract under OMB Circular A-76, affected employees are 
granted a ``right of first refusal'' to positions with the 
contractor. This provision is currently adopted only in 
Executive Order, and the Subcommittee believes that it would 
provide additional employment security to employees who might 
be affected by contracting of commercial activities now 
performed by government agencies.
    The bill also carries a number of additional provisions 
which address some long standing civil service problems and 
amendments of a technical nature. These include debarment of 
health care providers found to have engaged infraudulent 
practices, conversion of certain positions in the United States 
Fire Administration, and establishment of mandatory alternative 
dispute resolution (ADR) procedures. The ADR provisions are 
intended to address the growing disenchantment with the current 
appeals mechanism in the federal workplace.
    The National Performance Review had called attention to the 
need for a review of the appeals process and the Treasury 
Postal Appropriations Subcommittee of the House had charged OMB 
with the preparation of a report to the Congress on this 
matter. The Senior Executive Association testified at Civil 
Service Subcommittee hearings that managers believe that the 
current appeals system does not deter disgruntled employees 
from filing false or frivolous claims, causing many managers to 
hesitate to deal with problem performers. GAO testified that 
the average time between filing a complaint with the employing 
agency and an Equal Employment Opportunity Commission decision 
averages more than 800 days. Federal employees also file 
workplace discrimination complaints at six times the rate of 
private sector employees. Between 1991 and 1994, the number of 
discrimination complaints filed has risen substantially, to the 
extent that the inventory of appeals to EEOC of agencies'' 
final decisions has tripled. During 1994, MSPB decided 2,000 
``mixed cases,'' (that is, cases involving claims of 
discrimination as well as some other prohibited personnel 
practice). It found discrimination in only eight of them. 
Employees who are dissatisfied with an MSPB decision on a 
discrimination claim can file with the EEOC. GAO reports that 
EEOC disagreed with the MSPB in only three out of 200 cases 
that were appealed during 1994, and that MSPB accommodated its 
findings to the EEOC position in those cases.
    Provisions to streamline the employee appeals process had 
been included in this bill in an attempt to alleviate some of 
the burdens in the current system. At the request of the 
minority, the Subcommittee agreed to remove the proposed 
remedies pending further discussions and considerations. 
Provisions to encourage greater use of alternative dispute 
resolutions were substituted instead.

             II. Legislative Hearings and Committee Actions

    H.R. 3841 was introduced by Civil Service Subcommittee 
Chairman John L. Mica (for himself, Mr. Moran, and Mrs. 
Morella) on July 17, 1996, and referred to the Committee on 
Government Reform and Oversight. The bill combined provisions 
that had previously been introduced as H.R. 2082, H.R. 2306, 
H.R. 2683, H.R. 2688, H.R. 2751, H.R. 2825, H.R. 2858, H.R. 
3129, H.R. 3483, H.R. 3574, S. 1488, and H.R. 3649. The Civil 
Service Subcommittee conducted a hearing on the bill on July 
16, 1996. The bill was marked-up in the Civil Service 
Subcommittee on July 18, 1996, where Subcommittee Chairman Mica 
presented the bill.
    One amendment was offered by Mr. Moran and agreed to 
without objection. This amendment struck Section II of H.R. 
3841, which would have streamlined the appeals process 
available to federal employees. The Subcommittee agreed to 
continue discussions on this topic to develop acceptable 
language for an amendment which would be included later in the 
legislative process.
    The Government Reform and Oversight Committee met on July 
25, 1996 to consider H.R. 3841. Civil Service Subcommittee 
Chairman presented an amendment in the nature of a substitute 
to H.R. 3841, reflecting the Subcommittee amendment. Mr. Moran 
offered three amendments, en bloc, which were agreed to without 
objection. The first amendment directs the General Accounting 
Office to conduct a study and submit a report to the Committee 
on Government Reform and Oversight. The report would analyze 
the relationship of performance rating systems and several 
designated personnel actions. The second amendment requires 
federal agencies to establish alternative dispute resolution 
procedures that would precede formal appeals procedures through 
the Merit Systems Protection Board and/or the Equal Employment 
Opportunity Commission. The third amendment struck section 604 
of the bill, which would have extended to certain employees of 
the Federal Bureau of Investigation appeal rights before the 
Merit Systems Protection Board that are available to employees 
of other agencies. Mrs. Morella offered an amendment, which was 
agreed to without objection, to require the Office of Personnel 
Management to ensure that employees rated under different 
performance evaluation systems are treated equitably in the 
event of a reduction in force. The bill, as amended, was 
favorably reported to the House unanimously by voice vote and 
without further amendment by the full Committee.

             III. Committee Hearings and Written Testimony

    The Civil Service Subcommittee began a series of hearings 
specifically addressing civil service reform proposals on 
October 12 and 13, 1995. The National Performance Review's 
review of federal human resources policies concluded, ``The 
federal human resource administrative system contains major 
impediments to efficient and effective management of the 
workforce.'' Chairman Mica observed, ``We must redirect 
government agencies to address changing priorities as we head 
into the Twenty-First Century. American business and industry 
have undergone dramatic changes in the past decade. Now, our 
federal government and civil service system must also respond 
to changing times.''
    Office of Personnel Management (OPM) Director James B. King 
described a system whose major strength is that it protects 
merit principles and advances the interests of the nation's 
veterans, but does so through systems that are too rigid and 
complex, causing agencies to focus on process rather than 
results. Office of Management and Budget (OMB) Deputy Director 
for Management John Koskinen described changes in the 
professional qualifications desired of many federal managers, a 
contrast with the skills sought a generation ago. The 
Administration desired greater flexibility in managing their 
personnel while adhering to merit system principles. Deputy 
Secretary Mortimer Downey of the Department of Transportation 
contended that current civil service laws and procedures do not 
support efforts to develop high-performance units that reward 
knowledge, judgment, teamwork, and problem solving in response 
to rapidly changing forces. He claimed that the system 
encourages hierarchy at the expense of accountability. The 
Government Performance and Results Act (GPRA) is promoting some 
changes, but more will be needed to hire and develop an 
effective future workforce. Dr. Walter Broadnax, Deputy 
Secretary of the Department of Health and Human Services, 
focussed upon the classification and compensation issues. In 
response to Chairman Mica's question, both Deputy Secretaries 
agreed on the desirability for more flexible methods of 
addressing problems of poor performance.
    Panelists agreed that the current system to remove poor 
performers is something that managers will only use once. 
Director King observed that, in a reduction-in-force (RIF) 
situation, employees having ``bumping'' rights might not be 
suited to the lower-level positions that they could occupy 
after a RIF. In effect, current supervisors could be impaired 
by their ineffective management of the performance rating 
system. In response to questions from Mrs. Morella, both Deputy 
Secretaries admitted that their agencies are moving in the 
direction of ``pass/fail'' appraisal systems, broadly linked to 
organizational goals.
    Mr. L. Nye Stevens, the General Accounting Office's 
Director of Federal Workforce and Management Issues, observed 
that although there is broad agreement about the principles 
underlying the National Performance Review's sense of 
direction, he has not discerned much legislative support for 
specific measures to implement them. Former OPM Director 
Constance Horner stressed the importance of linking future 
performance ratings to objective measures, as contemplated by 
the Government Performance and Results Act.
    The Civil Service Subcommittee conducted a hearing on 
performance management in the federal workforce on October 26, 
1995. Chairman Mica observed that federal agencies appear to 
have difficulties managing people, and that the major reform 
initiatives envisioned in the Civil Service Reform Act of 1978 
have not improved the performance and accountability of federal 
agencies. OPM data report that 99.6 percent of federal 
employees are rated ``fully successful'' or better, with 73 
percent rated ``exceeds fully successful'' or ``outstanding.'' 
Nonetheless, data provided by the Merit Systems Protection 
Board (MSPB) showed that 78 percent of federal managers believe 
that they have supervised employees defined as ``poor 
performers,'' and they lack confidence that the government's 
human resource management tools are adequate to address 
problems related to poor performance. Thus, only 23 percent of 
these managers initiated measures to demote or terminate 
problem employees.
    Mrs. Morella commented that she had reservations about 
moving toward ``pass/fail'' performance evaluation systems, and 
that previous hearings left her with the impression that 
federal managers were more interested in managerial flexibility 
than the related accountability. Effective performance rating 
systems should probably include methods of weighting the 
multiple factors involved in evaluation.
    Ms. Sandra O'Neil of the Society for Human Resource 
Management, indicated that a three-point scale can be 
sufficient to identify superior and ineffective employees while 
minimizing the inclination to inflate ratings that is involved 
in more differentiated systems. Dr. Joyce Shields, of Hay 
Management Consultants, Inc., stressed that evaluation systems 
should be linked to superior performance, and include 
incentives for improvement. Effective organizations frequently 
obtain 360-degree feedback, with sources including peers, 
supervisors, subordinates, customers, and self-evaluations. 
Line management is held accountable, and good systems are 
designed to increase employees'' skills. Performance management 
needs selective reinvention to support the government's budget-
balancing efforts. Dr. Shields observed that effective measures 
to address poor performance begin on the front end--emphasizing 
the high expectations of excellent performers--but must include 
top-down willingness to impose sanctions on poor management.
    Mr. Frank Cipolla, of the National Academy of Public 
Administration, observed that a performance management system 
requires a link between individuals and the organization's 
performance. Performance issues are addressed best by designing 
workflow, according to intended outcomes that are defined 
early. The Government Performance and Results Act of 1993 
provides a vehicle to implement these procedures in federal 
agencies. He observed that the multiple appellate systems 
affecting federal agencies need to be streamlined. Even 
streamlining, however, will not make the system effective 
unless managers are willing to use available accountability 
mechanisms. Any comprehensive civil service reform would have 
to incorporate rethinking of career and tenure-based employment 
principles. Although concerns about performance have been 
central to previous civil service reforms, we still don't have 
a system that works well. He emphasized the need for rethinking 
of the classification system. The panel agreed that the private 
sector shares many of the government's human resource 
management problems in the area of performance assessment.
    On November 29, 1996 the Civil Service Subcommittee held a 
hearing to identify the issues attendant with streamlining the 
appeals procedures for federal employees. Evangeline Swift, 
Director of Policy and Evaluation at the Merit Systems 
Protection Board (MSPB), reported that the agency received 
8,775 appeals in 1994, of which only 204 were appeals of 
performance-based actions under Chapter 43. Of the 224 appeals 
heard by the Board that year, 109 involved affirmative defenses 
alleging discrimination. MSPB conducted a survey of 5,700 
federal managers, and many of the respondents believe that, if 
they took action, management would not support them if 
challenged. They also reported that they frequently received 
inconsistent and contradictory guidance from agency experts on 
the procedures. Despite the sentiments reflected in the survey, 
Ms. Swift observed that most terminations are unchallenged, and 
when they are challenged, management is upheld in the vast 
majority of cases.
    Mr. G. Jerry Shaw, executive director of the Senior 
Executive Association, argued that to take an action against a 
poorly performing employee is to invite a plethora of attacks 
by the employee on the manager. The Senior Executives 
Association surveyed its members, and found numerous reports of 
``frequent filers,'' many of them filing frivolous complaints 
in a multitude of forums. Agencies are widely believed to be 
willing to settle rather than contest the claims, especially in 
light of the diversion of time and effort involved in 
addressing them. The plethora of frivolous complaints clogging 
the system appear to have crowded out legitimate complaints 
that don't get filed because of the delays involved.
    Mr. Robert E. Tobias, National President of the National 
Treasury Employees Union, asserted that current federal 
procedures are easier and the burden of proof is less 
burdensome than private organizations. He contended that the 
current failure is a failure to engage the perceived poor 
performer and provide support, assistance, and training. If 77 
percent of managers with problem employees took no action, that 
is not a system failure. Nonetheless, the widespread perception 
of systemic flaws demands a response, and Mr. Tobias would 
substitute an arbitration system, fashioned through collective 
bargaining, as a one-stop alternative to the current system. 
Mr. Shaw also contended that the Civil Service Reform Act's use 
of ``substantial'' evidence, rather than a ``preponderance'' 
has appropriately reduced what had been an excessive burden of 
proof on agencies.
    On May 8, 1996, the Civil Service Subcommittee conducted a 
hearing on legislation addressing issues related to federal 
workforce reductions and proposed measures to provide soft 
landings for affected federal employees. H.R. 2751, a proposal 
introduced by Mr. Wolf and several colleagues to provide 
separation incentive payments, retraining, relocation, and 
educational assistance, and to continue health and life 
insurance coverage for separated employees consolidated several 
measures addressing related issues. Delegate Norton proposed 
the creation of both government-wide and agency priority 
placement systems for federal employees who might be separated 
during workforce reductions. Mrs. Morella recommended H.R. 2825 
to provide additional re-employment training opportunities for 
federal employees. Several members recommended measures to 
waive requirements that employees who retire before qualifying 
for full annuities receive pensions that are reduced 
commensurate with their lower age at separation.
    The Civil Service Subcommittee continued its oversight of 
the Administration's workforce reduction efforts at a hearing 
on May 23, 1996. This hearing demonstrated that the 
Administration spent more than $2.8 billion providing voluntary 
separation incentive payments (buyouts) to federal employees 
without achieving the restructuring goals targeted by the 
National Performance Review. Mr. Timothy P. Bowling, Associate 
Director of the General Accounting Office for Federal Workforce 
Management Issues testified that the Administration is ahead of 
the workforce reduction goals established by the Federal 
Workforce Restructuring Act of 1994 (P.L. 103-226), but added 
that nearly all federal workforce reductions in 1997 will focus 
on the Department of Defense; non-defense agencies are slated 
to increase employment by 2,000 positions. The managerial 
functions that were targeted by NPR, however, have not been 
reduced consistent with those recommendations. Indeed, in some 
cases, those functions have increased as a portion of the 
federal workforce.
    Mr. John A. Koskinen, OMB's Deputy Director for Management, 
testified that ``budgetary resources are not expected to be 
available to the agencies to meet the salary and other costs of 
a workforce that is any larger'' than provided under the 
Federal Workforce Restructuring Act. Both Koskinen and OPM 
Director King recommended the Administration's approach to 
adjusting civil service laws to manage workforce reductions 
more effectively than possible under current provisions. G. 
Jerry Shaw, General Counsel of the Senior Executive 
Association, remarked that the current efforts to reduce the 
federal workforce is having a major impact on middle managers 
and professionals that differs from previous workforce 
reductions, and he recommended that the Subcommittee consider 
the different retraining requirements that derive from these 
differences.
    The General Accounting Office also reported to the 
Subcommittee on its revision of RIF regulations and recommended 
the inclusion of authority to volunteer for RIFs.
    On July 16, 1996, the Civil Service Subcommittee invited 
several witnesses to provide comments on draft provisions under 
consideration for inclusion in the bill. The Office of 
Personnel Management remained supportive of the 
Administration's recommendations, and advised that it would 
have no problems implementing the measures contemplated. Roger 
W. Mehle testified that the Federal Retirement Thrift 
Investment Board, which governs the Thrift Savings Plan, was 
receptive to the additional options being provided for federal 
employees'' investments. The Board advised that provisions 
eliminating restrictions on employees ability to borrow or 
withdraw their TSP contributions could result in administrative 
savings.

            IV. Explanation of the Bill--Section by Section

Section 1. Short title and table of contents.

    This section provides a short title for the bill, the 
``Omnibus Civil Service Act of 1996,'' and a table of contents.

                    TITLE I--DEMONSTRATION PROJECTS

Section 101. Demonstration projects

    This section provides increased authority and streamlined 
procedures for the Office of Personnel Management (OPM) and 
other agencies to conduct demonstration projects. It permits 
agencies to develop demonstration projects on their own 
initiative and submit them to OPM for approval. Under this 
section, government corporations may participate in 
demonstration projects. This section also amends current law to 
permit the waiver of laws relating to leave other than Family 
and Medical Leave and to prohibit the waiver of subchapters II 
and III of chapter 73 of title 5, United States Code.
    This section establishes new limits on the time and scope 
of demonstration projects, increases the number of projects 
permitted, and lifts the current cap on the number of employees 
who may be covered. Demonstration projects may last for a 
maximum of 5 years. However, they may be continued beyond that 
date for a maximum of 2 years to the extent necessary to 
validate the results. The limit on the number of demonstration 
projects that may be in effect at any one time is increased 
from 10 to 15, not more than 5 of which may involve more than 
5,000 employees each (exclusive of employees in control 
groups).
    OPM may require the agency conducting a demonstration 
project to also perform the mandatory evaluation of the results 
of the project and its impact on public management.
    This section also requires OPM to take any corrective 
action within its authority if it determines that the 
termination of a demonstration project would create inequities 
for participating employees. If legislation is necessary to 
correct the inequity, OPM is required to submit an appropriate 
legislative proposal to Congress. OPM is also required to 
submit an appropriate legislative proposal to Congress if it 
determines that a demonstration project should be made 
permanent.

              TITLE II--PERFORMANCE MANAGEMENT ENHANCEMENT

Section 201. Increased weight given to performance management for 
        retention in a RIF

    This section puts increased emphasis upon performance in 
determining who is retained during a reduction in force (RIF). 
It builds upon and modifies OPM's current regulatory scheme for 
weighing performance in RIFs. Under this section, employees 
will be credited with additional years of service based upon 
the sum of their three most recent performance ratings (or 
assumed ratings) in the four years preceding the RIF or the 
agency-established cutoff date. Employees will earn five years 
of additional service for each rating of fully successful or 
equivalent (Level 3), 7 years for each rating of exceeds fully 
successful or equivalent (Level 4), or 10 years for each rating 
of outstanding or equivalent (Level 5).
    This section also establishes rules for crediting years of 
service when an agency uses a pass/fail appraisal system, a 
two-level system, and one with three or more levels to measure 
performance at the level of fully successful or better. 
Employees earn 5 years of additional service for each ``pass'' 
rating. In a two-level system, they earn 5 years for the lower 
rating, and 7 for the higher. When an agency uses three or more 
levels, employees earn 5 years for the lowest rating, 7 for the 
next highest, and 10 for each higher rating.
    Employees who have not received one or more of the three 
actual performance ratings required will be credited with 5 
years of service for each missing rating.
    This section requires GAO to issue a report to the House 
Committee on Government Reform and Oversight and the Senate 
Committee on Governmental Affairs analyzing a number of issues 
related to performance management, including the compatibility 
of ``pass/fail'' performance systems with the statutory 
requirement that efficiency or performance ratings be given 
``due effect'' during RIFs, and recommend improvements in the 
effectiveness of federal performance evaluation systems. The 
study is due within 270 days of the date of enactment.
     This section also requires OPM to issue regulations to 
ensure that in RIFs occurring on or October 1, 1999, employees 
are treated equitably when their agency has more than one 
performance evaluation system and that employees in the same 
competitive area are not adversely affected as a result of 
having been covered by different performance systems.
    The RIF rules established in this section will apply to 
RIFs taking effect on or after October 1, 1999.

Section 202. No appeal of denial of periodic step increases

    This section amends 5 U.S.C. Sec. 5535 to eliminate appeals 
of denials of within-grade step increases to the Merit Systems 
Protection Board. Nothing in this section is intended to 
prohibit an employee from grieving the denial of a within-grade 
increase under any grievance procedure.
    The section also changes the standard for determining when 
an employee may receive a step increase from work at ``an 
acceptable level of competence'' to fully successful 
performance or better.

Section 203. Performance appraisals

    This section amends 5 U.S.C. Sec. 302 to provide (1) that, 
in addition to reassignments, reductions in grade, and 
removals, agencies may take ``any other appropriate action'' 
against a poor performer and (2) that an employee must be 
afforded an opportunity to demonstrate acceptable performance 
before the agency proposes to demote or remove the employee for 
unacceptable performance. The employee is not entitled to 
another opportunity to demonstrate acceptable performance if 
the employee's performance is again determined to be 
unacceptable.
    This section shall take effect 180 days after the date of 
enactment, but shall not apply to any proposed action as to 
which the employee has received advance written notice in 
accordance with 5 U.S.C. Sec. 4303(b)(1)(A) before the 
effective date.

Section 204. Amendments to incentive awards authority

    This section amends the definitions in 5 U.S.C. Sec. 4501 
to eliminate all references to the government of the District 
of Columbia. It also amends section 4503 to permit cash awards 
to groups based upon a suggestion, invention, superior 
accomplishment, act, service, or other meritorious act of a 
group of employees collectively. A group award is permissible 
when, for example, it is infeasible to determine the relative 
role or contribution of each individual member of the group. 
Each member's award may not exceed the limits established in 
section 4502, and the awards to members of the group must be 
equal. However, awards may be prorated to reflect differences 
in the period of time during which an individual was a member 
of the group.

Section 205. Due process rights of managers under negotiated grievance 
        procedures

    In order to protect the due process rights of managers and 
supervisors, this section amends 5 U.S.C. Sec. 7121 to 
eliminate the requirement that arbitrators'' have the authority 
to require agencies to discipline an individual in a case 
involving an alleged prohibited personnel practice. This 
section takes effect on the date of enactment and applies with 
respect to orders issued on or after that date notwithstanding 
the provisions of any collective bargaining agreement.

Section 206. Collection and reporting of training information

    This section requires OPM to collect information concerning 
training programs, plans, and methods utilized by federal 
agencies and submit an annual report to Congress. OPM may also 
collect information on nongovernmental training to the extent 
it considers appropriate in the public interest. On request, 
OPM 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

Section 301. Short title

    The short title for this subtitle is the ``Thrift Savings 
Investment Funds Act of 1996.''

Section 302. Additional investment funds for the thrift savings plan

    This section makes changes to 5 U.S.C. Sec. 8438 which are 
necessary to authorize the addition of the two new investment 
funds. The language is similar to that in section 8438 with 
respect to the Common Stock Index Investment Fund (C Fund), to 
which the two new funds bear the greatest resemblance. Like 
that fund, the two new funds are required to be index funds 
which invest in indices that represent certain defined sectors 
in the equity markets.
    Section 302 makes changes necessary to add the two new 
funds to the list of those the Federal Retirement Thrift 
Investment Board is authorized to establish by subsection 
(b)(1) of section 8438. This is consistent with the statutory 
treatment of the current investment funds. The Board is given 
the responsibility to choose indices and establish investment 
funds that fall within the parameters for each fund as set 
forth in the statute.
    The section also adds two new paragraphs to section 8438(b) 
which describe the parameters of the two new investment funds. 
New paragraph (3) of section 8438(b) describes the requirements 
for the Small Capitalization Stock Index Investment Fund. The 
Board must choose a commonly recognized index that represents 
the market value of the United States equity markets, but 
excluding that portion of the equity markets represented by the 
common stocks included in the C Fund. It is intended therefore, 
that the Small Capitalization Stock Index Fund will be designed 
to replicate the performance of an index representing smaller 
capitalization stocks not held in the C Fund.
    New paragraph (4) describes the requirements for the 
International Stock Index Investment Fund. The Board must 
choose a commonly recognized index that is a reasonably 
complete representation of the international equity markets. 
The term ``international equity markets'' excludes the United 
States equity markets, which are represented by the other 
funds.

Section 303. Acknowledgment of investment risk

    Section 303 amends section 5 U.S.C. Sec. 8439(d), to add a 
reference to the two new investment funds in the section 
requiring each Thrift Savings Plan TSP participant who invests 
in one of the enumerated funds sign an acknowledgment stating 
that he understands that the investment is made at the 
participant's own risk, that the government will not protect 
the participant against any loss on such investment, and that a 
return on the investment is not guaranteed by the government. 
As is the case with the C Fund and the Fixed Income Investment 
Fund, Small Capitalization Stock Index Fund and the 
International Stock Index Fund each carry the risk that an 
investment may lose value. Therefore, it is appropriate to 
require the participant to sign the same acknowledgment of risk 
statement prior to investing in either of these funds.

Section 304. Effective date

    This subtitle will take effect on the date of enactment, 
and the two new funds it establishes will be offered for 
investment at the earliest practicable election period as 
determined by the Executive Director of the Federal Retirement 
Thrift Investment Board.

              Subtitle B. Thrift Savings Account Liquidity

    Subtitle B improves the liquidity of TSP accounts during 
employment and gives federal employees greater flexibility with 
their account upon separation. The amendment gives the 
Executive Director discretion to determine which accounts are 
so small that they should automatically be paid out upon 
separation. Finally, the proposed legislation would eliminate 
any need for and the existence of deferred TSP benefits, 
eliminating the current requirement that participants make an 
election as to how they wish to receive their account earlier 
than is required for all other retirement accounts under the 
Internal Revenue Code. Funds will simply remain on account 
until payment is requested by a participant (or beneficiary) 
required by law, or ordered by a court.

Section 311. Short title

    The short title for this subtitle is the ``Thrift Savings 
Plan Act of 1996.''

Section 312. Notice to spouses for in-service withdrawals; de minimis 
        accounts; Civil Service Retirement System participants

    Section 312(l)(A) eliminates provisions allowing for a 
modification of the date of a withdrawal election after 
separation. Under this subtitle, elections for deferred 
payments are rendered unnecessary and eliminated. Consequently, 
the need to be able to modify the date of an election is no 
longer necessary. Funds will simply remain on account to be 
paid promptly upon request or to satisfy court-ordered or age-
related payment requirements.
    This section includes technical amendments expanding the 
notice available to spouses of CSRS employees to apply to the 
new in-service withdrawals in the same manner it currently 
applies to loans.
    Subsection (2)(A) would eliminate the requirement that the 
Executive Director automatically pay, upon separation, a non-
forfeitable account balance of $3,500 or less where a CSRS 
employee fails to make a valid withdrawal election. This change 
would permit the Executive Director to determine a de minimis 
amount below which the account will automatically be disbursed.

Section 313. In-service withdrawals; de minimis Accounts; Civil Service 
        Retirement System participants

    Section 313 allows TSP participants additional access to 
their TSP accounts at separation by permitting more than one 
type of withdrawal election and prior to separation by adding 
two in-service withdrawal features. Access to TSP funds upon 
separation is currently limited to one of three options; the 
legislation would permit mixed withdrawal elections. Similarly, 
access to TSP funds before separation is currently limited by 
law to loans. Such loans are further limited by the requirement 
that they be approved only for the specific purposes enumerated 
in the statute. The legislation would remove these purpose 
tests. Further, it eliminates elections for deferred withdrawal 
payments.
    This section would eliminate the present statutory 
restriction which permits participants to select only one 
method of withdrawal payment upon separation. Subsection (a) 
would allow the Executive Director to offer, by regulation, a 
separated employee the opportunity to select one or more of the 
presently approved withdrawal options. It would add the option 
to a separated employee to make a one-time withdrawal or 
transfer of any or all of an account in addition to the options 
provided in subsection (a).
    Subsection (a)(3) would eliminate the requirement that the 
Executive Director automatically pay, upon separation, a 
nonforfeitable account balance of $3,500 or less, as was done 
for CSRS employees in section 1(c).
    Subsection (a)(3) would also change the date by which a 
separated participant must make a withdrawal election. 
Employees who separate from service have a number of withdrawal 
options. Currently, the statute provides that the TSP must 
purchase an annuity if the participant has not made a valid 
withdrawal election by February 1 of the year following the 
latest of (1) the year in which the participant turns age 65, 
(2) the tenth anniversary of the year in which the employee 
became subject to the provisions of FERSA, or (3) the 
employee's separation from service. Because the ten-year 
anniversary of the Plan occurs in 1997, this provision would 
first take effect next year.
    The purpose of the current provision is not clear, but it 
may already have caused many participants to become confused 
regarding TSP withdrawals. The change made by this subsection 
will eliminate this arbitrary deadline and simply require that 
annuity payments be made by April 1 of the year following the 
later of the year in which the employee turns age 70\1/2\ or 
the employee's separation from service, unless a withdrawal 
election is made before that time.
    Subsection (a)(5) simplifies and expands the current TSP 
loan program by eliminating the present ``purpose'' 
restrictions on loans. Currently, loan applicants must show 
that they qualify for a loan under one of four purposes 
enumerated in the law. The proposed change would remove this 
restriction and authorize certain withdrawals.
    Subsection (a)(6) would allow employees the option to 
withdraw all or a portion of their vested funds prior to 
separation provided they have attained age 59\1/2\. Employees 
are generally considered to be of retirement age when they 
reach age 59\1/2\. Consequently, they are permitted to withdraw 
retirement funds without the early withdrawal penalty imposed 
on other in-service withdrawals by the Internal Revenue Code.
    Subsection (a)(6) would also allow participants of any age 
to withdraw their own contributions and associated earnings 
prior to separation if they are able to demonstrate a financial 
hardship. Such a withdrawal is a taxable distribution subject 
to an early withdrawal penalty under the Internal Revenue Code 
for those persons under age 59\1/2\. Thus, such withdrawals are 
clearly discouraged but would not be prohibited where there is 
a clear and demonstrable need.
    Subsection (b) would invalidate elections with deferred 
payment dates that have not been executed once participants are 
eligible to submit an election at any time for immediate 
payment.

Section 314. Survivor annuities for former spouses; notice to Federal 
        employees retirement system spouses for in-service withdrawals

    Section 314 contains technical amendments eliminating 
references to changes of a withdrawal election and expanding 
the notice and consent portions of the statute available to 
spouses of FERS employees to apply to the new in-service 
withdrawals in the same manner they currently apply to loans.

Section 315. De minimis accounts relating to the judiciary

    Section 315 would eliminate the requirement that the 
Executive Director automatically pay, upon separation, a 
nonforfeitable account balance of $3,500 or less where FERS 
employees who are justices or judges as defined by section 451 
of title 28, bankruptcy judges and magistrates, or Court of 
Federal Claims judges, fail to make a valid withdrawal 
election, as was done for CSRS and other FERS employees.

Section 316. Definition of basic pay

    Eliminating the special definition of basic pay would have 
the effect of applying to the TSP the same basic pay 
calculation that applies to amounts contributed to the FERS and 
CSRS defined benefit programs. The current definition of basic 
pay for TSP purposes found at 5 U.S.C. Sec. 8341 authorizes the 
use of the ``uncapped'' rate of pay as it relates to Federal 
Wage System employees. This unique definition has caused 
unnecessary confusion and errors in calculations by employing 
agencies. Each year since 1988 Congress has approved 
legislative language requiring that the actual rate of basic 
pay be substituted for the special definition. The elimination 
of the special definition of basic pay for TSP purposes makes 
this change permanent.

Section 317. Eligible rollover distributions

    This section amends 5 U.S.C. Sec. 8432 to permit employees 
and members to transfer to the TSP his or her account balance 
from a plan qualified under section 401(a) or 408(b) of the 
Internal Revenue Code or an Individual Retirement Arrangement 
(IRA) qualified under sections 408(a) or 408(b) to the TSP. 
Such transfers are not permitted under current law. It is not 
clear why Congress did not permit such rollovers. Perhaps 
Congress wanted to insulate the TSP from defects which may be 
found in other qualified plans. For example, prior to 1992 it 
was unclear whether the joint and survivor annuity rules would 
apply to a transfer of funds from a transferror plan. Recent 
changes in the tax law, i.e, the Unemployment Compensation Act 
of 1992, Pub. L. 102-318, 106 Stat. 290 (1992), and final 
regulations issued by the IRS interpreting it, have clarified 
the rules applicable to transfers and rollovers. Under those 
regulations, the TSP will not be subject to rules which are 
applicable to the transferror plan or IRA. It now appears that 
the provisions of the Internal Revenue Code (and IRS 
regulations) encourage the type of transaction contemplated by 
this section.

Section 318. Effective date

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

    Subtitle C. Other Provisions Relating to the Thrift Savings Plan

Section 321. Percentage limitation on contributions

    Under current law, those who participate in the TSP may not 
contribute more than a fixed percentage of their basic pay. The 
caps are either 10% or 5%, depending upon their positions or 
whether they are in the FERS or CSRS retirement plans. This 
section eliminates those caps, which would permit individuals 
to contribute up to the limit established by the Internal 
Revenue Service. This section shall take effect 6 months after 
enactment or at such earlier date the Executive Director may 
prescribe by regulation.

Section 322. Loans under the thrift savings plan for furloughed 
        employees.

    This section amends 5 U.S.C. Sec. 8433(g) to provide that 
an employee who has been furloughed due to a lapse in 
appropriations may not be denied a loan from the TSP solely 
because he or she is not in a pay status.

Section 323. Immediate participation in the thrift savings plan

    This section amends 5 U.S.C. Sec. 8432 (b) to eliminate 
statutorily required waiting periods before employees and 
Members may contribute to the TSP. Under this section, such 
individuals shall be eligible to contribute on the day they 
begin service or, if that is not administratively feasible, on 
the earliest date thereafter that the Executive Director 
determines to be feasible.

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

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

    This section amends 5 U.S.C. Sec. Sec. 8341(e) and 8443(b) 
to provide for the reinstatement the survivors annuity of a 
child that is terminated by reason of marriage if that marriage 
ends by death of the spouse, divorce, or annulment. The annuity 
is to resume on the first day of the month in which the 
marriage ends if (1) the individual repays any lump sum paid 
and (2) the individual is not otherwise ineligible for such 
annuity.
    This section also amends 5 U.S.C. Sec. 8908 that a child 
whose survivor annuity is terminated by reason of marriage and 
then restored may enroll in a health benefits plan under 
sections 8903 or 8903a if such individual was covered by such a 
plan immediately before the annuity was terminated.
    The amendments made by this section shall apply to any 
termination of marriage taking effect before, on, or after the 
date of enactment. However, no annuities shall be payable 
retroactively.

                  Subtitle E. Life Insurance Benefits

Section 341. Domestic relations orders

    This section amends 5 U.S.C. Sec. 8705 to provide that 
death benefits payable under a group life or group accidental 
death insurance policy in effect on the date of an employee's 
death shall be subject to a court decree of divorce, annulment, 
or legal separation, or the terms or any court order or court-
approved property settlement agreement incident to a decree of 
divorce, annulment, or legal separation. The decree, order, or 
agreement shall not be effective unless it is received before 
the date of the employee's death by the employing agency or, if 
the employee has separated from service, by OPM. A designation 
under such a decree, order, or agreement may not be changed 
unless written consent of the designee or a modification of the 
decree, order, or agreement is received before the date of the 
employee's death by the employing agency or, if the employee 
has separated from service, by OPM. OPM shall issue regulations 
to implement this section, including regulations governing the 
receipt of 2 or more decrees, orders, or agreements with 
respect to the same amount.
    This section also amends 5 U.S.C. Sec. 8706 to provide that 
a court decree of divorce, annulment, or legal separation, or 
the terms of a court-approved property settlement agreement 
incidental to such decree may direct an employee or former 
employee to make an irrevocable assignment of such individual's 
insurance policy to a person specified in the court order or 
court- approved settlement agreement.

Section 342. Exception from provisions requiring reduction in 
        additional optional life insurance

    Under existing law, employees who retires on an immediate 
annuity or who become entitled to workers' compensation under 
subchapter I of chapter 81 of title 5 may continue to purchase 
additional optional life insurance. But the amount of that 
insurance is reduced 2% per month at the beginning of the 
second month following the employees 65th birthday. This 
section amends 5 U.S.C. Sec. 8714b to eliminate that mandatory 
reduction if at the time of retirement a permanently disabled 
individual is designated to receive the entire amount of such 
insurance and the employee has made a timely election. However, 
the mandatory reduction shall nevertheless be made if: (1) the 
additional optional insurance is not paid to the individual 
designated at the time of retirement, (2) OPM finds that 
adequate arrangements have not been made to ensure that the 
insurance will be used only for the care and support of that 
individual, or (3) the election terminates at any time before 
the death of the insured individual.
    Whether an individual is permanently disabled shall be 
determined by regulations to be issued by OPM based upon 
subparagraphs (A) and (C) of section 16414(a)(3) of the Social 
Security Act.
    The insured individual must also elect at the time and in 
the manner required by regulations issued by OPM to continue to 
have the full cost of the unreduced additional optional 
insurance withheld from such individual's annuity or 
compensation after reaching age 65. The election (and 
withholdings) shall terminate if the insured individual revokes 
the election or changes the beneficiary designated under 5 
U.S.C. Sec. 8705 at the time or retirement. It shall also 
terminate if OPM determines that any of the requirements or 
conditions for unreduced additional optional insurance are, at 
any time, no longer met.
    This section shall take effect on the date of enactment. 
OPM shall issue regulations under which individuals already 
separated from service may also elect unreduced additional 
optional insurance within 1 year after the date of enactment. 
Such an individual is eligible to make an election if the 
individual separated no more than 50 months before the date of 
enactment and would have been eligible to make an election on 
the date of separation (or, if earlier, the last day for making 
an election based upon that separation) if the amendments made 
by this section (and implementing regulations) had been in 
effect. If such individual makes an election, the appropriate 
amounts shall be withheld from the individual's annuity or 
compensation. If benefits are paid as a result of such election 
upon the death of the insured, the amount shall be reduced to 
reflect the additional amount that would have been withheld had 
the amendments made by this section (and implementing 
regulations) been in effect.
    OPM is required to notify current and former federal 
employees of the enactment of this section and any benefits for 
which they might be eligible under it by publication in the 
Federal Register and such other methods as OPM considers 
appropriate. The notification shall also describe the 
procedures for electing unreduced additional optional 
insurance.

                  TITLE IV--REORGANIZATION FLEXIBILITY

Section 401. Voluntary reductions in force

    This section amends 5 U.S.C. Sec. 3502(f) to provide 
additional flexibility to agencies undergoing a reduction in 
force. It grants to all agencies authority previously granted 
only to the Department of Defense to allow employees to 
volunteer to be separated rather than in a reduction in force. 
The agency may retain an individual in a similar position who 
would have been reached in the RIF. The separation of a 
volunteer shall be treated as involuntary for all purposes 
other than advance notice and participation in a priority 
placement program. An agency head may prohibit an individual 
with critical knowledge or skills from volunteering if the 
agency head determines that his or her separation would impair 
the performance of the agency's mission. The authority granted 
by this section may not be exercised after September 31, 2001.

Section 402. Nonreimbursable details to Federal agencies before a 
        reduction in force

    This section amends 5 U.S.C. Sec. 3341 to permit one agency 
to detail an employee who has received a specific RIF notice or 
who is likely to be separated in a RIF to another agency on a 
nonreimbursable basis. The detail may not exceed 90 days, and 
it may not be renewed. The purpose of this section is to allow 
an employee who is likely to be separated in a RIF to 
demonstrate the ability to perform another job. This section is 
effective 30 days after the date of enactment.

                    TITLE V--SOFT-LANDING PROVISIONS

Section 501. Temporary continuation of Federal employees' life 
        insurance

    This section amends 5 U.S.C. Sec. 8706 to permit employees 
who are separated due to a RIF or who voluntarily separate from 
a surplus position to continue their group life insurance for 
up to 18 months after the date of separation. The employee must 
pay both the employee's and agency's share of the premium and 
an amount not to exceed 2% to cover administrative expenses. 
This authority applies to separations occurring on or after the 
date of enactment but before October 1, 2001. However, with 
respect to an employee who has received a specific RIF notice 
before October 1, 2001, the authority extends to separations 
occurring before February 1, 2002.1

Section 502. Continued eligibility for health insurance

    This section amends 5 U.S.C. Sec. 8905 to allow certain 
employees who are separated in a RIF or who voluntarily 
separate from a surplus position to continue their health 
insurance under the Federal Employees Health Benefits Program. 
Subsection (a) applies to employees who retire on an immediate 
annuity based on such separations. It requires OPM to waive the 
requirement in section 8905(b) that the employee have been 
enrolled in an FEHBP plan for specific periods of time before 
retirement. Instead such employees will be eligible if they are 
enrolled in an FEHBP plan immediately before retirement. This 
authority applies to separations occurring on or after the date 
of enactment but before October 1, 2001. However, with respect 
to an employee who has received a specific RIF notice before 
October 1, 2001, the authority extends to separations occurring 
before February 1, 2002.
    Subsection (b) extends government wide a benefit previously 
available only to employees of the Department of Defense. Under 
it, an employee who is involuntarily separated due to a 
reduction in force or who voluntarily separates from a surplus 
position may elect to continue an FEHBP plan for a period of 18 
months after the date of the separation. The former employee is 
required to pay only the employee's share of the premium. The 
former employing agency pays the remainder.

Section 503. Priority placement programs for Federal employees affected 
        by a RIF

    This section adds a new section 3330a to title 5, United 
States Code, which requires agencies to establish agencywide 
priority placement programs within 3 months of the date of 
enactment. The priority placement programs shall facilitate 
employment placement for employees who are scheduled to be 
separated due to a RIF or who have been separated in a RIF. To 
participate in the program, an employee (other than one in a 
position excluded by law from a performance appraisal system) 
must have received a rating of fully successful (or equivalent) 
as their last rating of record. An individual loses eligibility 
for reemployment priority under this section if he or she 
requests removal in writing, accepts or declines a bona fide 
offer of employment (or fails to accept within the time 
permitted), or separates from the agency before being separated 
by the RIF.
    Agencies may not fill vacant positions from outside the 
agency if there is a qualified employee or former employee on 
the priority placement list, and they must apply veterans'' 
preference when placing employees who are on the list.

Section 504. Job placement and counseling services

    This section authorizes agencies to establish job placement 
and counseling services for current and former employees. These 
programs may include career and personal counseling, training 
in job search skills, and job placement assistance. Services 
authorized by this section may be provided to current employees 
of the agency or former employees who have been separated 
(other than for cause) for less than 1 year. An agency may also 
offer such services to current or former employees of another 
agency with the permission of that other agency. The costs of 
services provided to current or former employees of another 
agency shall be reimbursed by that agency.

Section 505. Education and retraining incentives

    This section authorizes agencies to pay retraining 
incentives, relocation incentives, and educational assistance 
on behalf of an individual who is involuntarily separated from 
a position, or an individual voluntarily separated from a 
surplus position, due to a reduction in force.
    An agency head may enter into an agreement with a non-
federal employer who agrees to employ an eligible employee for 
at least 12 months and to certify to the agency head any costs 
incurred by the employer in retraining such individual. The 
agency head shall pay a retraining incentive, in an amount 
prescribed by the agency head but in no event greater than the 
amount certified by the non-federal employer, upon the 
employee's completion of 12 months of continuous employment. 
The agency head shall pay a pro rated retraining incentive if 
the employee is employed by the non-federal employer for at 
least 6 months but less than 12.
    An agency head may also pay a relocation incentive to an 
eligible employee if it is necessary for the employee to 
relocate to begin employment with a non-federal employer. The 
amount of the relocation incentive is limited to the amount 
payable to relocate a federal employee who transfers between 
the same locations.
    Educational assistance may only be paid on behalf of full-
time permanent employees who have completed at least 3 years of 
current continuous service in any executive agency or agencies 
and been admitted to an institution of higher education within 
1 year after separation.
    The total amount spent on behalf of an individual under 
this section may not exceed $10,000. In addition, the amount of 
educational assistance available to employees is further 
limited to $8,000 if the employee has at least 4 but less than 
5 years of qualifying service and $6,000 if the employee has at 
least 3 but less than 4 years of qualifying service. (The term 
``qualifying service'' means service performed as an employee 
within the meaning of 5 U.S.C. Sec. 2105 on a permanent full-
time or permanent part-time basis. Part-time service shall be 
counted on a pro rated basis.) Retraining and relocation 
payments shall be paid from appropriations or other funds 
available to the agency for training. Educational assistance 
shall be paid from appropriations or other funds which would 
have been used to pay the employee's salary.
    Retraining and relocation incentives may not be paid for 
retraining or relocation commencing after June 30, 2002. 
Educational assistance may not be paid later than 10 years 
after the employee's separation.

                        TITLE VI--MISCELLANEOUS

Section 601. Reimbursements relating to professional liability 
        insurance

    This section authorizes an agency head to reimburse law 
enforcement officers, supervisors, managers, or any other 
employee the agency head considers appropriate, for up to 50% 
of the costs incurred by the employee for professional 
liability insurance. Reimbursements shall be paid from funds 
appropriated for the payment of salaries and expenses of 
government employees. Professional liability insurance subject 
to this section shall have policy limits of $1,000,000 per 
occurrence per year for legal liability and $100,000 for the 
cost of legal representation per occurrence per year.

Section 602. Employment rights following conversion to contract

    This section provides that contractors shall in good faith 
offer the right of first refusal of employment to qualified 
employees whose positions are abolished because an activity has 
been contracted out. However, the contractor is not required to 
make such an offer to an employee who, in the 12 months 
preceding the conversion, has been the subject of an adverse 
personnel action related to misconduct or received a less than 
fully successful performance rating. No employee shall have the 
right to more than 1 offer under this section based upon a 
particular separation due the contracting of an activity. The 
President shall issue regulations to carry out this section.

Section 603. Debarment of health care providers found to have engaged 
        in fraudulent practices

    Subsection (a) amends current Federal Employees Health 
Benefits (FEHB) law at 5 U.S.C. 8902a to remove unnecessary 
administrative constraints on, and otherwise improve, the 
Office of Personnel Management's (OPM) authority to bar FEHB 
Program participation by, and impose monetary penalties on, 
health care providers who engage in professional or financial 
misconduct. The proposal would make these FEHB provisions 
conform more closely with administrative sanctions authority 
for the Medicare Program (42 U.S.C. 1320a-7 and 1320a-7a), with 
regard to causes for imposing sanctions and the general 
availability of post-termination appellant rights, as was 
originally intended.
    The eight clauses in subsection (a) amend 5 U.S.C. 
Sec. 8902a--
          (1) in Sec. 8902a(a)(2)(A), to make a conforming 
        amendment;
          (2) in Sec. 8902a(b), to make OPM's authority to bar 
        providers convicted of criminal misconduct described in 
        (b)(1) through (4) mandatory, rather than permissive; 
        strike existing provisions in (b)(5), in order to move 
        the text to the new Sec. 8902a(c); and add a new 
        paragraph (b)(5) which reflects OPM responsibilities 
        for reciprocal debarments under the Governmentwide Non-
        procurement Debarment and Suspension Common Rule 
        authorized by Executive Order 12549 and OPM 
        implementing regulations issued May 17, 1993;
          (3) to redesignate Sec. 8902a(c) through (i), as (d) 
        through (j), and add a new Sec. 8902a(c) concerning 
        permissive authority for OPM to exclude providers from 
        FEHB participation; the new subsection (c) continues 
        discretion to impose programwide debarment on providers 
        subject to licensure restrictions in any state for 
        substantive misconduct, and adds provisions relating to 
        entities owned or controlled by an FEHB-sanctioned 
        provider, to providers who submit FEHB claims involving 
        excessive fees or inappropriate care, and to those 
        providers who engage in conduct that could be subject 
        to monetary penalties under subsection (d); this 
        subsection parallels Medicare sanction authority (42 
        U.S.C. 1320a-7(b)) and intends for OPM to consider the 
        seriousness of the conduct involved, nexus to FEHB 
        operations, and other mitigating circumstances, in 
        invoking this authority;
          (4) in Sec. 8902a(d)(1), as redesignated (relating to 
        OPM authority to impose civil monetary penalty, 
        assessment, and exclusion on providers) to more closely 
        parallel Medicare provisions for civil monetary 
        penalties; provisions now in clause (d)(1)(B) would be 
        moved to section 8902a(c)(3) (under section 2(3) of the 
        bill) because they relate to patterns of abuse for 
        which debarment is more appropriate; two new clauses 
        under (d)(1) would permit sanction of providers who 
        knowingly violate applicable Medicare charge 
        limitations under Sec. 8904(b) (for services provided 
        to retired FEHB enrollees age 65 or older who lack 
        Medicare part A or part B eligibility) or who continue 
        to submit claims under the FEHB Program while subject 
        to debarment;
          (5) in Sec. 8902a(f), as redesignated, to make a 
        conforming change in OPM authority for setting 
        conditions of debarment to reflect mandatory debarment 
        requirements under Sec. 8902a(g)(3);
          (6) in Sec. 8902a(g), as redesignated, to amend 
        paragraph (g)(1) concerning the effective date of 
        debarment, to specify that action to exclude a provider 
        from FEHB participation would generally be enforceable 
        after reasonable notice to affected parties, and would 
        confer a right for the provider to request a post-
        termination hearing as provided in Sec. 8902a(h)(1); 
        only in cases involving an adverse determination 
        relative to misconduct which warrants monetary 
        penalties under this section would the affected 
        provider receive written notice and an opportunity for 
        such determination to be made after a hearing under 
        Sec. 8902a(h)(1); these provisions parallel the 
        availability of appellant rights for excluded providers 
        under Medicare law [42 U.S.C. 1320a-7(f)]; in paragraph 
        (g)(3), to require a mandatory 3-year exclusion from 
        FEHB for providers convicted of a criminal offense 
        (unless OPM determines that special community needs 
        justify a shorter period);
          (7) in Sec. 8902a(h)(1), as redesignated, to strike 
        provisions which currently require that any adverse 
        determination under this section must be made on the 
        record after a formal evidentiary hearing, and instead 
        provide a basic right for adversely-affected parties to 
        request a hearing by a neutral hearing officer as 
        designated by OPM's Director, the timing of the hearing 
        to be determined under Sec. 8902a(g)(1) as amended; in 
        cases of mandatory debarments under subsection (b) 
        based on a criminal conviction or debarment by another 
        Government program for specified causes, due process 
        requirements would likely not require a further hearing 
        under this subsection; the nature of facts that could 
        be expected to be contested under appeals will 
        essentially involve review of documentary claims 
        evidence which will not be aided by formal, trial-like 
        hearing procedures and prompt removal of unfit 
        providers promotes FEHBP enrollee welfare and program 
        efficiency; this hearing format is consistent with OPM 
        practice with respect to withdrawal of approval of FEHB 
        plans under 5 U.S.C. Sec. 8902(e) [5 CFR Sec. 890.204], 
        debarment actions under the Governmentwide Non-
        procurement Debarment and Suspension Common Rule [5 
        CFR, Part 970], and proposed regulations to establish 
        Governmentwide reciprocal effect across procurement and 
        Non-procurement programs for debarment and suspension 
        actions [59 FR 65607-25, Dec. 20, 1994]; 
        Sec. 8902a(h)(2) is also amended to provide for 
        judicial review in the district courts of the United 
        States due to the less formal administrative hearing 
        process under (h)(1); and
          (8) in Sec. 8902a(i), as redesignated, to add a 
        sentence to authorize withholding civil monetary 
        penalties and assessments which OPM imposes under this 
        section from any sum owed by the United States to the 
        sanctioned party, as permitted under Medicare law (42 
        U.S.C. 1320a-7a(f)).
    Except as provided below, the Act would be effective upon 
enactment:
          New permissive authority under subsection 8902a(c) 
        (2) and (4) for OPM to bar FEHB participation, in cases 
        of entities owned or controlled by FEHB-sanctioned 
        providers and in cases of providers who engage in 
        conduct that could be subject to monetary penalties 
        under subsection (d), would apply only to the extent 
        that misconduct which is the basis for debarment under 
        this subsection occurs after enactment of this Act.
          Also, civil monetary penalties and assessments under 
        subsection (d)(1)(B), for providers who violate 
        Medicare charge limitations for purposes of 5 U.S.C. 
        8904(b), would apply in cases involving FEHB services 
        furnished after enactment of this Act.
          Finally, the minimum 3-year mandatory debarment 
        specified by subsection 8902a(g)(3), as redesignated 
        and amended by this Act, would only apply to debarments 
        based on criminal convictions that occur after 
        enactment of this Act.

Section 604. Conversion of certain excepted service positions in the 
        United States Fire Administration to competitive service 
        positions

    This section requires the Director of the Federal Emergency 
Management Agency and the Director of OPM to convert certain 
faculty positions at the National Academy of Fire Prevention 
and Control before the date of enactment of this act to a 
competitive service position without prejudice to the employees 
in those positions. This conversion shall take effect on the 
first pay period for such positions beginning after the date of 
enactment. It also amends 7(c)(4) of the Federal Fire 
Prevention and Control Act of 1974 (15 U.S.C. Sec. 2206(c)(4)), 
effective on the date of enactment of this Act, to provide for 
appointments of faculty members to competitive service 
positions.

Section 605. Eligibility for certain survivor annuity benefits

    This section requires OPM to approve survivor annuity 
benefits for a former spouse under 5 U.S.C. Sec. 8341 who meets 
the 14 criteria enumerated in this section.

Section 606. Amendment to Public Law 104-134

    This section amends paragraph (3) of section 3110(b) of the 
Omnibus Consolidated Rescissions and Appropriations Act of 1996 
(Public Law 104-134; 110 Stat. 1321-343) to require the United 
States Enrichment Corporation to make both the employee and 
agency contributions to the Thrift Savings Fund for those 
employees who elect to retain their coverage under the Civil 
Service Retirement System. This corrects an oversight in the 
Omnibus Consolidated Rescissions and Appropriations Act, which 
provided for such payments only on behalf of employees who 
retain their coverage under the Federal Employees' Retirement 
Service.

Section 607. Miscellaneous amendments relating to the health benefits 
        program for Federal employees

    Subsection (a) amends the definition of a carrier in the 
Federal Employees Health Benefits Program (FEHBP) to make clear 
that the government-wide Service Benefit Plan is sponsored by 
an association whose members are lawfully engaged in providing, 
paying for, or reimbursing the cost of group health plan 
functions and that the sponsor is the carrier.
    Subsection (b) adds language to clarify that the carrier 
for the government-wide Service Benefit Plan need not contract 
with underwriting affiliates licensed in all of the states and 
the District of Columbia. The carrier for this plan contracts 
with its local affiliates to underwrite the plan.
    Subsection (c) confirms the intent of Congress (1) that 
FEHBP contract terms which relate to the nature or extent of 
coverage or benefits (including payments with respect to 
benefits) completely displace state or local law relating to 
health insurance or plans and (2) that this preemption 
authority applies to FEHBP plan contract terms which relate to 
the provision of benefits or coverage, including managed care 
programs.

Section 608. Pay for certain positions formerly classified at GS-18

    This section provides that the rate of basic pay for 
positions classified at the GS-18 level on the date of 
enactment of the Federal Employees Pay Comparability Act of 
1990 shall be set and maintained at a rate equal to the highest 
rate of basic pay for the Senior Executive Service under 5 
U.S.C. Sec. 5382(b).

Section 609. Repeal of section 1307 of title 5, United States Code

    This section repeals an obsolete provision of title 5.

Section 610. Mandatory internal alternative dispute resolution 
        procedures

    This section authorizes federal agencies to develop 
mandatory alternative dispute resolution procedures covering 
certain employee complaints. The complaints covered are:
          any matter reviewable by the Office of Special 
        Counsel;
          any matter (other than retirement) appealable to the 
        Merit Systems Protection Board;
          and complaints of discrimination under--
                  section 717 of the Civil Rights Act of 1964,
                  section 6(d) of the Fair Labor Standards Act 
                of 1938,
                  section 501 of the Rehabilitation Act of 
                1973,
                  sections 12 and 15 of the Age Discrimination 
                in Employment Act of 1967,
                  and rules, regulations, or policy directive 
                under these laws.
    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 developing such alternative dispute resolution procedures.

                       V. Compliance With Rule XI

    Pursuant to rule XI, clause 2(l)(3) of the Rules of the 
House of Representatives, under the authority of rule X, clause 
2(b)(1) and clause 3(f), the results and findings from 
committee oversight activities are incorporated in the bill and 
this report.

                  VI. Budget Analysis and Projections

    Pursuant to the provisions of section 308(a) of the 
Congressional Budget Act, the enactment of H.R. 3841 is 
estimated to reduce revenues by approximately $1.6 billion over 
fiscal years 1997-2002, authorizes $2 million in new budget 
authority, and provides new spending authority of approximately 
$6 million.

                   VII. Estimated Cost of Legislation

    A copy of the cost estimate by the Congressional Budget 
Office follows:
                                     U.S. Congress,
                               Congressional Budget Office,
                                Washington, DC, September 16, 1996.
Hon. William F. Clinger, Jr.,
Chairman, Committee on Government Reform and Oversight,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3841, the Omnibus 
Civil Service Reform Act of 1996.
    Because enacting this legislation would affect both direct 
spending and receipts, pay-as-you-go procedures would apply.
    If you wish further details on this estimate, we will be 
pleased to provide them.
            Sincerely,
                                           June E. O'Neill,
                                                          Director.
    Enclosure.

               congressional budget office cost estimate

    1. Bill number: H.R. 3841.
    2. Bill title: The Omnibus Civil Service Reform Act of 
1996.
    3. Bill status: As ordered reported by the House Committee 
on Government Reform and Oversight on July 25, 1996.
    4. Bill purpose: H.R. 3841 would make many changes to laws 
that effect the hiring, retention, payment, and reduction in 
force of federal personnel, as well as the health, retirement, 
and life insurance benefits available to these employees.
    5. Estimated cost to the Federal Government: Enacting H.R. 
3841 would affect revenues, direct spending, and spending that 
is subject to appropriations action. The bill's most 
significant budgetary effect would be the loss of certain 
income tax revenues. The Joint Committee on Taxation (JCT) 
estimates that enacting this bill would decrease revenues by 
about $1.6 billion over the 1997-2002 period by allowing 
federal employees to increase the amount of their contributions 
to the Thrift Savings Plan (TSP) and by allowing new employees 
to make contributions sooner. An increase in contributions 
would decrease revenues from federal income taxes because 
income used for such contributions is not taxed until it is 
withdrawn from the plan.
    CBO estimates that enacting H.R. 3841 would increase direct 
spending by about $1 million each year over the 1997-2002 
period by allowing a child who is a survivor of a federal 
employee and whose marriage ends to reclaim benefits under the 
Civil Service Retirement System (CSRS) and Federal Employees' 
Retirement System (FERS), as long as that child is otherwise 
eligible under current law.
    Finally, the bill would increase discretionary costs, 
subject to the appropriation of necessary funds. CBO estimates 
that the Office of Personnel Management (OPM) and the General 
Accounting Office (GAO) would incur costs of about $2 million 
in 1997 to devise regulations and report on the bill's 
provisions. Because several of the bill's provisions would 
provide optional authorities to agencies, and because we have 
no basis for estimating the extent that agencies would use such 
authorities, CBO cannot estimate the total increase in 
discretionary costs that would arise from enacting H.R. 3841.
    The following table summarizes the estimated impact of H.R. 
3841 on revenues and direct spending over the 1997-2002 period.

                                    [By fiscal year, in millions of dollars]                                    
----------------------------------------------------------------------------------------------------------------
                                                        1997      1998      1999      2000      2001      2002  
----------------------------------------------------------------------------------------------------------------
                                             CHANGE IN REVENUES \1\                                             
                                                                                                                
Estimated revenues..................................       -83      -268      -306      -311      -316      -322
                                                                                                                
                                                 DIRECT SPENDING                                                
                                                                                                                
Spending under current law:                                                                                     
    Civilian retirement benefits:                                                                               
        Estimated budget authority..................    41,146    43,067    45,057    47,062    49,149    51,316
        Estimated outlays...........................    41,064    42,980    44,967    46,968    49,051    51,214
Proposed changes:                                                                                               
        Estimated budget authority..................         1         1         1         1         1         1
        Estimated outlays...........................         1         1         1         1         1         1
Projected spending under H.R. 3841:                                                                             
    Civian retirement benefits                                                                                  
        Estimated budget authority..................    41,147    43,068    45,058    47,063    49,150    51,317
        Estimated outlays...........................    41,065    42,981    44,968    46,969    49,052    51,215
----------------------------------------------------------------------------------------------------------------
\1\ Estimate prepared by the Joint Committee on Taxation.                                                       
                                                                                                                
Note: Enacting H.R. 3841 also would increase spending subject to appropriation, but CBO cannot estimate the     
  extent of such effects.                                                                                       

    The costs of this bill fall within budget function 800.
    6. Basis of estimate:

                                Revenues

    Increase in the Limit on TSP Contributions.--The largest 
budgetary impact of this bill would stem from the provisions of 
Title III that would increase the maximum amount of money some 
federal employees could contribute to the TSP. Under current 
law, employees enrolled in FERS can contribute up to 10 percent 
of their salary to the TSP on a pre-tax basis, as long as that 
dollar amount is less than the IRS limit for 401(k) plans, 
which currently is $9,500 a year. The limit for employees 
enrolled in CSRS is 5 percent of salary. Section 321 would 
eliminate the 10 percent and 5 percent of salary restrictions 
and allow employees to contribute up to the IRS limit for 
401(k) plans, regardless of salary.
    Employee contributions to the TSP reduce an employee's 
taxable income. Therefore, this proposal would reduce federal 
revenue if people increase their contributions to the TSP. The 
Joint Committee on Taxation estimates that the provision would 
result in a loss in revenue of $64 million in 1997 and $1.1 
billion over the 1997-2002 period.
    According to the General Accounting Office, about 800,000 
federal employees enrolled in FERS are eligible to contribute 
to the TSP. About 7 percent of the 800,000 employees contribute 
at the maximum rate of 10 percent. About 850,000 employees in 
CSRS are eligible to contribute to the TSP, and about 68 
percent of these employees contribute at the maximum rate of 5 
percent. JCT assumes that a majority of the employees in both 
FERS and CSRS who currently contribute at the maximum allowable 
level would increase their contributions by some amount.
    New Hires Allowed to Participate in TSP Sooner.--Section 
323 would allow new hires under FERS to contribute immediately 
to the TSP. Under current law, new employees must wait two open 
seasons until they can participate in the TSP. Under this 
proposal, the timing of the agency contributions would not 
change--agencies would still begin to make contributions to an 
employee's TSP after the employee waits two open seasons. JCT 
estimates that the federal government would forgo tax revenues 
of about $19 million in 1997 and $516 million over the 1997-
2002 period from enacting this provision. Data from OPM 
indicates that about 375,000 employees are hired each year who 
would become eligible to contribute immediately to the TSP. JCT 
assumes that the rate of participation for new employees would 
approximate the current rate of 77.2 percent for all federal 
employees, as reported by the Federal Retirement Thrift 
Investment Board. The slight increase in the amount of revenue 
loss for the years 2000 through 2002 reflects the net effect of 
rising employee salaries and declining federal employment.
    Other Provisions.--Section 205 would remove the authority 
under current law for arbitrators to impose a range of 
penalties on managers found in violation of prohibited 
personnel practices during binding arbitration. The 
disciplinary actions available to the arbitrator include the 
removal from employment, a reduction in grade, suspension, 
reprimand, or the imposition of a civil monetary penalty of up 
to $1,000. Based on information provided by the Merit Systems 
Protection Board, civil monetary penalties, which are 
classified as revenues, have rarely been imposed in such cases. 
Consequently, CBO estimates that the repeal of this authority 
would have no significant effect on revenue.
    Section 302 would add two new investment funds to those 
currently offered by the Thrift Savings Fund: a small 
capitalization stock index fund and an international stock 
index fund. Further, the bill would provide current and former 
federal employees greater flexibility with their Thrift Savings 
Plan accounts and would expand the options for withdrawals. 
These provisions would make TSP more attractive to federal 
employees and would tend to increase participation in the plan. 
Increased participation in TSP would reduce federal income tax 
revenues, because federal employees contribute portions of 
their salaries to TSP on a pre-tax basis. On the other hand, 
the bill would increase tax revenues by accelerating taxable 
disbursements from TSP. CBO estimates that the bill would 
increase participation in TSP only modestly, and that the 
resulting effects on the federal budget would be small.

                            Direct spending

    Section 331 would restore child survivor benefits under 
CSRS and FERS for individuals whose marriage ends (whether by 
death of the spouse, divorce, or annulment), as long as that 
child survivor meets all current law criteria for benefits. 
Under current law, once a child survivor marries, benefits are 
permanently terminated even if the marriage ends.
    According to OPM, an average of about 110 child survivors 
lose benefits each year due to marriage. Based on data from the 
Bureau of the Census, CBO estimates that almost half of the 
roughly 400 child survivors who married before enactment of 
this bill and who otherwise still qualify for benefits have 
divorced. At an average benefit of about $4,800, the increase 
in direct spending would total about $1 million annually for 
the 1997-2002 period. The estimated cost remains roughly 
constant because in each year some of the divorced child 
survivors whose benefits are restored would become ineligible 
for benefits because they reach age 18 (or age 22 if they are 
in school) while newly divorced child survivors would have 
their benefits restored.
    Section 606 would allow certain former spouses of deceased 
annuitants to receive survivor benefits under CSRS. Although 
this proposal creates a new class of individuals who can be 
eligible for survivor benefits, the proposal requires that 14 
restrictive criteria be met in order to qualify. According to 
OPM, this proposal attempts to provide relief to one individual 
who has unsuccessfully appealed for survivor benefits through 
the OPM appeals process and the courts. Although it is possible 
that additional individuals may qualify for benefits under the 
criteria in this bill, CBO estimates the cost to the government 
would be insignificant.

                   Spending subject to appropriation

    H.R. 3841 also would increase discretionary costs, subject 
to the appropriation of necessary funds. For instance, CBO 
estimates that the bill would increase costs by about $2 
million dollars in 1997 for OPM and GAO to comply with the 
bill's requirements for reporting and regulations.
    The bill would require that all agencies establish a 
priority program for rehiring or reassigning employees who have 
been affected or are likely to be affected by a reduction in 
force (RIF). In such cases, the agency would be required to 
offer an eligible current or former employee any comparable 
vacancy located within the commuting area that is no more than 
three grade levels below the last position held by the 
employee. According to OPM, the average number of RIFs per year 
from 1993 through 1995 was about 6,750. Since OPM already 
requires that agencies have a placement program similar to that 
required by the bill, CBO estimates that any additional costs 
would not be significant.
    In addition, H.R. 3841 could increase costs if agencies 
elect to use several of the new authorities provided under the 
bill. For instance, the bill would allow agencies to enter into 
agreements with nonfederal employers whereby the agency agrees 
to pay the company a training payment not to exceed $10,000 if 
it employs a former worker in a compensated position for at 
least 12 months, and to reimburse employees for up to half the 
costs to carry certain professional liability coverage of as 
much as $1 million. Because we have no way of knowing to what 
extent agencies would offer such optional services to their 
employees, CBO cannot estimate the amount of additional costs 
that might arise.
    In the case of the training payment, the additional costs 
could be significant if an agency, such as the Internal Revenue 
Service or the Department of Defense, had a RIF of several 
thousand employees. For example, if the $10,000 maximum payment 
were made for 1,000 employees a year, the annual costs would be 
$10 million. However, the ability of an agency to offer this 
benefit to employees affected by a RIF would depend on the 
availability of appropriated funds. In the case of offering 
professional liability coverage, it is unlikely that any 
increase in costs would be significant. Based on information 
provided by OPM, CBO expects that the premium for an insurance 
policy of about $1 million would be between $200 and $300. 
Thus, an agency would incur a cost of between $100 and $150 for 
its share of the policy's cost. CBO does not expect that the 
number of policies under H.R. 3841 would be sufficient to 
result in a significant increase in costs.
    Finally, the bill includes several other provisions that 
could affect discretionary costs and might even result in 
savings. For instance, the bill's authority for agencies to 
adopt mandatory alternative dispute resolution (ADR) procedures 
could allow some agencies to streamline their existing process 
for settling certain complaints and grievances. Many executive 
branch agencies already utilize various methods of ADR. Data 
compiled by GAO indicates that the use of ADR tends to result 
in more efficient resolutions of disputes, although such 
conclusions are based mainly on anecdotal evidence. If greater 
use of ADR leads to more efficient dispute resolution, then 
agencies could realize some savings. However, CBO does not have 
sufficient information to estimate the likelihood or magnitude 
of such potential savings.
    7. Pay-as-you-go considerations: Section 252 of the 
Balanced Budget and Emergency Deficit Control Act of 1985 sets 
up pay-as-you-go procedures for legislation affecting direct 
spending or receipts through 1998. CBO estimates that enacting 
H.R. 3841 would affect both direct spending and receipts. The 
estimated pay-as-you-go impact is summarized in the following 
table.

                [By fiscal year, in millions of dollars]                
------------------------------------------------------------------------
                                              1996      1997      1998  
------------------------------------------------------------------------
Change in outlays.........................         0         1         1
Change in receipts........................         0       -83      -268
------------------------------------------------------------------------

    8. Estimated impact on state, local, and tribal 
governments: H.R. 3841 contains no intergovernmental mandates 
as defined in the Unfunded Mandates Reform Act of 1995 (Public 
Law 104-4) and would have no impact on the budgets of state, 
local, or tribal governments.
    9. Estimated impact on the private sector: The bill would 
impose no new private-sector mandates as defined in Public Law 
104-4.
    10. Previous CBO estimate: None.
    11. Estimate prepared by: Federal Cost Estimate: Wayne 
Boyington, for costs related to retirement and life insurance 
benefits and John R. Righter, for other costs; Impact on State, 
local, and tribal governments: Theresa Gullo; Impact on the 
private sector: Matthew Eyles.
    12. Estimate approved by: Paul N. Van de Water, Assistant 
Director for Budget Analysis.

                  VIII. Inflationary Impact Statement

    In accordance with rule XI, clause 2(l)(4) of the Rules of 
the House of Representatives, this legislation is assessed to 
have no inflationary effect on prices and costs in the 
operation of the national economy.

       IX. Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3 of rule XIII of the Rules of the 
House of Representatives, changes in existing law made by the 
bill, as reported, are shown as follows (existing law proposed 
to be omitted is enclosed in black brackets, new matter is 
printed in italics, existing law in which no change is proposed 
is shown in roman):

                      TITLE 5, UNITED STATES CODE

                     PART I--THE AGENCIES GENERALLY

          * * * * * * *

         PART II--CIVIL SERVICE FUNCTIONS AND RESPONSIBILITIES

          * * * * * * *

                     CHAPTER 13--SPECIAL AUTHORITY

Sec.
1301.  Rules.
     * * * * * * *
[1307.  Minutes.]
          * * * * * * *

[Sec. 1307. Minutes

  [The Civil Service Commission shall keep minutes of its 
proceedings.]
          * * * * * * *

                          PART III--EMPLOYEES

          * * * * * * *

                  Subpart B--Employment and Retention

          * * * * * * *

           CHAPTER 33--EXAMINATION, SELECTION, AND PLACEMENT

        SUBCHAPTER I--EXAMINATION, CERTIFICATION, AND APPOINTMENT

Sec.
3301.  Civil service; generally.
3302.  Competitive service; rules.
3303.  Political recommendations.
     * * * * * * *
3330a.  Priority placement programs for employees affected by a 
          reduction in force.

                         SUBCHAPTER III--DETAILS

[3341.  Details; within Executive or military departments.]
3341.  Details; within Executive agencies and military departments; 
          employees affected by reduction in force.
     * * * * * * *

       SUBCHAPTER I--EXAMINATION, CERTIFICATION, AND APPOINTMENT

          * * * * * * *

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.

                        SUBCHAPTER III--DETAILS

[Sec. 3341. Details; within Executive or military departments

  [(a) The head of an Executive department or military 
department may detail employees among the bureaus and offices 
of his department, except employees who are required by law to 
be exclusively engaged on some specific work.
  [(b)(1) Details under subsection (a) of this section may be 
made only by written order of the head of the department, and 
may be for not more than 120 days. These details may be renewed 
by written order of the head of the department, in each 
particular case, for periods not exceeding 120 days.
  [(2) The 120-day limitation in paragraph (1) for details and 
renewals of details does not apply to the Department of Defense 
in the case of a detail--
          [(A) 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
          [(B) in which the position to which the employee is 
        detailed is eliminated on or before the date of the 
        closure, realignment, or restructuring.
  [(c) 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 
                (10 U.S.C. 2687 note); and
                  [(C) the Defense Base Closure and Realignment 
                Act of 1990 (10 U.S.C. 2687 note); 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 
                that paragraph, has the meaning given such term 
                in section 2910(4) of such Act.]

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.
          * * * * * * *

    CHAPTER 35--RETENTION PREFERENCE, RESTORATION, AND REEMPLOYMENT

          * * * * * * *

Sec. 3502. Order of retention

  (a) The Office of Personnel Management shall prescribe 
regulations for the release of competing employees in a 
reduction in force which give due effect to--
          (1) * * *
          * * * * * * *
          (4) efficiency or performance [ratings.] ratings, in 
        conformance with the requirements of subsection (g).
          * * * * * * *
  [(f)(1) The Secretary of Defense or the Secretary of a 
military department may--
          [(A) release in a reduction in force an employee who 
        volunteers for the release even though the employee is 
        not otherwise subject to release in the reduction in 
        force under the criteria applicable under the other 
        provisions of this section; and
          [(B) for each employee voluntarily released in the 
        reduction in force under subparagraph (A), retain an 
        employee in a similar position who would otherwise be 
        released in the reduction in force under such criteria.
  [(2) A voluntary release of an employee in a reduction in 
force pursuant to paragraph (1) shall be treated as an 
involuntary release in the reduction in force.
  [(3) An employee with critical knowledge and skills (as 
defined by the Secretary concerned) may not participate in a 
voluntary release under paragraph (1) if the Secretary 
concerned determines that such participation would impair the 
performance of the mission of the Department of Defense or the 
military department concerned.
  [(4) The regulations prescribed under this section shall 
incorporate the authority provided in this subsection.
  [(5) The authority under paragraph (1) may not be exercised 
after September 30, 1996.]
  (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.
  (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.''.
          * * * * * * *

                    Subpart C--Employee Performance

          * * * * * * *

                   CHAPTER 43--PERFORMANCE APPRAISAL

          * * * * * * *

                    SUBCHAPTER I--GENERAL PROVISIONS

Sec. 4302. Establishment of performance appraisal systems

  (a) * * *
  (b) Under regulations which the Office of Personnel 
Management shall prescribe, each performance appraisal system 
shall provide for--
          (1) * * *
          * * * * * * *
          [(5) assisting employees in improving unacceptable 
        performance; and
          [(6) reassigning, reducing in grade, or removing 
        employees who continue to have unacceptable performance 
        but only after an opportunity to demonstrate acceptable 
        performance.]
          (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.
  (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.
          * * * * * * *

                      CHAPTER 45--INCENTIVE AWARDS

          * * * * * * *

           SUBCHAPTER I--AWARDS FOR SUPERIOR ACCOMPLISHMENTS

[Sec. 4501. Definitions

  [For the purpose of this subchapter--
          [(1) ``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;
                  [(F) the government of the District of 
                Columbia; and
                  [(G) the United States Sentencing Commission;
          [but does not include--
                  [(i) the Tennessee Valley Authority; or
                  [(ii) the Central Bank for Cooperatives;
          [(2) ``employee'' means--
                  [(A) an employee as defined by section 2105; 
                and
                  [(B) an individual employed by the government 
                of the District of Columbia; and
          [(3) ``Government'' means the Government of the 
        United States and the government of the District of 
        Columbia.]

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.
          * * * * * * *

[Sec. 4503. Agency awards

  [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.]

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.
          * * * * * * *

Sec. 4505a. Performance-based cash awards

  (a)(1) An employee whose most recent performance rating was 
[at the fully successful level or higher] higher than the fully 
successful level (or the equivalent thereof) may be paid a cash 
award under this section.
          * * * * * * *

   CHAPTER 47--PERSONNEL RESEARCH PROGRAMS AND DEMONSTRATION PROJECTS

          * * * * * * *

Sec. 4701. Definitions

  (a) For the purpose of this chapter--
          (1) ``agency'' means an Executive agency and the 
        Government Printing Office, but does not include--
                  [(A) a Government corporation;]
                  [(B)] (A) the Federal Bureau of 
                Investigation, the Central Intelligence Agency, 
                the Defense Intelligence Agency, the Central 
                Imagery Office, the National Security Agency, 
                and, as determined by the President, any 
                Executive agency or unit thereof which is 
                designated by the President and which has as 
                its principal function the conduct of foreign 
                intelligence or counterintelligence activities; 
                or
                  [(C)] (B) the General Accounting Office;
          * * * * * * *

Sec. 4703. Demonstration projects

  (a) * * *
  [(b) Before conducting or entering into any agreement or 
contract to conduct a demonstration project, the Office shall--
          [(1) develop a plan for such project which 
        identifies--
                  [(A) the purposes of the project;
                  [(B) the types of employees or eligibles, 
                categorized by occupational series, grade, or 
                organizational unit;
                  [(C) the number of employees or eligibles to 
                be included, in the aggregate and by category;
                  [(D) the methodology;
                  [(E) the duration;
                  [(F) the training to be provided;
                  [(G) the anticipated costs;
                  [(H) the methodology and criteria for 
                evaluation;
                  [(I) a specific description of any aspect of 
                the project for which there is a lack of 
                specific authority; and
                  [(J) a specific citation to any provision of 
                law, rule, or regulation which, if not waived 
                under this section, would prohibit the 
                conducting of the project, or any part of the 
                project as proposed;
          [(2) publish the plan in the Federal Register;
          [(3) submit the plan so published to public hearing;
          [(4) provide notification of the proposed project, at 
        least 180 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;
          [(5) obtain approval from each agency involved of the 
        final version of the plan; and
          [(6) provide each House of the Congress with a report 
        at least 90 days in advance of the date the project is 
        to take effect setting forth the final version of the 
        plan as so approved.]
  (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) No demonstration project under this section may provide 
for a waiver of--
          [(1) any provision of chapter 63 or subpart G of this 
        title;]
          (1) any provision of subchapter V of chapter 63 or 
        subpart G of part III of this title;
          * * * * * * *
          [(3) any provision of chapter 15 or subchapter III of 
        chapter 73 of this title;]
          (3) any provision of chapter 15 or subchapter II or 
        III of chapter 73 of this title;
          * * * * * * *
  [(d)(1) Each demonstration project shall--
          [(A) involve not more than 5,000 individuals other 
        than individuals in any control groups necessary to 
        validate the results of the project; and
          [(B) 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 beyond the 
        date to the extent necessary to validate the results of 
        the project.
  [(2) Not more than 10 active demonstration projects may be in 
effect at any time.]
  (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.
          * * * * * * *
  (h) The Office shall provide for an evaluation of the results 
of each demonstration project and its impact on improving 
public management. 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.
  (i) Upon request of the Director of the Office of Personnel 
Management, agencies shall cooperate with and assist the 
Office, to the extent practicable, in any evaluation undertaken 
by the Office under subsection (h) of this section and provide 
the Office with requested information and reports relating to 
the conducting of demonstration projects in their respective 
agencies.
  (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.
          * * * * * * *

                     Subpart D--Pay and Allowances

          * * * * * * *

                   CHAPTER 53--PAY RATES AND SYSTEMS

          * * * * * * *

               SUBCHAPTER III--GENERAL SCHEDULE PAY RATES

          * * * * * * *

Sec. 5335. Periodic step-increases

  (a) An employee paid on an annual basis, and occupying a 
permanent position within the scope of the General Schedule, 
who has not reached the maximum rate of pay for the grade in 
which his position is placed, shall be advanced in pay 
successively to the next higher rate within the grade at the 
beginning of the next pay period following the completion of--
          (1) each 52 calendar weeks of service in pay rates 1, 
        2, and 3;
          (2) each 104 calendar weeks of service in pay rates 
        4, 5, and 6; or
          (3) each 156 calendar weeks of service in pay rates 
        7, 8, and 9;
subject to the following conditions:
          (A) the employee did not receive an equivalent 
        increase in pay from any cause during that period; and
          (B) the [work of the employee is of an acceptable 
        level of competence] performance of the employee is at 
        least fully successful as determined by the head of the 
        agency.
          * * * * * * *
  (c) When a determination is made under subsection (a) of this 
section that the [work of an employee is not of an acceptable 
level of competence,] performance of an employee is not at 
least fully successful, the employee is entitled to prompt 
written notice of that determination and an opportunity for 
reconsideration of the determination within his agency under 
uniform procedures prescribed by the Office of Personnel 
Management. [If the determination is affirmed on 
reconsideration, the employee is entitled to appeal to the 
Merit Systems Protection Board.] If the reconsideration [or 
appeal] results in a reversal of the earlier determination, the 
new determination supersedes the earlier determination and is 
deemed to have been made as of the date of the earlier 
determination. The authority of the Office to prescribe 
procedures [and the entitlement of the employee to appeal to 
the Board do not apply] does not apply to a determination of 
[acceptable level of competence] fully successful work 
performance made by the Librarian of Congress.
          * * * * * * *
  (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)).
          * * * * * * *

                     CHAPTER 55--PAY ADMINISTRATION

          * * * * * * *

                       SUBCHAPTER V--PREMIUM PAY

          * * * * * * *

Sec. 5545a. Availability pay for criminal investigators

  (a) * * *
          * * * * * * *
  (h) Availability pay under this section shall be--
          (1) 25 percent of the rate of basic pay for the 
        position; and
          (2) treated as part of the basic pay for purposes 
        of--
                  (A) sections 5595(c), 8114(e), 8331(3), 
                [8431,] and 8704(c); and
          * * * * * * *

           Subpart F--Labor-Management and Employee Relations

                 CHAPTER 71--LABOR-MANAGEMENT RELATIONS

          * * * * * * *

            SUBCHAPTER III--GRIEVANCES, APPEALS, AND REVIEW

Sec. 7121. Grievance procedures

  (a) * * *
  (b)(1) * * *
  [(2)(A) 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--
          [(i) 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; and
          [(ii) the taking, by an agency, of any disciplinary 
        action identified under section 1215(a)(3) that is 
        otherwise within the authority of such agency to take.
  [(B) Any employee who is the subject of any disciplinary 
action ordered under subparagraph (A)(ii) may appeal such 
action to the same extent and in the same manner as if the 
agency had taken the disciplinary action absent arbitration.]
  (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.
          * * * * * * *

                   Subpart G--Insurance and Annuities

          * * * * * * *

                         CHAPTER 83--RETIREMENT

          * * * * * * *

                SUBCHAPTER III--CIVIL SERVICE RETIREMENT

          * * * * * * *

Sec. 8341. Survivor annuities

  (a) * * *
          * * * * * * *
  (e)(1) * * *
          * * * * * * *
  (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.
          * * * * * * *

Sec. 8351. Participation in the Thrift Savings Plan

  (a) * * *
  (b)(1) Except as otherwise provided in this subsection, the 
provisions of subchapters III and VII of chapter 84 of this 
title shall apply with respect to employees and Members making 
contributions to the Thrift Savings Fund under subsection (a) 
of this section.
  (2) An employee or Member may contribute to the Thrift 
Savings Fund in any pay period any amount not exceeding [5 
percent of] the amount of the employee's or Member's basic pay 
for such period.
          * * * * * * *
  (5)(A) * * *
  (B) [An election, change of election, or modification 
(relating to the commencement date of a deferred annuity)] An 
election or change of election authorized by subchapter III of 
chapter 84 of this title shall be effective in the case of a 
married employee or Member, and a loan or withdrawal may be 
approved under section 8433(g) and (h) of this title in such 
case, only after the Executive Director notifies the employee's 
or Member's spouse that [the election, change of election, or 
modification] the election or change of election has been made 
or that the Executive Director has received an application for 
such loan or withdrawal, as the case may be.
  (C) Subparagraph (B) may be waived with respect to a spouse 
if the employee or Member establishes to the satisfaction of 
the Executive Director of the Federal Retirement Thrift 
Investment Board that the whereabouts of such spouse cannot be 
determined.
  (D) Except with respect to the making of loans or withdrawals 
under section 8433(g) or (h), none of the provisions of this 
paragraph requiring notification to a spouse or former spouse 
or an employee, Member, former employee, or former Member shall 
apply in any case in which the nonforfeitable account balance 
of the employee, Member, former employee, or former Member is 
$3,500 or less.
          * * * * * * *
  (6) Notwithstanding paragraph (4), if an employee or Member 
separates from Government employment and such employee's or 
Member's nonforfeitable account balance is [$3,500 or less] 
less than an amount that the Executive Director prescribes by 
regulation, the Executive Director shall pay the nonforfeitable 
account balance to the participant in a single payment [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)].
          * * * * * * *

            CHAPTER 84--FEDERAL EMPLOYEES' RETIREMENT SYSTEM

                    SUBCHAPTER I--GENERAL PROVISIONS

Sec.
8401.  Definitions.
     * * * * * * *

                   SUBCHAPTER III--THRIFT SAVINGS PLAN

[8431.  Definition.]
          * * * * * * *

                    SUBCHAPTER I--GENERAL PROVISIONS

Sec. 8401. Definitions

  For the purpose of this chapter--
          (1) * * *
          * * * * * * *
          (4) [except as provided in subchapter III of this 
        chapter,] the term ``basic pay'' has the meaning given 
        such term by section 8331(3);
          * * * * * * *

                  SUBCHAPTER III--THRIFT SAVINGS PLAN

[Sec. 8431. Definition

  [Notwithstanding section 8401 of this title, for the purpose 
of this subchapter, the term ``basic pay'', when used with 
respect to an employee or Member, means the basic pay of the 
employee or Member established pursuant to law, without regard 
to any provision of law (except sections 5303(e), 5304(g), and 
5382(b) of this title) limiting the rate of pay actually 
payable in any pay period (including any provision of law 
restricting the use of appropriated funds).]

Sec. 8432. Contributions

  (a) An employee or Member may contribute to the Thrift 
Savings Fund in any pay period, pursuant to an election under 
subsection (b)[(1)], an amount not to exceed [10 percent of] 
such individual's basic pay for such period. [Contributions 
made under this subsection during any 6-month period for which 
an election period is provided under subsection (b)(1) shall be 
made each pay period during such 6-month period pursuant to a 
program of regular contributions provided in regulations 
prescribed by the Executive Director.] 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.
  (b)(1)(A) The Executive Director shall prescribe regulations 
under which employees and Members shall be afforded a 
reasonable period every 6 months to elect to make contributions 
under subsection (a), to modify the amount to be contributed 
under such subsection, or to terminate such contributions. An 
election to make such contributions shall remain in effect 
until modified or terminated.
  (B) The amount to be contributed pursuant to an election 
under subparagraph (A) (or any election allowable by virtue of 
paragraph (4)) shall be the percentage of basic pay or amount 
designated by the employee or Member.
          * * * * * * *
  (3) [Notwithstanding paragraph (2)(A), an] An employee or 
Member who elects to become subject to this chapter under 
section 301 of the Federal Employees' Retirement System Act of 
1986 may make the first election for the purpose of subsection 
(a) during the period prescribed for such purpose by the 
Executive Director. The period prescribed by the Executive 
Director shall commence on the date on which the employee or 
Member makes the election to become subject to this chapter.
  [(4)(A) Notwithstanding paragraph (2)(A), an employee or 
Member who is an employee or Member on January 1, 1987, and 
continues as an employee or Member without a break in service 
through April 1, 1987, may make the first election for the 
purpose of subsection (a) during the election period prescribed 
for such purpose by the Executive Director. The Executive 
Director shall prescribe an election period for such purpose 
which shall commence on April 1, 1987. An election by such an 
employee or Member during that election period shall be 
effective on the first day of the employee's or Member's first 
pay period which begins after the date on which the employee or 
Member makes that election.
  [(B) Notwithstanding subsection (a), the maximum amount that 
an employee or Member may contribute during any pay period 
which begins on or after April 1, 1987, and before October 1, 
1987, pursuant to an election made during the election period 
provided under subparagraph (A) is the amount equal to 15 
percent of such individual's basic pay for such period.]
  (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).
          * * * * * * *
  (i)(1) This subsection applies to any employee--
          (A) to whom section 8432b applies; and
          (B) who, during the period of such employee's absence 
        from civilian service (as referred to in section 
        8432b(b)(2)(B))--
                  (i) is eligible to make an election described 
                in subsection (b)(1); or
                  (ii) would be so eligible but for having 
                [either elected to terminate individual 
                contributions to the Thrift Savings Fund within 
                2 months before commencing military service or] 
                separated in order to perform military service.
          * * * * * * *
  (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. 8433. Benefits and election of benefits

  (a)  * * *
  [(b) Subject to section 8435 of this title, any employee or 
Member who separates from Government employment is entitled and 
may elect--
          [(1) to receive an immediate annuity from the Thrift 
        Savings Fund;
          [(2) to defer the commencement of the payment of an 
        annuity from the Thrift Savings Fund until such date as 
        the employee or Member specifies, but not later than 
        April 1 of the year following the year in which the 
        employee or Member becomes 70\1/2\ years of age;
          [(3) to withdraw the amount of the balance in the 
        employee's or Member's account in the Thrift Savings 
        Fund in one or more substantially equal payments to be 
        made not less frequently than annually and to commence 
        before April 1 of the year following the year in which 
        the employee or Member becomes 70\1/2\ years of age; or
          [(4) to transfer the amount of the balance in the 
        employee's or Member's account to an eligible 
        retirement plan as provided in subsection (c).
  [(c)(1) The Executive Director shall make each transfer 
elected under subsection (b)(4) 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.
  [(2) A transfer may not be made for an employee, Member, 
former employee, or former Member under paragraph (1) 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.]
  (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.
  (d)(1) [Subject to paragraph (3)(A)] Subject to paragraph (3) 
and subsections (a) and (c) of section 8435 of this title, an 
employee or Member may change an election previously made under 
this subchapter.
  [(2) Subject to paragraph (3)(B) and section 8435(c) of this 
title, a former employee or Member who has made an election 
pursuant to subsection (b)(2) may modify the date specified in 
such election or in a previous modification under this 
paragraph.]
  [(3)(A)] (2) A former employee or Member may not change an 
election under this section on or after the date on which a 
payment is made in accordance with such election or, in the 
case of an election to receive an annuity, the date on which an 
annuity contract is purchased to provide for the annuity 
elected by the former employee or Member.
      [(B) A modification of a date may not be made under 
paragraph (2) on or after the date on which an annuity contract 
is purchased to provide for the annuity involved, and may not 
specify a date for the commencement of an annuity earlier than 
90 days after the date on which the modification is submitted 
to the Executive Director (or such period shorter than 90 days 
as the Executive Director (or such period shorter than 90 days 
as the Executive Director may by regulation prescribe).]
          * * * * * * *
  (f)(1) Notwithstanding subsection (b), if an employee or 
Member separates from Government employment, and such 
employee's or Member's nonforfeitable account balance is 
[$3,500 or less] less than an amount that the Executive 
Director prescribes by regulation, the Executive Director shall 
pay the nonforfeitable account balance to the participant in a 
single payment [unless the employee or Member elects, as such 
time and otherwise in such manner as the Executive Director 
prescribes, one of the options available under subsection (b), 
or], unless an election under section 8432b(h)(2) is made to 
treat such separation for purposes of this paragraph as if it 
had never occurred.
      (2) Unless otherwise elected under this section, and 
subject to paragraph (1), benefits under this subchapter shall 
be paid as an annuity commencing for an employee, Member, 
former employee, or former Member on [February] April 1 of the 
year following the latest of the year in which--
          (A) the employee, Member, former employee, or former 
        Member becomes [65] 70\1/2\ years of age; or
          [(B) occurs the tenth anniversary of the year in 
        which the employee, Member, former employee, or former 
        Member because subject to this subchapter; or]
          [(C)] (B) the employee, Member, former employee, or 
        former Member separates from Government employment.
  (g)(1) At any time [after December 31, 1987, and] before 
separation, an employee or Member may apply to the Board for 
permission to borrow from the employee's or Member's account 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.
  [(2) An application under this subsection may be approved 
only for--
          [(A) the purchase of a primary residence;
          [(B) educational expenses;
          [(C) medical expenses; or
          [(D) financial hardship.]
  [(3)] (2) Loans under this subsection shall be available to 
all employees and Members on a reasonably equivalent basis, and 
shall be subject to such other conditions as the Board may by 
regulation prescribe. The restrictions of section 8477(c)(1) of 
this title shall not apply to loans made under this subsection.
  [(4)] (3) A loan may not be made under this subsection to the 
extent that the loan would be treated as a taxable distribution 
under section 72(p) of the Internal Revenue Code of 1954.
  [(5)] (4) A loan may not be made under this subsection unless 
the requirements of section 8435(e) of this title are 
satisfied.
  (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.
  (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.
          * * * * * * *

Sec. 8435. Protections for spouses and former spouses

  (a)(1)(A) A married employee or Member (or former employee or 
Member) [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] 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 only if the employee or Member 
(or former employee or Member) satisfies the requirements of 
subparagraph (B) that the loan would be treated as a taxable 
distribution under section 72(p) of the Internal Revenue Code 
of 1954. 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).
          * * * * * * *
  (c)(1) [An election, change of election, or modification of 
the commencement date of a deferred annuity] An election or 
change of election shall not be effective under this subchapter 
to the extent that the election, change, [modification, or 
transfer] or transfer conflicts with any court decree, order, 
or agreement described in paragraph (2).
  (2) A court decree, order, or agreement referred to in 
paragraph (1) is, with respect to an employee or Member (or 
former employee or Member), a court decree of divorce, 
annulment, or legal separation issued in the case of such 
employee or Member (or former employee or Member) and any 
former spouse of the employee or Member (or former employee or 
Member) or any court order or court-approved property 
settlement agreement incident to such decree if--
          (A) the decree, order, or agreement expressly relates 
        to any portion of the balance in the employee's or 
        Member's (or former employee's or Member's) account; 
        and
          (B) notice of the decree, order, or agreement was 
        received by the Executive Director before--
                  (i) the date on which payment is made, or
                  (ii) in the case of an annuity, the date on 
                which an annuity contract is purchased to 
                provide for the annuity,
        in accordance with the election, change, 
        [modification,] or contribution referred to in 
        paragraph (1).
          * * * * * * *
  (e)(1)(A) A loan or withdrawal may be made to a married 
employee or Member under section 8433(g) and (h) of this title 
only if the employee's or Member's spouse consents to such loan 
or withdrawal in writing.
  (B) A consent under subparagraph (A) shall be irrevocable 
with respect to the loan or withdrawal to which the consent 
relates.
  (C) Subparagraph (A) shall not apply to a loan or withdrawal 
to an employee or Member who establishes to the satisfaction of 
the Executive Director (at the time the employee or Member 
applies for such loan or withdrawal and in accordance with 
regulations prescribed by the Executive Director)--
          (i) that the spouse's whereabouts cannot be 
        determined; or
          (ii) that, due to exceptional circumstances, 
        requiring the employee or Member to seek the spouse's 
        consent would otherwise be inappropriate.
  (2) An application for a loan or withdrawal under section 
8433(g) and (h) of this title shall not be approved if approval 
would have the result described under subsection (c)(1).
          * * * * * * *
  (g) Except with respect to the making of loans or withdrawals 
under section 8433(g) and (h), none of the provisions of this 
section requiring notification to, or the consent or waiver of, 
a spouse or former spouse of an employee, Member, former 
employees, or former Member shall apply in any case in which 
the nonforfeitable account balance of the employee, Member, 
former employee, or former Member is $3,500 or less.
          * * * * * * *

Sec. 8438. Investment of Thrift Savings Fund

  (a) For the purposes of this section--
          (1) * * *
          * * * * * * *
          (5) the term ``International Stock Index Investment 
        Fund'' means the International Stock Index Investment 
        Fund established under subsection (b)(1)(E);
          [(5)] (6) the term ``net worth'' means capital, paid-
        in and contributed surplus, unassigned surplus, 
        contingency reserves, group contingency reserves, and 
        special reserves;
          [(6)] (7) the term ``plan'' means an employee benefit 
        plan, as defined in section 3(3) of the Employee 
        Retirement Income Security Act of 1974 (29 U.S.C. 
        1002(3));
          [(7)] (8) the term ``qualified professional asset 
        manager'' means--
                  (A) * * *
          * * * * * * *
                  (D) an investment adviser registered under 
                section 203 of the Investment Advisers Act of 
                1940 (15 U.S.C. 80b-3) if the investment 
                adviser has, on the last day of its latest 
                fiscal year ending before the date of a 
                determination for the purpose of this 
                subparagraph, total client assets under its 
                management and control in excess of 
                $50,000,000, and--
                          (i) the investment adviser has, on 
                        such day, shareholder's or partner's 
                        equity in excess of $750,000; or
                          (ii) payment of all of the investment 
                        adviser's liabilities, including any 
                        liabilities which may arise by reason 
                        of a breach or violation of a duty 
                        described in section 8477 of this 
                        title, is unconditionally guaranteed 
                        by--
                                  (I) * * *
          * * * * * * *
                                  (III) a broker or dealer 
                                registered under section 15 of 
                                the Securities Exchange Act of 
                                1934 (15 U.S.C. 78o) that has, 
                                on the last day of the broker's 
                                or dealer's latest fiscal year 
                                ending before the date of a 
                                determination for the purpose 
                                of this clause, net worth in 
                                excess of $750,000; [and]
          [(8)] (9) the term ``shareholder's or partner's 
        equity'', as used in paragraph [(7)(D)] (8)(D) with 
        respect to an investment adviser or a person (as 
        defined in section 8471(4) of this title) who is 
        affiliated with the investment adviser in a manner 
        described in clause (ii)(I) of such paragraph [(7)(D)] 
        (8)(D) , means the equity shown in the most recent 
        balance sheet prepared for such investment adviser or 
        affiliated person, in accordance with generally 
        accepted accounting principles, within 2 years before 
        the date on which the investment adviser's status as a 
        qualified professional asset manager is determined for 
        the purposes of this section[.]; and
          (10) the term ``Small Capitalization Stock Index 
        Investment Fund'' means the Small Capitalization Stock 
        Index Investment Fund established under subsection 
        (b)(1)(D).
  (b)(1) The Board shall establish--
          (A) * * *
          (B) a Fixed Income Investment Fund under which sums 
        in the Thrift Savings Fund are invested in--
                  (i) insurance contracts;
                  (ii) certificates of deposits; or
                  (iii) other instruments or obligations 
                selected by qualified professional asset 
                managers,
        which return the amount invested and pay interest, at a 
        specified rate or rates, on that amount during a 
        specified period of time; [and]
          (C) a Common Stock Index Investment Fund as provided 
        in paragraph (2)[.];
          (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).
          * * * * * * *
  (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. 8439. Accounting and information

  (a)(1) The Executive Director shall establish and maintain an 
account for each individual who makes contributions or for whom 
contributions are made under [section 8432(c)(1)] section 8432 
of this title or who makes contributions to the Thrift Savings 
Fund under section 8351 of this title.
          * * * * * * *
  (c)(1) * * *
  (2) Information under this subsection shall be provided at 
least 30 calendar days before the beginning of each election 
period under section 8432(b)(1)(A) of this title, and in a 
manner designed to facilitate informed decisionmaking with 
respect to elections under sections 8432 and 8438 of this 
title. Nothing in this paragraph shall be considered to limit 
the dissemination of information only to the times required 
under the preceding sentence.
  (d) [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),] 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), respectively, of section 
8438(a) of this title shall sign an acknowledgement prescribed 
by the Executive Director which states that the employee, 
Member, former employee, or former Member understands that an 
investment in either such Fund is made at the employee's, 
Member's, former employee's, or former Member's risk, that the 
employee, Member, former employee, or former Member is not 
protected by the Government against any loss on such 
investment, and that a return on such investment is not 
guaranteed by the Government.
          * * * * * * *

Sec. 8440a. Justices and judges

      (a)(1) A justice or judge of the United States as defined 
by section 451 of title 28 may elect to contribute an amount of 
such individual's basic pay to the Thrift Savings Fund. Basic 
pay does not include an annuity or salary received by a justice 
or judge who has retired under section 371 (a) or (b) or 
section 372(a) of title 28, United States Code.
      (2) An election may be made under paragraph (1) only 
during a period provided under section 8432(b) for individuals 
[subject to chapter 84 of this title: Provided, however, That a 
justice or judge may make the first such election within 60 
days of the effective date of this section.] subject to this 
chapter.
      (b)(1) Except as otherwise provided in this subsection, 
the provisions of this subchapter and subchapter VII shall 
apply with respect to justices and judges making contributions 
to the Thrift Savings Fund.
      [(2) The amount contributed by a justice or judge shall 
not exceed 5 percent of basic pay.]
      [(3)] (2) No contributions shall be made for the benefit 
of a justice or judge under section 8432(c) of this title.
      [(4)] (3) Section 8433(b) of this title applies with 
respect to elections available to any justice or judge who 
retires under section 371 (a) or (b) or section 372(a) of title 
28. Retirement under section 371 (a) or (b) or section 372(a) 
of title 28 is a separation from service for the purposes of 
subchapters III and VII or chapter 84 of this title.
      [(5)] (4) Section 8433(b) of this title applies to any 
justice or judge who resigns without having met the age and 
service requirements set forth in section 371(c) of title 28.
      [(6)] (5) The provisions of section 8351(b)(5) of this 
title shall govern the rights of spouses of justices or judges 
contributing to the Thrift Savings Fund under this section.
  [(7)] (6) Notwithstanding paragraphs [(4) and (5)] (3) and 
(4), if any justice or judge retires under subsection (a) or 
(b) of section 371 or section 372(a) of title 28, or resigns 
without having met the age and service requirements set forth 
under section 371(c) of title 28, and such justice's or judge's 
nonforfeitable account balance is [$3,500 or less] less than an 
amount that the Executive Director prescribes by regulation, 
the Executive Director shall pay the nonforfeitable account 
balance to the participant in a single payment [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)].

Sec. 8440b. Bankruptcy judges and magistrates

      (a) * * *
      (b)(1) Except as otherwise provided in this subsection, 
the provisions of this subchapter and subchapter VII shall 
apply with respect to bankruptcy judges and magistrates who 
make contributions to the Thrift Savings Fund under subsection 
(a) of this section.
      [(2) The amount contributed by a bankruptcy judge or 
magistrate for any pay period shall not exceed 5 percent of 
basic pay for such pay period.]
      [(3)] (2) No contributions shall be made under section 
8432(c) of this title for the benefit of a bankruptcy judge or 
magistrate making contributions under subsection (a) of this 
section.
      [(4)] (3)(A) Section 8433(b) of this title applies to a 
bankruptcy judge or magistrate who elects to make contributions 
to the Thrift Savings Fund under subsection (a) of this section 
and who retires entitled to an immediate annuity under section 
377 of title 28 (including a disability annuity under 
subsection (d) of such section) or section 2(c) of the 
Retirement and Survivors' Annuities for Bankruptcy Judges and 
Magistrates Act of 1988.
  (B) Section 8433(b) of this title applies to any bankruptcy 
judge or magistrate who elects to make contributions to the 
Thrift Savings Fund under subsection (a) of this section and 
who retires before attaining age 65 but is entitled, upon 
attaining age 65, to an annuity under section 377 of title 28 
or section 2(c) of the Retirement and Survivors Annuities for 
Bankruptcy Judges and Magistrates Act of 1988.
      (C) Section 8433(b) of this title applies to any 
bankruptcy judge or magistrate who elects to make contributions 
to the Thrift Savings Fund under subsection (a) of this section 
and who retires before becoming entitled to an immediate 
annuity, or an annuity upon attaining age 65, under section 377 
of title 28 or section 2(c) of the Retirement and Survivors' 
Annuities for Bankruptcy Judges and Magistrates Act of 1988.
      [(5)] (4) With respect to bankruptcy judges and 
magistrates to whom this section applies, any of the actions 
described under [paragraph (4)(A), (B), or (C)] paragraph 
(3)(A), (B), or (C) shall be considered a separation from 
service for purposes of this subchapter and subchapter VII.
      [(6)] (5) For purposes of this section, the terms 
``retirement'' and ``retire'' include removal from office under 
section 377(d) of title 28 on the sole ground of mental or 
physical disability.
      [(7)] (6) In the case of a bankruptcy judge or magistrate 
who receives a distribution from the Thrift Savings Plan and 
who later receives an annuity under section 377 of title 28, 
that annuity shall be offset by an amount equal to the amount 
of the distribution which represents the Government's 
contribution to that person's Thrift Savings Account, without 
regard to earnings attributable to that amount. Where such an 
offset would exceed 50 percent of the annuity to be received in 
the first year, the offset may be divided equally over the 
first 2 years in which that person receives the annuity.
      [(8) Notwithstanding paragraph (4),] (7) Notwithstanding 
paragraph (3), if any bankruptcy judge or magistrate retires 
under circumstances making such bankruptcy judge or magistrate 
eligible to make an election under subsection (b) of section 
8433, and such bankruptcy judge's or magistrate's 
nonforfeitable account balance is [$3,500 or less] less than an 
amount that the Executive Director prescribes by regulation, 
the Executive Director shall pay the nonforfeitable account 
balance to the participant in a single payment [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 such subsection (b)].

Sec. 8440c. Claims Court judges

      (a) * * *
      (b)(1) Except as otherwise provided in this subsection, 
the provisions of this subchapter and subchapter VII shall 
apply with respect to Claims Court judges who make 
contributions to the Thrift Savings Fund under subsection (a) 
of this section.
      [(2) The amount contributed by a Claims Court judge for 
any pay period shall not exceed 5 percent of basic pay for such 
pay period.]
      [(3)] (2) No contributions shall be made under section 
8432(c) of this title for the benefit of a Claims Court judge 
making contributions under subsection (a) of this section.
      [(4)] (3)(A) Section 8433(b) of this title applies to a 
Claims court judge who elects to make contributions to the 
Thrift Savings Fund under subsection (a) of this section and 
who retires entitled to an annuity under section 178 of title 
28 (including a disability annuity under subsection (c) of such 
section).
      (B) Section 8433(b) of this title applies to any Claims 
Court judge who elects to make contributions to the Thrift 
Savings Fund under subsection (a) of this section and who 
retires before becoming entitled to an annuity under section 
178 of title 28.
      [(5)] (4) With respect to Claims Court judges to whom 
this section applies, any of the actions described in 
[paragraph (4) (A) or (B)] paragraph (3)(A) or (B) shall be 
considered a separation from service for purposes of this 
subchapter and subchapter VII.
      [(6)] (5) For purposes of this section, the terms 
``retirement'' and ``retire'' include removal from office under 
section 178(c) of title 28 on the sole ground of mental or 
physical disability.
      [(7)] (6) In the case of a Claims Court judge who 
receives a distribution from the Thrift Savings Plan and who 
later receives an annuity under section 178 of title 28, such 
annuity shall be offset by an amount equal to the amount of the 
distribution which represents the Governments contribution to 
that person's Thrift Savings Account, without regard to earning 
attributable to that amount. Where such an offset would exceed 
50 percent of the annuity to be received in the first year, the 
offset may be divided equally over the first 2 years in which 
that person receives the annuity.
  [(8) Notwithstanding paragraph (4),] (7) Notwithstanding 
paragraph (3), if any Claims Court judge retires under 
circumstances making such judge eligible to make an election 
under section 8433(b), and such judge's nonforfeitable account 
balance is [$3,500 or less] less than an amount that the 
Executive Director prescribes by regulation, the Executive 
Director shall pay the nonforfeitable account balance to the 
participant in a single payment [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. 8440d. Judges of the United States Court of Veterans Appeals

  (a)(1) * * *
  (2) An election may be made under paragraph (1) only during a 
period provided under section 8432(b) of this title for 
individuals [subject to chapter 84 of this title.] subject to 
this chapter.
  (b)(1) Except as otherwise provided in this subsection, the 
provisions of this subchapter and subchapter VII of this 
chapter shall apply with respect to a judge making 
contributions to the Thrift Savings Fund.
  [(2) The amount contributed by a judge may not exceed 5 
percent of the amount of the judge's basic pay. Basic pay does 
not include any retired pay paid pursuant to section 7296 of 
title 38.]
  (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.
          * * * * * * *

                   SUBCHAPTER IV--SURVIVOR ANNUITIES

          * * * * * * *

Sec. 8443. Rights of a child

  (a) * * *
  (b) The annuity of a child under this subchapter--
          (1) * * *
          * * * * * * *
This annuity and the right thereto terminate on the last day of 
the month before the child--
          (A) becomes 18 years of age unless then a student as 
        described or incapable of self-support;
          (B) becomes capable of self-support after becoming 18 
        years of age unless then such a student;
          (C) becomes 22 years of age if then such a student 
        and capable of self-support;
          (D) ceases to be such a student after becoming 18 
        years of age unless then incapable of self-support; or
          (E) dies or marries;
whichever occurs first. On the death of the surviving wife or 
husband, or former wife or husband, or termination of the 
annuity of a child, the annuity of any other child or children 
shall be recomputed and paid as though the wife or husband, 
former wife or husband, or child had not survived the 
annuitant, employee, or Member. 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.
          * * * * * * *

                       CHAPTER 87--LIFE INSURANCE

          * * * * * * *

Sec. 8705. Death claims; order of precedence; escheat

  [(a) The] (a) Except as provided in subsection (e), the 
amount of group life insurance and group accidental death 
insurance in force on an employee at the date of his death 
shall be paid, on the establishment of a valid claim, to the 
person or persons surviving at the date of his death, in the 
following order of precedence:
          First, to the beneficiary or beneficiaries designated 
        by the employee in a signed and witnessed writing 
        received before death in the employing office or, if 
        insured because of receipt of annuity or of benefits 
        under subchapter I of chapter 81 of this title as 
        provided by section 8706(b) of this title, in the 
        Office of Personnel Management. For this purpose, a 
        designation, change, or cancellation of beneficiary in 
        a will or other document not so executed and filed has 
        no force or effect.
          Second, if there is no designated beneficiary, to the 
        widow or widower of the employee.
          Third, if none of the above, to the child or children 
        of the employee and descendants of deceased children by 
        representation.
          Fourth, if none of the above, to the parents of the 
        employee or the survivor of them.
          Fifth, if none of the above, to the duly appointed 
        executor or administrator of the estate of the 
        employee.
          Sixth, if none of the above, to other next of kin of 
        the employee entitled under the laws of the domicile of 
        the employee at the date of his death.
          * * * * * * *
  (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.

Sec. 8706. Termination of insurance; assignment of ownership

  (a) * * *
          * * * * * * *
  (e)(1) Under regulations prescribed by the Office, each 
policy purchased under this chapter shall provide that an 
insured employee or former employee may make an irrevocable 
assignment of the employee's or former employee's incidents of 
ownership in the policy.
  (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.
          * * * * * * *
  (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. 8714b. Additional optional life insurance

  (a) * * *
          * * * * * * *
  (c)(1) * * *
          * * * * * * *
  (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''.
  (d)(1) * * *
          * * * * * * *
  (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.
          * * * * * * *

                      CHAPTER 89--HEALTH INSURANCE

          * * * * * * *

Sec. 8901. Definitions

  For the purpose of this chapter--
          (1) * * *
          * * * * * * *
          (7) ``carrier'' means a voluntary association, 
        corporation, partnership, or other nongovernmental 
        organization which is lawfully engaged in providing, 
        paying for, or reimbursing the cost of, health services 
        under group insurance policies or contracts, medical or 
        hospital service agreements, membership or subscription 
        contracts, or similar group arrangements, in 
        consideration of premiums or other periodic charges 
        payable to the carrier, including a health benefits 
        plan duly sponsored or underwritten by an employee 
        [organization;] organization and the Government-wide 
        service benefit plan sponsored by an association of 
        organizations described in this paragraph;
          * * * * * * *

Sec. 8902. Contracting authority

  (a) * * *
          * * * * * * *
  [(m)(1) The provisions of any contract under this chapter 
which relate to the nature 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 to the 
extent that such law or regulation is inconsistent with such 
contractual provisions.]
  (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. 8902a. Debarment and other sanctions

  (a)(1) * * *
  (2)(A) Notwithstanding section 8902(j) or any other provision 
of this chapter, if, under [subsection (b) or (c)] subsection 
(b), (c), or (d), a provider is barred from participating in 
the program under this chapter, no payment may be made by a 
carrier pursuant to any contract under this chapter (either to 
such provider or by reimbursement) for any service or supply 
furnished by such provider during the period of the debarment.
          * * * * * * *
  (b) The Office of Personnel Management [may] shall bar the 
following providers of health care services or supplies from 
participating in the program under this chapter:
          (1) * * *
          * * * * * * *
          [(5) 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.]
          (5) Any provider that is currently suspended or 
        excluded from participation under any program of the 
        Federal Government involving procurement or 
        nonprocurement activities.
  (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).
  [(c)] (d) Whenever the Office determines--
          [(1) in connection with a claim presented under this 
        chapter, that a provider of health care services or 
        supplies--
                  [(A) has charged for health care services or 
                supplies that the provider knows or should have 
                known were not provided as claimed; or
                  [(B) 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, 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;]
          (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);
          (2) that a provider of health care services or 
        supplies has knowingly made, or caused to be made, any 
        false statement or misrepresentation of a material fact 
        which is reflected in a claim presented under this 
        chapter; or
          (3) that a provider of health care services or 
        supplies has knowingly failed to provide any 
        information required by a carrier or by the Office to 
        determine whether a payment or reimbursement is payable 
        under this chapter or the amount of any such payment or 
        reimbursement;
the Office may, in addition to any other penalties that may be 
prescribed by law, and after consultation with the Attorney 
General, impose a civil monetary penalty of not more than 
$10,000 for any item or service involved. In addition, such a 
provider shall be subject to an assessment of not more than 
twice the amount claimed for each such item or service. In 
addition, the Office may make a determination in the same 
proceeding to bar such provider from participating in the 
program under this chapter.
  [(d)] (e) The Office--
          (1) may not initiate any debarment proceeding against 
        a provider, based on such provider's having been 
        convicted of a criminal offense, later than 6 years 
        after the date on which such provider is so convicted; 
        and
          (2) may not initiate any action relating to a civil 
        penalty, assessment, or debarment under this section, 
        in connection with any claim, later than 6 years after 
        the date the claim is presented, as determined under 
        regulations prescribed by the Office.
  [(e)] (f) In making a determination relating to the 
appropriateness of imposing or the period of any debarment 
under this section (where such debarment is not mandatory), or 
the appropriateness of imposing or the amount of any civil 
penalty or assessment under this section, the Office shall take 
into account--
          (1) the nature of any claims involved and the 
        circumstances under which they were presented;
          (2) the degree of culpability, history of prior 
        offenses or improper conduct of the provider involved; 
        and
          (3) such other matters as justice may require.
  [(f)(1) The 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 may be specified in regulations prescribed by 
the Office.]
  (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).
  (2)(A) Except as provided in subparagraph (B), a debarment 
shall be effective with respect to any health care services or 
supplies furnished by a provider on or after the effective date 
of such provider's debarment.
  (B) A debarment shall not apply with respect to inpatient 
institutional services furnished to an individual who was 
admitted to the institution before the date the debarment would 
otherwise become effective until the passage of 30 days after 
such date, unless the Office determines that the health or 
safety of the individual receiving those services warrants that 
a shorter period, or that no such period, be afforded.
  (3) Any notice of debarment referred to in paragraph (1) 
shall specify the date as of which debarment becomes effective 
and the minimum period of time for which such debarment is to 
remain effective. 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).
  (4)(A) A provider barred from participating in the program 
under this chapter may, after the expiration of the minimum 
period of debarment referred to in paragraph (3), apply to the 
Office, in such manner as the Office may by regulation 
prescribe, for termination of the debarment.
  (B) The Office may--
          (i) terminate the debarment of a provider, pursuant 
        to an application filed by such provider after the end 
        of the minimum debarment period, if the Office 
        determines, based on the conduct of the applicant, 
        that--
                  (I) there is no basis under [subsection (b) 
                or (c)] subsection (b), (c), or (d) for 
                continuing the debarment; and
                  (II) there are reasonable assurances that the 
                types of actions which formed the basis for the 
                original debarment have not recurred and will 
                not recur; or
          * * * * * * *
  [(g)(1) The Office may not make a determination under 
subsection (b) or (c) adverse to a provider of health care 
services or supplies until such provider has been given written 
notice and an opportunity for a hearing on the record. A 
provider is entitled to be represented by counsel, to present 
witnesses, and to cross-examine witnesses against the provider 
in any such hearing.
  [(2) Notwithstanding section 8912, any person adversely 
affected by a final decision under paragraph (1) may obtain 
review of such decision in the United States Court of Appeals 
for the Federal Circuit. A written petition requesting that the 
decision be modified or set aside must be filed within 60 days 
after the date on which such person is notified of such 
decision.]
  (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.
  (3) Matters that were raised or that could have been raised 
in a hearing under paragraph (1) or an appeal under paragraph 
(2) may not be raised as a defense to a civil action by the 
United States to collect a penalty or assessment imposed under 
this section.
  [(h)] (i) A civil action to recover civil monetary penalties 
or assessments under [subsection (c)] subsection (d) shall be 
brought by the Attorney General in the name of the United 
States, and may be brought in the United States district court 
for the district where the claim involved was presented or 
where the person subject to the penalty resides. Amounts 
recovered under this section shall be paid to the Office for 
deposit into the Employees Health Benefits Fund. 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.
  [(i)] (j) The Office shall prescribe regulations under which, 
with respect to services or supplies furnished by a debarred 
provider to a covered individual during the period of such 
provider's debarment, payment or reimbursement under this 
chapter may be made, notwithstanding the fact of such 
debarment, if such individual did not know or could not 
reasonably be expected to have known of the debarment. In any 
such instance, the carrier involved shall take appropriate 
measures to ensure that the individual is informed of the 
debarment and the minimum period of time remaining under the 
terms of the debarment.

Sec. 8903. Health benefits plans

  The Office of Personnel Management may contract for or 
approve the following health benefits plans:
          (1) Service Benefit Plan.--One Government-wide 
        [plan,] plan, underwritten by participating affiliates 
        licensed in any number of States, offering two levels 
        of benefits, under which payment is made by a carrier 
        under contracts with physicians, hospitals, or other 
        providers of health services for benefits of the types 
        described by section 8904(1) of this title given to 
        employees, annuitants, members of their families, 
        former spouses, or persons having continued coverage 
        under section 8905a of this title, or, under certain 
        conditions, payment is made by a carrier to the 
        employee, annuitant, family member, former spouse, or 
        person having continued coverage under section 8905a of 
        this title.
          * * * * * * *

Sec. 8905. Election of coverage

  (a) An employee may enroll in an approved health benefits 
plan described by section 8903 or 8903a of this title either as 
an individual or for self and family.
  (b) [An] Subject to subsection (g), an annuitant who at the 
time he becomes an annuitant was enrolled in a health benefits 
plan under this chapter--(1) * * *
          * * * * * * *
  (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.

Sec. 8905a. Continued coverage

  (a) * * *
          * * * * * * *
  (d)(1) * * *
          * * * * * * *
  (4)(A) If the basis for continued coverage under this section 
is an involuntary separation from a position, or a voluntary 
separation from a surplus position, in or under [the Department 
of Defense] an Executive agency due to a reduction in force--
          (i) the individual shall be liable for not more than 
        the employee contributions referred to in paragraph 
        (1)(A)(i); and
          (ii) the agency which last employed the individual 
        shall pay the remaining portion of the amount required 
        under paragraph (1)(A).
          * * * * * * *
  [(C) For the purpose of this paragraph, ``surplus position'' 
means a position which is identified in pre-reduction-in-force 
planning as no longer required, and which is expected to be 
eliminated under formal reduction-in-force procedures.]
  (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. 8908. Coverage of restored employees and survivor or disability 
                    annuitants

  (a) * * *
          * * * * * * *
  (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.
          * * * * * * *
                              ----------                              


  SECTION 616 OF THE TREASURY, POSTAL SERVICE, AND GENERAL GOVERMENT 
                        APPROPRIATIONS ACT, 1996

  Sec. 616. (a) * * *
          * * * * * * *
  (f) For the purpose of administering any provision of law 
(including [section 8431 of title 5, United States Code, and] 
any rule or regulation that provides premium pay, retirement, 
life insurance, or any other employee benefit) that requires 
any deduction or contribution, or that imposes any requirement 
or limitation on the basis of a rate of salary or basic pay, 
the rate of salary or basic pay payable after the application 
of this section shall be treated as the rate of salary or basic 
pay.
          * * * * * * *
                              ----------                              


    SECTION 7 OF THE FEDERAL FIRE PREVENTION AND CONTROL ACT OF 1974

            national academy for fire prevention and control

  Sec. 7. (a)  * * *
          * * * * * * *
  (c) Powers of Superintendent.--The Superintendent is 
authorized to--
          (1) * * *
          * * * * * * *
          [(4) appoint faculty members and consultants without 
        regard to the provisions of title 5, United States 
        Code, governing appointments in the competitive 
        service, and, with respect to temporary and 
        intermittent services, to make appointments to the same 
        extent as is authorized by section 3109 of title 5, 
        United States Code;]
          (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;
          * * * * * * *
                              ----------                              


SECTION 3110 OF THE OMNIBUS CONSOLIDATED RESCISSIONS AND APPROPRIATIONS 
                              ACT OF 1996

SEC. 3110. EMPLOYEE PROTECTIONS.

  (a) * * *
  (b) Former Federal Employees.--(1) * * *
          * * * * * * *
  [(3) The Corporation shall pay to the Thrift Savings Fund 
such employee and agency contributions as are required by 
section 8432 of title 5, United States Code, for those 
employees who elect to retain their coverage under FERS 
pursuant to paragraph (1).]
  (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).
          * * * * * * *

                      X. Committee Recommendation

    On July 25, 1996, a quorum being present, the Committee 
ordered the bill favorably reported.

 Committee on Government Reform and Oversight--104th Congress--Rollcall

    Date: July 25, 1996.
    Final Passage of H.R. 3841, as amended.
    Offered by: Hon. John L. Mica (R-FL).
    Voice vote: yea.

    XI. Congressional Accountability Act; Public Law 104-1; Section 
                               102(b)(3)

    H.R. 3841 is inapplicable to the legislative branch because 
it does not relate to any terms or conditions of employment or 
access to public services or accommodations.
                            ADDITIONAL VIEWS

    I am concerned that we are moving too quickly on 
complicated and controversial legislation that affects two 
million Federal workers throughout the nation--not just in 
Washington. For example, in Dade County there are more than 
11,000 Federal employees.
    The Republican majority decided to move this bill quickly. 
The Subcommittee on Civil Service held a legislative hearing on 
July 16 on a July 11 discussion draft. The next day H.R. 3841 
was introduced, and it was approved by the Subcommittee on July 
18. On the morning of July 25 the Committee approved an 87 page 
amendment in the nature of a substitute that had been prepared 
at 8:50 p.m. the previous day.
    This great speed might be all right if there were a 
consensus on all the contents of the bill. But in fact one 
section of the bill as reported by the subcommittee--section 
201--is opposed by many interested parties because of the 
changes it makes in who will be fired when a Federal agency 
must cut the number of its employees.
    Under current regulations, Federal workers who are in an 
agency that is shrinking are retained based on four factors: 
length of service, tenure, veterans' preference and 
performance. The current regulations have a formula for taking 
these four factors into account for each worker.
    Section 201 modifies this formula and then freezes the new 
procedures into a statute.
    The Office of Personnel Management (``OPM'') testified at 
the July 16 hearing that it was ``very concerned'' about 
section 201. OPM said that putting the layoff procedures into a 
statute ``would seriously diminish the current flexibilities of 
the governmentwide performance management system * * * 
Essentially depriving OPM of the ability to regulate in this 
area runs counter to the subcommittees's stated goal of making 
human resources management systems more flexible.''
    On July 24 the Federal Managers Association (``FMA'') urged 
the Committee to drop section 201 from the bill. FMA said that 
``performance appraisers at downsizing agencies today are at 
times improperly motivated to use performance ratings to 
protect favorite employees from RIFs. These favorites are not 
necessarily the ones who are the highest performers.''
    The American Federation of Government Employees (``AFGE'') 
urged that section 201 be deleted from the bill and said that 
``AFGE will oppose the bill if such a deletion does not 
occur.'' The union said that section 201 ``would codify a 
system that arbitrarily and unfairly impacts upon outstanding 
workers who find themselves under a pass-fail system certainly 
through no fault of their own or their exclusive 
representative.''
    The amendments to section 201 approved by the Committee on 
July 25 are improvements. But they do not cure the fundamental 
flaw of section 201: it codifies a firing process for the 
entire Federal government that is better left to the 
flexibility of regulations.
    I believe in performance evaluations of employees. But all 
this opposition to section 201 indicates that this very complex 
portion of this bill is being moved too quickly.

                                                    Carrie P. Meek.

                                
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