[House Report 108-733]
[From the U.S. Government Publishing Office]



108th Congress                                                   Report
                        HOUSE OF REPRESENTATIVES
 2d Session                                                     108-733

======================================================================
 
               FEDERAL WORKFORCE FLEXIBILITY ACT OF 2004

                                _______
                                

October 5, 2004.--Committed to the Committee of the Whole House on the 
              State of the Union and ordered to be printed

                                _______
                                

  Mr. Tom Davis of Virginia, from the Committee on Government Reform, 
                        submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                         [To accompany S. 129]

      [Including cost estimate of the Congressional Budget Office]

  The Committee on Government Reform, to whom was referred the 
bill (S. 129) to provide for reform relating to Federal 
employment, 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
Committee Statement and Views....................................    11
Section-by-Section...............................................    12
Explanation of Amendments........................................    22
Committee Consideration..........................................    22
Rollcall Votes...................................................    22
Application of Law to the Legislative Branch.....................    22
Statement of Oversight Findings and Recommendations of the 
  Committee......................................................    23
Statement of General Performance Goals and Objectives............    23
Constitutional Authority Statement...............................    23
Federal Advisory Committee Act...................................    23
Unfunded Mandate Statement.......................................    23
Committee Estimate...............................................    23
Budget Authority and Congressional Budget Office Cost Estimate...    23
Changes in Existing Law Made by the Bill as Reported.............    28
Additional Views.................................................    47

  The amendment is as follows:
  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Federal Workforce 
Flexibility Act of 2004''.
  (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.

     TITLE I--REFORMS RELATING TO FEDERAL HUMAN CAPITAL MANAGEMENT

Sec. 101. Recruitment, relocation, and retention bonuses.
Sec. 102. Streamlined critical pay authority.

 TITLE II--REFORMS RELATING TO FEDERAL EMPLOYEE CAREER DEVELOPMENT AND 
                                BENEFITS

                     Subtitle A--General Provisions

Sec. 201. Agency training.
Sec. 202. Annual leave enhancements.
Sec. 203. Compensatory time off for travel.

             Subtitle B--Provisions Relating to Retirement

Sec. 211. Civil Service Retirement System computation for part-time 
service.
Sec. 212. Retirement service credit for cadet or midshipman service.

          TITLE III--PROVISIONS RELATING TO PAY ADMINISTRATION

Sec. 301. Corrections relating to pay administration.
Sec. 302. Technical corrections.

     TITLE I--REFORMS RELATING TO FEDERAL HUMAN CAPITAL MANAGEMENT

SEC. 101. RECRUITMENT, RELOCATION, AND RETENTION BONUSES.

  (a) Bonuses.--
          (1) In general.--Chapter 57 of title 5, United States Code, 
        is amended by striking sections 5753 and 5754 and inserting the 
        following:

``Sec. 5753. Recruitment and relocation bonuses

  ``(a)(1) This section may be applied to--
          ``(A) employees covered by the General Schedule pay system 
        established under subchapter III of chapter 53; and
          ``(B) employees in a category approved by the Office of 
        Personnel Management at the request of the head of an Executive 
        agency.
  ``(2) A bonus may not be paid under this section to an individual who 
is appointed to or who holds--
          ``(A) a position to which an individual is appointed by the 
        President, by and with the advice and consent of the Senate;
          ``(B) a position in the Senior Executive Service as a 
        noncareer appointee (as such term is defined under section 
        3132(a)); or
          ``(C) a position which has been excepted from the competitive 
        service by reason of its confidential, policy-determining, 
        policy-making, or policy-advocating character.
  ``(3) In this section, the term `employee' has the meaning given that 
term in section 2105, except that such term also includes an employee 
described in subsection (c) of that section.
  ``(b) The Office of Personnel Management may authorize the head of an 
agency to pay a bonus under this section to an individual only if--
          ``(1) the position to which such individual is appointed (as 
        described in paragraph (2)(A)) or to which such individual 
        moves or must relocate (as described in paragraph (2)(B)) is 
        likely to be difficult to fill in the absence of such a bonus; 
        and
          ``(2) the individual--
                  ``(A) is newly appointed as an employee of the 
                Federal Government; or
                  ``(B)(i) is currently employed by the Federal 
                Government; and
                  ``(ii)(I) moves to a new position in the same 
                geographic area under circumstances described in 
                regulations of the Office; or
                  ``(II) must relocate to accept a position in a 
                different geographic area.
  ``(c)(1) Payment of a bonus under this section shall be contingent 
upon the employee entering into a written service agreement to complete 
a period of employment with the agency, not longer than 4 years. The 
Office may, by regulation, prescribe a minimum service period for 
purposes of this section.
  ``(2)(A) The agreement shall include--
          ``(i) the commencement and termination dates of the required 
        service period (or provisions for the determination thereof);
          ``(ii) the amount of the bonus;
          ``(iii) the method of payment; and
          ``(iv) other terms and conditions under which the bonus is 
        payable, subject to the requirements of this section and 
        regulations of the Office.
  ``(B) The terms and conditions for paying a bonus, as specified in 
the service agreement, shall include--
          ``(i) the conditions under which the agreement may be 
        terminated before the agreed-upon service period has been 
        completed; and
          ``(ii) the effect of the termination.
  ``(C) The required service period shall commence upon the 
commencement of service with the agency or movement to a new position 
or geographic area, as applicable, unless the service agreement 
provides for a later commencement date in circumstances and to the 
extent allowable under regulations of the Office, such as when there is 
an initial period of formal basic training.
  ``(d)(1) Except as provided in subsection (e), a bonus under this 
section shall not exceed 25 percent of the annual rate of basic pay of 
the employee at the beginning of the service period multiplied by the 
number of years (including a fractional part of a year, as determined 
under regulations of the Office) in the required service period of the 
employee involved.
  ``(2) A bonus under this section may be paid as an initial lump sum, 
in installments, as a final lump sum upon the completion of the full 
period of service required by the agreement, or in a combination of 
these forms of payment.
  ``(3) A bonus under this section is not part of the basic pay of an 
employee for any purpose.
  ``(4) Under regulations of the Office, a recruitment bonus under this 
section may be paid to an eligible individual before that individual 
enters on duty.
  ``(e) The Office may authorize the head of an agency to waive the 
limitation under subsection (d)(1) based on a critical agency need, 
subject to regulations prescribed by the Office. Under such a waiver, 
the maximum bonus allowable shall--
          ``(1) be equal to the maximum that would be determined if 
        subsection (d)(1) were applied by substituting `50' for `25'; 
        but
          ``(2) in no event exceed 100 percent of the annual rate of 
        basic pay of the employee at the beginning of the service 
        period.
Nothing in this subsection shall be considered to permit the waiver of 
any requirement under subsection (c).
  ``(f) The Office shall require that an agency establish a plan for 
the payment of recruitment bonuses before paying any such bonuses, and 
a plan for the payment of relocation bonuses before paying any such 
bonuses, subject to regulations prescribed by the Office.
  ``(g) The Office may prescribe regulations to carry out this section, 
including regulations relating to the repayment of a bonus under this 
section in appropriate circumstances when the agreed-upon service 
period has not been completed.

``Sec. 5754. Retention bonuses

  ``(a)(1) This section may be applied to--
          ``(A) employees covered by the General Schedule pay system 
        established under subchapter III of chapter 53; and
          ``(B) employees in a category approved by the Office of 
        Personnel Management at the request of the head of an Executive 
        agency.
  ``(2) A bonus may not be paid under this section to an individual who 
is appointed to or who holds--
          ``(A) a position to which an individual is appointed by the 
        President, by and with the advice and consent of the Senate;
          ``(B) a position in the Senior Executive Service as a 
        noncareer appointee (as such term is defined under section 
        3132(a)); or
          ``(C) a position which has been excepted from the competitive 
        service by reason of its confidential, policy-determining, 
        policy-making, or policy-advocating character.
  ``(3) In this section, the term `employee' has the meaning given that 
term in section 2105, except that such term also includes an employee 
described in subsection (c) of that section.
  ``(b) The Office of Personnel Management may authorize the head of an 
agency to pay a retention bonus to an employee if--
          ``(1) the unusually high or unique qualifications of the 
        employee or a special need of the agency for the employee's 
        services makes it essential to retain the employee; and
          ``(2) the agency determines that, in the absence of a 
        retention bonus, the employee would be likely to leave--
                  ``(A) the Federal service; or
                  ``(B) for a different position in the Federal service 
                under conditions described in regulations of the 
                Office.
  ``(c) The Office may authorize the head of an agency to pay retention 
bonuses to a group of employees in 1 or more categories of positions in 
1 or more geographic areas, subject to the requirements of subsection 
(b)(1) and regulations prescribed by the Office, if there is a high 
risk that a significant portion of employees in the group would be 
likely to leave in the absence of retention bonuses.
  ``(d)(1) Payment of a retention bonus is contingent upon the employee 
entering into a written service agreement with the agency to complete a 
period of employment with the agency.
  ``(2)(A) The agreement shall include--
          ``(i) the length of the required service period;
          ``(ii) the amount of the bonus;
          ``(iii) the method of payment; and
          ``(iv) other terms and conditions under which the bonus is 
        payable, subject to the requirements of this section and 
        regulations of the Office.
  ``(B) The terms and conditions for paying a bonus, as specified in 
the service agreement, shall include--
          ``(i) the conditions under which the agreement may be 
        terminated before the agreed-upon service period has been 
        completed; and
          ``(ii) the effect of the termination.
  ``(3)(A) Notwithstanding paragraph (1), a written service agreement 
is not required if the agency pays a retention bonus in biweekly 
installments and sets the installment payment at the full bonus 
percentage rate established for the employee with no portion of the 
bonus deferred.
  ``(B) If an agency pays a retention bonus in accordance with 
subparagraph (A) and makes a determination to terminate the payments, 
the agency shall provide written notice to the employee of that 
determination. Except as provided in regulations of the Office, the 
employee shall continue to be paid the retention bonus through the end 
of the pay period in which such written notice is provided.
  ``(4) A retention bonus for an employee may not be based on any 
period of such service which is the basis for a recruitment or 
relocation bonus under section 5753.
  ``(e)(1) Except as provided in subsection (f), a retention bonus, 
which shall be stated as a percentage of the employee's basic pay for 
the service period associated with the bonus, may not exceed--
          ``(A) 25 percent of the employee's basic pay if paid under 
        subsection (b); or
          ``(B) 10 percent of an employee's basic pay if paid under 
        subsection (c).
  ``(2)(A) A retention bonus may be paid to an employee in installments 
after completion of specified periods of service or in a single lump 
sum at the end of the full period of service required by the agreement.
  ``(B) An installment payment is derived by multiplying the amount of 
basic pay earned in the installment period by a percentage not to 
exceed the bonus percentage rate established for the employee.
  ``(C) If the installment payment percentage established for the 
employee is less than the bonus percentage rate established for the 
employee, the accrued but unpaid portion of the bonus is payable as 
part of the final installment payment to the employee after completion 
of the full service period under the terms of the service agreement.
  ``(D) For purposes of this paragraph, the bonus percentage rate 
established for an employee means the bonus percentage rate established 
for such employee in accordance with paragraph (1) or subsection (f), 
as the case may be.
  ``(3) A retention bonus is not part of the basic pay of an employee 
for any purpose.
  ``(f) Upon the request of the head of an agency, the Office may waive 
the limit established under subsection (e)(1) and permit the agency 
head to pay an otherwise eligible employee or category of employees 
retention bonuses of up to 50 percent of basic pay, based on a critical 
agency need.
  ``(g) The Office shall require that, before paying any bonuses under 
this section, an agency shall establish a plan for the payment of any 
such bonuses, subject to regulations prescribed by the Office.
  ``(h) The Office may prescribe regulations to carry out this 
section.''.
          (2) Clerical amendment.--The table of sections for chapter 57 
        of title 5, United States Code, is amended by striking the item 
        relating to section 5754 and inserting the following:

``5754. Retention bonuses.''.
          (3) Sense of congress.--It is the sense of the Congress that 
        the Director of the Office of Personnel Management--
                  (A) should, each time a bonus is paid under the 
                amendment made by paragraph (1) to recruit or relocate 
                a Federal employee from one Government agency to 
                another within the same geographic area or to retain a 
                Federal employee who might otherwise leave one 
                Government agency for another within the same 
                geographic area, be notified of that payment within 60 
                days after the date on which such bonus is paid; and
                  (B) should monitor the payment of such bonuses (in 
                the circumstances described in subparagraph (A)) to 
                ensure that they are an effective use of the Federal 
                Government's funds and have not adversely affected the 
                ability of those Government agencies that lost 
                employees to other Government agencies (in such 
                circumstances) to carry out their mission.
  (b) Relocation Payments.--Section 407 of the Federal Employees Pay 
Comparability Act of 1990 (5 U.S.C. 5305 note; 104 Stat. 1467) is 
repealed.
  (c) Reports.--
          (1) Recruitment and relocation bonuses.--
                  (A) In general.--The Office of Personnel Management 
                shall submit to the Committee on Governmental Affairs 
                of the Senate and the Committee on Government Reform of 
                the House of Representatives annually, for each of the 
                first 5 years during which section 5753 of title 5, 
                United States Code (as amended by subsection (a)(1)) is 
                in effect, a report on the operation of such section.
                  (B) Contents.--Each report submitted under this 
                paragraph shall include, with respect to the period 
                covered by such report, a description of how the 
                authority to pay bonuses under the section of title 5, 
                United States Code, referred to in subparagraph (A) was 
                used by the respective agencies, including, with 
                respect to each such agency and each type of bonus 
                under such section--
                          (i) the number and dollar-amount of bonuses 
                        paid--
                                  (I) to individuals holding positions 
                                within each pay grade, pay level, or 
                                other pay classification; and
                                  (II) if applicable, to individuals 
                                who moved between positions that were 
                                in different agencies but the same 
                                geographic area (including the names of 
                                the agencies involved); and
                          (ii) a determination of the extent to which 
                        such bonuses furthered the purposes of such 
                        section.
          (2) Retention bonuses.--
                  (A) In general.--The Office of Personnel Management 
                shall submit to the Committee on Governmental Affairs 
                of the Senate and the Committee on Government Reform of 
                the House of Representatives annually, for each of the 
                first 5 years during which section 5754 of title 5, 
                United States Code (as amended by subsection (a)(1)) is 
                in effect, a report on the operation of such section.
                  (B) Contents.--Each report submitted under this 
                paragraph shall include, with respect to the period 
                covered by such report, a description of how the 
                authority to pay bonuses under the section of title 5, 
                United States Code, referred to in subparagraph (A) was 
                used by the respective agencies, including, with 
                respect to each such agency--
                          (i) the number and dollar-amount of bonuses 
                        paid--
                                  (I) to individuals holding positions 
                                within each pay grade, pay level, or 
                                other pay classification; and
                                  (II) if applicable, to prevent 
                                individuals from moving between 
                                positions that were in different 
                                agencies but the same geographic area 
                                (including the names of the agencies 
                                involved); and
                          (ii) a determination of the extent to which 
                        such bonuses furthered the purposes of such 
                        section.
  (d) Effective Date and Application.--
          (1) Effective date.--Except as provided under paragraphs (2) 
        and (3), this section shall take effect on the first day of the 
        first applicable pay period beginning on or after the 180th day 
        after the date of the enactment of this Act.
          (2) Application to agreements.--A recruitment or relocation 
        bonus service agreement that was authorized under section 5753 
        of title 5, United States Code, before the effective date under 
        paragraph (1) shall continue, until its expiration, to be 
        subject to such section as in effect on the day before such 
        effective date.
          (3) Application to allowances.--Payment of a retention 
        allowance that was authorized under section 5754 of title 5, 
        United States Code, before the effective date under paragraph 
        (1) shall continue, subject to such section as in effect on the 
        day before such effective date, until the retention allowance 
        is reauthorized or terminated (but no longer than 1 year after 
        such effective date).

SEC. 102. STREAMLINED CRITICAL PAY AUTHORITY.

  Section 5377 of title 5, United States Code, is amended--
          (1) by striking ``Office of Personnel Management'' each place 
        it appears and inserting ``Office of Management and Budget'';
          (2) by striking ``Office of Management and Budget'' each 
        place it appears and inserting ``Office of Personnel 
        Management'';
          (3) in subsection (g), by striking ``prescribing regulations 
        under this section or''; and
          (4) in subsection (h), by striking ``Committee on Post Office 
        and Civil Service'' and inserting ``Committee on Government 
        Reform''.

 TITLE II--REFORMS RELATING TO FEDERAL EMPLOYEE CAREER DEVELOPMENT AND 
                                BENEFITS

                     Subtitle A--General Provisions

SEC. 201. AGENCY TRAINING.

  (a) Training To Accomplish Performance Plans and Strategic Goals.--
Section 4103 of title 5, United States Code, is amended by adding at 
the end the following:
  ``(c) The head of each agency shall, on a regular basis--
          ``(1) evaluate each program or plan established, operated, or 
        maintained under subsection (a) with respect to accomplishing 
        specific performance plans and strategic goals in performing 
        the agency mission; and
          ``(2) modify such program or plan as needed to accomplish 
        such plans and goals.''.
  (b) Specific Training Programs.--
          (1) In general.--Chapter 41 of title 5, United States Code, 
        is amended by adding after section 4120 the following:

``Sec. 4121. Specific training programs

  ``In consultation with the Office of Personnel Management, the head 
of each agency shall establish--
          ``(1) a comprehensive management succession program to 
        provide training to employees to develop managers for the 
        agency; and
          ``(2) a program to provide training to managers on actions, 
        options, and strategies a manager may use in--
                  ``(A) relating to employees with unacceptable 
                performance;
                  ``(B) mentoring employees and improving employee 
                performance and productivity; and
                  ``(C) conducting employee performance appraisals.''.
          (2) Clerical amendment.--The table of sections for chapter 41 
        of title 5, United States Code, is amended by adding at the end 
        the following:

``4121. Specific training programs.''.

SEC. 202. ANNUAL LEAVE ENHANCEMENTS.

  (a) Creditability of Prior Nongovernmental Service for Purposes of 
Determining Rate of Leave Accrual.--
          (1) In general.--Section 6303 of title 5, United States Code, 
        is amended by adding at the end the following:
  ``(e)(1) Not later than 180 days after the date of the enactment of 
this subsection, the Office of Personnel Management shall prescribe 
regulations under which, for purposes of determining years of service 
under subsection (a), credit shall, in the case of a newly appointed 
employee, be given for any prior service of such employee that would 
not otherwise be creditable for such purposes, if--
          ``(A) such service--
                          ``(i) was performed in a position the duties 
                        of which directly relate to the duties of the 
                        position to which such employee is so 
                        appointed; and
                          ``(ii) meets such other requirements as the 
                        Office may prescribe; and
          ``(B) in the judgment of the head of the appointing agency, 
        the application of this subsection is necessary in order to 
        achieve an important agency mission or performance goal.
  ``(2) Service described in paragraph (1)--
          ``(A) shall be creditable, for the purposes described in 
        paragraph (1), as of the effective date of the employee's 
        appointment; and
          ``(B) shall not thereafter cease to be so creditable, unless 
        the employee fails to complete a full year of continuous 
        service with the agency.
  ``(3) An employee shall not be eligible for the application of 
paragraph (1) on the basis of any appointment if, within 90 days before 
the effective date of such appointment, such employee has held any 
position in the civil service.''.
          (2) Conforming amendment.--The second sentence of section 
        6303(a) of title 5, United States Code, is amended by striking 
        the period and inserting ``, and for all service which is 
        creditable by virtue of subsection (e).''.
  (b) Other Annual Leave Enhancements.--Section 6303 of title 5, United 
States Code, is amended by adding after subsection (e) (as added by 
subsection (a)) the following:
  ``(f) Notwithstanding any other provision of this section, the rate 
of accrual of annual leave under subsection (a) shall be 1 day for each 
full biweekly pay period in the case of any employee who holds a 
position which is subject to--
          ``(1) section 5376 or 5383; or
          ``(2) a pay system equivalent to either of the foregoing, as 
        determined by the Office of Personnel Management.''.
  (c) Applicability.--None of the amendments made by subsection (a) 
shall apply in the case of any employee holding a position pursuant to 
an appointment made before the effective date of the regulations 
implementing such amendments.

SEC. 203. COMPENSATORY TIME OFF FOR TRAVEL.

  (a) In General.--Subchapter V of chapter 55 of title 5, United States 
Code, is amended by adding at end the following:

``Sec. 5550b. Compensatory time off for travel

  ``(a) Notwithstanding section 5542(b)(2), each hour spent by an 
employee in travel status away from the official duty station of the 
employee, that is not otherwise compensable, shall be treated as an 
hour of work or employment for purposes of calculating compensatory 
time off.
  ``(b) An employee who has any hours treated as hours of work or 
employment for purposes of calculating compensatory time under 
subsection (a), shall not be entitled to payment for any such hours 
that are unused as compensatory time.
  ``(c) Not later than 30 days after the date of enactment of this 
section, the Office of Personnel Management shall prescribe regulations 
to implement this section.''.
  (b) Technical and Conforming Amendment.--The table of sections for 
chapter 55 of title 5, United States Code, is amended by inserting 
after the item relating to section 5550a the following:

``5550b. Compensatory time off for travel.''.

             Subtitle B--Provisions Relating to Retirement

SEC. 211. CIVIL SERVICE RETIREMENT SYSTEM COMPUTATION FOR PART-TIME 
                    SERVICE.

  Section 8339(p) of title 5, United States Code, is amended by adding 
at the end the following:
  ``(3)(A) In the administration of paragraph (1)--
          ``(i) subparagraph (A) of such paragraph shall apply with 
        respect to service performed before, on, or after April 7, 
        1986; and
          ``(ii) subparagraph (B) of such paragraph shall apply with 
        respect to that portion of any annuity which is attributable to 
        service performed on or after April 7, 1986.
  ``(B) This paragraph shall be effective with respect to any annuity 
entitlement to which is based on a separation from service occurring on 
or after the date of the enactment of this paragraph.''.

SEC. 212. RETIREMENT SERVICE CREDIT FOR CADET OR MIDSHIPMAN SERVICE.

  (a) Civil Service Retirement System.--Section 8331(13) of title 5, 
United States Code, is amended by striking ``or'' at the end of 
subparagraph (B), by adding ``or'' at the end of subparagraph (C), and 
by inserting after subparagraph (C) the following:
                  ``(D) as a cadet at the United States Military 
                Academy, the United States Air Force Academy, or the 
                United States Coast Guard Academy, or as a midshipman 
                at the United States Naval Academy;''.
  (b) Federal Employees' Retirement System.--Section 8401(31) of title 
5, United States Code, is amended by striking ``or'' at the end of 
subparagraph (B), by adding ``or'' at the end of subparagraph (C), and 
by inserting after subparagraph (C) the following:
                  ``(D) as a cadet at the United States Military 
                Academy, the United States Air Force Academy, or the 
                United States Coast Guard Academy, or as a midshipman 
                at the United States Naval Academy;''.
  (c) Applicability.--The amendments made by this section shall apply 
with respect to--
          (1) any annuity entitlement to which is based on a separation 
        from service occurring before, on, or after the date of the 
        enactment of this Act; and
          (2) any period of service, described in the amendment made by 
        subsection (a) or (b), which occurs before, on, or after the 
        date of the enactment of this Act.

          TITLE III--PROVISIONS RELATING TO PAY ADMINISTRATION

SEC. 301. CORRECTIONS RELATING TO PAY ADMINISTRATION.

  (a) In General.--Chapter 53 of title 5, United States Code, is 
amended--
          (1) in section 5302, by striking paragraph (8) and inserting 
        the following:
          ``(8) the term `rates of pay under the General Schedule', 
        `rates of pay for the General Schedule', or `scheduled rates of 
        basic pay' means the rates of basic pay under the General 
        Schedule as established by section 5332, excluding pay under 
        section 5304 and any other additional pay of any kind; and'';
          (2) in section 5305--
                  (A) by striking subsection (a) and inserting the 
                following:
  ``(a)(1) Whenever the Office of Personnel Management finds that the 
Government's recruitment or retention efforts with respect to 1 or more 
occupations in 1 or more areas or locations are, or are likely to 
become, significantly handicapped due to any of the circumstances 
described in subsection (b), the Office may establish for the areas or 
locations involved, with respect to individuals in positions paid under 
any of the pay systems referred to in subsection (c), higher minimum 
rates of pay for 1 or more grades or levels, occupational groups, 
series, classes, or subdivisions thereof, and may make corresponding 
increases in all rates of the pay range for each such grade or level. 
However, a minimum rate so established may not exceed the maximum rate 
of basic pay (excluding any locality-based comparability payment under 
section 5304 or similar provision of law) for the grade or level by 
more than 30 percent, and no rate may be established under this section 
in excess of the rate of basic pay payable for level IV of the 
Executive Schedule. In the case of individuals not subject to the 
provisions of this title governing appointment in the competitive 
service, the President may designate another agency to authorize 
special rates under this section.
  ``(2) The head of an agency may determine that a category of 
employees of the agency will not be covered by a special rate 
authorization established under this section. The head of an agency 
shall provide written notice to the Office of Personnel Management (or 
other agency designated by the President to authorize special rates 
under the last sentence of paragraph (1)) which identifies the specific 
category or categories of employees that will not be covered by special 
rates authorized under this section. If the head of an agency removes a 
category of employees from coverage under a special rate authorization 
after that authorization takes effect, the loss of coverage will take 
effect on the first day of the first pay period after the date of the 
notice.'';
                  (B) in subsection (b), by striking paragraph (4) and 
                inserting the following:
          ``(4) any other circumstances which the Office of Personnel 
        Management (or such other agency as the President may under the 
        last sentence of subsection (a)(1) designate) considers 
        appropriate.'';
                  (C) in subsection (d)--
                          (i) by striking ``President'' and inserting 
                        ``Office of Personnel Management''; and
                          (ii) by striking ``or by such agency as he 
                        may designate'' and inserting ``(or by such 
                        other agency as the President may designate 
                        under the last sentence of subsection 
                        (a)(1))'';
                  (D) in subsection (e), by striking ``basic pay'' and 
                inserting ``pay'';
                  (E) by striking subsection (f) and inserting the 
                following:
  ``(f) When a schedule of special rates established under this section 
is adjusted under subsection (d), a covered employee's special rate 
will be adjusted in accordance with conversion rules prescribed by the 
Office of Personnel Management (or by such other agency as the 
President may under the last sentence of subsection (a)(1) 
designate).'';
                  (F) in subsection (g)(1)--
                          (i) by striking ``basic pay'' and inserting 
                        ``pay''; and
                          (ii) by striking ``President (or his 
                        designated agency)'' and inserting ``Office of 
                        Personnel Management (or such other agency as 
                        the President may under the last sentence of 
                        subsection (a)(1) designate)'';
                  (G) by striking subsection (h) and inserting the 
                following:
  ``(h) An employee shall not for any purpose be considered to be 
entitled to a rate of pay established under this section with respect 
to any period for which such employee is entitled to a higher rate of 
basic pay under any other provision of law. For purposes of this 
subsection, the term `basic pay' includes any applicable locality-based 
comparability payment under section 5304 or similar provision of 
law.''; and
                  (H) by adding at the end the following:
  ``(i) If an employee who is receiving a rate of pay under this 
section becomes subject, by virtue of moving to a new official duty 
station, to a different pay schedule, such employee's new rate of pay 
shall be initially established under conversion rules prescribed by the 
Office of Personnel Management (or such other agency as the President 
may under the last sentence of subsection (a)(1) designate) in 
conformance with the following:
          ``(1) First, determine the rate of pay to which such employee 
        would be entitled at the new official duty station based on 
        such employee's position, grade, and step (or relative position 
        in the rate range) before the move.
          ``(2) Then, if (in addition to the change in pay schedule) 
        the move also involves any personnel action or other change 
        requiring a rate adjustment under any other provision of law, 
        rule, or regulation, apply the applicable rate adjustment 
        provisions, treating the rate determined under paragraph (1) as 
        if it were the rate last received by the employee before the 
        rate adjustment.
  ``(j) A rate determined under a schedule of special rates established 
under this section shall be considered to be part of basic pay for 
purposes of subchapter III of chapter 83, chapter 84, chapter 87, 
subchapter V of chapter 55, and section 5941, and for such other 
purposes as may be expressly provided for by law or as the Office of 
Personnel Management may by regulation prescribe.'';
          (3) in section 5334--
                  (A) in subsection (b), by adding at the end the 
                following:
``If an employee's rate after promotion or transfer is greater than the 
maximum rate of basic pay for the employee's grade, that rate shall be 
treated as a retained rate under section 5363. The Office of Personnel 
Management shall prescribe by regulation the circumstances under which 
and the extent to which special rates under section 5305 (or similar 
provision of law) or locality-adjusted rates under section 5304 (or 
similar provision of law) are considered to be basic pay in applying 
this subsection.''; and
                  (B) by adding at the end the following:
  ``(g) In the case of an employee who--
          ``(1) moves to a new official duty station, and
          ``(2) by virtue of such move, becomes subject to a different 
        pay schedule,
any rate adjustment under the preceding provisions of this section, 
with respect to such employee in connection with such move, shall be 
made--
          ``(A) first, by determining the rate of pay to which such 
        employee would be entitled at the new official duty station 
        based on such employee's position, grade, and step (or relative 
        position in the rate range) before the move, and
          ``(B) then, by applying the provisions of this section that 
        would otherwise apply (if any), treating the rate determined 
        under subparagraph (A) as if it were the rate last received by 
        the employee before the rate adjustment.'';
          (4) in section 5361--
                  (A) by amending paragraph (4) to read as follows:
          ``(4) `rate of basic pay' means--
                  ``(A) the rate of basic pay payable to an employee 
                under law or regulations before any deductions or 
                additions of any kind, but including--
                          ``(i) any applicable locality-based 
                        comparability payment under section 5304 or 
                        similar provision of law;
                          ``(ii) any applicable special pay under 
                        section 5305 or similar provision of law; and
                          ``(iii) subject to such regulations as the 
                        Office of Personnel Management may prescribe, 
                        any applicable existing retained rate of pay 
                        established under section 5363 or similar 
                        provision of law; and
                  ``(B) in the case of a prevailing rate employee, the 
                scheduled rate of pay determined under section 5343;'';
                  (B) in paragraph (6), by striking ``and'' at the end;
                  (C) in paragraph (7), by striking the period and 
                inserting``; and''; and
                  (D) by adding at the end the following:
          ``(8) `retained rate' means the rate of basic pay to which an 
        employee is entitled under section 5363(b)(2).'';
          (5) in section 5363--
                  (A) in subsection (a), by striking the matter 
                following paragraph (4) and inserting the following:
``is entitled to a rate of basic pay in accordance with regulations 
prescribed by the Office of Personnel Management in conformity with the 
provisions of this section.''; and
                  (B) by striking subsections (b) and (c) and inserting 
                the following:
  ``(b)(1)(A) If, as a result of any event described in subsection (a), 
the employee's former rate of basic pay is less than or equal to the 
maximum rate of basic pay payable for the grade of the employee's 
position immediately after the occurrence of the event involved, the 
employee is entitled to basic pay at the lowest rate of basic pay 
payable for such grade that equals or exceeds such former rate of basic 
pay.
  ``(B) This section shall cease to apply to an employee to whom 
subparagraph (A) applies once the appropriate rate of basic pay has 
been determined for such employee under this paragraph.
  ``(2)(A) If, as a result of any event described in subsection (a), 
the employee's former rate of basic pay is greater than the maximum 
rate of basic pay payable for the grade of the employee's position 
immediately after the occurrence of the event involved, the employee is 
entitled to basic pay at a rate equal to the lesser of--
          ``(i) the employee's former rate of basic pay; or
          ``(ii) 150 percent of the maximum rate of basic pay payable 
        for the grade of the employee's position immediately after the 
        occurrence of the event involved,
as adjusted by subparagraph (B).
  ``(B) A rate to which an employee is entitled under this paragraph 
shall be increased at the time of any increase in the maximum rate of 
basic pay payable for the grade of the employee's position by 50 
percent of the dollar amount of each such increase.
  ``(3) For purposes of this subsection, the term `former rate of basic 
pay', as used with respect to an employee in connection with an event 
described in subsection (a), means the rate of basic pay last received 
by such employee before the occurrence of such event.
  ``(c)(1) Notwithstanding any other provision of this section, in the 
case of an employee who--
          ``(A) moves to a new official duty station, and
          ``(B) in conjunction with such move, becomes subject to both 
        a different pay schedule and (disregarding this subsection) the 
        preceding provisions of this section,
this section shall be applied--
          ``(i) first, by determining the rate of pay to which such 
        employee would be entitled at the new official duty station 
        based on such employee's position, grade, and step (or relative 
        position in the pay range) before the move, and
          ``(ii) then, by applying the provisions of this section that 
        would apply (if any), treating the rate determined under clause 
        (i) as if it were the rate last received by the employee before 
        the application of this section.
  ``(2) A reduction in an employee's rate of basic pay resulting from a 
determination under paragraph (1)(ii) is not a basis for an entitlement 
under this section.
  ``(3) The rate of basic pay for an employee who is receiving a 
retained rate at the time of moving to a new official duty station at 
which different pay schedules apply shall be subject to regulations 
prescribed by the Office of Personnel Management consistent with the 
purposes of this section.
  ``(d) A retained rate shall be considered part of basic pay for 
purposes of this subchapter and for purposes of subchapter III of 
chapter 83, chapters 84 and 87, subchapter V of chapter 55, section 
5941, and for such other purposes as may be expressly provided for by 
law or as the Office of Personnel Management may by regulation 
prescribe. The Office shall, for any purpose other than any of the 
purposes referred to in the preceding sentence, prescribe by regulation 
what constitutes basic pay for employees receiving a retained rate.
  ``(e) This section shall not apply, or shall cease to apply, to an 
employee who--
          ``(1) has a break in service of 1 workday or more;
          ``(2) is entitled, by operation of this subchapter, chapter 
        51 or 53, or any other provision of law, to a rate of basic pay 
        which is equal to or higher than, or declines a reasonable 
        offer of a position the rate of basic pay for which is equal to 
        or higher than, the retained rate to which the employee would 
        otherwise be entitled; or
          ``(3) is demoted for personal cause or at the employee's 
        request.''; and
          (6) in section 5365(b), by inserting after ``provisions of 
        this subchapter'' the following: ``(subject to any conditions 
        or limitations the Office may establish)''.
  (b) Special Rates for Law Enforcement Officers.--Section 403(c) of 
the Federal Employees Pay Comparability Act of 1990 (5 U.S.C. 5305 
note) is amended by striking all after ``provision of law)'' and 
inserting ``and shall be basic pay for all purposes. The rates shall be 
adjusted at the time of adjustments in the General Schedule to maintain 
the step linkage set forth in subsection (b)(2).''.
  (c) Repeal.--Section 4505a(a)(2) of title 5, United States Code, is 
amended--
          (1) by striking ``(2)(A)'' and inserting ``(2)''; and
          (2) by striking subparagraph (B).
  (d) Effective date; conversion rules.--
          (1) Effective date.--This section shall take effect on the 
        first day of the first applicable pay period beginning on or 
        after the 180th day after the date of the enactment of this 
        Act.
          (2) Conversion rules.--
                  (A) Individuals receiving a retained rate or a rate 
                greater than the maximum rate for the grade.--Subject 
                to any regulations the Office of Personnel Management 
                may prescribe, an employee under a covered pay schedule 
                who, on the day before the effective date of this 
                section, is receiving a retained rate under section 
                5363 of title 5, United States Code, or is receiving 
                under similar authority a rate of basic pay that is 
                greater than the maximum rate of basic pay payable for 
                the grade of the employee's position shall have that 
                rate converted as of the effective date of this 
                section, and the employee shall be considered to be 
                receiving a retained rate under section 5363 of such 
                title (as amended by this section). The newly 
                applicable retained rate shall equal the formerly 
                applicable retained rate as adjusted to include any 
                applicable locality-based payment under section 5304 of 
                title 5, United States Code, or similar provision of 
                law.
                  (B) Definition.--For purposes of this paragraph, the 
                term ``covered pay schedule'' has the meaning given 
                such term by section 5361 of title 5, United States 
                Code.

SEC. 302. TECHNICAL CORRECTIONS.

  (a)(1) Section 5304 of title 5, United States Code, as amended by 
section 1125 of the National Defense Authorization Act for Fiscal Year 
2004 (Public Law 108-136), is amended--
          (A) in subsection (g)(2)(A), by striking ``(A)-(D)'' and 
        inserting ``(A)-(C)''; and
          (B) in subsection (h)(2)(B)(i), by striking ``or (vii)'' and 
        inserting ``or (vi)''.
  (2) The amendments made by this subsection shall take effect as if 
included in the enactment of the National Defense Authorization Act for 
Fiscal Year 2004 (Public Law 108-136).
  (b) Section 5314 of title 5, United States Code, is amended by adding 
at the end the following:
          ``Administrator of the Office of Electronic Government.''.

                     Committee Statement and Views


                  BACKGROUND AND NEED FOR LEGISLATION

    S. 129, the Federal Workforce Flexibility Act, will 
modernize and update personnel flexibilities and authorities 
available to agencies of the Federal government. This 
legislation not only enhances existing statutory authorities, 
but provides additional flexibilities as well that will assist 
in the management of our most important resource--human 
capital. The federal government is not unlike any other 
organization in this respect--the most important asset is our 
people, and we must be able to recruit, retain and reward them. 
The legislation amends current law with regard to critical pay 
authorimty, computation of annuities for certain individuals 
with part-time service, agency training activities, annual 
leave, and recruitment and retention bonuses. In addition, the 
legislation codifies retirement service credit for individuals 
enrolled at the military service academies.

                          LEGISLATIVE HISTORY

    S. 129 was introduced on January 9, 2003 by Senator George 
Voinovich, and referred to the Senate Committee on Governmental 
Affairs. On January 27, 2004, the bill was reported favorably 
with an amendment in the nature of a substitute, and was agreed 
to in the Senate on April 8, 2004 by unanimous consent.
    On May 18, 2004, the Subcommittee on Civil Service and 
Agency Organization referred S. 129 to the Full Committee with 
an amendment in the nature of a substitute, offered by 
Chairwoman Jo Ann Davis. The Committee on Government Reform 
reported the bill favorably by voice vote on June 24, 2004.

                           Section-by-Section


Sec. 101. Recruitment, relocation and retention bonuses

    Subsection (a)(1) replaces existing sections 5753 and 5754 
of title 5, U.S. Code, with entirely revised sections 
concerning recruitment and relocation bonuses (Sec. 5753) and 
retention allowances (Sec. 5754).

New Sec. 5753 is entitled, ``Recruitment and relocation bonuses''

    Subsection (a) of new Sec. 5753 defines the class of 
employees to whom the section may be applied as those who are 
covered by the General Schedule and others as may be approved 
by OPM at the request of an agency head. Bonuses under this 
section may not be paid to an individual appointed by the 
President with the advice and consent of the Senate, a non-
career appointee in the Senior Executive Service, or an 
individual in a position excepted from the competitive service 
due to its confidential, policy-determining, policy-making, or 
policy-advocating character. The term ``employee'' means an 
employee as defined in sec. 2105 of title 5, U.S. Code (the 
generally applicable definition of ``employee'' for purposes of 
title 5), including those paid with non-appropriated funds.
    Subsection (b) of new Sec. 5753 states that OPM may 
authorize the head of an agency to pay a bonus to an individual 
appointed or moved to a position that is likely to be difficult 
to fill in the absence of a bonus. Also, a bonus may be paid 
only if the individual is newly appointed to a position in the 
civil service or is currently employed and moves to a new 
position in the same geographic area or must relocate to accept 
a position in a different area.
    Subsection (c)(1) of new Sec. 5753 states that the bonuses 
shall be contingent upon the employee entering into a written 
service agreement to complete a certain period of employment, 
not to exceed four years.
    Subsection (c)(2) of new Sec. 5753 states that the written 
service agreement must include the length of the required 
service period; the amount of the bonus; the method of payment; 
and other terms and conditions under which the bonus is 
payable, including the beginning and ending dates of the 
required service, or provisions for termination. The required 
service period begins upon employment or movement to a new 
position or geographic area, unless an exception is made under 
circumstances such as tying the beginning of the required 
service period to completion of an initial period of formal 
basic training.
    Subsection (d) of new Sec. 5753 states that, unless an 
exception is authorized under subsection (e), bonuses shall not 
exceed 25 percent of the annual rate of basic pay of the 
employee at the beginning of the service period multiplied by 
the number of years of the service period, not to exceed 4 
years. The bonus is not considered basic pay, may be paid in a 
variety of ways, including an initial lump sum, installments, 
or a final lump sum at the end of the required period of 
service and, for recruitment bonuses, may be paid before the 
individual enters on duty.
    Subsection (e) of new Sec. 5753 states that the Office of 
Personnel Management may authorize an agency head to waive the 
25 percent cap, based on a critical agency need. The amount of 
the bonus may not exceed 50 percent of the employee's annual 
rate of basic pay multiplied by the number of years of the 
service period, or 100 percent of the employee's annual rate of 
basic pay at the beginning of the service period.
    Subsection (f) of new Sec. 5753 states that the Office of 
Personnel Management shall require that each agency establish a 
plan for paying recruitment and relocation bonuses before such 
bonuses are paid.
    Subsection (g) of new Sec. 5753 authorizes the Office of 
Personnel Management to issue regulations to carry out Sec. 
5753, including regulations relating to the repayment of 
recruitment or relocation bonuses when the agreed upon service 
period has not been met.

New Sec. 5754 is titled ``Retention bonuses''

    Subsection (a) of new Sec. 5754 defines the class of 
employees to whom the section may be applied as those who are 
covered by the General Schedule and others as may be approved 
by OPM at the request of an agency head. Bonuses under this 
section may not be paid to an individual appointed by the 
President with the advice and consent of theSenate, a non-
career appointee in the Senior Executive Service, or an individual in a 
position excepted from the competitive service due to its confidential, 
policy-determining, policy-making, or policy-advocating character. The 
term ``employee'' means an employee as defined in sec. 2105 of title 5, 
U.S. Code (the generally applicable definition of ``employee'' for 
purposes of title 5), including those paid with non-appropriated funds.
    Subsection (b) of new Sec. 5754 states that the Office of 
Personnel Management may authorize the head of an agency to pay 
a retention bonus to an employee if the employee's unusually 
high or unique qualifications, or a special need of the agency 
for the employee's service, make the employee's retention 
essential. Additionally, the agency is required to make a 
determination that in the absence of a retention bonus the 
employee would be likely to leave Federal service or take a 
different position in Federal service, as described in 
regulation.
    Subsection (c) of new Sec. 5754 states that the Office of 
Personnel Management may authorize the head of an agency to pay 
retention bonuses to a group of employees in one or more 
categories of positions in certain geographic areas, if the 
agency perceives a high risk that a significant portion of 
employees in the group would be likely to leave without such 
bonus.
    Subsection (d) of new Sec. 5754 states that payment of a 
retention bonus is contingent upon the employee entering into a 
written service agreement with the agency to complete a period 
of employment. The agreement must include the length of the 
required service period; the amount of the bonus; the method of 
payment; and the terms and conditions under which the bonus is 
payable, including the conditions under which the agreement may 
be terminated before the agreed-upon service period has been 
completed and the effect of termination. A written service 
agreement is not required if the agency pays a retention bonus 
in biweekly installments and sets the installment payment at 
the full bonus percentage rate established for the employee, 
with no portion of the bonus deferred; if the bonus is being 
paid in biweekly installments, the agency must notify the 
employee before it terminates the payments and must pay the 
bonus through the end of the pay period in which the notice is 
provided. A retention bonus for an employee may not be based on 
any period of service that is the basis for a recruitment or 
relocation bonus under 5 U.S.C. 5753.
    Subsection (e) of new Sec. 5754 states that a retention 
bonus may not exceed 25 percent of the employee's basic pay if 
the bonus is paid to an individual under subsection (b), or 10 
percent of the employee's basic pay if the bonus is paid to a 
group of employees under subsection (c). The retention bonus 
may be paid to an employee in installments after completion of 
specified periods of service or in a single lump sum at the end 
of the full period of service required by the service 
agreement. An installment rate may not exceed the bonus 
percentage rate for the employee (that is, up to 25 percent 
under subsection (b) or up to 10 percent under subsection (c)), 
and if the payment percentage is less than the bonus percentage 
rate, the unpaid portion of the bonus is payable as part of the 
final installment under the service agreement. A retention 
bonus is not part of the basic pay of an employee.
    Subsection (f) of new Sec. 5754 states the Office of 
Personnel Management may, at the request of the head of an 
agency, waive the percentage limit applicable under subsection 
(e) and permit the agency head to pay an otherwise eligible 
employee or group of employees retention bonuses of up to 50 
percent of basic pay, based on a critical need of the agency.
    Subsection (g) of new Sec. 5754 states that the Office of 
Personnel Management shall require that, before paying a bonus 
under this section, an agency must establish a plan for paying 
retention bonuses.
    Subsection (h) of new Sec. 5754 authorizes the Office of 
Personnel Management to issue regulations to carry out this 
section.
    Paragraph (a)(2) of Sec. 101 makes a clerical amendment to 
the table of section for chapter 57 of title 5, U.S. Code.
    Paragraph (a)(3) of Sec. 101 states the sense of Congress 
concerning bonuses paid by one agency to recruit or relocate a 
Federal employee from another Government agency in the same 
geographic area or to retain an employee who might otherwise 
leave to work for another Government agency in the same 
geographic area. It is the sense of Congress that an agency 
paying a bonus in this circumstance should notify the Office of 
Personnel Management within 60 days after the bonus is paid. 
Also, the Office should monitor such payments to ensure they 
are an effective use of funds and have not harmed the ability 
of agencies that lost employees to carry out their mission.
    Subsection (b) of Sec. 101 repeals a section of the Federal 
Employees Pay Comparability Act of 1990. Section 407 of that 
Act allows payment of up to $15,000 as a relocation bonus for a 
law enforcement officer whose basic pay is less than $60,000. 
New Sec. 5753 of title 5, U.S. Code, as created in section 
101(a)(1) of this Act, will authorize payment of up to 100% of 
basic pay as a recruitment or relocation bonus in cases of a 
critical agency need. Therefore, if S. 129 is enacted, the 
authority in section 407 of the 1990 Act, which creates a 
special rule allowing certain law enforcement officers to 
receive bonuses that exceed 25% of basic pay, will no longer be 
needed.
    Subsection (c) of Sec. 101 places two reporting 
requirements upon the Office of Personnel Management. The 
Office must report annually, for the first five years after the 
effective date of sec. 101, a report on the operation of the 
new Sec. 5753 of title 5, U.S. Code and another report on the 
operation of new Sec. 5754. Each report must include the number 
and dollar-amount of bonuses paid and a determination of the 
extent to which the bonuses furthered the purposes of the new 
provisions.
    Subsection (d) of Sec. 101 establishes the effective date 
for the section as the first day of the first applicable pay 
period beginning on or after the 180th day after the date of 
enactment. However, a service agreement relating to a 
recruitment or relocation bonus under prior law shall remain in 
effect until its expiration, subject to the provisions of Sec. 
5753 of title 5, U.S. Code as in effect on the day before the 
effective date of the new Sec. 5753. Also, a retention 
allowance authorized under Sec. 5754 of title 5, U.S. Code 
beforeeffective date of Sec. 101 continues in effect, subject 
to Sec. 5754 as in effect on the day before the effective date of Sec. 
101, until the allowance is reauthorized or terminated, but no longer 
than one year after the effective date of Sec. 101.

Sec. 102. Streamlined critical pay authority

    This section would amend 5 U.S.C. Sec. 5377, to switch the 
respective roles of the Office of Management and Budget and the 
Office of Personnel Management concerning the authority to 
approve requests to fix pay for critical positions at a rate up 
to level I of the Executive Schedule. OPM would be authorized 
to approve requests, in consultation with OMB. Also, OPM would 
issue implementing regulations, after consulting with OMB, and 
would be responsible for reporting to the Government Reform 
Committee of the House and the Governmental Affairs Committee 
of the Senate concerning the operation of Sec. 5377.

 TITLE II--REFORMS RELATING TO FEDERAL EMPLOYEE CAREER DEVELOPMENT AND 
                                BENEFITS


                     Subtitle A--General Provisions


Sec. 201. Agency training

    Subsection (a) would amend 5 U.S.C. Sec. 4103 to require 
each agency to evaluate, on a regular basis, its training 
programs and plans so as to ensure that its training activities 
are linked to the accomplishment of its specific performance 
plans and strategic goals, and to modify its training plans and 
programs as needed to accomplish the agency's performance plans 
and strategic goals.
    Subsection (b)(1) would add a new Sec. 4121 to title 5, 
U.S. Code, to require agencies to work with the Office of 
Personnel Management to institute comprehensive management 
succession programs designed to develop future managers for the 
agency. Subsection (b) would also require agencies, in 
consultation with the Office of Personnel Management, to 
provide special training to managers regarding how they relate 
to employees with unacceptable performance, mentor employees 
and improve their performance and productivity, and conduct 
employee performance appraisals. Subsection (b)(2) is a 
clerical amendment to the table of sections for chapter 41 of 
title 5, U.S. Code.

Sec. 202. Annual leave enhancements

    Subsection (a) would amend 5 U.S.C. Sec. 6303 to reform the 
policy on accrual of annual leave for newly-hired Federal 
employees. A new subsection (e) would authorize the Office of 
Personnel Management to issue regulations (no later than 180 
days after enactment) under which a newly-hired employee's 
prior work experience may be credited in determining the amount 
of annual leave the employee will earn. To be creditable, the 
employee's past service must have been performed in a position 
with duties that directly relate to the new position to which 
he or she is being appointed and must meet other requirements 
as OPM regulations may prescribe. Before granting such credit, 
the head of the new employee's agency must determine that it is 
necessary in order to achieve an agency mission or performance 
goal. Once credited upon the effective date of the employee's 
appointment, the past experience remains creditable for this 
purpose unless the employee does not complete one continuous 
year of service with the same agency. An individual who has 
been employed in the Federal civil service within 90 days 
before an appointment to an agency is not eligible for leave 
system service credit under this subsection.
    Subsection (b) would amend section 5 U.S.C. Sec. 6303 by 
adding a new subsection (f) providing that members of the 
Senior Executive Service whose pay is set under Sec. 5383 of 
title 5, U.S. Code, and the senior level and scientific and 
professional employees whose pay is set under Sec. 5376 of 
title 5, U.S. Code, accrue annual leave at the maximum rate: 
one day (eight hours) for each bi-weekly pay period. New 
subsection (f) of Sec. 6303 would allow the same leave accrual 
rate for other employees in positions subject to an equivalent 
pay system, as determined by OPM.
    Subsection (c) states that an employee occupying a position 
under an appointment made before the effective dating of the 
implementing regulations is not eligible for the enhanced leave 
accrual rate provided by Sec. 202(b).

Sec. 203. Compensatory time off for travel

    Subsection (a) of this section would amend title 5, U.S. 
Code, by creating a new Sec. 5550b. Subsection (a) of new Sec. 
5550b requires an employing agency to grant an employee 
compensatory time off for time spent in travel status away from 
his or her official duty station, if the time is not otherwise 
compensable.
    Subsection (b) of new Sec. 5550b states that an employee 
whose travel time is credited as compensatory time off is not 
entitled to pay for those hours.
    Subsection (c) of new Sec. 5550b requires OPM to issue 
implementing regulations not later than 30 days after 
enactment.

             Subtitle B--Provisions Relating to Retirement


Sec. 211. Civil Service Retirement System computation for part-time 
        service

    This section would amend section 5 U.S.C. Sec. 8339(p) by 
adding a new subsection (3) to amend the special annuity 
computation formula for employees who performed part-time 
service after April 7, 1986. For these employees, this section 
would extend application of full-time rates of pay in computing 
average salary to all service, regardless of when it was 
performed.
    New Sec. 8339(p)(3) would state that subparagraph (A) of 
8339(p)(1) (providing for use of full-time rates of pay in 
computing average salary) would apply to service performed 
before, on or after April 7, 1986; subparagraph (B) of 
8339(p)(1) (providing for proration of the annuity benefit to 
reflect part-time service) would apply only to service 
performed on or after April 7, 1986.

Sec. 212. Retirement service credit for cadet or midshipman service

    Subsection (a) would amend 5 U.S.C. Sec. 8331(13) to 
include an individual's service as a cadet or midshipman for 
the purposes of calculating an annuity under the Civil Service 
Retirement System.
    Subsection (b) would amend 5 U.S.C. Sec. 8401(31) to 
include an individual's service as a cadet or midshipman for 
the purposes of calculating an annuity under the Federal 
Employees Retirement System.
    Subsection (c) provides the effective date and 
applicability of this section. The section shall apply to (1) 
any annuity, eligibility for which is based upon a separation 
before, on, or after the date of enactment; and (2) any period 
of service as a cadet or midshipman at the military service 
academy of the Army, Air Force, Coast Guard, or Navy occurring 
before, on, or after enactment.

          TITLE III--PROVISIONS RELATING TO PAY ADMINISTRATION


Sec. 301. Corrections relating to pay administration

    Section 301(a) amends the following sections of chapter 53 
of title 5, U.S. Code: Sec. 5302 (definitions), Sec. 5305 
(special pay authority), 5334 (rate on change of position or 
type of appointment), Sec. 5361 (definitions) and Sec. 5363 
(pay retention). The following analysis refers to those 
sections.
    Sec. 301(a)(1) revises Sec. 5302 to define the terms 
``rates of pay under the General Schedule,'' `` rates of pay 
for the General Schedule,'' and ``rates of basic pay'' to mean 
the General Schedule rates, excluding comparability pay under 
Sec. 5304, and any other additional pay. The current definition 
of these terms includes retained rates under Sec. 5363, which 
are rates above step 10 of any grade in the General Schedule. 
Under this amendment, locality pay would not be paid on top of 
a retained rate. This change, in combination with other changes 
in section 5361 and 5363 would prevent an unnecessary and 
unintended windfall increase in pay for employees who become 
entitled to pay retention because their special rates are 
terminated or reduced.
    Sec. 301(a)(2)(A) revises Sec. 5305(a) to provide that (1) 
OPM may establish special pay rates. A minimum special rate 
could not exceed the maximum General Schedule basic pay rate 
(excluding locality-based comparability payments) for the grade 
or level by more than 30% and no rate could exceed level IV of 
the Executive Schedule, which is higher than the current level 
V cap on special rates. The higher level IV cap would put 
special rates on the same footing as locality rates, which are 
subject to a level IV cap for GS employees. For individuals not 
subject to title 5 provisions governing appointment in the 
competitive service, the President could designate another 
agency to authorize special rates under this section; and (2) 
the agency head could determine that a category of agency 
employees would not be covered by a special rate authorization. 
The agency head would provide written notice to OPM (or other 
agency designated by the President to authorize special rates 
under the last sentence of paragraph (1)), which identifies the 
specific category or categories of employees that will not be 
covered by special rates. If the agency head removes a category 
of employees from coverage after the special rate authorization 
takes effect, the loss of coverage would take effect on the 
first day of the first pay period after the notice date. This 
amendment would allow the head of an agency to opt out of a 
special rate authorization. The agency head could provide a 
formal written notice to OPM (or other agency that is 
authorized by the President to establish special rates) that 
identified the specific category or categories of employees 
that would not be covered by a particular special rates 
authorization. Agencies could decide to use this authority when 
they determined that they did not need to pay higher rates of 
pay to recruit or retain employees in certain occupations or 
locations, or they did not have the additional funds needed to 
pay the higher special rates. If an agency removed employees 
from coverage after a special rate authorization took effect, 
the employees would be covered by the pay retention provisions 
of Sec. 5363, as applicable.
    Sec. 301(a)(2)(B) would amend Sec. 5305(b)(4), which 
currently lists as one of the circumstances under which the 
special rates authority in Sec. 5305(a) may be exercised: any 
other circumstances which the President (or an agency duly 
authorized or designated by the President in accordance with 
the last sentence of subsection (a)) considers appropriate. To 
conform to the change made to Sec. 5305(a), Sec. 5305(b)(4) 
would be revised to provide that the authority could also be 
used in any other circumstances which OPM (or such other agency 
as the President may under the last sentence of subsection 
(a)(1) designate) considers appropriate. Subparagraphs (C), (E) 
and (F) of Sec. 301(a)(2) make similarly conforming changes to 
subsections (d), (f) and (g)(1), respectively, of Sec. 5305.
    Sec. 301(a)(2)(D) would amend Sec. 5305(e), which now 
states than an increase in a rate of basic pay established 
under Sec. 5305 is not an equivalent increase in pay within the 
meaning of Sec. 5335 of title 5, U.S. Code, which governs 
periodic step increases under the General Schedule. The amended 
language would change ``basic pay'' to ``pay,'' in order to 
clarify that special rates authorized under Sec. 5305 are not 
necessarily ``basic pay'' for all purposes. A similar change to 
replace ``basic pay'' with ``pay'' is incorporated in the 
amendment made by Sec. 301(a)(2)(F).
    Sec. 301(a)(2)(E) amends Sec. 5305(f), which addresses 
adjustment of special pay rates, under conversion rules 
prescribed by the President or such agency he designates, when 
statutory pay rates increase. The revised subsection (f) would 
provide that when special rates are adjusted under subsection 
(d), a covered employee's special rate would be adjusted in 
accordance with conversion rules prescribed by OPM (or by such 
other agency as the President may under the last sentence of 
subsection (a)(1) designate. This amendment would clarify that 
the reference to conversion rules applies to the conversion of 
an employee's pay to a new special rate schedule and not to the 
adjustment of the special rate schedule itself, as provided in 
Sec. 5305(d). This amendment would make clear that the 
Government has full authority to adjust or not to adjust 
special rate schedules based on staffing needs. It also would 
allow the Government to discontinue mandatory annual review of 
all special rate schedules (currently over 400), which poses an 
unnecessary administrative burden. Instead the Government would 
be allowed to pursue a targeted approach.
    Sec. 301(a)(2)(G) would amend Sec. 5305(h), which now 
provides that pay cannot be less than basic pay (including 
locality pay) payable if special pay were not available. The 
new Sec. 5305(h) would provide that an employee would not for 
any purpose be considered to be entitled to a rate of pay 
established under this section with respect to any period for 
which such employee is entitled to a higher rate of basic pay 
under any other provision of law. ``Basic pay'' would include 
any applicable locality-based comparabilitypayment under 5 
U.S.C. Sec. 5304 or similar provision of law. This amendment is 
intended to clarify that an employee's entitlement to a special rate is 
eliminated if that employee is entitled to a higher locality rate. 
Under current law, an employee's special rate is not automatically 
terminated when surpassed by a locality rate, but remains as an 
underlying rate of basic pay that is used for certain pay 
administration purposes. Thus, different pay rules may apply to two 
employees being paid the same rate of pay. Under current law, the 
underlying special rate cannot be terminated without triggering pay 
retention and a windfall pay increase. The revised Sec. 5305(h), in 
combination with other changes in Sec. 301(a), is intended to prevent 
such illogical and inequitable results.
    Sec. 301(a)(2)(H) would amend Sec. 5305 by adding a new 
subsection (i) which would provide that if an employee who is 
receiving a rate of pay under this section becomes subject, by 
virtue of moving to a new official duty station, to a different 
pay schedule, such employee's new rate of pay would be 
initially established under conversion rules prescribed by OPM 
(or such other agency as the President may under the last 
sentence of subsection (a)(1) designate) in conformance with 
the following: (1) First, determine the pay rate to which such 
employee would be entitled at the new official duty station 
based on such employee's position, grade, and step (or relative 
position in the rate range) before the move. (2) Then, if (in 
addition to the change in pay schedule) the move also involves 
any personnel action or other change requiring a rate 
adjustment under any other provision of law, rule, or 
regulation, apply the applicable rate adjustment provisions, 
treating the rate determined under paragraph (1) as if it were 
the rate last received by the employee before the rate 
adjustment. This amendment is intended to clarify that local 
special rates are a Government tool to address a local labor 
market problem, not an employee entitlement that employees 
should be allowed to carry to another area where there is no 
such problem. The new subsection would make it clear that an 
employee with the same work history as another employee will 
not have higher pay simply because he or she came from an area 
where higher pay rates applied, while also ensuring consistency 
between the treatment of locality rates and special rates. An 
employee who moves from a higher locality rate area to a lower 
locality rate area would not be entitled to pay retention even 
if the move is involuntary.
    Sec. 301(a)(2)(H) would also amend Sec. 5305 by adding a 
new subsection (j), which would provide that a rate included in 
a special rates schedule would be part of basic pay for 
purposes of civil service retirement, federal employees' 
retirement system, life insurance, premium pay, miscellaneous 
allowances, and for such other purposes as may be expressly 
provided for by law or as OPM could prescribe by regulation.
    Sec. 301(a)(3)(A) would amend Sec. 5334(b), which covers 
employee entitlement to basic pay rates upon promotion or 
transfer to a higher grade, by adding new text providing that 
if an employee's rate after promotion or transfer is greater 
than the maximum rate of basic pay for his or her grade, that 
rate would be treated as a retained rate. OPM would prescribe 
regulations on the circumstances under which and the extent to 
which special rates or locality-adjusted rates would be 
considered to be basic pay in applying this subsection. This 
amendment would authorize OPM to determine how special rates 
and locality rates should be used in applying the two-step 
promotion rule (upon promotion to a higher General Schedule 
grade, an employee is generally eligible for a pay increase at 
least equal to two steps in the grade from which he or she is 
promoted) in order to remedy existing pay administration 
problems arising in situations involving promotions, special 
rates, and retained pay when locality pay is not considered to 
be basic pay. This amendment would also allow OPM to prescribe 
regulations to avoid current windfalls resulting from employees 
receiving a two-step promotion (based on the higher special 
rate schedule) and then receiving locality pay on top of the 
adjusted rate. In addition, OPM could prescribe regulations to 
prevent unwarranted pay reductions when an employee receiving a 
retained rate plus a locality pay adjustment is promoted to a 
grade at which special rates apply, causing the employee to 
lose the locality pay adjustment.
    Sec. 301(a)(3)(B) would amend Sec. 5334, by adding a new 
subsection (g) providing that in the case of an employee who 
(1) moves to a new official duty station, and (2) by virtue of 
such move, becomes subject to a different pay schedule, any 
rate adjustment under the preceding provisions of this section, 
with respect to such employee in connection with such move, 
would be made (A) first, by determining the rate of pay to 
which such employee would be entitled at the new official duty 
station based on such employee's position, grade, and step (or 
relative position in the rate range) before the move, and (B) 
then, by applying the provisions of this section that would 
otherwise apply (if any), treating the rate determined under 
subparagraph (A) as if it were the rate last received by the 
employee before the rate adjustment. See also the above 
description of the amendment made by Sec. 301(a)(2)(H).
    Sec. 301(a)(4)(A) would amend Sec. 5361 by amending 
paragraph (4) to provide that ``rate of basic pay'' would mean 
(A) the rate of basic pay payable to an employee under law or 
regulations before any deductions or additions of any kind, but 
including (i) any applicable locality-based comparability 
payment or (ii) any applicable special pay and (iii) subject to 
such regulations as OPM could prescribe, any applicable 
existing retained rate of pay; and (B) in the case of a 
prevailing rate employee, the scheduled rate of pay determined 
under Sec. 5343.
    Sec. 301(a)(4)(B)-(D) would amend Sec. 5361 by adding at 
the end the following: (8) ``retained rate'' would mean the 
rate of basic pay to which an employee is entitled under Sec. 
5363(b)(2).
    Sec. 301(a)(5)(A) would amend Sec. 5363(a) by striking the 
matter following paragraph (4) and inserting: ``is entitled to 
a rate of basic pay in accordance with regulations prescribed 
by OPM in conformity with the provisions of this section. The 
four paragraphs in current Sec. 5363(a), which establish the 
conditions under which an employee may qualify for pay 
retention, are unaffected by this amendment. However, the 
amendment sets out that OPM regulations are needed to clarify 
the various types of situations under which pay retention may 
apply. The material deleted from current Sec. 5363(a), which 
sets out the general formula for determining the amount of 
retained rate, is moved to a revised Sec. 5363(b). OPM 
regulations could establish additional limitations and 
conditions for employees to whom pay retention eligibility is 
extended. For example, this provision would allow OPM to limit 
adjustments of retained rates forformer members of the Senior 
Executive Service who are involuntarily downgraded to General Schedule 
positions.
    Sec. 301(a)(5)(B) would also amend Sec. 5363 by striking 
subsections (b) and (c) and inserting new subsections (b) and 
(c) addressing pay administration in pay retention cases when 
an employee moves to a new official duty station. See also the 
above description of Sec. 301(a)(2)(H), concerning pay setting 
in similar circumstances involving a move to a new official 
duty station.
    Sec. 301(a)(5)(B) would also add a new subsection (d) of 
Sec. 5363 to provide that a retained rate would be considered 
part of basic pay for purposes of this subchapter and for 
purposes of civil service retirement, federal employees' 
retirement system, life insurance, premium pay, miscellaneous 
allowances, and for such other purposes as could be expressly 
provided for by law or as OPM could prescribe by regulation.
    Sec. 301(a)(5)(B) would also clarify, in a new Sec. 
5363(e), that the currently specified conditions that terminate 
entitlement to pay retention also operate to deny initial 
entitlement to pay retention. Those conditions are: a 1-day 
break in service, entitlement to an equal or higher rate of 
basic pay or declining a reasonable offer of a position with 
such pay; and demotion for personal cause or at the employees 
request.
    Sec. 301(a)(6) would amend Sec. 5365(b), which authorizes 
OPM to prescribe regulations to administer grade and pay 
retention, to provide that OPM regulations could provide for 
the application of all or portions of the provisions on grade 
and pay retention (subject to any conditions or limitations the 
Office may establish).
    Sec. 301(b) amends Sec. 403(c) of the Federal Employees Pay 
Comparability Act of 1990 (5 U.S.C. 5305 note) to clarify that 
the special statutory pay rates for law enforcement officers 
authorized by the 1990 Act are basic pay for all purposes and 
must be adjusted when General Schedule rates are adjusted, so 
as to maintain these rates' linkage to the General Schedule 
steps, as provided in Sec. 403(b)(2) of the 1990 Act. These 
adjustments are automatic, unlike the special rate increases 
under Sec. 5305(f), which OPM administratively determines.
    Sec. 301(c) repeals section 4505a(a)(2)(B), to ensure that 
performance-based cash awards may be based on an employee's 
rate of basic pay, including locality payments under Sec. 5304, 
as may be provided in OPM regulations.
    Sec. 301(d)(1) provides that Sec. 301 takes effect on the 
first day of the first applicable pay period beginning on or 
after the 180th day after the act's enactment.
    Sec. 301(d)(2) provides for conversion rules. Subject to 
OPM regulations, an employee under a covered pay schedule (as 
defined by Sec. 5361) who is receiving a retained rate under 
Sec. 5363, or is receiving under similar authority a rate of 
basic pay that is greater than the maximum rate of basic pay 
payable for the grade of the employee's position, would have 
that rate converted to a retained rate under Sec. 5363 (as 
amended by Sec. 301), which would equal the formerly applicable 
retained rate as adjusted to include any applicable locality-
based comparability payment.
    Sec. 302(a) amends Sec. 5304 of title 5, U.S. Code, to make 
technical corrections in subsections (g) and (h), effective as 
if included in Pub. L. 108-136, the National Defense 
Authorization Act for Fiscal Year 2004.
    Sec. 302(b) amends Sec. 5314 of title 5, U.S. Code, by 
adding: ``Administrator of the Office of Electronic 
Government,'' a position created under authority of Pub. L. 
107-347, the E-Government Act of 2002. The salary of this 
position would therefore be set at level III of the Executive 
Schedule.

                       Explanation of Amendments

    The provisions of the substitute are explained in this 
report.

                        Committee Consideration

    On June 24, 2004 the Committee met in open session, and by 
voice vote, ordered reported favorably the bill, S. 129.

                             Rollcall Votes

    No rollcall votes were held.

              Application of Law to the Legislative Branch

    Section 102(b)(3) of Public Law 104-1 requires a 
description of the application of this bill to the legislative 
branch where the bill relates to the terms and conditions of 
employment or access to public services and accommodations. 
This bill modernizes and updates personnel flexibilities and 
authorities available to agencies of the Federal government.
    Some of the benefits of this bill will not be available to 
all legislative branch employees. The pay and certain benefits 
of Legislative branch employees are not subject to the same 
rules and regulations as the Federal civil service. To the 
extent that the provisions of this bill regulate pay and time 
off, Legislative branch employees would not necessarily benefit 
from this legislation

  Statement of Oversight Findings and Recommendations of the Committee

    In compliance with clause 3(c)(1) of rule XIII and clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
the Committee's oversight findings and recommendations are 
reflected in the descriptive portions of this report.

         Statement of General Performance Goals and Objectives

    In accordance with clause 3(c)(4) of rule XIII of the Rules 
of the House of Representatives, the Committee's performance 
goals and objectives are reflected in the descriptive portions 
of this report.

                   Constitutional Authority Statement

    Under clause 3(d)(1) of rule XIII of the Rules of the House 
of Representatives, the Committee must include a statement 
citing the specific powers granted to Congress to enact the law 
proposed by S. 129. Article I, Section 8, Clause 18 of the 
Constitution of the United States grants the Congress the power 
to enact this law.

                     Federal Advisory Committee Act

    The Committee finds that the legislation does not establish 
or authorize the establishment of an advisory committee within 
the definition of 5 U.S.C. App., Section 5(b).

                       Unfunded Mandate Statement

    Section 423 of the Congressional Budget and Impoundment 
Control Act (as amended by Section 101(a)(2) of the Unfunded 
Mandates Reform Act, P.L. 104-4) requires a statement whether 
the provisions of the reported bill include unfunded mandates. 
In compliance with this requirement the Committee has received 
a letter from the Congressional Budget Office included herein.

                           Committee Estimate

    Clause 3(d)(2) of rule XIII of the Rules of the House of 
Representatives requires an estimate and a comparison by the 
Committee of the costs that would be incurred in carrying out 
S. 129. However, clause 3(d)(3)(B) of that rule provides that 
this requirement does not apply when the Committee has included 
in its report a timely submitted cost estimate of the bill 
prepared by the Director of the Congressional Budget Office 
under section 402 of the Congressional Budget Act.

     Budget Authority and Congressional Budget Office Cost Estimate

    With respect to the requirements of clause 3(c)(2) of rule 
XIII of the Rules of the House of Representatives and section 
308(a) of the Congressional Budget Act of 1974 and with respect 
to requirements of clause 3(c)(3) of rule XIII of the Rules of 
the House of Representatives and section 402 of the 
Congressional Budget Act of 1974, the Committee has received 
the following cost estimate for S. 129 from the Director of 
Congressional Budget Office:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, July 13, 2004.
Hon. Tom Davis,
Chairman, Committee on Government Reform,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for S. 129, the Federal 
Workforce Flexibility Act of 2004.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Geoffrey 
Gerhardt.
            Sincerely,
                                       Douglas Holtz-Eakin,
                                                          Director.
    Enclosure.

S. 129--Federal Workforce Flexibility Act of 2004

    Summary: S. 129 would amend laws affecting civilian 
employees of the federal government. Major provisions of the 
bill would increase federal retirement benefits for some 
workers who performed part-time service and would effect the 
way time spent at a U.S. military academy is credited for 
retirement purposes. The legislation also would amend current 
laws related to recruitment, relocation, and retention bonuses, 
as well as agency training.
    CBO estimates that enacting S. 129 would increase direct 
spending by $2 million in 2005, $60 million over the 2005-2009 
period, and $196 million over the 2005-2014 period. Enacting 
the bill would increase revenues by less than $500,000 annually 
starting in 2005. In addition, CBO estimates that implementing 
S. 129 would cost $361 million over the 2005-2009 period and 
$786 million over the 2005-2014 period for various 
administrative requirements--assuming appropriation of the 
necessary amounts.
    S. 129 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act (UMRA) 
and would not affect the budgets of state, local, or tribal 
governments.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of S. 129 is shown in the following table. The 
direct spending costs of this legislation fall within budget 
function 600 (income security); the spending subject to 
appropriation would fall across multiple budget functions.

----------------------------------------------------------------------------------------------------------------
                                                          By fiscal year, in millions of dollars--
                                           ---------------------------------------------------------------------
                                             2005   2006   2007   2008   2009   2010   2011   2012   2013   2014
----------------------------------------------------------------------------------------------------------------
                                         CHANGES IN DIRECT SPENDING \1\

CSRS Retirement Benefits for Part-Time
 Service:
    Estimated Budget Authority............      3      8     11     14     17     19     21     22     23     24
    Estimated Outlays.....................      3      8     11     14     17     19     21     22     23     24
Retirement Benefits for Service Academy
 Credits:
    Estimated Budget Authority............      *      1      2      2      3      4      5      5      6      7
    Estimated Outlays.....................      *      1      2      2      3      4      5      5      6      7
Refunds of Payments Made to CSRDF:
    Estimated Budget Authority............     -1      0      0      0      0      0      0      0      0      0
    Estimated Outlays.....................     -1      0      0      0      0      0      0      0      0      0
                                           ---------------------------------------------------------------------
Total Changes:
    Estimated Budget Authority............      2      9     13     16     20     23     26     27     29     31
    Estimated Outlays.....................      2      9     13     16     20     23     26     27     29     31

                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Enhanced Recruitment, Relocation, and
 Retention Bonuses:
    Estimated Authorization Level.........     69     70     72     74     77     79     82     85     88     91
    Estimated Outlays.....................     69     70     72     74     77     79     82     85     88    91
----------------------------------------------------------------------------------------------------------------
\1\ The bill also would increase revenues, but by less than $500,000 a year, beginning in 2005.

Notes.--CSRS = Civil Service Retirement System; CSRDF = Civil Service Retirement and Disability Fund. * = less
  than $500,000.

    Basis of estimate: For this estimate, CBO assumes that S. 
129 will be enacted late in 2004.

Direct Spending and Revenues

    Civil Service Retirement Benefits for Part-Time Service. 
Section 211 would alter the way retirement benefits under the 
Civil Service Retirement System (CSRS) are calculated for 
workers with part-time service. The act would apply to workers 
who performed work priorto April 7, 1986, have some part-time 
service, and retire after the legislation is enacted. Based on 
information from Office of Personnel Management (OPM), CBO estimates 
that this provision would cost $3 million in 2005, $53 million over the 
2005-2009 period, and $162 million over the 2005-2014 period.
    Under current law, benefits for CSRS workers with part-time 
service are calculated using a two-step process. For workers 
with service prior to April 7, 1986, the current formula uses 
the highest salary the worker actually earned to reflect the 
part-time employment. For work on or after April 7, 1986, the 
formula uses a deemed salary (what the worker would have been 
earning if the worker had been working full time) to determine 
benefits and applies a pro-rata factor to adjust for part-time 
service. In effect, the current formula often treats new 
retirees with part-time service early in their careers more 
favorably than those whose part-time service comes at the end 
of their careers.
    Section 211 would calculate CSRS benefits for all part-time 
service according to the formula currently used to determine 
benefits for service performed on or after April 7, 1986. The 
legislation also contains a hold-harmless provision to ensure 
that no one receives a smaller annuity under the proposal than 
they would get under current law. CBO estimates section 211 
would affect benefits for several thousand new CSRS retirees 
each year. Depending on an individual employee's work history, 
benefits for those retirees could be more than 30 percent 
higher than they would be if calculated under the current 
formula.
    Allow Time Spent at Service Academies to Be Creditable For 
Civilian Retirement. Section 212 would continue to allow time 
spent at any of the four U.S. military academies be considered 
creditable service under CSRS and the Federal Employees' 
Retirement System (FERS). These two pension program, which 
cover most civilian federal workers, allow time served as an 
active-duty member of the U.S. armed forces to be used as 
creditable service provided that it is not already being 
credited toward military retirement benefits and a deposit to 
purchase the credits is made to the Civil Service Retirement 
and Disability Fund (CSRDF). Virtually all civilian employees 
who have performed military service and are not collecting 
military retirement benefits choose to have their military 
service credited toward their civilian pensions.
    Although current law is silent about whether time spent at 
a military service academy--typically four years--should be 
treated as creditable military service under CSRS and FERS, OPM 
historically has allowed such service to be credited. Following 
several court rulings, however, OPM has indicated that it no 
longer believes such treatment is permissible under the law. As 
a result, at some point in the near future, time spent at 
military academies will no longer be creditable under either 
civilian retirement program. CBO assumes this change will take 
place in early 2005.
    Based on data from OPM and the Department of Defense, CBO 
estimates that, of the current federal civilian workforce 
(including Postal Service employees), approximately 2,200 
employees or just less than 0.1 percent have graduated from a 
U.S. service academy. We estimate an average of 120,000 federal 
employees will begin collecting retirement benefits annually 
over the next 10 years, of whom about 100 will have graduated 
from a service academy. For those retiring with CSRS benefits, 
four years of creditable service represents 8 percentage points 
of their annuity. For those retiring under FERS, four years of 
service represents between 4.0 percentage points and 4.4 
percentage points of their annuity. By allowing time spent at a 
service academy to continue being used a creditable service 
under CSRS and FERS, this bill would increase retirement 
benefits above what they would be once OPM stops crediting such 
service. CBO estimates this section of the bill would increase 
direct spending on retirement benefits by less than $500,000 in 
2005, $8 million during the 2005-2009 period, and $35 million 
over the 2005-2014 period.
    In order to have military service credited toward civilian 
retirement benefits, a deposit must be made by the employee 
into the CSRDF. For those under the CSRS program, the deposit 
equals 7 percent of the basic pay received while performing the 
service, and under the FERS the deposit equals 3 percent of 
basic pay. Once OPM stops crediting time spent at an academy as 
military service, refunds will be made to employees who already 
made such deposits. Under this legislation, those refunds would 
not be made, which CBO estimates would reduce direct spending 
by $1 million in 2005. By continuing to allow time spent at 
academies to be purchased as creditable service, S. 129 also 
increase future deposits into the CSRDF. We estimate these 
deposits would increase federal revenues by less than $500,000 
annually over the 2005-2014 period.

Spending Subject to Appropriation

    Recruitment, Relocation and Relocation Bonuses. Section 101 
would allow OPM to authorize agencies to pay enhanced 
recruitment and relocation bonuses for new or existing career 
employees (not political appointees). Unlike the current 
bonuses of 25 percent of basic pay, the enhanced bonuses could 
total up to 25 percent of annual basic pay for up to four 
consecutive years. Current law provides for retention 
allowances of up to 25 percent of basic pay over the period of 
service. Section 101 would allow OPM to authorize agencies to 
pay enhanced retention bonuses to individual career employees 
(25 percent of basic pay) or groups of employees (10 percent of 
basic pay). With a waiver from OPM, all three of these bonuses 
could be further increased to up to 50 percent of basic pay in 
a given year.
    Unlike the current bonuses and allowances, these enhanced 
bonuses could be paid in installments or in lump sums (or any 
suitable combination) and require the employee to enter into a 
written service agreement with the employing agency.
    The cost of these enhanced bonuses depends on how 
extensively the agencies use the new authorities, and that 
information is not available. Based on information from OPM, in 
2002 the existing authorities were used to pay bonuses totaling 
$129 million to just under 20,000 new and existing employees 
across the government. Granting the maximum allowable level of 
enhanced bonuses to this number of employees could roughly 
double to quadruple this cost over time. CBO assumes that 
agencies paying recruitment bonuses would, on average, double 
the amount of these bonuses they award to new employees, and 
also would increase outlays for retention bonuses by one-
quarter. CBO estimates that such actions would cost $361 
million over the 2005-2009 period and $786 million over the 
2005-2014 period, assuming the appropriation of the necessary 
funds.
    Streamlined Critcal Pay Authority. Section 102 would make 
OPM (instead of OMB) the lead agency for fixing the rate of 
basic pay for positions in an agency, in accordance with 
existing authorities governing pay for critical positions. CBO 
does not expect this provision would significantly affect 
federal spending.
    Agency Training. Section 201 would require each agency to 
establish a comprehensive management program to train employees 
and develop managers. According to OPM, the legislation would 
codify and expand current agency practices regarding employee 
training. Based on information from OPM, CBO does not expect 
that these requirements would have any significant cost.
    Annual Leave Enhancements. Section 202 would allow an 
agency head to deem nonfederal career experience prior to 
employment with an agency as federal employment for purposes of 
placing new hires in leave accrual categories, and would allow 
agencies to automatically place Senior Executive Service and 
other senior-level employees in the 8-hour leave accrual 
category.
    Compensatory Time Off for Travel. Section 203 would allow 
employees to earn compensatory time off for any time spent in 
travel status, if that time is not otherwise compensable.
    Section 301 includes provisions that would correct several 
pay administration anomalies associated with the current rules 
pertaining to special rates, locality pay, and pay retention. 
According to OPM, the provisions would, on net, have no effect 
on the amount of pay for affected employees, but would make the 
current pay administration system more effective.
    Intergovernmental and private-sector impact: S. 129 
contains no intergovernmental or private-sector mandates as 
defined in UMRA and would not affect the budgets of state, 
local, or tribal governments.
    Previoius CBO cost estimate: On December 1, 2003, CBO 
transmitted a cost estimate of S. 129, as ordered reported by 
the Senate Committee on Governmental Affairs on October 22, 
2003. At that time, CBO estimated that the legislation would 
increase direct spending by $233 million over the 2004-2013 
period, with new spending subject to appropriation totaling 
$756 million over the same period. The difference between that 
estimate and the current estimate reflect changes in 
assumptions about the number of workers with part-time service 
who will retire over the next decade and a later assumed 
enactment date.
    Estimate prepared by: Federal Costs: Federal Employment 
Recruitment Benefits: Geoffrey Gerhardt; Federal Employee Pay 
and Bonuses: Ellen Hays; and Agency Training: Matthew Pickford. 
Impact on State, Local, and Tribal Governments: Sarah Puro. 
Impact on the Private Sector: Paige Piper/Bach.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) 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 italic, existing law in which no change is 
proposed is shown in roman):

TITLE 5, UNITED STATES CODE

           *       *       *       *       *       *       *



PART III--EMPLOYEES

           *       *       *       *       *       *       *


                    Subpart C--Employee Performance

                          CHAPTER 41--TRAINING

Sec.
4101.  Definitions.
     * * * * * * *
4121.  Specific training programs.

           *       *       *       *       *       *       *


Sec. 4103. Establishment of training programs

  (a) * * *

           *       *       *       *       *       *       *

  (c) The head of each agency shall, on a regular basis--
          (1) evaluate each program or plan established, 
        operated, or maintained under subsection (a) with 
        respect to accomplishing specific performance plans and 
        strategic goals in performing the agency mission; and
          (2) modify such program or plan as needed to 
        accomplish such plans and goals.

           *       *       *       *       *       *       *


Sec. 4121. Specific training programs

  In consultation with the Office of Personnel Management, the 
head of each agency shall establish--
          (1) a comprehensive management succession program to 
        provide training to employees to develop managers for 
        the agency; and
          (2) a program to provide training to managers on 
        actions, options, and strategies a manager may use in--
                  (A) relating to employees with unacceptable 
                performance;
                  (B) mentoring employees and improving 
                employee performance and productivity; and
                  (C) conducting employee performance 
                appraisals.

           *       *       *       *       *       *       *


CHAPTER 45--INCENTIVE AWARDS

           *       *       *       *       *       *       *


SUBCHAPTER I--AWARDS FOR SUPERIOR ACCOMPLISHMENTS

           *       *       *       *       *       *       *


Sec. 4505a. Performance-based cash awards

  (a)(1) * * *
  [(2)(A)] (2) A cash award under this section shall be equal 
to an amount determined appropriate by the head of the agency, 
but may not be more than 10 percent of the employee's annual 
rate of basic pay. Notwithstanding the preceding sentence, the 
agency head may authorize a cash award equal to an amount 
exceeding 10 percent of the employee's annual rate of basic pay 
if the agency head determines that exceptional performance by 
the employee justifies such an award, but in no case may an 
award under this section exceed 20 percent of the employee's 
annual rate of basic pay.
  [(B) For purposes of computing a percentage of a rate of 
basic pay under subparagraph (A), the rate of basic pay used 
shall be determined without taking into account any 
comparability payment under section 5304.]

           *       *       *       *       *       *       *


Subpart D--Pay and Allowances

           *       *       *       *       *       *       *


CHAPTER 53--PAY RATES AND SYSTEMS

           *       *       *       *       *       *       *


Sec. 5302. Definitions

  For the purpose of this subchapter--
          (1) * * *

           *       *       *       *       *       *       *

          [(8) the term ``rates of pay under the General 
        Schedule'', ``rates of pay for the General Schedule'', 
        or ``scheduled rates of basic pay'' means--
                  [(A) the rates of basic pay set forth in the 
                General Schedule; and
                  [(B) in the case of an employee receiving a 
                retained rate of basic pay under section 5363, 
                the rate of basic pay payable under such 
                section; and]
          (8) the term ``rates of pay under the General 
        Schedule'', ``rates of pay for the General Schedule'', 
        or ``scheduled rates of basic pay'' means the rates of 
        basic pay under the General Schedule as established by 
        section 5332, excluding pay under section 5304 and any 
        other additional pay of any kind; and

           *       *       *       *       *       *       *


Sec. 5304. Locality-based comparability payments

  (a) * * *

           *       *       *       *       *       *       *

  (g)(1) * * *
  (2) The applicable maximum under this subsection shall be 
level III of the Executive Schedule for--
          (A) positions under subparagraphs [(A)-(D)] (A)-(C) 
        of subsection (h)(1); and

           *       *       *       *       *       *       *

  (h)(1) * * *
  (2)(A) * * *
  (B) A request by an agency head or exercise of authority by 
the President under subparagraph (A) shall cover--
          (i) with respect to the positions under subparagraphs 
        (A) through (C) of paragraph (1), all positions 
        described in the subparagraph or subparagraphs involved 
        (excluding any under clause (i), (ii), (iii), (iv), 
        (v), [or (vii)] or (vi) of such paragraph); and

           *       *       *       *       *       *       *


Sec. 5305. Special pay authority

  [(a) Whenever the President finds that the Government's 
recruitment or retention efforts with respect to 1 or more 
occupations in 1 or more areas or locations are, or are likely 
to become, significantly handicapped, due to any of the 
circumstances described in subsection (b), he may establish for 
the areas or locations involved, with respect to individuals in 
positions paid under any of the pay systems referred to in 
subsection (c), higher minimum rates of basic pay for 1 or more 
grades or levels, occupational groups, series, classes, or 
subdivisions thereof, and may make corresponding increases in 
all step rates of the pay range for each such grade or level. 
However, a minimum rate so established may not exceed the 
maximum pay rate prescribed by statute for the grade or level 
by more than 30 percent, and no rate may be established under 
this section (disregarding any amount payable under subsection 
(g)) in excess of the rate of basic pay payable for level V of 
the Executive Schedule. The President may authorize the 
exercise of the authority conferred on him by this section by 
the Office of Personnel Management or, in the case of 
individuals not subject to the provisions of this title 
governing appointment in the competitive service, by such other 
agency as he may designate.]
  (a)(1) Whenever the Office of Personnel Management finds that 
the Government's recruitment or retention efforts with respect 
to 1 or more occupations in 1 or more areas or locations are, 
or are likely to become, significantly handicapped due to any 
of the circumstances described in subsection (b), the Office 
may establish for the areas or locations involved, with respect 
to individuals in positions paid under any of the pay systems 
referred to in subsection (c),higher minimum rates of pay for 1 
or more grades or levels, occupational groups, series, classes, or 
subdivisions thereof, and may make corresponding increases in all rates 
of the pay range for each such grade or level. However, a minimum rate 
so established may not exceed the maximum rate of basic pay (excluding 
any locality-based comparability payment under section 5304 or similar 
provision of law) for the grade or level by more than 30 percent, and 
no rate may be established under this section in excess of the rate of 
basic pay payable for level IV of the Executive Schedule. In the case 
of individuals not subject to the provisions of this title governing 
appointment in the competitive service, the President may designate 
another agency to authorize special rates under this section.
  (2) The head of an agency may determine that a category of 
employees of the agency will not be covered by a special rate 
authorization established under this section. The head of an 
agency shall provide written notice to the Office of Personnel 
Management (or other agency designated by the President to 
authorize special rates under the last sentence of paragraph 
(1)) which identifies the specific category or categories of 
employees that will not be covered by special rates authorized 
under this section. If the head of an agency removes a category 
of employees from coverage under a special rate authorization 
after that authorization takes effect, the loss of coverage 
will take effect on the first day of the first pay period after 
the date of the notice.
  (b) The circumstances referred to in subsection (a) are--
          (1) * * *

           *       *       *       *       *       *       *

          [(4) any other circumstances which the President (or 
        an agency duly authorized or designated by the 
        President in accordance with the last sentence of 
        subsection (a)) considers appropriate.]
          (4) any other circumstances which the Office of 
        Personnel Management (or such other agency as the 
        President may under the last sentence of subsection 
        (a)(1) designate) considers appropriate.

           *       *       *       *       *       *       *

  (d) Within the limitations applicable under the preceding 
provisions of this section, rates of pay established under this 
section may be revised from time to time by the [President or 
by such agency as he may designate] Office of Personnel 
Management (or by such other agency as the President may 
designate under the last sentence of subsection (a)(1)). The 
actions and revisions have the force and effect of statute.
  (e) An increase in a rate of [basic] pay established under 
this section is not an equivalent increase in pay within the 
meaning of section 5335.
  [(f) The rate of basic pay established under this section and 
received by an individual immediately before a statutory 
increase, which becomes effective prior to, on, or after the 
date of enactment of the statute, in the pay schedule 
applicable to such individual of any pay system specified in 
subsection (c) of this section, shall be initially adjusted, 
effective on the effective date of the statutory increase, 
under conversion rules prescribed by the President or by such 
agency as the President may designate.]
  (f) When a schedule of special rates established under this 
section is adjusted under subsection (d), a covered employee's 
special rate will be adjusted in accordance with conversion 
rules prescribed by the Office of Personnel Management (or by 
such other agency as the President may under the last sentence 
of subsection (a)(1) designate).
  (g)(1) The benefit of any comparability payments under 
section 5304 shall be available to individuals receiving rates 
of [basic] pay established under this section to such extent as 
the [President (or his designated agency)] Office of Personnel 
Management (or such other agency as the President may under the 
last sentence of subsection (a)(1) designate) considers 
appropriate, subject to paragraph (2) and subsection (h).

           *       *       *       *       *       *       *

  [(h) The rate of basic pay payable to an individual under 
this section may not, at any time, be less than the rate which 
would then be payable to such individual (taking comparability 
payments under section 5304 into account) if this section had 
never been enacted.]
  (h) An employee shall not for any purpose be considered to be 
entitled to a rate of pay established under this section with 
respect to any period for which such employee is entitled to a 
higher rate of basic pay under any other provision of law. For 
purposes of this subsection, the term ``basic pay'' includes 
any applicable locality-based comparability payment under 
section 5304 or similar provision of law.
  (i) If an employee who is receiving a rate of pay under this 
section becomes subject, by virtue of moving to a new official 
duty station, to a different pay schedule, such employee's new 
rate of pay shall be initially established under conversion 
rules prescribed by the Office of Personnel Management (or such 
other agency as the President may under the last sentence of 
subsection (a)(1) designate) in conformance with the following:
          (1) First, determine the rate of pay to which such 
        employee would be entitled at the new official duty 
        station based on such employee's position, grade, and 
        step (or relative position in the rate range) before 
        the move.
          (2) Then, if (in addition to the change in pay 
        schedule) the move also involves any personnel action 
        or other change requiring a rate adjustment under any 
        other provision of law, rule, or regulation, apply the 
        applicable rate adjustment provisions, treating the 
        rate determined under paragraph (1) as if it were the 
        rate last received by the employee before the rate 
        adjustment.
  (j) A rate determined under a schedule of special rates 
established under this section shall be considered to be part 
of basic pay for purposes of subchapter III of chapter 83, 
chapter 84, chapter 87, subchapter V of chapter 55, and section 
5941, and for such other purposes as may be expressly provided 
for by law or as the Office of Personnel Management may by 
regulation prescribe.

           *       *       *       *       *       *       *


SUBCHAPTER II--EXECUTIVE SCHEDULE PAY RATES

           *       *       *       *       *       *       *



Sec. 5314. Positions at level III

  Level III of the Executive Schedule applies to the following 
positions, for which the annual rate of basic pay shall be the 
rate determined with respect to such level under chapter 11 of 
title 2, as adjusted by section 5318 of this title:
          Solicitor General of the United States.

           *       *       *       *       *       *       *

          Administrator of the Office of Electronic Government.

           *       *       *       *       *       *       *


SUBCHAPTER III--GENERAL SCHEDULE PAY RATES

           *       *       *       *       *       *       *


Sec. 5334. Rate on change of position or type of appointment; 
                    regulations

  (a) * * *
  (b) An employee who is promoted or transferred to a position 
in a higher grade is entitled to basic pay at the lowest rate 
of the higher grade which exceeds his existing rate of basic 
pay by not less than two step-increases of the grade from which 
he is promoted or transferred. If, in the case of an employee 
so promoted or transferred who is receiving basic pay at a rate 
in excess of the maximum rate of his grade, there is no rate in 
the higher grade which is at least two step-increases above his 
existing rate of basic pay, he is entitled to--
          (1) * * *

           *       *       *       *       *       *       *

If an employee's rate after promotion or transfer is greater 
than the maximum rate of basic pay for the employee's grade, 
that rate shall be treated as a retained rate under section 
5363. The Office of Personnel Management shall prescribe by 
regulation the circumstances under which and the extent to 
which special rates under section 5305 (or similar provision of 
law) or locality-adjusted rates under section 5304 (or similar 
provision of law) are considered to be basic pay in applying 
this subsection.

           *       *       *       *       *       *       *

  (g) In the case of an employee who--
          (1) moves to a new official duty station, and
          (2) by virtue of such move, becomes subject to a 
        different pay schedule,
any rate adjustment under the preceding provisions of this 
section, with respect to such employee in connection with such 
move, shall be made--
          (A) first, by determining the rate of pay to which 
        such employee would be entitled at the new official 
        duty station based on such employee's position, grade, 
        and step (or relative position in the rate range) 
        before the move, and
          (B) then, by applying the provisions of this section 
        that would otherwise apply (if any), treating the rate 
        determined under subparagraph (A) as if it were the 
        rate last received by the employee before the rate 
        adjustment.

           *       *       *       *       *       *       *


                 SUBCHAPTER VI--GRADE AND PAY RETENTION

Sec. 5361. Definitions

  For the purpose of this subchapter--
          (1) * * *

           *       *       *       *       *       *       *

          [(4) ``rate of basic pay'' means, in the case of a 
        prevailing rate employee, the scheduled rate of pay 
        determined under section 5343 of this title;]
          (4) ``rate of basic pay'' means--
                  (A) the rate of basic pay payable to an 
                employee under law or regulations before any 
                deductions or additions of any kind, but 
                including--
                          (i) any applicable locality-based 
                        comparability payment under section 
                        5304 or similar provision of law;
                          (ii) any applicable special pay under 
                        section 5305 or similar provision of 
                        law; and
                          (iii) subject to such regulations as 
                        the Office of Personnel Management may 
                        prescribe, any applicable existing 
                        retained rate of pay established under 
                        section 5363 or similar provision of 
                        law; and
                  (B) in the case of a prevailing rate 
                employee, the scheduled rate of pay determined 
                under section 5343;

           *       *       *       *       *       *       *

          (6) ``position subject to this subchapter'' means any 
        position under a covered pay schedule; [and]
          (7) ``reduction-in-force procedures'' means 
        procedures applied in carrying out any reduction in 
        force due to a reorganization, due to lack of funds or 
        curtailment of work, or due to any other factor[.]; and
          (8) ``retained rate'' means the rate of basic pay to 
        which an employee is entitled under section 5363(b)(2).

           *       *       *       *       *       *       *


Sec. 5363. Pay retention

  (a) Any employee--
          (1) * * *

           *       *       *       *       *       *       *

[is entitled to basic pay at a rate equal to (A) the employee's 
allowable former rate of basic pay, plus (B) 50 percent of the 
amount of each increase in the maximum rate of basic pay 
payable for the grade of the employee's position immediately 
after such reduction in pay if such allowable former rate 
exceeds such maximum rate for such grade.]
is entitled to a rate of basic pay in accordance with 
regulations prescribed by the Office of Personnel Management in 
conformity with the provisions of this section.
  [(b) For the purpose of subsection (a) of this section, 
``allowable former rate of basic pay'' means the lower of--
          [(1) the rate of basic pay payable to the employee 
        immediately before the reduction in pay; or
          [(2) 150 percent of the maximum rate of basic pay 
        payable for the grade of the employee's position 
        immediately after such reduction in pay.
  [(c) The preceding provisions of this section shall cease to 
apply to an employee who--
          [(1) has a break in service of one workday or more;
          [(2) is entitled by operation of this subchapter or 
        chapter 51 or 53 of this title to a rate of basic pay 
        which is equal to or higher than, or declines a 
        reasonable offer of a position the rate of basic pay 
        for which is equal to or higher than, the rate to which 
        the employee is entitled under this section; or
          [(3) is demoted for personal cause or at the 
        employee's request.]
  (b)(1)(A) If, as a result of any event described in 
subsection (a), the employee's former rate of basic pay is less 
than or equal to the maximum rate of basic pay payable for the 
grade of the employee's position immediately after the 
occurrence of the event involved, the employee is entitled to 
basic pay at the lowest rate of basic pay payable for such 
grade that equals or exceeds such former rate of basic pay.
  (B) This section shall cease to apply to an employee to whom 
subparagraph (A) applies once the appropriate rate of basic pay 
has been determined for such employee under this paragraph.
  (2)(A) If, as a result of any event described in subsection 
(a), the employee's former rate of basic pay is greater than 
the maximum rate of basic pay payable for the grade of the 
employee's position immediately after the occurrence of the 
event involved, the employee is entitled to basic pay at a rate 
equal to the lesser of--
          (i) the employee's former rate of basic pay; or
          (ii) 150 percent of the maximum rate of basic pay 
        payable for the grade of the employee's position 
        immediately after the occurrence of the event involved,
as adjusted by subparagraph (B).
  (B) A rate to which an employee is entitled under this 
paragraph shall be increased at the time of any increase in the 
maximum rate of basic pay payable for the grade of the 
employee's position by 50 percent of the dollar amount of each 
such increase.
  (3) For purposes of this subsection, the term ``former rate 
of basic pay'', as used with respect to an employee in 
connection with an event described in subsection (a), means the 
rate of basic pay last received by such employee before the 
occurrence of such event.
  (c)(1) Notwithstanding any other provision of this section, 
in the case of an employee who--
          (A) moves to a new official duty station, and
          (B) in conjunction with such move, becomes subject to 
        both a different pay schedule and (disregarding this 
        subsection) the preceding provisions of this 
section,this section shall be applied--
          (i) first, by determining the rate of pay to which 
        such employee would be entitled at the new official 
        duty station based on such employee's position, grade, 
        and step (or relative position in the pay range) before 
        the move, and
          (ii) then, by applying the provisions of this section 
        that would apply (if any), treating the rate determined 
        under clause (i) as if it were the rate last received 
        by the employee before the application of this section.
  (2) A reduction in an employee's rate of basic pay resulting 
from a determination under paragraph (1)(ii) is not a basis for 
an entitlement under this section.
  (3) The rate of basic pay for an employee who is receiving a 
retained rate at the time of moving to a new official duty 
station at which different pay schedules apply shall be subject 
to regulations prescribed by the Office of Personnel Management 
consistent with the purposes of this section.
  (d) A retained rate shall be considered part of basic pay for 
purposes of this subchapter and for purposes of subchapter III 
of chapter 83, chapters 84 and 87, subchapter V of chapter 55, 
section 5941, and for such other purposes as may be expressly 
provided for by law or as the Office of Personnel Management 
may by regulation prescribe. The Office shall, for any purpose 
other than any of the purposes referred to in the preceding 
sentence, prescribe by regulation what constitutes basic pay 
for employees receiving a retained rate.
  (e) This section shall not apply, or shall cease to apply, to 
an employee who--
          (1) has a break in service of 1 workday or more;
          (2) is entitled, by operation of this subchapter, 
        chapter 51 or 53, or any other provision of law, to a 
        rate of basic pay which is equal to or higher than, or 
        declines a reasonable offer of a position the rate of 
        basic pay for which is equal to or higher than, the 
        retained rate to which the employee would otherwise be 
        entitled; or
          (3) is demoted for personal cause or at the 
        employee's request.

           *       *       *       *       *       *       *


Sec. 5365. Regulations

  (a) * * *
  (b) Under such regulations, the Office may provide for the 
application of all or portions of the provisions of this 
subchapter (subject to any conditions or limitations the Office 
may establish)--
          (1) * * *

           *       *       *       *       *       *       *


SUBCHAPTER VII--MISCELLANEOUS PROVISIONS

           *       *       *       *       *       *       *


Sec. 5377. Pay authority for critical positions

  (a) * * *

           *       *       *       *       *       *       *

  (c) The [Office of Management and Budget] Office of Personnel 
Management, in consultation with the [Office of Personnel 
Management] Office of Management and Budget, may, upon the 
request of the head of an agency, grant authority to fix the 
rate of basic pay for 1 or more positions in such agency in 
accordance with this section.

           *       *       *       *       *       *       *

  (e) The authority to fix the rate of basic pay under this 
section for a position shall terminate--
          (1) whenever the [Office of Management and Budget] 
        Office of Personnel Management determines (in 
        accordance with such procedures and subject to such 
        terms or conditions as such Office by regulation 
        prescribes) that 1 or more of the requirements of 
        subsection (b) are no longer met; or

           *       *       *       *       *       *       *

  (f) The [Office of Management and Budget] Office of Personnel 
Management may not authorize the exercise of authority under 
this section with respect to more than 800 positions at any 
time, of which not more than 30 may, at any such time, be 
positions the rate of basic pay for which would otherwise be 
determined under subchapter II.
  (g) The [Office of Management and Budget] Office of Personnel 
Management shall consult with the [Office of Personnel 
Management] Office of Management and Budget before [prescribing 
regulations under this section or] making any decision to grant 
or terminate any authority under this section.
  (h) The [Office of Management and Budget] Office of Personnel 
Management shall report to the [Committee on Post Office and 
Civil Service] Committee on Government Reform of the House of 
Representatives and the Committee on Governmental Affairs of 
the Senate each year, in writing, on the operation of this 
section. Each report under this subsection shall include--
          (1) * * *

           *       *       *       *       *       *       *


                     CHAPTER 55--PAY ADMINISTRATION

                    SUBCHAPTER I--GENERAL PROVISIONS

Sec.
5501.  Disposition of money accruing from lapsed salaries or unused 
          appropriations for salaries.
     * * * * * * *

                        SUBCHAPTER V--PREMIUM PAY

5541.  Definitions.
     * * * * * * *
5550b. Compensatory time off for travel.

           *       *       *       *       *       *       *


SUBCHAPTER V--PREMIUM PAY

           *       *       *       *       *       *       *


Sec. 5550b. Compensatory time off for travel

  (a) Notwithstanding section 5542(b)(2), each hour spent by an 
employee in travel status away from the official duty station 
of the employee, that is not otherwise compensable, shall be 
treated as an hour of work or employment for purposes of 
calculating compensatory time off.
  (b) An employee who has any hours treated as hours of work or 
employment for purposes of calculating compensatory time under 
subsection (a), shall not be entitled to payment for any such 
hours that are unused as compensatory time.
  (c) Not later than 30 days after the date of enactment of 
this section, the Office of Personnel Management shall 
prescribe regulations to implement this section.

           *       *       *       *       *       *       *


          CHAPTER 57--TRAVEL, TRANSPORTATION, AND SUBSISTENCE

    SUBCHAPTER I--TRAVEL AND SUBSISTENCE EXPENSES; MILEAGE ALLOWANCES

Sec.
5701.  Definitions.
     * * * * * * *

                 SUBCHAPTER IV--MISCELLANEOUS PROVISIONS

5751.  Travel expenses of witnesses.
     * * * * * * *
[5754.  Retention allowances.]
5754.  Retention bonuses.

           *       *       *       *       *       *       *


SUBCHAPTER IV--MISCELLANEOUS PROVISIONS

           *       *       *       *       *       *       *


[Sec. 5753. Recruitment and relocation bonuses

  [(a) The Office of Personnel Management may authorize the 
head of an agency to pay a bonus to an employee who is newly 
appointed to a position under the General Schedule, or to an 
employee under the General Schedule or under any other pay 
authority in the executive, legislative, or judicial branch who 
must relocate to accept a position under the General Schedule, 
if the Office determines that the agency would be likely, in 
the absence of such a bonus, to encounter difficulty in filling 
the position.
  [(b)(1)(A) The amount of a bonus under this section shall be 
determined by regulations of the Office, but may not exceed 25 
percent of the annual rate of basic pay of the position to 
which the employee is being appointed or relocated.
  [(B) For purposes of computing a percentage of a rate of 
basic pay under subparagraph (A), the rate of basic pay used 
shall be determined without taking into account any 
comparability payment under section 5304.
  [(2) Payment of a bonus under this section shall be 
contingent upon the employee entering into an agreement with 
the agency to complete a period of employment with the agency, 
with the required period determined pursuant to regulations of 
the Office. If the employee voluntarily fails to complete such 
period of service or is separated from the service before 
completion of such period of service for cause on charges of 
misconduct or delinquency, the employee shall repay the bonus 
on a pro rata basis.
  [(3) A bonus under this section shall be paid as a lump sum, 
and may not be considered to be part of the basic pay of an 
employee.
  [(4) Under regulations of the Office, a recruitment bonus may 
be paid to a newly-hired employee before the employee enters on 
duty.
  [(c) For the purposes of this section--
          [(1) the terms ``agency'' and ``employee'' have the 
        meanings given them by section 5102; and
          [(2) any reference to ``a position under the General 
        Schedule'' or ``an employee under the General 
        Schedule'' shall be considered to be a reference to any 
        position or employee to which subchapter III of chapter 
        53 applies.
  [(d) The Office shall prescribe such regulations as it 
considers necessary for the administration of subsections (a) 
through (c).
  [(e) At the request of the head of an Executive agency, the 
President may authorize the application of the preceding 
provisions of this section with respect to 1 or more categories 
of employees within such agency who would not otherwise be 
covered by this section (including authority under subsection 
(d) to prescribe any necessary regulations).

[Sec. 5754. Retention allowances

  [(a) The Office of Personnel Management may authorize the 
head of an agency to pay an allowance to an employee under the 
General Schedule if--
          [(1) the unusually high or unique qualifications of 
        the employee or a special need of the agency for the 
        employee's services makes it essential to retain the 
        employee; and
          [(2) the agency determines that the employee would be 
        likely to leave in the absence of a retention 
        allowance.
  [(b)(1) A retention allowance, which shall be stated as a 
percentage of the rate of basic pay (excluding any 
comparability payments under section 5304) of the employee, may 
not exceed 25 percent of such rate of basic pay.
  [(2) A retention allowance may not be considered to be part 
of the basic pay of an employee, and the reduction or 
elimination of a retention allowance may not be appealed. The 
preceding sentence shall not be construed to extinguish or 
lessen any right or remedy under subchapter II of chapter 12 or 
under any of the laws referred to in section 2302(d).
  [(3) A retention allowance shall be paid at the same time and 
in the same manner as the employee's basic pay is paid.
  [(c) For the purpose of this section--
          [(1) the terms ``agency'' and ``employee'' have the 
        meanings given them by section 5102; and
          [(2) any reference to ``an employee under the General 
        Schedule'' shall be considered to be a reference to any 
        employee holding a position to which subchapter III of 
        chapter 53 applies.
  [(d) The Office shall prescribe such regulations as it 
considers necessary for the administration of subsections (a) 
through (c).
  [(e) At the request of the head of an Executive agency, the 
President may authorize the application of the preceding 
provisions of this section with respect to 1 or more categories 
of employees within such agency who would not otherwise be 
covered by this section (including authority under subsection 
(d) to prescribe any necessary regulations).]

Sec. 5753. Recruitment and relocation bonuses

  (a)(1) This section may be applied to--
          (A) employees covered by the General Schedule pay 
        system established under subchapter III of chapter 53; 
        and
          (B) employees in a category approved by the Office of 
        Personnel Management at the request of the head of an 
        Executive agency.
  (2) A bonus may not be paid under this section to an 
individual who is appointed to or who holds--
          (A) a position to which an individual is appointed by 
        the President, by and with the advice and consent of 
        the Senate;
          (B) a position in the Senior Executive Service as a 
        noncareer appointee (as such term is defined under 
        section 3132(a)); or
          (C) a position which has been excepted from the 
        competitive service by reason of its confidential, 
        policy-determining, policy-making, or policy-advocating 
        character.
  (3) In this section, the term ``employee'' has the meaning 
given that term in section 2105, except that such term also 
includes an employee described in subsection (c) of that 
section.
  (b) The Office of Personnel Management may authorize the head 
of an agency to pay a bonus under this section to an individual 
only if--
          (1) the position to which such individual is 
        appointed (as described in paragraph (2)(A)) or to 
        which such individual moves or must relocate (as 
        described in paragraph (2)(B)) is likely to be 
        difficult to fill in the absence of such a bonus; and
          (2) the individual--
                  (A) is newly appointed as an employee of the 
                Federal Government; or
                  (B)(i) is currently employed by the Federal 
                Government; and
                  (ii)(I) moves to a new position in the same 
                geographic area under circumstances described 
                in regulations of the Office; or
                  (II) must relocate to accept a position in a 
                different geographic area.
  (c)(1) Payment of a bonus under this section shall be 
contingent upon the employee entering into a written service 
agreement to complete a period of employment with the agency, 
not longer than 4years. The Office may, by regulation, 
prescribe a minimum service period for purposes of this section.
  (2)(A) The agreement shall include--
          (i) the commencement and termination dates of the 
        required service period (or provisions for the 
        determination thereof);
          (ii) the amount of the bonus;
          (iii) the method of payment; and
          (iv) other terms and conditions under which the bonus 
        is payable, subject to the requirements of this section 
        and regulations of the Office.
  (B) The terms and conditions for paying a bonus, as specified 
in the service agreement, shall include--
          (i) the conditions under which the agreement may be 
        terminated before the agreed-upon service period has 
        been completed; and
          (ii) the effect of the termination.
  (C) The required service period shall commence upon the 
commencement of service with the agency or movement to a new 
position or geographic area, as applicable, unless the service 
agreement provides for a later commencement date in 
circumstances and to the extent allowable under regulations of 
the Office, such as when there is an initial period of formal 
basic training.
  (d)(1) Except as provided in subsection (e), a bonus under 
this section shall not exceed 25 percent of the annual rate of 
basic pay of the employee at the beginning of the service 
period multiplied by the number of years (including a 
fractional part of a year, as determined under regulations of 
the Office) in the required service period of the employee 
involved.
  (2) A bonus under this section may be paid as an initial lump 
sum, in installments, as a final lump sum upon the completion 
of the full period of service required by the agreement, or in 
a combination of these forms of payment.
  (3) A bonus under this section is not part of the basic pay 
of an employee for any purpose.
  (4) Under regulations of the Office, a recruitment bonus 
under this section may be paid to an eligible individual before 
that individual enters on duty.
  (e) The Office may authorize the head of an agency to waive 
the limitation under subsection (d)(1) based on a critical 
agency need, subject to regulations prescribed by the Office. 
Under such a waiver, the maximum bonus allowable shall--
          (1) be equal to the maximum that would be determined 
        if subsection (d)(1) were applied by substituting 
        ``50'' for ``25''; but
          (2) in no event exceed 100 percent of the annual rate 
        of basic pay of the employee at the beginning of the 
        service period.
Nothing in this subsection shall be considered to permit the 
waiver of any requirement under subsection (c).
  (f) The Office shall require that an agency establish a plan 
for the payment of recruitment bonuses before paying any such 
bonuses, and a plan for the payment of relocation bonuses 
before paying any such bonuses, subject to regulations 
prescribed by the Office.
  (g) The Office may prescribe regulations to carry out this 
section, including regulations relating to the repayment of a 
bonus under this section in appropriate circumstances when the 
agreed-upon service period has not been completed.

Sec. 5754. Retention bonuses

  (a)(1) This section may be applied to--
          (A) employees covered by the General Schedule pay 
        system established under subchapter III of chapter 53; 
        and
          (B) employees in a category approved by the Office of 
        Personnel Management at the request of the head of an 
        Executive agency.
  (2) A bonus may not be paid under this section to an 
individual who is appointed to or who holds--
          (A) a position to which an individual is appointed by 
        the President, by and with the advice and consent of 
        the Senate;
          (B) a position in the Senior Executive Service as a 
        noncareer appointee (as such term is defined under 
        section 3132(a)); or
          (C) a position which has been excepted from the 
        competitive service by reason of its confidential, 
        policy-determining, policy-making, or policy-advocating 
        character.
  (3) In this section, the term ``employee'' has the meaning 
given that term in section 2105, except that such term also 
includes an employee described in subsection (c) of that 
section.
  (b) The Office of Personnel Management may authorize the head 
of an agency to pay a retention bonus to an employee if--
          (1) the unusually high or unique qualifications of 
        the employee or a special need of the agency for the 
        employee's services makes it essential to retain the 
        employee; and
          (2) the agency determines that, in the absence of a 
        retention bonus, the employee would be likely to 
        leave--
                  (A) the Federal service; or
                  (B) for a different position in the Federal 
                service under conditions described in 
                regulations of the Office.
  (c) The Office may authorize the head of an agency to pay 
retention bonuses to a group of employees in 1 or more 
categories of positions in 1 or more geographic areas, subject 
to the requirements of subsection (b)(1) and regulations 
prescribed by the Office, if there is a high risk that a 
significant portion of employees in the group would be likely 
to leave in the absence of retention bonuses.
  (d)(1) Payment of a retention bonus is contingent upon the 
employee entering into a written service agreement with the 
agency to complete a period of employment with the agency.
  (2)(A) The agreement shall include--
          (i) the length of the required service period;
          (ii) the amount of the bonus;
          (iii) the method of payment; and
          (iv) other terms and conditions under which the bonus 
        is payable, subject to the requirements of this section 
        and regulations of the Office.
  (B) The terms and conditions for paying a bonus, as specified 
in the service agreement, shall include--
          (i) the conditions under which the agreement may be 
        terminated before the agreed-upon service period has 
        been completed; and
          (ii) the effect of the termination.
  (3)(A) Notwithstanding paragraph (1), a written service 
agreement is not required if the agency pays a retention bonus 
in biweekly installments and sets the installment payment at 
the full bonus percentage rate established for the employee 
with no portion of the bonus deferred.
  (B) If an agency pays a retention bonus in accordance with 
subparagraph (A) and makes a determination to terminate the 
payments, the agency shall provide written notice to the 
employee of that determination. Except as provided in 
regulations of the Office, the employee shall continue to be 
paid the retention bonus through the end of the pay period in 
which such written notice is provided.
  (4) A retention bonus for an employee may not be based on any 
period of such service which is the basis for a recruitment or 
relocation bonus under section 5753.
  (e)(1) Except as provided in subsection (f), a retention 
bonus, which shall be stated as a percentage of the employee's 
basic pay for the service period associated with the bonus, may 
not exceed--
          (A) 25 percent of the employee's basic pay if paid 
        under subsection (b); or
          (B) 10 percent of an employee's basic pay if paid 
        under subsection (c).
  (2)(A) A retention bonus may be paid to an employee in 
installments after completion of specified periods of service 
or in a single lump sum at the end of the full period of 
service required by the agreement.
  (B) An installment payment is derived by multiplying the 
amount of basic pay earned in the installment period by a 
percentage not to exceed the bonus percentage rate established 
for the employee.
  (C) If the installment payment percentage established for the 
employee is less than the bonus percentage rate established for 
the employee, the accrued but unpaid portion of the bonus is 
payable as part of the final installment payment to the 
employee after completion of the full service period under the 
terms of the service agreement.
  (D) For purposes of this paragraph, the bonus percentage rate 
established for an employee means the bonus percentage rate 
established for such employee in accordance with paragraph (1) 
or subsection (f), as the case may be.
  (3) A retention bonus is not part of the basic pay of an 
employee for any purpose.
  (f) Upon the request of the head of an agency, the Office may 
waive the limit established under subsection (e)(1) and permit 
the agency head to pay an otherwise eligible employee or 
category of employees retention bonuses of up to 50 percent of 
basic pay, based on a critical agency need.
  (g) The Office shall require that, before paying any bonuses 
under this section, an agency shall establish a plan for the 
payment of any such bonuses, subject to regulations prescribed 
by the Office.
  (h) The Office may prescribe regulations to carry out this 
section.

           *       *       *       *       *       *       *


Subpart E--Attendance and Leave

           *       *       *       *       *       *       *


CHAPTER 63--LEAVE

           *       *       *       *       *       *       *


SUBCHAPTER I--ANNUAL AND SICK LEAVE

           *       *       *       *       *       *       *


Sec. 6303. Annual leave; accrual

  (a) An employee is entitled to annual leave with pay which 
accrues as follows--
          (1) * * *

           *       *       *       *       *       *       *

In determining years of service, an employee is entitled to 
credit for all service of a type that would be creditable under 
section 8332, regardless of whether or not the employee is 
covered by subchapter III of chapter 83[.], and for all service 
which is creditable by virtue of subsection (e). However, an 
employee who is a retired member of a uniformed service as 
defined by section 3501 of this title is entitled to credit for 
active military service only if--
          (A) * * *

           *       *       *       *       *       *       *

  (e)(1) Not later than 180 days after the date of the 
enactment of this subsection, the Office of Personnel 
Management shall prescribe regulations under which, for 
purposes of determining years of service under subsection (a), 
credit shall, in the case of a newly appointed employee, be 
given for any prior service of such employee that would not 
otherwise be creditable for such purposes, if--
          (A) such service--
                          (i) was performed in a position the 
                        duties of which directly relate to the 
                        duties of the position to which such 
                        employee is so appointed; and
                          (ii) meets such other requirements as 
                        the Office may prescribe; and
          (B) in the judgment of the head of the appointing 
        agency, the application of this subsection is necessary 
        in order to achieve an important agency mission or 
        performance goal.
  (2) Service described in paragraph (1)--
          (A) shall be creditable, for the purposes described 
        in paragraph (1), as of the effective date of the 
        employee's appointment; and
          (B) shall not thereafter cease to be so creditable, 
        unless the employee fails to complete a full year of 
        continuous service with the agency.
  (3) An employee shall not be eligible for the application of 
paragraph (1) on the basis of any appointment if, within 90 
days before the effective date of such appointment, such 
employee has held any position in the civil service.
  (f) Notwithstanding any other provision of this section, the 
rate of accrual of annual leave under subsection (a) shall be 1 
day for each full biweekly pay period in the case of any 
employee who holds a position which is subject to--
          (1) section 5376 or 5383; or
          (2) a pay system equivalent to either of the 
        foregoing, as determined by the Office of Personnel 
        Management.

           *       *       *       *       *       *       *


Subpart F--Labor-Management and Employee Relations

           *       *       *       *       *       *       *


CHAPTER 83--RETIREMENT

           *       *       *       *       *       *       *


                SUBCHAPTER III--CIVIL SERVICE RETIREMENT

Sec. 8331. Definitions

  For the purpose of this subchapter--
          (1) * * *

           *       *       *       *       *       *       *

          (13) ``military service'' means honorable active 
        service--
                  (A) * * *
                  (B) in the Regular or Reserve Corps of the 
                Public Health Service after June 30, 1960; [or]
                  (C) as a commissioned officer of the 
                Environmental Science Services Administration 
                after June 30, 1961; or
                  (D) as a cadet at the United States Military 
                Academy, the United States Air Force Academy, 
                or the United States Coast Guard Academy, or as 
                a midshipman at the United States Naval 
                Academy;

           *       *       *       *       *       *       *


Sec. 8339. Computation of annuity

  (a) * * *

           *       *       *       *       *       *       *

  (p)(1) * * *

           *       *       *       *       *       *       *

  (3)(A) In the administration of paragraph (1)--
          (i) subparagraph (A) of such paragraph shall apply 
        with respect to service performed before, on, or after 
        April 7, 1986; and
          (ii) subparagraph (B) of such paragraph shall apply 
        with respect to that portion of any annuity which is 
        attributable to service performed on or after April 7, 
        1986.
  (B) This paragraph shall be effective with respect to any 
annuity entitlement to which is based on a separation from 
service occurring on or after the date of the enactment of this 
paragraph.

           *       *       *       *       *       *       *


CHAPTER 84--FEDERAL EMPLOYEES' RETIREMENT SYSTEM

           *       *       *       *       *       *       *



                    SUBCHAPTER I--GENERAL PROVISIONS


Sec. 8401. Definitions

  For the purpose of this chapter--
          (1) * * *

           *       *       *       *       *       *       *

          (31) the term ``military service'' means honorable 
        active service--
                  (A) * * *
                  (B) in the commissioned corps of the Public 
                Health Service after June 30, 1960; [or]
                  (C) in the commissioned corps of the National 
                Oceanic and Atmospheric Administration, or a 
                predecessor entity in function, after June 30, 
                1961; or
                  (D) as a cadet at the United States Military 
                Academy, the United States Air Force Academy, 
                or the United States Coast Guard Academy, or as 
                a midshipman at the United States Naval 
                Academy;

           *       *       *       *       *       *       *

                              ----------                              


FEDERAL EMPLOYEES PAY COMPARABILITY ACT OF 1990

           *       *       *       *       *       *       *


              TITLE IV--FEDERAL LAW ENFORCEMENT PAY REFORM

SEC. 401. SHORT TITLE.

  This title may be cited as the ``Federal Law Enforcement Pay 
Reform Act of 1990''.

           *       *       *       *       *       *       *


SEC. 403. SPECIAL RATES FOR LAW ENFORCEMENT OFFICERS.

  (a) * * *
  (c) The higher minimum rates and corresponding higher rates 
for each step rate of each designated grade shall apply to 
every law enforcement officer in the designated grades (except 
in the case of any law enforcement officer for whom a higher 
rate is authorized under section 5305 of title 5, United States 
Code, as amended by section 101 of this Act, or similar 
provision of law) [in the same manner as rates established 
under section 5305 of such title, as so amended, and may be 
increased in accordance with subsection (f) of such section 
5305.] and shall be basic pay for all purposes. The rates shall 
be adjusted at the time of adjustments in the General Schedule 
to maintain the step linkage set forth in subsection (b)(2).

           *       *       *       *       *       *       *


[SEC. 407. RELOCATION PAYMENTS.

  [Notwithstanding section 5753(b)(1)(A) of title 5, United 
States Code, as added by this Act, a law enforcement officer 
whose rate of basic pay is less than $60,000 may receive a 
relocation payment of up to $15,000 under section 5753.]

           *       *       *       *       *       *       *


                            ADDITIONAL VIEWS

    We support S. 129, the ``Federal Workforce Flexibility 
Act.'' S. 129 provides federal agencies with additional tools 
for recruiting employees for difficult-to-fill positions and 
for retaining employees with unusual qualifications. We are 
pleased that the flexibilities in this bill apply 
governmentwide. We think this is a far better approach than the 
agency-specific reform bills that Congress has passed in recent 
years.
    We want to highlight a few important provisions of this 
bill. During the Civil Service and Agency Subcommittee mark up 
on March 18, 2004, a minority amendment was offered, and 
accepted, that would prohibit recruitment, relocation and 
retention bonuses from being paid to political appointees. 
There is no evidence that the federal government is having a 
difficult time recruiting or retaining political appointees.
    In addition, the amendment requires the Office of Personnel 
Management (OPM) to report the number of bonuses paid under the 
bill. This will allow Congress to evaluate whether these 
bonuses are effective in improving the recruitment and 
retention of high-quality employees. Too often, the proper 
information is not collected in order to determine whether 
Congress should have granted additional personnel 
flexibilities. Congress also needs to know whether federal 
agencies are taking full advantage of the flexibilities. 
Earlier this month, a Government Accountability Officer (GAO) 
report found that agencies are not using all the hiring 
flexibilities that Congress has given them over the years. This 
troubling GAO finding deserves this Committee's further 
oversight. After all, it does no good to authorize recruiting 
tools that are never used.
    Furthermore, the minority amendment recommends that OPM 
monitor recruitment bonuses paid by one federal agency to hire 
an individual working in another federal agency in the same 
geographic area. OPM will also have to study bonuses that are 
used to keep current employees from leaving to go work at 
another federal agency. It is generally not in the government's 
best interest for agencies to engage in bidding wars over each 
others employees. OPM should ensure that bonuses paid to 
employees moving within the federal government are an effective 
use of the governments resources and do not negatively impact 
the human capital needs of the entire federal government.
    Finally, we also want to highlight one provision in this 
bill that provides compensatory time to federal employees when 
they travel on official business during non-working hours. If 
an employee has to travel on a Sunday to attend an out-of-town 
meeting on Monday, that employee should receive some type of 
credit for giving up his weekend to travel for the government. 
We are pleased that the majority was unsuccessful in its 
efforts to place caps on this compensatory time.

                                   Henry A. Waxman.
                                   Danny K. Davis.

                                  
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