[Senate Report 108-223]
[From the U.S. Government Publishing Office]



108th Congress
                                 SENATE
                                                                 Report
 2d Session                                                     108-223
_______________________________________________________________________

                                     

                                                       Calendar No. 428


               FEDERAL WORKFORCE FLEXIBILITY ACT OF 2003

                               __________

                              R E P O R T

                                 of the

         COMMITTEE ON GOVERNMENTAL AFFAIRS UNITED STATES SENATE

                              to accompany

                                 S. 129

  TO PROVIDE FOR REFORM RELATING TO FEDERAL EMPLOYMENT, AND FOR OTHER 
                                PURPOSES





                January 27, 2004.--Ordered to be printed
                   COMMITTEE ON GOVERNMENTAL AFFAIRS

                   SUSAN M. COLLINS, Maine, Chairman
TED STEVENS, Alaska                  JOSEPH I. LIEBERMAN, Connecticut
GEORGE V. VOINOVICH, Ohio            CARL LEVIN, Michigan
NORM COLEMAN, Minnesota              DANIEL K. AKAKA, Hawaii
ARLEN SPECTER, Pennsylvania          RICHARD J. DURBIN, Illinois
ROBERT F. BENNETT, Utah              THOMAS R. CARPER, Delaware
PETER G. FITZGERALD, Illinois        MARK DAYTON, Minnesota
JOHN E. SUNUNU, New Hampshire        FRANK LAUTENBERG, New Jersey
RICHARD C. SHELBY, Alabama           MARK PRYOR, Arkansas

           Michael D. Bopp, Staff Director and Chief Counsel
            Jennifer A. Hemingway, Professional Staff Member
      Joyce A. Rechtschaffen, Minority Staff Director and Counsel
                    Larry B. Novey, Minority Counsel
                      Amy B. Newhouse, Chief Clerk


                                                       Calendar No. 428
108th Congress
                                 SENATE
                                                                 Report
 2d Session                                                     108-223

======================================================================



 
               FEDERAL WORKFORCE FLEXIBILITY ACT OF 2003

                                _______
                                

                January 27, 2004.--Ordered to be printed

                                _______
                                

Ms. Collins, from the Committee on Governmental Affairs, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 129]

    The Committee on Governmental Affairs, to which was 
referred the bill (S. 129) to provide for reform relating to 
Federal employment, and for other purposes, having considered 
the same, reports favorably thereon with an amendment and 
recommends that the bill do pass.

                                CONTENTS

                                                                   Page
  I. Purpose and Summary..............................................1
 II. Background.......................................................2
III. Legislative History.............................................10
 IV. Section-by-Section Analysis.....................................10
  V. Estimated Cost of Legislation...................................15
 VI. Evaluation of Regulatory Impact.................................19
VII. Changes to Existing Law.........................................19

                         I. Purpose and Summary

    S. 129, the Federal Workforce Flexibility Act, is a bill to 
modernize and update certain rules relating to Federal 
employment. The purpose of the legislation is to augment 
existing statutory authorities and to provide additional 
flexibilities to Federal agencies in the management of their 
human resources. Several of the provisions are designed to 
assist the Federal government in recruiting and retaining a 
high quality workforce. The legislation amends current law with 
regard to critical pay authority, 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, and establishes career-reserve Senior Executive 
Service positions at the White House.

                             II. Background

    The average Federal employee is 47 years old, and by 2005, 
the Office of Personnel Management (OPM) reports that over 50 
percent of the Federal workforce will be eligible for early or 
regular retirement.\1\ Although OPM reports that those eligible 
for retirement are not immediately leaving the federal 
workforce and that the current retirement rate is similar to 
that in previous years, the potential departure of such a large 
number of Federal employees could result in the loss of 
considerable institutional knowledge and skills. In addition, 
fewer college graduates are expressing interest in pursuing 
public sector careers, creating the possibility that Federal 
agencies will not have adequate personnel to provide the 
services the American people expect from their government.\2\ 
Among the reasons cited by young Americans for their decisions 
to pursue alternate employment is the Federal government's 
lengthy, impersonal hiring process and the perception that its 
dense bureaucratic processes stifle the ability of employees to 
realize the positive impact of their efforts or deny the 
opportunity to make a difference.
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    \1\ Office of Personnel Management, Central Personnel Data File, 
www.opm.gov/feddata.
    \2\ Partnership for Public Service/Hart-Teeter Survey: Recruitment 
Problem Remains, Despite Increasing Respect for Government's Work Since 
9/11, (September 12, 2002).
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    At the request of this Committee, the General Accounting 
Office (GAO) has issued a series of reports focusing on issues 
affecting the government's ability to recruit, retain, and 
motivate employees. One area of specific review is the 
effective use of human capital flexibilities as an essential 
element to acquiring, developing, and retaining high-quality 
federal employees. In 2002, GAO found that the flexibilities 
most effective in managing the workforce are work-life 
programs, such as alternative work schedules, child care 
assistance, and transit subsidies; monetary recruitment and 
retention incentives; special hiring authorities; and incentive 
awards for notable job performance and contributions, such as 
cash and time-off awards.\3\
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    \3\ General Accounting Office, HUMAN CAPITAL: Effective Use of 
Flexibilities Can Assist Agencies in Managing Their Workforces, GAO-03-
2, November 2002.
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                                HISTORY

    Since 1999, the Subcommittee on Oversight of Government 
Management, the Federal Workforce and the District of Columbia 
(and its predecessor, the Subcommittee on Oversight of 
Government Management, Restructuring, and the District of 
Columbia) [hereinafter referred to as ``OGM''] has conducted 13 
hearings on the Federal government's strategic management of 
human capital.
    In December 2000, Senator Voinovich issued a report titled 
``Report to the President: The Crisis in Human Capital,'' which 
outlined two important themes on which OGM worked during the 
106th Congress: empowering federal employees and highlighting 
the critical importance of addressing the Federal government's 
human capital challenges.
    During the 107th Congress, a group of interested and 
affected stakeholders began to coalesce around the need to 
provide solutions to the challenges this public policy issue 
presented for the Nation. In 2001, GAO designated strategic 
human capital management a government-wide ``high-risk'' 
area,\4\ and President Bush included this issue as the first 
priority in his President's Management Agenda.\5\
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    \4\ High Risk Series: An Update (GAO-01-263, January 2001).
    \5\ The President's Management Agenda, Fiscal Year 2002, Office of 
Management and Budget, pp. 11-15.
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    In March 2001, former Defense Secretary James Schlesinger 
and Admiral Harry D. Train United States Navy (Ret.), members 
of the U.S. Commission on National Security/21st Century, 
testified before a joint hearing held by OGM and the House 
Government Reform Subcommittee on Civil Service and Agency 
Organization.\6\ Secretary Schlesinger discussed a 
comprehensive evaluation on national security strategy and 
structure that was recently undertaken by the Commission. 
Regarding human capital, the Commission's final report 
concluded:
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    \6\ S. Hrg. 107-133.

          As it enters the 21st century, the United States 
        finds itself on the brink of an unprecedented crisis of 
        competence in government. The maintenance of American 
        power in the world depends on the quality of U.S. 
        government personnel, civil and military, at all 
        levels. We must take immediate action in the personnel 
        area to ensure that the United States can meet future 
        challenges.\7\
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    \7\ The United States Commission on National Security/21st Century, 
Road Map for National Security: Imperative for Change (2001), p. 86.

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    Secretary Schlesinger added further:

          * * * it is the Commission's view that fixing the 
        personnel problem is a precondition for fixing 
        virtually everything else that needs repair in the 
        institutional edifice of U.S. national security 
        policy.\8\
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    \8\ S. Hrg. 107-133, p. 36.

    The September 11, 2001, terrorist attacks on New York City 
and Washington, D.C. brought greater attention to the human 
capital crisis the Commission had described. No longer the 
``quiet crisis'' the National Commission on the Public Service 
cited in 1989,\9\ the Federal government's human capital 
challenges have received attention as potentially affecting the 
manner in which the Federal government delivers services to the 
taxpayer and protects the national interests of the United 
States.
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    \9\ ``Leadership for America: Rebuilding the Public Service,'' 
National Commission on the Public Service, 1989.
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    Building on previous efforts on this issue, Senator George 
Voinovich convened a human capital working group to define the 
universe of human capital problems and work together to develop 
and take action on solutions. The working group, which met four 
times between June 2001 and July 2002, included Members of 
Congress, officials from the Clinton and Bush Administrations, 
and representatives of numerous nonprofit think tanks and 
academic institutions.
    In addition, the John F. Kennedy School of Government at 
Harvard University played an important role in addressing the 
human capital crisis by organizing a series of four executive 
sessions on this topic during the 2001-2002 academic year. 
Approximately 40 leaders on this issue from the government, the 
private sector, think tanks and academia gathered to discuss 
this important public policy issue. The executive sessions 
addressed such issues as recruitment, hiring and retention at 
the entry and mid-career levels, compensation reform, and 
quality of life issues in the federal workplace.
    As a result of the human capital working group and 
executive sessions, Senator George Voinovich introduced S. 
1603, the Human Capital Act of 2001, on October 31, 2001, and 
subsequently S. 2651, the Federal Workforce Improvement Act of 
2002, on June 20, 2002, which incorporated elements of S. 1603 
and a similar Administration proposal. On March 18 and 19, 
2002, Senator Daniel Akaka chaired a Governmental Affairs 
Subcommittee on International Security, Proliferation, and 
Federal Services hearing entitled: ``The Federal Workforce: 
Legislative Proposals for Change,'' which reviewed these 
bills.\10\ The hearing continued the dialogue on the proposed 
reforms, including the challenges of appropriately implementing 
the proposals and the needed commitment from the highest levels 
of government to allocate the resources necessary to achieve a 
strong and vibrant workforce. In the House of Representatives, 
Representative Connie Morella introduced a companion bill, H.R. 
4580, the Good People, Good Government Act, in April 2002.
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    \10\ S. Hrg. 107-470.
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    At the same time, the second National Commission on the 
Public Service was created to focus attention on the need for 
comprehensive reform in the federal public service. On July 18, 
2002, Senator Daniel Akaka and Senator George Voinovich 
testified before the Commission along with other members of 
Congress and discussed the need for certain reforms to the 
federal service. In the Commission's final report, issued in 
January 2003, the Commission recommended that more flexible 
personnel management systems should be developed to meet 
agencies' needs.\11\
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    \11\ National Commission on the Public Service, Urgent Business for 
America: Revitalizing the Federal Government for the 21st Century, 
January 2003, pp. 27.
---------------------------------------------------------------------------
    During the Governmental Affairs Committee's July 24-25, 
2002, business meeting to consider S. 2452, the National 
Homeland Security and Combating Terrorism Act of 2002, Senators 
Voinovich and Akaka offered an amendment to add several major 
provisions of S. 2651 to S. 2452. The Committee agreed 
unanimously to the amendment. On November 22, 2002, Congress 
enacted the Homeland Security Act of 2002,\12\ which included 
11 government-wide human capital reform provisions from S. 
2651. The enactment of this legislation marked the first major, 
government-wide revisions to civil service law since the 
enactment of the Civil Service Reform Act of 1978.\13\
---------------------------------------------------------------------------
    \12\ Public Law 107-296.
    \13\ Public Law 95-454.
---------------------------------------------------------------------------
    To further improve the federal government's ability to 
recruit and retain a world-class 21st century workforce, 
Senator George Voinovich introduced in the 108th Congress the 
Federal Workforce Flexibility Act of 2003, S. 129, which 
included some of the remaining provisions in S. 2651. The 
sections that follow discuss the various elements of S. 129, as 
amended, as well as their significance.

                        ENHANCED BONUS AUTHORITY

    S. 129 would allow federal agencies to use recruitment, 
relocation and retention bonuses in a more strategic manner to 
help the government improve its competitiveness in maintaining 
a high quality workforce. The current bonus authorities already 
offer agencies important tools for recruiting and retaining key 
employees to perform critical functions. The existing 
authorities were authorized by the Federal Employees Pay 
Comparability Act of 1990 (FEPCA).\14\ Under FEPCA, agencies 
are authorized to pay a lump-sum recruitment or relocation 
bonus of up to 25 percent of the annual rate of basic pay to an 
employee newly appointed to a difficult-to-fill position. FEPCA 
also authorized agencies to pay a retention allowance of up to 
25 percent of basic pay to an employee if 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 the agency determines that the employee would 
be likely to leave the Federal service without the allowance.
---------------------------------------------------------------------------
    \14\ Public Law 101-509.
---------------------------------------------------------------------------
    A 1999 OPM evaluation found that limited funding and 
limited opportunities for recruitment because of downsizing 
contributed to restricted agency use of these bonus 
authorities. Allowing flexibility in the methods of payment and 
raising the maximum amounts were among the suggestions raised 
by agencies in responding to the report.\15\ S. 129 would allow 
an agency head to waive the 25% limitation based on a critical 
agency need, subject to OPM's regulations. Under a wavier, the 
amount of the bonus could be up to 50% of the employee's annual 
basic pay rate at the beginning of the service period, 
multiplied by the number of years in the service period, not to 
exceed 100% of the employee's annual basic pay rate at the 
beginning of the service period. Agencies would be required to 
establish plans for paying recruitment and relocation bonuses 
before paying such bonuses. By expanding the circumstances in 
which recruitment, relocation and retention bonuses may be paid 
and by enabling agencies to make the payments in more strategic 
ways that enhance their desired effect, this section would help 
federal agencies recruit and retain the kind of workforce they 
will need in the 21st century. These changes are particularly 
appropriate to the current environment in which federal 
agencies are engaged in keen competition for the most qualified 
candidates.
---------------------------------------------------------------------------
    \15\ U.S. Office of Personnel Management, Office of Merit Systems 
Oversight and Effectiveness, Report of a Special Study; The 3Rs: 
Lessons Learned from Recruitment, Relocation, and Retention Incentives 
(Washington: OPM, 1999), p. 33.
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    S. 129 would amend current law to add an additional basis 
for paying a retention allowance. Specifically, the legislation 
would amend current law to state that agencies which determine 
that an employee would likely leave for a different federal 
position, in the absence of a bonus, would be authorized to pay 
a retention bonus to the employee. Prior to receiving a 
retention allowance, an employee would have to enter into a 
written service agreement to complete a period of employment 
with the agency.
    The enhanced bonus authority could not be used to pay an 
employee in a position to which an individual is appointed by 
the President, by and with the advice and consent of the 
Senate; a non-career appointee position in the Senior Executive 
Service; or a position that has been excepted from the 
competitive service by reason of its confidential, policy-
making, or policy-advocating character.

                 MODIFICATION OF CRITICAL PAY AUTHORITY

    Under current law, the Office of Management and Budget 
(OMB), in consultation with OPM, may, upon the request of an 
agency head, grant authority to fix the rate of basic pay for 
one or more critical positions in an agency at not less than 
the rate that would otherwise be payable for that position, but 
not greater than the rate payable for Level I of the Executive 
Schedule, except upon the President's written approval.\16\ In 
order to apply critical pay authority, the position must 
require a very high level of expertise in a scientific, 
technical, or administrative field and be crucial to the 
accomplishment of an agency's mission. Although the federal 
government is authorized to fill up to 800 critical pay 
provisions, at present only 13 have been filled.
---------------------------------------------------------------------------
    \16\ 5 U.S.C. Sec. 5377.
---------------------------------------------------------------------------
    S. 129 would shift oversight of the federal government's 
critical pay authority, from the Office of Management and 
Budget (OMB) to the Office of Personnel Management (OPM), in 
order to encourage increased application of this underutilized 
flexibility as a means of attracting talented individuals to 
critical positions in the federal government for short periods 
of time. As the agency charged with assisting the executive 
branch to meet its growing human capital demands, OPM currently 
works directly with other agencies to ensure that they 
strategically use the broad range of existing human resource 
management tools to recruit, retain, and manage a high-
performing workforce. OPM is committed to increased use of this 
authority, which would allow the federal government to realize 
the benefits of talented individuals whose expertise could 
improve agencies' efficiency and effectiveness.

        CORRECTION OF A RETIREMENT ANOMALY FOR PART-TIME SERVICE

    The Federal Workforce Flexibility Act would also change the 
computation of Civil Service Retirement System (CSRS) annuities 
involving part-time service by correcting an anomaly that is a 
disincentive for employees nearing the end of their careers who 
would like to phase into retirement by working part-time 
schedules. Specifically, the legislation would clarify that 
CSRS annuities based in whole or in part on part-time service 
should be pro-rated for the period of service that was 
performed on a part-time basis. The correction allows agencies, 
as part of their succession planning efforts, to retain the 
expertise of senior staff who wish to work on a part-time basis 
at the end of their federal careers.
    CSRS annuities are computed based on an average of an 
employee's highest three years of salary, multiplied by a 
factor representing their years of service. Before 1986, 
employees who worked part-time could switch to a full-time 
schedule in the last three years of service and thereby reap a 
benefit equal to that of an employee who worked full-time for 
an entire career. In 1986, Congress decided to reverse the 
computation formula so that the computation of part-time 
service performed after April 6, 1986, is based on a deemed 
full-time high-three average salary, multiplied by the factor 
representing years of service. The resulting benefit is then 
reduced by a fraction representing the actual time worked over 
the equivalent full-time service. Because this new computation 
applied only to service performed after April 6, 1986, the old 
formula continued to apply to service performed before that 
date. Consequently, if an employee with substantial full-time 
service before 1986 switches to a part-time schedule at the end 
of his career, the high-three average salary that is applied to 
service before 1986 is the pro-rated salary or, if higher, the 
full-time salary from the years before the employee began 
working part-time. This often results in a disproportionate 
reduction in the employee's benefit.
    Under current law, the adverse impact of working part-time 
just prior to retirement results from the requirement to use 
the actual salary received in computing the pre-April 1986 
average salary. This results in using a pro-rated, or lower, 
salary even though all service before 1986 may have been full-
time.
    The following is an example of the change in part-time 
annuity computations that would result from enactment of S. 
129. Assume an employee worked full-time from April 1976 
through April 2001, converted to part-time status in April 2001 
and worked 20 hours per week until retirement in April 2006, 
the employee's full-time and (part-time) salary rates are as 
follows:

2000--$40,000
2001--$41,000
2002--$42,000
2003--$43,000 ($21,500)
2004--$44,000 ($22,000)
2005--$45,000 ($22,500)
2006--$46,000 ($23,000)

    Under current law, using the salary rates listed above, the 
employee would receive an annual benefit of $22,412, based on 
an average salary of $41,000 applied to pre-1986 service. Under 
S. 129, the employee would receive an annual benefit of $23,062 
because the person's highest salary, including his or her 
deemed full-time salary for years of part-time work, would be 
used in computing the benefit derived from the pre-1986 
service. The degree of difference in the computations in any 
particular case is dependent upon the employee's actual tour of 
duty, the length of part-time service before retirement, and 
the true salary progression. The computation follows:

Computation under current law

            Annuity computation
Pre-April 1986: $41,000  .1625 = $6,662

Post-April 1986: $45,000  .40 = $18,000

 .875 (Proration factor) = $15,750

Annual benefit (Add pre- and post-April 1986 benefits)
      $6,662 + $15,750 = $22,412

Computation under S. 129

Pre-April 1986: $45,000  .1625 = $7,312

Post-April 1986: $45,000  .40 = $18,000

 .875 (Proration factor) = $15,750

Annual benefit (Add pre- and post-April 1986 benefits)
      $7,312 + $15,750 = $23,062

              RETIREMENT CREDIT FOR CADETS AND MIDSHIPMAN

    Under current law, a federal employee who served in the 
armed forces can count his or her military service toward a 
civilian retirement annuity, provided that the employee makes a 
deposit tothe Civil Service Retirement and Disability Fund 
equal to the amount that would have been withheld from his or her 
military pay if military service had been covered under the civilian 
retirement system. S. 129 would ratify the long-standing practice of 
OPM (and, previously, the Civil Service Commission) of granting credit 
under the CSRS and the Federal Employees' Retirement System (FERS) for 
time spent as a cadet or midshipman at one of the military service 
academies, provided that he or she makes a deposit to the Civil Service 
Retirement and Disability Fund equal to the amount that would have been 
withheld from his or her cadet or midshipman stipend if the service had 
been covered. Granting retirement credit recognizes that some members 
of the armed services begin their federal service at the academies, and 
can serve as an incentive for those considering an extended career in 
the federal government.

                   SENIOR EXECUTIVE HIRING AUTHORITY

    The Federal Workforce Flexibility Act would provide 
authority for the White House Office of Administration to 
employ senior executives. S. 129 would require that any 
permanent Senior Executive Service positions established be 
career reserved positions. The hiring process for career 
appointees to the Senior Executive Service is a merit-based 
selection process under existing law.\17\ All statutory rights 
and protections that apply generally to senior executives in 
career reserved positions in agencies would be applicable. The 
employment of career senior executives will help build the 
capability needed to address administrative, knowledge and 
other challenges important to the analysis of current and 
future issues before the executive branch, while providing an 
opportunity for individual civilian employees to further 
develop their management skills.
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    \17\ 5 U.S.C. Sec. 3393.
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    This new section also would ensure that the ceiling 
applicable to General Schedule positions does not apply to the 
new senior executive positions, and it updates a reference to a 
grade of the General Schedule that no longer exists.

                         TRAINING COORDINATION

    Continuous investment in training and workforce development 
is essential for improving the performance of the federal 
government. S. 129 contains several provisions that are 
designed to assist agencies in coordinating their training 
programs. The legislation would amend current law \18\ to 
require agencies to link training activities with performance 
plans and strategic goals in performing the agency mission, in 
order to help ensure that the federal government's training 
resources are appropriately used. S. 129 would require each 
agency to appoint or designate a training officer, who would be 
responsible for developing, coordinating and administering 
agency training. The individual could be the same person as the 
Chief Human Capital Officer. Agencies would also be required to 
institute comprehensive management succession programs designed 
to develop future leaders; and provide special training to 
managers to help them deal with poor performers. The training 
plans would be developed in consultation with OPM. Several 
agencies already have such initiatives, such as the Defense 
Leadership Management Program at the Department of Defense. 
Combined, the provisions create a renewed emphasis on the 
importance of training.
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    \18\ 5 U.S.C. Sec. 4103.
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                       ANNUAL LEAVE ENHANCEMENTS

    Current law provides for accrual of annual leave at four 
hours per biweekly pay period for individuals with less than 
three years of federal service, six hours of leave for any 
employee with between three and 15 years of service, and eight 
hours of leave for any employee with a minimum of 15 years of 
service.\19\ The Federal Workforce Flexibility Act would reform 
the annual leave accrual policy for new mid-career federal 
employees, allowing agency heads to deem a period of qualified 
non-federal career experience for an individual an equal period 
of service performed as a federal employee. The legislation 
also provides that all senior executives and other senior level 
employees accrue annual leave at the maximum rate of eight 
hours for each bi-weekly pay period.
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    \19\ 5 U.S.C. Sec. 6303.
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    Individuals with substantial private sector experience may 
be hesitant to enter government service if they have to 
surrender a considerable amount of vacation time. By allowing 
them to accrue annual leave at the rate of six or eight hours 
per biweekly pay period (i.e., 20 and 26 days per annum, 
respectively) instead of the four hours (i.e., 13 days per 
annum) currently specified by law, agencies will have a greatly 
enhanced capability to recruit qualified mid-career 
individuals.

                      COMPENSATORY TIME FOR TRAVEL

    Under current law, the time that an employee spends in a 
travel status away from his or her official duty station is not 
considered to be hours of employment unless specific 
requirements are met.\20\ The requirements are that (1) the 
time spent is within the days and hours of the employee's 
regularly scheduled workweek, or (2) the travel involves the 
performance of work while traveling, is incident to travel that 
involves the performance of work while traveling, is carried 
out under arduous conditions, or results from an event that 
could not be scheduled or controlled administratively. In light 
of the fact that work-life programs are among the most 
effective recruitment and retention tools,\21\ the Committee 
believes that federal employees should receive compensation 
while traveling on the government's business. S. 129 would 
require federal agencies to provide employees compensatory time 
off for time spent by employees in travel status away from 
their official duty stations, to the extent the time spent in 
travel status is not otherwise compensable. Employees receiving 
compensatory time off for travel would not be entitled to 
payment for unused compensatory time earned under this new 
statutory requirement. OPM would prescribe regulations to 
implement the provision no later than 30 days after enactment.
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    \20\ 5 U.S.C. Sec. 5542(b)(2).
    \21\ General Accounting Office, HUMAN CAPITAL: Effective Use of 
Flexibilities Can Assist Agencies in Managing Their Workforces, GAO-03-
2, November 2002.
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                        III. Legislative History

    S. 129 was introduced on January 9, 2003, by Senator George 
V. Voinovich and was referred to the Senate Committee on 
Governmental Affairs. On March 21, 2003, the bill was referred 
to the OGM Subcommittee. A hearing on S. 129 was held before 
the Subcommittee on Oversight of Government Management, the 
Federal Workforce and the District of Columbia on April 8, 
2003.
    On June 11, 2003, the Subcommittee on Oversight of 
Government Management, the Federal Workforce and the District 
of Columbia favorably polled out S. 129. On October 22, 2003, 
the Committee on Governmental Affairs met in open session and 
by voice vote agreed to a manager's amendment to S. 129, 
offered by Senator Voinovich and cosponsored by Senator Akaka, 
and by voice vote, ordered S. 129 reported favorably with the 
amendment. The manager's amendment differed from the original 
bill by, among other things--(a) prohibiting the use of the 
enhanced bonus authority for political appointees; (b) 
requiring OPM to submit an annual report to the Senate 
Governmental Affairs Committee and the House Government Reform 
Committee describing agency use of the enhanced bonus 
authorities; (c) providing compensatory time off for federal 
employee travel during hours not otherwise compensable; (d) 
granting retirement credit for cadet or midshipman service at 
military service academies; (e) authorizing the White House 
Office of Administration to establish and fill career reserved 
senior executive positions, and (f) omitting provisions, which 
were in the original bill, involving streamlined personnel 
management demonstration projects and law enforcement officer 
relocation payments. Senators present: Akaka, Bennett, Coleman, 
Collins, Fitzgerald, Lautenberg, Levin, Pryor, and Voinovich.

           IV. Section-by-Section Analysis of Bill as Amended


Sec. 101. Recruitment, relocation and retention bonuses

    Subsection (a) adds new sections 5754a and 5754b to title 
5, U.S. Code, to allow the Office of Personnel Management to 
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 absence of such a bonus in certain cases. The new 
Sec. Sec. 5754a and 5754b are in addition to existing bonus 
authority (5 U.S.C. Sec. 5753 and 5 U.S.C. Sec. 5754), which 
remains in effect. Agencies can use either or both existing and 
new authority.
    New Sec. 5754a. is entitled, ``Recruitment and retention 
bonuses.''
    Subsection (a) of new Sec. 5754a defines the term 
``employee.''
    Subsection (b) of new Sec. 5754a 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 absence of a bonus.
    Subsection (c)(1) of new Sec. 5754a 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. 5754a 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 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.
    Subsection (c)(3) of new Sec. 5754a states that the 
agreements shall be made effective upon employment or 
relocation, unless an exception is made to allow for an initial 
period of formal basic training.
    Subsection (d)(1) of new Sec. 5754a states that 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.
    Subsection (d)(2) of new Sec. 5754a states that bonuses may 
be paid as an initial lump sum, in installments, or as a final 
lump sum upon the completion of the service period, or in a 
combination of these forms of payment.
    Subsection (d)(3) of new Sec. 5754a clarifies that bonuses 
under this section are not part of the basic pay of an 
employee.
    Subsection (d)(4) of new Sec. 5754a states that the Office 
of Personnel Management may prescribe regulations to allow 
recruitment bonuses to be paid to an eligible individual before 
that individual enters on duty.
    Subsection (e) of new Sec. 5754a states that the Office of 
Personnel Management may authorize an agency head to waive the 
25 percent cap under subsection (d)(1), allowing the amount of 
the bonus to be up to 50 percent of the employee's annual rate 
of basic pay multiplied by the number of years of the service 
period, not to exceed 100 percent of the employee's annual rate 
of basic pay at the beginning of the service period.
    Subsection (f) of new Sec. 5754a 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. 5754a authorizes the Office of 
Personnel Management to issue regulations to carry out Section 
101, including regulations relating to the repayment of 
recruitment or relocation bonuses when the agreed upon service 
period has not been met.
    Subsection (h)(1) of new Sec. 5754a states that, at the 
request of the head of an Executive agency, the Office of 
Personnel Management may extend coverage under this section to 
categories of employees otherwise not eligible.
    Subsection (h)(2) of new Sec. 5754a states that none of the 
bonuses authorized under Section 101 may be paid to an 
individual who holds a political appointment (Senate confirmed, 
non-career Senior Executive, or General Schedule) in an 
executive branch agency.
    Subsection (i) of new Sec. 5754a requires OPM to report 
annually to Congress on the bonuses paid under this authority 
to the Committee. The report must include the use of each 
agency of recruitment and relocation bonuses, including the 
number and amount of bonuses by grade.
    Subsection (j) of new Sec. 5754a makes it clear that 
individuals may not be paid a recruitment or relocation bonus 
under this section if they are receiving the same category of 
bonus under 5 U.S.C. Sec. 5753.
    New Sec. 5754b is entitled, ``Retention bonuses.''
    Subsection (a) of new Sec. 5754b defines the term 
``employee.''
    Subsection (b) of new Sec. 5754b 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 possesses 
unusually high or unique qualifications make it essential for 
the employee's retention. Additionally, the agency is required 
to make a determination that in the absence of a retention 
bonus the employee would be likely to leave the federal service 
or take a different position in the federal service, as 
described in regulation.
    Subsection (c) of new Sec. 5754b 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. 5754b states that except as 
provided in new Sec. 5754j, a retention bonus under new 
Sec. 5754b may be paid only to an employee covered by the 
General Schedule pay system established under subchapter III of 
chapter 53, title 5, United States Code.
    Subsection (e) of new Sec. 5754b 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.
    Subsection (e)(2) of new Sec. 5754b states that 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.
    Subsection (e)(3) of new Sec. 5754b states that 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.
    Subsection (e)(4) of new Sec. 5754b states that a retention 
bonus for an employee may not be based on any period of service 
which is the basis for a recruitment or relocation bonus under 
5 U.S.C. Sec. 5753 or Sec. 5754a.
    Subsection (f) of new Sec. 5754b 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), and 10 
percent of the employee's basic pay if the bonus is paid to a 
group of employees under subsection (c).
    Subsection (f)(2) of new Sec. 5754b states that 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 in subsection (e).
    Subsection (f)(3) of new Sec. 5754b makes it clear that a 
retention bonus is not part of the basic pay of an employee.
    Subsection (g) of new Sec. 5754b states the Office of 
Personnel Management may, at the request of the head of an 
agency, may waive the percentage limit under subsection (f)(1) 
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 critical need.
    Subsection (h) of new Sec. 5754b states that the Office of 
Personnel Management shall require that, before paying a bonus 
under this section, an agency shall establish a plan for paying 
retention bonuses.
    Subsection (i) of new Sec. 5754b authorizes the Office of 
Personnel Management to issue regulations to carry out this 
section.
    Subsection (j) of new Sec. 5754b states that a retention 
bonus under this section may not be paid to an individual who 
holds a political appointment (Senate confirmed, non-career 
Senior Executive, or General Schedule) in an executive branch 
agency.
    Subsection (k) of new Sec. 5754b requires the Office of 
Personnel Management to submit an annual report to the 
Committee on retention bonuses paid under this section. The 
report shall include the use by each agency of retention 
bonuses, including the number and amount of bonuses by grade.
    Subsection (l) of new Sec. 5754b states that an employee 
may not be paid a retention bonus under this section and a 
retention allowance under 5 U.S.C. Sec. 5754.
    The new bonus authorities under section 101 will take 
effect on the first day of the first applicable pay period 
beginning on or after 180 days after the enactment date. It 
further provides that a recruitment or relocation bonus service 
agreement in effect prior to the changes would continue in 
effect. Additionally, payment of a retention allowance 
authorized previously shall continue in effect until 
reauthorized or terminated, but for no longer than one year.

Sec. 102. Streamlined critical pay authority

    This section would amend 5 U.S.C. Sec. 5377, by shifting 
oversight and the current statutorily requiredreporting 
authority from the Office of Management and Budget to the Office of 
Personnel Management.
    Subsection (f) of amended Sec. 5377 would limit the Office 
of Personnel Management's authority to offer critical pay to no 
more than 800 positions at any one time.
    Subsection (g) of amended Sec. 5377 would require the 
Office of Personnel Management to consult with the Office of 
Management and Budget before making any decision to grant or 
terminate any critical pay authority.

Sec. 103. 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 provide a 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 
Sec. 8339(p)(1) would apply to any service performed before, on 
or after April 7, 1986; subparagraph (b) of Sec. 8339(p)(1) 
would apply to all service performed on a part-time or full-
time basis on or after April 7, 1986; and subparagraph (c) of 
Sec. 8339(p) would that any service performed on a part-time 
basis before April 7, 1986, would be credited as service 
performed on a full-time basis.

Sec. 104. Retirement service credit for cadet or midshipman service

    Subsection (a) would amend 5 U.S.C. Sec. 8331(13) to 
include an individuals 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 individuals 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.

Sec. 105. Senior Executive Service authority for White House Office of 
        Administration

    This section would amend chapter 2 of title 3, United 
States Code, by adding a new section to provide authority for 
the White House Office of Administration to establish Senior 
Executive Service positions. The new section would state that 
the positions are expressly designated as career reserved, 
restricting the use of limited appointments to temporary 
positions. This new section also would ensure that the ceiling 
applicable to General Schedule positions does not apply to the 
new senior executive positions, and it updates a reference to a 
grade of the General Schedule that no longer exists.

Sec. 201. Agency training

    Subsection (a) would amend 5 U.S.C. Sec. 4103 to require 
agencies to link training activities with performance plans and 
strategic goals, and clearly articulate how their training 
programs help to accomplish the agency's mission.
    Subsection (b) would amend chapter 41 of title 5, United 
States Code, by adding a new section to require each agency to 
appoint or designate a training officer, who would be 
responsible for developing, coordinating and administering 
training for the agency.
    Subsection (b) also would 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 to help 
those employees exhibiting unacceptable performance.

Sec. 202. Annual leave enhancements

    Subsection (a) would amend 5 U.S.C. Sec. 6303 to reform the 
policy which dictates the accrual of annual leave for newly-
hired mid-career federal employees. This section would add a 
new subsection (e) to 5 U.S.C. Sec. 6303, that would allow the 
head of an agency to deem a period of qualified non-federal 
career experience for an individual an equal period of service 
performed as a federal employee. This subsection would take 
effect 120 days after the date of enactment of S. 129, and 
shall only apply to an individual hired on or after the 
effective date.
    Subsection (b) would amend section 5 U.S.C. Sec. 6303(a), 
to provide that all senior executives and other senior level 
employees accrue annual leave at the maximum rate: one day 
(eight hours) for each bi-weekly pay period. It also would 
authorize OPM to extend coverage of this section to other 
equivalent categories of employees. This subsection would take 
effect 120 days after the date of enactment of S. 129.

Sec. 203. Compensatory time off for travel

    Subsection (a) of this section would amend 5 U.S.C. 
Sec. 5550, to require federal agencies to provide employees 
compensatory time off for time spent by employees in travel 
status away from their official duty stations, to the extent 
the time spent in travel status is not otherwise compensable.
    Subsection (b) states that employees receiving compensatory 
time off for travel would not be entitled to payment for unused 
compensatory time earned under this new statutory requirement.

                    V. Estimated Cost of Legislation


               CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

S. 129--Federal Workforce Flexibility Act of 2003

    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 affect 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 $4 million in 2004, $71 million over the 2004-2008 
period, and $233 million over the 2004-2013 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 $351 million over the 2004-2008 period and 
$756 million over the 2004-2013 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--
                                           ---------------------------------------------------------------------
                                             2004   2005   2006   2007   2008   2009   2010   2011   2012   2013
----------------------------------------------------------------------------------------------------------------
                                         CHANGES IN DIRECT SPENDING \1\

CSRS Retirement Benefits for Part-Time
 Service:
    Estimated Budget Authority............      4     10     14     18     21     24     26     28     30     31
    Estimated Outlays.....................      4     10     14     18     21     24     26     28     30     31
Retirement Benefits for Service Academy
 Credits:
    Estimated Budget Authority............      0      *      1      2      2      3      4      5      5      6
    Estimated Outlays.....................      0      *      1      2      2      3      4      5      5      6
Refunds of Payments Made to CSRDF:
    Estimated Budget Authority............      0     -1      0      0      0      0      0      0      0      0
    Estimated Outlays.....................      0     -1      0      0      0      0      0      0      0      0
Total Changes:
    Estimated Budget Authority............      4      9     15     20     23     27     30     33     35     37
    Estimated Outlays.....................      4      9     15     20     23     27     30     33     35     37

                                  CHANGES IN SPENDING SUBJECT TO APPROPRIATION

Enhanced Recruitment, Relocation, and
 Retention Bonuses:
    Estimated Authorization Level.........     67     69     70     72     74     76     79     81     83     86
    Estimated Outlays.....................     66     69     70     72     74     76     79     81     83     86
----------------------------------------------------------------------------------------------------------------
\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 early in 2004.

Direct spending and revenues

    Civil Service Retirement Benefits for Part-Time Service. 
Section 103 would alter the way retirement benefits under the 
Civil Service Retirement System (CSRS) are calculated 
forworkers with part-time service. The bill would apply to workers who 
performed work prior to April 7, 1986, have some part-time service, and 
retire after the bill is enacted. Based on information from Office of 
Personnel Management (OPM), CBO estimates that this provision would 
cost $4 million in 2004, $67 million over the 2004-2008 period, and 
$206 million over the 2004-2013 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 tends to treat 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 103 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 103 
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 104 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 programs, 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 1 percent have graduated from a 
U.S. service academy. Of the 120,000 federal employees who 
begin collecting retirement benefits each year, we further 
estimate that 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 as 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 in2 005, 
$5 million during the 2005-2008 period, and $28 million over 
the 2005-2013 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, the bill would 
also increase future deposits into the CSRDF. We estimate these 
deposits would increase federal revenues by less than $500,000 
annually over the 2005-2013 period.

Spending subject to appropriation

    Recruitment, Relocation, and Retention Bonuses. Section 101 
allows 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 
allows 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 can 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 this would result in a cost of $351 
million over the 2004-2008 period and $756 million over the 
2004-2013 period, assuming the appropriation of the necessary 
funds.
    SES Authority for White House Office of Administration. 
Section 105 would allow the White House Office of 
Administration (OA) to hire new (or convert existing) employees 
to career Senior Executive Service (SES) positions. OA expects 
to convert 11 existing employees from General Schedule (GS) 
status to SES status, eventually resulting in higher pay and 
bonuses for these individuals. The section also changes the pay 
cap for non-SES employees of the Vice President, the White 
House Office, the executive residence, the domestic policy 
staff, and OA from $115,184 including locality pay (minimum for 
a GS-16) to $124,783 including locality pay (maximum for a GS-
15). Relatively few of these employees are believed to be near 
the cap, however. CBO estimates that the cost of these two 
provisions would not be significant.
    Agency Training. Section 201 would require each agency to 
designate a training officer to coordinate and administer 
training programs. In consultation with OPM, each agency would 
establish a comprehensive management program to train employees 
and develop managers. CBO expects that the new requirements 
would not add significant costs because the requirements mostly 
reflect current agency practices.
    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.
    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: Selena Caldera.
    Estimate approved by: Peter H. Fontaine, Deputy Assistant 
Director for Budget Analysis.

                  VI. Evaluation of Regulatory Impact

    Pursuant to the requirements of paragraph 11(b) of rule 
XXVI of the Standing Rules of the Senate, the Committee has 
considered the regulatory impact of this bill. CBO states that 
there are no intergovernmental or private-sector mandates as 
defined in the Unfunded Mandates Reform Act and no costs on 
state, local, or tribal governments. The legislation contains 
no other regulatory impact.

                      VII. Changes to Existing Law

    In compliance with paragraph 12 of rule XXVI of the 
Standing Rules of the Senate, 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 and existing law, in which no 
change is proposed, is shown in roman):

TITLE 3, UNITED STATES CODE

           *       *       *       *       *       *       *


CHAPTER 2--OFFICE AND COMPENSATION OF PRESIDENT

           *       *       *       *       *       *       *



Sec. 107. Domestic Policy Staff and Office of Administration; personnel

           *       *       *       *       *       *       *


    (2) In addition to any authority granted under paragraph 
(1) of this subsection, the President (or his designee) is 
authorized to employ individuals in the Office of 
Administration in accordance with [section 3101] sections 3101 
and 3132 of title 5 and provisions relating thereto. Any 
individual so employed under the authority granted under such 
section 3101 shall be subject to the limitation specified in 
section 114 of this title.
    (3) Any permanent Senior Executive Service position 
established under paragraph (2) shall be a career reserved 
position.

           *       *       *       *       *       *       *


Sec. 114. General pay limitation

           *       *       *       *       *       *       *


    (a) Notwithstanding any provision of law, other than the 
provisions of this chapter, no employee of the White House 
Office, the Executive Residence at the White House, the 
Domestic Policy Staff, or the Office of Administration, nor any 
employee under the Vice President appointed under section 106 
of this title, may be paid at a rate of basic pay in excess of 
the [minimum rate of basic pay then currently paid for GS-16] 
maximum rate of basic pay then currently paid for GS-15 of the 
General Schedule of section 5332 of title 5.
    (b) The limitation established in subsection (a) shall not 
apply to an individual appointed under the authority in section 
107(b)(2), in accordance with section 3132 of title 5.

           *       *       *       *       *       *       *


TITLE 5, UNITED STATES CODE

           *       *       *       *       *       *       *


                          CHAPTER 41--TRAINING

Sec.
4101. Definitions.
4102. Exceptions; Presidential authority.
4103. Establishment of training programs.
4104. Government facilities; use of.
4105. Non-Government facilities; use of.
(4106. Repealed.)
4107. Restriction on degree training.
4108. Employee agreements; service after training.
4109. Expenses of training.
4110. Expenses of attendance at meetings.
4111. Acceptance of contributions, awards, and other payments.
4112. Absorption of costs within funds available.
(4113. Repealed.)
(4114. Repealed.)
4115. Collection of training information.
4116. Training program assistance.
4117. Administration.
4118. Regulations.
4119. Training for employees under the Office of the Architect of the 
          Capitol and the Botanic Garden.
4120. Agency training officer.
4121. Specific training programs.

           *       *       *       *       *       *       *


Sec. 4103. Establishment of training programs

           *       *       *       *       *       *       *


    (c) The head of each agency shall--
          (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 to accomplish such 
        plans and goals.

           *       *       *       *       *       *       *


Sec. 4120. Agency training officer

           *       *       *       *       *       *       *


    Each agency shall appoint or designate a training officer 
who shall be responsible for developing, coordinating, and 
administering training for the agency.

           *       *       *       *       *       *       *


Sec. 4121. Specific training programs

           *       *       *       *       *       *       *


    In consultation with the Office of Personnel Management, 
each head of an 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 
                performances; and
                  (B) mentoring employees and improving 
                employee performance and productivity.

           *       *       *       *       *       *       *


                   CHAPTER 53--PAY RATES AND SYSTEMS


Subchapter VII--Miscellaneous Provisions

           *       *       *       *       *       *       *



Sec. 5377. Pay authority for critical positions

           *       *       *       *       *       *       *


    [(c) The Office of Management and Budget, in consultation 
with the Office of Personnel Management, 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.]
    (c) The Office of Personnel Management, in consultation 
with the 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.
    (d)(1) The rate of basic pay fixed under this section by an 
agency head may not be less than the rate of basic pay 
(including any comparability payments) which would then 
otherwise be payable for the position involved if this section 
had never been enacted.
    (2) Basic pay may not be fixed under this section at a rate 
greater than the rate payable for level I of the Executive 
Schedule, except upon written approval of the President.
    (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
          (2) as of such date as such Office may otherwise 
        specify, except that termination under this paragraph 
        may not take effect before the authority has been 
        available for such position for at least 1 calendar 
        year.
    [(f) The Office of Management and Budget 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 shall consult with 
the Office of Personnel Management before prescribing 
regulations under this section or making any decision to grant 
or terminate any authority under this section.]
    (f) The Office of Personnel Management may not authorize 
the exercise of authority under this section with respect to 
more than 800 positions at any 1 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 Personnel Management shall consult with 
the Office of Management and Budget before making any decision 
to grant or terminate any authority under this section.
    (h) [The Office of Management and Budget shall report to 
the Committee on Post Office and Civil Service] The Office of 
Personnel Management shall report to the 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) the number of positions, in the aggregate and by 
        agency, for which higher rates of pay were authorized 
        or paid under this section during any part of the 
        period covered by such report; and
          (2) the name of each employee to whom a higher rate 
        of pay was paid under this section during any portion 
        of the period covered by such report, the rate on rates 
        paid under this section during such period, the dates 
        between which each such higher rate was paid, and the 
        rate or rates that would have been paid but for this 
        section.

           *       *       *       *       *       *       *


CHAPTER 55--PAY ADMINISTRATION

           *       *       *       *       *       *       *



                       Subchapter V--Premium Pay

Sec.
5541. Definitions.
5542. Overtime rates; computation.
5543. Compensatory time off.
5544. Wage-board overtime and Sunday rates; computation.
5545. Night, standby, irregular, and hazardous duty differential.
5545a. Availability pay for criminal investigators.
5545b. Pay for firefighters.
5546. Pay for Sunday and holiday work.
5546a. Differential pay for certain employees of the Federal Aviation 
          Administration and the Department of Defense.
5547. Limitation on premium pay.
5548. Regulations.
5549. Effect on other statutes.
(5550. Repealed.)
5550a. Compensatory time off for religious observances.
5550b. Compensatory time off for travel.

           *       *       *       *       *       *       *


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. 5754a. Retention allowances

           *       *       *       *       *       *       *


    (a) In this section, the term ``employee'' has the meaning 
given that term under section 2105, except that such term also 
includes an employee described under subsection (c) of that 
section.
    (b)(1) The Office of Personnel Management 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 such a bonus, if the individual--
          (A)(i) is newly appointed as an employee of the 
        Federal Government; or
          (ii) is currently employed by the Federal Government 
        and moves to a new position in the same geographic area 
        under circumstances described in regulations of the 
        Office; or
          (B) is currently employed by the Federal Government 
        and must relocate to accept a position stationed in a 
        different geographic area.
    (2) Except as provided by subsection (h), a bonus may be 
paid under this section only to an employee covered by the 
General Schedule pay system established under subchapter III of 
chapter 53.
    (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 to exceed 4 years. The Office may, by regulation, prescribe 
a minimum service.
    (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 subsections (d) and (e) 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) The agreement shall be made effective upon employment 
with the agency or movement to a new position or geographic 
area, as applicable, except that a service agreement with 
respect to a recruitment bonus may be made effective at a later 
date under circumstances described in 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 (or fractions thereof) 
in the service period, not to exceed 4 years.
    (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 service period, 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 amount of the bonus may be up to 50 
percent of the employee's annual rate of basic pay at the 
beginning of the service period multiplied by the number of 
years (or fractions thereof) in the service period, not to 
exceed 100 percent of the employee's annual rate of basic pay 
at the beginning of the service period.
    (f) The Office shall require that, before paying a bonus 
under this section, an agency shall establish a plan for paying 
recruitment bonuses and a plan for paying relocation 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 
recruitment or relocation bonus in appropriate circumstances 
when the agreed-upon service period has not been completed.
    (h)(1) At the request of the head of an Executive agency, 
the Office may extend coverage under this section to categories 
of employees within the agency who otherwise would not be 
covered by this section.
    (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.
    (i)(1) The Office of Personnel Management shall submit an 
annual report on bonuses paid under this section to the 
Committee on Governmental Affairs of the Senate and the 
Committee on Government Reform of the House of Representatives.
    (2) Each report submitted under this subsection shall 
include the use by each agency of recruitment and relocation 
bonuses, including, with respect to each agency and each type 
of bonus, the number and amount of bonuses by grade (including 
the General Schedule, the Senior Executive Service, and 
positions on the Executive Schedule).
    (j)(1) An individual may not be paid a recruitment bonus 
under this section and a recruitment bonus under section 5753.
    (2) An individual may not be paid a relocation bonus under 
this section and a recruitment bonus under section 5753.

           *       *       *       *       *       *       *


Sec. 5754b. Retention bonuses

           *       *       *       *       *       *       *


    (a) In this section, the term `employee' has the meaning 
given that term under 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, 
subject to regulations prescribed by the Office, 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) Except as provided in subsection (j), a bonus may be 
paid only to an employee covered by the General Schedule pay 
system established under subchapter III of chapter 53.
    (e)(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 subsections (f) and (g) 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.
    (f)(1) Except as provided in subsection (g), 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 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. An installment payment may 
not exceed the product derived from 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. If the installment payment percentage is less than 
the bonus percentage rate, 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.
    (3) A retention bonus is not part of the basic pay of an 
employee for any purpose.
    (g) Upon the request of the head of an agency, the Office 
may waive the limit established under subsection (f)(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.
    (h) The Office shall require that, before paying a bonus 
under this section, an agency shall establish a plan for paying 
retention bonuses, subject to regulations prescribed by the 
Office.
    (i) The Office may prescribe regulations to carry out this 
section.
    (j)(1) At the request of the head of an Executive agency, 
the Office may extend coverage under this section to categories 
of employees within the agency who otherwise would not be 
covered by this section.
    (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.
    (k)(1) The Office of Personnel Management shall submit an 
annual report on bonuses paid under this section to the 
Committee on Governmental Affairs of the Senate and the 
Committee on Government Reform of the House of Representatives.
    (2) Each report submitted under this subsection shall 
include the use by each agency of recruitment and relocation 
bonuses, including, with respect to each agency and each type 
of bonus, the number and amount of bonuses by grad (including 
the General Schedule, the Senior Executive Service, and 
positions on the Executive Schedule).
    (l) An individual may not be paid a retention bonus under 
this section and a recruitment allowance under section 5754.

           *       *       *       *       *       *       *


                           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) one-half day for each full biweekly pay period 
        for an employee with less than 3 years of service;
          (2) three-fourths day for each full biweekly pay 
        period, except that the accrual for the last full 
        biweekly pay period in the year is one and one-fourth 
        days, for an employee with 3 but less than 15 years of 
        service; [and]
          (3) one day for each full biweekly pay period for an 
        employee with 15 or more years of service[.]; and
          (4) one day for each full biweekly pay period for an 
        employee in a position paid under section 5376 or 5383, 
        or for an employee in an equivalent category for which 
        the minimum rate of basic pay is greater than the rate 
        payable at GS-15, step 10.
    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. 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) his retirement was based on disability--
                  (i) resulting from injury or disease received 
                in line of duty as a direct result of armed 
                conflict; or
                  (ii) caused by an instrumentality of war and 
                incurred in line of duty during a period of war 
                as defined by sections 101 and 1101 of title 
                38;
          (B) that service was performed in the armed forces 
        during a war, or in a campaign or expedition for which 
        a campaign badge has been authorized; or
          (C) on November 30, 1964, he was employed in a 
        position to which this subchapter applies and 
        thereafter he continued to be so employed without a 
        break in service of more than 30 days.
    The determination of years of service may be made on the 
basis of an affidavit of the employee. Leave provided by this 
subchapter accrues to an employee who is not paid on the basis 
of biweekly pay periods on the same basis as it would accrue if 
the employee were paid on the basis of biweekly pay periods.
    (b) Notwithstanding subsection (a) of this section, an 
employee whose current employment is limited to less than 90 
days is entitled to annual leave under this subchapter only 
after being currently employed for a continuous period of 90 
days under successive appointments without a break in service. 
After completing the 90-day period, the employee is entitled to 
be credited with the leave that would have accrued to him under 
subsection (a) of this section except for this subsection.
    (c) A change in the rate of accrual of annual leave by an 
employee under this section takes effect at the beginning of 
the pay period after the pay period, or corresponding period 
for an employee who is not paid on the basis of biweekly pay 
periods, in which the employee completed the prescribed period 
of service.
    (d) Leave granted under this subchapter is exclusive of 
time actually and necessarily occupied in going to or from a 
post of duty and time necessarily occupied awaiting 
transportation, in the case of an employee--
          (1) to whom section 6304(b) of this title applies;
          (2) whose post of duty is outside the United States; 
        and
          (3) who returns on leave to the United States, or to 
        his place of residence, which is outside the area of 
        employment, in its territories or possessions including 
        the Commonwealth of Puerto Rico.
    This subsection does not apply to more than one period of 
leave in a prescribed tour of duty at a post outside the United 
States.
    (e)(1) In this subsection, the term ``period of qualified 
non-Federal career experience'' means any equal period of 
service performed by an individual that--
          (A) except for this subsection would not otherwise be 
        service performed by an employee for purposes of 
        subsection (a); and
          (B) was performed in a position--
                  (i) the duties of which were directly related 
                to the duties of the position in an agency that 
                such individual holds; and
                  (ii) which meets such other conditions as the 
                Office of Personnel Management shall prescribe 
                by regulation.
    (2) For purposes of subsection (a), the head of an agency 
may deem a period of qualified non-Federal career experience 
performed by an individual to be a period of service performed 
as an employee.

           *       *       *       *       *       *       *


                         CHAPTER 83--RETIREMENT


Subchapter III--Civil Service Retirement

           *       *       *       *       *       *       *



Sec. 8331. Definitions

           *       *       *       *       *       *       *


          (13) ``military service'' means honorable active 
        service--
                  (A) in the armed forces;
                  (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;
        [but] and includes service 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, but 
        does not include service in the National Guard except 
        when ordered to active duty in the service of the 
        United States or full-time National Guard duty (as such 
        term is defined in section 101(d) of title 10) if such 
        service interrupts creditable civilian service under 
        thissubchapter and is followed by reemployment in 
accordance with chapter 43 of title 38 that occurs on or after August 
1, 1990;

           *       *       *       *       *       *       *


Sec. 8339. Deferred retirement

           *       *       *       *       *       *       *


    (p)(1) In computing an annuity under this subchapter for an 
employee whose service includes service that was performed on a 
part-time basis--
          (A) the average pay of the employee, to the extent 
        that it includes pay for service performed in any 
        position on a part-time basis, shall be determined by 
        using the annual rate of basic pay that would be 
        payable for full-time service in the position; and
          (B) the benefit so computed shall then be multiplied 
        by a fraction equal to the ratio which the employee's 
        actual service, as determined by prorating an 
        employee's total service to reflect the service that 
        was performed on a part-time basis, bears to the total 
        service that would be creditable for the employee if 
        all of the service had been performed on a full-time 
        basis.
    (2) For the purpose of this subsection, employment on a 
part-time basis shall not be considered to include employment 
on a temporary or intermittent basis.
    (3) In the administration of paragraph (1)--
          (A) subparagraph (A) of such paragraph shall apply to 
        any service performed before, on, or after April 7, 
        1986;
          (B) subparagraph (B) of such paragraph shall apply to 
        all service performed on part-time or full-time basis 
        on or after April 7, 1986; and
          (C) any service performed on a part-time basis before 
        April 7, 1986, shall be credited as service performed 
        on a full-time basis.

           *       *       *       *       *       *       *


            CHAPTER 84--FEDERAL EMPLOYEES' RETIREMENT SYSTEM


Subchapter I--General Provisions

           *       *       *       *       *       *       *



Sec. 8401. Definitions

           *       *       *       *       *       *       *


          (31) the term ``military service'' means honorable 
        active service--
                  (A) in the armed forces;
                  (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;
        [but] and includes service 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, but 
        does not include service in the National Guard except 
        when ordered to active duty in the service of the 
        United States or full-time National Guard duty (as such 
        term is defined in section 101(d) of title 10) if such 
        service interrupts creditable civilian service under 
        this subchapter and is followed by reemployment in 
        accordance with chapter 43 of title 38 that occurs on 
        or after August 1, 1990;

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