[Federal Register Volume 60, Number 163 (Wednesday, August 23, 1995)]
[Rules and Regulations]
[Pages 43936-43948]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-20745]



      

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_______________________________________________________________________

Part V





Office of Personnel Management





_______________________________________________________________________



5 CFR Parts 430 et al.



Deregulation of Performance Management and Incentive Awards: Final Rule

  Federal Register / Vol. 60, No. 163 / Wednesday, August 23, 1995 / 
Rules and Regulations  

[[Page 43936]]


OFFICE OF PERSONNEL MANAGEMENT

5 CFR Parts 430, 432, 451 and 531

RIN 3206-AG34


Performance Management

AGENCY: Office of Personnel Management.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Office of Personnel Management (OPM) is issuing final 
regulations to deregulate performance management and incentive awards, 
including provisions allowing agencies to use as few as two levels for 
critical element appraisals for and summary performance assessments of 
non-SES employees, and to make conforming changes to related 
regulations. These changes provide agencies additional flexibility as 
called for by the National Performance Review.

EFFECTIVE DATE: September 22, 1995.

FOR FURTHER INFORMATION CONTACT:
Barbara Colchao, (202) 606-2720.

SUPPLEMENTARY INFORMATION: OPM published for comment in the Federal 
Register on January 27, 1995, at 60 FR 5542-5557, proposed revisions to 
the regulations on performance management systems. A total of 52 
comments and/or suggestions were received: 37 from agencies, 6 from 
unions, 6 from individuals, and 3 from management associations. The 
comments generally supported the proposed changes. On some topics, 
commenters suggested additional changes. In other instances, commenters 
either suggested that no change be made to the current regulations or 
suggested some modification to the proposed changes. Comments and 
suggestions, along with the rationale for and explanation of revisions 
to the final regulations, are discussed below.

I. Background

    Following several years of study and recommendations for ways to 
improve the Federal Government's performance management system for non-
Senior Executive Service (SES) employees, OPM reviewed the regulatory 
structure for appraisal and awards for opportunities to implement the 
various recommendations. OPM concluded that the regulations 
implementing the basic statutory requirements could be made much more 
flexible and constructive for managing and recognizing group as well as 
individual performance. Consequently, OPM proposed a variety of changes 
to the regulations covering performance appraisal (part 430) and 
incentive awards (part 451), as well as related regulations that 
referenced appraisal results (e.g., granting within-grade and quality 
step increases).
    OPM's intent in deregulating performance management was to give 
agencies a great deal of flexibility for both appraisal and awards so 
that the working organizations of the Federal Government could operate 
in a decentralized environment where the performance management 
procedures for planning, monitoring, evaluating, and rewarding 
individual, team, and organizational performance were tailored to fit 
local work technologies and cultures. A chief means of achieving this 
flexibility was to remove a great deal of regulatory language. As a 
result of comments received, OPM is restoring language in several 
instances that had been deleted in the proposed regulations (e.g., 
restoring a reference to ``employee'' in the definition of critical 
element). Whenever reasonable, the restoration is establishing a 
permissive authority, rather than a Governmentwide requirement. OPM's 
original strategy was to adopt a ``permissive silence'' approach to 
many issues. That is, by leaving the regulations silent, agencies would 
not be constrained from designing and implementing a variety of 
procedures and mechanisms. However, the comments clearly indicated that 
in some cases, agencies believe a direct reference to certain 
permissible techniques, such as permitting the assigning of a summary 
level as part of a performance rating, is needed to permit their use. 
Consequently, OPM is reinserting some broad language in certain cases.
    Even with these additions, however, OPM believes that our goal of 
creating a deregulated Governmentwide policy framework in which 
performance management can be revitalized and reinvented is being 
achieved, without sacrificing agency accountability and adequate 
employee protections. OPM encourages agencies to seize these 
flexibilities and work to make performance appraisal and awards an 
integral part of their general efforts to address the serious 
challenges Government is facing to create and sustain high performance 
organizations.

II. Statutory Limitations

    OPM's proposals for regulatory changes to performance management 
implemented specific National Performance Review recommendations which 
were achievable within the limits of existing statute and which we 
believe substantially reform performance management in the Federal 
Government. However, there were several requests made by commenters to 
take actions that are outside OPM's authority. For example, a few 
commenters suggested that the regulations be further modified to 
require mandatory collective bargaining of aspects of performance 
appraisal and awards such as performance standards. Several other 
commenters made suggestions that also would require changes to statute; 
for example--
     integrate sections from different chapters of title 5, 
United States Code;
     eliminate the requirement that OPM approve performance 
appraisal systems;
     require that agencies take a chapter 43 action against 
employees whose performance is less than fully successful, but better 
than unacceptable as defined in statute;
     lift the prohibition on granting honorary, nonmonetary 
awards to political officers during a Presidential election period;
     modify regulations to permit that within-grade increases 
that are delayed do not have to be granted retroactively; and
     eliminate the connection between performance appraisal and 
retention standing in a reduction in force.

OPM does not have the authority under existing statute to take these 
actions. Therefore, they are not being adopted.
III. Employee Involvement and Labor Relations Issues

    As OPM stated when publishing the proposed regulations, agencies 
are strongly urged to develop their performance management systems and 
programs in partnership with their employees and union representatives 
in accordance with law. Many studies have shown that the success of a 
performance management system in achieving its goals is dependent upon 
acceptance by the management and employees who use it. There is no 
better way to garner support for a system than by giving all 
stakeholders a role in developing it. Further, the National Performance 
Review stated in its accompanying report, Reinventing Human Resource 
Management, that under the ideal performance management system 
``Employees and their representatives will be involved in design and 
implementation of performance management programs and in development of 
performance expectations.'' Consequently, OPM advises agencies that 
these regulatory changes in performance management should be 
implemented through full partnership with employees and their union 
representatives.
    Several comments pointed out that the elimination of a 
Governmentwide 

[[Page 43937]]
regulation could affect the negotiability of a particular aspect of an 
appraisal or award program. OPM is aware of this potential implication 
of removing such regulations. In balancing among the interests of 
establishing flexibility for effective program design, decentralizing 
programs to facilitate their being properly tailored to local work 
settings and cultures, achieving meaningful employee involvement to 
increase program acceptance, and maintaining an appropriate framework 
of Governmentwide regulation to ensure that statutory requirements are 
met, OPM is deciding more often than not to remove regulatory 
constraints.
    A number of comments focused on OPM's objective of providing for 
involving employees in the design and implementation of performance 
management programs and the implications of the proposed regulations 
for how that involvement could and should be achieved. The principle 
that successful performance management approaches are best served by 
the involvement of the employees that will be affected by them is well 
established. In the Federal Government, under the Federal Service 
Labor-Management Relations Statute (chapter 71 of title 5, United 
States Code), for employees in bargaining units where a labor 
organization has been given exclusive recognition, employee involvement 
must be through that exclusive representative for subject matters that 
are within the statutory duty to bargain. As well as striving to 
develop performance management systems and programs in partnership, 
agencies must be mindful of the requirements of chapter 71 as they 
implement these final regulations.
    Several comments raised questions about the means and methods of 
involving employees who are not in recognized bargaining units. One 
commenter suggested that OPM mandate that agencies use representatives 
of professional and management associations to involve employees who 
make up their memberships. OPM has no authority to set such a 
requirement. OPM strongly encourages agencies to involve all employees, 
including managers and supervisors, in the design and implementation of 
performance management programs. Where appropriate, this should include 
the involvement of representatives of professional and managerial 
associations, OPM, however, does not have the authority to require such 
involvement.
    Also, agency officials are reminded that 18 U.S.C. 201-216 place 
restrictions on a wide range of activities by Federal employees, 
including representational activities on behalf of organizations that 
are not labor organizations. OPM therefore advises agency officials to 
consult with their designated agency ethics official for guidance 
regarding any conflicts of interest that may arise. Accordingly, OPM is 
revising text to clarify that agencies are free to choose appropriate 
forms of employee involvement in accordance with law. (See 
Sec. 430.204(c), Sec. 430.205(d), and Sec. 451.103(b).)
    Several comments raised related labor relations issues concerning 
employees who serve as representatives of labor organizations in their 
agencies under chapter 71 of title 5, United States Code. For example, 
one commenter suggested adding a requirement that union officials be 
granted presumptive ratings at the ``Fully Successful'' (or equivalent) 
level. Under performance appraisal provisions in part 430, the 
performance to be planned, monitored, and rated covers the work, 
duties, and responsibilities that accomplish the agency mission and for 
which the employee is accountable to the employing organization. When 
an employee is serving as the representative of a labor organization, 
he or she is performing duties for that labor organization. To 
intermingle performance of the representational duties into the 
appraisal program would be inappropriate because appraisal of the 
employee's performance must be based solely upon the employee's 
performance of agency duties. For employees who spend 100 percent of 
their time as labor representatives, and for employees who spend a 
significant amount of time as determined by the agency, this means that 
they cannot, and should not, be given performance appraisal ratings of 
record. In the interest of preserving the distinction between the 
agency-assigned duties of an official position and union duties and 
responsibilities, OPM is not adopting this suggestion. The regulations 
at part 430 continue to preclude a ``presumptive'' or ``assumed'' 
rating of record and such employees are considered ``unratable.'' The 
only place in regulations where an ``assumed'' rating is used is in the 
regulations at Sec. 351.504 for granting addition service credit based 
on performance in a reduction in force.
    Other commenters asked whether the waiver of an acceptable level of 
competence (ALOC) determination at Sec. 531.409(d) is discretionary or 
mandatory. OPM is clarifying that waiving the ALOC determination for 
labor representatives is not discretionary for representatives who are 
unratable based upon the fact that ALOC must be based on a performance 
determination.
    An additional comment stated that the provision addressing the ALOC 
waiver for union officials should also refer to representational 
duties. OPM is adopting the suggestion to clarify the representational 
duties are performed under the authority of chapter 71 of title 5, 
United States Code. (See Sec. 531.409(d)(1)(v).)
    One commenter suggested that where the proposed regulations at 
Sec. 451.104(h) clarified that employees do not have appeal rights with 
respect to awards, language be added concerning the right to grieve an 
award. In considering this suggestion, OPM has concluded that it is not 
necessary to promulgate a Governmentwide regulation in this subpart 
that reminds employees about matters where they do and do not have 
appeal or grievance rights. Consequently, OPM is eliminating all 
reference to appealing awards by deleting Sec. 451.104(h). Because 
appeal rights to the Merit Systems Protection Board must be granted 
specifically by law or regulation, deletion of this regulatory language 
does not have the effect of creating such an appeal right. (See 
Sec. 541.104 (paragraph (h) as proposed, removed).)

IV. OPM Role Examined

    Several comments raised questions that concern OPM's role in 
administering the Federal Government's performance management system 
under the provisions of chapters 43 and 45 of title 5, United States 
Code. One commenter asked whether these regulatory changes would affect 
the administrative exclusions that OPM had already granted some 
agencies for some excepted service employees under its authority at 5 
U.S.C. 4301(2)(G). OPM has concluded that all existing administrative 
exclusions the Director of OPM has already granted will remain in 
effect and that agencies need not reapply for those exclusions.
    One commenter suggested that OPM seek a reinterpretation of the 
statutory requirement that OPM review and approve agency appraisal 
systems in advance of program implementation. OPM believes that case 
law and established practice are sufficiently clear in this regard and 
that appraisal system approval must still be required in advance of 
program implementation.
    One commenter expressed concern about the distinctions OPM is 
making between appraisal system and appraisal program. The commenter 
suggested that OPM would not be carrying out our 

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review and approval responsibilities properly if only a framework of 
parameters that an agency's programs must comply with were to be 
reviewed. OPM believes that the system descriptions that agencies will 
submit to OPM will provide sufficient information about the policies 
under which appraisals will be conducted to permit an adequate 
determination of whether the agency meets the requirements of 
subchapter I of chapter 43 of title 5, United States Code, which is 
OPM's responsibility under the law. As a consequence, the final 
regulations at Secs. 430.203-205 continue to distinguish agency 
appraisal systems from appraisal programs and require at Secs. 430.209-
210 the submission and review of agency systems. (See Sec. 430.203 
(appraisal program, appraisal system) and Secs. 430.205 (a) and (c).)
    Other commenters asked about what documents agencies would be 
required to submit for OPM review. OPM will be distributing specific 
guidance and instructions, providing models, holding informational 
meetings, and supplying technical assistance to the agencies to 
facilitate the submission and approval of their systems and to support 
the design and implementation of revised appraisal and award programs.
    One commenter suggested that the definition of ``Performance 
Management Plan'' be removed as paragraph Sec. 430.102(c) and grouped 
with other definitions in Sec. 430.203. OPM is taking this suggestion 
one step further by removing the provision and all references to 
``Performance Management Plan'' in part 430, subparts A and B, which 
cover non-SES employees. Also, OPM is making conforming changes in 
subpart C by removing references to subpart A as a source of the 
continued SES requirement for a Performance Management Plan. From a 
Governmentwide regulatory perspective, reference to a document (e.g., a 
Performance Management Plan) that serves as the repository for an 
agency's non-SES performance management systems is no longer necessary 
because the regulations are clear in requiring agencies only to submit 
appraisal systems for OPM review and approval. However, agencies are 
free to continue to use a Performance Management Plan for internal 
purposes. The requirements for submitting appraisal systems for SES 
employees and for non-SES employees are spelled out separately in their 
respective subparts. (See Sec. 430.102 (paragraph (c) as proposed, 
removed), Sec. 430.209(d), Sec. 430.303 (Performance Management Plan), 
and Sec. 430.310.)
    On OPM's evaluation responsibilities, one commenter suggested the 
wording ``must evaluate'' and another suggested the wording ``will 
evaluate'' to replace the wording ``may evaluate'' systems and programs 
at Sec. 430.210(b) and Sec. 451.107(d). Another commenter suggested 
that OPM include in the regulations at Sec. 430.209(d) the criteria 
against which programs would be evaluated. OPM is fully committed to 
executing our evaluation role in a meaningful way. Moreover, OPM 
believes that agencies will be in the best position to establish 
criteria for evaluating their programs against the specific objectives 
that program design features were intended to achieve. Consequently, 
the suggested changes are not being adopted.

V. More Flexibility Requested

    Some commenters did not feel that OPM had gone far enough in our 
proposals and urged OPM to consider providing further flexibilities. By 
far, the most commonly raised concern addressed the fact that OPM had 
not proposed any changes to the regulations at Sec. 351.504 governing 
how additional service credit is granted during a reduction in force 
(RIF) on the basis of performance appraisal ratings of record. Most 
commenters noted that OPM's proposal to provide flexibility about the 
number of summary levels used in an appraisal program was a highly 
desirable system improvement. However, 27 of the 52 commenters 
suggested that OPM revisit the issue of crediting performance in a RIF. 
A few commenters urged that the connection between appraisal and 
retention be completely eliminated. Others suggested particular 
approaches for dealing with situations where employees in the same 
competitive area in a RIF were given ratings of record under programs 
that use different patterns of summary levels. To respond to the 
concerns expressed, OPM will review the RIF regulations in part 351 and 
consider whether any changes to the RIF retention provisions would be 
beneficial and appropriate. As part of this review, OPM will confer 
with stakeholders to assure that a full range of interests is 
considered.
    In four other instances, changes were suggested that would have 
lifted regulatory requirements beyond what OPM had proposed. One 
commenter requested that the required progress review in the regulation 
at Sec. 430.207(b) about monitoring performance during the appraised 
period be eliminated on grounds that agencies ``should not be required 
to conduct a formalized review.'' OPM had maintained the requirement 
for a progress review as a reasonable implementation of the specific 
statutory requirement that employees be evaluated during (and not just 
at the end of) their appraisal period. Given the more flexible 
definition of progress review, which could now be much simpler than a 
formally conducted or written review, OPM is preserving the 
requirement.
    Another commenter suggested that after one appraisal period, 
journey-level employees should not be required under Sec. 430.206(b)(2) 
to receive performance plans at the start of each subsequent period. 
Instead, a performance plan would be provided upon reaching the journey 
level and ``carry over'' after that. OPM understands that situations 
may continue where performance plans are constructed in such a way that 
they need not change from period to period. However, OPM believes that 
the statutory requirement for employees to be evaluated during each 
appraisal period on their standards is reasonably implemented by the 
current requirement. Also, eliminating the current requirement would 
strongly suggest that such plans are by their nature unchanging, at 
least at the journey level. One of OPM's goals in deregulating 
performance management is to reemphasize the value and importance of 
effective planning and goal setting. Consequently, OPM is not adopting 
the suggestion.
    Two commenters sought greater flexibility with respect to assigning 
summary levels. One thought that the regulations at Sec. 430.208(d)(1) 
should allow an appraisal program to use more than five summary levels. 
Other personnel systems and actions, including granting quality step 
increases, granting within-grade increases, and granting additional 
service credit in a reduction in force, are regulated to operate with 
reference to the five numerically-designated summary levels. The 
proposed regulations offered the flexibility for an appraisal program 
to assess performance at more than five levels, so long as the program 
included some method of translating such assessments to one of the 
patterns of summary levels that programs are permitted to use to 
designate their official ratings of record that the other personnel 
systems use. Given that flexibility, OPM is not adopting the suggestion 
to permit more than five summary levels.
    The other commenter suggested that the proposed deregulation at 
Sec. 430.208(e) to eliminate the Governmentwide requirement that all 
assigned summary levels be reviewed by a reviewing official should be 
extended 

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to Level 1 (``Unacceptable'') ratings of record. OPM has proposed 
maintaining the requirement for reviewing Level 1 ratings as an 
appropriate employee protection in cases where the assigned rating of 
record could affect an employee's retention in the Federal service. OPM 
believes such a measure of protection is still justified and is not 
adopting the suggestion.

VI. Restoring or Adding Restrictions and Requirements

    A considerable number of comments requested that Governmentwide 
restrictions or requirements be restored or that new ones be 
established. OPM considered each of these suggestions carefully, 
attempting to implement the National Performance Review recommendation 
to eliminate unnecessary regulation consistent with our responsibility 
to regulate the Governmentwide implementation of chapters 43 and 45 of 
title 5, United States Code, as required by law.

A. Team and Organizational Performance

    A number of commenters wanted OPM to restore language that we had 
proposed be removed from the regulations. For example, in the provision 
dealing with performance plans, OPM had proposed to eliminate the 
language referring to supervisor. Several commenters suggested that OPM 
restore the language that referred to supervisors. Current regulation 
at Sec. 430.204(c)(4) states that ``Final authority for establishing 
such plans rests with the supervising officials.'' By proposing the 
removal of this type of language, OPM had hoped to broaden the coverage 
of the regulations to the management of team and organizational 
performance in other than traditional hierarchical organizations, as 
well as individual performance, without detracting from the management 
rights preserved by law.
    The deletion of the reference to supervisors was not intended to, 
and cannot have the effect of, subtracting from management's inherent 
rights because those rights are preserved elsewhere in the law. For 
example, 5 U.S.C. 7106(a)(2) (A) and (B) protect management's right to 
direct employees and to assign work. Therefore, reference to the 
supervisor did not confer upon management any rights that did not 
already exist. Consequently, OPM is not adopting the suggestion to 
restore the reference to the supervisor establishing a performance 
plan.
    The requirement for higher-level review of awards had been proposed 
for removal to accommodate restructured organizational environments. 
Several commenters suggested that the requirement be restored because 
its removal could have the effect of making award programs negotiable. 
OPM is not adopting this suggestion because of our focus on eliminating 
unnecessary layers of review to create flatter, more effective 
organizations. Such delayering could be used to establish more 
effective recognition systems.
    Four commenters suggested OPM restore an exclusive reference to the 
performance of ``an employee.'' One of these suggestions applied to the 
definition of performance rating and another to the provision for 
ongoing appraisal at Sec. 430.207(b). OPM is not adopting either change 
because each would limit performance to the individual, excluding the 
use of team or organizational performance from the appraisal process. A 
third commenter wanted to restore classification-centered references to 
duties and responsibilities in the definition of critical element. The 
third proposed change could result in limiting critical elements by 
tying them to position descriptions that are frequently outdated rather 
than allowing them to reflect the employee responsibilities needed by 
the organization. Accordingly, OPM is not adopting this suggestion. The 
fourth commenter, however, suggested restoring reference to ``an 
employee's'' overall performance in the definition of critical element 
as that which is found unacceptable if performance on one or more 
critical elements is unacceptable. OPM is adopting this suggestion 
because it emphasizes the necessary connection in the law between 
critical elements and the individual employee for retention purposes. 
(See Sec. 430.203 (critical element) and Sec. 432.103(b).)

B. Meaning and Use of Terms

    1. Critical Elements and Other Performance Factors. OPM received a 
number of comments about the meaning and use of terms such as ``other 
performance factors'' and ``non-critical elements'' and the 
relationships among those and ``critical elements,'' especially with 
respect to their use in performance plans and their impact on summary 
ratings of record. Two commenters requested OPM to restore the 
definition of ``non-critical element.''
    In response to these comments, OPM is amending definitions and 
provisions to establish three distinct kinds of performance elements: 
critical, non-critical, and additional. The concept of ``other 
performance factors'' that the proposed regulations had included has 
been replaced and refined by using ``non-critical elements'' and 
``additional performance elements.''
    The meaning and use of a ``critical element'' cannot change; as set 
forth in 5 U.S.C. 4301(3), failure to meet established performance 
standards on one or more critical elements means unacceptable 
performance. Because an appraisal system must be able to identify 
unacceptable performance, an appraisal program must use at least one 
critical element, and any critical element must have an established 
performance standard and be appraisable as ``Unacceptable.'' Critical 
elements must be used in deriving a summary level, and they form the 
only basis for taking a performance-based action under 5 CFR part 432 
or 752.
    The definition of non-critical element is being adjusted to reflect 
a new, broader meaning. (This change renders moot another commenter's 
suggestion to remove all references to noncritical elements.) As in 
current regulation, establishing a non-critical element is optional. If 
used, it must be included in the employee's performance plan. It cannot 
be used as a basis for taking a performance-based action under 5 CFR 
part 432 or 752. However, a non-critical element would be used in 
deriving a summary level. As in the proposed regulations and because it 
must be factored into the summary level, it must be appraisable at a 
minimum of two levels with a performance standard established for at 
least one level, which need not be the ``Fully Successful'' level. This 
change is being made in recognition of 5 U.S.C. 4302(b)(3), which 
requires that employees be evaluated against their performance 
standards.
    OPM is changing the definition and use of non-critical elements to 
permit them to focus on levels of performance other than individual and 
on a standard other than that required for retention. Critical elements 
are designed to be focused on individual performance and an established 
performance standard for retention because of the definition of 
unacceptable performance at 5 U.S.C. 4301(3). Agencies may continue to 
use non-critical elements as they are used now under current 
regulation, provided they are used to derive a summary level.
    Under these regulations, an optional ``additional performance 
element'' gives agencies additional flexibility for communicating 
performance expectations important to the organization. This kind of 
performance element differs from the other two in that it may not be 
used in deriving a summary level. However, it may be used for other 
purposes, such as making award determinations. Therefore, as was 

[[Page 43940]]
proposed for ``other performance factors'' in general in the proposed 
regulations, an additional performance element need not include a 
performance standard, be appraised at any particular level, or 
necessarily be included in the employee performance plan. Also, by 
making clear that performance on an additional performance element may 
not be used in assigning a summary level, this change addresses one 
commenter's concerns that summary level derivations could be affected 
by performance expectations (``other performance factors'') not 
expressed at the beginning of the appraisal period in the performance 
plan.
    Accordingly, OPM is adding definitions of additional performance 
element and non-critical element; revising procedures at 
Sec. 430.206(b) required to establish performance plans to clarify 
options and requirements; and making conforming changes in other 
definitions and provisions. (See Sec. 430.203) (additional performance 
element, non-critical element, performance plan, performance rating, 
progress review), Sec. 430.204(b)(3)(iii), Secs. 430.206 (b)(4) through 
(b)(7), Sec. 430.207(b), and Sec. 430.208(b).)
    2. Summary Rating. Two commenters suggested that the definition of 
``summary rating'' be retained. Another commenter suggested that either 
the definition be retained or all references to summary rating be 
removed. In current regulation at Sec. 430.203, the definition of 
summary rating requires a label describing an employee's overall level 
of performance. In practice, the term ``summary rating'' frequently 
means the label only, without reference to the appraisal process or 
documentation that generated it. OPM proposed to replace summary rating 
with performance rating, which requires only the appraisal of critical 
and non-critical elements in an employee's performance plan. To help 
minimize confusion in this area, OPM is removing references to summary 
rating. OPM also is replacing references to ``summary rating level'' 
with ``summary level.'' A summary level must be assigned with a 
performance rating is prepared as part of a rating of record. At other 
times, assigning a summary level is optional. (See Sec. 430.203 
(performance plan, rating of record); Sec. 430.204(b)(3)(iv); 
Secs. 430.208 (b), (c), and (d); and Sec. 531.504(b).)
    3. Other Terms. In several instances, commenters requested that 
definitions of terms such as ``team,'' ``informal recognition item,'' 
and the performance and summary levels themselves be provided in the 
regulations. Commenters also requested that--
     the regulations include precise requirements for 
performance standards;
     ``as soon as practicable'' be defined;
     the proposed provision at Sec. 531.409(d)(1)(v) for 
waiving the acceptable level of competence (ALOC) determination for 
labor representatives be permitted only for employees who are 
performing representational duties a full 100 percent of their time; 
and
     ``performance-based'' be added to modify ``actions based 
on unacceptable performance'' that must be provided for under 
Sec. 430.207(d)(2), which would have restricted the actions an agency 
could take to deal with a poor performer.

OPM is committed to emphasizing flexibility for the performance 
appraisal and award programs that will be established under these 
regulations. Accordingly, OPM is not adopting these suggestions.

C. Appraisal Program Procedures

    A number of commenters suggested restoring or adding procedural 
requirements within an appraisal program, such as--
     requiring paper copies of performance plans and ratings of 
record;
     requiring a minimum appraisal period of at least 90 days;
     requiring close-out ratings;
     specifying how to treat employees on detail;
     coordinating the assignment of summary levels between 
programs to assure equitable distribution of rewards; and
     establishing specific requirements and criteria for 
granting quality step increases under appraisal programs that do not 
use a Level 5 summary.

OPM believes that agencies should have the flexibility and authority to 
design their own means of addressing these procedures so that they fit 
their work technologies or cultures well. Consequently, OPM is not 
adopting these suggestions.
    Five commenters urged OPM to reconsider removing the requirement to 
assist employees whose performance is better than ``Unacceptable,'' but 
not ``Fully Successful'' (or equivalent). OPM had removed the 
requirement on the basis that it went further than the statute required 
and that agencies would have the full discretion to provide such 
assistance without a Governmentwide regulation. However, OPM agrees 
that a commitment to improving performance includes assisting a 
marginal performer. Accordingly, OPM is adding language to emphasize 
that agencies should offer assistance to employees whose performance is 
less than ``Fully Successful'' (or equivalent). (See Sec. 430.207(c).)
    Some commenters suggested that the proposed provision to permit the 
delay of an acceptable level of competence (ALOC) determination for 
employees completing an opportunity to improve or under notice of a 
performance-based action to be taken under 5 CFR part 432 or 752 is 
unfair to employees whose performance is less than ``Fully Successful'' 
but better than ``Unacceptable.'' These marginal performers would not 
have access to such a delay and, upon improvement to the ``Fully 
Successful'' level, to a retroactive within-grade increase. Thus, those 
whom management deemed to be performing at an unacceptable level would 
be endowed with greater rights than those whose performance is somewhat 
better, thereby creating an inequity in the application of the law.
    OPM agrees. The proposed regulation does not further our policy 
objectives. All employees whose performance is deemed less than ``Fully 
Successful'' should be treated equally for ALOC determinations. No 
group of less than ``Fully Successful'' performers should be granted 
advantage over any others. Accordingly, these final regulations do not 
include the provision at Sec. 531.409(c) as described above for 
delaying the ALOC determination. (See Sec. 531.409 (amendments to 
paragraphs (c)(2) through (c)(3) as proposed, withdrawn).)
    Four commenters addressed the provision requiring agencies to 
communicate to employees about relevant parts of applicable performance 
management systems and programs. All stressed, to varying degrees, the 
importance of training and the concern that OPM's omitting specific 
mention of it would send inappropriate signals about its importance, if 
not necessity, in implementing effective systems and programs. One 
commenter specifically recommended that OPM re-insert the training 
requirement. OPM is not adopting this suggestion because we had 
proposed to remove the training requirement to allow agencies the 
flexibility to use resources in addition to formal training funds to 
communicate system and program operations to supervisors and employees. 
OPM recognizes, however, that while formal training is rarely 
sufficient, it often is necessary to ensure adequate communication. 
Accordingly, OPM is adding a specific reference to formal training as 
an example of communicating to employees and supervisors about the 
relevant parts of applicable appraisal systems and programs and award 
programs. (See Sec. 430.209(c) and Sec. 451.106(c).)

[[Page 43941]]


D. Forced Distributions of Ratings

    Several commenters questioned OPM's proposal at Sec. 430.208(c) to 
permit agency appraisal programs to use ``forced distributions'' of 
summary levels for ratings of record and urged that OPM restore the 
existing prohibition on their use. These commenters believed that 
forced distributions were incompatible with effective performance 
management. OPM is persuaded by the arguments that criticized the use 
of forced distributions and is adopting the suggestions that the 
regulations continue to prohibit forced distributions, as the current 
regulations do at Sec. 430.206(d). Therefore, the proposed language at 
Sec. 430.208(c) is being changed from being a permissive authority. 
Under these final regulations, no  limitations on ratings at any level 
used by an appraisal program are permitted. The regulations still 
require that a summary level be derived solely from comparing 
performance to the pre-established standards required for critical and 
non-critical elements and not be based at all on additional performance 
elements. Definitions of additional performance element and non-
critical element are added or restored as outlined above to clarify 
this issue. OPM is permitting more flexibility to use non-critical 
elements to derive a summary level and in making performance 
distinctions above a Level 3 summary (``Fully Successful'' or 
equivalent), while heeding the commenters' calls for not permitting 
quotas for summary levels. However, OPM is also adding language to 
clarify that using methods where relative comparisons are made among 
individuals or groups, such as rank ordering or categorizing employees, 
may be used for purposes outside appraisal and assigning a summary 
level, such as making decisions about distributing rewards. (See 
Sec. 430.208(c).)

VII. Performance and Awards Data

    Nine commenters requested additional information and OPM guidance 
regarding how to report award and performance data to the Central 
Personnel Data File (CPDF) and clarification of the transfer of rating 
requirements when employees change agencies or leave Federal service.
    The inclusion of these reporting requirements in the performance 
management and award regulations is intended to reinforce their 
mandatory nature. However, official OPM policy on how agencies are to 
comply with these reporting requirements is contained in three OPM 
Operating Manuals. Policy and instructions on how to submit data to the 
CPDF are contained in FEDERAL WORKFORCE REPORTING SYSTEMS. Policy and 
instructions on how to process personnel actions, including appropriate 
nature-of-action codes (NOAC's) for awards, within-grade increases, and 
quality step increases, are in THE GUIDE TO PROCESSING PERSONNEL 
ACTIONS. Finally, policy and instructions on the transfer of 
performance records are addressed in the regulations at 5 CFR part 293 
and, along with records documentation requirements for the Official 
Personnel Folder (OPF), in THE GUIDE TO PERSONNEL RECORDKEEPING.
    The new regulations in part 451 remove the specific requirement to 
prepare an SF-50 for a time-off award. This is consistent with OPM's 
intent to review the data collection and reporting and documentation 
requirements for appraisal and awards in the coming months with the 
objective of simplifying requirements to the extent possible, given 
OPM's responsibilities for maintaining Governmentwide data in these 
areas. In the meantime, agencies are reminded that they should follow 
the reporting and documentation requirements specified in the relevant 
OPM Operating Manuals, which at this point still require SF-50's for 
all cash and time-off awards. Accordingly, the regulations are amended 
to clarify that transfer, documentation, and reporting of records must 
be done in compliance with these OPM Operating Manuals. Further, 
language is added to indicate where they can be obtained. (See 
Secs. 430.209(b) and (e); Secs. 451.106(e), (f), and (g); and 
Sec. 531.507(b).)

VIII. Miscellaneous, Technical, and Editorial Changes

    OPM is incorporating two structural changes in these final 
regulations. OPM is replacing text describing the summary levels 
available for program use with a table of permissible patterns of 
summary levels and explanatory text. In addition to providing a clearer 
presentation of what combinations of summary levels may be used, this 
table establishes a convenient pattern label (A through H) for possible 
reference in future data reporting instructions in the OPM Operating 
Manual, FEDERAL WORKFORCE REPORTING SYSTEMS. A conforming change 
requires agencies to specify in their systems which patterns, not 
levels, programs are permitted to adopt. (See Sec. 430.204(b)(3)(iv) 
and Secs. 430.208(d)(1) and (2).)
    OPM is revising the definitions of appraisal period and rating of 
record to accommodate their establishment under programs in accordance 
with an agency system. (See Sec. 430.203 (appraisal period, rating of 
record).)
    One commenter found it confusing that the definition of performance 
rating makes no mention of deriving a summary level. OPM had intended 
that silence on the derivation of a summary level would be taken to 
imply consent. To make our intent clearer, however, OPM is revising the 
definition of performance rating to specify explicitly that assigning a 
summary level is permitted. A summary level is required only for a 
rating of record. (See Sec. 430.203 (performance rating).)
    The definition of performance rating is being revised to include 
the new flexibility to use additional performance elements. (See 
Sec. 430.203 (Performance standard).)
    The provision requiring an appraisal program to establish a minimum 
period is being revised so that the minimum period applies to 
performance ratings only, rather than a more general performance 
determination. This change accommodates a commenter's suggestion to 
ensure that agencies retain the flexibility to make a determination 
about performance at any time, as permitted, for example, in an 
unacceptable performance determination. (See Sec. 430.207(a).)
    The provision prohibiting the assignment of a Level 1 
(``Unacceptable'') summary if all critical elements are rated ``Fully 
Successful'' (or equivalent) or better is being corrected to align with 
statute, which links unacceptable performance overall with an 
``Unacceptable'' (not just ``less than `Fully Successful' '') appraisal 
on one or more critical elements. (See Sec. 430.208(b)(1).)
    One commenter asserted that OPM must, but does not, allow itself to 
disapprove an appraisal system at Sec. 430.210. OPM does not 
contemplate such disapproval because an agency must have an approved 
appraisal system under which it can manage performance, take 
performance-based actions under 5 CFR part 432 or 752, and make other 
personnel decisions. In this respect, an appraisal system is unlike an 
award, which OPM may disapprove in some cases. This does not mean that 
OPM cannot withhold approval of a proposed appraisal system until it is 
made to conform to regulatory requirements; it only means that 
ultimately an appraisal system must be approved. Of course, OPM would 
work with the agency to ensure that such approval could be given. 
Accordingly, OPM is not adopting the suggestion.
    The provisions cross-referencing current regulation at Sec. 534.403 
are being revised to clarify that Senior Executive 

[[Page 43942]]
Service (SES) performance awards are authorized by 5 U.S.C. 5384, not 
subchapter I of chapter 45, United States Code. Awards to SES members 
for goals, objectives, and accomplishments attained through sustained 
superior performance of regular job duties and responsibilities are 
properly made under 5 U.S.C. 5384. (See Secs. 451.101(d) and 
451.104(a)(3).)
    One commenter suggested that the reference to ``productivity 
gainshares'' be removed from the definition of award proposed at 
Sec. 451.102. OPM is adopting this suggestion and is including 
``productivity gain'' among the contributions that can form the basis 
for granting an award. (See Sec. 451.102 (award) and 
Sec. 451.104(a)(1).)
    One commenter asked whether time-off and honorary awards should be 
excluded from tax withholding. OPM does not have the authority to 
determine the applicability of tax withholding or any other tax rules. 
The provision specifying that awards are subject to tax withholding has 
always been intended to serve as a reminder to agencies of their 
obligations to the Internal Revenue Service and other tax collecting 
authorities. Accordingly, it is being broadened to reflect the fact 
that non-cash awards may be considered supplemental wages and subject 
to applicable tax rules (See Sec. 451.104(c).)
    One commenter suggested that the awards regulations be amended to 
permit giving awards to private citizens and former Federal employees. 
OPM addressed a similar comment in the final regulations on incentive 
awards, pay, and leave published on June 27, 1995, at 60 FR 33097-
33098. In the supplementary information published with those 
regulations, OPM explained that awards authorized by chapter 45 of 
title 5, United States Code, may be granted only to Federal employees 
or former Federal employees for contributions made while in the Federal 
service. To accord with current regulation (as amended June 27, 1995) 
and statutory intent, OPM is extending the provision permitting 
agencies to grant awards to the legal heirs or estates of deceased 
employees to include former employees, but not private citizens. (See 
Sec. 451.104(e).)
    To protect the integrity of quality step increases (QSI's), OPM is 
adding a provision that requires an employee covered by an appraisal 
program not using a Level 5 (``Outstanding, or equivalent) summary to 
receive the highest rating of record that the program does use as well 
as to meet whatever eligibility criteria the agency establishes before 
the employee can receive a QSI. QSI's are intended to recognize or 
provide incentives for sustained, extraordinary performance. Granting 
one to an employee who has not demonstrated both by receiving the 
highest rating of record that can be achieved would be inconsistent 
with that intent. (See Sec. 531.504(b).)
    OPM is amending Sec. 531.507 to eliminate the requirement that 
agencies establish plans for granting quality step increases. Executive 
Order 11721 (Providing for Federal Pay Administration, May 23, 1973), 
as amended, which required that OPM establish such an agency 
responsibility, has been revoked. Accordingly, OPM may now deregulate 
further in this area and will no longer require these plans. Of course, 
agencies may continue to establish such plans. Additional references to 
Executive Order 11721 are also being removed. (See Sec. 531.404(a), 
Sec. 531.501, and Sec. 531.507 (paragraph (a) as proposed, removed).)
    OPM is not revising, as was proposed, the authority citation for 
part 531 and two of the provisions establishing principal authorities 
for regulating within-grade increases. The authority citation and the 
provision at Sec. 531.401(c) need not be revised because of final 
regulations on incentive awards, pay, and leave published on June 27, 
1995, at 60 FR 33097-33098. Those regulations corrected references in 
the authority citation and revised Sec. 531.401(c) to replace 
references to 5 U.S.C. 5335 and E.O. 11721 (revoked) with a general 
reference to 5 U.S.C. 5338. The provision at Sec. 531.401(d) need not 
be revised because the title of Public Law 103-89 is already identified 
properly. Accordingly, the authority citation as proposed is being 
revised to match current regulation (as amended June 27, 1995), and its 
instruction line revised to indicate no change. Also, the entire 
instruction to revise paragraphs (c) and (d) in Sec. 531.401 is being 
removed. (See part 531 (authority citation) and Sec. 531.401 
(amendments to paragraphs (c) and (d) as proposed, withdrawn).)
    The undesignated provision at the end of Sec. 531.409(d) is being 
designated, which requires redesignation of the rest of 
Sec. 531.409(d). (See Secs. 531.409 (d)(1) through (d)(2).)
    Finally, OPM received several comments suggesting minor editorial 
changes to improve understanding and readability of regulatory text. 
OPM is adopting many of them and making conforming changes. Also, minor 
editorial changes are being made to correct typographical errors or to 
clarify text: (See Sec. 430.102(b)(4); Sec. 430.201(b); 
Sec. 430.202(c); Secs. 430.204 (b) and (b)(3) through (b)(5); 
Sec. 430.205(b); Sec. 430.206(b)(6); Sec. 430.207(d); Sec. 430.208(b); 
part 451 (authority citation); Secs. 451.101 (a) and (c); Sec. 451.102 
(award program); Sec. 451.104(b); Secs. 451.105 (a) and (b), 
Secs. 451.106 (b) and (h); Secs. 451.107 (a) and (b); Sec. 451.201(b); 
Sec. 531.402(a); Sec. 531.403 (acceptable level of competence, 
equivalent increase) Sec. 531.409(d)(2); and Secs. 531.507 (a) and 
(b).)

IX. Requests for Guidance

    Fourteen commenters requested that OPM provide additional guidance 
on a variety of topics, including:
     how to proceed from a centralized to a decentralized 
approach to systems and programs;
     model appraisal and award programs and information about 
agency experience;
     examples of what the phrase ``or otherwise recorded'' 
might cover and how agencies can appropriately move to a paperless 
format;
     examples of Governmentwide regulations with compliance 
implications for designing an award program; and
     examples of criteria and procedures that could be used to 
identify ``sustained performance of high quality'' when determining 
eligibility for quality step increases under appraisal programs that do 
not use a Level 5 summary.

OPM will issue additional guidance in various formats on all of these 
issues. In particular, agency personnel directors will receive specific 
guidance for submitting agency system descriptions. OPM will also 
provide program designers with examples of the wide variety of programs 
that can be designed under a single, flexible agency appraisal system.

E.O. 12866, Regulatory Review

    This rule has been reviewed by the Office of Management and Budget 
in accordance with E.O. 12866.
Regulatory Flexibility Act

    I certify that these regulations will not have a significant 
economic impact on a substantial number of small entities because they 
apply only to Federal agencies and employees.

List of Subjects

5 CFR Parts 430 and 451

    Decorations, medals, awards, Government employees.

5 CFR Part 432

    Administrative practice and procedure, Government employees.

[[Page 43943]]


5 CFR Part 531

    Government employees, Law enforcement officers, Wages.

U.S. Office of Personnel Management.
James B. King,
Director.

    Accordingly, OPM is amending parts 430, 432, 451 and 531 of title 
5, Code of Federal Regulations, as follows:
PART 430--PERFORMANCE MANAGEMENT
    1. The authority citation for part 430 is revised to read as 
follows:

    Authority: 5 U.S.C. chapter 43.

    2. Subpart A, is revised to read as follows:

Subpart A--Performance Management

Sec.
430.101  Authority.
430.102  Performance management.

Subpart A--Performance Management


Sec. 430.101  Authority.

    Chapter 43 of title 5, United States Code, provides for the 
performance appraisal of Federal employees. This subpart supplements 
and implements this portion of the law.


Sec. 430.102  Performance management.

    (a) Performance management is the systematic process by which an 
agency involves its employees, as individuals and members of a group, 
in improving organizational effectiveness in the accomplishment of 
agency mission and goals.
    (b) Performance management integrates the processes in agency uses 
to--
    (1) Communicate and clarify organizational goals to employees;
    (2) Identify individual and, where applicable, team accountability 
for accomplishing organizational goals;
    (3) Identify and address developmental needs for individuals and, 
where applicable, teams;
    (4) Assess and improve individual, team, and organizational 
performance;
    (5) Use appropriate measures of performance as the basis for 
recognizing and rewarding accomplishments; and
    (6) Use the results of performance appraisal as a basis for 
appropriate personnel actions.
    3. Subpart B, consisting of Secs. 430.201 through 430.210, is 
revised to read as follows:

Subpart B--Performance Appraisal for General Schedule, Prevailing 
Rate, and Certain Other Employees

Sec.
430.201  General.
430.202  Coverage.
430.203  Definitions.
430.204  Agency performance appraisal system(s).
430.205  Agency performance appraisal program(s).
430.206  Planning performance.
430.207  Monitoring performance.
430.208  Rating performance.
430.209  Agency responsibilities.
430.210  OPM responsibilities.

Subpart B--Performance Appraisal for General Schedule, Prevailing 
Rate, and Certain Other Employees


Sec. 430.201  General.

    (a) Statutory authority. Chapter 43 of title 5, United States Code, 
provides for the establishment of agency performance appraisal systems 
and requires the Office of Personnel Management (OPM) to prescribe 
regulations governing such systems. The regulations in this subpart in 
combination with statute set forth the requirements for agency 
performance appraisal system(s) and program(s) for employees covered by 
subchapter I of chapter 43.
    (b) Savings provision. The performance appraisal system portion of 
an agency's Performance Management Plan approved by OPM as of August 
23, 1995 shall constitute an approved performance appraisal system 
under the regulations in this subpart until such time changes to the 
system are approved. No provision of the regulations in this subpart 
shall be applied in such a way as to affect any administrative 
proceeding related to any action taken under regulations in this 
chapter pending on August 23, 1995.


Sec. 430.202  Coverage.

    (a) Employees and agencies covered by statute. (1) Section 4301(1) 
of title 5, United States Code, defines agencies covered by this 
subpart.
    (2) Section 4301(2) of title 5, United States Code, defines 
employees covered by statute by this subpart. Besides General Schedule 
(GS/GM) and prevailing rate employees, coverage includes, but is not 
limited to, senior-level and scientific and professional employees paid 
under 5 U.S.C. 5376.
    (b) Statutory exclusions. This subpart does not apply to agencies 
or employees excluded by 5 U.S.C. 4301(1) and (2), the United States 
Postal Service, or the Postal Rate Commission.
    (c) Administrative exclusions. OPM may exclude any position or 
group of positions in the excepted service under the authority of 5 
U.S.C. 4301(2)(G). The regulations in this subpart exclude excepted 
service positions for which employment is not reasonably expected to 
exceed the minimum period established under Sec. 430.207(a) in a 
consecutive 12-month period.
    (d) Agency requests for exclusions. Heads of agencies or their 
designees may request the Director of OPM to exclude positions in the 
excepted service. The request must be in writing, explaining why the 
exclusion would be in the interest of good administration.
Sec. 430.203  Definitions.

    In this subpart, terms are defined as follows:
    Additional performance element means a dimension or aspect of 
individual, team, or organizational performance that is not a critical 
or non-critical element. Such elements are not used in assigning a 
summary level but, like critical and non-critical elements, are useful 
for purposes such as communicating performance expectations and serving 
as the basis for granting awards. Such elements may include, but are 
not limited to, objectives, goals, program plans, work plans, and other 
means of expressing expected performance.
    Appraisal means the process under which performance is reviewed and 
evaluated.
    Appraisal period means the established period of time for which 
performance will be reviewed and a rating of record will be prepared.
    Appraisal program means the specific procedures and requirements 
established under the policies and parameters of an agency appraisal 
system.
    Appraisal system means a framework of policies and parameters 
established by an agency as defined at 5 U.S.C. 4301(1) for the 
administration of performance appraisal programs under subchapter I of 
chapter 43 of title 5, United States Code, and this subpart.
    Critical element means a work assignment or responsibility of such 
importance that unacceptable performance on the element would result in 
a determination that an employee's overall performance is unacceptable.
    Non-critical element means a dimension or aspect of individual, 
team, or organizational performance, exclusive of a critical element, 
that is used in assigning a summary level. Such elements may include, 
but are not limited to, objectives, goals, program plans, work plans, 
and other means of expressing expected performance.
    Performance means accomplishment of work assignments or 
responsibilities.
    Performance appraisal system: See Appraisal system.
    Performance plan means all of the written, or otherwise recorded, 

[[Page 43944]]
    performance elements that set forth expected performance. A plan must 
include all critical and non-critical elements and their performance 
standards.
    Performance rating means the written, or otherwise recorded, 
appraisal of performance compared to the performance standard(s) for 
each critical and non-critical element on which there has been an 
opportunity to perform for the minimum period. A performance rating may 
include the assignment of a summary level (as specified in 
Sec. 430.208(d)).
    Performance standard means the management-approved expression of 
the performance threshold(s), requirement(s), or expectation(s) that 
must be met to be appraised at a particular level of performance. A 
performance standard may include, but is not limited to, quality, 
quantity, timeliness, and manner of performance.
    Progress review means communicating with the employee about 
performance compared to the performance standards of critical and non-
critical elements.
    Rating of record means the performance rating prepared at the end 
of an appraisal period for performance over the entire period and the 
assignment of a summary level (as specified in Sec. 430.208(d)). This 
constitutes the official rating of record referenced in this chapter.


Sec. 430.204  Agency performance appraisal system(s).

    (a) Each agency as defined at section 4301(1) of title 5, United 
States Code, shall develop one or more performance appraisal systems 
for employees covered by this subpart.
    (b) An agency appraisal system shall establish agencywide policies 
and parameters for the application and operation of performance 
appraisal within the agency for the employees covered by the system. At 
a minimum, a agency system shall--
    (1) Provide for--
    (i) Establishing employee performance plans, including, but not 
limited to, critical elements and performance standards;
    (ii) Communicating performance plans to employees at the beginning 
of an appraisal period;
    (iii) Evaluating each employee during the appraisal period on the 
employee's elements and standards;
    (iv) Recognizing and rewarding employees whose performance so 
warrants;
    (v) Assisting employees in improving unacceptable performance; and
    (vi) Reassigning, reducing in grade, or removing employees who 
continue to have unacceptable performance, but only after an 
opportunity to demonstrate acceptable performance.
    (2) Identify employees covered by the system;
    (3) Specify the flexibilities an agency program established under 
the system has for setting--
    (i) The length of the appraisal period (as specified in 
Sec. 430.206(a));
    (ii) The length of the minimum period (as specified in 
Sec. 430.207(a));
    (iii) The number(s) of performance levels at which critical and 
non-critical elements may be appraised (as specified in 
Sec. 430.206(b)(7) (i)(A) and (ii)(A)); and
    (iv) The pattern of summary levels that may be assigned in a rating 
of record (as specified in Sec. 420.208(d));
    (4) Include, where applicable, criteria and procedures for 
establishing separate appraisal programs under an appraisal system; and
    (5) Require that an appraisal program shall conform to statute, the 
regulations of this chapter, and the requirements established by the 
appraisal system.
    (c) Agencies are encouraged to involve employees in developing and 
implementing their system(s). When agencies involve employees, the 
method of involvement shall be in accordance with the law.


Sec. 430.205  Agency performance appraisal program(s).

    (a) Each agency shall establish at least one appraisal program of 
specific procedures and requirements to be implemented in accordance 
with the applicable agency appraisal system. At a minimum, each 
appraisal program shall specify the employees covered by the program 
and include the procedures and requirements for planning performance 
(as specified in Sec. 430.206), monitoring performance (as specified in 
Sec. 430.207), and rating performance (as specified in Sec. 430.208).
    (b) An agency program shall establish criteria and procedures to 
address employee performance for employees who are on detail, who are 
transferred, and for other special circumstances as established by the 
agency.
    (c) An agency may permit the development of separate appraisal 
programs under an appraisal system.
    (d) Agencies are encouraged to involve employees in developing and 
implementing their program(s). When agencies involve employees, the 
method of involvement shall be in accordance with law.


Sec. 430.206  Planning performance.

    (a) Appraisal period. (1) An appraisal program shall designate an 
official appraisal period for which a performance plan shall be 
prepared, during which performance shall be monitored, and for which a 
rating of record shall be prepared.
    (2) The appraisal period shall generally be designated so that 
employees shall be provided a rating of record on an annual basis. An 
appraisal program may provide that longer appraisal periods may be 
designated when work assignments and responsibilities so warrant or 
performance management objectives can be achieved more effectively.
    (b) Performance plan. (1) Agencies shall encourage employee 
participation in establishing performance plans.
    (2) Performance plans shall be provided to employees at the 
beginning of each appraisal period (normally within 30 days).
    (3) An appraisal program shall require that each employee be 
covered by an appropriate written, or otherwise recorded, performance 
plan based on work assignments and responsibilities.
    (4) Each performance plan shall include all elements which are used 
in deriving and assigning a summary level, including--
    (i) At least one critical element that addresses individual 
performance; and
    (ii) Any non-critical element(s).
    (5) Each performance plan may include one or more additional 
performance elements, which--
    (i) Are not used in deriving and assigning a summary level, and
    (ii) Are used to support performance management processes as 
described at Sec. 430.102(b).
    (6) An appraisal program shall establish how many and which 
performance levels may be used to appraise critical and non-critical 
elements.
    (7) Elements and standards shall be established as follows--
    (i) For a critical element--
    (A) At least two levels for appraisal shall be used with one level 
being ``Fully Successful'' or its equivalent and another level being 
``Unacceptable,'' and
    (B) A performance standard shall be established at the ``Fully 
Successful'' level and may be established at other levels.
    (ii) For non-critical elements, when established,--
    (A) At least two levels for appraisal shall be used, and
    (B) A performance standard(s) shall be established at whatever 
level(s) is appropriate.
    (iii) The absence of an established performance standard at a level 
specified in the program shall not preclude a determination that 
performance is at that level.

[[Page 43945]]



Sec. 430.207  Monitoring performance.

    (a) Minimum period. An appraisal program shall establish a minimum 
period of performance that must be completed before a performance 
rating may be prepared.
    (b) Ongoing appraisal. An appraisal program shall include methods 
for appraising each critical and non-critical element during the 
appraisal period. Performance on each critical and non-critical element 
shall be appraised against its performance standard(s). Ongoing 
appraisal methods shall include, but not be limited to, conducting one 
or more progress reviews during each appraisal period.
    (c) Marginal performance. Appraisal programs should provide 
assistance whenever performance is determined to be below ``Fully 
Successful'' or equivalent but above ``Unacceptable.''
    (d) Unacceptable performance. An appraisal program shall provide 
for--
    (1) Assisting employees in improving unacceptable performance at 
any time during the appraisal period that performance is determined to 
be unacceptable in one or more critical elements; and
    (2) Taking action based on unacceptable performance.


Sec. 430.208  Rating performance.

    (a) As soon as practicable after the end of the appraisal period, a 
written, or otherwise recorded, rating of record shall be given to each 
employee.
    (b) Rating of record procedures for each appraisal program shall 
include a method for deriving and assigning a summary level as 
specified in paragraph (d) of this section based on appraisal of 
performance on critical elements and, as applicable, non-critical 
elements.
    (1) A Level 1 summary (``Unacceptable'') shall be assigned if and 
only if performance on one or more critical elements is appraised as 
``Unacceptable.''
    (2) Consideration of non-critical elements shall not result in 
assigning a Level 1 summary (`` Unacceptable'').
    (c) The method for deriving and assigning a summary level may not 
limit or require the use of particular summary levels (i.e., establish 
a forced distribution of summary levels). However, methods used to make 
distinctions among employees or groups of employees such as comparing, 
categorizing, and ranking employees or groups on the basis of their 
performance may be used for purposes other than assigning a summary 
level including, but not limited to, award determinations and promotion 
decisions.
    (d) Summary levels. (1) An appraisal program shall use one of the 
following patterns of summary levels:

------------------------------------------------------------------------
                                          Summary level                 
        Pattern        -------------------------------------------------
                            1         2         3         4         5   
------------------------------------------------------------------------
A.....................        X   ........        X   ........  ........
B.....................        X   ........        X   ........        X 
C.....................        X   ........        X         X   ........
D.....................        X         X         X   ........  ........
E.....................        X   ........        X         X         X 
F.....................        X         X         X   ........        X 
G.....................        X         X         X         X   ........
H.....................        X         X         X         X         X 
------------------------------------------------------------------------

    (2) Summary levels shall comply with the following requirements:
    (i) Level 1 through Level 5 are ordered categories, with Level 1 as 
the lowest and Level 5 as the highest;
    (ii) Level 1 is ``Unacceptable'';
    (iii) Level 3 is ``Fully Successful'' or equivalent; and
    (iv) Level 5 is ``Outstanding'' or equivalent.
    (3) The term ``Outstanding'' shall be used only to describe a Level 
5 summary.
    (4) Summary levels (Level 1 through Level 5) shall be used to 
provide consistency in describing ratings of record and in referencing 
other related regulations (including, but not limited to, Sec. 351.504 
of this chapter).
    (e) A rating of record of ``Unacceptable'' (Level 1) shall be 
reviewed and approved by a higher level management official.
    (f) The rating of record or performance rating for a disabled 
veteran shall not be lowered because the veteran has been absent from 
work to seek medical treatment as provided in Executive Order 5396.
    (g) When a rating of record cannot be prepared at the time 
specified, the appraisal period shall be extended. Once the conditions 
necessary to complete a rating of record have been met, a rating of 
record shall be prepared as soon as practicable.
    (h) A performance rating may be prepared at such other times as an 
appraisal program may specify for special circumstances including, but 
not limited to, transfers and performance on details.


Sec. 430.209  Agency responsibilities.

    An agency shall--
    (a) Submit to OPM for approval a description of its appraisal 
system(s) as specified in Sec. 430.204(b) of this subpart, and any 
subsequent changes that modify any element of the agency's system(s) 
that is subject to a regulatory requirement in this part;
    (b) Transfer the employee's most recent ratings of record, and any 
subsequent performance ratings, when an employee transfers to another 
agency or is assigned to another organization within the agency in 
compliance with part 293 of this chapter and instructions in the OPM 
Operating Manual, THE GUIDE TO PERSONNEL RECORDKEEPING, for sale by the 
U.S. Government Printing Office, Superintendent of Documents;
    (c) Communicate with supervisors and employees (e.g., through 
formal training) about relevant parts of its performance appraisal 
system(s) and program(s);
    (d) Evaluate the performance appraisal system(s) and performance 
appraisal program(s) in operation in the agency;
    (e) Report ratings of record data to the Central Personnel Data 
File in compliance with instructions in the OPM Operating Manual, 
FEDERAL WORKFORCE REPORTING SYSTEMS, for sale by the U.S. Government 
Printing Office, Superintendent of Documents;
    (f) Maintain and submit such records as OPM may require; and
    (g) Take any action required by OPM to ensure conformance with 
applicable law, regulation, and OPM policy.


Sec. 430.210  OPM responsibilities.

    (a) OPM shall review and approve an agency's performance appraisal 
system(s).
    (b) OPM may evaluate the operation and application of an agency's 

[[Page 43946]]
    performance appraisal system(s) and program(s).
    (c) If OPM determines that an appraisal system or program does not 
meet the requirements of applicable law, regulation, or OPM policy, it 
shall direct the agency to implement an appropriate system or program 
or to take other corrective action.
    4. In Sec. 430.303, the last sentence of the definition of 
Performance Management Plan is revised to read as follows:


Sec. 430.303  Definitions.

* * * * *
    Performance Management Plan * * * The Performance Management Plan, 
which includes the SES performance appraisal plan, must be submitted to 
OPM for review and approval as required in Sec. 430.310 of this 
subpart.
* * * * *
    5. Section 430.310 is revised to read as follows:


Sec. 430.310  SES Performance appraisal systems.

    Agencies must submit proposed SES performance appraisal plans to 
OPM for approval as part of Performance Management Plans in accordance 
with provisions of this subpart.
    6. Subpart D [Reserved], and Subpart E, consisting of Secs. 430.501 
through 430.506, are removed.

PART 432--PERFORMANCE BASED REDUCTION IN GRADE AND REMOVAL ACTIONS

    7. The authority citation for part 432 continues to read as 
follows:

    Authority: 5 U.S.C. 4303, 4305.

    8. In Sec. 432.103, paragraph (b) is revised to read as follows:


Sec. 432.103  Definitions.

* * * * *
    (b) Critical element means a work assignment or responsibility of 
such importance that unacceptable performance on the element would 
result in a determination that an employee's overall performance is 
unacceptable.
* * * * *

PART 451--AWARDS

    9. The title of part 451 is revised to read as follows:

PART 451--AWARDS

    10. The authority citation for part 451 is revised to read as 
follows:

    Authority: 5 U.S.C. 4302, 4501-4509; E.O. 11438, 12828.

    11. Subpart A, consisting of Secs. 451.101 through 451.107, is 
revised to read as follows:

Subpart A--Agency Awards

Sec.
451.101  Authority and coverage.
451.102  Definitions.
451.103  Agency award program(s).
451.104  Awards.
451.105  Award restrictions.
451.106  Agency responsibilities.
451.107  OPM responsibilities.

Subpart A--Agency Awards


Sec. 451.101  Authority and coverage.

    (a) Chapter 45 of title 5, United States Code authorizes agencies 
to pay a cash award to, grant time-off to, and incur necessary expense 
for the honorary recognition of, an employee (individually or as a 
member of a group) and requires the Office of Personnel Management to 
prescribe regulations governing such authority. Chapter 43 of title 5, 
United States Code, provides for recognizing and rewarding employees 
whose performance so warrants. The regulations in this subpart, in 
combination with chapters 43 and 45 of title 5, United States Code, and 
any other applicable law, establish the requirements for agency award 
programs.
    (b) Section 4 of E.O. 11438 (Prescribing Procedures Governing 
Interdepartmental Cash Awards to the Members of the Armed Forces, 
December 3, 1968) requires the Office of Personnel Management to 
prescribe procedures for covering the cost of a cash award recommended 
by more than one agency for a member of the armed forces for the 
adoption or use of a suggestion, invention, or scientific achievement. 
Section 1 of E.O. 12828 (Delegation of Certain Personnel Management 
Authorities, January 5, 1993) delegates to the Office of Personnel 
Management the authority of the President to permit performance-based 
cash awards under 5 U.S.C. 4505a to be paid to categories of employees 
who would not be eligible otherwise.
    (c) This subpart applies to employees as defined by section 2105 
and agencies as defined by section 4501 title 5, United States Code, 
except as provided in Secs. 451.105 and 451.201(b).
    (d) For the regulatory requirements for granting performance awards 
to Senior Executive Service (SES) employees under 5 U.S.C. 5384, refer 
to Sec. 534.403 of this chapter.


Sec. 451.102  Definitions.

    Award means something bestowed or an action taken to recognize and 
reward individual or team achievement that contributes to meeting 
organizational goals or improving the efficiency, effectiveness, and 
economy of the Government or is otherwise in the public interest. Such 
awards include, but are not limited to, employee incentives which are 
based on predetermined criteria such as productivity standards, 
performance goals, measurement systems, award formulas, or payout 
schedules.
    Award program means the specific procedures and requirements 
established by an agency or a component of an agency for granting 
awards under subchapter I of chapter 43 and subchapter I of chapter 45 
of title 5, United States Code, and this subpart.


Sec. 451.103  Agency award program(s).

    (a) Agencies shall develop one or more award programs for employees 
covered by this subpart.
    (b) Agencies are encouraged to involve employees in developing such 
programs. When agencies involve employees, the method of involvement 
shall be in accordance with law.
    (c) An agency award program shall provide for--
    (1) Obligating funds consistent with applicable agency financial 
management controls and delegations of authority; and
    (2) Documenting justification for awards that are not based on a 
rating of record (as defined in Sec. 430.20 of this chapter).


Sec. 451.104  Awards.

    (a) An agency may grant a cash, honorary, or informal recognition 
award, or grant time-off without charge to leave or loss of pay 
consistent with chapter 45 of title 5, United States Code, and this 
part to an employee, as an individual or member of a group, on the 
basis of--
    (1) A suggestion, invention, superior accomplishment, productivity 
gain, or other personal effort that contributes to the efficiency, 
economy, or other improvement of Government operations or achieves a 
significant reduction in paperwork;
    (2) A special act or service in the public interest in connection 
with or related to official employment; or
    (3) Performance as reflected in the employee's most recent rating 
of record (as defined in Sec. 430.203 of this chapter), except that 
performance awards may be paid to SES employees only under Sec. 534.403 
of this chapter and not on the basis of this subpart.
    (b) A cash award under this subpart is a lump sum payment and is 
not basic pay for any purpose.
    (c) An award is subject to applicable tax rules, such as 
withholding.

[[Page 43947]]

    (d) When an award is approved for--
    (1) An employee of another agency, the benefiting agency shall make 
arrangements to transfer funds to the employing agency to cover the 
award. If the administrative costs of transferring funds would exceed 
the amount of the award, the employing agency shall absorb the award 
costs and pay the award; and
    (2) A member of the armed forces for a suggestion, invention, or 
scientific achievement, arrangements shall be made to transfer funds to 
the agency having jurisdiction over the member in accordance with E.O. 
11438, ``Prescribing Procedures Governing Interdepartmental Cash Awards 
to the Members of the Armed Forces''.
    (e) An award may be granted to a separated employee or the legal 
heir(s) or estate of a deceased employee.
    (f) A time-off award granted under this subpart shall not be 
converted to a cash payment under any circumstances.
    (g) When granting an award on the basis of a rating of record that 
is paid as a percentage of basic pay under 5 U.S.C. 4505a(a)(2)(A), the 
rate of basic pay used shall be determined without taking into account 
any locality-based comparability payment under 5 U.S.C. 5304 or an 
interim geographic adjustment or special law enforcement adjustment 
under section 302 or 404 of the Federal Employees Pay Comparability Act 
of 1990, respectively.


Sec. 451.105  Award restrictions.

    (a) In accordance with 5 U.S.C. 4508, agencies shall not grant 
awards under this subpart during a Presidential election period to 
employees who are--
    (1) In a Senior Executive Service position and not a career 
appointee as defined under 5 U.S.C. 3132(a)(4); or
    (2) In an excepted service position of a confidential or policy-
determining character (schedule C).
    (b) In accordance with 5 U.S.C. 4509, agencies shall not grant cash 
awards under this subpart to employees appointed by the President with 
Senate confirmation who serve in--
    (1) An Executive Schedule position, or
    (2) A position for which pay is set in statute by reference to a 
section or level of the Executive Schedule.


Sec. 451.106  Agency responsibilities.

    (a) In establishing and operating its award program(s), an agency 
shall assure that a program does not conflict with or violate any other 
law or Governmentwide regulation.
    (b) When a recommended award would grant more than $10,000 to an 
individual employee, the agency shall submit the recommendation to OPM 
for approval.
    (c) Agencies shall provide for communicating with employees and 
supervisors (e.g., through formal training) about the relevant parts of 
their award program(s).
    (d) Agencies shall evaluate their award program(s).
    (e) Agencies shall document all cash and time off awards in 
compliance with instructions in the OPM Operating Manual, THE GUIDE TO 
PROCESSING PERSONNEL ACTIONS, for sale by the U.S. Government Printing 
Office, Superintendent of Documents.
    (f) Agencies shall file award documents in the Official Personnel 
Folder in compliance with instructions in the OPM Operating Manual, THE 
GUIDE TO PERSONNEL RECORDKEEPING, for sale by the U.S. Government 
Printing Office, Superintendent of Documents.
    (g) Agencies shall report award data to the Central Personnel Data 
File in Compliance with instructions in the OPM Operating Manual, 
FEDERAL WORKFORCE REPORTING SYSTEMS, for sale by the U.S. Government 
Printing Office, Superintendent of Documents.
    (h) Agencies shall maintain and submit to OPM such records as OPM 
may require.
    (i) Agencies shall give due weight to an award granted under this 
part in qualifying and selecting an employee for promotion as provided 
in 5 U.S.C. 3362.
    (j) Agencies shall take any corrective action required by OPM to 
ensure conformance with applicable law, regulation, and OPM policy.


Sec. 451.107  OPM responsibilities.

    (a) OPM shall review and approve or disapprove each agency 
recommendation for an award that would grant more than $10,000 to an 
individual employee.
    (b) When a recommended award would grant more than $25,000 to an 
individual employee, OPM shall review the recommendation and submit it 
(if approved) to the President for final approval.
    (c) OPM shall review and approve or disapprove a request from the 
head of an Executive agency to extend the provisions of 5 U.S.C. 4505a 
to any category of employees within that agency that would not be 
covered otherwise.
    (d) OPM may evaluate the operation and application of an agency's 
award program(s).
    12. In Sec. 451.201, the second introductory paragraph (a) is 
removed, paragraph (b), (c), and (d) are redesignated as paragraphs 
(c), (d), and (e) respectively, and a new paragraph (b) is added to 
read as follows:


Sec. 451.201  Authority and coverage.

* * * * *
    (b) Awards granted under paragraph (a) of this section are subject 
to the restrictions as specified in Sec. 451.105.
* * * * *
    13. Subpart C, consisting of Secs. 451.301 through 451.307, is 
removed.

PART 531--PAY UNDER THE GENERAL SCHEDULE

    14. The authority citation for part 531 continues to read as 
follows:

    Authority: 5 U.S.C. 5115, 5307, and 5338; sec. 4 of Pub. L. 103-
89, 107 Stat. 981; and E.O. 12748, 56 FR 4521, 3 CFR, 1991 Comp., p. 
316;
    Subpart A also issued under 5 U.S.C. 5304, 5305, and 5553; 
section 302 of the Federal Employees Pay Comparability Act of 1990 
(FEPCA), Pub. L. 101-509, 104 Stat. 1462; and E.O. 12786, 56 FR 
67453, 3 CFR, 1991 Comp., p. 376;
    Subpart B also issued under 5 U.S.C. 5303(g), 5333, 5334(a), and 
7701(b)(2);
    Subpart C also issued under 5 U.S.C. 5304, 5305, and 5553; 
sections 302 and 404 of FEPCA, Pub. L. 101-509, 104 Stat. 1462 and 
1466; and section 3(7) of Pub. L. 102-378, 106 Stat. 1356;
    Subpart D also issued under 5 U.S.C. 5335(g) and 7701(b)(2);
    Subpart E also issued under 5 U.S.C. 5336;
    Subpart F also issued under 5 U.S.C. 5304, 5305(g)(1), and 5553; 
and E.O. 12883, 58 FR 63281, 3 CFR, 1993 Comp., p. 682.

    15. In Sec. 531.402, paragraph (a) is revised to read as follows:


Sec. 531.402  Employee coverage.

    (a) Except as provided in paragraph (b) of this section, this 
subpart applies to employees who occupy permanent positions classified 
and paid under the General Schedule and who are paid less than the 
maximum rate of their grades.
* * * * *
    16. In Sec. 531.403, the definitions of acceptable level of 
competence, critical element, and equivalent increase are revised to 
read as follows:


Sec. 531.403  Definitions.

* * * * *
    Acceptable level of competence means performance by an employee 
that warrants advancement of the employee's rate of basic pay to the 
next higher step of the grade or the next higher rate within the grade 
(as defined in this section) of his or her position, subject to the 
requirements of Sec. 531.404 of this subpart, as determined by the head 
of the agency.
* * * * *

[[Page 43948]]

    Critical element has the meaning given that term in Sec. 430.203 of 
this chapter.
* * * * *
    Equivalent increase means an increase or increases in an employee's 
rate of basic pay equal to or greater than the difference between the 
employee's rate of basic pay and the rate of pay for the next higher 
step of that grade or the next higher rate within the grade (as defined 
in this section).
* * * * *
    17. In Sec. 531.404, the introductory text, and the introductory 
text of paragraph (a) are revised to read as follows:


Sec. 531.404  Earning within-grade increase.

    An employee paid at less than the maximum rate of the grade of his 
or her position shall earn advancement in pay to the next higher step 
of the grade or the next higher rate within the grade (as defined in 
Sec. 531.403) upon meeting the following three requirements established 
by law:
    (a) The employee's performance must be at an acceptable level of 
competence, as defined in this subpart. To be determined at an 
acceptable level of competence, the employee's most recent rating of 
record (as defined in Sec. 430.203 of this chapter) shall be at least 
Level 3 (``Fully Successful'' or equivalent).
* * * * *
    18. Section 531.408 is removed and reserved.


Sec. 531.408  [Reserved].

    19. In Sec. 531.409, paragraphs (b) and (d) are revised to read as 
follows:


Sec. 531.409  Acceptable level of competence determinations.

* * * * *
    (b) Basis for determination. When applicable, an acceptable level 
of competence determination shall be based on a current rating of 
record made under part 430, subpart B, of this chapter. For those 
agencies not covered by chapter 43 of title 5, United States Code, and 
for employees in positions excluded from 5 U.S.C. 4301, an acceptable 
level of competence determination shall be based on performance 
appraisal requirements established by the agency. If an employee has 
been reduced in grade because of unacceptable performance and has 
served in one position at the lower grade for at least the minimum 
period established by the agency, a rating of record at the lower grade 
shall be used as the basis for an acceptable level of competence 
determination.
* * * * *
    (d) Waiver of requirement for determination. (1) An acceptable 
level of competence determination shall be waived and a within-grade 
increase granted when an employee has not served in any position for 
the minimum period under an applicable agency performance appraisal 
program during the final 52 calendar weeks of the waiting period for 
one or more of the following reasons:
    (i) Because of absences that are creditable service in the 
computation of a waiting period or periods under Sec. 531.406 of this 
subpart;
    (ii) Because of paid leave;
    (iii) Because the employee received service credit under the back 
pay provisions of subpart H of part 550 of this chapter;
    (iv) Because of details to another agency or employer for which no 
rating has been prepared;
    (v) Because the employee has had insufficient time to demonstrate 
an acceptable level of competence due to authorized activities of 
official interest to the agency not subject to appraisal under part 430 
of this chapter (including, but not limited to, labor-management 
partnership activities under section 2 of Executive Order 12871 and 
serving as a representative of a labor organization under chapter 71 of 
title 5, United States Code); or
    (vi) Because of long-term training.
    (2) When an acceptable level of competence determination has been 
waived and a within-grade increase granted under paragraph (d)(1) of 
this section, there shall be a presumption that the employee would have 
performed at an acceptable level of competence had the employee 
performed the duties of his or her position of record for the minimum 
period under the applicable agency performance appraisal program.
* * * * *
    20. Section 531.501 is revised to read as follows:


Sec. 531.501  Applicability.

    This subpart contains regulations of the Office of Personnel 
Management to carry out section 5336 of title 5, United States Code, 
which authorizes the head of an agency, or another official to whom 
such authority is delegated, to grant quality step increases.
    21. Section 531.503 is revised to read as follows:


Sec. 531.503  Purpose of quality step increases.

    The purpose of quality step increases is to provide appropriate 
incentives and recognition for excellence in performance by granting 
faster than normal step increases.
    22. Section 531.504 is revised to read as follows:


Sec. 531.504  Level of performance required for quality step increase.

    A quality step increase shall not be required but may be granted 
only to--
    (a) An employee who receives a rating of record at Level 5 
(``Outstanding'' or equivalent), as defined in part 430, subpart B, of 
this chapter; or
    (b) An employee who, when covered by a performance appraisal 
program that does not use a Level 5 summary--
    (1) Receives a rating of record at the highest summary level used 
by the program; and
    (2) Demonstrates sustained performance of high quality 
significantly above that expected at the ``Fully Successful'' level in 
the type of position concerned, as determined under performance-related 
criteria established by the agency.
    23. Section 531.506 is revised to read as follows:


Sec. 531.506  Effective date of a quality step increase.

    The quality step increase should be made effective as soon as 
practicable after it is approved.
    24. Section 531.507 is revised to read as follows:


Sec. 531.507  Agency responsibilities.

    (a) Agencies shall maintain and submit to OPM such records as OPM 
may require.
    (b) Agencies shall report quality step increases to the Central 
Personnel Data File in compliance with instructions in the OPM 
Operating Manual, FEDERAL WORKFORCE REPORTING SYSTEMS, for sale by the 
U.S. Government Printing Office, Superintendent of Documents.
    25. Section 531.508 is revised to read as follows:


Sec. 531.508  Evaluation of quality step increase authority.

    The Office of Personnel Management may evaluate an agency's use of 
the authority to grant quality step increases. The agency shall take 
any corrective action required by the Office.

[FR Doc. 95-20745 Filed 8-22-95; 8:45 am]
BILLING CODE 6325-01-M