[Federal Register Volume 65, Number 102 (Thursday, May 25, 2000)]
[Rules and Regulations]
[Pages 33738-33741]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-13053]


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OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 317

RIN 3206-A158


Employment in the Senior Executive Service

AGENCY: Office of Personnel Management.

ACTION: Final rule.

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SUMMARY: The Office of Personnel Management (OPM) is amending its 
regulations governing career and limited appointments to the Senior 
Executive Services (SES). The amended regulations emphasize the 
importance of executive leadership qualifications in agency SES 
selection criteria, strengthen merit principles, and increase SES 
staffing flexibilities to help agencies recruit the brightest and most 
diverse executive cadre possible.

EFFECTIVE DATE: June 26, 2000.

FOR FURTHER INFORMATION CONTACT: Daliza Salas (202-606-1274, email 
[email protected]) or Marcia Staten (202-606-1832, email 
[email protected]).

SUPPLEMENTARY INFORMATION:  The success of the Senior Executive Service 
(SES) rests on the ability of agencies to employ highly competent, 
motivated, and diverse professionals dedicated to public service who 
have the requisite leadership expertise to meet the challenges facing 
the Government and the Nation now and into the future.
    The final regulations and accompanying guidance to agencies are an 
outcome of extensive discussions with stakeholders about improving the 
SES. These discussions challenged stakeholders to think about the 
future and whether the way we develop, select, and manage the SES cadre 
produces the kind of executives the Government needs to meet the 
leadership challenges of the 21st century. Although stakeholder views 
varied widely, there was consensus on many ideas, including increasing 
agency flexibilities for SES staffing. Specifically, there was general 
support for improving the SES selection process to ensure that 
leadership and executive qualifications are the major selection 
criteria, reducing the paperwork burden on applicants and agencies, 
considering options for delegating QRB administration, and increasing 
agency authority to make limited terms appointments.
    On July 30, 1999, OPM published a proposed rule in the Federal 
Register (64 CFR 41334) to amend the regulations governing career and 
limited appointments to the Senior Executive Service (SES) and 
Qualifications Review Board (QRB) certification. We received 24 written 
comments during the comment period: 16 from departments and agencies, 4 
from professional organizations, and 4 from individuals. There was 
broad support for the changes, although some respondents had serious 
reservations about the proposal to delegate QRB administration to 
individual agencies via delegation agreement.
    In addition to these regulatory changes, we have modified internal 
procedures and other requirements to streamline the SES application 
process, reduce paperwork requirements, and improve the QRB 
certification process. These modifications provide alternative methods 
for documenting executive qualifications for presentation to QRBs and 
improved guidance and instructions to QRBs to ensure that members fully 
understand their role and responsibilities. We have also suggested ways 
for agencies to improve their recruitment and selection procedures. 
OPM's administrative modifications and the suggested changes at the 
agency level will help agencies and candidates focus on substance 
rather than process and format, and they reinforce the goal of 
achieving a highly-qualified, diverse SES corps. We have summarized 
these procedural modifications and flexibilities in supplemental 
guidance to agencies.

Emphasis on Executive Leadership

    The key characteristic of an SES position is executive leadership, 
and therefore selection criteria should focus primarily on leadership 
qualifications. Further, the law at 5 U.S.C. 3393 requires agency 
Executive Resources Boards to conduct the merit staffing process for 
career entry into the SES, including reviewing the executive 
qualifications of each career SES candidate.
    During discussions on improving the SES, stakeholders confirmed 
that, in many agencies, the selection criteria focuses mainly on 
candidates' professional or technical qualifications, and therefore 
consideration of executive qualifications is not getting the full 
attention intended by the SES legislation. To strengthen that focus and 
encourage agencies to fully integrate consideration of executive 
leadership qualifications into their selection processes, the proposed 
regulations amended the current provisions to incorporate the statutory 
requirements.
    Most commenters supported the proposal. One agency felt there was 
not pressing need to revise the current wording, as what constitutes 
SES qualifications changes over time with new studies and emerging 
approaches and theories. We do not agree, given that the statute 
requires selection based on executive qualifications and our findings 
that many agencies are not considering executive expertise in their SES 
selections. An August 1999 survey of SES members reinforces these 
findings. Only 56 percent of the senior executives responding to the 
survey said that their agencies strongly emphasize executive 
qualifications in evaluating applications and use them as key factor in 
determining who is selected for the SES. Further, our research tells us 
that the emphasis on executive skills and expertise is even more 
critical than in the past and will continue to be of primary importance 
in the future. The survey findings supported this as well. When asked 
to rank qualifications for SES positions now and in five years, 
respondents rated executive qualifications as more important than 
technical qualifications today and even more important in five years.
    One agency, while not opposing the proposal, was concerned that it 
might lead to overly prescriptive procedural requirements. This is not 
our intent. Agencies will continue to have the latitude to design merit 
staffing processes to meet their unique mission requirements, within 
the framework of

[[Page 33739]]

law and regulations, including determining how to ensure that SES 
selections are based on consideration of executive qualifications.
    One agency objected to the requirement that the appointing 
authority certify the candidate's executive and technical 
qualifications. The certification requirement is not new--it is 
included in current regulations at Sec. 317.502(b). The same agency 
recommended adding a statement that the appointing authority can 
approve the appointment of a candidate who does not meet the executive 
qualifications but has special or unique qualities that indicate a 
likelihood of executive success. Selection of a candidate on this basis 
is already provided in statute (5 U.S.C. 3393(c)(2)) and current 
regulations (Sec. 317.502(c)).
    Two professional organizations recommended that we require equal 
consideration of executive and technical qualifications to ensure that 
technical qualifications are not favored over executive qualifications. 
Since the statute does not make this specification, we have not adopted 
the recommendation. Further, ``equal consideration'' would indicate 
that technical qualifications should carry the same weight in SES 
selections, which is not the case. Executive qualifications should be 
the primary factor. The final regulations concerning executive 
qualifications are adopted as proposed in order to reinforce the 
primacy of executive expertise and encourage agencies to fully 
integrate consideration of executive leadership qualifications into 
their selection processes.
    Three professional organizations recommended additional language to 
emphasize that recruitment and selection for initial SES career 
appointments should be achieved from the brightest and most diverse 
executive cadre possible. We have added language to the final 
regulations that stresses the importance of reaching out to women, 
minorities, and people with disabilities in SES recruitment and 
selection. We have also addressed this in the supplemental guidance to 
agencies on the staffing flexibilities and procedural modifications.

Delegating QRB Administration

    During stakeholder discussions on improving the SES, several 
agencies recommended delegating QRB administration to agencies to give 
them more flexibility to manage their executive resources. Some were 
critical of the paperwork and procedures connected with QRB 
certification and felt that agencies could make process improvements if 
the authority were delegated. OPM agreed to consider the 
recommendation, incorporated it into the proposed regulations, and 
formally asked for stakeholder views. The proposed regulatory changes 
provided for delegation of QRB administration to agencies, on an 
agency-by-agency basis via individual delegation agreements, provided 
that the focus on leadership and executive expertise would be 
maintained and merit system principles would be preserved.
    Two-thirds of those commenting on the proposal either supported or 
voiced no objections to the proposal. However, very few indicated an 
interest in pursuing a delegation agreement. Supporters favored the 
increased flexibility to manage and be held accountable for the SES 
appointment process. Another commented that agencies have long records 
of merit-based selections of individuals with well-demonstrated SES 
qualifications.
    A few supporters had some reservations. One stated that delegation 
might create undue pressure on QRB members to certify candidates. 
Another commented that fairness might be jeopardized under delegation 
and politicization heightened. A third commenter said that more benefit 
could be obtained through streamlining paperwork requirements than 
through QRB delegation.
    One agency, three professional organizations, and four individuals 
strongly opposed the proposal. Key reasons given were serious concerns 
about the ability of agencies to guarantee an independent peer review, 
the potential for abuse of the merit staffing process and 
politicization of the career SES, and the possible adverse impact on 
efforts to increase the diversity of the SES cadre. In addition, one 
professional organization questioned OPM's authority to delegate QRB 
administration. Regarding this issue, we have determined that OPM's 
broad statutory authority at 5 U.S.C. 1104 for delegating personnel 
management functions permits the delegation of QRB administration.
    Although more respondents supported the proposal than opposed it, 
the arguments against delegation were substantive and persuasive. The 
concerns about preserving the independence of QRB certification and the 
perceived potential for politicization of the career appointment 
process expressed by those opposed to the proposal outweighed comments 
in favor of delegation. Since the supporters did not offer compelling 
reasons for proceeding with the proposal, the final regulations do not 
include the proposed amendment to Sec. 317.502 regarding QRB 
delegation.
    We will strengthen efforts to encourage senior executives from 
diverse backgrounds to serve as QRB members to ensure that the boards 
are representative of the Nation's diversity. In addition, we have 
modified the procedures and streamlined paperwork associated with QRB 
administration to address concerns that the process focuses on paper 
over substance and to provide more specific and detailed feedback to 
agencies on QRB disapprovals.

Noncareer Conversion Restriction

    The current regulation at Sec. 317.502(e) precludes QRB 
certification of a noncareer SES employee for career appointment in the 
employee's current position or a successor to that position, because 
there is no bona-fide vacancy for which to hold competition. This 
regulation was intended to preserve the merit principle of fair and 
open competition in merit selections. Since the regulation was 
promulgated, however, questions have arisen about the definition of 
``noncareer SES employee.'' The proposed regulation strengthens and 
clarifies the intent of the current regulation by expanding coverage to 
noncareer-type employees, including noncareer SES appointees and 
Schedule C appointees, or the equivalent. This generally refers to 
individuals in or from positions of a confidential, policy-determining, 
or policy-advocating nature.
    Commenters concurred with the proposed revision. One agency 
recommended adding certain limited appointees to those considered to be 
noncareer-type employees. These would be limited appointees not 
appointed under an agency's delegated authority at Sec. 317.601(c)(1), 
which restricts use of the authority to individuals with career or 
career-conditional appointments. Since limited appointees, regardless 
of the method of appointment, are not considered noncareer-type 
employees within the meaning intended by this provision, we are not 
adopting the recommendation.
    One agency recommended that we delete ``or equivalent'' and 
restrict coverage to noncareer SES and Schedule C appointees only. We 
believe the additional language is needed to cover other categories 
that might meet the intent of the provision, so we have not adopted 
this recommendation. The final regulations are adopted as proposed.

SES Probationary Period

    The proposal made two changes to the regulations governing the SES

[[Page 33740]]

probationary period. One would require agencies to assess the 
performance of new career appointees before the end of the probationary 
period and make an official determination that the appointee is 
performing at the level of excellence expected of a senior executive. 
The second change would require that, during the probationary period, 
agencies address the executive development activities outlined in 
development plans used to support QRB certification based on special 
and unique qualifications. Both requirements were an outcome of 
stakeholder discussions about making more effective use of the 
probationary period. Stakeholders had serious concerns about the lack 
of attention paid to performance during probation. They also felt that, 
when a QRB certifies candidates on the basis of special and unique 
qualifications, stronger oversight is needed to verify that the 
executive development activities promised by the agency are 
accomplished.
    There was overall support for the proposals. One agency, while 
supporting the concepts, opposed placing the provisions in regulation. 
The agency felt that agencies should be trusted to manage their own 
executive resources effectively under their own administrative 
authority. Another supported the concepts, but said that the means 
should be left to each agency. Another agency opposed the provision, 
stating that performance issues can be addressed through the 
performance management system. While these views have merit, most 
stakeholders indicated that something more is needed to reinforce the 
importance of paying attention to performance during probation.
    One professional organization recommended requiring training in 
succession planning and diversity leadership during probation. These 
are important issues, and we are using other venues to bring their 
importance to that attention of agency leadership and human resources 
directors. The training needs of individual appointees vary widely. 
While some may need training in succession planning or diversity 
leadership, there are other equally critical areas where training might 
be necessary, such as managing information technology or measuring 
business results. Agencies should have the flexibility to assess these 
needs and determine how to address them.
    Two agencies recommended that the appointing authority be allowed 
to delegate the certification responsibility, and we agree. The final 
regulations provide that the appointing authority, or his or her 
designee, must certify that the appointee performed at the level of 
excellence expected of a senior executive during the probationary 
period.

Pool of Limited Appointment Authorities

    The proposed regulations would increase the pool of limited 
appointment authorities currently available to agencies from 2 percent 
to 3 percent of their total SES allocation. Use of this pool authority 
is restricted to appointments of individuals with career or career-type 
appointments outside the SES.
    Most commenters supported this provision. One agency recommended 
that the pool be increased to 5 percent. One professional organization 
opposed the provision, stating that it would encourage and facilitate 
more temporary SES appointments and would jeopardize OPM's traditional 
oversight role. However, Congress intended that a number of 
appointments in the SES be temporary, and set a maximum of 5 percent of 
the Governmentwide SES allocation to prevent excessive use of the 
authority. Since the SES was established in 1978, no more than 2.5 
percent have been limited appointees, well within the congressional 
limit. Increasing the agency pool authority by 1 percent gives agencies 
some additional flexibility, while giving OPM enough reserves to 
address other limited appointment needs that cannot be met with the 
agencies' delegated authority. The final rule adopts the amendment as 
proposed.
    In exercising this delegated authority, agencies must continue to 
comply with all other statutory and regulatory provisions affecting 
limited appointments, e.g., that an appointment be made only to a 
general position; that the appointee meet the qualifications required 
for the position; and that the appointment is to a non-continuing, 
project-type position. OPM will continue to monitor use of this 
appointment authority to ensure compliance with the statutory 5 percent 
limit on SES limited appointments Governmentwide and that appointments 
are being made in accordance with statutory and regulatory 
requirements.

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 the 
regulations pertain only to Federal employees and agencies.

List of Subjects in 5 CFR Part 317

    Government employees.

Office of Personnel Management.
Janice R. Lachance,
Director.

    Accordingly, OPM is amending 5 CFR Part 317 as follows:

PART 317--EMPLOYMENT IN THE SENIOR EXECUTIVE SERVICE

    1. The authority citation for part 317 continues to read as 
follows:

    Authority: 5 U.S.C. 3392, 3393, 3393a, 3395, 3397, 3593 and 
3596.

Subpart E--Career Appointments

    2. Amend Sec. 317.501 by revising the section heading, the first 
sentence of paragraph (c)(2), and paragraph (c)(6), to read as follows:


Sec. 317.501  Recruitment and selection for initial SEC career 
appointment be achieved from the brightest and most diverse pool 
possible.

* * * * *
    (c) * * *
    (2) Provide that the ERB consider the executive and technical 
qualifications of each candidate, other than those found ineligible 
because they do not meet the requirements of the vacancy announcement. 
* * *
* * * * *
    (6) Provide that the appointing authority select from among the 
candidates identified as best qualified by the ERB and certify the 
candidate's executive and technical qualifications.
* * * * *

    3. Amend Sec. 317.502 by revising paragraph (e) to read as follows:


Sec. 317.502  Qualifications Review Board certification.

* * * * *
    (e) An action to convert a ``noncareer-type'' employee to a career 
SES appointment in the employee's current position or a successor to 
that position will not be forwarded to a QRB. A ``noncareer-type'' 
employee includes a noncareer SES appointee, a Schedule C appointee, or 
equivalent.
* * * * *

    4. Amend Sec. 317.403 by revising paragraph (a); redesignating 
paragraphs (b) through (f) as paragraphs (c) through (g), respectively; 
adding a new paragraph (b); and revising the last sentence in newly 
redesignated paragraph (f) to read as follows:


Sec. 317.503  Probationary period.

    (a) An individual's initial appointment as an SES career appointee

[[Page 33741]]

becomes final only after the individual has served a 1-year 
probationary period as a career appointee; there has been an assessment 
of the appointee's performance during the probationary period; and the 
appointing authority, or his or her designee, has certified that the 
appointee performed at the level of excellence expected of a senior 
executive during the probationary period.
    (b) When a career appointee's executive qualification have been 
certified by a Qualifications Review Board on the basis of special or 
unique qualities, as described in Sec. 317.502(c), the probationary 
assessment must address any executive development activities the agency 
identified in support of the request for QRB certification.
* * * * *
    (f) * * * The individual, however, need not be recertified by a QRB 
unless the individual was removed for performance or disciplinary 
reasons.
* * * * *

    5. In Subpart F, the heading for the subpart is revised to read as 
follows:

Subpart F--Noncareer and Limited Appointments

    6. Amend Sec. 317.601, paragraph (c)(1), by revising the first 
sentence to read as follows:


Sec. 317.601  Authorization.

* * * * *
    (c) * * *
    (1) Agencies are provided a pool of limited appointment authorities 
equal to 3 percent of their Senior Executive Service (SES) position 
allocation, or one authority, whichever is greater. * * *

[FR Doc. 00-13053 Filed 5-24-00; 8:45 am]
BILLING CODE 6325-01-M