[Federal Register Volume 69, Number 8 (Tuesday, January 13, 2004)]
[Rules and Regulations]
[Pages 2048-2052]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-733]



[[Page 2047]]

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

Part II





Office of Personnel Management





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



5 CFR Parts 317, 352, 531, and 534



Senior Executive Service Pay and Performance Awards; Interim Final Rule

  Federal Register / Vol. 69, No. 8 / Tuesday, January 13, 2004 / Rules 
and Regulations  

[[Page 2048]]


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

OFFICE OF PERSONNEL MANAGEMENT

5 CFR Parts 317, 352, 531, and 534

RIN 3206-AK32


Senior Executive Service Pay and Performance Awards

AGENCY: Office of Personnel Management.

ACTION: Interim rule with request for comments.

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

SUMMARY: The Office of Personnel Management is issuing interim 
regulations to establish a new pay-for-performance system for the 
Senior Executive Service (SES). The new SES pay system replaces the 
current six-level system with an open-range ``payband'' and allows a 
higher annual maximum rate of basic pay. These regulations set forth 
the requirements for converting SES members to the new pay system and 
adjusting SES rates of basic pay.

DATES: Effective Date: The regulations are effective on January 1, 
2004.
    Applicability Date: The regulations apply on the first day of the 
first applicable pay period beginning on or after January 1, 2004.
    Comment Date: Comments must be received by OPM on or before March 
15, 2004.

ADDRESSES: Send or deliver comments to Donald J. Winstead, Deputy 
Associate Director for Pay and Performance Policy, Office of Personnel 
Management, Room 7H31, 1900 E Street, NW., Washington, DC 20415-8200; 
by FAX at (202) 606-0824; or by e-mail at [email protected].

FOR FURTHER INFORMATION CONTACT: For information, please contact Jo Ann 
Perrini by telephone at (202) 606-2858; by FAX at (202) 606-0824; or by 
email at [email protected].

SUPPLEMENTARY INFORMATION: Section 1125 of the ``National Defense 
Authorization Act for Fiscal Year 2004'' (Public Law 108-136, November 
24, 2003) (the ``Act'') amends 5 U.S.C. 5382 to replace the current 
six-level pay system for the Senior Executive Service (SES) with a 
single, open-range ``payband'' that has only its minimum and maximum 
rates of basic pay fixed by statute. The minimum rate of basic pay in 
the SES rate range may not be less than the minimum rate of basic pay 
(excluding locality pay) payable under 5 U.S.C. 5376 for senior-level 
positions ($103,700 in 2004), and the maximum rate of basic pay in the 
SES rate range may not exceed the rate for level III of the Executive 
Schedule ($144,600 in 2004). The new section 5382 also allows the 
maximum rate of basic pay to be set at level III of the Executive 
Schedule for a position in a system equivalent to the SES as determined 
by the President's Pay Agent (i.e., the Secretary of Labor and the 
Directors of the Office of Management and Budget (OMB) and the Office 
of Personnel Management (OPM)).
    The new section 5382 will allow an agency to establish a higher 
maximum rate of basic pay in the SES rate range up to the rate for 
level II of the Executive Schedule ($157,000 in 2004) if the agency 
obtains the certification specified in 5 U.S.C. 5307(d). In addition, 
agencies that obtain such certification will be allowed to apply to 
their SES members a higher aggregate limitation on pay under 5 U.S.C. 
5307(d) that is equivalent to the total annual compensation payable to 
the Vice President ($201,600 in 2004). Section 1322 of the Homeland 
Security Act of 2002 (Public Law 107-296, November 25, 2002) added a 
new paragraph (d) to 5 U.S.C. 5307 to allow those agencies that are 
granted such certification to apply a higher aggregate limitation on 
pay equivalent to the total compensation payable to the Vice President. 
Under 5 U.S.C. 5307(d)(3)(A), the regulations prescribing the 
substantive and procedural requirements that an agency must meet to 
receive such certification for these purposes must be issued jointly by 
OPM and OMB. Consequently, those regulations will be promulgated 
separately. Those regulations also will address the requirements for 
setting a senior executive's rate of basic pay up to the rate for level 
II of the Executive Schedule.
    The new section 5382 provides that, subject to regulations 
prescribed by OPM, there shall be established a range of rates of basic 
pay for the Senior Executive Service, and each senior executive shall 
be paid at one of the rates within the range, based on individual 
performance, contribution to the agency's performance, or both, as 
determined under a rigorous performance management system. In 
promulgating these regulations, OPM interprets this provision as 
permitting agencies to consider any unique skills, qualifications, or 
competencies that the individual possesses, and their significance to 
the agency's mission, as well as the individual's current 
responsibilities.
    OPM has added a new Sec.  534.406 to establish the structure of the 
new SES pay system, as well as the rules for conversion to the new pay 
system. In addition, new Sec.  534.406 provides criteria for providing 
a pay adjustment to eligible senior executives on or after the first 
day of the first applicable pay period beginning on or after January 1, 
2004. In these regulations, we refer to SES members as ``senior 
executives.''
    As a general matter, senior executives paid above the minimum rate 
will no longer receive an automatic annual across-the-board pay 
adjustment. The minimum rate of basic pay in the SES rate range will 
increase consistent with any increase in the minimum rate of basic pay 
for senior-level positions under 5 U.S.C. 5376 and the maximum rate of 
basic pay in the SES rate range will increase with any increase in the 
rate for level III of the Executive Schedule.
    Under the new SES pay system, individual SES members will no longer 
receive locality-based comparability payments. Section 5 U.S.C. 5304(h) 
has been amended to remove the SES pay system, as well as the Federal 
Bureau of Investigation (FBI) and Drug Enforcement Administration (DEA) 
SES pay system from the list of positions for which locality-based 
comparability payments may be extended. In addition, revised 5 U.S.C. 
5304(h) prohibits other positions under a system equivalent to the SES 
pay system, as determined by the President's Pay Agent, from receiving 
locality-based comparability payments. We have made conforming 
amendments in 5 CFR part 531 to reflect the changes made by 5 U.S.C. 
5304(h).

New SES Performance-Based Pay System

    Conversion to the new SES pay system. Section 534.406 of OPM's 
interim regulations requires agencies to convert SES members to the new 
SES pay system on the first day of the first applicable pay period 
beginning on or after January 1, 2004. The senior executive's converted 
rate of basic pay is the employee's rate of basic pay, plus any 
applicable locality pay, in effect immediately prior to the first day 
of the first applicable pay period beginning on or after January 1, 
2004. The newly converted SES rate will become the SES member's rate of 
basic pay for all pay computation purposes, and the existing pay plan 
code ``ES'' for SES members will be retained. Conversion to a new SES 
rate of basic pay is not considered a pay adjustment under Sec.  
534.401(c)(1) for the purpose of limiting an agency's flexibility to 
adjust pay more than once during a 12-month period.
    Prohibition on reducing pay for 12 months. Consistent with section 
1125(c)(2) of the Act, the interim regulations prohibit agencies from 
reducing a senior executive's rate of basic pay, including any 
applicable

[[Page 2049]]

locality payment, below the rate that was in effect on November 24, 
2003, for 12 months following the effective date of the new SES pay 
system (January 11, 2004, for most employees).
    FBI and DEA SES. Under 5 U.S.C. 3151, the Attorney General may 
provide rates of basic pay for the FBI and DEA SES that are not less 
than nor greater than the rates of basic pay established for the SES 
under 5 U.S.C. 5382, and the Attorney General may adjust the rates of 
basic pay for the FBI and DEA SES ``at the same time and to the same 
extent as rates of basic pay for the [SES] are adjusted.'' As a result, 
the new minimum and maximum rates of basic pay for the SES under 5 
U.S.C. 5382 also will apply to the FBI and DEA SES. In addition, on the 
first day of the first applicable pay period beginning on or after 
January 1, 2004, affected agencies are authorized to convert the rates 
of basic pay for FBI and DEA senior executives to include any 
applicable locality payment in effect for the employee immediately 
before that date. The newly converted rate of basic pay will become the 
individual's rate of basic pay for all pay computation purposes. Since 
the rates of basic pay for the FBI/DEA SES are adjusted ``at the same 
time and to the same extent'' as rates of basic pay for the SES are 
adjusted, conversion to a new rate of basic pay is not considered a pay 
adjustment for the purpose of applying Sec.  534.401(c)(1).
    Geographic assignments outside the 48 contiguous States and the 
District of Columbia. Certain members of the SES may be in positions 
that have geographic mobility requirements and are expected to serve 
abroad for portions of their careers. On the first day of the first 
applicable pay period beginning on or after January 1, 2004, these 
senior executives may be on assignment outside the 48 contiguous States 
or the District of Columbia to a position overseas or in Alaska, 
Hawaii, Guam and the Commonwealth of the Northern Mariana Islands, 
Puerto Rico, the U.S. Virgin Islands, or other U.S. territories and 
possessions where locality pay is not authorized. While these senior 
executives will convert to the new SES pay system at their rate of 
basic pay (exclusive of any locality rate of pay) on the first day of 
the first applicable pay period beginning on or after January 1, 2004, 
their converted rate of basic pay must be adjusted upon reassignment to 
a locality pay area. The adjustment will be equal to the amount of 
locality pay authorized for the applicable locality pay area upon 
reassignment. The adjustment will be prospective, not retroactive, and 
it will not be considered a pay adjustment for the purpose of applying 
Sec.  534.401(c)(1).
    SES Law Enforcement Officers. On the first day of the first 
applicable pay period beginning on or after January 1, 2004, a law 
enforcement officer (LEO) who is a member of the SES (including LEOs in 
the FBI and DEA SES) will continue to receive his or her rate of basic 
pay, plus any applicable special geographic pay adjustment established 
for LEOs under section 404(a) of the Federal Employees Pay 
Comparability Act of 1990 (Public Law 101-509) that he or she was 
entitled immediately before that date. Currently, a special geographic 
pay adjustment (16 percent) applies only to LEOs in the Boston-
Worchester-Lawrence, MA-NH-ME-CT Consolidated Metropolitan Statistical 
Area (CMSA). When the special geographic pay adjustment for LEOs in 
Boston no longer applies (because a higher locality pay percentage 
becomes applicable to employees in the Boston locality pay area), the 
senior executive's rate of basic pay will be converted to his or her 
rate of basic pay, plus the special geographic pay adjustment for LEOs, 
in effect immediately before the effective date of the higher locality-
based comparability payment. Conversion to a new SES rate of basic pay 
is not considered a pay adjustment for the purpose of applying Sec.  
534.401(c)(1).

Adjustments in Pay Prior to Any Certification Pursuant to 5 U.S.C. 
5307(d)

    The new Sec.  534.406(c) authorizes agencies to increase a senior 
executive's converted rate of basic pay on the first day of the first 
applicable pay period beginning on or after January 1, 2004, or on any 
date thereafter. Prior to obtaining certification under 5 U.S.C. 
5307(d), such increases may be made only up to the new rate for level 
III of the Executive Schedule, and only upon a determination that the 
senior executive's performance and/or contributions so warrant and that 
the senior executive is otherwise eligible for such a pay adjustment 
(i.e., he or she has not received a pay adjustment in the previous 12-
month period.)
    In assessing an individual's performance and/or contribution to the 
agency's performance, the agency may consider such things as unique 
skills, qualifications, or competencies that the individual possesses 
and their significance to the agency's mission, as well as the 
individual's current responsibilities. Any such adjustment will be 
considered a pay adjustment for the purpose of applying Sec.  
534.401(c)(1) and will be reviewed for the purpose of granting 
certification under 5 U.S.C. 5307(d). If there is an additional 
increase in the rate for level III of the Executive Schedule in 2004, 
and if that increase becomes effective as of the first day of the first 
applicable pay period beginning on or after January 1, 2004, an agency 
may review the previous determination to increase the pay of a senior 
executive to determine whether, and to what extent, an additional pay 
increase may be warranted based on the same criteria used for the 
previous determination to increase pay. If the agency determines that 
an additional pay increase is warranted, that increase must be made 
effective as of the effective date of the previous increase.
    In addition, new Sec.  534.401(c)(2) allows an agency to request an 
exception from the Director of OPM to the rule that limits an agency's 
authority to adjust a senior executive's rate of basic pay more than 
once during a 12-month period.

Miscellaneous Changes

    Section 1321 of the Homeland Security Act repealed the SES 
recertification requirements in 5 U.S.C. 3393a. As a result, OPM's 
regulations in Sec.  317.504 are no longer needed and have been 
removed. In addition, we have made changes in 5 CFR parts 317 and 352 
to remove references to the former six levels of SES pay.

Regulatory Flexibility Act

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

Waiver of Notice of Proposed Rulemaking

    Pursuant to section 553(b)(3)(B) of title 5 of the United States 
Code, I find that good cause exists for waiving the general notice of 
proposed rulemaking. Also, pursuant to 5 U.S.C. 553(d)(3), I find that 
good cause exists for making this rule effective in less than 30 days. 
These regulations implement Public Law 108-136, which became effective 
on November 24, 2003. The waiver of the requirements for proposed 
rulemaking and a delay in the effective date is necessary to ensure 
timely implementation of the law as intended by Congress.

E.O. 12866, Regulatory Review

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

[[Page 2050]]

List of Subjects in 5 CFR Parts 317, 352, 531, and 534

    Decorations, Medals, Awards, Government employees, Law enforcement 
officers, Reporting and recordkeeping requirements, Wages, Hospitals, 
and Students.

    Office of Personnel Management.
Kay Coles James,
Director.

0
Accordingly, OPM is amending parts 317, 352, 531, and 534 as follows:

PART 317--EMPLOYMENT IN THE SENIOR EXECUTIVE SERVICE

0
1. The authority citation for part 317 is revised to read as follows:

    Authority: 5 U.S.C. 3392, 3393, 3395, 3397,3592, 3593, 3595, 
3596, 8414, and 8421.

Subpart C--Conversion to the Senior Executive Service

0
2. In Sec.  317.302, paragraphs (a)(2), (b)(3), and (d)(2) are revised 
to read as follows:


Sec.  317.302  Conversion procedures.

    (a) * * *
    (2) Pay. Upon conversion to the Senior Executive Service, an 
employee's SES rate will be determined under 5 CFR part 534, subpart D.
* * * * *
    (b) * * *
    (3) Pay. An employee's SES rate will be determined under 5 CFR part 
534, subpart D.
* * * * *
    (d) * * *
    (2) Pay. An employee's SES rate will be determined under 5 CFR part 
534, subpart D.
* * * * *

Subpart E--Career Appointments


Sec.  317.504  [Removed and Reserved]

0
3. Section 317.504 is removed and reserved.

Subpart H--Retention of SES Provisions


Sec.  317.801  [Amended]

0
4. In Sec.  317.801, paragraph (b)(3) is removed.

PART 352--REEMPLOYMENT RIGHTS

0
5. The authority citation for subpart B of part 352 continues to read 
as follows:

    Authority: 5 U.S.C. 3101 note, 3301, 3131 et seq. 3302; E.O. 
10577, 3 CFR 1954-1958 Comp., p. 218; sec. 352. 209 also issued 
under 5 U.S.C. 7701, et seq.

0
6. In part 352, remove the phrase ``SES pay level'' and add in its 
place ``SES rate of basic pay as determined under 5 CFR part 534, 
subpart D'' wherever it occurs.

PART 531--PAY UNDER THE GENERAL SCHEDULE

0
7. 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 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 Federal Employees Pay Comparability 
Act of 1990 (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 and E.O. 1306, 63 FR 68151, 3 CFR, 1998 Comp., p. 224; 
Subpart G also issued under 5 U.S.C. 5304, 5305, and 5553; section 
302 of the FEPCA, Pub. L. 101-509, 104 Stat. 1462; and E.O. 12786, 
56 FR 67453, 3 CFR, 1991 Comp., p. 376.

0
8. In Sec.  531.302, paragraph (c) is revised to read as follows:


Sec.  531.302  Determining special law enforcement adjusted rates of 
pay.

* * * * *
    (c) The special law enforcement adjusted rate of pay for an 
employee in a position described in 5 U.S.C. 5304(h)(1)(A)-(C), in a 
senior executive position covered under 5 U.S.C. 3132, or in a senior 
executive position covered under 5 U.S.C. 3151 may not exceed the rate 
for level III of the Executive Schedule.

Subpart F--Locality-Based Comparability Payments

0
9. In Sec.  531.602, the definition of employee is revised and the 
definition of scheduled annual rate of pay is amended by revising 
paragraph (4) to read as follows:


Sec.  531.602  Definitions.

* * * * *
    Employee means--
    (1) An employee in a position to which 5 U.S.C. chapter 53, 
subchapter III, applies and whose official duty station is located in a 
locality pay area within the continental United States, including a GM 
employee (as defined in Sec.  531.202); and
    (2) An employee in a category of positions described in 5 U.S.C. 
5304(h)(1)(A)-(D) for which the President (or designee) has authorized 
locality-based comparability payments under 5 U.S.C. 5304(h)(2) and 
whose official duty station is located in a locality pay area.
* * * * *
    Scheduled annual rate of pay means--
* * * * *
    (4) For an employee in a category of positions described in 5 
U.S.C. 5304(h)(1)(A)-(D) for which the President (or designee) has 
authorized locality-based comparability payments under 5 U.S.C. 
5304(h)(2), the rate of basic pay fixed by law or administrative 
action, exclusive of any locality-based adjustments (including 
adjustments equivalent to local special rate adjustments under 5 U.S.C. 
5305) or other additional pay of any kind.
* * * * *

0
10. In Sec.  531.604, paragraph (c)(1) and the introductory language in 
paragraph (c)(2) are revised to read as follows:


Sec.  531.604  Determining locality rates of pay.

* * * * *
    (c)(1) Locality rates of pay approved by the President (or 
designee) for employees in a category of positions described in 5 
U.S.C. 5304(h)(1)(A)-(C) may not exceed the rate for level III of the 
Executive Schedule.
    (2) Locality rates of pay approved by the President (or designee) 
for employees in a category of positions described in 5 U.S.C. 
5304(h)(1)(D) may not exceed--
* * * * *


Sec.  531.606  [Amended]

0
11. In Sec.  531.606, paragraph (b)(6) is removed.

PART 534--PAY UNDER OTHER SYSTEMS

0
12. The authority citation for part 534 is revised to read as follows:

    Authority: 5 U.S.C. 1104, 3161(d), 5307, 5351, 5352, 5353, 5376, 
5382, 5383, 5384, 5385, 5541, 5550a, and sec. 1125 of the ``National 
Defense Authorization Act for FY 2004,'' Pub. L. 108-136.

Subpart D--Pay and Performance Awards Under the Senior Executive 
Service

0
13. In Sec.  534.401:
0
A. In paragraph (a), the definition of ES rate is removed and new 
definitions of authorized agency official, SES or ES rate, and SES or 
ES rate range are added in alphabetical order.
0
B. Paragraph (c) is revised.
    The added and revised text reads as follows:

[[Page 2051]]

Sec.  534.401  Definitions and setting individual basic pay.

    (a) Definitions. * * *
* * * * *
    Authorized agency official means the head of an agency or an 
official who is authorized to act for the head of the agency in the 
matter concerned.
* * * * *
    SES or ES rate means a rate of basic pay within the SES or ES rate 
range assigned to a member of the SES under Sec.  534.406(a).
    SES or ES rate range means the range of rates of basic pay 
established for the SES under 5 U.S.C. 5382 and Sec.  534.406(a).
* * * * *
    (c) Adjusting pay while in the SES. (1) An authorized agency 
official may adjust (i.e., increase or reduce) the rate of basic pay of 
a senior executive not more than once in any 12-month period.
    (i) The following pay actions are considered pay adjustments for 
this purpose:
    (A) The setting of an individual's rate of basic pay upon initial 
appointment to the SES;
    (B) The change from one SES rate of basic pay to another while 
employed in the SES;
    (C) The assignment of an SES rate of basic pay upon reappointment 
to the SES following a break in SES service if the new SES rate of 
basic pay is different from the senior executive's former rate or if 
the break in service exceeds 12 months;
    (D) An adjustment in pay granted in 2004 prior to any certification 
pursuant to 5 U.S.C. 5307(d), as provided in Sec.  534.406(c)(i); and
    (E) A determination by an authorized agency official to make a zero 
adjustment in pay or a reduction in pay for a senior executive, except 
as provided in paragraph (c)(1)(ii)(B) of this section.
    (ii) The following pay actions are not considered pay adjustments 
for this purpose:
    (A) Conversion of senior executives to the new SES pay system under 
Sec.  534.406(b) and the conversion of other employees to equivalent 
senior executive positions; and
    (B) A zero adjustment in pay during the 12-month period preceding 
the first day of the first applicable pay period beginning on or after 
January 1, 2004, caused by the former limitation on basic pay plus 
locality-based comparability payments under 5 U.S.C. 5304(g)(2) for a 
senior executive who was granted an increase in his or her rate of 
basic pay that did not result in an actual increase in pay.
    (2) An authorized agency official may request an exception from the 
Director of OPM to the prohibition in paragraph (c)(1) of this section 
on adjusting a senior executive's rate of basic pay not more than once 
in any 12-month period.
    (3) An authorized agency official may increase or reduce the rate 
of basic pay for a senior executive, consistent with the SES 
performance management requirements set forth in 5 CFR part 430, 
subpart C. Restrictions on reducing the rate of basic pay of a career 
senior executive are found in paragraph (f) of this section and in 
Sec.  534.406(b)(2).

0
14. In Sec.  534.403, paragraph (a)(2)(i) is revised to read as 
follows:
    (a) * * *
    (2) * * *
    (i) A former SES career appointee who elected to retain award 
eligibility under 5 CFR part 317, subpart H. If the salary of the 
individual is higher than the maximum rate of basic pay for the SES 
rate range, the maximum rate of the SES rate range is used for 
crediting the agency award pool under paragraph (b) of this section and 
the amount the individual may receive under paragraph (c) of this 
section.
* * * * *

0
15. A new section 534.406 is added to subpart D to read as follows:


Sec.  534.406  Establishment of and conversion to SES pay system.

    (a) SES rate range. On the first day of the first applicable pay 
period beginning on or after January 1, 2004, the minimum rate of basic 
pay of the SES rate range is set at an amount equal to the minimum rate 
of basic pay under 5 U.S.C. 5376 for senior-level positions (excluding 
any locality-based comparability payment under 5 U.S.C. 5304). An SES 
member may not receive less than the minimum rate of the SES rate 
range. The maximum rate of basic pay of the SES rate range is set at 
the rate for level III of the Executive Schedule. An SES member's rate 
of basic pay must be set at one of the rates within the SES rate range 
based on the senior executive's performance and/or contribution to the 
agency's performance. In assessing an individual's performance and/or 
contribution to the agency's performance, the agency may consider such 
things as unique skills, qualifications, or competencies that the 
individual possesses and their significance to the agency's mission, as 
well as the senior executive's current responsibilities.
    (b) Establishing an SES rate of basic pay upon conversion to the 
new SES pay system.
    (1) On the first day of the first applicable pay period beginning 
on or after January 1, 2004, agencies must convert an existing SES rate 
of pay for a senior executive to an SES rate of basic pay that is equal 
to the employee's rate of basic pay, plus any applicable locality-based 
comparability payment under 5 U.S.C. 5304 which the senior executive 
was receiving immediately before that date. The newly converted rate is 
the senior executive's SES rate of basic pay. An agency's establishment 
of an SES rate of basic pay for a senior executive under this paragraph 
is not considered a pay adjustment for the purpose of applying Sec.  
534.401(c)(1).
    (2) An SES member's rate of basic pay, plus any applicable 
locality-based comparability payment under 5 U.S.C. 5304 to which the 
employee was entitled on November 24, 2003, may not be reduced for 1 
year from the first day of the first applicable pay period beginning on 
or after January 1, 2004.
    (3) Certain SES members in positions that have geographic mobility 
requirements and who are assigned outside the 48 contiguous States and 
the District of Columbia to a position overseas or in Alaska, Hawaii, 
Guam and the Commonwealth of the Northern Mariana Islands, Puerto Rico, 
the U.S. Virgin Islands, or other U.S. territories and possessions as 
of the first day of the first applicable pay period beginning on or 
after January 1, 2004, will be converted to a new rate of basic pay 
that equals their current rate of basic pay, plus the amount of 
locality pay authorized for the applicable locality pay area upon 
reassignment to a position in the 48 contiguous States or the District 
of Columbia. The adjustment will be prospective, not retroactive, and 
it will not be considered a pay adjustment for the purpose of applying 
Sec.  534.401(c)(1).
    (4) On the first day of the first applicable pay period beginning 
on or after January 1, 2004, a law enforcement officer (LEO), as 
defined in 5 CFR 531.301, who is a member of the SES will continue to 
receive his or her rate of basic pay, plus any applicable special 
geographic pay adjustment established for LEOs under section 404(a) of 
the Federal Employees Pay Comparability Act of 1990 (Public Law 101-
509) to which he or she was entitled immediately before that date. When 
the special geographic pay adjustment for LEOs no longer applies 
(because a higher locality pay percentage applies to employees in the 
locality pay area), the senior executive's rate of basic pay will be 
converted to his or her rate of basic pay, plus the special geographic 
pay adjustment for LEOs to which he or she

[[Page 2052]]

was entitled immediately before the effective date of the higher 
locality-based comparability payments. Conversion to a new SES rate of 
basic pay is not considered a pay adjustment for the purpose of 
applying Sec.  534.401(c)(1).
    (c) Adjustments in pay prior to any certification pursuant to 5 
U.S.C. 5307(d).
    (1) An agency may increase a senior executive's rate of basic pay 
converted under paragraph (b) of this section on the first day of the 
first applicable pay period beginning on or after January 1, 2004, or 
on any date thereafter prior to obtaining certification under 5 U.S.C. 
5307(d), but only up to the rate for level III of the Executive 
Schedule. An agency may provide such an increase only upon a 
determination that the senior executive's individual performance and/or 
contributions to agency performance so warrant and that the senior 
executive is otherwise eligible for such a pay adjustment (i.e., he or 
she has not received a pay adjustment under Sec.  534.402(c)(1)(i)(B) 
in the previous 12-month period). In assessing a senior executive's 
performance and/or contribution to the agency's performance, the agency 
may consider such things as unique skills, qualifications, or 
competencies that the individual possesses, and their significance to 
the agency's mission, as well as the senior executive's current 
responsibilities. An adjustment in pay made under this paragraph will 
be considered a pay adjustment for the purpose of applying Sec.  
534.401(c)(1).
    (2) If there is an additional increase in the rate for level III of 
the Executive Schedule in 2004, and if that increase becomes effective 
as of the effective date prescribed in 5 U.S.C. 5318, an agency may 
review any determination made under paragraph (c)(1) of this section to 
determine whether, and to what extent, an additional pay increase may 
be warranted for a senior executive based on the same criteria used for 
the determination made under paragraph (c)(1) of this section. If the 
agency determines that an additional pay increase is warranted, that 
increase must be made effective as of the effective date of the 
increase made under paragraph (c)(1) of this section.
    (3) Any adjustments in pay made under paragraphs (c)(1) and (2) of 
this section will be reviewed for the purpose of certification under 5 
U.S.C. 5307(d).

[FR Doc. 04-733 Filed 1-9-04; 1:24 pm]
BILLING CODE 6325-39-P