[Federal Register Volume 69, Number 114 (Tuesday, June 15, 2004)]
[Rules and Regulations]
[Pages 33271-33277]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-13426]



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  Federal Register / Vol. 69, No. 114 / Tuesday, June 15, 2004 / Rules 
and Regulations  

[[Page 33271]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Parts 230, 301, 316, 337, and 410

RIN 3206-AJ99


Organization of the Government for Personnel Management, Overseas 
Employment, Temporary and Term Employment, Recruitment and Selection 
for Temporary and Term Appointments Outside the Register, Examining 
System, and Training

AGENCY: Office of Personnel Management.

ACTION: Final rule.

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

SUMMARY: The Office of Personnel Management (OPM) is revising its 
regulations to implement certain Governmentwide human resources 
flexibilities contained in the Chief Human Capital Officers Act of 2002 
(Title XIII of the Homeland Security Act). These regulations provide 
agencies with: The ability to appoint qualified candidates for 
positions in the competitive service using direct-hire procedures; 
increased flexibility in assessing applicants using alternative 
(category-based) rating and selection procedures; the authority to pay 
or reimburse the costs of academic degree training from appropriated or 
other available funds under specified conditions; and increased 
flexibility to use academic degree training to address agency-specific 
human capital requirements and objectives. This final regulation also 
removes Recruitment and Selection for Temporary and Term Appointments 
Outside the Register, and all related references including temporary 
appointments pending establishment of a register (TAPER) authority.

EFFECTIVE DATES: July 15, 2004.

FOR FURTHER INFORMATION CONTACT: On alternative rating and selection 
procedures, Ms. Linda Watson by telephone at (202) 606-0830, fax at 
(202) 606-2329 or by e-mail at [email protected]. On direct-hire 
authority, emergency indefinite appointments, overseas employment, 
TAPER, and outside the register appointments, Mr. Larry Lorenz by 
telephone at (202) 606-0830, fax at (202) 606-2329 or by e-mail at 
[email protected]. On academic degree training, Ms. LaVeen M. Ponds by 
telephone at (202) 606-1394, fax at (202) 606-2329 or by e-mail at 
[email protected]. Ms. Watson, Ms. Tyrrell and Ms. Ponds may also be 
contacted by TTY at (202) 418-3134.

SUPPLEMENTARY INFORMATION: On June 13, 2003, OPM published interim 
regulations at Federal Register 68 FR 35265, to implement provisions of 
the Chief Human Capital Officers Act of 2002 (Title XIII of the 
Homeland Security Act). The Chief Human Capital Officers Act of 2002 
(Act) provides Federal agencies with a number of human resources (HR) 
flexibilities. These flexibilities include direct-hire authority and 
alternative (that is, category) rating and selection procedures, which 
will aid in recruitment and hiring. The Act also provides Federal 
agencies with the authority to pay or reimburse employees for the costs 
of academic degree training. For additional background information on 
these flexibilities, please refer to the interim regulations.
    During the comment period, OPM hosted four briefings to introduce 
the new flexibilities. We received written and oral comments from six 
Federal agencies, one employee union, a Federal program director, one 
private sector company, and numerous Federal employees and human 
resources professionals. Based on these comments, we have made several 
changes in the final regulations to adopt suggestions or to clarify 
intent. We have addressed these comments as they apply within each 
flexibility.
    Additional information on direct-hire and category rating and 
selection procedures has been added to OPM's Delegated Examining 
Operations Handbook. Information on approved Governmentwide direct-hire 
authorities can be obtained by visiting OPM's Web site at http://www.opm.gov and accessing the document entitled ``Primary Appointing 
Authorities for Career and Career Conditional Employees'' from the Web 
site index. We have also posted fact sheets on our Web site that 
address many of the questions received on these new flexibilities. To 
access these fact sheets, refer to the individual flexibility in the 
Web site index.

Direct-Hire Authority

    Section 3304(c) of title 5, United States Code, provides agencies 
with the authority to appoint candidates directly to jobs for which OPM 
determines that there is a severe shortage of candidates or a critical 
hiring need.
    We asked agencies to comment on whether OPM should combine the 
requirements and justification for direct-hire authorities in a single 
section of the regulations, or whether we should continue to publish 
them in separate sections. Three of the four agencies responding to our 
request recommended we retain this information in separate sections. 
Therefore, this information will remain in separate sections in the 
final regulation.
    The final regulation provides that OPM may independently decide 
that a severe shortage of candidates or a critical hiring need exists, 
either Governmentwide or in specified agencies, for one or more 
specific occupational series, grades (or equivalent), or geographic 
locations. Alternatively, an agency may, in a written request to OPM, 
identify the position(s) for which it believes a severe shortage or a 
critical hiring need exists. The agency must support its request with 
relevant evidence, as described below. Agencies that use this direct-
hire authority must adhere to public notice requirements, as set forth 
in 5 U.S.C. 3327 and 3330, and 5 CFR part 330, subpart G.

Discussion of Comments

    Two agencies suggested that the authority to approve the use of 
direct-hire authority be delegated to agencies, and if not delegated, 
that the regulation require requests be submitted from the agency 
headquarters level. Based on our experience to date, there are widely 
varying interpretations of the appropriate use of direct-hire 
authority. OPM will, therefore, retain approval authority. However, for 
consistent application within individual agencies, requests for direct-
hire authority should be submitted by the agency

[[Page 33272]]

headquarters level. We have added this requirement to the regulation.
    One agency suggested we include, in the definition portion of the 
regulation, the same language explaining when a ``critical need'' 
exists that was published in the interim regulation supplementary 
information. In addition, it was suggested that we substitute 
``difficult to identify'' for ``unable to identify'' in the definition 
of ``severe shortage of candidates'' to more realistically describe a 
severe shortage situation. We have added these language changes in the 
regulation for clarity.
    We received several agency comments and questions about the ability 
to use a direct-hire authority if a delegated examining unit (DEU) is 
not present. Although an agency using direct-hire authority must have a 
delegated examining authority, the agency is not required to have a DEU 
in place. We have clarified this in the regulation.
    One agency commented that the required justification for a direct-
hire authority based on a critical hiring need is excessive and 
burdensome. The agency recommended the regulation provide for agencies 
to use direct-hire based on a critical hiring need to prevent a 
staffing crisis rather than to address an existing one. This comment is 
outside the scope of the provisions of the Act and the regulation. The 
legislative language provides for direct-hire authority, outside the 
merit system, when a critical hiring need exists. We want to emphasize, 
however, that the regulation provides a number of criteria that can be 
used to evidence a critical hiring need, as they apply to a specific 
situation. These criteria, not necessarily all-inclusive, present 
examples of the type of information that will support reasonable 
evidence that the agency is experiencing a critical situation.
    A union objected to the use of direct-hire authority for a severe 
shortage of candidates unless a special salary rate had been 
established for the position. Special salary rates are one of the many 
flexibilities agencies have to address their recruitment difficulties. 
Establishing a special salary rate is not a prerequisite for obtaining 
approval for a direct-hire authority. Special salary rates were 
included in the regulation as an example of a flexibility an agency may 
use to support its justification for a severe shortage of candidates. 
We have added language to clarify our intention.
    The same union also noted that the regulation requires agencies to 
submit supporting evidence when requesting direct-hire authority based 
on a severe shortage of candidates or a critical hiring need, but does 
not require the same evidence from OPM when deciding on its own that a 
need exists. In addition, the union commented that similar evidence 
from OPM to support the need for an extension of existing direct-hire 
authority should be required. We agree that these additions should be 
included in the regulation and have added clarifying language.
    The union also commented that the ``periodic'' review of existing 
direct-hire authorities should adhere to a specific schedule and that 
the content of reviews and the requirement for publication should be 
identified. We have determined it to be impractical to regulate a 
schedule for reviewing direct-hire authorities. However, we will ensure 
that these reviews will take place often and will focus on continued 
adherence to regulatory intent. We have not adopted this suggestion.

Elimination of Outside-the-Register Procedures

    OPM has eliminated 5 CFR part 333, Recruitment and Selection for 
Temporary and Term Appointments Outside the Register, based on its 
conclusion that this hiring authority is now obsolete.
    One Federal agency submitted comments opposing the elimination of 
the outside-the-register procedures. The comments did not adequately 
explain why using other merit-based hiring authorities does not enable 
the agency to meet its hiring needs. Nor did the agency provide any 
compelling independent reason for retaining outside-the-register 
procedures. The comments have not been adopted and the outside-the-
register procedures are eliminated.

Elimination of the TAPER Regulation

    Based on the elimination of the outside-the-register procedure, OPM 
has also eliminated the Temporary Appointments Pending the 
Establishment of a Register (TAPER) regulation.
    One Federal agency submitted comments opposing the elimination of 
the TAPER regulation. The comments did not adequately explain why the 
agency cannot use other merit-based hiring authorities to meet its 
hiring needs. Nor did the agency provide any compelling independent 
reason for retaining the ability to make TAPER appointments. As 
described in the interim regulation's supplemental information, this 
regulation has been shown to have outlived its usefulness, and other 
appropriate appointing authorities are available for use in its place. 
The comments have not been adopted and the TAPER regulation is 
eliminated.
    Eliminating the TAPER regulation will not adversely affect 
employees currently serving under TAPER appointments. These individuals 
will continue under these appointments until they have completed the 3 
years of service that entitles them, under 5 U.S.C. 3304a, to be 
converted to career appointments.

Category Rating and Selection Procedures

Background

    Agencies have authority under 5 U.S.C. 3319 to develop a category-
based rating method as an alternative way of assessing job applicants 
for positions filled through the competitive examining process. 
Traditionally, applicants for Federal jobs are assigned numerical 
scores, including veterans' preference points, if appropriate, and are 
considered for selection based on the ``rule of three'' (5 U.S.C. 
3318(a)). The category rating method prescribed by the Act does not add 
veterans' preference points or apply the ``rule of three'' but protects 
the rights of veterans by placing them ahead of non-preference 
eligibles within each category. Preference eligibles who meet minimum 
qualification requirements and who have a compensable service-connected 
disability of at least 10 percent must be listed in the highest quality 
category, except when the position being filled is scientific or 
professional at the GS-9 grade level or higher. When using category 
rating, agencies must follow veterans' preference procedures as 
specified in 5 U.S.C. 3319(b) and (c)(2). Consistent with this 
requirement and with 5 U.S.C. 2302(e)(1)(G), OPM intends to promulgate 
a regulation in the near future designating section 3319(b) and (c)(2) 
as a ``veterans' preference requirement'' for purposes of the 
prohibited personnel practice described in 5 U.S.C. 2302(b)(11). Please 
refer to the interim regulations' supplementary information in Federal 
Register dated June 13, 2003, 68 FR 35265 for a full discussion of the 
category rating method.

Discussion of Comments

    Based on the complexity of the comments on category rating, we have 
organized them into topic areas for clarity and for ease of reference.

General

    One agency requested that the regulations specify that category 
rating may be used for term and temporary appointments. Category rating 
is a method for evaluating applicants under

[[Page 33273]]

a competitive examining system. It is not a separate appointing 
authority. Category rating may be used to fill any competitive service 
position, including a position filled through a term or temporary 
appointment. This is reflected in sections 316.302 and 316.402 of the 
regulation.
    One agency requested clarification on the proper placement of the 
word ``competencies'' in relation to the words ``knowledge, skills, or 
abilities'' cited in Sec.  337.302(b). We have modified that section to 
clarify our meaning. This agency also suggested we change the wording 
in Sec.  337.303(b) to read ``based on job analysis'' instead of 
``through job analysis.'' We did not adopt this suggestion because the 
chosen phrase is consistent with the language in other guides issued by 
OPM.

Vacancy Announcement

    Three agencies and several Federal employees suggested 
clarification of what is required in the vacancy announcement when 
using category rating.
    The current vacancy announcement requirements of 5 CFR part 330 and 
Executive Order 13078, requiring the agency to state how applicants 
will be rated, have not changed. However, agencies have a choice in 
their basis of rating. Agencies must decide on rating and selection 
procedures in advance of posting a vacancy announcement. Once a 
procedure is chosen, it must be described in the vacancy announcement.
    Traditionally, agencies described rating procedures in general 
terms under the ``Basis of Rating'' heading in the vacancy 
announcement. Under category rating procedures, agencies will continue 
to use the ``Basis of Rating'' as a means of communicating rating 
procedures to applicants. Agencies can simply state whether the rating 
is based on numerical rating procedures or category rating procedures 
and how veterans' preference will be applied.
    Also, agencies were concerned that the statement ``Describe each 
quality category in the job announcement * * *'' is ambiguous and could 
be read as tantamount to a requirement to publish the crediting plan 
and benchmarks in the vacancy announcement. No such requirement 
applies.
    When describing each quality category, agencies may continue to use 
the ``Qualification Requirement'' heading to describe each quality 
category. This description could vary from naming the quality 
categories to describing the competencies or the knowledge, skills, and 
abilities required for each quality category. OPM does not expect 
agencies to disclose crediting plans and/or rating schedules with 
scoring keys to the general public because doing so would jeopardize 
the integrity and validity of the assessment. These issues are 
addressed in OPM's Delegated Examining Operations Handbook (DEOH). No 
changes in the regulation are necessary to respond to this comment.

Veterans' Preference

    Two agencies requested that OPM clarify how to use category rating 
procedures to rank preference eligibles with a service-connected 
disability of 10 percent or more.
    Under the traditional numerical rating and ranking procedures, 5 
U.S.C. 3313 instructs agencies to place preference eligibles, who meet 
the minimum qualification requirements, at the top of the list of 
eligibles, regardless of their numerical scores, for all positions 
except scientific and professional positions at the GS-09 (and 
equivalent) grade level or higher. When filling scientific and 
professional positions at the GS-09 (and equivalent) grade level or 
higher, these preference eligibles are ranked according to their 
numerical scores, including points added under 5 U.S.C. 3309.
    Under category rating, the same concept applies. The Act instructs 
agencies to place preference eligibles, who meet the minimum 
qualification requirements, in the highest quality category when 
filling all positions except scientific and professional positions at 
the GS-09 (and equivalent) grade level or higher. These preference 
eligibles are placed above the non-preference eligibles. When filling 
scientific and professional positions at the GS-09 (and equivalent) 
grade level or higher, these preference eligibles are placed above the 
non-preference eligibles within the quality category in which they were 
assessed.
    Within a quality category, agencies may list preference eligibles 
above non-preference eligibles in any order (such as type of 
preference, alphabetical order, Social Security number, etc.). An 
example of how to rank preference eligibles with a service-connected 
disability of 10 percent or more is in Chapter 6 of the DEOH.
    Several agencies and Federal employees suggested that OPM explain 
how to remove preference eligibles from the list after three 
considerations under category rating.
    Currently, 5 U.S.C. 3317(b) allows an appointing official to remove 
a preference eligible from further consideration after considering and 
passing over the preference eligible three times. This same rule 
applies under category rating. A preference eligible within a quality 
category must receive three bona fide considerations before he or she 
may be eliminated from further consideration. We intend to address the 
possibility of adding information about how this rule applies to 
preference eligibles and whether it applies to non-preference eligibles 
in an upcoming amendment to this regulation, which will be published 
with a request for comments.

Reporting Requirements

    One agency suggested that OPM include the category rating reporting 
requirements in the regulation. For convenience and clarity, we added 
the reporting requirements in Sec.  337.306 of the final regulation. 
These reporting requirements are also located in Chapter 5 of the DEOH. 
One agency noticed that the reporting requirements did not include all 
minority groups in the annual report to Congress. The Act requires that 
agencies submit information on the impact category rating has on hiring 
veterans and particular minorities. Because the Act does not include 
all minority groups in the list of minorities, we may not require 
agencies to add to the specific groups included in the Act. An agency 
may do so on its own.
    Several Federal employees asked for specific information on where 
agencies should send their annual reports on category rating. We have 
added this information at Sec.  337.305 of the final regulation and to 
the DEOH.
    One agency suggested, for reporting consistency, that OPM develop a 
standard reporting form for use by all agencies. We do not plan to 
develop a reporting form at this time. Each agency is responsible for 
developing its own reporting format.
    One agency suggested that OPM develop a training module on category 
rating for its managers. We did not adopt this suggestion because it is 
outside the scope of the regulation.

Merging Quality Categories

    Four agencies and several Federal employees suggested that OPM 
explain the merging of quality categories. The Act allows agencies to 
merge the highest quality category with the next lower quality 
category, if the highest quality category has fewer than three 
candidates. Merging quality categories is optional. When merging 
quality categories, preference eligibles from the next lower quality 
category are placed

[[Page 33274]]

above the non-preference eligibles in the newly merged quality 
category.
    Additional information on merging quality categories is described 
in the DEOH.

Use of Numerical Scores

    Three agencies requested clarification on using examinations that 
produce numerical scores (e.g., Luevano Consent Decree examination or 
rating schedule) with category rating. We did not include this 
information in the final regulation, but will publish guidance on this 
issue that will be posted on OPM's Web site at http://www.opm.gov.

Accountability

    One professional organization commented that in order to promote 
accountability, an agency that decides to use category rating should 
first be required to publicize the data upon which it relied in 
reaching its decision.
    Agencies with delegated examining authority are required to 
establish an accountability system in compliance with all examining 
laws and regulations, including category rating. Additionally, OPM has 
oversight responsibility to ensure that each agency complies with 
competitive examining laws and regulations. OPM plans to add the 
alternative ranking and selection procedures to its evaluation agenda 
to ensure that agencies are complying with the category rating 
regulations. Because periodic oversight is a sufficient mechanism for 
accountability, we chose not to adopt the recommendations that agencies 
should be required to publish their data.

Wage Grade Positions

    An agency asked whether category rating may be used for rating and 
ranking candidates for wage grade positions. Neither the Act nor these 
regulations bar the use of category rating for wage grade positions.

Excepted Service Positions

    A Federal employee suggested that agencies should be able to use 
category rating to fill excepted service positions. We have not adopted 
this suggestion. The Act authorizes agencies with delegated examining 
authority under 5 U.S.C. 1104(a)(2) to develop a category rating system 
for jobs filled through competitive examining. This authority cannot be 
extended to the excepted service. However, 5 CFR part 302 gives 
agencies the flexibility to develop procedures similar to category 
rating to fill excepted service positions.

Expanded Academic Degree Training Authority

    Section 1331(a) of the Act amended the provisions of 5 U.S.C. 4107 
by expanding the agency's authority to pay or reimburse employees for 
the cost of academic degree training when such training contributes 
significantly to meeting an identified agency training need, resolving 
an identified agency staffing problem, or accomplishing goals in the 
agency's human capital management strategic plan.

Discussion of Comments

    One agency suggested the reference to 5 CFR 335.103(c)(1)(iii), 
which requires competition for certain training opportunities that lead 
to promotion, be added to the requirement for selecting employees for 
academic degree programs. We agree and have added the reference 5 CFR 
335.103(c)(1)(iii) to Sec.  410.308(c). The same agency questioned 
whether Career Transition Assistance Plan (CTAP) requirements should be 
followed concerning details for training assignments that may become 
permanent. The scenario presented by the agency concerning CTAP and 
detail assignments is outside the scope of the regulation.
    A union suggested that OPM redraft the regulation to reincorporate 
constraints on the use of academic degrees as previously written in 5 
CFR 410.308 to guard against the abusive spending of funds for closely 
related purposes. The wording in the interim regulation does not remove 
protection against abusive use of funds. Agencies continue to be 
required to establish written training policies and procedures to 
support and document the use of this expanded authority in accordance 
with the criteria in law. Agencies are also required to maintain 
records on the use and efficacy of their academic degree training 
programs. However, we have rephrased Sec.  410.308(c) to address 
specific criteria concerning the use of this authority.
    Two agencies commented that sections 410.309 and 410.310 need 
clarification in light of the expanded authority to pay for academic 
degrees. They indicated that if the authority is to be a useful tool 
for retention, it should not require an agency paying for a four-year 
degree to commit the beneficiary to a 12-year service obligation. 
Although these sections do not specifically address the expanded 
academic degree authority, they are integral to the implementation of 
this authority. Therefore, we have considered the comments and concur 
that sections 410.309 and 410.310 should be clarified to explain 
agencies' flexibilities when using this academic degree training 
authority. We have added a definition to Sec.  410.101 and a new 
paragraph (d) to Sec.  410.310 to provide an additional method to 
compute time in training. These changes allow agencies more flexibility 
in establishing effective continued service requirements following 
training. Additional information and an example on how to apply section 
410.310(d) can be found on the OPM Web site at http://www.opm.gov/hrd/lead/pubs/handbook/opmintro.asp.

Other Comments, Including Those on Overseas Employment

    One agency and one union commented on the need for clarification of 
overseas limited appointing authority. We have revised Sec.  301.201 to 
clarify its meaning.
    Two Federal agencies commented that restating referenced sections 
of title 5, U.S.C., instead of referencing them, would make the 
regulations clearer and easier to apply. We have adopted this 
suggestion throughout the regulation.

Executive Order 12866, Regulatory Review

    This final rule has been reviewed by the Office of Management and 
Budget in accordance with Executive Order 12866.

Regulatory Flexibility Act

    I certify that these regulations will not have a significant 
economic impact on a substantial number of small entities (including 
small businesses, small organizational units, and small governmental 
jurisdictions) because they only apply to Federal agencies and 
employees.

List of Subjects in 5 CFR Parts 230, 301, 316, 337, and 410

    Civil defense, Education, Government employees.

U.S. Office of Personnel Management.
Kay Coles James,
 Director.


0
Accordingly, under the authority of 5 U.S.C. 3304, 3319, and 4107, the 
interim rule (68 FR 35265) amending 5 CFR parts 230, 301, 316, 337, and 
410 is adopted as final with the following changes:

PART 230--ORGANIZATION OF THE GOVERNMENT FOR PERSONNEL MANAGEMENT

0
1. The authority for part 230 continues to read as follows:

    Authority: 5 U.S.C. 1302, 3301, 3302; E.O. 10577; 3 CFR 1954-
1958 Comp., p. 218; Sec.  230.401 also issued under 5 U.S.C. 1104.

[[Page 33275]]

Subpart D--Agency Authority To Take Personnel Actions in a National 
Emergency

0
2. Revise Sec.  230.402(c), (h)(1), and (h)(2) to read as follows:


Sec.  230.402  Agency authority to make emergency-indefinite 
appointments in a national emergency.

* * * * *
    (c) Appointment under direct-hire authority. An agency may make 
emergency-indefinite appointments under this section using the direct-
hire procedures in part 337 of this chapter.
* * * * *
    (h) * * * (1) The term indefinite employee includes an emergency-
indefinite employee or an employee under an emergency appointment as 
used in the following: parts 351, 353 of this chapter, subpart G of 
part 550 of this chapter, and part 752 of this chapter.
    (2) The selection procedures of part 337 of this chapter apply to 
emergency-indefinite appointments that use the direct-hire authority 
under paragraph (c) of this section.
* * * * *

PART 301--OVERSEAS EMPLOYMENT

0
3. The authority citation for part 301 continues to read as follows:

    Authority: 5 U.S.C. 3301, 3302; E.O. 10577, 3 CFR 1954-1958 
Comp., p. 218, as amended by E.O. 10641, 3 CFR 1954-1958 Comp., p. 
274, unless otherwise noted.

Subpart B--Overseas Limited Appointment

0
4. Revise Sec.  301.201 to read as follows:


Sec.  301.201  Appointments of United States citizens recruited 
overseas.

    When there is a shortage of eligible applicants, as defined at 
Sec.  337.202 of this chapter, resulting from a competitive 
announcement that is open to applicants in the local overseas area, an 
agency may give an overseas limited appointment to a United States 
citizen recruited overseas for a position overseas.

0
5. Revise Sec.  301.205 to read as follows:


Sec.  301.205  Requirements and restrictions.

    The requirements and restrictions in subpart F of part 300 of this 
chapter apply to appointments under this subpart.

PART 316--TEMPORARY AND TERM EMPLOYMENT

0
6. The authority citation for part 316 continues to read as follows:

    Authority: 5 U.S.C. 3301, 3302; E.O. 10577, 3 CFR, 1954-1958 
Comp., p. 218.

Subpart C--Term Employment

0
7-8. Revise paragraph (a) of Sec.  316.302 to read as follows:


Sec.  316.302  Selection of term employees.

    (a) Competitive term appointment. An agency may make a term 
appointment under part 332 of this chapter, by using competitive 
procedures, or under part 337 of this chapter, by using direct-hire 
procedures, as appropriate.
* * * * *

Subpart D--Temporary Limited Employment

0
9. Revise paragraph (a) of Sec.  316.402 to read as follows:


Sec.  316.402  Procedures for making temporary appointments.

    (a) Competitive temporary appointments. In accordance with the time 
limits in Sec.  316.401, an agency may make a temporary appointment 
under part 332 of this chapter, by using competitive procedures, or 
under part 337 of this chapter, by using direct-hire procedures, as 
appropriate.
* * * * *

PART 337--EXAMINING SYSTEM

0
10-11. Revise the authority citation for part 337 to read as follows:

    Authority: 5 U.S.C. 1104(a)(2), 1302, 3301, 3302, 3304, 3319, 
5364; E.O. 10577, 3 CFR 1954-1958 Comp., p. 218; 33 FR 12423, Sept. 
4, 1968; and 45 FR 18365, Mar. 21, 1980.

0
12. Revise subpart B to read as follows:

Subpart B--Direct-Hire Authority

Sec.
337.201 Coverage and purpose.
337.202 Definitions.
337.203 Public notice requirements.
337.204 Severe shortage of candidates.
337.205 Critical hiring needs.
337.206 Terminations, modifications, extensions, and reporting.


Sec.  337.201  Coverage and purpose.

    OPM will permit an agency with delegated examining authority under 
5 U.S.C. 1104(a)(2) to use direct-hire authority under 5 U.S.C. 
3304(a)(3) for a permanent or nonpermanent position or group of 
positions in the competitive service at GS-15 (or equivalent) and 
below, if OPM determines that there is either a severe shortage of 
candidates or a critical hiring need for such positions. It is not 
required that this direct-hire authority be exercised by a delegated 
examining unit. Requests for direct-hire authority must be submitted by 
the agency's Chief Human Capital Officer (or equivalent) at the agency 
headquarters level. OPM will determine the length of the direct-hire 
authority based on the justification.


Sec.  337.202  Definitions.

    In this subpart:
    (a) A direct-hire authority permits hiring without regard to the 
provisions of 5 U.S.C. 3309 through 3318; part 211 of this chapter; and 
subpart A of part 337 of this chapter.
    (b) A severe shortage of candidates for a particular position or 
group of positions means that an agency is having difficulty 
identifying candidates possessing the competencies or the knowledge, 
skills, and abilities required to perform the job requirements despite 
extensive recruitment, extended announcement periods, and the use, as 
applicable, of hiring flexibilities such as recruitment or relocation 
incentives or special salary rates.
    (c) A critical hiring need for a particular position or group of 
positions means that an agency has a need to fill the position(s) to 
meet mission requirements brought about by circumstances such as, but 
not limited to, a national emergency, threat, potential threat, 
environmental disaster, or unanticipated or unusual event or mission 
requirement, or to conform to the requirements of law, a Presidential 
directive or Administration initiative.


Sec.  337.203  Public notice requirements.

    Agencies must comply with public notice requirements as prescribed 
in 5 U.S.C. 3327 and 3330, and subpart G of part 330 of this chapter 
with respect to any position that an agency seeks to fill using direct-
hire authority.


Sec.  337.204  Severe shortage of candidates.

    (a) OPM will determine when a severe shortage of candidates exists 
for particular occupations, grades (or equivalent), and/or geographic 
locations. OPM may decide independently that such a shortage exists, or 
may make this decision in response to a written request from an agency.
    (b) An agency when requesting direct-hire authority under this 
section, or OPM when deciding independently, must identify the position 
or positions that are difficult to fill and must provide supporting 
evidence that demonstrates the existence of a severe shortage of 
candidates with respect to the position(s). The evidence should 
include, as applicable, information about:
    (1) The results of workforce planning and analysis;

[[Page 33276]]

    (2) Employment trends including the local or national labor market;
    (3) The existence of nationwide or geographic skills shortages;
    (4) Agency efforts, including recruitment initiatives, use of other 
appointing authorities (e.g., schedule A, schedule B) and 
flexibilities, training and development programs tailored to the 
position(s), and an explanation of why these recruitment and training 
efforts have not been sufficient;
    (5) The availability and quality of candidates;
    (6) The desirability of the geographic location of the position(s);
    (7) The desirability of the duties and/or work environment 
associated with the position(s); and
    (8) Other pertinent information such as selective placement factors 
or other special requirements of the position, as well as agency use of 
hiring flexibilities such as recruitment or retention allowances or 
special salary rates.


Sec.  337.205  Critical hiring needs.

    (a) OPM will determine when there is a critical hiring need for 
particular occupations, grades (or equivalent) and/or geographic 
locations. OPM may decide independently that such a need exists or may 
make this decision in response to a written request from an agency.
    (b) An agency when requesting direct-hire authority under this 
section, or OPM when deciding on its own, must:
    (1) Identify the position(s) that must be filled;
    (2) Describe the event or circumstance that has created the need to 
fill the position(s);
    (3) Specify the duration for which the critical need is expected to 
exist; and
    (4) Include supporting evidence that demonstrates why the use of 
other hiring authorities is impracticable or ineffective.


Sec.  337.206  Terminations, modifications, extensions, and reporting.

    (a) Termination and modification. On a periodic basis, for each 
direct-hire authority, OPM will review agency use of the authority to 
ensure proper administration and to determine if continued use of the 
authority is supportable. OPM will terminate or modify a direct-hire 
authority if it determines that there is no longer a severe shortage of 
candidates or a critical hiring need. Likewise, when an agency finds 
there are adequate numbers of qualified candidates for positions 
previously filled under direct-hire authorities, based on severe 
shortage of candidates, the agency is required to report this change of 
events to OPM. OPM may also terminate an agency's authority when the 
agency has used an authority improperly.
    (b) Extension. OPM may extend direct-hire authority if OPM 
determines, based on relevant, recent, and supportable data, that there 
is or will continue to be a severe shortage of candidates or a critical 
hiring need for particular positions as of the date the authority is 
due to expire. In their requests for extensions of direct-hire 
authorities, agencies must include an update of the supporting evidence 
that demonstrated the need for the original authority.
    (c) Reporting requirement. On a periodic basis, OPM may request 
information from agencies regarding their use of these direct-hire 
authorities. The requested information may include numbers of 
positions, title, series, and grade of positions advertised under the 
direct-hire authority, the number of qualified applicants, the specific 
qualification criteria, and the number of applicants appointed under 
the authority.

0
13. Revise Subpart C to read as follows:

Subpart C--Alternative Rating and Selection Procedures

Sec.
337.301 Coverage and purpose.
337.302 Definitions.
337.303 Agency responsibilities.
337.304 Veterans' preference.
337.305 Reporting requirements.


Sec.  337.301  Coverage and purpose.

    This subpart implements the category rating and selection 
procedures at 5 U.S.C. 3319. This law authorizes agencies with 
delegated examining authority under 5 U.S.C. 1104(a)(2) to develop a 
category rating method as an alternative process to assess applicants 
for jobs filled through competitive examining.


Sec.  337.302  Definitions.

    In this subpart:
    (a) Category rating is synonymous with alternative rating as 
described at 5 U.S.C. 3319, and is a process of evaluating qualified 
eligibles by quality categories rather than by assigning individual 
numeric scores. The agency assesses candidates against job-related 
criteria and then places them into two or more pre-defined categories.
    (b) Quality categories are groupings of individuals with similar 
levels of job-related competencies or similar levels of knowledge, 
skills, and abilities.


Sec.  337.303  Agency responsibilities.

    To use a category rating procedure, agencies must:
    (a) Establish a system for evaluating applicants that provides for 
two or more quality categories;
    (b) Define each quality category through job analysis conducted in 
accordance with the ``Uniform Guidelines on Employee Selection 
Procedures'' at 29 CFR part 1607 and part 300 of this chapter. Each 
category must have a clear definition that distinguishes it from other 
categories;
    (c) Describe each quality category in the job announcement and 
apply the provisions of part 330, subparts B, F, and G of this chapter;
    (d) Place applicants into categories based upon their job-related 
competencies or their knowledge, skills, and abilities; and
    (e) Establish documentation and record keeping procedures for 
reconstruction purposes.


Sec.  337.304  Veterans' preference.

    In this subpart:
    (a) Veterans' preference must be applied as prescribed in 5 U.S.C. 
3319(b) and (c)(2); and
    (b) Veterans' preference points as prescribed in section 337.101 of 
this part are not applied in category rating.


Sec.  337.305  Reporting requirements.

    Any agency that uses category rating must forward to OPM a copy of 
the annual report that it must submit to Congress pursuant to 5 U.S.C. 
3319(d). Agencies must send their annual reports to the Speaker of the 
House and the President of the Senate. The report must include the 
following information:
    (a) The number of employees hired under the system;
    (b) The impact that system has had on the hiring of veterans and 
minorities, including those who are American Indian or Alaska Natives, 
Asian, Black or African American, and native Hawaiian or other Pacific 
Islanders; and
    (c) The way managers were trained in the administration of category 
rating.

PART 410--TRAINING

0
14. Revise the authority citation in part 410 to read as follows:

    Authority: 5 U.S.C. 4101, et seq.; E.O. 11348, 3 CFR, 1967 
Comp., p. 275.

Subpart C--Establishing and Implementing Training Programs

0
15. Amend Sec.  410.101 to add paragraph (i) to read as follows:


Sec.  410.101  Definitions.

* * * * *
    (i) Established contact hours are the number of academic credit 
hours assigned to a course(s) times the number

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of weeks in a term times the number of terms required to complete the 
degree.

0
16. Revise Sec.  410.308 to read as follows:


Sec.  410.308  Training to obtain an academic degree.

    (a) An agency may authorize training for an employee to obtain an 
academic degree under conditions prescribed at 5 U.S.C. 4107(a).
    (b) Colleges and universities participating in an academic degree 
training program must be accredited by a nationally recognized body. A 
``nationally recognized body'' is a regional, national, or 
international accrediting organization recognized by the U.S. 
Department of Education. The listing of accrediting bodies is available 
through the Department.
    (c) The selection of employees for an academic degree training 
program must follow the requirements of Sec.  335.103(b)(3), Sec.  
335.103(c)(1)(iii), and subpart A of part 300 of this chapter. The 
selection and assignment must be accomplished to meet one or more of 
the criteria identified in 5 U.S.C. 4107(a). Therefore, an agency may 
competitively select and assign an employee to an academic degree 
training program that qualifies the employee for promotion to a higher 
graded position or to a position that requires an academic degree.
    (d) Agency heads must assess and maintain records on the 
effectiveness of training assignments under this section.
    (e) On a periodic basis, OPM may request agency information on the 
use and effectiveness of training assignments under this section.

0
17. Add paragraph (b)(3) to Sec.  410.309 to read as follows:


Sec.  410.309  Agreements to continue in service.

* * * * *
    (b) Requirements. * * *
    (3) The head of an agency shall establish procedures to compute 
length of training period for academic degree training programs in 
accordance with Sec.  410.310(d).

0
18. Amend Sec.  410.310 to add paragraph (d) to read as follows:


Sec.  410.310  Computing time in training.

* * * * *
    (d) When an employee is pursuing an academic degree through an 
agency academic degree training program, an agency may compute the 
length of the academic degree training period based on the academic 
institution's established contact hours.

[FR Doc. 04-13426 Filed 6-9-04; 5:03 pm]
BILLING CODE 6325-39-P