[Federal Register Volume 70, Number 17 (Thursday, January 27, 2005)]
[Rules and Regulations]
[Pages 3858-3861]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-1483]


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OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 576

RIN 3206-AJ76


Voluntary Separation Incentive Payments

AGENCY: Office of Personnel Management.

ACTION: Final rule.

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SUMMARY: The Office of Personnel Management (OPM) is issuing final 
regulations on Voluntary Separation Incentive Payments (generally known 
as ``VSIPs'' or ``buyouts''). These final regulations explain how an 
agency requests authority from OPM to offer Voluntary Separation 
Incentive Payments under the Chief Human Capital Officers Act of 2002, 
which applies to most executive branch agencies.
    These final regulations also explain how agencies must inform 
employees returning from military leave of any Voluntary Separation 
Incentive Payment offers they may have missed while on military leave. 
Finally, these regulations explain how in exceptional circumstances an 
agency that is hiring a former employee who previously received a 
Voluntary Separation Incentive Payment may request that OPM waive the 
general requirement that the individual repay the incentive if 
reemployed in the Government within 5 years of receiving the incentive.

DATES: These regulations are effective January 27, 2005.

FOR FURTHER INFORMATION CONTACT: Sharon K. Ginley at (202 606-0960, fax 
at (202) 606-2329, TTY at (202) 418-3134, or e-mail at 
[email protected].

SUPPLEMENTARY INFORMATION: Section 1313(a) of the Chief Human Capital 
Officers Act of 2002 (Public Law 107-296; 116 Stat. 2135) added new 
sections 3521 through 3525 to title 5, United States Code, to allow 
executive branch agencies, at their option, to offer Voluntary 
Separation Incentive Payments to employees who separate by voluntary 
retirement or by resignation. On February 4, 2003, OPM issued interim 
regulations to revise part 576 of title 5, Code of Federal Regulations, 
with a request for public comments. These final regulations incorporate 
public comments and make clarifying revisions.
    To offer buyouts, an agency must submit a plan for OPM approval. 
The plan must describe how the agency will use Voluntary Separation 
Incentive Payments as a tool to facilitate its restructuring goals. OPM 
will review each agency's plan and, in consultation with the Director 
of the Office of Management and Budget (OMB), may make any appropriate 
modifications to the agency's plan for Voluntary Separation Incentive 
Payments. The review may include a consideration of costs and benefits 
associated with using the authority. OPM will issue supplemental 
guidance for agency use in preparing a VSIP implementation plan. The 
agency must have OPM approval before using this flexibility.
    A former employee who accepts any employment with the Government of 
the United States for compensation within 5 years after the date of 
separating for a Voluntary Separation Incentive Payment must repay the 
entire amount of the incentive payment before the first day of 
reemployment in the Federal service. Under exceptional circumstances, 
and at the request of the hiring agency, the OPM Director may waive the 
repayment requirement for former executive branch employees.

Comments Received

    OPM received five comments from agencies concerning the interim 
regulations. One agency pointed out that the interim regulations 
contained the words ``* * * to offer Voluntary Separation Incentive 
Payments to surplus or displaced employees.'' The agency pointed out 
that the words

[[Page 3859]]

``surplus or displaced'' were not in Public Law 107-296. We agree that 
the words are unnecessary, but note that they were mentioned only in 
the Supplementary Information to the interim regulations, and not the 
actual interim regulations themselves. We have not included those words 
in the final regulations.
    Two agencies disagreed with OPM's interpretation of the phrase 
``currently employed for a continuous period of at least 3 years,'' 
which is a minimum service requirement for a Voluntary Separation 
Incentive Payment. OPM's interpretation has been 3 years of continuous 
employment within the same agency, and it had been included in OPM's 
instructions to agencies in the use of Voluntary Separation Incentive 
Payments (attached to Voluntary Separation Incentive Payment approval 
letters). For purposes of clarification, in order to fall within the 
coverage of section 576.101(b) of this regulation, an individual must 
have 3 years of current continuous employment as an employee within the 
meaning of 5 U.S.C. 2105 or 16 U.S.C. 590(h)(b)(5).
    One agency expressed concern with the regulations allowing OPM, in 
consultation with OMB, to modify an agency's buyout plan. They said 
that the requesting agency should also be consulted before any changes 
are made to its plans. Although the statute does not require OPM to 
consult with the agency before modifying a plan, we agree with the 
commenter, and have made the suggested change.
    Two agencies expressed concern that the requirements in section 
576.102(c) of the interim regulations are more restrictive than the 
provisions of Public Law 107-296. Section 576.102(c) of the interim 
regulations requires listings of employees by organizational unit, 
geographic location, occupational category, and grade level. Public Law 
107-296 requires ``* * * a description of which categories of employees 
will be offered incentives.'' Of the two agencies that commented about 
this section, one felt that the more detailed requirements in section 
576.102(c) hamper managerial flexibility during restructuring. The 
other agency expressed concern that these requirements hinder an 
agency's ability to plan for restructuring (and submit requests for 
buyout authority) during periods when competitive sourcing is being 
studied. They pointed out that specific information about the positions 
for which they intend to offer buyouts might be sensitive at that time. 
Also, they said, such information might be inaccurate depending upon 
whether they won or lost a bid.
    In addition to the Public Law 107-296 requirement the agency cited 
above, the statute also requires that agency plans identify ``the 
specific positions and functions to be reduced or eliminated'' and 
specifies the basis upon which employees shall be offered voluntary 
incentive payments. Identifying specific positions and functions 
necessarily entails identification of organizational units, 
occupational series or levels, and geographic locations. OPM believes, 
therefore, that its requirements are consistent with the statute and in 
the best interest of the Federal Government. Requiring the specific 
information about the positions for which agencies plan to offer 
buyouts is the best way to ensure that agencies' buyout plans are 
executed in the manner intended by the statute. Retaining the level of 
position specificity shown in the interim regulations will reinforce 
the fact that this is a management tool and not an employee 
entitlement. In regard to the competitive sourcing comment, OPM will 
work with agencies to determine the best course of action during study 
periods. For these reasons, we are retaining the specific position 
requirements contained in section 576.102(c) of the interim 
regulations. They can be found in section 576.102(a) of the final 
regulations.

Final Rule

    New subpart A of 5 CFR part 576 defines the terms ``Employee'' and 
``Specific Designee'' and provides additional guidance concerning 
making buyout offers to employees.
    New subpart B of 5 CFR part 576 discusses the term ``employment 
with the Government of the United States'' for buyout repayment and 
waiver of buyout repayment purposes. It indicates that personal service 
contracts and other direct contracts are considered to be employment 
with the Government of the United States for buyout repayment purposes. 
Like other buyout recipients who accept Federal employment within 5 
years of receipt of a buyout, employees working on personal service 
contracts and other direct contracts are also subject to buyout 
repayment if they begin working on such contracts within 5 years of 
receipt of a buyout.

Regulatory Flexibility Act

    I certify that this regulation will not have a significant economic 
impact on a substantial number of small entities because it affects 
only certain Federal employees.

Executive Order 12866, Regulatory Review

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

List of Subjects in 5 CFR Part 576

    Government employees, Wages.

U.S. Office of Personnel Management.

Kay Coles James,
Director.

0
Accordingly, OPM amends part 576 of title 5, Code of Federal 
Regulations, as follows:
0
1. Part 576 is revised to read as follows:

PART 576--VOLUNTARY SEPARATION INCENTIVE PAYMENTS

Subpart A--Voluntary Separation Incentive Payments
Sec.
576.101 Definitions.
576.102 Voluntary Separation Incentive Payment implementation plans.
576.103 Offering Voluntary Separation Incentive Payments to 
employees.
576.104 Additional agency requirements.
576.105 Existing Voluntary Separation Incentive Payment authorities.
Subpart B--Waiver of Repayment of Voluntary Separation Incentive 
Payments
576.201 Definitions.
576.202 Repayment requirement.
576.203 Waivers of the Voluntary Separation Incentive Repayment 
requirement.

    Authority: Sections 3521, 3522, 3523, 3524, and 3535 of title 5, 
United States Code.

Subpart A--Voluntary Separation Incentive Payments


Sec.  576.101  Definitions.

    In this part:
    Employee, as defined in 5 U.S.C. 3521, means an employee as defined 
under 5 U.S.C. 2105 employed by an agency and an individual employed by 
a county committee established under section 8(b)(5) of the Soil 
Conservation and Domestic Allotment Act (16 U.S.C. 590h(b)(5)) who--
    (1) Is serving under an appointment without time limitation; and
    (2) Has been currently employed for a continuous period of at least 
3 years.
    Specific designee means a senior officer or official within an 
agency who has been specifically designated to sign requests for 
authority to offer Voluntary Separation Incentive Payments for, or in 
place of, the head of the agency. Examples include the Chief Human 
Capital Officer, the Assistant Secretary for Administration, the 
Director of Human Resources Management, or a deputy of one of these 
persons.

[[Page 3860]]

Sec.  576.102  Voluntary Separation Incentive Payment implementation 
plans.

    (a) In accordance with section 3522(b) of title 5, United States 
Code, a plan submitted by the head of an agency, or his or her specific 
designee, must include:
    (1) Identification of the specific positions and functions to be 
reduced or eliminated, identified by organizational unit, geographic 
location, occupational series, grade level and any other factors 
related to the position;
    (2) A description of the categories of employees who will be 
offered incentives identified by organizational unit, geographic 
location, occupational series, grade level and any other factors, such 
as skills, knowledge, or retirement eligibility (as discussed in 
implementing guidance);
    (3) The time period during which incentives may be paid;
    (4) The number and maximum amounts of Voluntary Separation 
Incentive Payments to be offered;
    (5) A description of how the agency will operate without the 
eliminated or restructured positions and functions;
    (6) A proposed organizational chart displaying the expected changes 
in the agency's organizational structure after the agency has completed 
the incentive payments;
    (7) A short explanation of how Voluntary Early Retirement Authority 
will be used in conjunction with separation incentives, if the agency 
has requested, or will request, that authority; and
    (8) A description of how Voluntary Separation Incentives offered 
under another statutory authority are being used, if the agency is 
offering incentives under any other statutory authority.
    (b) When submitting a plan to OPM, the agency may submit either:
    (1) A specific Voluntary Separation Incentive Payment 
implementation plan outlining the intended use of the incentive 
payments, or
    (2) The agency's human capital plan, which outlines the intended 
use of the incentive payments and the expected changes in the agency's 
organizational structure after the agency has completed the incentive 
payments. If the human capital plan is submitted, it must include the 
information specified in paragraph (a) of this section.
    (c) OPM will consult with the Office of Management and Budget 
regarding the plan and any subsequent modifications, and will notify 
the agency head in writing when the plan is approved. The review may 
include a consideration of costs and benefits associated with using the 
authority. If there are questions concerning the agency's plan, OPM 
reserves the right to contact the agency, inform agency staff of its 
concerns, and require that the agency revise the plan to bring it into 
conformance with these regulations. The agency must obtain OPM approval 
before offering incentives under this authority.


Sec.  576.103  Offering Voluntary Separation Incentive Payments to 
employees.

    (a) Agencies may make offers of Voluntary Separation Incentive 
Payments to employees who agree to voluntarily separate by resignation, 
early retirement, or optional retirement.
    (b) Each time an agency with authority to offer Voluntary 
Separation Incentive Payments establishes a window period for 
acceptance of Voluntary Separation Incentive applications, it may limit 
offers to its employees based on an established opening and closing 
date or the acceptance of a specified number of applications. However, 
at the time of the offer, the agency must notify its employees that it 
retains the right to limit the number of Voluntary Separation Incentive 
Payment offers by use of a specific closing date or by receipt of a 
specified number of applications.
    (c) An agency's downsizing and/or reshaping strategy may change, 
necessitating a change in the offer notice to employees. If the amended 
notice includes a revised closing date, or a revised number of 
applications to be accepted, the new date or number of applications 
must be announced to the same group of employees included in the 
original announcement. If a new or separate notice includes a new 
window period with a new closing date, or a new instance of a specific 
number of applications to be accepted, the new window period or number 
of applications to be accepted may be announced to a different group of 
employees as long as the new group is covered by the approved Voluntary 
Separation Incentive Payment authority.
    (d) Section 4311 of title 38, United States Code, requires that, 
for all practical purposes, agencies treat employees on military duty 
as though they were still on the job. Further, employees are not to be 
disadvantaged because of their military duty. In accordance with these 
provisions, employees on military duty who would otherwise be eligible 
for an offer of a Voluntary Separation Incentive Payment will have 30 
days following their return to duty to either accept or reject an offer 
of a Voluntary Separation Incentive Payment. This is true even if the 
Voluntary Separation Incentive Payment authority provided by OPM has 
expired.
    (e) An employee may separate from the service voluntarily, with a 
Voluntary Separation Incentive Payment, if, on the date of separation, 
the employee:
    (1) Is serving in a position covered by a Voluntary Separation 
Incentive Payment offer; and
    (2) Meets the definition of employee discussed in 5 U.S.C. 3521.
    (f) Agencies are responsible for ensuring that employees are not 
coerced into accepting a Voluntary Separation Incentive Payment. If an 
agency finds any instances of coercion, it must take appropriate 
corrective action.
    (g) An agency may not offer Voluntary Separation Incentive Payments 
beyond the stated expiration date of an authority or assign an 
effective date for a Voluntary Separation Incentive Payment that is 
beyond the time period for paying a Voluntary Separation Incentive 
Payment that was stated in the agency's approved Voluntary Separation 
Incentive Payment plan.
    (h) An agency may not offer Voluntary Separation Incentive Payments 
to employees who are outside the scope of the Voluntary Separation 
Incentive Payment authority approved by OPM.
    (i) OPM may amend, limit, or terminate Voluntary Separation 
Incentive Payment authority if it determines that the agency is no 
longer undergoing the condition(s) that formed the basis for its 
approval or to ensure that the law and regulations governing Voluntary 
Separation Incentive Payments, including the Voluntary Separation 
Incentive Payment usage reporting requirements, are being properly 
followed.


Sec.  576.104  Additional agency requirements

    (a) After OPM approves an agency's plan for Voluntary Separation 
Incentive Payments, the agency is required to immediately notify OPM of 
any subsequent changes in the conditions that served as the basis for 
the approval of the Voluntary Separation Incentive Payment authority.
    (b) Agencies are required to provide OPM with interim and final 
Voluntary Separation Incentive Payment reports, as covered in OPM's 
approval letter to the agency. OPM may suspend or cancel a Voluntary 
Separation Incentive Payment authority if the agency is not in 
compliance with the reporting requirements or reporting schedule 
specified in OPM's Voluntary Separation Incentive Payment authority 
approval letter.

[[Page 3861]]

Sec.  576.105  Existing Voluntary Separation Incentive Payment 
authorities.

    As provided in section 1313(a)(3) of Public Law 107-296, any agency 
exercising Voluntary Separation Incentive authority in effect on 
January 24, 2003, may continue to offer Voluntary Separation Incentives 
consistent with that authority until that authority expires. An agency 
that is eligible to offer Voluntary Separation Incentive Payments under 
this authority and under any other statutory authority may choose which 
authority it wishes to use, or offer incentives under both.

Subpart B--Waiver of Repayment of Voluntary Separation Incentive 
Payments


Sec.  576.201  Definitions.

    `Employment' means employment with the Government of the United 
States, including employment under a personal services contract (or 
other direct contract) with the United States Government (other than an 
entity in the legislative branch) unless employed pursuant to Sec.  
576.203(a).


Sec.  576.202  Repayment requirement.

    An executive branch employee who received a Voluntary Separation 
Incentive Payment as described in subpart A of this part and accepts 
any employment for compensation with the Government of the United 
States within 5 years after the date of the separation on which the 
payment is based must repay the entire amount of the Voluntary 
Separation Incentive Payment to the agency that paid it before the 
individual's first day of reemployment.


Sec.  576.203  Waivers of the Voluntary Separation Incentive Repayment 
requirement.

    (a)(1) If the proposed reemployment is with an agency other than 
the General Accountability Office, the United States Postal Service, or 
the Postal Rate Commission, the Director of the Office of Personnel 
Management may, at the request of the head of the agency, waive the 
repayment if--
    (i) The individual involved possesses unique abilities and is the 
only qualified applicant available for the position; or
    (ii) In case of an emergency involving a direct threat to life or 
property, the individual--
    (A) Has skills directly related to resolving the emergency; and
    (B) Will serve on a temporary basis only so long as that 
individual's services are made necessary by the emergency.
    (2) If the proposed reemployment is with an entity in the 
legislative branch, the head of the entity or the appointing official 
may waive the repayment if the individual involved possesses unique 
abilities and is the only qualified applicant available for the 
position.
    (3) If the proposed reemployment is with the judicial branch, the 
Director of the Administrative Office of the United States Courts may 
waive the repayment if the individual involved possesses unique 
abilities and is the only qualified applicant available for the 
position.
    (4) The repayment waiver provisions under this section do not 
extend to a repayment obligation resulting from employment under a 
personal services contract or other direct contract.
    (b) For a Voluntary Separation Incentive Payment made under 
statutory authority other than subpart A of this part, the agency 
should review the authorizing statute and, if a waiver is permitted, 
submit a request as specified by that statute.
[FR Doc. 05-1483 Filed 1-26-05; 8:45 am]
BILLING CODE 6325-39-M