[Federal Register Volume 72, Number 79 (Wednesday, April 25, 2007)]
[Proposed Rules]
[Pages 20440-20442]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-7763]


 ========================================================================
 Proposed Rules
                                                 Federal Register
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 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
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 

  Federal Register / Vol. 72, No. 79 / Wednesday, April 25, 2007 / 
Proposed Rules  

[[Page 20440]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 535

RIN 3206-AK87


Critical Position Pay Authority

AGENCY: Office of Personnel Management.

ACTION: Proposed rule with request for comments.

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SUMMARY: The Office of Personnel Management (OPM) is proposing new 
regulations to govern the use of a critical position pay authority that 
allows higher rates of pay for positions that require a very high level 
of expertise in a scientific, technical, professional, or 
administrative field and are critical to the agency's mission. By law, 
agency requests for critical position pay authority must be approved by 
OPM in consultation with the Office of Management and Budget.

DATES: Submit comments on or before June 25, 2007.

ADDRESSES: Send or deliver written comments to Charles D. Grimes III, 
Deputy Associate Director for Performance Management and Pay Systems 
Design, Office of Personnel Management, Room 7H31, 1900 E Street, NW., 
Washington, DC 20415-8200; FAX: (202) 606-4264; or e-mail: [email protected].

FOR FURTHER INFORMATION CONTACT: Joe Ratcliffe, (202) 606-2838; FAX: 
(202) 606-4264; or e-mail: [email protected].

SUPPLEMENTARY INFORMATION: Section 5377 of title 5, United States Code, 
as revised by section 102 of the Federal Workforce Flexibility Act of 
2004 (Public Law 108-411, October 30, 2004), authorizes the Office of 
Personnel Management (OPM), in consultation with the Office of 
Management and Budget (OMB), to grant authority to an agency to fix the 
rate of basic pay for one or more positions that are designated as 
critical positions.
    Section 102 shifts responsibility for the critical position pay 
authority from OMB to OPM to encourage increased application of this 
underutilized flexibility as a means of attracting talented individuals 
to critical positions in the Federal Government who would not otherwise 
accept or stay in Government jobs at lower rates of pay. As the agency 
charged with assisting the executive branch to meet its growing human 
capital demands, OPM currently works directly with other agencies to 
ensure that they use the broad range of existing human resources 
management tools strategically to recruit, retain, and manage a high-
performing workforce.
    Under the critical position pay authority, OPM may, upon the 
request of the head of an agency, grant critical position pay authority 
for positions that require a very high level of expertise in a 
scientific, technical, professional, or administrative field and are 
critical to the accomplishment of the agency's mission. Critical 
position pay authority may be granted only to the extent necessary to 
recruit or retain an individual exceptionally well-qualified for a 
critical position.
    Approval of critical position pay authority for a position does not 
change conditions of employment other than the rate of basic pay. For 
example, employees who receive critical position pay still remain under 
their normal pay plan, may still receive applicable performance awards; 
cash awards; recruitment, retention, and relocation incentives; and 
other similar payments; and remain subject to the applicable aggregate 
limitation on pay. However, employees receiving critical position pay 
may not receive locality pay under 5 U.S.C. 5304 or similar authority. 
Agencies with employees under the critical position pay authority must 
use the pay rate determinant code ``C'' for covered employees in 
submissions to the Central Personnel Data File.
    Guidance on submitting requests for critical position pay authority 
was published in OMB Bulletin No. 91-09, March 7, 1991. These proposed 
regulations would generally continue the policies and procedures 
established by OMB, but critical position pay would not be limited to 
positions classified above GS-15. A general summary of the proposed 
regulations is as follows:
     The head of an agency would request critical position pay 
authority by sending a written request and supporting documentation to 
the Director of OPM. Requests would be prepared in accordance with 
Sec.  535.104.
     Heads of agencies with approved critical position pay 
authority would be authorized to set the rate of basic pay for a 
critical position up to the rate for level II of the Executive Schedule 
($168,000 in 2007) without further approval.
     In exceptional circumstances, the head of an agency could 
seek approval for critical position pay authority up to the rate for 
level I of the Executive Schedule ($186,600 in 2007), based on 
information and data that justify the higher rate of pay.
     In rare circumstances, the head of an agency could seek 
approval for critical position pay authority at a rate higher than the 
rate for level I of the Executive Schedule with approval by the 
President based on information and data that justify the higher rate of 
pay.
     After establishing a critical position pay rate, the head 
of an agency would have authority to make subsequent pay adjustments, 
up to the authorized maximum rate of pay. However, the employee must 
have at least a rating of Fully Successful or equivalent, and 
subsequent adjustments must be based on labor market factors, 
recruitment and retention needs, and individual accomplishments and 
contributions to an agency's mission.
     A critical position pay rate would be a rate of basic pay 
for most purposes.
     Critical position pay authority could be granted to one or 
more specific positions at an agency.
     The law requires that OPM submit an annual report to 
Congress on the use of the critical position pay authority. To produce 
this report, agencies using the critical position pay authority would 
submit to OPM by January 31 of each year the information described in 
Sec.  535.107. The agency would be required to report with respect to 
each covered position whether the critical position pay authority is 
still needed.
     Agencies granted critical position pay authority could 
continue to use the authority as long as it is needed. OPM would 
monitor agencies' use of critical position pay authorities through 
annual reports and could terminate the authority associated with any 
given position if, in OPM's judgment in consultation with OMB, the 
authority is no longer needed.

[[Page 20441]]

Executive Order 12866, Regulatory Review

    The Office of Management and Budget has reviewed this rule 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 because they 
will affect only Federal agencies and employees.

List of Subjects in 5 CFR Part 535

    Government employees, Wages.

    Office of Personnel Management.
Linda M. Springer,
Director.

    Accordingly, OPM is proposing to amend title 5, Code of Federal 
Regulations, by adding a new part 535 as follows:

PART 535--CRITICAL POSITION PAY AUTHORITY

Sec.
535.101 Purpose.
535.102 Definitions.
535.103 Authority.
535.104 Requests for and granting critical position pay authority.
535.105 Setting and adjusting rates of basic pay.
535.106 Treatment as a rate of basic pay.
535.107 Annual reporting requirements.

    Authority: 5 U.S.C. 5377; E.O. 13415, 71 FR 70641.


Sec.  535.101  Purpose.

    The purpose of this part is to provide a regulatory framework for 
the critical position pay authority authorized by 5 U.S.C. 5377. The 
Office of Personnel Management (OPM), in consultation with the Office 
of Management and Budget (OMB), may grant authority to the head of an 
agency to fix the rate of basic pay for one or more positions under 
this part.


Sec.  535.102  Definitions.

    (a) Agency has the meaning given that term in 5 U.S.C. 5102.
    (b) Employee means an employee (as defined in 5 U.S.C. 2105) in or 
under an agency.
    (c) Head of an agency means the agency head or an official who has 
been delegated the authority to act for the agency head in the matter 
concerned.
    (d) Critical position means a position for which OPM has granted 
authority to the head of an agency to exercise the pay-setting 
authority provided in 5 U.S.C. 5377.
    (e) Critical position pay authority means the authority that may be 
granted to the head of an agency by OPM under 5 U.S.C. 5377 to set the 
rate of basic pay for a given critical position under the provisions of 
that section.
    (f) Critical position pay rate means the specific rate of pay 
established by the head of an agency for an employee in a critical 
position based upon the exercise of the critical position pay 
authority. A critical position pay rate is a rate of basic pay to the 
extent provided in Sec.  535.106.


Sec.  535.103  Authority.

    (a) Subject to a grant of authority from OPM in consultation with 
OMB and all other requirements in this part, the head of an agency may 
fix the rate of basic pay for a critical position at a rate not less 
than the rate of basic pay that would otherwise be payable for the 
position, but not greater than--
    (1) The rate payable for level II of the Executive Schedule (unless 
paragraph (a)(2) or (a)(3) applies);
    (2) The rate payable for level I of the Executive Schedule in 
exceptional circumstances based on information and data that justify a 
rate higher than the rate payable for level II of the Executive 
Schedule; or
    (3) A rate in excess of the rate for level I of the Executive 
Schedule that is established in rare circumstances with the written 
approval of the President.
    (b) The head of an agency may exercise his or her critical position 
pay authority only--
    (1) When such a position requires expertise of an extremely high 
level in a scientific, technical, professional, or administrative field 
and is critical to the agency's successful accomplishment of an 
important mission; and
    (2) To the extent necessary to recruit or retain an individual 
exceptionally well-qualified for the critical position.
    (c) If critical position pay authority is granted for a position, 
the head of an agency may determine whether it is appropriate to 
exercise the authority with respect to any proposed appointee or 
incumbent of the position.
    (d) An agency granted critical position pay authority may continue 
to use the authority for an authorized position as long as needed. OPM 
will monitor the use of critical position pay authorities annually, 
through the agency's required reports under Sec.  535.107, and will 
terminate the authority associated with a given position after 
notifying the agency if, in OPM's judgment in consultation with OMB, 
the authority is no longer needed.


Sec.  535.104  Requests for and granting critical position pay 
authority.

    (a) An agency may request critical position pay authority only 
after determining that the position in question cannot be filled with 
an exceptionally well-qualified individual through the use of other 
available human resources flexibilities and pay authorities. Agency 
requests must include the information in paragraph (d) of this 
subsection. OPM, in consultation with OMB, will review agency requests. 
OPM will advise the requesting agency as to whether the request is 
approved and when the agency's critical position pay authority becomes 
effective.
    (b) A request for critical position pay authority (or authorities) 
must be signed by the head of an agency and submitted to OPM. Requests 
covering multiple positions must include a list of the positions in 
priority order. The head of an agency may request coverage of positions 
of a type not listed in 5 U.S.C. 5377(a)(2), as authorized by 5 U.S.C. 
5377(i)(2) and Executive Order 13415.
    (c) Requests for critical position pay authority to set pay above 
the rate for level II of the Executive Schedule and up to the rate for 
level I of the Executive Schedule because of exceptional circumstances 
require information and data that justify the higher pay. Requests for 
critical position pay authority to set pay above the rate for level I 
of the Executive Schedule due to rare circumstances require approval by 
the President. The head of an agency must submit such requests to OPM 
with the information required in paragraph (d) of this section. If OPM, 
in consultation with OMB, concurs with a request to set pay above the 
rate for level I of the Executive Schedule, OPM will seek the 
President's approval.
    (d) At a minimum, all requests for critical position pay authority 
must include:
    (1) Position title;
    (2) Position appointment authority (for Senior Executive Service 
positions, appointment authority for any incumbent);
    (3) Pay plan and grade/level;
    (4) Occupational series of the position;
    (5) Geographic location of the position;
    (6) Current salary of the position or incumbent;
    (7) Name of incumbent (or ``Vacant'');
    (8) Length of time the incumbent has been in the position or length 
of time the position has been vacant;
    (9) A written evaluation of the need to designate the position as 
critical. Such an evaluation must include--
    (i) The kinds of work required by the position and the context 
within which it operates;
    (ii) The range of positions and qualification requirements that

[[Page 20442]]

characterize the occupational field, including those that require 
extremely high levels of expertise;
    (iii) The rates of pay reasonably and generally required in the 
public and private sectors for similar positions; and
    (iv) The availability of individuals who possess the qualifications 
to do the work required by the position;
    (10) Documentation, with appropriate supporting data, of the 
agency's experience and, as appropriate, the experience of other 
organizations, in efforts to recruit or retain exceptionally well-
qualified individuals for the position or for a position sufficiently 
similar with respect to the occupational field, required 
qualifications, and other pertinent factors, to provide a reliable 
comparison;
    (11) Assessment of why the agency could not, through diligent and 
comprehensive recruitment efforts and without using the critical 
position pay authority, fill the position within a reasonable period 
with an individual who could perform the duties and responsibilities in 
a manner sufficient to fulfill the agency's mission. This assessment 
must include a justification as to why the agency could not, as an 
effective alternative, use other human resources flexibilities and pay 
authorities, such as recruitment, retention, and relocation incentives 
under 5 CFR part 575;
    (12) An explanation regarding why the position should be designated 
a critical position and made eligible for a higher rate of pay under 
this part within its organizational context (i.e., relative to other 
positions in the organization) and, when applicable, how it compares 
with other critical positions in the agency. The agency must include an 
explanation of how it will deal with perceived inequities among agency 
employees (e.g., situations in which employees in positions designated 
as critical would receive higher rates of pay than their peers, 
supervisors, or other employees in positions with higher-level duties 
and responsibilities);
    (13) Documentation of the effect on the successful accomplishment 
of important agency missions if the position is not designated as a 
critical position;
    (14) Any additional information the agency may deem appropriate to 
demonstrate that higher pay is needed to recruit or retain an employee 
for a critical position;
    (15) Unless the position is an Executive Schedule position, a copy 
of the position description and qualification standard for the critical 
position; and
    (16) The desired rate of basic pay for requests to set pay above 
the rate for level II of the Executive Schedule and justification to 
show that such a rate is necessary to recruit and retain an individual 
exceptionally well-qualified for the critical position.


Sec.  535.105  Setting and adjusting rates of basic pay.

    (a) The rate of basic pay for a critical position may not be less 
than the rate of basic pay, including any locality-based comparability 
payments established under 5 U.S.C. 5304 (or similar geographic 
adjustment or supplement under other legal authority) that would 
otherwise be payable for the position.
    (b) If critical position pay authority is granted for a position, 
the head of an agency may set pay initially at any amount up to the 
rate of pay for level II or level I of the Executive Schedule, as 
applicable, without further approval unless a higher maximum rate is 
approved by the President under Sec.  535.104(c).
    (c) The head of an agency may make subsequent adjustments in the 
rate of pay for a critical position each January at the same time 
general pay adjustments are authorized for Executive Schedule employees 
under section 5318 of title 5, United States Code. Such adjustments may 
not exceed the new rate for Executive Schedule level II or other 
applicable maximum established for the critical position. However, the 
employee must have at least a rating of Fully Successful or equivalent, 
and subsequent adjustments must be based on labor market factors, 
recruitment and retention needs, and individual accomplishments and 
contributions to an agency's mission.
    (d) Employees receiving critical position pay are not entitled to 
locality-based comparability payments established under 5 U.S.C. 5304 
or similar geographic adjustments or supplements under other provision 
of law.
    (e) If an agency discontinues critical position pay for a given 
position (on its own initiative or because OPM, in consultation with 
OMB, terminates the authority under Sec.  535.103(d)), the employee's 
rate of basic pay will be set at the rate to which the employee would 
be entitled had he or she not received critical pay, as determined by 
the head of the agency.


Sec.  535.106  Treatment as rate of basic pay.

    A critical position pay rate is considered a rate of basic pay for 
all purposes except--
    (a) Application of any saved pay or pay retention provisions (e.g., 
5 U.S.C. 5363); or
    (b) Application of any adverse action provisions (e.g., 5 U.S.C. 
7512).


Sec.  535.107  Annual reporting requirements.

    (a) OPM must submit an annual report to Congress on the use of the 
critical position pay authority. Agencies must submit the following 
information to OPM by January 31 of each year on their use of critical 
position pay authority for the previous calendar year:
    (1) The name, title, pay plan, and grade/level of each employee 
receiving a higher rate of basic pay under this subpart;
    (2) The annual rate or rates of basic pay paid in the preceding 
calendar year to each employee in a critical position;
    (3) The beginning and ending dates of such rate(s) of basic pay, as 
applicable;
    (4) The rate or rates of basic pay that would have been paid but 
for the grant of critical position pay. This includes what the rate or 
rates of basic pay were, or would have been, without critical position 
pay at the time critical position pay is initially exercised and any 
subsequent adjustments to basic pay that would have been made if 
critical position pay authority had not been exercised (estimate rates 
where a range would apply, such as for Senior Executive Service 
positions); and
    (5) Whether the authority is still needed for the critical 
position(s).
    (b) [Reserved]

 [FR Doc. E7-7763 Filed 4-24-07; 8:45 am]
BILLING CODE 6325-39-P