[Federal Register Volume 76, Number 151 (Friday, August 5, 2011)]
[Proposed Rules]
[Pages 47516-47518]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-19844]

[[Page 47516]]



5 CFR PART 250

RIN 3206-AL98

Personnel Management in Agencies

AGENCY: U.S. Office of Personnel Management.

ACTION: Proposed rule.


SUMMARY: The U.S. Office of Personnel Management is issuing proposed 
regulations that would provide regulatory definitions related to the 
strategic management of human capital, clarify requirements regarding 
the systems and metrics for managing human resources in the Federal 
Government, and streamline/clarify the procedures agencies are required 
to follow.

DATES: Comments must be received on or before October 4, 2011.

ADDRESSES: You may submit comments, identified by RIN number ``3206-
AL98,'' using any of the following methods:
    Federal eRulemaking Portal: http://www.regulations.gov. Follow the 
instructions for submitting comments.
    Mail: Joseph Kennedy, Deputy Associate Director, Agency and 
Veterans Support, U.S. Office of Personnel Management, Room 7460, 1900 
E Street, NW., Washington, DC 20415.

FOR FURTHER INFORMATION CONTACT: Patsy Stevens by telephone at (202) 
606-1574; by fax at (202) 606-1574; or by e-mail at 
[email protected].

SUPPLEMENTARY INFORMATION: The U.S. Office of Personnel Management 
(OPM) is issuing proposed regulations to revise 5 CFR part 250, subpart 
B, Strategic Human Capital Management, and make a technical correction 
to subpart C, Employee Surveys. Subpart B implements the requirements 
of the Chief Human Capital Officers Act (CHCO Act), codified at 5 
U.S.C. 1103(c). Section 1103 requires OPM to ``design a set of systems, 
including appropriate metrics, for assessing the management of human 
capital by Federal agencies'' and to define those systems in 
regulation. Subpart B of part 250 of title 5, Code of Federal 
Regulations, contains those regulations. Subpart B also provides a 
mechanism for Chief Human Capital Officers (CHCOs) to carry out their 
required functions under 5 U.S.C. 1402(a). Subpart C addresses the 
requirements for employee surveys.
    The current regulations implement 5 U.S.C. 1103(c) by adopting the 
systems currently comprising the Human Capital Assessment and 
Accountability Framework (HCAAF) to constitute the systems required by 
5 U.S.C. 1103(c)(1) and to provide the definitions required by 5 U.S.C. 
1103(c)(2). The HCAAF is a framework that integrates five human capital 
systems--Strategic Alignment, Leadership and Knowledge Management, 
Results Oriented Performance Culture, Talent Management, and 
Accountability. These systems define good practices for effective and 
efficient human capital management and support the steps involved in 
the planning and goal setting, implementation, and evaluation of human 
capital initiatives in the Federal Government.
    OPM believes that incorporating the full text of the HCAAF to 
satisfy these requirements has proven to undermine the original concept 
of the HCAAF with respect to flexibility and adaptability. The original 
HCAAF document was integrated several years ago into a Web-based 
Resource Center that was being updated based on feedback, analysis, and 
emerging agency practices and results. Once the entire text of the 
HCAAF was brought into regulation, it became more difficult to keep 
current. OPM has concluded that it would be more effective to discharge 
its obligations under 5 U.S.C. 1103(c)(2) by providing definitions in 
the regulations that establish broad, overarching concepts, and 
treating the material in the HCAAF as guidance that is subject to 
change as Federal human capital management evolves.
    In addition, OPM is clarifying requirements imposed by two separate 
legal authorities. In the past, there was some confusion regarding 
whether agencies must establish separate accountability systems in 
order to satisfy the statutory requirements of 5 U.S.C. 1103(c)(2)(F) 
and any requirement OPM previously imposed under Civil Service Rule X 
(5 CFR 10.2). The proposed regulations would make clear that the 
requirements of these two legal authorities are satisfied by the 
establishment of the Human Capital Accountability System (HCAS) set 
forth in section 250.207 of the proposed regulation. Section 250.205(e) 
would codify in regulation OPM's longstanding practice in this area of 
these two legal authorities.
    Finally, the proposed regulation would eliminate the requirement 
currently stated in section 250.203 to maintain a human capital plan. 
However, even though the requirement for a human capital plan will be 
eliminated, agencies are expected to continue to engage in strategic 
human capital planning. OPM will monitor agency outcomes in human 
capital management, and agencies should continue to implement good 
business practices that support effective and efficient human capital 
management. The purpose of these proposed changes is to focus the 
regulations on the specific requirements that are the most significant 
for establishing and maintaining efficient and effective human capital 
management while providing agencies more flexibility in determining how 
they will accomplish their human capital planning activities.
    The proposed regulations, therefore, will--
     Define applicable systems and include standards as 
required by 5 U.S.C. 1103(c)(2) to constitute a set of overarching 
concepts in regulation, to be supplemented with details in guidance.
     Enable agencies to have a greater alignment of human 
capital policies and programs with mission objectives, by simplifying 
the system definitions to broad, overarching concepts. The current 
definitions incorporate the entire text of the HCAAF, which is quite 
lengthy and includes much material better suited as guidance. Because 
of its length, the HCAAF had to be printed in an Appendix, which was 
published as part of the final rule in the Federal Register (73 FR 
23013, April 28, 2008), but was not codified in title 5. Our experience 
in recent years has shown agencies can achieve better alignment if they 
focus their human capital activities on those initiatives that offer 
the most organizational benefits, thus allowing them to allocate 
budgetary and human resources more effectively. We hope the simplified 
system definitions will facilitate more effective alignment of human 
capital programs with agency mission objectives.
     Ensure consistency by clearly defining key human capital 
management terms, including the Human Capital Management Report (HCMR).
     Outline OPM's requirements for the annual agency HCMR 
agencies currently submit, in alignment with the requirements placed on 
agencies' CHCOs in 31 U.S.C. 1115(a)(3) and (f) and 1116(d)(5).
     For purposes of the required elements of their Human 
Capital Accountability System and their HCMR, differentiate between 
agencies that are required by the CHCO Act to have a CHCO (hereafter 
referred to as ``CHCO agencies'') and agencies that are not required to 
have a CHCO (hereafter referred to as ``non-CHCO agencies'') in how 
they are expected to comply with subpart B. This does not suggest that

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two separate systems are being implemented, rather that we have a 
system that is flexible enough to accommodate the human capital 
requirements for large agencies (or CHCO agencies) with small 
subcomponents, and smaller agencies (non-CHCO agencies).
     Streamline the requirements of subpart B of part 250 for 
agencies, by removing the regulatory requirement for a human capital 
plan and eliminating redundancy in provisions relating to agency 
accountability systems.
    The technical correction to subpart C clarifies that the 
definitions contained in the subpart apply only to that subpart.

Executive Order 13563 and Executive Order 12866, Regulatory Review

    The Office of Management and Budget has reviewed this rule in 
accordance with E.O. 13563 and 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 apply only to Federal agencies and employees.

List of Subjects in 5 CFR Part 250

    Authority delegations (Government agencies), Government employees.

U.S. Office of Personnel Management.
John Berry,
    Accordingly, OPM is proposing to amend 5 CFR part 250 as follows:


    1. Revise the authority citation for part 250 to read as follows:

    Authority:  5 U.S.C. 1101 note, 1103(a)(5), 1103(c), 1104, 1302, 
1401, 1401 note, 1402, 3301, 3302; E.O. 10577, 12 FR 1259, 3 CFR, 
1954-1958 Comp., p. 218; E.O. 13197, 66 FR 7853, 3 CFR 748 (2002).

    2. Revise the heading of Part 250 to read as set forth above:
    3. Revise subpart B to read as follows:
Subpart B--Strategic Human Capital Management
250.201 Coverage and purpose.
250.202 Definitions.
250.203 Agency responsibilities.
250.204 Human Capital Management.
250.205 Systems and standards.
250.206 System metrics.
250.207 Human Capital Accountability System.
250.208 Human Capital Management Report.

Subpart B--Strategic Human Capital Management

Sec.  250.201  Coverage and purpose.

    Pursuant to 5 U.S.C. 1103(c), this subpart defines a set of 
systems, including standards and metrics, for assessing the management 
of human capital by Federal agencies. These regulations apply to all 
Executive agencies as defined in 5 U.S.C. 105 and support the 
performance planning and reporting that is required by sections 
1115(a)(3) and (f) and 1116(d)(5) of title 31, United States Code.

Sec.  250.202  Definitions.

    Chief Human Capital Officer (CHCO) means the person appointed or 
designated by the agency head as required by 5 U.S.C. 1401, who is 
accountable for the strategic alignment of the agency's workforce to 
its mission and is responsible for maintaining and effectively 
directing the agency's human capital management policies and programs.
    CHCO agency means an agency required by 5 U.S.C. 1401 to appoint a 
    Human Capital Management Report (HCMR) means the report compiling 
an agency's required metrics and its self-assessment of its progress in 
meeting the established goals, objectives and milestones in the 
agency's human capital programs and initiatives. Agencies may also use 
the HCMR to report on designated Governmentwide goals and objectives. 
The report helps CHCOs meet the requirements of 31 U.S.C. 1115(a)(3) 
and (f) and 1116(d)(5).
    Non-CHCO agency means an agency not required by 5 U.S.C. 1401 to 
appoint a CHCO, although it may have one.

Sec.  250.203  Agency responsibilities.

    (a) An agency is responsible for planning, developing, 
implementing, maintaining and evaluating its strategic human capital 
management programs and policies and its human resources practices to 
ensure that they support meeting mission objectives and are efficient, 
effective, and compliant with merit system principles, laws, and 
    (b) An agency must comply with OPM instructions when assessing and 
reporting on its human capital management efforts.

Sec.  250.204  Human Capital Management.

    An agency must use the systems, standards and metrics contained in 
Sec. Sec.  250.205 and 250.206 of this part in planning, evaluating and 
improving the efficiency and effectiveness of agency human capital 
management with respect to--
    (a) Aligning with executive branch policies and priorities, as well 
as with individual agency missions, goals, and program objectives, and 
ensuring its human capital management strategies support its strategic 
plans and performance budgets prepared under OMB Circular A-11;
    (b) Supporting human capital programs with comprehensive workforce 
planning and analysis;
    (c) Recruiting, hiring and retaining a highly competent workforce, 
especially in the agency's mission-critical occupations;
    (d) Ensuring leadership continuity through the implementation of 
recruitment, development, and succession plans;
    (e) Sustaining an agency culture that values, elicits, identifies, 
and rewards high performance;
    (f) Developing and implementing a knowledge-management strategy, 
supported by appropriate investment in training and technology; and
    (g) Holding the agency head, executives, managers and human 
resources officers accountable for efficient and effective human 
capital management, in accordance with merit system principles.

Sec.  250.205  Systems and standards.

    The five human capital management systems and standards are--
    (a) Strategic Alignment. A system led by senior management--
typically the CHCO--to promote the alignment of human capital 
management strategies with agency mission, goals, and objectives 
through analysis, planning, investment, measurement, and management of 
human resources programs. The core standards for the Strategic 
Alignment system require an agency to have--
    (1) Human capital management strategies and practices that 
effectively promote accomplishment of its mission; and
    (2) Measurable, observable agency performance results.
    (b) Leadership and Knowledge Management. A system that ensures 
continuity of leadership by identifying and addressing potential gaps 
in effective leadership and implements and maintains programs that 
capture organizational knowledge and promote learning. The core 
standards for the Leadership and Knowledge Management system require 
that agency leaders and managers--
    (1) Manage people effectively, ensure continuity of leadership, 
sustain a learning environment that drives continuous improvement in 

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    (2) Provide a means to share critical knowledge across the 
organization; and
    (3) Support knowledge management by appropriate investment in 
training and technology.
    (c) Results-Oriented Performance Culture. A system that fosters a 
high-performing organizational culture that offers challenging work and 
is supported by effective performance management systems and awards 
programs. The core standards for the Results-Oriented Performance 
Culture system require an agency to have--
    (1) A diverse, results-oriented, high-performing workforce; and
    (2) A performance management system that effectively differentiates 
between high and low levels of performance and links individual/team/
unit performance to organizational goals and desired results 
    (d) Talent Management. A system that addresses competency gaps, 
particularly in mission-critical occupations, by implementing and 
maintaining programs to attract, acquire, develop, promote, and retain 
quality talent. The core standards for the Talent Management system 
require an agency to--
    (1) Close skills, knowledge, and competency gaps/deficiencies in 
mission-critical occupations; and
    (2) Make meaningful progress toward closing skills, knowledge, and 
competency gaps/deficiencies in all occupations used in the agency.
    (e) Accountability. A system an agency is required to establish 
under Sec.  250.207 of this part that contributes to agency performance 
and mission accomplishment by measuring, monitoring and evaluating the 
results of its human capital management policies, programs, and 
activities; by analyzing compliance with merit system principles; and 
by identifying and monitoring necessary improvements. The core 
standards for the Accountability system require an agency to--
    (1) Guide its human capital management decisions by a data-driven, 
results-oriented planning and accountability system;
    (2) Inform the development of its human capital goals and 
objectives by the results of the agency's accountability system, in 
conjunction with the agency's strategic planning and performance 
budgets; and
    (3) Effectively apply its accountability system to promote 
effective human capital management in accordance with the merit system 
principles and in compliance with Federal laws, rules, and regulations.
    (f) OPM may augment the core standards set forth in this section 
with additional standards that the Director of OPM will publish in such 
form as the Director determines appropriate.

Sec.  250.206  System metrics.

    (a) The required metrics that an agency must address focus on the 
three systems that implement the human resources life cycle (Leadership 
and Knowledge Management, Results-Oriented Performance Culture, and 
Talent Management) and include--
    (1) Organization metrics;
    (2) Employee perspective metrics; and
    (3) Merit system compliance metrics.
    (b) OPM will provide instructions on the specific metrics an agency 
must include in its Human Capital Management Report described in Sec.  
    (c) OPM may provide additional suggested metrics in guidance on 
human capital management activities that an agency may use in its 

Sec.  250.207  Human Capital Accountability System.

    (a) Each agency must establish and maintain a Human Capital 
Accountability System (HCAS), consistent with Sec.  250.205(e), that--
    (1) Is formal and documented; and
    (2) Is approved by OPM.
    (b) For a CHCO agency, the HCAS also must provide for an 
independent audit process, subject to full OPM participation and 
evaluation, to review periodically the agency's human resources 
transactions to ensure legal and regulatory compliance.
    (c) An agency must--
    (1) Take corrective action to eliminate deficiencies identified in 
the independent audit and to improve its human capital management 
programs and its human resources processes and practices; and
    (2) Report the analysis, HCAS results, and corrective actions taken 
to its leadership and OPM.

Sec.  250.208  Human Capital Management Report.

    (a) An agency must submit a Human Capital Management Report (HCMR) 
to OPM that--
    (1) Assesses human capital performance in relationship to the 
agency's mission;
    (2) Addresses agency human capital programs and initiatives, 
including the required metrics specified in OPM instructions; and
    (3) Informs the development of human capital management goals and 
objectives to support the agency's strategic planning and annual 
performance budget formulation processes, as well as the treatment of 
human resources results during the annual performance and 
accountability reporting process.
    (b) A CHCO agency must submit an HCMR annually.
    (c) A non-CHCO agency must submit an HCMR in accordance with the 
timeframe established by OPM.
    4. Revise the introductory text to Sec.  250.301 to read as 

Sec.  250.301  Definitions.

    In this subpart--
* * * * *
[FR Doc. 2011-19844 Filed 8-4-11; 8:45 am]