[Federal Register Volume 91, Number 128 (Tuesday, July 7, 2026)]
[Rules and Regulations]
[Pages 41521-41539]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2026-13715]
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Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
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Federal Register / Vol. 91, No. 128 / Tuesday, July 7, 2026 / Rules
and Regulations
[[Page 41521]]
OFFICE OF PERSONNEL MANAGEMENT
5 CFR Parts 351, 430, and 537
[Docket ID: OPM-2025-0273]
RIN 3206-AP06
Performance Appraisal for General Schedule, Prevailing Rate, and
Certain Other Employees
AGENCY: Office of Personnel Management.
ACTION: Final rule.
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SUMMARY: The Office of Personnel Management (OPM) is issuing a final
rule to increase the efficiency and effectiveness of performance
management for non-Senior Executive Service (SES) employees, including
General Schedule (GS) and prevailing rate employees. This final rule
eliminates unnecessary summary level patterns; removes the prohibition
of a forced, or standardized, distribution of performance rating
levels; eliminates mandatory review of Level 1 ratings; removes the
option to grieve a rating of record; requires a supervisory critical
element for all supervisors covered under this subpart; and requires
OPM to conduct biennial certifications of agency appraisal systems.
DATES:
Effective date: August 6, 2026.
Compliance date: Compliance with Sec. 430.208(e)(1) and (2) is
required beginning January 1, 2027.
FOR FURTHER INFORMATION CONTACT: Noah Peters, Senior Advisor to the
Director, 202-606-8046 or by email at [email protected].
SUPPLEMENTARY INFORMATION:
Background
The Civil Service Reform Act (CSRA) of 1978 established a new
framework for merit-based personnel management in the Federal
Government, including reforms to the performance appraisal system for
Federal employees. When Congress debated and passed this legislation, a
major concern was that the existing appraisal system did not
meaningfully measure employee performance.\1\ The Senate Committee on
Governmental Affairs observed that performance ratings were frequently
inflated, failed to meaningfully distinguish among levels of
performance, and were often assigned without sufficient rigor or
accountability. Supervisors were often reluctant to assign low ratings,
so ratings were not regarded as reliable indicators of performance.
Performance ratings therefore lost much of their management value. As a
result, the appraisal system provided little practical support for
personnel decisions and did not function as an effective tool for
managing employee performance.
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\1\ S. Rep. No. 95-969, at 44-45 (1978), reprinted in
Legislative History of the Civil Service Reform Act of 1978, Vol. 2
(1979).
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Pursuant to CSRA, OPM is responsible for promulgating
governmentwide regulations governing Federal performance management
systems under chapter 43 of title 5, United States Code. Under this
authority, OPM issues regulations applicable to non-SES employees,
including GS and prevailing rate employees, as well as senior-level and
scientific or professional employees referred to as ``senior
professionals'' (SP). Among its statutory responsibilities, OPM is
required to review the appraisal systems covering these employees to
ensure they comply with statutory requirements \2\ and design personnel
systems that provide governmentwide standards that sustain a culture
that cultivates and develops a high-performing workforce.\3\ Where OPM
finds that an agency's system fails to meet statutory and regulatory
requirements, OPM is authorized to direct agencies to implement an
appropriate system or correct its operations to meet those
requirements.\4\
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\2\ 5 U.S.C. 4304(b)(1).
\3\ 5 U.S.C. 1103(c)(2)(D).
\4\ 5 U.S.C. 4304(b)(3).
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Throughout the 1980s and early 1990s, Federal performance
management operated under a centralized regulatory framework
established by OPM in 1983.\5\ The system standardized appraisal
processes through establishment of a five-level rating structure and by
formally tying performance ratings to pay, awards, and promotion
decisions. While intended to strengthen accountability and create a
performance-based civil service, the framework often produced limited
differentiation among employees, administrative complexity, and
inconsistent enforcement of performance standards. By the early 1990s,
policymakers increasingly viewed the system as overly rigid and
insufficiently responsive to agency management needs, prompting calls
for greater flexibility and decentralization. When developing the non-
SES performance appraisal regulations at part 430, subpart B, in 1995,
OPM adopted recommendations by the National Performance Review for
flexible, decentralized performance management.\6\ This move towards
agency flexibility and decentralization was a stark contrast to the
highly detailed regulatory requirements of the mid-1980s--a time when
there was a strong policy interest in achieving governmentwide
uniformity. Aside from a few minor changes in the late 1990s, the
appraisal regulations at part 430, subpart B, have remained in place
and unchanged, failing to adapt to the evolving mission needs of the
Federal workforce.
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\5\ 48 FR 49472 (Oct. 25, 1983).
\6\ 60 FR 43936 (Aug. 23, 1995).
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For decades, oversight agencies have specifically identified
performance management as an area that requires improvement and reform.
As early as the 1980s, the Merit Systems Protection Board (MSPB)
reported that Federal performance appraisal systems often failed to
meaningfully distinguish between levels of performance and that ratings
were frequently concentrated at higher levels.\7\ More recently, the
Government Accountability Office (GAO) has noted the challenges and
failures of the current performance management appraisal system.\8\
Notably, a 2016 GAO report found that 99% of
[[Page 41522]]
permanent, non-SES employees received performance ratings at or above
Fully Successful.\9\ This inflation in performance ratings continued
into the 2020s as detailed in the proposed rule.\10\ OPM has attempted
to curb ratings inflation and increase accountability through non-
regulatory efforts, including issuing a 2019 memorandum encouraging
agencies to increase rigor in performance management through well-
developed performance standards that make clear distinctions among what
is required to achieve performance at the various performance
levels.\11\ Despite these recent attempts, data from the Federal
Employee Viewpoint Survey (FEVS) and GAO show that only 42-51% of
Federal employees believe that their supervisors distinguish and
recognize performance in a meaningful way.\12\ It is clear that doing
more of the same is not going to improve performance management in the
Federal Government.
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\7\ U.S. Merit Systems Protection Board, Toward Effective
Performance Management in the Federal Government: A Report to the
President and the Congress of the United States, at V (July 1988),
https://www.mspb.gov/studies/studies/Toward_Effective_Performance_Management_in_the_Federal_Government_317713.pdf.
\8\ GAO, Federal Workforce, Opportunities Exist for OPM to
Further Innovation in Performance Management, at 2 (Nov. 2018),
https://www.gao.gov/assets/700/695639.pdf.
\9\ GAO, Federal Workforce: Distribution of Performance Ratings
Across the Federal Government, 2013, at 5 (May 9, 2016), https://www.gao.gov/assets/680/677016.pdf.
\10\ 91 FR 8780, 8782 (Feb. 24, 2026).
\11\ OPM, Applying Rigor in the Performance Management Process
and Leveraging Awards Programs for a High-Performing Workforce, at
1-2 (July 12, 2019), https://www.opm.gov/chcoc/transmittals/2019/applying-rigor-performance-management-process-and-leveraging-awards-programs-high-performing_508_0.pdf.
\12\ OPM, OPM FEVS Dashboard (last accessed June 1, 2026),
https://www.opm.gov/fevs/reports/opm-fevs-dashboard/; note 8 at 19.
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Recognizing that reforms to Federal performance management are long
overdue, President Trump issued Presidential Memoranda and Executive
Orders that establish a high-performing Federal workplace culture where
excellent performance is celebrated and rewarded, and low performance
is swiftly addressed by appropriate actions.\13\ Accordingly, OPM
issued a memorandum titled ``Performance Management for Federal
Employees.'' \14\ In that guidance, OPM noted that it is ``reforming
employee performance management across the Federal Government to ensure
that it shall reward individual initiative, skills, performance and
hard work.'' \15\ OPM further stated that ``performance management
across the Federal workforce has fallen short'' and ``has resulted in a
lack of accountability and inflated performance ratings.'' \16\ OPM
also designed an extensive performance management toolkit and playbook
providing all employees with critical performance management best
practices.\17\
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\13\ See, e.g., E.O. 14284, Strengthening Probationary Periods
in the Federal Service, 90 FR 17729 (April 24, 2025); E.O. 14171,
Restoring Accountability to Policy-Influencing Positions Within the
Federal Workforce, 90 FR 8625 (Jan. 20, 2025); Restoring
Accountability for Career Senior Executives, 90 FR 8481 (Jan. 30,
2025); Return to In-Person Work, 90 FR 8251 (Jan. 28, 2025).
\14\ OPM, Performance Management for Federal Employees (June 17,
2025), https://www.opm.gov/chcoc/latest-memos/performance-management-for-federal-employees.pdf.
\15\ Id. (internal quotation marks omitted).
\16\ Id. at 2.
\17\ www.opm.gov/policy-data-oversight/performance-management/.
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In response to these historical and enduring challenges, OPM
determined that updates to its performance appraisal regulations for
non-SES employees are necessary. On February 24, 2026, OPM issued a
proposed rule at 91 FR 8780 pursuant to its regulatory authority at 5
U.S.C. 4305. As described in the proposed rule, these updates will
strengthen agencies' ability to evaluate performance accurately and
fairly, ensure that high performance is recognized and rewarded, and
align workforce management with mission accomplishment. These changes
are necessary to promote a culture of accountability and excellence
across the Federal workforce--one that reflects both the Government's
evolving operational demands and its longstanding commitment to a
merit-based civil service.
Digest of Public Comments
In response to the proposed rule, OPM received 626 comments during
the 30-day public comment period. These responses came from a range of
sources: 602 individuals--including current and former civil servants,
scientists, attorneys, and researchers--plus 4 Federal agencies, 11
organizations such as employee advocacy groups and professional
associations, 8 unions, and a member of Congress.
Of the 626 comments received, all were posted and made available to
the public in the docket at https://www.regulations.gov/docket/OPM-2025-0273. At the conclusion of the public comment period, OPM reviewed
and analyzed the comments. Comments on the rule ranged from supportive
to categorical rejection.
The comments are summarized below, together with suggestions for
revisions that were considered and either fully or partially adopted,
or declined, along with OPM's reasoning. The first section addresses
general or overarching comments, while subsequent sections discuss
feedback related to specific parts of the regulation that OPM proposed
to revise.
General Comments
Some commenters were supportive of the rule, such as Commenter 0332
\18\ who stated, ``These are great changes proposed. Please move
forward.'' Commenter 0008 expressed support for OPM updating the
``antiquated evaluation system'' currently in place. Several
commenters, such as 0072, 0044, 0161, 0101, and 0225, acknowledged that
performance appraisal reform is warranted and that improvements to the
current system may be needed; however, these commenters also generally
opposed the approaches taken in the proposed rule, particularly the use
of standardized distribution and modifications to the procedures for
assigning employee ratings. Most commenters either opposed the rule as
a whole or objected to one or more of the major provisions of the rule,
such as standardized distribution, elimination of negotiated grievance
procedures under 5 U.S.C. 7121, and elimination of the requirement for
mandatory review of a Level 1 (``Unacceptable'') rating of record.
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\18\ References to comments provide the location of the item in
the public record (that is, the four-digit number associated with
the location in the docket). Comments filed in response to the
proposed rule are available at https://www.regulations.gov/comment/OPM-2025-0273-nnnn, where nnnn is the comment number.
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Commenters 0517, 0549, 0554, and others argued that OPM failed to
provide sufficient time to address the proposed rule given its
``foundational change in the appraisal of federal employees.'' The
commenters suggested that at least another 60 days should be provided
to allow those impacted and other interested parties to provide
substantive comments. Respectfully, OPM provided sufficient time for
the public to review the proposed rule and submit comments. As multiple
appellate courts have held, a 30-day comment period is generally the
minimum needed to comply with the Administrative Procedure Act
(APA).\19\ Moreover, the more than 600 comments received during the
public notice period raised a variety of issues and arguments, as
further explored below, which indicates that the comment period
provided adequate opportunity for the
[[Page 41523]]
public to provide meaningful input into the rule.
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\19\ See Chamber of Com. of the U.S. v. U.S. Sec. & Exch.
Comm'n, 85 F.4th 760, 779 (5th Cir. 2023) (``. . . the APA generally
requires only a minimum thirty-day comment period.''); see also
Riverbend Farms, Inc. v. Madigan, 958 F.2d 1479, 1484 (9th Cir.
1992) (``Although the APA mandates no minimum comment period, some
window of time, usually thirty days or more, is . . . allowed for
interested parties to comment.'').
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In the subsequent sections, we discuss and address comments related
to the specific portion of the regulation to which each comment
applied.
Standardized Distribution
In the proposed rule, OPM proposed removing the existing
prohibition on a forced, or standardized, distribution of performance
ratings, and instead proposed to authorize OPM to establish and
maintain a standardized distribution of some or all rating levels that
agencies must apply.
Consistency With 5 U.S.C. 4302
A number of commenters, including 0004, 0011, 0101, 0115, 0161,
0377, 0468, and others, asserted that the use of a standardized
distribution of performance ratings conflicts with 5 U.S.C. 4302(c),
which requires that performance appraisal systems permit the accurate
evaluation of job performance on the basis of objective criteria
related to the job in question. Commenters argued that standardized
distribution requires supervisors to rate employees relative to one
another rather than against established performance standards, thereby
introducing non-performance-based factors into rating determinations.
These commenters further stated a standardized distribution approach
may result in employees receiving inaccurate ratings that do not
reflect their actual job performance.
OPM respectfully disagrees that the final rule is inconsistent with
5 U.S.C. 4302. The statute requires that appraisal systems ``to the
maximum extent feasible, permit the accurate evaluation of job
performance on the basis of objective criteria . . . related to the job
in question for each employee or position under the system;'' \20\ it
does not prescribe or prohibit a specific rating methodology or
preclude the use of a standardized distribution to differentiate among
levels of performance. Under this final rule, agencies remain
responsible for establishing performance plans with clear, job-related
expectations and for evaluating employees against those expectations.
The phrase ``to the maximum extent feasible'' allows for the
performance standards to include a standardized distribution framework.
This framework provides a structured mechanism to support consistent
application of performance distinctions; it does not authorize ratings
based on non-performance factors or require agencies to disregard
evidence of individual performance against established performance
standards.
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\20\ 5 U.S.C. 4302(c)(1) (emphasis added).
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OPM rejects commenters' arguments that comparative judgments
through the implementation of standardized distribution will lead to
inaccurate ratings. As explained in the proposed rule, any human
judgment is by nature comparative.\21\ Thus, the quality of an
evaluation is improved by ensuring that it is comparative in nature
(that is, involving relative judgments of a target in comparison to
other individuals and groups), instead of absolute (that is, involving
judgments on scales that do not reference others).\22\ One study, for
example, concluded that ``[t]he relatively few studies that have
investigated the validity of comparative performance appraisal methods
have tended to support their validity.'' \23\ It found significant
evidence from ``at least three important and quite different domains
that comparative evaluative judgments of the self or others may be more
advantageous than absolute evaluative judgments.'' \24\ This suggests
that comparative judgments among employees, by utilizing a standardized
distribution of ratings, will more accurately and objectively measure
individual performance than one that prohibits any comparative
judgments between employees and requires that any measurement of
employee performance be framed in absolute terms.
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\21\ Kedia G, Mussweiler T, Linden DE. Brain mechanisms of
social comparison and their influence on the reward system.
Neuroreport. 2014 Nov 12;25.
\22\ Goffin RD, Olson JM. Is It All Relative? Comparative
Judgments and the Possible Improvement of Self-Ratings and Ratings
of Others. Perspect. Psychol. Sci. 2011 Jan; 6(1):48-60.
\23\ Id. at p. 50.
\24\ Id. at 53.
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Further, OPM intends to require agencies to apply a standardized
distribution at the appropriate aggregate level as opposed to
supervisors applying the rating limits within their own work unit or
office. Therefore, the requirement to differentiate between relative
levels of performance through the use of a standardized distribution
operates only after employees are assessed against established
performance standards, as required by 5 U.S.C. 4302(c)(3), and,
consequently, does not replace or supplant those standards. The concern
put forth by commenters claiming that distributional requirements
create tension with statute because they involve relative comparison is
baseless. The final rule does not require the mechanical application of
quotas without regard to objective, job-related performance evidence.
Rather, it requires agencies to exercise informed judgment in the
evaluation of rigorous performance objectives aligned to the duties of
the position within a structured framework designed to support accurate
differentiation.
Finally, OPM also notes that the current system suffers from the
same flaws that the commenters warn about in adopting the proposed
rule-inaccurate performance ratings. The evidence clearly shows that
the Federal Government's approach to performance management has long
struggled to accurately measure employee performance.\25\ During the
public comment period, the Departments of Labor and Treasury
(Commenters 0226 and 0375, respectively) describe how they have
suffered from a leniency bias that inflates performance ratings and
ties their supervisors' hands when attempting to hold their employees
accountable for poor performance. The Department of Labor identified
how it issued 70-80% of its employees' performance ratings at the
highest two levels and rarely used the lowest two rating levels. The
Department of the Treasury, likewise, identified suffering from the
same problem and concluded that a standardized distribution of
performance ratings may be the only path forward to disrupting the
persistent pattern of ratings inflation. OPM credits these agencies'
experiences and agrees that this final rule is the best way to address
these long-standing challenges.
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\25\ See notes 7 and 9.
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Merit System Principles
Several commenters asserted that the use of standardized
distribution of performance ratings conflicts with merit system
principles under 5 U.S.C. 2301. They argued that the requirement to
distribute ratings using a standardized distribution framework
undermines the principle that employees should be treated fairly and
equitably under section 2301(b)(2) because similarly performing
employees may receive different ratings based on distribution targets
rather than individual performance (e.g., commenters 0064, 0242, 0377,
and 0520). Other commenters, including 0477 and 0554, asserted that
standardized distribution may increase the risk of arbitrary action
contrary to section 2301(b)(8)(A) by requiring supervisors to
differentiate among employees even where performance differences are
minimal or not clearly defined. Similarly, other commenters expressed
concern that standardized distribution of
[[Page 41524]]
performance ratings could increase the risk of bias, favoritism,
retaliation, or politicization of performance evaluations (e.g.,
commenters 0003, 0031, 0173, 0288, 0498, and 0557).
OPM does not agree that use of a standardized rating system would
deny employees fair or equitable treatment or subject them to arbitrary
action. The merit system principles do not prohibit agencies from
rating employees based upon a comparison of individual employee
performance. They instead guard against personnel decisions based on
factors other than merit. Under the final rule, supervisors will
continue to evaluate employee performance based on their assessments of
their employees' individual performance against established performance
standards. Afterwards, agencies at the appropriate aggregate level will
apply the standardized distribution of performance ratings consistent
with OPM guidance. Agencies will apply OPM guidance at a higher level,
which will mitigate commenters' concerns that individual supervisors
will make subjective, non-merit-based judgments about employee
performance when deriving comparative judgments. Moreover, by requiring
agencies to limit the highest ratings to the most accomplished,
agencies will be required to truly focus on mission-driven performance
that contributes to organizational performance, thereby promoting the
effective and efficient use of the Federal workforce and enhancing
alignment with the merit system principles.\26\ To further alleviate
commenters' concerns, OPM will amend Sec. 430.209 in the final rule to
make clear that agency performance appraisal systems and programs must
be administered consistent with the merit system principles, and OPM
will amend Sec. 430.210 to make clear that OPM will enforce such
compliance.
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\26\ 5 U.S.C. 2301(b)(5).
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Additionally, this rule promotes fair and equitable treatment by
incentivizing agencies to focus on individual performance that drives
mission accomplishment and, therefore, rewards the highest performance.
The current system suffers from leniency bias whereby supervisors
arbitrarily issue inflated performance ratings to avoid confrontation,
lack of support from management, or other factors that undermine the
performance management evaluation process.\27\ The current system also
suffers from a sustained lack of trust that employee performance is
fairly evaluated and rewarded.\28\ This rule realigns incentives away
from `defensive medicine' towards an approach where agencies are
incentivized to clearly define performance standards, prioritize
mission objectives, and accurately evaluate and reward employees'
performance. See 5 U.S.C. 4302(c)(4) and (6). Employee performance
ratings will still be based on individual merit and individual
performance--not on irrelevant factors like race, political
affiliation, or religion. Supervisors who assign ratings based on
personal favoritism would continue to violate merit system principles
regardless of the rating structure in place, while a standardized
distribution would reinforce objective, performance-based
differentiation. Thus, distinguishing employees based on relative
performance does not conflict with the principle of fair and equitable
treatment without regard to prohibited factors such as race, color,
religion, sex, national origin, age, or political affiliation (5 U.S.C.
2301(b)(2)); rather, it reflects fair and equitable treatment by basing
outcomes on job-related performance. Similarly, the prohibition on
arbitrary action, personal favoritism, or coercion for partisan
political purposes (5 U.S.C. 2301(b)(8)) is directed at improper
motives and conduct, not at performance-based distinctions.
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\27\ GAO, Issues Related to Poor Performers in the Federal
Workplace, GAO-05-812R (Jun. 29, 2005), 19-21, https://www.gao.gov/assets/gao-05-812r.pdf. See also note 6 at v-vi.
\28\ See note 12.
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Commenter 0161 claimed that a standardized distribution
specifically conflicts with the merit system principle at 5 U.S.C.
2301(b)(6), which requires that employees be retained on the basis of
the adequacy of their performance. Similarly, commenters 0004 and 0248
voiced concern that adequate performers who happen to be part of high-
performing teams would be particularly negatively affected by
standardized distribution, presuming that supervisors may be required
to rate a portion of their subordinates at Level 1 (``Unacceptable'').
Any argument that this final rule negatively affects an employee's
ability to be retained on the basis of the adequacy of their
performance is unfounded. As previously mentioned, OPM intends that the
standardized distribution will apply only to the assignment of the
highest performance rating levels (Levels 4 and 5) and will not impose
limitations on any of the levels at or below Level 3 (``Fully
Successful''), such as a ``quota'' requiring the issuance of a certain
amount of Level 1 (``Unacceptable'') ratings. Because Level 3
represents fully adequate performance and remains unrestricted, the
application of a standardized distribution will not require an employee
to receive lower than a Level 3 rating, invalidating concerns over
associated performance-based demotion or removal. As such, OPM
concludes that a standardized distribution does not interfere with an
employee's ability to be retained on the basis of the adequacy of their
performance and, therefore, does not conflict with 5 U.S.C. 2301(b)(6).
Several commenters, including 0159, 0206, 0553, and 0558, objected
to the proposed rule's provision that excepted service employees
appointed under Schedules C and G may be excluded from the standardized
distribution requirements. Commenters assumed that the exclusion was
designed to provide an unfair advantage to political appointees. For
example, one commenter stated, ``These employees, who are in the
excepted service and often political or policy-making positions (90 FR
34753), would not be subject to rating caps that career non-SES
employees must follow. This exemption creates two separate systems and
gives these groups a built-in advantage in obtaining higher ratings and
access to awards.'' Comment 0206.
OPM notes that, since the publication of the proposed rule, it
exempted employees appointed under Schedules C and G from the
provisions of subchapter I of chapter 43 of title 5, U.S.C.\29\ Thus,
such employees will no longer be required under OPM regulations to
receive performance ratings. Despite this exclusion from chapter 43,
Schedule C and G employees are still subject to the administrative
freeze on discretionary awards, bonuses, and similar payments, such as
performance awards and General Schedule quality step increases.\30\
Thus, employees appointed under Schedules C and G will not be rewarded
with higher performance ratings and receive greater awards.
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\29\ Scott Kupor, Memorandum, ``Exclusion of Schedule C and G
General Schedule positions from Subchapter I of Chapter 43 of Title
5, United States Code: Performance Appraisal,'' April 28, 2026,
https://www.opm.gov/chcoc/latest-memos/exclusion-of-schedule-c-and-g-general-schedule-positions-from-subchapter-i-of-chapter-43-of-title-5-united-states-code-performance-appraisal.pdf.
\30\ Id.
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Justification of Policy Change
Commenters 0225 and 0468 asserted that OPM's proposal to permit
standardized distribution is inconsistent with OPM's prior regulatory
determinations, including its 1979 and
[[Page 41525]]
1995 final rules in which OPM barred ``preestablished distributions of
expected levels of performance (such as a requirement to rate on a bell
curve)'' because such practices could ``interfere with appraisal of
actual performance,'' \31\ and later concluded that forced distribution
systems were ``incompatible with effective performance management.''
\32\ Commenter 0615 argues that OPM did not consider OPM's prior
reasons for authorizing union grievances for performance ratings. These
commenters argued that OPM has not adequately explained its departure
from these prior positions or provided sufficient support to justify
reversing them. They further contended that the proposal reflects a
change in policy that is not accompanied by a reasoned explanation
addressing OPM's earlier findings and conclusions.
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\31\ 44 FR 45587, 45590 (Aug. 3, 1979).
\32\ 60 FR 43936, 43936 (Aug. 23, 1995).
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OPM respectfully disagrees that it has not articulated a sufficient
reason for departing from its prior statements. As the Supreme Court
held in F.C.C. v. Fox Television Stations, the APA requires, as
relevant here, that OPM provide a reasoned explanation and show
awareness that there is, in fact, a change in policy.\33\ The Court
also held that an agency's reasoning need not prove to be a better
solution than the status quo but rather that there are good reasons the
agency believes support the change in policy.\34\
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\33\ F.C.C. v. Fox Television Stations, 556 U.S. 502, 515-16
(2009) (explaining the requirements under the APA that an agency
provide a reasoned explanation when changing its position).
\34\ Id.
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The 1979 and 1995 rulemakings cited by commenters reflected OPM's
judgments at that time based on the record and policy considerations
then before the agency. As noted above, one of the central objectives
of the CSRA was to reform how Federal agencies accurately assess
employee performance. Thus, it was entirely reasonable for OPM to pin
its hopes on the CSRA delivering on its promise when issuing its
performance appraisal regulations in 1979. And while OPM may have been
persuaded in 1995 that forced distributions were incompatible with
effective performance management, it is now clear to OPM that changes
are necessary to address Congress' concerns of effective performance
management. OPM's reevaluation of its performance appraisal system and
program regulations is entirely reasonable in light of current
conditions: longstanding concerns regarding the lack of meaningful
differentiation in performance ratings across the Federal workforce.
OPM does not agree that the final rule is unsupported by evidence or
rests solely on policy preference. As discussed in the proposed rule,
OPM considered multiple sources of information in crafting its
determination, including governmentwide data on rating distributions
and employee perceptions of performance differentiation. During the
comment period agencies informed OPM they supported the proposed
changes and believed they would be beneficial. (See comments 0226,
0374, and 0375). OPM credits this agency feedback. OPM has also
considered commenters' arguments regarding prior policy, the available
research, and potential alternatives.
Other commenters including 0101, 0157, 0161, 0521, 0553, and 0558,
asserted that OPM failed to consider the potential for disparate impact
on certain groups of employees. Commenters asserted that research on
standardized distribution has demonstrated the potential for
discriminatory effects and that OPM should have conducted a disparate
impact analysis prior to proposing the rule. Commenter 0553
specifically cited Griggs v. Duke Power Co., 401 U.S. 424 (1971),
highlighting that ``[f]ederal law prohibits employment practices with
an unjustified disparate impact on protected classes.''
OPM considered commenters' concerns regarding potential workforce
impacts, including claims that standardized distribution could have
differential effects across employee populations. However, the final
rule establishes a facially neutral performance management framework
that requires agencies to evaluate employees based on objective, job-
related performance standards and does not direct or permit
consideration of protected characteristics. Nothing in this final rule
authorizes agencies to administer performance appraisal systems in a
manner that violates Title VII, the Rehabilitation Act, the Age
Discrimination in Employment Act, or any other applicable
nondiscrimination requirement. The rule requires ratings to be based on
job-related performance standards and objective performance evidence.
OPM will consider compliance with legal requirements as part of its
certification and oversight process, and may require corrective action
where agency implementation is inconsistent with law, regulation, or
OPM policy.
Consideration of Empirical Evidence
Although OPM has provided data demonstrating inflated performance
ratings and cited empirical evidence in the proposed rule recognizing
the potential benefits (and areas for caution) regarding standardized
distribution, several commenters (e.g., Commenters 0005, 0082, 0101,
0225, 0468, and 0534) disagree with OPM's interpretations or
conclusions and also cite research that counterargues the benefits of
forced distribution systems. For example, Commenter 0082 cited studies
that found standardized distribution in a team setting significantly
reduces knowledge sharing (e.g., Loberg, N[uuml]esch & Foege \35\) and
that found standardized distribution may reduce citizenship behaviors
and increase counterproductive performance over time (e.g., Moon,
Scullen & Latham \36\).
---------------------------------------------------------------------------
\35\ Loberg, F., N[uuml]esch, S., & Foege, J.N., The Impact of
Forced Distribution Rating Systems on Knowledge Sharing and Team
Performance, Journal of Management Control, Vol. 32, 395-423 (2021),
available at https://www.sciencedirect.com/science/article/pii/S0167268121001827.
\36\ Moon, H., Scullen, S.E., & Latham, G.P., Precarious Curve
Ahead: The Effects of Forced Distribution Rating Systems on
Organizational Citizenship Behavior and Counterproductive Work
Behavior, Human Resource Management Review, Vol. 26, No. 2, 166-179
(2016), available at https://www.sciencedirect.com/science/article/abs/pii/S1053482215300024.
---------------------------------------------------------------------------
OPM reviewed the empirical studies and findings highlighted by the
commenters. In the proposed rule, OPM noted that the literature on
standardized distribution reflects a broad range of findings with
respect to its efficacy and potential impacts on collaboration, morale,
and perceptions of fairness. However, OPM does not agree that the
existence of contrary or mixed research findings precludes adopting the
changes in the final rule. The APA does not require agencies to resolve
all disagreements in the academic literature or to demonstrate that a
policy is supported by uniform empirical consensus. OPM has considered
the evidence cited in the proposed rule and in comments and has
determined that the amendments made in the final rule are necessary to
address longstanding concerns regarding the lack of meaningful
differentiation in performance ratings across the Federal workforce.
Assuming arguendo that the potential concerns identified in the
research literature may arise to some extent or in some context(s), OPM
has determined that the current degree of rating inflation has so
egregiously undermined the credibility and accountability of
performance appraisal systems that implementing a standardized
[[Page 41526]]
distribution is the best alternative. Accordingly, OPM concludes that
this final rule reflects a reasonable policy judgment, based on the
administrative record as a whole, to improve the effectiveness and
credibility of performance appraisal systems, notwithstanding some
differing views expressed in the research literature.
Impact on Individual Employee Morale and Productivity
Several commenters asserted that implementing a standardized
distribution would have demoralizing and demotivating effects on
individual employees leading to reduced performance over time (e.g.,
Commenters 0002, 0003, 0004, 0013, 0037, 0105, 0159, 0294, and 0522).
For instance, Commenter 0013 highlighted that the study by Berger,
Harbring, and Sliwka cited in the proposed rule \37\ found that
introducing a standardized or quota-based rating system into a
previously lenient rating culture can lead to an initial increase in
productivity but then a drop-off. Other commenters argued that there
are ``more than 40 research studies'' criticizing the use of ``Forced
Distribution Rating Systems (FDRS)'' for their negative impacts on
teamwork, trust, and long-term engagement. Other commenters (e.g., 0508
and 0549) asserted that the proposed rule will trigger a brain drain of
technical talent.
---------------------------------------------------------------------------
\37\ Berger, J., Harbring, C., & Sliwka, D., Performance
Appraisals and the Impact of Forced Distribution: An Experimental
Investigation, IZA Discussion Paper No. 5020 (2010), available at
https://www.econstor.eu/bitstream/10419/36830/1/63078180X.pdf.
---------------------------------------------------------------------------
OPM does not agree that the findings of Berger et al. (2010) \38\
demonstrate that standardized distribution reduces employee motivation
in the context of this final rule. To the extent the study identifies a
decline in performance following the introduction of a standardized
distribution, the authors attribute that effect to changes in employee
expectations and reference points--specifically, where employees
previously experienced more lenient ratings and higher bonus outcomes.
Thus, the observed decline reflects a transitional adjustment in
expectations rather than an inherent flaw in the structure of a
differentiated rating system.
---------------------------------------------------------------------------
\38\ Some commenters cited to a 2013 study by the same authors.
Berger, J, Harbring, C., & Sliwka, D., ``Performance appraisals and
the impact of forced distribution-an experimental investigation,''
Management Science, 2013, v. 59(1).
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OPM acknowledges that some studies identify risks associated with
rigid forced-ranking systems, including reduced collaboration,
knowledge sharing, and morale in certain settings. OPM gives those
studies limited weight here because the final rule does not require a
fixed percentage of employees to receive low ratings, does not require
work-unit-level stack ranking, and preserves the requirement that
ratings be based on job-related performance standards and actual
performance evidence. In addition, each agency will have the latitude
to determine how it may apply the distribution among components, grade
levels, or supervisory status. This flexibility allows a governmentwide
distribution to be equitable as well as tailored to ensure optimal
performance within each agency. OPM also recognizes that even upper
rating caps may affect employee expectations and workplace culture. For
that reason, OPM will monitor implementation through the biennial
certification process and may refine distribution criteria based on
agency data, including evidence bearing on collaboration, mission
performance, rating accuracy, and merit system compliance.
Even if OPM credited commenters' citation to these various studies
to support their criticisms of the rule, OPM concludes that the
potential benefits of authorizing a standardized distribution of
ratings outweigh the purported costs of overhauling a performance
appraisal system that has failed over the last 40-plus years to enable
Federal agencies to accurately assess the job performance of their
employees, promote a culture of high performance, and hold employees
accountable for poor performance. As Commenter 0450 points out, the
private sector has not found a generally accepted or industry-specific
solution to performance management and often uses different approaches
in search of the same outcome. OPM believes that continuing down the
same path as it has since the passage of the CSRA will only produce the
same distrust and performance outcomes plaguing Federal agencies. OPM
will closely evaluate implementation of this final rule through
biennial certification and refine criteria as warranted by data and
agency experience.
Impact on Teamwork and Cooperation
A number of commenters argued that standardized distribution will
negatively affect teamwork, knowledge sharing, and cooperation (e.g.,
0015, 0025, 0037, 0319, 0468, and 0524). Commenters 0015 and 0319 cited
various studies on relative performance evaluation systems that report
potential adverse effects on cooperation, including reduced knowledge
sharing and increased competition among employees rather than
contribution to collective outcomes. These commenters contend that such
systems are poorly suited to Federal work, which often depends on
collaboration and shared mission performance.
OPM has considered the studies cited by commenters regarding the
potential effects of forced distribution systems on teamwork,
collaboration, and knowledge sharing. The cited research, including
experimental research on relative performance evaluation systems,
generally examines models that rely on strict rank ordering or zero-sum
competition among employees. OPM does not agree that these findings are
directly applicable to the approach adopted in the final rule.
The final rule does not establish a forced ranking model that must
be inflexibly applied for all performance ratings and across every
individual team. OPM intends only to require a limit on the upper
rating levels, measured at the appropriate aggregate agency level,
while continuing to require that all performance ratings be based on
objective, job-related performance standards. The final rule does not
require agencies to assign a fixed percentage of employees to the
lowest rating level or to evaluate employees solely on a comparative
basis. At this time, ``OPM is not requiring or suggesting any forced
ratings distributions at these levels.'' \39\ Accordingly, OPM
concludes that the potential adverse effects identified in the cited
research--such as reduced knowledge sharing, diminished collaboration,
and increased competition--are not relevant to OPM's approach as
adopted in this final rule. Because agencies must continue to rate
employees against established performance standards rather than against
one another and are not required to place a fixed proportion of
employees in the lowest rating category, the concerns associated with
strict, zero-sum ranking systems do not apply.
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\39\ OPM, ``Bad Management?!,'' available at: https://www.opm.gov/news/secrets-of-opm/bad-management/.
---------------------------------------------------------------------------
In accordance with longstanding OPM and GAO guidance, individual
performance appraisals should align with achievement of organizational
and team goals.\40\ OPM believes that by making competencies like
teamwork, problem-solving, collaboration, and mentoring critical
elements in individual performance plans, agencies
[[Page 41527]]
will be able to maintain important collaborative and team-focused
efforts and reward and incentivize employees to work together in
support of team goals.
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\40\ GAO, Creating a Clear Linkage between Individual
Performance and Organizational Success, GAO-03-488 (March 2003)
(noting, as a key practice, ``[a]lign[ing] individual performance
expectations with organizational goals'').
---------------------------------------------------------------------------
Concerns over teamwork and collaboration may also be ameliorated by
agencies granting awards for team achievements and by applying the
standardized distribution the appropriate aggregate agency level. OPM
will not require agencies to apply standardized distribution at a level
that is too small to support meaningful differentiation. OPM expects
distribution requirements to be applied at an appropriate aggregate
level and with exceptions or adjustments where warranted by mission,
occupational structure, small population size, unusual rating-cycle
circumstances, or other factors identified in OPM criteria. Agencies
remain responsible for ensuring that ratings are based on job-related
performance standards, actual performance evidence, and merit system
principles, and for using awards and other forms of recognition in a
way that supports collaboration and high performance.
Use in Private Industry
Commenters such as 0032, 0104, 0169, 0225, 0517, 0629 and others
argued standardized distribution has been tested and abandoned by major
private-sector organizations due to its negative effects, and that OPM
has not explained why it would succeed in the Federal Government where
it failed elsewhere. Commenter 0450 asserts that the proposed rule
rests on an implied assumption that the private sector's preferred
solution is forced rankings despite evidence that private sector
organizations have long experimented with a variety of performance
management approaches without converging on a universal or industry
standard approach.
OPM notes that commenters' assertions that private sector
organizations have largely abandoned standardized distribution of
performance ratings are inaccurate. One recent report estimates that 30
percent of Fortune 500 companies use some form of standardized or
forced distribution in their performance evaluations.\41\ OPM
acknowledges that certain private-sector organizations have moved away
from rigid ``stack ranking'' systems and that systematic review of
studies on standardized distributions (e.g., Wijayanti, Sholihin,
Nahartyo (2024)) \42\ report mixed findings regarding their effects.
However, the evolution of private-sector performance management
practices reflects not an abandonment of performance differentiation,
but a shift away from inflexible quota systems--particularly those
requiring assigning a fixed percentage of employees to the lowest
rating categories. Many organizations continue to employ structured
mechanisms to differentiate performance, such as placing constraints on
the number of the highest ratings to ensure that ratings distributions
reflect differences in contribution. Accordingly, the private-sector
experience cited by commenters does not demonstrate that limiting the
concentration of top performance ratings is inherently ineffective or
inappropriate. Rather, it supports the conclusion that organizations
continue to rely on structured differentiation to ensure that
performance ratings meaningfully reflect differences in employee
contributions and can be used to allocate rewards in a credible manner.
---------------------------------------------------------------------------
\41\ ``Stack Ranking--All You Need to Know,'' Medium (April 3,
2020) https://medium.com/@corvisio/stack-ranking-all-you-need-to-know-a5339c27ad83.
\42\ Wijayanti, A., Sholihin, M., Nahartyo, E., & Supriyadi, S.,
What do we know about the forced distribution system: A systematic
literature review and opportunities for future research, Management
Review Quarterly (2024).
---------------------------------------------------------------------------
Further, even if private sector companies have abandoned
standardized distributions of performance ratings, there are meaningful
reasons to use standardized distributions in the specific context of
the civil service. As OPM noted in its proposed rule, private sector
companies do not operate under a statutory mandate requiring that they
have performance appraisal systems that permit the accurate evaluation
of performance. But, under 5 U.S.C. 4302(c)(1), non-SES employees
operate under just such a statutory mandate. In addition, the Federal
Government is entrusted with many critical responsibilities from
veterans' health care to law enforcement to disaster relief to fighting
pandemics. When employees in the Federal Government fail to perform at
a high level, these crucial, life-or-death missions are compromised.
Further, unlike the private sector, the Federal Government lacks a
profit motive to ensure meaningful evaluations of its employees.
Commenter 0450 also raises concerns with OPM's focus on
standardizing the distribution of performance ratings without
addressing other challenges, such as supervisor quality, leniency bias,
and the administrative burden of performance management. OPM agrees
with the commenter that these challenges must also be addressed to
reform how the Federal Government approaches performance management.
OPM recently published a notice of proposed rulemaking proposing to
amend parts 432 and 752 to streamline the process for holding employees
accountable for poor performance and misconduct.\43\ In that
rulemaking, OPM also proposes to amend part 412 to improve training on
performance management and employee accountability. OPM believes these
two rulemakings address some of the challenges raised by the commenter.
This final rule also addresses, head-on, leniency bias in agencies
where supervisors issue inflated performance ratings. The final rule
authorizes a standardized distribution of ratings, which OPM intends to
apply only to the highest rating levels, so as to require agencies to
make meaningful distinctions in employee performance ratings. Between
this final rule and the proposed rulemaking, OPM is taking much needed
action to address the challenges of an antiquated, failing performance
management system.
---------------------------------------------------------------------------
\43\ 91 FR 40444 (July 2, 2026).
---------------------------------------------------------------------------
Interaction With Other Rulemakings
Commenters 0104, 0157, 0468, 0520, 0616 and others claim that OPM
has not adequately addressed how this rule will interact with other
pending rules. For instance, OPM is simultaneously pursuing a reduction
in force rule that prioritizes ratings over tenure or length of service
for determining retention standing. The commenters argue this makes
ratings more consequential in the event of a reduction in force. The
asserted interactions with other proposed rules are less clear, but the
premise appears to be that the proposed rules collectively discourage
submitting public comments by demoralizing potential commenters.
OPM is committed to significant Federal workforce reforms to
promote a workplace culture of high performance and employee
accountability. The fact that OPM has taken action to address long-
standing issues is not based on a desire to impede the public from
submitting comments but rather a desire to address longstanding
performance management problems plaguing Federal agencies and
employees.
OPM notes that commenters had an opportunity to submit comments
during the public comment period for each of its rulemakings including
the proposed rule on reductions in force, and OPM continues to receive
higher comment response rates than it has historically
[[Page 41528]]
received. OPM will respond to relevant concerns if or when it issues a
final rule in each rulemaking.
OPM observes, however, that performance ratings have long affected
retention standing in a reduction in force. Such usage is consistent
with 5 U.S.C. 3502(a), which requires that OPM issue regulations that
``give due effect'' to, inter alia, ``performance ratings'' in
determining retention standing among competing employees in a reduction
in force. See Am. Fed'n of Gov't Emps., AFL-CIO v. Off. of Pers. Mgmt.,
821 F.2d 761, 765 (D.C. Cir. 1987). Further, 5 U.S.C. 4302(a)(3)
contemplates using appraisal results as a basis for training,
rewarding, reassigning, promoting, reducing in grade, retaining, and
removing employees. Thus, the interaction between this rulemaking and
OPM's reduction in force (RIF) rulemaking does not represent an
unexplained gap in OPM's reasoning, but a longstanding feature of the
Title 5 statutory scheme.
Further, this rule is complementary to OPM's reduction in force
proposal, as it seeks to ensure that performance appraisal systems
accurately evaluate employee performance while better distinguishing
levels of performance. A rule that makes performance matter more in RIF
retention and a rule that seeks to improve the accuracy and
differentiation of performance ratings address complementary parts of
the same merit-based personnel system.
OPM appreciates all commenters submitting feedback to the proposed
changes to authorize a standardized distribution of performance rating
levels. While OPM acknowledges the significance of the change and for
the reasons above, this final rule authorizes the use of a standardized
distribution of performance rating levels. These amendments retain the
longstanding requirement that a rating of record be based on the
evaluation of job performance, while removing the categorical
prohibition on methods that limit or require particular summary levels.
Under the final rule, agencies are required to follow OPM guidance in
implementing a standardized distribution of rating levels when issuing
employee performance ratings. This change permits OPM to require and
enforce an agency-wide and government-wide distribution of performance
ratings among all covered non-SES employees.\44\ The final rule
clarifies that OPM retains discretion to determine the scope and
structure of any standardized distribution, including which rating
levels are subject to distribution requirements. OPM intends that any
standardized distribution will limit only the highest rating levels
(e.g., Levels 4 and 5), rather than prescribing limits for all rating
levels.
---------------------------------------------------------------------------
\44\ OPM notes that standardized distribution for senior
professionals will be addressed under separate final rule. See
Office of Personnel Management and Office of Management and Budget,
Managing Senior Professional Performance, 91 FR 8763 (Feb. 24, 2026)
(proposed rule).
---------------------------------------------------------------------------
Finally, the rule text at 5 CFR 430.208(d) expressly provides that
comparing, categorizing, and ranking employees on the basis of their
performance are practices that may be used for the purpose of assigning
a summary level. This change is necessary to support implementation of
a standardized distribution of performance ratings while preserving the
principle that ratings must reflect employees' demonstrated performance
against established standards.
Together, these changes align the regulatory text with OPM's
determination that comparative evaluation mechanisms are necessary to
improve differentiation in performance ratings and to address
documented rating inflation across agencies.
Summary Levels and Patterns
As discussed in the proposed rule, OPM proposed to amend 5 CFR
430.208(e) to eliminate summary level patterns with a Level 2 summary
level between Level 1 (``Unacceptable'') and Level 3 (``Fully
Successful''), and summary level patterns in which Level 4 was the
highest summary level. In effect, this change eliminates Level 2 as an
available summary level and retains only those summary level patterns
that meaningfully promote differentiation in performance. Agencies
retain flexibility to select among the remaining available patterns
consistent with the requirements of 5 CFR part 430, subpart B.
Several commenters (e.g., Commenters 0002, 0004, 0027, 0031, 0036,
and 0068) expressed concern that eliminating the Level 2 summary rating
level would reduce the ability to distinguish among varying levels of
performance and creates an ``all-or-nothing'' rating structure.
Commenters argue that Level 2 provides an intermediate rating that
allows supervisors to recognize gradations in performance between Level
1 and Level 3 and that removing this level could reduce the accuracy of
performance evaluations.
OPM does not agree that eliminating the Level 2 summary rating
level results in a meaningful loss of nuance in performance
evaluations. The purpose of summary ratings is to provide a clear,
meaningful assessment of whether an employee meets established
performance expectations. Arguments that eliminating the Level 2
summary rating will remove important granularity in rating employee
performance are not supported given the extremely infrequent use of
that rating level. OPM's oversight of agency non-SES performance
appraisal systems revealed that, for agencies using a five-level
summary rating system, only 0.3 percent of non-SES employees were rated
at Level 2 for the fiscal years 2022 to 2024.\45\ The minimal use of a
Level 2 rating indicates that agencies rarely rely on this summary
level to distinguish performance. Supervisors remain responsible for
identifying and addressing performance deficiencies at the element
level, including providing feedback, documenting deficiencies, and
taking appropriate corrective action where needed. Accordingly, OPM
does not believe that eliminating the Level 2 rating will prevent
agencies from identifying or addressing performance issues or providing
employees with required opportunities to improve.
---------------------------------------------------------------------------
\45\ Non-SES/SP ratings data submitted by individual agencies.
---------------------------------------------------------------------------
Commenters 0098 and 0206 asserted that a Level 2 rating serves as a
mechanism for identifying employees whose performance requires
improvement but is not ``Unacceptable,'' thereby allowing agencies to
address marginal performance without resorting to adverse action. This
commenter further stated that ``Under 5 U.S.C. chapter 43 and
established merit system principles, agencies must be able to identify
and develop employees whose performance is inadequate but
recoverable,'' implying that there is a statutory basis for continued
use of the Level 2 summary level.
OPM respectfully disagrees. Neither chapter 43 nor the merit system
principles require use of a Level 2 summary level or any particular
number or naming of summary levels. The statutory obligation to
identify, assist, and, where necessary, take action with respect to
employees whose performance does not meet required standards does not
depend on the availability of a separate Level 2 summary rating. This
is reflected in the fact that the currently existing rating patterns of
A, B, C, and E do not provide for a Level 2 summary rating.\46\ This
rule does not create new ratings patterns but merely limits agency
selections from among the existing ratings patterns.
---------------------------------------------------------------------------
\46\ 5 CFR 430.208(d)(1).
---------------------------------------------------------------------------
The final rule eliminates Level 2 as a summary rating level. It
does not prevent agencies from providing
[[Page 41529]]
feedback, coaching, or assistance before performance becomes
unacceptable. When an employee's performance fails to meet established
standards in one or more critical elements, agencies remain required to
provide assistance consistent with 5 U.S.C. 4302(c)(5) and Sec.
430.207(c), as redesignated.
Also, merit system principle #6 (5 U.S.C. 2301(b)(6)) states that
``employees should be retained on the basis of the adequacy of their
performance, inadequate performance should be corrected, and employees
should be separated who cannot or will not improve their performance to
meet required standards.'' \47\ This principle conveys that an
employee's retention should be based on the adequacy of performance and
does not require the use of a Level 2 summary rating level between
``Unacceptable'' and ``Fully Successful.'' Under the final rule,
``adequate performance'' is considered performance that meets the
``Fully Successful'' performance standards. As OPM explained in the
proposed rule, any pattern of summary levels that has two levels below
``Fully Successful'' creates unnecessary complexity without meaningful
distinction. The Merit Systems Protection Board (MSPB) also noted the
failings of a Level 2 rating, noting it ``is a difficult level of
performance to define'' because ``it makes possible a situation that
managers, employees, and members of the public may find intolerable: an
employee who is not performing the job satisfactorily, yet cannot be
removed for performance and who remains in the position at a full
salary.'' \48\
---------------------------------------------------------------------------
\47\ 5 U.S.C. 2301(b)(6).
\48\ MSPB, Determining an Acceptable Level of Competence for
Step Increases (Apr. 2021), https://www.mspb.gov/studies/researchbriefs/Determining_an_Acceptable_Level_of_Competence_for_Step_Increases_1823371.pdf.
---------------------------------------------------------------------------
A few commenters (e.g., Commenters 0055, 0226, 0374, 0375, and
0621) expressed support for the proposed change, stating that reducing
the number of summary rating levels would simplify performance
appraisal systems, improve clarity, and help address rating inflation.
Commenter 0621 further recommended that, if the Level 2 summary rating
is eliminated, OPM should also eliminate the use of ``non-critical
elements'' because current regulations preclude assigning a Level 1
(``Unacceptable'') summary rating based on consideration of non-
critical elements.\49\
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\49\ 5 CFR 430.208(b)(2).
---------------------------------------------------------------------------
OPM agrees that eliminating redundant patterns of summary levels
will improve clarity and promote more meaningful distinctions in
performance outcomes. A more streamlined rating framework reduces
ambiguity and supports more consistent application of performance
standards across organizations. However, OPM does not agree that
elimination of the Level 2 summary rating level warrants the removal of
non-critical elements. Non-critical elements serve an important and
distinct function within performance appraisal systems for employees
covered by this subpart. Specifically, they allow agencies to assess
and communicate expectations related to important aspects of
performance that, while not rising to the level of a critical element,
contribute to overall effectiveness, teamwork, and mission
accomplishment.
Lastly, a few commenters (e.g., 0022 and 0587) expressed concerns
about the readiness of agencies to implement the reforms under the
proposed rule. OPM considered these concerns and determined it
appropriate to delay compliance with 5 CFR 430.208(e)(1) and (2) until
January 1, 2027, as described in the effective date of the rule. This
delay will allow agencies to complete Fiscal Year 2026 performance
appraisals using all five summary level ratings, including Level 2, as
appropriate. Under the final rule, agencies will move to new
performance appraisal systems without a Level 2 rating beginning at the
start of Fiscal Year 2027. Agencies currently using a summary level
pattern with Level 2 will have sufficient time to complete the
performance appraisal cycle for Fiscal Year 2026 including issuing
ratings of record with the option of assigning a Level 2 rating. OPM
believes this additional time will allow agencies to complete the
transition to a new performance appraisal system including making
appropriate changes to their human resources information systems,
policies, and procedures.
After consideration of the comments, OPM has determined that
eliminating summary level patterns that utilize a Level 2 summary level
will promote clearer and more consistent application of performance
standards. Under the final rule, there is only one summary rating
level--Level 1 (``Unacceptable'')--that represents when a non-SES
employee's performance fails to meet the fully successful standards.
This amendment aligns with OPM's statutory mandate to improve the
accuracy and consistency of performance appraisal systems. By
eliminating unnecessary patterns of summary levels, agencies will be
better positioned to make clear and accurate distinctions between
performance that is ``Fully Successful'' and ``Unacceptable.'' The rule
also eliminates ambiguity with respect to ``Outstanding'' performance,
which under the final rule is identified only by a Level 5 rating.
Accordingly, OPM removes Patterns C, D, F, G, and H, retains Patterns A
and B, and redesignates Pattern E as C.
Eliminate Assistance for Marginal Performance
Since OPM is eliminating the Level 2 summary rating, OPM is also
removing the provision at 5 CFR 430.207(c), which required appraisal
programs to provide assistance whenever performance is determined to be
below ``Fully Successful'' or equivalent but above ``Unacceptable.''
A number of commenters, including 0062, 0068, 0206, 0240, 0285 and
others, objected to removing this requirement because they perceive it
as reducing the opportunity for employees to receive assistance if
their performance drops below ``Fully Successful.'' Relatedly,
Commenter 0521 questioned how eliminating the provision for assistance
under 5 CFR 430.207(c) complies with the statutory requirement that
performance appraisal systems provide for ``assisting employees in
improving unacceptable performance.'' 5 U.S.C. 4302(c)(5).
OPM emphasizes that the regulation at 5 CFR 430.207(c) stated that
appraisal programs should provide assistance whenever performance is
determined to be below ``Fully Successful'' or equivalent but above
``Unacceptable.'' Because the final rule eliminates the Level 2 summary
level, there are no corresponding performance standards defining Level
2 performance. Therefore, any time an employee's performance is
determined to be below ``Fully Successful,'' agencies are required
under 5 U.S.C. 4302(c)(5) to provide assistance to improve the
unacceptable performance. Hence, opportunity for assistance is not
diminished under the final rule. Additionally, employees who
demonstrate unacceptable performance remain entitled to an opportunity
to demonstrate acceptable performance before being reassigned, reduced
in grade, or removed.\50\
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\50\ 5 U.S.C. 4302(c)(6) and 5 CFR 430.204(b)(1)(v).
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Furthermore, OPM's performance management guidance emphasizes the
importance of communication between supervisors and employees, and OPM
instructed agencies to establish policies that require more frequent
check-ins to ensure supervisors are providing necessary performance-
related feedback
[[Page 41530]]
to their subordinates.\51\ These resources for agencies, combined with
the increased emphasis on frequent communication and performance
feedback, address commenters' concerns regarding employees whose
performance falls below ``Fully Successful'' during the appraisal
period.
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\51\ See note 14.
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Limited Use of Pattern A
OPM determined that use of Pattern A (``pass/fail'') is reasonable
for a limited number of populations in which comparing, categorizing,
and ranking of employees is impractical or impossible. In the final
rule, Pattern A may only be used for seasonal employees, teachers,
General Schedule grades 1-4, and Federal Wage System employees. This
change promotes meaningful performance-based differentiation by
ensuring the vast majority of employees covered by this rulemaking are
subject to a summary level pattern other than Pattern A.
OPM received little feedback on this provision. Commenter 0206
argues that restricting Pattern A to the aforementioned groups creates
structural inequity by making rating options tied to grade level as
opposed to job characteristics. Commenter 0206 also asserts that
employees subject to this rating pattern may have limited recognition
and award opportunities. Other commenters asserted that the proposed
rule would impose costly system changes.
OPM disagrees that this provision creates structural inequities
based on grade level. OPM's intent is for agencies to utilize summary
level patterns that, to the greatest extent possible, promote
differentiation in performance, while reserving Pattern A for positions
where a more detailed rating structure is not practicable. The
regulatory framework is designed to provide flexibility while ensuring
that performance appraisal systems are appropriate to the nature of the
work being performed, and agencies retain discretion to design rating
structures consistent with regulatory requirements and organizational
needs. Limiting Pattern A to specified categories of employees reflects
longstanding practice in which simplified rating structures have been
appropriate for these positions. This does not preclude agencies from
utilizing Patterns B or C for these groups of employees or from
recognizing or rewarding high performance through the use of Pattern A.
OPM also acknowledges that this rule may require agencies to modify
their human resources information systems to accommodate the changes in
this rule. However, commenters fail to provide any specific reason or
argument that these changes may be costly. While OPM believes that
agencies may incur some non-zero cost to adjust their information
systems, such costs are de minimis. Even so, OPM views the costs of
these changes as necessary to free agencies from the burden of a
performance management appraisal system that has proven ineffective for
the last 40-plus years. For these reasons, OPM is adopting in the final
rule its proposal limiting the use of Pattern A.
Higher-Level Review and Approval
OPM proposed eliminating the requirement for mandatory higher-level
review and approval of a Level 1 (``Unacceptable'') rating of record to
further streamline performance appraisal processes and eliminate
procedural hurdles that impede accountability. Several commenters
expressed concern that eliminating this requirement removes an
important safeguard against error, inconsistency, and potential abuse
(e.g., Commenters 0030, 0098, 0152, 0203, 0224, and 0289). Commenters
argued that higher-level review provides a critical check on
supervisory decisions and helps ensure that highly consequential Level
1 ratings are applied accurately and consistently.
OPM recognizes the importance of ensuring that all performance
ratings, including Level 1 ratings, are applied accurately and
consistently. However, OPM does not agree that mandatory higher-level
review in all cases is necessary to achieve these objectives. As
explained in the proposed rule, mandating an additional level of review
and approval adds unnecessary complexity, delays corrective action, and
may be redundant in streamlined agency structures. For example, where
the rating official is already a senior leader or where the agency
structure does not support additional layers of review, a mandatory
higher-level review requirement may provide little incremental value.
It is also important to note that this change does not prohibit higher-
level review or approval of a Level 1 rating of record; it simply
removes the regulatory mandate that such review and approval occur in
every case. Agencies retain discretion to establish internal review
processes where appropriate, including authorizing the use of the
administrative grievance procedures to review performance ratings, and
OPM expects agencies to maintain effective oversight of performance
management practices. Further, OPM notes that Level 1 ratings are
extremely rare. Relevant data \52\ show that only approximately 0.1
percent of employees receive an ``Unacceptable'' rating. Given this
very limited usage, removal of a mandatory review step for such ratings
will not have a widespread impact on Federal employees. Instead, the
change targets a narrow category of clearly defined poor performance
while preserving all substantive statutory protections and allowing
agencies to tailor their oversight mechanisms to their organizational
structures.
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\52\ See note 45.
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Some commenters, including 0159, 0553, and 0558, asserted that
eliminating the requirement for mandatory higher-level review of Level
1 ratings raises due process concerns because such ratings may
ultimately serve as the basis for a performance improvement plan (PIP),
demotion, or removal action under chapter 43 of title 5, United States
Code. Commenter 0159 specifically cited Cleveland Board of Education v.
Loudermill, 470 U.S. 532 (1985), arguing that higher-level review helps
satisfy constitutional due process protections before an employee may
be deprived of continued Federal employment.
OPM respectfully disagrees that eliminating mandatory higher-level
review of a Level 1 rating of record deprives employees of
constitutionally required due process protections. A rating of record,
by itself, does not constitute an adverse action or independently
deprive an employee of a protected property interest in continued
employment. Commenters' reliance on Loudermill is misplaced. Loudermill
does not establish that employees have a vested property interest in
higher-level review of a performance rating. Rather, it addresses the
minimum procedural protections required before a tenured public
employee may be deprived of continued employment. A Level 1 summary
rating by itself does not remove an employee from Federal service or
otherwise deprive the employee of a property interest. Instead, it
initiates a process governed by chapter 43 of title 5, United States
Code,\53\ and OPM's regulations at 5 CFR part 432, under which
employees are provided notice of unacceptable performance and an
opportunity to demonstrate acceptable performance before any
performance-based action may be taken. If an employee fails to improve
to the ``Fully Successful'' level, the agency must then provide notice
of the proposed action and comply with applicable statutory and
regulatory
[[Page 41531]]
procedures, including concurrence by a higher-level official before a
removal or reduction in grade may occur.
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\53\ See 5 U.S.C. 4303.
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Further, although the final rule removes the governmentwide
requirement for mandatory higher-level review of all Level 1 ratings,
agencies remain free to establish such review requirements through
internal policy or procedure where appropriate. Employees also retain
multiple avenues to raise concerns regarding allegedly arbitrary,
retaliatory, or discriminatory ratings, including administrative
grievances, whistleblower disclosures, prohibited personnel practice
complaints, and equal employment opportunity complaints. Accordingly,
OPM concludes that the final rule does not eliminate or otherwise
conflict with constitutional due process requirements.
Commenter 0152 argued that higher level review is necessary because
``performance issues are a result of systemic failures, such as
inadequate training or a lack of clear guidance, which cannot be solved
by penalizing the employee.''
OPM disagrees that performance issues are generally the result only
of systemic failures. While OPM acknowledges that there are several
factors that play a role in whether an employee is successful in his or
her position, OPM is unpersuaded by Commenter 0152's broad, unsupported
assertion that poor performance is primarily attributable to such
factors. That is not to say OPM is not addressing systemic issues that
may affect performance management outcomes. As noted above, OPM is
proposing regulatory reforms intended to improve how agencies recognize
excellence and address poor performance. In addition, OPM has taken
separate action to improve hiring processes and outcomes \54\ and to
hold supervisors accountable for addressing poor performance within
their organizations.\55\ These efforts complement, rather than
substitute for, agency responsibility to evaluate and address
individual performance consistent with statutory and regulatory
requirements.
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\54\ OPM, Memorandum, ``Merit Hiring Plan,'' May 29, 2025,
https://www.opm.gov/chcoc/transmittals/2025/Merit%20Hiring%20Plan%205-29-2025%20FINAL.pdf.
\55\ See note 14.
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OPM has carefully considered these comments and concludes that
eliminating the requirement for mandatory higher-level review of Level
1 ratings does not impede due process, nor will it reduce fairness or
accuracy in performance evaluations. The final rule provides agencies
with appropriate flexibility to manage performance appraisal processes,
including the discretion to provide higher-level reviews of any rating
level through internal policy. Therefore, OPM is not adopting
commenters' recommendations to retain the mandatory higher-level review
and approval of Level 1 ratings of record.
Eliminate Negotiated Grievance Procedures
OPM proposed amending 5 CFR 430.208 to clarify the finality of a
rating of record and to establish explicit limitations on the
mechanisms by which such ratings may be challenged. Specifically, the
amendment provides that a rating of record, once issued with all
appropriate reviews and approvals, constitutes the agency's final
determination of an employee's performance for the appraisal period,
subject only to those reconsideration processes expressly provided by
regulation. As a result, ratings of record are not subject to
negotiated grievance procedures or arbitration under 5 U.S.C. 7121,
regardless of collective bargaining coverage. This change represents a
departure from prior practice, under which a rating of record could, in
certain circumstances, be modified as a result of a grievance,
complaint, or other formal proceeding. OPM notes, however, that the
revision to 5 CFR 430.208 does not preclude the use of negotiated
grievance procedures established under 5 U.S.C. 7121 to challenge a
rating of record in all cases. Where a collective bargaining agreement
contains a provision that permits a bargaining unit employee to grieve
a rating of record and the agreement is in effect before the date this
rule is prescribed, such a grievance will continue up until the term of
the agreement expires.\56\ Once the term of the agreement expires,
grievances over ratings of record will no longer be subject to any
negotiated grievance procedures or arbitration under 5 U.S.C. 7121.
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\56\ See 5 U.S.C. 7116(a)(7).
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Several commenters (e.g., Commenters 0161, 0165, 0569, and 0421)
asserted that OPM lacks statutory authority to prohibit employees from
contesting ratings of record through negotiated grievance procedures.
Commenters argued that under the Federal Labor Relations Authority's
decision in Nat'l Treasury Emps. Union and Internal Revenue Serv., 31
FLRA 181 (1988) (NTEU), OPM cannot prohibit grievances under a
negotiated grievance procedure through a governmentwide regulation
unless expressly authorized by Congress under 5 U.S.C. 7121, and that
ratings of record are not among the matters excluded in section
7121(c).
OPM disagrees that the FLRA's decision is controlling as it is no
longer good case law. In NTEU, the FLRA held that OPM's governmentwide
regulation prohibiting grievances over non-selections for promotion was
inconsistent with 5 U.S.C. 7121. The FLRA's holding relied on an
earlier D.C. Circuit's opinion in EEOC v. FLRA, 744 F.2d 842 (D.C. Cir.
1984) (EEOC) where that court stated that there is no evidence that
Congress intended for governmentwide regulations to limit the scope of
the negotiated grievance procedure under section 7121.\57\ Five years
after NTEU, the D.C. Circuit revisited EEOC in Dep't of Treasury v.
FLRA, 996 F.2d 1246 (D.C. Cir. 1993) (Treasury) to determine whether a
governmentwide regulation barring grievances is consistent with section
7121.\58\ The D.C. Circuit overturned EEOC and held that under 5 U.S.C.
7117(a)(1) an agency may ``pull a subject out of the bargaining process
by issuing a government-wide rule that creates a regime inconsistent
with bargaining.'' \59\
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\57\ NTEU at 200 (citing EEOC v. FLRA, 744 F.2d 842, 851 (DC
1984)).
\58\ Treasury at 1251-53.
\59\ Id.
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Consistent with the D.C. Circuit's opinion in Treasury, OPM is
prohibiting labor unions from negotiating and agencies agreeing to a
proposal that authorizes grievances over ratings of record under
section 7121. In doing so, OPM notes that performance ratings, in and
of themselves, do not constitute adverse actions subject to independent
statutory appeal rights. To the extent a rating of record is used as
the basis for a subsequent personnel action that is otherwise
appealable or able to be grieved under applicable law, employees retain
any applicable procedural rights attached to that action. However, the
rating of record itself will not be subject to challenge through
negotiated grievance procedures. Accordingly, OPM concludes that the
final rule establishes reforms consistent with 5 U.S.C. 7121 and falls
within OPM's statutory authority to regulate performance appraisal
systems under chapter 43.
Several commenters (e.g., Commenters 0002, 0044, 0053, 0206, 0288,
0377, 0418, and 0616) asserted that eliminating the opportunity to
challenge performance ratings through negotiated grievance procedures
[[Page 41532]]
undermines due process protections. These commenters argued that
grievance procedures provide employees with a meaningful opportunity to
contest inaccurate or unfair ratings and serve as an important
safeguard against arbitrary decision-making. Commenter 0377 asserted
that prohibiting labor union grievances over ratings of record is
contrary to law under Cleveland Bd. of Educ. v. Loudermill, 470 U.S.
532 (1985).
OPM does not agree that the final rule eliminates any required due
process protections or is inconsistent with Loudermill. Loudermill
addresses the procedural protections required when the government seeks
to deprive an employee of a protected property interest and requires
notice and an opportunity to respond prior to such deprivation. Ratings
of record, standing alone, do not constitute an adverse action or a
deprivation of a property interest and therefore do not independently
trigger the due process protections described in Loudermill. Moreover,
where a performance rating forms the basis for a subsequent
performance-based or adverse action under 5 U.S.C. chapters 43 or 75,
respectively, employees retain all applicable procedural protections
provided by Congress. This includes entitlement to advance notice, an
opportunity to respond, a right to representation, and a decision
taking into account the employee's response. Most employees also
benefit from the ability to appeal such actions to the Merit Systems
Protection Board. The proposed rule does not alter these protections.
Further, employees continue to enjoy protections against prohibited
personnel practices under 5 U.S.C. 2302 including filing complaints
with the Office of Special Counsel. Employees also retain protections
under the many anti-discrimination laws enforced by the Equal
Employment Opportunity Commission. Taken together, these statutory
protections ensure that eliminating challenges to ratings through
negotiated grievance procedures does not undermine due process or
reduce the integrity of the performance appraisal process.
Other commenters, including 0003, 0007, 0031, 0059, 0206, 0288,
0498, and 0629, claim that challenging ratings through negotiated
grievance procedures is a necessary check on supervisory inaccuracy and
bias, including favoritism, retaliation, or arbitrary decision-making.
Others characterize the procedures as necessary for ensuring fair and
equitable treatment required by merit system principles (e.g.,
Commenters 0053, 0288, and 0319).
OPM acknowledges the importance of fair and accurate performance
appraisals but disagrees that negotiated grievance procedures are an
appropriate or necessary mechanism to achieve that objective. As OPM
explained in the proposed rule, grievance arbitrators are poorly
positioned to substitute their judgment for that of supervisors in
these areas, particularly where the dispute centers on the relative
level of performance (e.g., ``Fully Successful'' versus
``Outstanding'') rather than a clear procedural or legal violation.
These arbitrators are particularly ill-equipped to assess performance
ratings assigned under a standardized distribution, as they generally
review an individual record and may not have access to the full
agencywide rating-distribution context.
OPM notes that grievances over ratings have not been limited to
correcting clearly erroneous or unjustified low ratings. Instead, cases
show that negotiated grievance procedures have frequently been used to
contest ratings that are already at or above the ``Fully Successful''
level, with the objective of obtaining the highest possible rating.\60\
Such cases demonstrate the propensity to use grievance procedures not
as a safeguard against improper low ratings, but as a mechanism to
relitigate performance determinations. This prospect creates incentives
for supervisors to avoid assigning lower ratings that may be subject to
challenge, especially those that could result in adverse action. In
this regard, the current system has tended to bias ratings upward, not
downward, but bias in any direction nonetheless undermines the
meaningful differentiation of performance that chapter 43 is intended
to achieve.
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\60\ See, e.g., Def. Logistics Ag. and AFGE Local 987, 71 FLRA
1029 (2020); Farm Serv. Agency and AFGE Local 3354, 56 FLRA 679
(2000); Dep't of Veterans Affairs and NAGE Local R4-78, 47 FLRA 797
(1993).
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Lastly, as discussed earlier, existing statutory safeguards remain
in place to ensure fair and equitable treatment and address concerns
regarding bias, retaliation, or improper conduct. Employees retain many
paths to ensure they receive a fair assessment of their performance.
Further, OPM is amending Sec. 430.209 and Sec. 430.210 to expressly
require agencies to administer their performance appraisal systems in
accordance with the merit system principles set forth in 5 U.S.C. 2301
and that OPM will take effective action to correct any violations. OPM
is revising the Authority citation for part 430 to reflect this
addition.
After careful consideration of the comments, OPM has determined
that excluding performance ratings from negotiated grievance procedures
is appropriate to promote consistency, accountability, and integrity in
performance appraisal systems. OPM has considered commenters' statutory
and policy concerns but concludes that the final rule reflects a
reasonable and lawful exercise of its authority to regulate performance
appraisal systems on a governmentwide basis. OPM concludes that the
provision preserves necessary due process safeguards against
supervisory bias; employees retain all procedural protections required
by law in connection with adverse actions; and agencies maintain
internal review mechanisms to ensure the accuracy and consistency of
performance evaluations. OPM further finds that the existing grievance
framework has contributed to longstanding concerns regarding rating
inflation, gives arbitrators with little experience in agency
operations the final word on performance ratings, and has frequently
been used to challenge ratings at or above the ``Fully Successful''
level, rather than to address clear violations of law or regulation. By
clarifying the finality of ratings of record and limiting their review
to appropriate internal processes, the final rule promotes supervisory
accountability, supports more meaningful differentiation of
performance, and aligns performance management practices with the
statutory framework under chapter 43. Accordingly, OPM adopts the
amendments to Sec. 430.208 as proposed.
Supervisory Critical Element
As OPM explained in the proposed rule, supervisors are responsible
for accurately assessing employee performance and play a critical role
in ensuring the integrity of agency performance management systems.
However, in the absence of clearly defined and consistently applied
expectations for supervisory performance, agencies may lack an
effective mechanism to evaluate how well supervisors carry out these
responsibilities. This gap can contribute to inconsistent application
of performance standards, diminished accountability, and, in some
cases, inflated ratings or insufficient action to address poor
performance. A supervisory critical element provides a clear, formal
basis for evaluating supervisory performance management
responsibilities, including setting
[[Page 41533]]
expectations, providing feedback, and addressing performance
deficiencies. Establishing such an element ensures that supervisory
performance is assessed against defined criteria and reinforces the
expectation that supervisors are accountable for effective performance
management practices. Accordingly, to strengthen accountability and
promote more consistent and accurate performance evaluations, OPM
proposed amending 5 CFR 430.206(b) to require that a supervisory
critical element be included in the performance plans of all
supervisors covered under 5 CFR part 430, subpart B.
Several commenters, including 0002 and 0044, expressed concern that
the requirement could impose unrealistic or overly burdensome
expectations on supervisors, noting that supervisors already face
significant administrative and operational demands. Commenter 0044
further noted that mandating a supervisory critical element across all
agencies may not fully reflect the diversity of supervisory roles
within the Federal Government and may reduce agencies' flexibility to
tailor performance plans to mission-specific responsibilities.
Respectfully, OPM disagrees with commenters' concerns. In 2025, OPM
published guidance consistent with the President's commitment to
transform the Federal bureaucracy, including promoting a high-
performance Federal workplace culture.\61\ This guidance required
agencies to take steps to improve their supervisory, managerial, and
executive corps, including mandatory performance management training
and tying certain supervisor and managerial performance plans to
driving a culture of accountability. These requirements are not
burdensome. Supervisors, managers, and executives are already subject
to training requirements under OPM regulations.\62\ Moreover, it is a
core competency of all Federal supervisors and managers, regardless of
technical specialization or the uniqueness of positions, to hold
employees accountable.\63\ OPM does not view linking this core
competency to performance plans as unduly burdensome as these
expectations have always been critical to their positions. Nonetheless,
OPM will be mindful of the commenters' concerns if and when it issues
new or revised guidance.
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\61\ See note 14.
\62\ 5 CFR part 412, subpart A.
\63\ https://www.opm.gov/policy-data-oversight/classification-qualifications/general-schedule-qualification-standards/specialty-areas/supervisory-guide/.
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Commenter 0161 expressed support, in principle, for requiring a
supervisory critical element but also voiced concern that, if
supervisors are evaluated under the new critical element based on the
distribution of ratings they assign, it could create an incentive for
supervisors to issue lower ratings to their subordinates, regardless of
the subordinates' actual level of performance.
OPM appreciates the commenter's concern and confirms that the
performance of non-SES supervisors will not be evaluated based on the
ratings they issue to their subordinates. OPM issued performance
management guidance \64\ containing the verbatim language of the new
supervisory critical element titled, ``Holding Employees Accountable,''
and its associated performance standards. The critical element focuses
on process-based actions such as modeling self-accountability, holding
subordinates accountable, rewarding excellent performance, addressing
poor performance in a timely manner, and taking appropriate action when
employees report concerns of illegal conduct or waste, fraud, or abuse.
It does not involve evaluating supervisors based on the ratings
distribution of their subordinates. OPM intends for agencies to apply
the standardized distribution requirements at the agency or department
level as opposed to the work unit level. As such, ratings issued by an
individual supervisor will not need to strictly adhere to the overall
rating limits that apply to the agency. OPM also notes that it is
possible the commenter conflated the supervisory critical element
requirement with an SES-specific requirement in the same guidance--that
senior executives who supervise 10 or more subordinate SES must
describe, in their annual performance narrative, the rating
distribution of subordinate SES and how that distribution reflects the
performance of their organization. That requirement does not apply to
non-SES supervisors.
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\64\ See note 14.
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Commenter 0068 and others suggested that improvements to
performance management should focus on enhanced training, clearer
standards, and improved oversight, rather than the addition of new
regulatory requirements. OPM agrees that improving performance
management requires a multifaceted approach. To that end, as discussed
above, OPM has proposed changes to other regulations that improve
training for supervisory, managerial, and executive leaders. OPM also
provided free training resources \65\ to assist agencies and
supervisors in effectively carrying out performance management
responsibilities, including methods for identifying and addressing poor
performance and how to develop and discuss relevant performance goals
and objectives with employees. In addition, OPM encourages agencies to
provide supervisors with appropriate training and resources to carry
out their responsibilities.
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\65\ OPM, New Governmentwide Supervisory Training (Dec. 3,
2025), https://www.opm.gov/chcoc/published-memos/new-governmentwide-supervisory-training.pdf.
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After careful consideration of the comments, OPM has determined
that requiring a supervisory critical element is an appropriate and
necessary component of a modern performance management system. The
requirement promotes accountability, reinforces effective supervisory
practices, and supports fair and consistent evaluation of supervisory
responsibilities across the Federal workforce. Therefore, OPM is
amending 5 CFR 430.206(b) as proposed, by adding a new subparagraph
(9), requiring that a supervisory critical element be included in the
performance plans of all supervisors covered under 5 CFR part 430,
subpart B.
Biennial Appraisal System Certifications
In the proposed rule, OPM proposed amending 5 CFR 430.210(b) to
establish a requirement that agency performance appraisal system(s) and
program(s) be evaluated and certified by OPM biennially. The purpose of
this requirement is to ensure that agency appraisal systems and
programs are implemented in a manner consistent with statutory and
regulatory requirements, as well as OPM performance management
guidance. This change supports OPM's broader objective of strengthening
accountability and consistency across agencies, which is particularly
important given changes in this final rule, including the provision
authorizing OPM to establish and maintain a standardized distribution
of rating levels.
Commenter 0002 objected to the proposal, arguing that ``[a]gencies
already operate under strict oversight.'' Under 5 U.S.C. 4304(b), OPM
is required to review each performance appraisal system developed by an
agency and to direct agencies to make appropriate corrections where
such systems do not meet statutory
[[Page 41534]]
requirements. In practice, OPM fulfills this responsibility by
reviewing and approving newly developed appraisal systems and requiring
reapproval when agencies make substantive changes. However, where
appraisal systems remain in place for extended periods without
modification, OPM may have limited opportunity to evaluate how those
systems are being applied and whether they continue to meet statutory
and regulatory requirements. The biennial review and certification
requirement addresses this gap by providing for regular, structured
oversight of both the design and application of agency appraisal
systems.
OPM sought this certification requirement to improve its oversight
of agencies' performance appraisal systems in response to surveys
showing long-held skepticism among Federal employees that current
performance appraisal systems meaningfully differentiate between levels
of performance.\66\ Coupled with ratings distribution data that
consistently show dramatically inflated performance ratings,\67\ these
trends demonstrate that performance management systems covered by 5 CFR
part 430, subpart B, are not functioning as effective instruments for
performance differentiation, accountability, or workforce development.
As such, additional oversight is warranted.
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\66\ See note 12.
\67\ See notes 9 and 45.
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Commenters 0002, 0041, 0042, 0044, 0098, 0130, 0253, 0398, 0403,
and 0448 argue that this requirement would impose significant
administrative burden on agencies without clear benefits.
OPM acknowledges these concerns. While OPM intends for the
certification requirement to build upon existing agency processes and
oversight mechanisms, rather than create duplicative or unnecessarily
burdensome reporting requirements, OPM agrees that there could be a
substantial administrative burden if the biennial review and
certification process involves evaluating all agency appraisal systems
and corresponding appraisal programs. Agencies may have several
appraisal programs established under a single appraisal system. OPM
notes that an ``appraisal system'' is the agency's framework of
policies and parameters (i.e., guidelines, boundaries, limits) for the
administration of performance appraisal programs, and an ``appraisal
program'' is the specific procedures and requirements established under
the policies and parameters of an agency appraisal system.
Historically, there has been no requirement for OPM to review or
approve agency appraisal programs, and OPM is confident that sufficient
oversight can be achieved solely through evaluating agencies'
application of their performance appraisal systems. Therefore, OPM is
finalizing the biennial review and certification requirements in 5 CFR
430.210(b) with an amendment to the proposed language to only require
recertification of appraisal systems and to remove agency performance
appraisal programs from the requirement.
Commenters 0206, 0421, and 0514 voiced concern over the provision
in 5 CFR 430.210 authorizing OPM to recommend an agency's aggregate
awards spending be reduced based on an unfavorable certification
result. Commenter 0206 specifically stated it ``risks penalizing
employees for systemic issues related to agency leadership, training,
or implementation--factors outside individual employee control.''
OPM recognizes that agency leadership is primarily responsible for
ensuring compliance and that any consequences of an unfavorable
certification determination may affect employees. However, in
exercising its review and certification authority, OPM will ensure that
any recommendations or actions resulting from an unfavorable
certification determination are based on data-driven criteria that OPM
is required to issue. The intent is to improve system integrity, not to
impose punitive measures. OPM further notes that appraisal system
certification has been a longstanding requirement for SES and SP
appraisal systems and that agencies have successfully implemented those
requirements for many years. Furthermore, the outcomes associated with
SES and SP certification determinations are significantly more
consequential, as those certifications are directly tied to statutory
pay limitations. Unlike SES/SP certification, the non-SES/SP
certification process created by this rule does not itself impose
statutory pay caps or alter individual pay entitlements. OPM may,
however, recommend prospective aggregate awards spending limitations to
OMB.
Conversely, Commenters 0013 and 0225 provided general support for
the certification requirement or acknowledged that it could enhance
consistency, oversight, and accountability across agencies,
particularly when considered alongside other proposed reforms.
Commenter 0013 remarked that the proposed rule improves OPM's oversight
role. OPM agrees and concludes that enhanced oversight through a
required biennial review and certification process is an appropriate
mechanism for improving rigor and consistency of performance management
across the Federal Government. Accordingly, OPM is adopting the
proposed amendment to 5 CFR 430.210 with the modification described
above.
Conforming Amendments
As proposed, OPM is making conforming changes to 5 CFR parts 351
and 537 to adjust cross-references. In an unrelated rulemaking, OPM has
proposed revisions to the reduction in force regulations found in 5 CFR
part 351. 91 FR 10904 (March 5, 2026). If that rulemaking is finalized,
these conforming changes would be incorporated into that revised text.
Finally, OPM is also making other changes to 5 CFR part 430,
subpart B in this final rule. OPM is correcting references to out-of-
date operating manuals at Sec. 430.209(b) and (e). In response to
comments asserting that standardized distribution could undermine
merit-system principles, OPM is clarifying at 5 CFR 430.209(g) and
430.210(c) that agency appraisal systems and appraisal programs must be
administered consistent with the merit system principles set forth
under 5 U.S.C. 2301 and that OPM may require corrective action where
systems fail to meet applicable legal and regulatory requirements.
Expected Impact of This Rulemaking
A. Statement of Need
OPM is issuing this rule pursuant to its authority to issue
regulations governing performance appraisals for non-SES employees in
subchapter I of chapter 43 of title 5, United States Code. As discussed
in the Background, the purpose of this rule is to modernize and
strengthen the performance management framework for non-SES employees
under 5 CFR part 430, subpart B. The current regulatory structure has
remained largely unchanged for decades. Therefore, it no longer
reflects the operational realities or accountability standards
necessary for today's Federal workforce. This has led to persistent
issues going unaddressed--including inflated performance ratings,
limited differentiation between successful and unsuccessful
performance, and uneven agency compliance with statutory performance
appraisal requirements. Despite OPM's non-regulatory efforts to improve
rigor in the performance management process, ratings inflation remains
particularly acute, leading OPM
[[Page 41535]]
to conclude that comprehensive regulatory reform is needed. By
providing for the establishment of a standardized distribution of some
or all rating levels, streamlining certain appraisal processes to
strengthen accountability for poor performance, and requiring OPM to
biennially review and certify agency non-SES appraisal systems, this
rule is designed to promote increased accuracy and credibility in
performance appraisals.
B. Impact
OPM is making these revisions to increase the efficiency and
effectiveness of performance management for employees that make up the
biggest percentage of all Federal employees: non-SES employees.
Removing the regulatory prohibition on standardized distribution and
authorizing OPM to establish and maintain a standardized distribution
of some or all rating levels is expected to produce a more normalized
distribution of performance ratings. These changes will require
agencies to refocus efforts on ensuring that there are meaningful
distinctions in non-SES performance ratings.
OPM expects that the implementation of a standardized distribution,
in conjunction with the provisions in this rule that eliminate barriers
to accountability, will incentivize improved performance of non-SES
employees, who will no longer expect to receive the highest ratings
without demonstrating superior performance relative to the other non-
SES employees in their agency. Those non-SES employees who continue to
perform at a level that is less than fully successful will be more
swiftly held accountable. Over time, these improvements are expected to
result in higher-performing organizations, more responsive public
service, and renewed public trust in the integrity and effectiveness of
the Federal workforce.
OPM's biennial evaluation and certification of agency appraisal
systems will serve as a structured mechanism for agencies to
demonstrate compliance, identify deficiencies, and receive technical
assistance from OPM regarding the operation and application of their
performance appraisal system(s). OPM expects that this process will
enhance interagency comparability and help ensure that non-SES
appraisal systems continue to conform with applicable law, regulation,
and OPM policy.
Reliance Interests
In addition to the concerns identified above, some commenters
expressed concern with the impacts of the proposed rule. Commenter 0260
asked OPM to consider the impacts of the proposed rule on ``technical
professionals, workforce quality, and the government's ability to
recruit and retain qualified engineers and other specialists.'' The
commenter, however, did not offer more to explain how the proposed rule
would impact these issues. Other commenters similarly raised issues of
productivity, retention, and morale. OPM believes that the final rule
will remedy the problem of inflation of performance ratings and,
therefore, restore integrity and confidence in the performance
management appraisal process. This, in turn, is expected to incentivize
employees to focus on delivering mission-driven results and to enable
agencies to better distinguish and reward high performance. As a
result, the Federal workforce, including technical professionals,
should see better alignment between performance expectations and
mission priorities and more appropriate recognition for demonstrated
performance. OPM does not foresee an impact on recruitment but
acknowledges that those employees who have grown accustomed to inflated
performance ratings may receive lower ratings and fewer awards. OPM
views the final rule as realigning incentives so that such employees
will work closely with their supervisors to understand performance
expectations and identify additional ways to contribute to their
agencies' success. Where employees are dissatisfied with these changes,
including expectations about their individual performance, OPM
anticipates some may choose to leave their current agencies for another
or Federal service altogether. OPM believes it is far too speculative
to estimate how many employees may leave Federal service or how that
might impact agencies.
Some commenters raised concerns with the impact of the rule on
collective bargaining agreements. One commenter noted that OPM
explained in the preamble how a final rule would interact with
collective bargaining agreements but objected that this explanation
appeared in a footnote rather than in regulatory text. As discussed in
the proposed rule, OPM acknowledges that a collective bargaining
agreement may contain provisions that are in effect before the date the
final rule is prescribed.\68\ If such a conflict arises, the provisions
in the collective bargaining agreement would control until the term of
the agreement expires. OPM does not agree with the notion that this
principle of Federal labor law should be codified in the regulatory
text of the final rule. There is adequate and well-established FLRA
case law that provides guidance to agencies on how to apply new
governmentwide regulations.
---------------------------------------------------------------------------
\68\ 5 U.S.C. 7116(a)(7).
---------------------------------------------------------------------------
OPM acknowledges, however, that any pending grievances or
arbitrations concerning ratings of record that continue past the term
of a collective bargaining agreement authorizing grievances over
ratings of record may be affected by the final rule. In these
situations, OPM expects agencies to assert that such grievances are no
longer arbitrable and that any arbitrator therefore lacks authority to
adjudicate the dispute. Agencies are encouraged, where appropriate, to
convert these grievances to administrative grievances to the extent
they are consistent with their internal administrative grievance
policies. OPM also reminds labor unions and agencies that they may
engage in collective bargaining, as appropriate, in anticipation of
these changes to provide greater certainty to their employees.
C. Costs
This final rule affects most Federal agencies--ranging from
cabinet-level departments to small independent agencies--that have
employees covered under 5 CFR part 430, subpart B. Individuals employed
by these agencies will spend time updating their performance appraisal
system(s), program(s), policies, and plans to prepare for
implementation before the end of Fiscal Year 2026. Typically, an
agency's human resources staff are responsible for these tasks.
Therefore, for this cost analysis, the assumed average salary rate of
Federal employees performing this work will be the rate in 2026 for GS-
14, step 5, in the Washington, DC, locality pay table ($163,104 annual
locality rate and $78.15 hourly locality rate). We assume the total
dollar value of labor, which includes wages, benefits, and overhead, is
equal to 200 percent of the wage rate, resulting in an assumed labor
cost of $156.30 per hour. We estimate that, in the first year following
publication of the final rule, this will require an average of 22,500
hours of work governmentwide, resulting in estimated costs of about
$23,445 per agency and about $3,516,750 governmentwide. Additionally,
USAPerformance, an IT tool used by many agencies to service their
performance management systems, will be updated to reflect the removal
of summary level patterns where Level 4 is the highest summary level or
that include a Level 2 summary level. We
[[Page 41536]]
estimate that this will require 400 hours of work at the rate of $390
per hour, resulting in an estimated cost of $156,000. There are also
approximately 48 other agency-specific IT systems used for performance
management requiring the same update. OPM estimates the cost to each
agency will be similar to that of USAPerformance, resulting in an
estimated $7,488,000 in total costs to update these other systems.
To comply with the regulatory changes in this rule, OPM must
evaluate and certify the operation and application of agency
performance appraisal system(s) and program(s) on a biennial basis. We
estimate that, in the first year following publication of the final
rule, this will require 150 hours of work by OPM employees with an
average hourly cost of $156.30. This work will result in estimated
costs in that first year of implementation of about $23,445.
OPM anticipates that the regulatory changes in this rule will not
substantially increase the ongoing administrative costs to agencies
(including any administrative costs associated with OPM's biennial
review of agency appraisal system(s)) because the regulation provides
cost-saving provisions such as eliminating mandatory review of Level 1
(``Unacceptable'') ratings of record and eliminating challenges to
ratings of record through the grievance provisions of 5 U.S.C. 7121,
thereby eliminating those associated labor costs.
A small number of commenters raised concerns regarding the
potential costs associated with implementing the rule. Commenter 0161
asserted that the rule does not account for increased workload
associated with performance improvement plans and adverse actions,
while Commenter 0225 suggested that the changes could lead to increased
costs related to employment disputes, including adverse action and EEO
litigation.
OPM does not agree that the final rule will result in material
increases in the types of costs identified by the commenters. With
respect to performance improvement plans and adverse actions, these
processes are already required under existing statutory frameworks and
are part of routine performance management responsibilities. The final
rule does not impose new requirements in these areas but is intended to
improve the accuracy and credibility of performance ratings, which may
reduce the need for corrective actions driven by unclear or inflated
evaluations. With respect to potential litigation-related costs, OPM
notes that the final rule does not alter the legal standards governing
adverse actions or EEO claims, nor does it create new bases for
challenge. Any such costs are contingent on agency-specific
implementation and compliance with existing legal requirements, rather
than the structure of the rule itself. Nor do commenters identify or
explain how litigation costs may increase as a result of the proposed
rule. Accordingly, OPM concludes that the cost estimates provided in
the proposed rule do not need to be amended.
D. Benefits
Since 5 CFR part 430, subpart B, covers positions that include GS
and prevailing rate employees, its impact is governmentwide. Non-SES
employees are the backbone of the Federal Government and are,
therefore, critical to the operation of an effective and efficient
government. The application of a standardized distribution within the
non-SES employee performance appraisal system will reinforce the
understanding that success as a Federal employee is aligned to the
appropriate rating at the fully successful level. By establishing a
limit on the number of non-SES employees who can receive a rating above
the fully successful level, there will be a clear distinction of the
highest performers across an agency and the Federal Government.
Agencies will no longer be able to rate the vast majority of their non-
SES employees at the highest performance ratings, thus encouraging
employees to strive for increased levels of performance and ultimately
provide better results for the Government and the American public.
The removal of summary level patterns that include a ``Level 2''
also simplifies and increases the rating accuracy of non-SES employees.
A ``Level 2'' rating is rarely used and can be confusing because it
creates a performance rating that allows an employee to remain in their
position when their performance is not ``Fully Successful.'' Its
removal eliminates redundancy, simplifies rating scales, and allows
agencies to more clearly distinguish between satisfactory and
unsatisfactory performance. This simplification will also help
supervisors communicate expectations more clearly and apply performance
standards more consistently across the workforce.
The new biennial certification requirement will also strengthen
OPM's oversight of non-SES employees and aid in continuous improvement.
The establishment of a biennial oversight mechanism will ensure that
OPM and all impacted Federal agencies are complying with the
congressional requirements of 5 U.S.C. 4302. Recurring certification
will aid OPM in identifying inconsistencies or deficiencies in agency
appraisal systems, promote best practices across the Government, and
enable OPM to provide targeted technical assistance where needed. This
ongoing review process will foster greater accountability,
transparency, and uniformity in the administration of performance
appraisal systems, thereby improving public confidence in Federal
workforce management.
E. Regulatory Alternatives
An alternative to this rulemaking is to not permit standardized
distributions and instead issue further guidance encouraging agencies
to be increasingly rigorous in their management of non-SES performance
to promote meaningful distinctions in non-SES performance. However, OPM
has concluded this is not a viable option. Previous attempts to achieve
this result through guidance have not been successful in curbing
inflated non-SES employee ratings. Without the ability to place limits
on the ratings of non-SES employees, there will almost certainly
continue to be a pervasive inflation of ratings and a lack of
accountability and meaningful distinction in performance ratings.
Another alternative to this rulemaking is to keep all patterns of
summary levels that include a ``Level 2.'' Instead, OPM could issue
further guidance on the appropriate use of any ratings below a ``Level
3,'' and instruct agencies to hold employees in this rating level more
accountable. However, the use of a summary level pattern that includes
a ``Level 2'' has not aided agencies in meaningfully distinguishing
between performers at different rating levels, as evidenced by the
extremely rare use of the Level 2 rating.
Another alternative to this rulemaking is to not create a biennial
certification requirement. Instead, OPM could issue further guidance
encouraging agencies to be increasingly rigorous in managing the
performance of their non-SES employees. OPM could exercise its
authority and include a more rigorous review of agency performance
management results in its human capital oversight, conducted by OPM's
Office of Merit Systems Accountability and Compliance. Oversight
agencies have noted for decades that there are issues with the
performance management of Federal employees and guidance has proven to
be ineffective at materially improving an agency's performance
management system. By contrast, a biennial certification requirement
will guarantee a regular, recurring review of
[[Page 41537]]
each agency's performance management system and require compliance with
5 CFR part 430, subpart B. Therefore, the biennial certification
requirement will better aid OPM and the Federal Government as a whole
in meeting the statutory requirements for performance management
systems.
F. Severability
If any of the provisions of this rule as finalized are held to be
invalid or unenforceable by its terms, or as applied to any person or
circumstance, it shall be severable from its respective section(s) and
shall not affect the remainder thereof or the application of the
provision to other persons not similarly situated or to other
dissimilar circumstances. For example, if the implementation of a
standardized distribution of ratings were held to be unenforceable, the
remaining provisions established by this final rule would remain in
effect.
Regulatory Compliance
A. Regulatory Flexibility Act
The Director of OPM certifies that this rulemaking will not have a
significant economic impact on a substantial number of small entities
because it will apply only to Federal agencies and employees.
B. Regulatory Review
OPM has examined the impact of this rule as required by E.O.s 12866
and 13563, which direct agencies to assess all costs and benefits of
available regulatory alternatives and, if regulation is necessary, to
select regulatory approaches that maximize net benefits (including
potential economic, environmental, public, health, and safety effects,
distributive impacts, and equity). A regulatory impact analysis must be
prepared for economically significant rules as defined by section
3(f)(1) of E.O. 12866. This rulemaking does not reach that threshold
but has otherwise been designated a ``significant regulatory action''
under section 3(f) of E.O. 12866. This rule is not considered an E.O.
14192 regulatory action because it imposes no more than de minimis
costs.
C. Federalism
This regulation will not have substantial direct effects on the
States, on the relationship between the National Government and the
States, or on distribution of power and responsibilities among the
various levels of government. Therefore, in accordance with E.O. 13132,
it is determined that this final rule does not have sufficient
federalism implications to warrant preparation of a Federalism
Assessment.
D. Civil Justice Reform
This regulation meets the applicable standards set forth in section
3(a) and (b)(2) of E.O. 12988.
E. Unfunded Mandates Reform Act of 1995
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated costs and benefits before
issuing any rule that would impose spending costs on State, local, or
tribal governments in the aggregate, or on the private sector, in any 1
year of $100 million in 1995 dollars, updated annually for inflation.
That threshold is currently approximately $206 million. This rulemaking
will not result in the expenditure by State, local, or tribal
governments, in the aggregate, or by the private sector, in excess of
the threshold. Thus, no written assessment of unfunded mandates is
required.
F. Congressional Review Act
The Office of Management and Budget's (OMB) Office of Information
and Regulatory Affairs has determined this rule does not meet the
criteria listed in 5 U.S.C. 804(2). In addition, this is a rule
relating to agency management or personnel and does not come within the
meaning of the term ``rule'' as used in 5 U.S.C. 804(3). Therefore, the
reporting requirement of 5 U.S.C. 801 does not apply.
G. Paperwork Reduction Act
This regulatory action will not impose any reporting or
recordkeeping requirements under the Paperwork Reduction Act.
List of Subjects
5 CFR Part 351
Administrative practice and procedure, Government employees.
5 CFR Part 430
Decorations, Government employees.
5 CFR Part 537
Administrative practice and procedure, Government employees,
Students, Wages.
Signing Statement
The Director of OPM, Scott Kupor, reviewed and approved this
document and has authorized the undersigned to electronically sign and
submit this document to the Office of the Federal Register for
publication.
Office of Personnel Management.
Jerson Matias,
Federal Register Liaison.
Accordingly, for the reasons stated in the preamble, OPM amends 5
CFR parts 351, 430, and 537 as follows:
PART 351--REDUCTION IN FORCE
0
1. The authority citation for part 351 continues to read as follows:
Authority: 5 U.S.C. 1302, 3502, 3503; E.O. 14284, 90 FR 17729; 5
CFR 2.2(c). Sec. 351.801 also issued under E.O. 12828, 58 FR 2965.
Subpart E--Retention Standing
Sec. 351.504 [Amended]
0
2. In Sec. 351.504, remove each reference to ``430.208(d)'' and add in
its place ``430.208(e)''.
PART 430--PERFORMANCE MANAGEMENT
0
3. The authority citation for part 430 is revised to read as follows:
Authority: 5 U.S.C. 2301, chapter 43 and 5307(d).
Subpart B--Performance Appraisal for General Schedule, Prevailing
Rate, and Certain Other Employees
0
4. Amend Sec. 430.206 by revising paragraph (b)(6) and adding
paragraph (b)(9) to read as follows:
Sec. 430.206 Planning performance.
* * * * *
(b) * * *
(6) A performance plan established under an appraisal program that
uses only two summary levels (pattern A as specified in Sec.
430.208(e)(1)) shall not include non-critical elements.
* * * * *
(9) The performance plan of any supervisor covered under this
subpart must include a supervisory critical element comprised of
supervisory requirements established by OPM and agency-established
criteria for protecting whistleblowers, as required by 5 U.S.C.
4302(b).
Sec. 430.207 [Amended]
0
5. Amend Sec. 430.207 by:
0
a. Removing paragraph (c); and
0
b. Redesignating paragraph (d) as paragraph (c).
0
6. Revise and republish Sec. 430.208 to read as follows:
Sec. 430.208 Rating performance.
(a) As soon as practicable after the end of the appraisal period, a
written, or otherwise recorded, rating of record must be given to each
employee.
[[Page 41538]]
(1) A rating of record must be based only on the evaluation of
actual job performance for the designated appraisal period.
(2) An agency must not issue a rating of record that assumes a
level of performance by an employee without an actual evaluation of
that employee's performance.
(3) Except as provided in paragraph (i) of this section, a rating
of record is final when it is issued to an employee with all
appropriate reviews and signatures.
(b) Rating of record procedures for each appraisal program must
include a method for deriving and assigning a summary level as
specified in paragraph (d) of this section based on appraisal of
performance on critical elements and, as applicable, non-critical
elements.
(1) A Level 1 summary (``Unacceptable'') must be assigned if and
only if performance on one or more critical elements is appraised as
``Unacceptable.''
(2) Consideration of non-critical elements must not result in
assigning a Level 1 summary (``Unacceptable'').
(c) OPM may establish, and refine as needed, a standardized
distribution of some or all rating levels which agencies must apply
when rating employees, except that employees appointed under Schedules
C or G in the excepted service may be excluded from such standardized
distribution requirements, as determined by OPM.
(d) The method for deriving and assigning a summary level, as may
be established by OPM as described in paragraph (c) of this section,
may involve comparing, categorizing, and ranking employees or groups on
the basis of their performance. Such procedures may also be used, where
otherwise authorized by law and regulation, to inform award
determinations and promotion decisions.
(e) Summary levels. (1) An appraisal program must use one of the
following patterns of summary levels, but Pattern A may only be used
for seasonal employees, teachers, General Schedule grades 1-4, and
Federal Wage System employees:
------------------------------------------------------------------------
Summary level
Pattern ---------------------------------------
1 2 3 4 5
------------------------------------------------------------------------
A............................... X ...... X ...... ......
B............................... X ...... X ...... X
C............................... X ...... X X X
------------------------------------------------------------------------
(2) Within any of the patterns shown in paragraph (e)(1) of this
section, summary levels must comply with the following requirements:
(i) Level 1 through Level 5 are ordered categories, with Level 1 as
the lowest and Level 5 as the highest;
(ii) Level 1 is ``Unacceptable'';
(iii) Level 3 is ``Fully Successful'' or equivalent; and
(iv) Level 5 is ``Outstanding'' or equivalent.
(3) The term ``Outstanding'' may be used only to describe the
summary level ``Level 5.''
(4) The designation of a summary level and its pattern shall be
used to provide consistency in describing ratings of record and as a
reference point for applying other related regulations, including, but
not limited to, assigning additional retention service credit under
Sec. 351.504 of this chapter.
(5) Under the provisions of Sec. 351.504(e) of this chapter, the
number of years of additional retention service credit established for
a summary level of a rating of record shall be applied in a uniform and
consistent manner within a competitive area in any given reduction in
force, but the number of years may vary:
(i) In different reductions in force;
(ii) In different competitive areas; and
(iii) In different summary level patterns within the same
competitive area.
(f) The rating of record or performance rating for a disabled
veteran must not be lowered because the veteran has been absent from
work to seek medical treatment as provided in Executive Order 5396.
(g) When a rating of record cannot be prepared at the time
specified, the appraisal period must be extended. Once the conditions
necessary to complete a rating of record have been met, a rating of
record must be prepared as soon as practicable.
(h) Each rating of record must cover a specified appraisal period.
Agencies must not carry over a rating of record prepared for a previous
appraisal period as the rating of record for a subsequent appraisal
period(s) without an actual evaluation of the employee's performance
during the subsequent appraisal period.
(i) When either a regular appraisal period or an extended appraisal
period ends and any agency-established deadline for providing ratings
of record passes or a subsequent rating of record is issued, an agency
must not produce or change retroactively a rating of record that covers
that earlier appraisal period except that a rating of record may be
changed--
(1) Within 60 days of issuance based upon an informal request, as
specified in agency policies and procedures, by the employee;
(2) As a result of a formal proceeding permitted by law or
regulation, other than a negotiated grievance procedure barred by
paragraph (k) of this section, that results in a final determination by
appropriate authority that the rating of record must be changed or as
part of a bona fide settlement of a formal proceeding; or
(3) Where the agency determines that a rating of record was
incorrectly recorded or calculated.
(j) A performance rating may be prepared at such other times as an
appraisal program may specify for special circumstances including, but
not limited to, transfers and performance on details.
(k) Subject to 5 U.S.C. 7116(a)(7), a rating of record may not be
challenged through the negotiated grievance procedures established
under 5 U.S.C. 7121.
0
7. Amend Sec. 430.209 by revising paragraphs (b), (e), and (g) and
adding paragraph (h) to read as follows:
Sec. 430.209 Agency responsibilities.
* * * * *
(b) Transfer the employee's most recent ratings of record, and any
subsequent performance ratings, when an employee transfers to another
agency or is assigned to another organization within the agency in
compliance with part 293 of this chapter and instructions in the OPM
Guide to Personnel Recordkeeping;
* * * * *
(e) Report ratings of record data to OPM in compliance with
instructions in the OPM Guide to Human Resources Reporting;
* * * * *
(g) Ensure that agency performance appraisal system(s) and
performance appraisal program(s) are administered consistent with the
merit system principles set forth under 5 U.S.C. 2301; and
(h) Take any action required by OPM to ensure conformance with
applicable law, regulation, and OPM policy.
0
8. Amend Sec. 430.210 by revising paragraphs (b) and (c) to read as
follows:
Sec. 430.210 OPM responsibilities.
* * * * *
(b) OPM must evaluate and certify the operation and application of
an agency's performance appraisal system(s) on a biennial basis. OPM
may recommend that the Office of Management and Budget limit an
agency's aggregate awards spending based on an unfavorable evaluation.
OPM must issue biennial certification criteria and policy.
[[Page 41539]]
(c) If OPM determines that an appraisal system or program does not
meet the requirements of applicable law, regulation, or OPM policy,
including but not limited to the merit system principles set forth
under 5 U.S.C. 2301, it shall direct the agency to implement an
appropriate system or program or to take other corrective action.
PART 537--REPAYMENT OF STUDENT LOANS
0
9. The authority citation for part 537 continues to read as follows:
Authority: 5 U.S.C. 2301, 2302, and 5379(g). E.O. 11478, 3 CFR,
1966-1970 Comp., p. 803, unless otherwise noted; E.O. 13087, 63 FR
30097, 3 CFR, 1998 Comp., p. 191; and E.O. 13152, 65 FR 26115, 3
CFR, 2000 Comp., p. 264.
Sec. 537.108 [Amended]
0
10. In 5 CFR 537.108(b), remove the reference to ``5 CFR 430.208(d)''
and add in its place a reference to ``5 CFR 430.208(e)''.
[FR Doc. 2026-13715 Filed 7-6-26; 8:45 am]
BILLING CODE 6325-39-P