TITLE: B-305945, Architect of the Capitol--Maximum Rate of Pay for Senior Employees, September 30, 2005
BNUMBER: B-305945
DATE: September 30, 2005
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B-305945, Architect of the Capitol--Maximum Rate of Pay for Senior Employees, September 30, 2005

   B-305945

   September 30, 2005

   The Honorable Jerry Lewis

   Chairman

   Committee on Appropriations

   United States House of Representatives

   Subject: Architect of the Capitol--Maximum Rate of Pay for Senior
   Employees

   Dear Mr. Chairman:

   This responds to your request of July 29, 2005, for our legal opinion as
   to whether the Architect of the Capitol (AOC) has the authority to raise
   the maximum rate of pay for its employees to Level II of the Executive
   Schedule.[1] Specifically, you ask whether AOC's authority under 2 U.S.C.
   sect. 1849 to fix the rate of basic pay of certain employees at a rate not
   to exceed the highest total rate of pay for the Senior Executive Service
   (SES) authorizes AOC to compensate at rates above Level III of the
   Executive Schedule[2] without a certified performance appraisal system, as
   is required for executive branch agencies by 5 U.S.C. sect. 5382.

   To respond to your request, we asked AOC for factual information and for
   its legal views on this question.[3] In response, AOC stated that it has
   not submitted its performance management system to the Office of Personnel
   Management (OPM) for certification and that it had increased the rate of
   pay for several of its employees above Level III of the Executive
   Schedule. Letter from Peter Kushner, General Counsel, AOC, to Michael R.
   Volpe, Assistant General Counsel, GAO, Aug. 29, 2005 (Kushner Letter). AOC
   asserted that the certification requirement applies only to the executive
   branch, and that its own authority is without condition or limitation. Id.

   As we explain below, we disagree with AOC's conclusion. We conclude that
   AOC may only pay up to level III of the Executive Schedule unless it has a
   certified performance appraisal system that makes meaningful distinctions
   in performance. Congress created two separate maximum rates of pay for the
   SES, but intended that only agencies with certified performance appraisal
   systems could pay up to the higher maximum.

   Background

   Since 1991, AOC has had the authority to compensate certain employees at a
   rate that was linked to the maximum rate of the SES.[4] Pub. L. No.
   102-90, sect. 104 (Aug. 14, 1991). Currently, this authority states: "The
   Architect of the Capitol may fix the rate of basic pay for not more than
   12 positions at a rate not to exceed the highest total rate of pay for the
   Senior Executive Service under subchapter VIII of chapter 53 of title 5
   for the locality involved." 2 U.S.C. sect. 1849(a).

   When this authority was originally enacted, title 5 required the President
   to establish five or more rates of basic pay for the SES. Pub. L. No.
   95-454, sect. 407(a) (Oct. 13, 1978) (codified as amended at 5 U.S.C.
   sect. 5382(a)). The lowest of these rates was not to be less than the
   minimum rate applicable to senior-level scientific or professional
   positions (120 percent of the minimum rate of basic pay for GS-15 of the
   General Schedule), and the maximum rate was not to be greater than level
   IV of the Executive Schedule. Pub. L. No. 101-509, sect. 529 (Nov. 5,
   1990) (codified as amended at 5 U.S.C. sect. 5382(b)). The President
   established six rates of basic pay (ES-1 through ES-6), which were
   adjusted each year by executive order. See, e.g., Exec. Order No. 13282,
   Adjustments of Certain Rates of Pay, 68 Fed. Reg. 1133, 1138 (Dec. 31,
   2002).

   In 2003, Congress eliminated the rates of SES pay and established a range
   of rates of pay for the SES, with the minimum rate not less than the
   minimum rate for senior-level scientific or professional positions and the
   maximum rate not more than level III of the Executive Schedule. Pub. L.
   No. 108-136, sect. 1125(a)(2) (Nov. 24, 2003), 5 U.S.C. sect. 5382. The
   rate of pay of an individual senior executive is now to be based on
   individual performance or contribution to the agency's performance, or
   both. Id.

   However, Congress also added a provision that stated: "Notwithstanding the
   provisions of subsection (a) [establishing the minimum and maximum rates],
   the applicable maximum shall be level II of the Executive Schedule for any
   agency that is certified under section 5307 as having a performance
   appraisal system which, as designed and applied, makes meaningful
   distinctions based on relative performance."Id. Section 5307, which sets
   the annual aggregate compensation limit for executive branch employees,
   was amended in 2002 and sets the higher limit of the Vice President's
   salary, rather than level I of the Executive Schedule, for employees of
   agencies who have been certified by OPM, with the concurrence of the
   Office of Management and Budget (OMB), as having "a performance appraisal
   system which (as designed and applied) makes meaningful distinctions based
   on relative performance." 5 U.S.C. sect. 5307(d). OPM's regulations
   implementing the performance appraisal certification provision are
   contained in 5 C.F.R. pt. 430, subpt. D (2005).

   After Congress revised the provisions setting the rates of pay for the
   SES, AOC raised the rate of basic pay for several of its employees above
   level III of the Executive Schedule. In 2004, two employees were paid at
   rates above level III.[5] Kushner Letter, at 5. The rate of pay of one was
   set at $152,000, while the other was set at $150,000. Id. In 2005, the
   rate of pay of three employees is set above level III;[6] their rates of
   pay are $158,000, $153,000, and $150,000. Id.

   AOC has a performance management system, with performance agreement plans,
   performance standards, and a pass-fail system. Human Resources Manual,
   Chapter 430: Performance Review Plan for Exempt Personnel, AOC, July 1,
   2003. However, AOC has not submitted this system for OPM approval, nor has
   it self-certified that the system makes meaningful distinctions in
   relative performance consistent with OPM's regulations. Kushner Letter, at
   5.

   Analysis

   For purposes of the SES pay setting statute, 5 U.S.C. sect. 5382, AOC is
   not within the definition of "agency." 5 U.S.C. sections 3132(a)(1), 5381.
   In addition, there are no terms of condition or limitation in 2 U.S.C.
   sect. 1849; instead, it simply provides that AOC may pay up to the highest
   total rate of pay for the SES. Therefore, AOC asserts that the
   certification requirement that applies to executive branch agencies does
   not apply to AOC. Kushner Letter, at 2-3. AOC also noted that amendment by
   implication is disfavored, especially when constitutional issues might
   arise. Id. at 4. AOC asserted that a separation of powers issue might
   arise if OPM, an executive branch agency, were to certify the performance
   appraisal system of AOC, a legislative branch agency. Id.

   Amendments by implication are not favored. 1A Sutherland, Statutes and
   Statutory Construction sect. 22:13 (6th ed. 2000). However, this is not a
   case of amendment by implication because section 1849 explicitly
   references another statute (5 U.S.C. sect. 5382), which was later amended.
   If AOC is correct in asserting that Congress did not intend to amend its
   pay authority when it revised the maximum rate of pay for the SES, then
   AOC could only pay its employees up to the former maximum, level IV of the
   Executive Schedule.

   In 2003, Congress clearly intended to increase the maximum rate of pay for
   the SES to level III of the Executive Schedule. See H.R. Rep. No. 108-106
   (May 16, 2003), at 366. Level III is now the "highest rate" of pay for the
   SES. 5 U.S.C. sect. 5382(a). Under normal circumstances, the maximum rate
   of basic pay for SES members in the executive branch is Level III. The
   statute does have an exception to this rule, but it is only for agencies
   who have a certified appraisal system. 5 U.S.C. sect. 5382(b). Thus, 2
   U.S.C. sect. 1849 authorizes AOC to pay up to 12 positions at a maximum of
   level III under normal circumstances.

   Congressional amendments to the statutes setting pay for the Defense
   Intelligence Senior Executive Service and the Senior Foreign Service
   confirm this interpretation. Prior to 2004, the Secretary of Defense had
   the authority to fix the rate of pay for members of the Defense
   Intelligence Senior Executive Service up to an amount not to exceed "the
   maximum rate provided in section 5382 of title 5." Pub. L. No. 104-201,
   sect. 1632(a)(3) (Sept. 23, 1996) (codified as amended at 10 U.S.C. sect.
   1602(b)(2)). In 2004, Congress amended this provision and subjected
   members of the Defense Intelligence Senior Executive Service to the same
   maximum rates of pay as other Department of Defense employees, but
   provided that the Secretary of Defense must certify that the performance
   appraisal system for Defense Intelligence senior executives makes
   meaningful distinctions based on relative performance. Pub. L. No.
   108-375, sect. 1103 (Oct. 28, 2004), 10 U.S.C. sect. 1602. This provision
   was entitled "Pay and Performance Appraisal Parity for Civilian
   Intelligence Personnel," which implies that without the amendment, the
   Defense Intelligence Senior Executive Service would not have been
   authorized to set its pay comparable to other Defense Department senior
   executives. Id.

   Similarly, Congress amended the compensation provisions for the Senior
   Foreign Service. Prior to 2004, the President was authorized to set basic
   salary rates for the Senior Foreign Service up to an amount not to "exceed
   the maximum rate . . . of basic pay payable for the Senior Executive
   Service under section 5382 of Title 5." Pub. L. No. 96-465, sect. 402
   (Oct. 17, 1980) (codified as amended at 22 U.S.C. sect. 3962). In 2004,
   Congress amended this provision to raise the maximum rate of pay for the
   Senior Foreign Service to level II of the Executive Schedule upon a
   determination by the Secretary of State that the performance appraisal
   system for the Senior Foreign Service makes meaningful distinctions based
   on relative performance. Pub. L. No. 108-447, sect. 412 (Dec. 8, 2004), 22
   U.S.C. sect. 3962(a).

   If Congress had adopted an interpretation similar to AOC's reading of 2
   U.S.C. sect. 1849, there would have been no need for Congress to amend the
   Defense Intelligence Senior Executive Service and Senior Foreign Service
   pay provisions. Under AOC's interpretation, once Congress amended 5 U.S.C.
   sect. 5382 in 2003, the Defense Intelligence Senior Executive Service and
   Senior Foreign Service could have immediately raised their maximum rate of
   pay to level II of the Executive Schedule, because their maximum rate of
   pay was also linked to the maximum for the SES. However, Congress'
   amendment of these provisions indicates that the maximum rate of pay for
   the SES is level III and agencies whose maximum rate of pay is linked to
   the SES may only compensate up to that level.

   Furthermore, these amendments demonstrate Congress' intention that senior
   executives government-wide may be compensated at rates above level III of
   the Executive Schedule only if they are covered by a performance appraisal
   system that makes meaningful distinctions in performance. To allow AOC to
   raise its maximum rate of pay to level II without a performance appraisal
   system that makes such meaningful distinctions would clearly frustrate
   that intent.

   Congress could grant authority to AOC to raise its maximum rate of pay in
   less specific terms. For example, Congress granted the Comptroller General
   authority to establish a GAO Senior Executive Service and to provide for
   rates of pay "not more than the maximum rate or less than the minimum rate
   for the Senior Executive Service under section 5382 of title 5." 31 U.S.C.
   sect. 733(a). Additionally, the Comptroller General is authorized to apply
   any part of title 5 that applies to the executive branch SES to the GAO
   Senior Executive Service. 31 U.S.C. sect. 733(b). This authority was
   granted as part of the General Accounting Office Personnel Act of 1980.
   Pub. L. No. 96-191, sect. 5(a)(2). The purpose of the Act was to ensure
   that GAO's personnel management system "would be self-contained and not
   subject to regulation or oversight by the Office of Personnel Management."
   H.R. Rep. No. 96-494, at 2 (1979). Pursuant to this authority, the
   Comptroller General certified that the GAO Senior Executive Service
   performance appraisal system, as designed and applied, makes meaningful
   distinctions based on relative performance,[7] and subsequently raised the
   maximum rate payable under the GAO Senior Executive Service to level II of
   the Executive Schedule. AOC, however, lacks this general authority.

   In order for AOC to pay up to a maximum of level II of the Executive
   Schedule for its 12 authorized positions, it should submit its performance
   appraisal system to OPM for certification. AOC argues that "significant
   questions with regard to separation of powers would arise if the AOC, a
   legislative branch agency, must submit its performance appraisal system to
   OPM/OMB for review and certification in order to qualify for the higher
   SES pay rate." Kushner Letter, at 4. However, the courts have clearly
   rejected such an inflexible view of the separation of powers. Indeed, the
   Supreme Court has on more than occasion noted that "the Framers did not
   require -- and indeed rejected -- the notion that the three Branches must
   be entirely separate and distinct." Mistretta v. United States, 488 U.S.
   361, 380 (1989). The Framers recognized that "our constitutional system
   imposes upon the Branches a degree of overlapping responsibility, a duty
   of interdependence as well as independence." Id. at 381. In the Federalist
   Papers, James Madison stated that separation of powers "d[oes] not mean
   that these [three] departments ought to have no partial agency in, or no
   controul over the acts of each other," but rather "that where the whole
   power of one department is exercised by the same hands which possess the
   whole power of another department, the fundamental principles of a free
   constitution are subverted." The Federalist No. 47 (James Madison). The
   Supreme Court has upheld statutory provisions that involve the commingling
   of the functions of the three branches "but that pose no danger of either
   aggrandizement or encroachment." Mistretta, at 382. The Court has only
   found a violation of the separation of powers in situations where one
   branch intrudes upon "the central prerogatives of another." Loving v.
   United States, 517 U.S. 748, 757 (1996).

   While AOC is a legislative branch agency, the Architect is appointed by
   the President by and with the advice and consent of the Senate. 2 U.S.C.
   sect. 1801. AOC is charged with such duties as care and superintendence of
   the Capitol, but does not exercise any legislative powers. 2 U.S.C.
   sections 1811-22. It is unlikely that OPM review of the appraisal system
   of an organization whose head is appointed by the President and which does
   not perform any legislative duties would impair the functioning of the
   legislative branch or intrude upon one of its central prerogatives. See
   Mistretta, at 388; Loving, at 757. Even if OPM refused to certify its
   performance appraisal system, AOC could still compensate its employees; it
   would simply be limited to level III of the Executive Schedule. Such a
   minor commingling of the executive branch and a legislative branch support
   agency does not impair the functioning of the legislative branch so as to
   lead to a violation of the separation of powers.[8]

   Furthermore, the Supreme Court has allowed Congress to "delegate to others
   powers which the legislature may rightfully exercise itself." Wayman v.
   Southard, 23 U.S. 1, 43 (1825). If Congress can delegate some of its own
   legislative powers to the executive branch, then it can also delegate some
   of the powers of its support agencies to the executive branch, a far less
   significant delegation of power. Nonetheless, if AOC still has concerns
   about OPM certification of its performance appraisal system, it should
   approach Congress for authorization to self-certify its system, as
   Congress granted to the Comptroller General, the Defense Intelligence
   Senior Executive Service, and the Senior Foreign Service.

   Since AOC has not received certification of its performance appraisal
   system, but nonetheless raised the maximum rate of pay to level II of the
   Executive Schedule, it must either collect any amounts paid to employees
   over level III or it may waive these overpayments as authorized by 5
   U.S.C. sect. 5584. Section 5584 allows the Architect to waive any
   erroneous payments of pay if collection would be "against equity and good
   conscience and not in the best interests of the United States." 5 U.S.C.
   sections 5584(a),(g). GAO has long interpreted this provision to authorize
   waiver if the overpayment was made through administrative error and there
   was no indication of fraud, misrepresentation, fault, or lack of good
   faith on the part of the employee. See, e.g., 68 Comp. Gen. 326 (1989).
   Prior to the transfer of the waiver authority from GAO to the executive
   branch, we had previously granted waivers in cases involving a
   misinterpretation of law by an agency where there was no indication of any
   fault on the part of the employee. See, e.g., B-230880.2, Oct. 27, 1989.

   Conclusion

   AOC's authority to fix the pay of certain positions up to the highest
   total rate of pay for the SES authorizes it to compensate such positions
   up to a maximum of level III of the Executive Schedule. Congress intended
   that only agencies with performance appraisal systems certified as making
   meaningful distinctions in performance may pay up to level II of the
   Executive Schedule. If AOC wishes to continue to pay up to level II, it
   must submit its performance appraisal system to OPM for certification or
   request Congress provide it with the authority to self-certify.

   Sincerely yours,

   Anthony H. Gamboa

   General Counsel

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

   [1]In 2005, level II of the Executive Schedule is $162,100. Exec. Order
   No. 13368, Adjustments of Certain Rates of Pay, 70 Fed. Reg. 1147, 1152
   (Dec. 30, 2004).

   [2]In 2005, level III of the Executive Schedule is $149,200. Exec. Order
   No. 13368, Adjustments of Certain Rates of Pay, 70 Fed. Reg. 1147, 1152
   (Dec. 30, 2004).

   [3]Letter from Michael R. Volpe, Assistant General Counsel, GAO, to Peter
   Kushner, General Counsel, AOC, Aug. 10, 2005.

   [4]The Senior Executive Service is comprised of individuals who hold the
   top managerial, supervisory and policy positions in the executive branch.
   5 U.S.C. sections 3131-2.

   [5]In 2004, level III of the Executive Schedule was $145,600. Exec. Order
   No. 13332, Further Adjustment of Certain Rates of Pay, 69 Fed. Reg. 10891,
   10896 (March 3, 2004).

   [6]In 2005, level III of the Executive Schedule is $149,200. Exec. Order
   No. 13368, Adjustments of Certain Rates of Pay, 70 Fed. Reg. 1147, 1152
   (Dec. 30, 2004).

   [7]Certification of David M. Walker, Comptroller General, GAO, Jan. 18,
   2005.

   [8]OPM also approves voluntary early retirement authority for the Library
   of Congress, another legislative branch support agency. 5 U.S.C. sections
   8331, 8336(d), 8414(b). Congress delegated this authority to OPM without
   either branch raising separation of powers issues.