[United States Statutes at Large, Volume 118, 108th Congress, 2nd Session]
[From the U.S. Government Publishing Office, www.gpo.gov]

118 STAT. 2305

Public Law 108-411
108th Congress

An Act


 
To provide for reform relating to Federal employment, and for other
purposes. NOTE: Oct. 30, 2004 -  [S. 129]

Be it enacted by the Senate and House of Representatives of the
United States of America in Congress NOTE: Federal Workforce
Flexibility Act of 2004. assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

(a) Short Title.--This NOTE: 5 USC 101 note. Act may be cited as
the ``Federal Workforce Flexibility Act of 2004''.

(b) Table of Contents.--The table of contents of this Act is as
follows:

Sec. 1. Short title; table of contents.

TITLE I--REFORMS RELATING TO FEDERAL HUMAN CAPITAL MANAGEMENT

Sec. 101. Recruitment, relocation, and retention bonuses.
Sec. 102. Streamlined critical pay authority.

TITLE II--REFORMS RELATING TO FEDERAL EMPLOYEE CAREER DEVELOPMENT AND
BENEFITS

Sec. 201. Agency training.
Sec. 202. Annual leave enhancements.
Sec. 203. Compensatory time off for travel.

TITLE III--PROVISIONS RELATING TO PAY ADMINISTRATION

Sec. 301. Corrections relating to pay administration.
Sec. 302. Technical corrections.

TITLE I--REFORMS RELATING TO FEDERAL HUMAN CAPITAL MANAGEMENT

SEC. 101. RECRUITMENT, RELOCATION, AND RETENTION BONUSES.

(a) Bonuses.--
(1) In general.--Chapter 57 of title 5, United States Code,
is amended by striking sections 5753 and 5754 and inserting the
following:

``Sec. 5753. Recruitment and relocation bonuses

``(a)(1) This section may be applied to--
``(A) employees covered by the General Schedule pay system
established under subchapter III of chapter 53; and
``(B) employees in a category approved by the Office of
Personnel Management at the request of the head of an Executive
agency.

``(2) A bonus may not be paid under this section to an individual
who is appointed to or who holds--

[[Page 2306]]
118 STAT. 2306

``(A) a position to which an individual is appointed by the
President, by and with the advice and consent of the Senate;
``(B) a position in the Senior Executive Service as a
noncareer appointee (as such term is defined under section
3132(a)); or
``(C) a position which has been excepted from the
competitive service by reason of its confidential, policy-
determining, policy-making, or policy-advocating character.

``(3) In this section, the term `employee' has the meaning given
that term in section 2105, except that such term also includes an
employee described in subsection (c) of that section.
``(b) The Office of Personnel Management may authorize the head of
an agency to pay a bonus under this section to an individual only if--
``(1) the position to which such individual is appointed (as
described in paragraph (2)(A)) or to which such individual moves
or must relocate (as described in paragraph (2)(B)) is likely to
be difficult to fill in the absence of such a bonus; and
``(2) the individual--
``(A) is newly appointed as an employee of the
Federal Government; or
``(B)(i) is currently employed by the Federal
Government; and
``(ii)(I) moves to a new position in the same
geographic area under circumstances described in
regulations of the Office; or
``(II) must relocate to accept a position in a
different geographic area.

``(c)(1) NOTE: Contracts. Payment of a bonus under this section
shall be contingent upon the employee entering into a written service
agreement to complete a period of employment with the agency, not longer
than 4 years. The Office may, by regulation, prescribe a minimum service
period for purposes of this section.

``(2)(A) The agreement shall include--
``(i) the commencement and termination dates of the required
service period (or provisions for the determination thereof);
``(ii) the amount of the bonus;
``(iii) the method of payment; and
``(iv) other terms and conditions under which the bonus is
payable, subject to the requirements of this section and
regulations of the Office.

``(B) The terms and conditions for paying a bonus, as specified in
the service agreement, shall include--
``(i) the conditions under which the agreement may be
terminated before the agreed-upon service period has been
completed; and
``(ii) the effect of the termination.

``(C) The required service period shall commence upon the
commencement of service with the agency or movement to a new position or
geographic area, as applicable, unless the service agreement provides
for a later commencement date in circumstances and to the extent
allowable under regulations of the Office, such as when there is an
initial period of formal basic training.
``(d)(1) Except as provided in subsection (e), a bonus under this
section shall not exceed 25 percent of the annual rate of

[[Page 2307]]
118 STAT. 2307

basic pay of the employee at the beginning of the service period
multiplied by the number of years (including a fractional part of a
year, as determined under regulations of the Office) in the required
service period of the employee involved.
``(2) A bonus under this section may be paid as an initial lump sum,
in installments, as a final lump sum upon the completion of the full
period of service required by the agreement, or in a combination of
these forms of payment.
``(3) A bonus under this section is not part of the basic pay of an
employee for any purpose.
``(4) Under regulations of the Office, a recruitment bonus under
this section may be paid to an eligible individual before that
individual enters on duty.
``(e) The Office may authorize the head of an agency to waive the
limitation under subsection (d)(1) based on a critical agency need,
subject to regulations prescribed by the Office. Under such a waiver,
the maximum bonus allowable shall--
``(1) be equal to the maximum that would be determined if
subsection (d)(1) were applied by substituting `50' for `25';
but
``(2) in no event exceed 100 percent of the annual rate of
basic pay of the employee at the beginning of the service
period.

Nothing in this subsection shall be considered to permit the waiver of
any requirement under subsection (c).
``(f) The Office shall require that an agency establish a plan for
the payment of recruitment bonuses before paying any such bonuses, and a
plan for the payment of relocation bonuses before paying any such
bonuses, subject to regulations prescribed by the Office.
``(g) The Office may prescribe regulations to carry out this
section, including regulations relating to the repayment of a bonus
under this section in appropriate circumstances when the agreed-upon
service period has not been completed.

``Sec. 5754. Retention bonuses

``(a)(1) This section may be applied to--
``(A) employees covered by the General Schedule pay system
established under subchapter III of chapter 53; and
``(B) employees in a category approved by the Office of
Personnel Management at the request of the head of an Executive
agency.

``(2) A bonus may not be paid under this section to an individual
who is appointed to or who holds--
``(A) a position to which an individual is appointed by the
President, by and with the advice and consent of the Senate;
``(B) a position in the Senior Executive Service as a
noncareer appointee (as such term is defined under section
3132(a)); or
``(C) a position which has been excepted from the
competitive service by reason of its confidential, policy-
determining, policy-making, or policy-advocating character.

``(3) In this section, the term `employee' has the meaning given
that term in section 2105, except that such term also includes an
employee described in subsection (c) of that section.
``(b) The Office of Personnel Management may authorize the head of
an agency to pay a retention bonus to an employee if--

[[Page 2308]]
118 STAT. 2308

``(1) the unusually high or unique qualifications of the
employee or a special need of the agency for the employee's
services makes it essential to retain the employee; and
``(2) the agency determines that, in the absence of a
retention bonus, the employee would be likely to leave--
``(A) the Federal service; or
``(B) for a different position in the Federal
service under conditions described in regulations of the
Office.

``(c) The Office may authorize the head of an agency to pay
retention bonuses to a group of employees in 1 or more categories of
positions in 1 or more geographic areas, subject to the requirements of
subsection (b)(1) and regulations prescribed by the Office, if there is
a high risk that a significant portion of employees in the group would
be likely to leave in the absence of retention bonuses.
``(d)(1) NOTE: Contracts. Payment of a retention bonus is
contingent upon the employee entering into a written service agreement
with the agency to complete a period of employment with the agency.

``(2)(A) The agreement shall include--
``(i) the length of the required service period;
``(ii) the amount of the bonus;
``(iii) the method of payment; and
``(iv) other terms and conditions under which the bonus is
payable, subject to the requirements of this section and
regulations of the Office.

``(B) The terms and conditions for paying a bonus, as specified in
the service agreement, shall include--
``(i) the conditions under which the agreement may be
terminated before the agreed-upon service period has been
completed; and
``(ii) the effect of the termination.

``(3)(A) Notwithstanding paragraph (1), a written service agreement
is not required if the agency pays a retention bonus in biweekly
installments and sets the installment payment at the full bonus
percentage rate established for the employee with no portion of the
bonus deferred.
``(B) NOTE: Notices. If an agency pays a retention bonus in
accordance with subparagraph (A) and makes a determination to terminate
the payments, the agency shall provide written notice to the employee of
that determination. Except as provided in regulations of the Office, the
employee shall continue to be paid the retention bonus through the end
of the pay period in which such written notice is provided.

``(4) A retention bonus for an employee may not be based on any
period of such service which is the basis for a recruitment or
relocation bonus under section 5753.
``(e)(1) Except as provided in subsection (f), a retention bonus,
which shall be stated as a percentage of the employee's basic pay for
the service period associated with the bonus, may not exceed--
``(A) 25 percent of the employee's basic pay if paid under
subsection (b); or
``(B) 10 percent of an employee's basic pay if paid under
subsection (c).

``(2)(A) A retention bonus may be paid to an employee in
installments after completion of specified periods of service or in a
single

[[Page 2309]]
118 STAT. 2309

lump sum at the end of the full period of service required by the
agreement.
``(B) An installment payment is derived by multiplying the amount of
basic pay earned in the installment period by a percentage not to exceed
the bonus percentage rate established for the employee.
``(C) If the installment payment percentage established for the
employee is less than the bonus percentage rate established for the
employee, the accrued but unpaid portion of the bonus is payable as part
of the final installment payment to the employee after completion of the
full service period under the terms of the service agreement.
``(D) For purposes of this paragraph, the bonus percentage rate
established for an employee means the bonus percentage rate established
for such employee in accordance with paragraph (1) or subsection (f), as
the case may be.
``(3) A retention bonus is not part of the basic pay of an employee
for any purpose.
``(f) Upon the request of the head of an agency, the Office may
waive the limit established under subsection (e)(1) and permit the
agency head to pay an otherwise eligible employee or category of
employees retention bonuses of up to 50 percent of basic pay, based on a
critical agency need.
``(g) The Office shall require that, before paying any bonuses under
this section, an agency shall establish a plan for the payment of any
such bonuses, subject to regulations prescribed by the Office.
``(h) The Office may prescribe regulations to carry out this
section.''.
(2) Clerical amendment.--The table of sections for chapter
57 of title 5, United States Code, is amended by striking the
item relating to section 5754 and inserting the following:

``5754. Retention bonuses.''.

(3) Sense of congress.--It is the sense of the Congress that
the Director of the Office of Personnel Management--
(A) should, each time a bonus is paid under the
amendment made by paragraph (1) to recruit or relocate a
Federal employee from one Government agency to another
within the same geographic area or to retain a Federal
employee who might otherwise leave one Government agency
for another within the same geographic area, be notified
of that payment within 60 days after the date on which
such bonus is paid; and
(B) should monitor the payment of such bonuses (in
the circumstances described in subparagraph (A)) to
ensure that they are an effective use of the Federal
Government's funds and have not adversely affected the
ability of those Government agencies that lost employees
to other Government agencies (in such circumstances) to
carry out their mission.

(b) Relocation Payments.--Section 407 of the Federal Employees Pay
Comparability Act of 1990 (5 U.S.C. 5305 note; 104 Stat. 1467) is
repealed.
(c) Reports.--
(1) Recruitment and relocation bonuses.--
(A) In general.--The Office of Personnel Management
shall submit to the Committee on Governmental Affairs of
the Senate and the Committee on Government Reform

[[Page 2310]]
118 STAT. 2310

of the House of Representatives annually, for each of
the first 5 years during which section 5753 of title 5,
United States Code (as amended by subsection (a)(1)) is
in effect, a report on the operation of such section.
(B) Contents.--Each report submitted under this
paragraph shall include, with respect to the period
covered by such report, a description of how the
authority to pay bonuses under the section of title 5,
United States Code, referred to in subparagraph (A) was
used by the respective agencies, including, with respect
to each such agency and each type of bonus under such
section--
(i) the number and dollar-amount of bonuses
paid--
(I) to individuals holding positions
within each pay grade, pay level, or
other pay classification; and
(II) if applicable, to individuals
who moved between positions that were in
different agencies but the same
geographic area (including the names of
the agencies involved); and
(ii) a determination of the extent to which
such bonuses furthered the purposes of such
section.
(2) Retention bonuses.--
(A) In general.--The Office of Personnel Management
shall submit to the Committee on Governmental Affairs of
the Senate and the Committee on Government Reform of the
House of Representatives annually, for each of the first
5 years during which section 5754 of title 5, United
States Code (as amended by subsection (a)(1)) is in
effect, a report on the operation of such section.
(B) Contents.--Each report submitted under this
paragraph shall include, with respect to the period
covered by such report, a description of how the
authority to pay bonuses under the section of title 5,
United States Code, referred to in subparagraph (A) was
used by the respective agencies, including, with respect
to each such agency--
(i) the number and dollar-amount of bonuses
paid--
(I) to individuals holding positions
within each pay grade, pay level, or
other pay classification; and
(II) if applicable, to prevent
individuals from moving between
positions that were in different
agencies but the same geographic area
(including the names of the agencies
involved); and
(ii) a determination of the extent to which
such bonuses furthered the purposes of such
section.

(d) Effective Date and NOTE: 5 USC 5753 note. Application.--
(1) Effective date.--Except as provided under paragraphs (2)
and (3), this section shall take effect on the first day of the
first applicable pay period beginning on or after the 180th day
after the date of the enactment of this Act.
(2) Application to agreements.--A recruitment or relocation
bonus service agreement that was authorized under section 5753
of title 5, United States Code, before the effective date under
paragraph (1) shall continue, until its expiration, to

[[Page 2311]]
118 STAT. 2311

be subject to such section as in effect on the day before such
effective date.
(3) Application to allowances.--Payment of a retention
allowance that was authorized under section 5754 of title 5,
United States Code, before the effective date under paragraph
(1) shall continue, subject to such section as in effect on the
day before such effective date, until the retention allowance is
reauthorized or terminated (but no longer than 1 year after such
effective date).
SEC. 102. STREAMLINED CRITICAL PAY AUTHORITY.

Section 5377 of title 5, United States Code, is amended--
(1) by striking ``Office of Personnel Management'' each
place it appears and inserting ``Office of Management and
Budget'';
(2) by striking ``Office of Management and Budget'' each
place it appears and inserting ``Office of Personnel
Management'';
(3) in subsection (g), by striking ``prescribing regulations
under this section or''; and
(4) in subsection (h), by striking ``Committee on Post
Office and Civil Service'' and inserting ``Committee on
Government Reform''.

TITLE II--REFORMS RELATING TO FEDERAL EMPLOYEE CAREER DEVELOPMENT AND
BENEFITS

SEC. 201. AGENCY TRAINING.

(a) Training To Accomplish Performance Plans and Strategic Goals.--
Section 4103 of title 5, United States Code, is amended by adding at the
end the following:
``(c) The head of each agency shall, on a regular basis--
``(1) evaluate each program or plan established, operated,
or maintained under subsection (a) with respect to accomplishing
specific performance plans and strategic goals in performing the
agency mission; and
``(2) modify such program or plan as needed to accomplish
such plans and goals.''.

(b) Specific Training Programs.--
(1) In general.--Chapter 41 of title 5, United States Code,
is amended by adding after section 4120 the following:

``Sec. 4121. Specific training programs

``In consultation with the Office of Personnel Management, the head
of each agency shall establish--
``(1) a comprehensive management succession program to
provide training to employees to develop managers for the
agency; and
``(2) a program to provide training to managers on actions,
options, and strategies a manager may use in--
``(A) relating to employees with unacceptable
performance;
``(B) mentoring employees and improving employee
performance and productivity; and
``(C) conducting employee performance appraisals.''.

[[Page 2312]]
118 STAT. 2312

(2) Clerical amendment.--The table of sections for chapter
41 of title 5, United States Code, is amended by adding at the
end the following:

``4121. Specific training programs.''.

SEC. 202. ANNUAL LEAVE ENHANCEMENTS.

(a) Creditability of Prior Nongovernmental Service for Purposes of
Determining Rate of Leave Accrual.--
(1) In general.--Section 6303 of title 5, United States
Code, is amended by adding at the end the following:

``(e)(1) NOTE: Deadline. Regulations. Not later than 180 days
after the date of the enactment of this subsection, the Office of
Personnel Management shall prescribe regulations under which, for
purposes of determining years of service under subsection (a), credit
shall, in the case of a newly appointed employee, be given for any prior
service of such employee that would not otherwise be creditable for such
purposes, if--
``(A) such service--
``(i) was performed in a position the duties
of which directly relate to the duties of the
position to which such employee is so appointed;
and
``(ii) meets such other requirements as the
Office may prescribe; and
``(B) in the judgment of the head of the appointing agency,
the application of this subsection is necessary in order to
achieve an important agency mission or performance goal.

``(2) Service described in paragraph (1)--
``(A) shall be creditable, for the purposes described in
paragraph (1), as of the effective date of the employee's
appointment; and
``(B) shall not thereafter cease to be so creditable, unless
the employee fails to complete a full year of continuous service
with the agency.

``(3) An employee shall not be eligible for the application of
paragraph (1) on the basis of any appointment if, within 90 days before
the effective date of such appointment, such employee has held any
position in the civil service.''.
(2) Conforming amendment.--The second sentence of section
6303(a) of title 5, United States Code, is amended by striking
the period and inserting ``, and for all service which is
creditable by virtue of subsection (e).''.

(b) Other Annual Leave Enhancements.--Section 6303 of title 5,
United States Code, is amended by adding after subsection (e) (as added
by subsection (a)) the following:
``(f) Notwithstanding any other provision of this section, the rate
of accrual of annual leave under subsection (a) shall be 1 day for each
full biweekly pay period in the case of any employee who holds a
position which is subject to--
``(1) section 5376 or 5383; or
``(2) a pay system equivalent to either of the foregoing, as
determined by the Office of Personnel Management.''.

(c) Applicability.--None NOTE: 5 USC 6303 note. of the
amendments made by subsection (a) shall apply in the case of any
employee holding a position pursuant to an appointment made before the
effective date of the regulations implementing such amendments.

[[Page 2313]]
118 STAT. 2313

SEC. 203. COMPENSATORY TIME OFF FOR TRAVEL.

(a) In General.--Subchapter V of chapter 55 of title 5, United
States Code, is amended by adding at end the following:

``Sec. 5550b. Compensatory time off for travel

``(a) Notwithstanding section 5542(b)(2), each hour spent by an
employee in travel status away from the official duty station of the
employee, that is not otherwise compensable, shall be treated as an hour
of work or employment for purposes of calculating compensatory time off.
``(b) An employee who has any hours treated as hours of work or
employment for purposes of calculating compensatory time under
subsection (a), shall not be entitled to payment for any such hours that
are unused as compensatory time.''.
(b) Clerical Amendment.--The table of sections for chapter 55 of
title 5, United States Code, is amended by inserting after the item
relating to section 5550a the following:

``5550b. Compensatory time off for travel.''.

(c) Effective Date.--The NOTE: 5 USC 5550b note. amendments made
by this section shall take effect on the earlier of--
(1) the effective date of any regulations prescribed to
carry out such amendments; or
(2) the 90th day after the date of the enactment of this
Act.

TITLE III--PROVISIONS RELATING TO PAY ADMINISTRATION

SEC. 301. CORRECTIONS RELATING TO PAY ADMINISTRATION.

(a) In General.--Chapter 53 of title 5, United States Code, is
amended--
(1) in section 5302, by striking paragraph (8) and inserting
the following:
``(8) the term `rates of pay under the General Schedule',
`rates of pay for the General Schedule', or `scheduled rates of
basic pay' means the rates of basic pay under the General
Schedule as established by section 5332, excluding pay under
section 5304 and any other additional pay of any kind; and'';
(2) in section 5305--
(A) by striking subsection (a) and inserting the
following:

``(a)(1) Whenever the Office of Personnel Management finds that the
Government's recruitment or retention efforts with respect to 1 or more
occupations in 1 or more areas or locations are, or are likely to
become, significantly handicapped due to any of the circumstances
described in subsection (b), the Office may establish for the areas or
locations involved, with respect to individuals in positions paid under
any of the pay systems referred to in subsection (c), higher minimum
rates of pay for 1 or more grades or levels, occupational groups,
series, classes, or subdivisions thereof, and may make corresponding
increases in all rates of the pay range for each such grade or level.
However, a minimum rate so established may not exceed the maximum rate
of basic pay (excluding any locality-based comparability payment under
section 5304 or similar provision of law) for the grade or level by

[[Page 2314]]
118 STAT. 2314

more than 30 percent, and no rate may be established under this section
in excess of the rate of basic pay payable for level IV of the Executive
Schedule. In the case of individuals not subject to the provisions of
this title governing appointment in the competitive service, the
President may designate another agency to authorize special rates under
this section.
``(2) The head of an agency may determine that a category of
employees of the agency will not be covered by a special rate
authorization established under this
section. NOTE: Notification. The head of an agency shall provide
written notice to the Office of Personnel Management (or other agency
designated by the President to authorize special rates under the last
sentence of paragraph (1)) which identifies the specific category or
categories of employees that will not be covered by special rates
authorized under this section. NOTE: Effective date. If the head of
an agency removes a category of employees from coverage under a special
rate authorization after that authorization takes effect, the loss of
coverage will take effect on the first day of the first pay period after
the date of the notice.'';
(B) in subsection (b), by striking paragraph (4) and
inserting the following:
``(4) any other circumstances which the Office of Personnel
Management (or such other agency as the President may under the
last sentence of subsection (a)(1) designate) considers
appropriate.'';
(C) in subsection (d)--
(i) by striking ``President'' and inserting
``Office of Personnel Management''; and
(ii) by striking ``or by such agency as he may
designate'' and inserting ``(or by such other
agency as the President may designate under the
last sentence of subsection (a)(1))'';
(D) in subsection (e), by striking ``basic pay'' and
inserting ``pay'';
(E) by striking subsection (f) and inserting the
following:

``(f) When a schedule of special rates established under this
section is adjusted under subsection (d), a covered employee's special
rate will be adjusted in accordance with conversion rules prescribed by
the Office of Personnel Management (or by such other agency as the
President may under the last sentence of subsection (a)(1)
designate).'';
(F) in subsection (g)(1)--
(i) by striking ``basic pay'' and inserting
``pay''; and
(ii) by striking ``President (or his
designated agency)'' and inserting ``Office of
Personnel Management (or such other agency as the
President may under the last sentence of
subsection (a)(1) designate)'';
(G) by striking subsection (h) and inserting the
following:

``(h) An employee shall not for any purpose be considered to be
entitled to a rate of pay established under this section with respect to
any period for which such employee is entitled to a higher rate of basic
pay under any other provision of law. For purposes of this subsection,
the term `basic pay' includes any applicable locality-based
comparability payment under section 5304 or similar provision of law.'';
and

[[Page 2315]]
118 STAT. 2315

(H) by adding at the end the following:

``(i) If an employee who is receiving a rate of pay under this
section becomes subject, by virtue of moving to a new official duty
station, to a different pay schedule, such employee's new rate of pay
shall be initially established under conversion rules prescribed by the
Office of Personnel Management (or such other agency as the President
may under the last sentence of subsection (a)(1) designate) in
conformance with the following:
``(1) First, determine the rate of pay to which such
employee would be entitled at the new official duty station
based on such employee's position, grade, and step (or relative
position in the rate range) before the move.
``(2) Then, if (in addition to the change in pay schedule)
the move also involves any personnel action or other change
requiring a rate adjustment under any other provision of law,
rule, or regulation, apply the applicable rate adjustment
provisions, treating the rate determined under paragraph (1) as
if it were the rate last received by the employee before the
rate adjustment.

``(j) A rate determined under a schedule of special rates
established under this section shall be considered to be part of basic
pay for purposes of subchapter III of chapter 83, chapter 84, chapter
87, subchapter V of chapter 55, and section 5941, and for such other
purposes as may be expressly provided for by law or as the Office of
Personnel Management may by regulation prescribe.'';
(3) in section 5334--
(A) in subsection (b), by adding at the end the
following:

``If an employee's rate after promotion or transfer is greater than the
maximum rate of basic pay for the employee's grade, that rate shall be
treated as a retained rate under NOTE: Regulations. section 5363.
The Office of Personnel Management shall prescribe by regulation the
circumstances under which and the extent to which special rates under
section 5305 (or similar provision of law) or locality-adjusted rates
under section 5304 (or similar provision of law) are considered to be
basic pay in applying this subsection.''; and
(B) by adding at the end the following:

``(g) In the case of an employee who--
``(1) moves to a new official duty station, and
``(2) by virtue of such move, becomes subject to a different
pay schedule,

any rate adjustment under the preceding provisions of this section, with
respect to such employee in connection with such move, shall be made--
``(A) first, by determining the rate of pay to which such
employee would be entitled at the new official duty station
based on such employee's position, grade, and step (or relative
position in the rate range) before the move, and
``(B) then, by applying the provisions of this section that
would otherwise apply (if any), treating the rate determined
under subparagraph (A) as if it were the rate last received by
the employee before the rate adjustment.'';
(4) in section 5361--
(A) by amending paragraph (4) to read as follows:
``(4) `rate of basic pay' means--
``(A) the rate of basic pay payable to an employee
under law or regulations before any deductions or
additions of any kind, but including--

[[Page 2316]]
118 STAT. 2316

``(i) any applicable locality-based
comparability payment under section 5304 or
similar provision of law;
``(ii) any applicable special pay under
section 5305 or similar provision of law; and
``(iii) subject to such regulations as the
Office of Personnel Management may prescribe, any
applicable existing retained rate of pay
established under section 5363 or similar
provision of law; and
``(B) in the case of a prevailing rate employee, the
scheduled rate of pay determined under section 5343;'';
(B) in paragraph (6), by striking ``and'' at the
end;
(C) in paragraph (7), by striking the period and
inserting ``; and''; and
(D) by adding at the end the following:
``(8) `retained rate' means the rate of basic pay to which
an employee is entitled under section 5363(b)(2).'';
(5) in section 5363--
(A) in subsection (a), by striking the matter
following paragraph (4) and inserting the following:

``is entitled to a rate of basic pay in accordance with regulations
prescribed by the Office of Personnel Management in conformity with the
provisions of this section.''; and
(B) by striking subsections (b) and (c) and
inserting the following:

``(b)(1)(A) If, as a result of any event described in subsection
(a), the employee's former rate of basic pay is less than or equal to
the maximum rate of basic pay payable for the grade of the employee's
position immediately after the occurrence of the event involved, the
employee is entitled to basic pay at the lowest rate of basic pay
payable for such grade that equals or exceeds such former rate of basic
pay.
``(B) This section shall cease to apply to an employee to whom
subparagraph (A) applies once the appropriate rate of basic pay has been
determined for such employee under this paragraph.
``(2)(A) If, as a result of any event described in subsection (a),
the employee's former rate of basic pay is greater than the maximum rate
of basic pay payable for the grade of the employee's position
immediately after the occurrence of the event involved, the employee is
entitled to basic pay at a rate equal to the lesser of--
``(i) the employee's former rate of basic pay; or
``(ii) 150 percent of the maximum rate of basic pay payable
for the grade of the employee's position immediately after the
occurrence of the event involved,

as adjusted by subparagraph (B).
``(B) A rate to which an employee is entitled under this paragraph
shall be increased at the time of any increase in the maximum rate of
basic pay payable for the grade of the employee's position by 50 percent
of the dollar amount of each such increase.
``(3) For purposes of this subsection, the term `former rate of
basic pay', as used with respect to an employee in connection with an
event described in subsection (a), means the rate of basic pay last
received by such employee before the occurrence of such event.
``(c)(1) Notwithstanding any other provision of this section, in the
case of an employee who--

[[Page 2317]]
118 STAT. 2317

``(A) moves to a new official duty station, and
``(B) in conjunction with such move, becomes subject to both
a different pay schedule and (disregarding this subsection) the
preceding provisions of this section,

this section shall be applied--
``(i) first, by determining the rate of pay to which such
employee would be entitled at the new official duty station
based on such employee's position, grade, and step (or relative
position in the pay range) before the move, and
``(ii) then, by applying the provisions of this section that
would apply (if any), treating the rate determined under clause
(i) as if it were the rate last received by the employee before
the application of this section.

``(2) A reduction in an employee's rate of basic pay resulting from
a determination under paragraph (1)(ii) is not a basis for an
entitlement under this section.
``(3) The rate of basic pay for an employee who is receiving a
retained rate at the time of moving to a new official duty station at
which different pay schedules apply shall be subject to regulations
prescribed by the Office of Personnel Management consistent with the
purposes of this section.
``(d) A retained rate shall be considered part of basic pay for
purposes of this subchapter and for purposes of subchapter III of
chapter 83, chapters 84 and 87, subchapter V of chapter 55, section
5941, and for such other purposes as may be expressly provided for by
law or as the Office of Personnel Management may by regulation
prescribe. NOTE: Regulations. The Office shall, for any purpose
other than any of the purposes referred to in the preceding sentence,
prescribe by regulation what constitutes basic pay for employees
receiving a retained rate.

``(e) This section shall not apply, or shall cease to apply, to an
employee who--
``(1) has a break in service of 1 workday or more;
``(2) is entitled, by operation of this subchapter, chapter
51 or 53, or any other provision of law, to a rate of basic pay
which is equal to or higher than, or declines a reasonable offer
of a position the rate of basic pay for which is equal to or
higher than, the retained rate to which the employee would
otherwise be entitled; or
``(3) is demoted for personal cause or at the employee's
request.''; and
(6) in section 5365(b), by inserting after ``provisions of
this subchapter'' the following: ``(subject to any conditions or
limitations the Office may establish)''.

(b) Special Rates for Law Enforcement Officers.--Section 403(c) of
the Federal Employees Pay Comparability Act of 1990 (5 U.S.C. 5305 note)
is amended by striking all after ``provision of law)'' and inserting
``and shall be basic pay for all purposes. The rates shall be adjusted
at the time of adjustments in the General Schedule to maintain the step
linkage set forth in subsection (b)(2).''.
(c) Repeal.--Section 4505a(a)(2) of title 5, United States Code, is
amended--
(1) by striking ``(2)(A)'' and inserting ``(2)''; and
(2) by striking subparagraph (B).

(d) Effective NOTE: 5 USC 5363 note. Date; Conversion Rules.--

[[Page 2318]]
118 STAT. 2318

(1) Effective date.--This section shall take effect on the
first day of the first applicable pay period beginning on or
after the 180th day after the date of the enactment of this Act.
(2) Conversion rules.--
(A) Individuals receiving a retained rate or a rate
greater than the maximum rate for the grade.--Subject to
any regulations the Office of Personnel Management may
prescribe, an employee under a covered pay schedule who,
on the day before the effective date of this section, is
receiving a retained rate under section 5363 of title 5,
United States Code, or is receiving under similar
authority a rate of basic pay that is greater than the
maximum rate of basic pay payable for the grade of the
employee's position shall have that rate converted as of
the effective date of this section, and the employee
shall be considered to be receiving a retained rate
under section 5363 of such title (as amended by this
section). The newly applicable retained rate shall equal
the formerly applicable retained rate as adjusted to
include any applicable locality-based payment under
section 5304 of title 5, United States Code, or similar
provision of law.
(B) Definition.--For purposes of this paragraph, the
term ``covered pay schedule'' has the meaning given such
term by section 5361 of title 5, United States Code.

SEC. 302. TECHNICAL CORRECTIONS.

(a)(1) Section 5304 of title 5, United States Code, as amended by
section 1125 of the National Defense Authorization Act for Fiscal Year
2004 (Public Law 108-136), is amended--
(A) in subsection (g)(2)(A), by striking ``(A)-(D)'' and
inserting ``(A)-(C)''; and
(B) in subsection (h)(2)(B)(i), by striking ``or (vii)'' and
inserting ``or (vi)''.

(2) NOTE: Effective date. 5 USC 5304 note. The amendments made
by this subsection shall take effect as if included in the enactment of
the National Defense Authorization Act for Fiscal Year 2004 (Public Law
108-136).

[[Page 2319]]
118 STAT. 2319

(b) Section 5314 of title 5, United States Code, is amended by
adding at the end the following:
``Administrator of the Office of Electronic Government.''.

Approved October 30, 2004.

LEGISLATIVE HISTORY--S. 129:
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HOUSE REPORTS: No. 108-733 (Comm. on Government Reform).
SENATE REPORTS: No. 108-223 (Comm. on Governmental Affairs).
CONGRESSIONAL RECORD, Vol. 150 (2004):
Apr. 8, considered and passed Senate.
Oct. 6, considered and passed House, amended.
Oct. 11, Senate concurred in House amendment.