82_FR_6351 82 FR 6339 - Performance Appraisal System Certification

82 FR 6339 - Performance Appraisal System Certification

Office of Personnel Management
Office of Management and Budget

Federal Register Volume 82, Issue 12 (January 19, 2017)

Page Range6339-6353
FR Document2017-01326

The U.S. Office of Personnel Management (OPM) and the U.S. Office of Management and Budget (OMB) jointly propose to implement certain requirements contained in the Senior Professional Performance Act of 2008, incorporate OPM policies and to reorganize information for ease of reading. OPM additionally proposes to make conforming changes and technical corrections, and to update and simplify the processes used based on over a decade of experience with the certification process and recommendations from an interagency workgroup.

Federal Register, Volume 82 Issue 12 (Thursday, January 19, 2017)
[Federal Register Volume 82, Number 12 (Thursday, January 19, 2017)]
[Proposed Rules]
[Pages 6339-6353]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-01326]


========================================================================
Proposed Rules
                                                Federal Register
________________________________________________________________________

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

========================================================================


Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / 
Proposed Rules

[[Page 6339]]



Office of Personnel Management

5 CFR Parts 317, 430, and 534

Office of Management and Budget

5 CFR Part 1330

RIN 3206-AL20


Performance Appraisal System Certification

AGENCY: Office of Personnel Management and Office of Management and 
Budget.

ACTION: Proposed rule with request for comments.

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

SUMMARY: The U.S. Office of Personnel Management (OPM) and the U.S. 
Office of Management and Budget (OMB) jointly propose to implement 
certain requirements contained in the Senior Professional Performance 
Act of 2008, incorporate OPM policies and to reorganize information for 
ease of reading. OPM additionally proposes to make conforming changes 
and technical corrections, and to update and simplify the processes 
used based on over a decade of experience with the certification 
process and recommendations from an interagency workgroup.

DATES: OPM must receive comments on or before February 21, 2017.

ADDRESSES: You may submit comments, identified by ``RIN 3206-AL20,'' 
using any of the following methods:
    Federal eRulemaking Portal: http://www.regulations.gov. Follow the 
instructions for submitting comments. All submissions received through 
the Portal must include the agency name and docket number or Regulation 
Identifier Number (RIN) for this rulemaking.
    Email: [email protected]. Include ``RIN 3206-AL20'' in the subject 
line of the message.
    Fax: (202) 606-4264.
    Mail, Hand Deliver/Courier comments: Address comments to Mr. 
Stephen T. Shih, Deputy Associate Director for Senior Executive 
Services and Performance Management, Suite 7412, 1900 E Street NW., 
Washington, DC 20415-9700.

FOR FURTHER INFORMATION CONTACT: Myriam Mayobre by telephone at (202) 
606-8046, by FAX at (202) 606-4264, or by email at 
[email protected].

SUPPLEMENTARY INFORMATION: This proposal updates current regulations to 
account for changes in statute, policies, and processes that have 
occurred since the current regulation became effective in 2004. This 
proposal also streamlines the existing process to decrease burden on 
agencies while ensuring OPM and OMB have information needed for 
certification.
    On October 8, 2008, the President signed into law the Senior 
Professional Performance Act of 2008 (the Act), Public Law 110-372. The 
Act made significant changes in the law governing certification of 
senior employee performance appraisal systems. This rulemaking would 
revise subpart D of parts 430 and 1330 of title 5, Code of Federal 
Regulations to reflect the changes resulting from the Act. Other 
changes to the regulations not related to the Act have been included in 
this revision to update and simplify the processes used based on over a 
decade of experience with the certification process and recommendations 
from an interagency workgroup. OPM convened the workgroup in December 
2014 as a result of a President's Management Agenda recommendation made 
in 2011 by a separate workgroup, to follow up on recommendations made 
by a Chief Human Capital Officers workgroup held in February 2014, and 
as part of the current Presidential Management Agenda initiatives to 
improve the Senior Executive Service (SES). The workgroup was comprised 
of agency subject matter experts who were tasked to review the 
certification process and provide recommendations regarding the 
certification criteria and streamlining the process.
    While OPM and OMB jointly propose to amend parts 430 and 1330 of 
title 5, Code of Federal Regulations, OPM additionally proposes to make 
the following changes to parts 317, 430 Subpart C, and 534 of title 5, 
Code of Federal Regulations, for which OPM alone is responsible. OPM 
proposes changes in 5 CFR 317.501(b)(2) and 317.503(g)(3) to fix 
erroneous internal cross-references to certain regulations affecting 
those sections. OPM also proposes certain changes to final regulations 
on 5 CFR 430 subpart C--Managing Senior Executive Performance published 
September 25, 2015, 80 FR 57693 to update citations to the proposed 
regulation. Revisions to 5 CFR 430.309(e)(2) would further clarify 
higher level review.
    OPM is proposing conforming changes to pay regulations at 5 CFR 534 
subparts D and E. For the most part, these changes update citations 
from the current regulations with citations to the same or similar 
material in the proposed regulations or change the existing references 
in current regulation to ``suspension'' of an appraisal system 
certification with the term ``termination'' of certification. In 5 CFR 
534 subpart D, OPM also proposes to revise 5 CFR 534.404(e)(1) to 
clarify that certification of an appraisal system does not provide an 
immediate opportunity to adjust the pay of current senior executives. 
Rather, pay adjustments for current senior executives must be based on 
an annual summary rating and, therefore, occur only after the 
completion of a rating cycle under the newly certified appraisal 
system. This should occur on the normal appraisal cycle and include a 
period of performance under the certified system that is at least equal 
to the agency's minimum appraisal period. OPM also proposes to add new 
paragraph 534.404(c)(6) to address a technical issue associated with 
the 12-month rule and enable authorized agency officials to grant a pay 
adjustment up to 2 days before the expiration date of the 12-month 
restriction on pay adjustments that applies to a senior executive. This 
will allow agencies to make a pay adjustment consistent with an 
otherwise applicable annual performance and pay adjustment cycle. OPM 
finds this appropriate to support agencies in maintaining a cycle that 
provides for granting pay adjustments based upon performance on the 
first day of the same bi-weekly pay period each year (e.g., at the time 
of the statutory annual adjustment to General Schedule rates, which may 
occur 1 or 2 days short of a full 12-month period). OPM does not 
propose to require annual approval and documentation of the basis for 
this exception prior to its use. In 5 CFR 534 subpart E, OPM proposes 
to revise 5

[[Page 6340]]

CFR 534.505(a)(5) to add the review of proposed performance awards for 
senior professionals as a responsibility of the centralized review 
panel. This creates consistency with the duties of the performance 
review boards (PRB) for senior executives. OPM also proposes to revise 
5 CFR 534.507(a)(2) to include a 14-day time period from the date 
specified in paragraph (a)(1) of that section in which an authorized 
agency official must provide notice to a senior professional concerning 
the reasons for a zero adjustment in pay, as required by paragraph (h) 
of that section. Specifying a 14-day time period will ensure that 
senior professionals receive such notices in a timely manner.

Key Changes to 5 CFR Parts 430 and 1330

    The proposed regulations implement the provision in the Act that 
authorizes agencies to apply higher maximum rates of basic pay for 
employees in senior-level (SL) and scientific or professional (ST) 
positions (i.e., senior professionals) paid under 5 U.S.C. 5376. An 
agency without an applicable certified appraisal system must use a 
maximum rate of basic pay for senior professionals that does not exceed 
the rate for level III of the Executive Schedule (EX-III). An agency 
with an applicable certified appraisal system may use a maximum rate of 
basic pay for senior professionals covered by the certified system that 
does not exceed the rate for level II of the Executive Schedule (EX-
II).
    The proposed regulation implements a section of the Act providing 
that certification may be granted beginning at any point in the year 
for a period not to exceed 24 months. Under rare and exceptional 
circumstances, the Director of OPM may extend certification for up to 6 
additional months. Full certification will be granted for a period of 
24 months. Provisional certification will be granted for a period of 12 
months.
    Since certification no longer expires at the end of a calendar 
year, there is no need for OPM to extend provisional certification into 
the following calendar year. That extension enabled agencies to 
maintain certification long enough to make pay adjustments using the 
higher maximum rate of the newly adjusted pay range and continued their 
access to the higher pay rate of EX-II.
    OPM proposes to remove sections of the regulation that governed the 
renewal of an already fully certified system and described a process 
for automatic renewal based on an OPM/OMB review of the required agency 
annual report. OPM determined that this information alone is 
insufficient to assess whether an agency's system continues to meet the 
certification criteria. An agency that intends to maintain its 
certification must submit a request for certification in accordance 
with proposed sections 430.407 and 1330.407.
    OPM proposes to change the requirement of current sections 
430.404(a)(6) and 1330.404(a)(6) that only the agency head or the 
official designated under paragraph (a)(5) of those sections may 
provide oversight of the agency's appraisal system and its results. The 
proposed regulations also add Communication of Results (i.e., overall 
rating distributions, average adjustment in the rate of basic pay for 
each rating level, and average performance award for each rating level, 
as applicable) as a certification criterion. This change is consistent 
with OPM's current guidance that each agency must describe the 
communication of ratings and payouts to senior employees and other 
involved officials in its certification request. Additionally, the 
proposed regulations combine the criteria for Alignment and Results 
into a single criterion, Aligned Results.
    OPM proposes to remove the references that distinguish requests for 
full certification from requests for provisional certification. As the 
certification process has evolved, OPM has found that submission of the 
same information is needed for all agency requests for certification. 
Based on review of an agency request, OPM, with OMB concurrence, may 
then grant full or provisional certification as appropriate. Reasons 
for which an agency would receive provisional rather than full 
certification are specified in the proposed regulations. OPM also 
proposes to remove the requirement for agencies to submit, as part of 
their certification requests, the process they use for ensuring ratings 
are not distributed arbitrarily or on a rotational basis. OPM believes 
this falls within the responsibilities of the oversight official to 
ensure the appraisal system is administered appropriately. OPM 
continues to require, as part of the oversight criterion, that an 
agency identify the official responsible for certifying that the senior 
employee appraisal process makes meaningful distinctions based on 
relative performance. OPM recognizes the ability to make meaningful 
distinctions in performance starts with the development of performance 
standards and requirements that clearly describe the different 
expectations at various performance levels. Agencies should consult 
their strategic plans and objectives when developing performance 
requirements to ensure alignment with mission outcomes and 
organizational results. This first critical step falls to the rating 
official, in consultation with the senior employee, followed by the 
accurate application of these standards/requirements when assessing 
performance. The proper development of performance standards/
requirements and the accurate assessment of performance compared to 
these standards/requirements should lead to meaningful distinctions in 
ratings. OPM has found that the role of the oversight official provides 
the appropriate level for ensuring ratings make meaningful distinctions 
on the basis of actual differences in levels of performance. 
Furthermore, OPM proposes to remove the requirement for an agency to 
submit, as part of its certification request, the process for reviewing 
performance standards, requirements, expectations, or ratings of 
employees supervised by senior employees, because OPM believes this too 
is a review that should be included in the responsibilities of the 
Oversight Official.
    The proposed regulations introduce a new procedural framework that 
provides for shared responsibilities in assessing certification 
criteria. Instead of OPM assessing all criteria, OPM will assess 
Aligned Results, Performance Distinctions, and Pay Differentiation. OPM 
will seek OMB concurrence on its findings. Agencies will verify 
Organizational Assessment and Guidelines, Oversight, and Communication. 
The criteria verified by the agency will, however, be subject to 
periodic spot checks by OPM to ensure continued compliance. Spot checks 
will not be announced in advance and when they occur, agencies will 
submit to OPM the documentation they used as the basis of their 
verification of the applicable criteria. In addition, the proposed 
regulations allow for an agency to demonstrate compliance with the 
Aligned Results criterion through a peer review process. This peer 
review process will provide the option for an agency with full 
certification to either have its performance plans reviewed by another 
agency with a fully certified appraisal system or submit the 
performance plans to OPM. Agencies that maintain full certification may 
continuously use this peer review method to demonstrate compliance with 
the Aligned Results criterion subject to spot checks by OPM. To 
maintain the integrity of the peer review process, agencies will not be 
allowed to conduct reciprocal reviews.
    OPM proposes to remove Consultation, Balance, and Accountability 
criteria from the

[[Page 6341]]

Certification Criteria and move them to a new section, Additional 
Appraisal Program Requirements and add the Training requirement to this 
same section. Based on over a decade of experience and careful 
deliberation by a cross-agency working group of subject matter experts, 
we have determined these important aspects of a successful and 
effective performance management system no longer need to be reviewed 
by OPM for the purpose of supporting a certification determination. 
Since they are vital to the success of a performance management system, 
are included in the design and application of the Basic SES appraisal 
system, and agencies already have incorporated them into their 
performance cultures, each agency will now be responsible for ensuring 
they continue to be properly applied within their organizations.
    OPM proposes to modify the definition of Relative Performance to 
clarify that a senior employee's performance is compared to the 
performance expectations established for his or her position, including 
their contribution to agency performance as appropriate. The definition 
of Relative Performance also specifies that it does not permit peer 
ranking or peer comparison for rating purposes. OPM also proposes to 
remove Outstanding Performance from the definitions to avoid confusion 
with the commonly used Level 5 rating label--Outstanding. As used in 
the certification regulations, Outstanding Performance originally was 
intended to allow for separately identifying the highest performers 
even within the highest performance level, usually Level 5, which often 
uses the label Outstanding. Some additional terms have been defined, as 
noted in the table of changes. OPM also proposes to revise the title of 
this subpart from Performance Appraisal Certification for Pay Purposes 
to Performance Appraisal System Certification for accuracy.
    Agencies will also be required to submit, as part of the 
certification request, the applicable agency SES or SL/ST pay setting 
and adjustment policy required under 5 CFR part 534 and the policy and 
procedures for granting performance awards under Sec.  534.405 for SES 
or Sec. Sec.  451.101(e) and 451.104(a)(3) for SL/ST. In order to 
assess whether an agency is meeting the pay differentiation criterion 
for certification, OPM often finds it necessary to examine the pay 
policy to understand the context within which the reported pay 
adjustments have been authorized and performance awards have been 
granted. OPM also proposes that agencies make pay adjustments and 
performance awards for senior employees in a timely manner. These pay 
adjustments and awards for SES must have an effective date no later 
than 5 months after the end of the applicable appraisal period. For 
senior professionals, agencies must make pay adjustments, in compliance 
with requirements in Sec.  534.505(b), at the same time as the 
adjustment to the General Schedule. This is the only time during the 
year annual increases in basic pay for senior professionals are 
permissible. Performance awards must be paid as soon as practicable 
after the end of the appraisal period. These timeliness requirements 
support the principles of performance-based compensation by ensuring 
the pay and awards are as close as practicable to the ratings upon 
which they are based.
    OPM proposes to remove paragraphs addressing the limits on basic 
pay and aggregate total compensation because they are contained in 5 
CFR part 534, subparts D and E and Sec.  530.203(b) respectively.

Summary of Major Changes

    These proposed regulations make the following major changes:
    1. Proposed revisions make conforming changes as a result of Public 
Law 110-372, Senior Professional Performance Act of 2008.
     Adds that an agency with an applicable certified appraisal 
system may apply the higher maximum rate of basic pay for senior 
professionals covered by the certified system.
     Implements the provision of the Act where certification 
may be granted beginning at any point in the year for a period not to 
exceed 24 months as opposed to a calendar-year basis.
    2. Proposed revisions address recommendations stemming from over a 
decade of experience with certification as well as from an interagency 
work group tasked to design an improved certification process to 
support the President's Management Agenda recommendation to improve the 
SES.
     Provides for shared responsibilities in assessing 
certification criteria in which OPM assesses Aligned Results, 
Performance Distinctions, and Pay Differentiation and agencies will 
verify all other criteria.
     Adds new option for Peer Review--this would allow fully 
certified agencies to engage in a review of other fully certified 
agencies' performance plans to determine whether they meet the 
criterion for ``Aligned Results,'' while prohibiting concurrent 
reciprocal reviews.
     Requires timely pay adjustments and performance awards for 
senior employees; for SES, not later than 5 months after the end of the 
appraisal period.

Request for Comments

    In addition to the general request for comments on the proposed 
regulation, we would appreciate feedback focused specifically on the 
following questions:
     How could agencies best assess and highlight their 
organizational performance--strengthening alignment to individual SES 
performance requirements--to distinguish between SES performance levels 
and/or to objectively set high performance expectations for individual 
SES?
     Are there additional ways, or alternatives, OMB and OPM 
should consider to make the SES and SL/ST performance appraisal system 
certification process less resource-intensive, while still achieving 
the goal of tying performance to agency outcomes, and making meaningful 
distinctions amongst individuals' performance levels?

Complete Table of Changes

    The following table lists all the proposed changes to the current 
regulations. The ``current rule'' column lists the regulations in the 
current subpart D. The ``proposed rule'' column indicates where matters 
addressed in the current regulation are addressed in the proposed 
regulation and where new material is being added. The third column 
explains each change.

------------------------------------------------------------------------
         Current rule             Proposed rule    Explanation of change
------------------------------------------------------------------------
                           Part 430, subpart D
------------------------------------------------------------------------
430.401(a)....................  430.401(a) and     Divides paragraph
                                 (b).               into multiple
                                                    sections to increase
                                                    clarity.
430.401(b)....................  Removed..........  Removes paragraphs
                                                    addressing the
                                                    limits on basic pay
                                                    and aggregate
                                                    compensation because
                                                    they are contained
                                                    in 5 CFR part 534,
                                                    subparts D and E and
                                                    Sec.   530.203(b)
                                                    respectively.

[[Page 6342]]

 
430.402.......................  430.402..........  Adds definitions for
                                                    Agency, Agency Head,
                                                    Annual Summary
                                                    Rating, Appraisal,
                                                    Certification
                                                    Criteria, Peer
                                                    Review, Rating of
                                                    Record, Senior
                                                    Professional Review
                                                    Panel (SPRP),
                                                    updates GPRA to
                                                    GPRAMA, clarifies
                                                    the definitions of
                                                    Performance
                                                    Expectations,
                                                    Relative
                                                    Performance, and
                                                    Senior Executive.
                                                    Removes the
                                                    definition for
                                                    Outstanding
                                                    Performance.
430.403(a)....................  430.403(a).......  Edits made to
                                                    increase clarity.
                                430.403(b).......  Adds provision that
                                                    certifications are
                                                    not renewable.
430.403(b)....................  430.403(c).......  Moves requirement
                                                    that agencies
                                                    seeking
                                                    certification must
                                                    submit systems that
                                                    have been approved
                                                    by OPM.
430.403(c)....................  Removed..........  Removes option for
                                                    agencies to submit a
                                                    new appraisal
                                                    system(s) for
                                                    certification that
                                                    has not yet been
                                                    approved by OPM.
430.403(d)....................  430.403(e).......  Moves requirement
                                                    that agencies submit
                                                    for certification,
                                                    separate systems for
                                                    their senior
                                                    professionals and
                                                    SES members. Adds
                                                    new requirement for
                                                    a centralized review
                                                    panel for agencies
                                                    with 10 or more
                                                    senior
                                                    professionals. Also
                                                    moves the option to
                                                    include features in
                                                    the senior
                                                    professional
                                                    appraisal system
                                                    that are similar to
                                                    the SES system.
430.403(e)....................  430.403(c) and     Splits paragraph into
                                 (d).               two sections.
430.404(a)....................  430.404..........  Edits made to
                                                    increase clarity.
430.404(a)(1).................  430.404(a)(1)....  Moves certification
                                                    criterion and
                                                    changes name from
                                                    Alignment to Aligned
                                                    Results.
430.404(a)(2).................  430.406(a).......  Moves to Additional
                                                    Appraisal System
                                                    Requirements and
                                                    clarifies.
430.404(a)(3).................  430.404(a)(2)....  Moves certification
                                                    criterion and
                                                    changes name from
                                                    Results to Aligned
                                                    Results.
                                430.404(a)(3)....  New provision
                                                    allowing for peer
                                                    review of aligned
                                                    results.
430.404(a)(4).................  430.406(b).......  Moves to Additional
                                                    Appraisal System
                                                    Requirements and
                                                    clarifies.
430.404(a)(5).................  430.405(a).......  Moves certification
                                                    criterion and
                                                    simplifies.
430.404(a)(6).................  430.405(b).......  Moves certification
                                                    criterion and
                                                    clarifies.
430.404(a)(7).................  430.406(c).......  Moves to Additional
                                                    Appraisal System
                                                    Requirements,
                                                    changes name from
                                                    Accountability to
                                                    Accountability for
                                                    the Performance
                                                    Management of
                                                    Subordinates, and
                                                    clarifies.
430.404(a)(8).................  430.404(b)(2)....  Moves the
                                                    certification
                                                    criterion, changes
                                                    the name from
                                                    Performance
                                                    Differentiation to
                                                    Performance
                                                    Distinctions, and
                                                    simplifies.
430.404(a)(9).................  430.404(c)(1) and  Moves certification
                                 (2).               criterion and
                                                    clarifies.
                                430.404(c)(3)....  Adds specific
                                                    timeframe for making
                                                    pay adjustments and
                                                    awards in a timely
                                                    manner.
430.404(a)(9).................  430.404(c)(4)....  Moves certification
                                                    criterion and
                                                    clarifies
                                                    transparency in the
                                                    process for making
                                                    pay and awards
                                                    decisions.
430.404(b)....................  Removed..........  Addressed by defining
                                                    agency head to mean
                                                    an Inspector General
                                                    when applying these
                                                    provisions to
                                                    Offices of the
                                                    Inspector General.
                                430.405(c).......  Adds Communication of
                                                    Results as a
                                                    certification
                                                    criterion.
                                430.406(d).......  Adds Training to
                                                    Additional Appraisal
                                                    System Requirements.
                                430.405..........  Adds new section
                                                    titled Certification
                                                    Criteria Verified by
                                                    the Agency.
430.405(a)....................  430.407..........  Moves and clarifies.
430.405(b)....................  430.407(a).......  Moves and removes the
                                                    requirement to
                                                    identify whether the
                                                    request is for full
                                                    or provisional
                                                    certification.
                                                    Removes requests
                                                    covering an
                                                    agencywide system or
                                                    a system that
                                                    applies to one or
                                                    more agency
                                                    organizations or
                                                    components.
                                                    Specifies who must
                                                    submit certification
                                                    requests.
430.405(b)(1).................  430.407(a)(1)....  Moves and remains
                                                    unchanged.
                                430.407(a)(2)....  Adds new paragraph
                                                    explicitly requiring
                                                    separate
                                                    certification
                                                    requests for Offices
                                                    of Inspectors
                                                    General.
430.405(b)(1)(i)..............  430.407(a)(3)(i).  Moves and remains
                                                    unchanged.
430.405(b)(1)(ii).............  Removed..........  Removes applicable
                                                    administrative
                                                    instructions and
                                                    implementing
                                                    guidance from
                                                    written requests for
                                                    certification.
430.405(b)(1)(iii)............  430.407(a)(3)(ii)  Moves and edits made
                                                    to increase clarity.
430.405(b)(1)(iii)(A) and (B).  430.404(b)(1)....  Moves and clarifies.
                                430.404(b)(3)....  Adds provision
                                                    requiring agencies
                                                    to appropriately
                                                    assign the highest
                                                    ratings to the best
                                                    performers.
430.405(b)(1)(iii)(C).........  430.404(b)(4)....  Moves and replaces
                                                    Outstanding
                                                    Performance with the
                                                    highest level of
                                                    performance.
430.405(b)(2).................  Removed..........  Removes requirement
                                                    to submit a clearly
                                                    defined process for
                                                    reviewing initial
                                                    ratings as well as
                                                    the requirement to
                                                    submit a review of
                                                    supervised
                                                    employees'
                                                    performance
                                                    standards,
                                                    requirements, and
                                                    ratings.
430.405(b)(3).................  430.407..........  Moves and simplifies.
430.405(b)(3)(i) and (ii).....  Removed..........  Removes distinction
                                                    between requirements
                                                    associated with full
                                                    and provisional
                                                    certification
                                                    requests.
                                430.407(a)(4)....  New requirement to
                                                    include a sample of
                                                    performance plans.
                                430.407(a)(5)....  New requirement to
                                                    include
                                                    documentation of
                                                    organizational
                                                    performance results
                                                    and relationship
                                                    with ratings
                                                    distribution.

[[Page 6343]]

 
430.405(b)(4).................  430.407(a)(6) and  Moves and references
                                 (7).               the annual reporting
                                                    requirement. Moves
                                                    references to full
                                                    certification and
                                                    the two appraisal
                                                    periods, by
                                                    requiring data
                                                    reported in the
                                                    annual data call.
                                430.407(a)(7)....  New requirement to
                                                    submit documentation
                                                    of the pay policy
                                                    and procedures as
                                                    well as policies
                                                    established for
                                                    awards programs.
430.405(b)(5).................  430.407(a)(8)....  Moves and remains
                                                    unchanged.
                                430.407(b).......  Requires agencies
                                                    participating in
                                                    peer review to
                                                    submit such
                                                    documentation as OPM
                                                    requires.
430.405(c)....................  430.408(a).......  Moves and simplifies.
430.405(c)(1).................  430.408(a)(1)....  Moves, redefines the
                                                    certification period
                                                    from 2 calendar
                                                    years to 24 months,
                                                    and clarifies the
                                                    requirements for
                                                    full certification.
430.405(c)(2).................  430.408(a)(2)....  Moves, deletes the
                                                    option for OPM to
                                                    extend provisional
                                                    certification into
                                                    the following
                                                    calendar year,
                                                    redefines the
                                                    certification period
                                                    from 1 calendar year
                                                    to 12 months, and
                                                    specifies reasons an
                                                    agency would receive
                                                    provisional rather
                                                    than full
                                                    certification.
430.405(c)(3).................  430.410(a).......  Moves and changes the
                                                    word suspend to
                                                    terminate.
                                430.408(b)(1)....  Implements statutory
                                                    authority of OPM
                                                    Director to provide
                                                    certification
                                                    extensions.
                                430.408(b)(2)....  New provision
                                                    providing
                                                    requirements for
                                                    requesting a
                                                    certification
                                                    extension.
430.405(d)....................  Removed..........  Removes paragraphs
430.405(e)(2).................                      addressing the
430.405(f)(2).................                      limits on basic pay
                                                    and aggregate
                                                    compensation because
                                                    they are contained
                                                    in 5 CFR part 534,
                                                    subparts D and E and
                                                    Sec.   530.203(b),
                                                    respectively.
430.405(e)(1).................  430.408(a)(1)(i)-  Moves and
                                 (iii).             restructures for
                                                    clarity. Adds as a
                                                    requirement for full
                                                    certification,
                                                    demonstration of
                                                    appropriate system
                                                    application based on
                                                    data reports for the
                                                    two most recent
                                                    completed
                                                    performance cycles.
430.405(e)(3).................  Removed..........  Removes automatic
                                                    renewal of full
                                                    certification.
430.405(f)(1).................  430.408(a)(2)(i)   Moves and
                                 and (ii).          restructures for
                                                    clarity.
                                430.408(a)(2)(iii  Adds as a reason for
                                 ).                 receiving
                                                    provisional rather
                                                    than full
                                                    certification, the
                                                    demonstration of
                                                    appropriate system
                                                    application based on
                                                    data reports for
                                                    only the most recent
                                                    completed
                                                    performance cycle.
430.405(f)(3).................  Removed..........  Removes requirement
                                                    to resubmit
                                                    application
                                                    requesting
                                                    provisional
                                                    certification.
430.405(g)....................  430.409..........  Moves and edits for
                                                    increased clarity.
                                                    Also removes the
                                                    requirement to
                                                    report aggregate
                                                    total compensation.
430.405(h)(1).................  430.410(a).......  Combines redundant
                                                    provisions
                                                    previously at
                                                    430.405(c)(3) and
                                                    430.405(h)(1).
430.405(h)(2).................  430.410(b).......  Moves and changes the
                                                    word suspension to
                                                    termination.
430.405(h)(3).................  430.410(c)-(e)...  Moves and
                                                    restructures for
                                                    increased clarity.
                                                    Changes the word
                                                    suspension to
                                                    termination.
430.405(h)(4).................  430.410(f).......  Moves, changes the
                                                    word suspension to
                                                    termination, and
                                                    clarifies that a
                                                    restored
                                                    certification will
                                                    terminate on the
                                                    same date as the
                                                    original
                                                    certification.
430.405(h)(5).................  430.410(g).......  Moves and changes the
                                                    word suspension to
                                                    termination.
------------------------------------------------------------------------

Regulatory Flexibility Act

    I certify that these regulations will not have a significant 
economic impact on a substantial number of small entities, because they 
will apply only to Federal agencies and employees.

E.O. 12866, Regulatory Review

    This rule has been reviewed by the U.S. Office of Management and 
Budget in accordance with E.O. 12866.

List of Subjects

5 CFR Parts 317 and 1330

    Government employees.

List of Subjects in 5 CFR Parts 430

    Decorations, Government employees.

List of Subjects in 5 CFR Part 534

    Government employees, Hospitals, Students, and Wages.

U.S. Office of Management and Budget.
Shaun Donovan,
Director.

U.S. Office of Personnel Management.
Beth F. Cobert,
Acting Director.

    Accordingly, OPM and OMB are proposing jointly to amend parts 430 
and 1330 of title 5 of the Code of Federal Regulations, and OPM 
proposes to amend parts 317, 430, and 534 of title 5, Code of Federal 
Regulations as follows:

5 CFR Chapter I--Office of Personnel Management

PART 317--EMPLOYMENT IN THE SENIOR EXECUTIVE SERVICE

0
1. The authority citation for part 317 continues to read as follows:

    Authority:  5 U.S.C. 3392, 3393, 3395, 3397, 3592, 3593, 3595, 
3596, 8414, and 8421.

Subpart E--Career Appointments

0
2. In Sec.  317.501, revise paragraph (b)(2) to read as follows:


Sec.  317.501  Recruitment and selection for initial SES career 
appointment be achieved from the brightest and most diverse pool 
possible.

* * * * *
    (b) * * *
    (2) Before an agency may fill an SES vacancy by an initial career 
appointment, it must post a vacancy announcement in USAJOBS for at 
least 14 calendar days, including the date of publication. Each 
agency's SES vacancy announcement must comply with criteria in Sec.  
330.104 of subpart A of this chapter, except for criteria pertaining to

[[Page 6344]]

veterans' preference, the Career Transition Assistance Program, and the 
Interagency Career Transition Assistance Program.
* * * * *
0
3. In Sec.  317.503, revise paragraph (g)(3) to read as follows:


Sec.  317.503  Probationary period.

* * * * *
    (g) * * *
    (3) The break in SES service was the result of military duty or 
compensable injury, and the time credited under paragraph (d)(3) of 
this section was not sufficient to complete the probationary period.

PART 430--MANAGING SENIOR EXECUTIVE PERFORMANCE

0
4. The authority citation for Part 430 continues to read as follows:

    Authority:  5 U.S.C. chapter 43 and 5307(d).

0
5. In Sec.  430.309, revise the last sentence of the introductory text 
in paragraph (e)(2), paragraph (e)(2)(ii), and the first sentence in 
paragraph (e)(2)(iii) to read as follows:


Sec.  430.309.  Rating Performance

* * * * *
    (e) * * *
    (2) * * * The agency must provide each senior executive an 
opportunity for review of the initial summary rating by an employee, or 
(with the consent of the senior executive) a commissioned officer in 
the uniformed services on active duty in the agency, in a higher level 
in the agency than the official who prepared the initial rating.
* * * * *
    (ii) When an agency cannot provide review by a higher-level 
official for a senior executive who receives an initial summary rating 
from the agency head because no such official exists in the agency, the 
agency must offer an alternative review as it determines appropriate; 
however, neither HLR nor alternative review may be provided by a member 
of the PRB that will make a recommendation under Sec.  430.311(b)(2) 
concerning the senior executive or by an official who participated in 
determining the initial summary rating.
    (iii) If a senior executive declines review by agency-designated 
higher-level officials, the agency may offer an alternative review but 
is not obligated to do so unless the only official in a higher level 
than the initial rater is the head of the agency. * * *
* * * * *

PART 430--PERFORMANCE MANAGEMENT

0
6. The authority citation for part 430 continues to read as follows:

    Authority: 5 U.S.C. chapter 43 and 5307(d).

0
7. Revise subpart D to read as follows.
Subpart D--Performance Appraisal System Certification
Sec.
430.401 Purpose.
430.402 Definitions.
430.403 System certification.
430.404 Certification criteria verified by OPM/OMB.
430.405 Certification criteria verified by the agency.
430.406 Additional appraisal system requirements.
430.407 Agency certification requests.
430.408 OPM certification actions.
430.409 Annual reporting requirement.
430.410 Termination of certification.

Subpart D--Performance Appraisal System Certification


Sec.  403.401  Purpose.

    (a) This subpart implements 5 U.S.C. 5307(d), which provides for 
certification of performance appraisal systems that as designed and 
applied make meaningful distinctions based on relative performance with 
respect to--
    (1) Members of the Senior Executive Service (SES) paid under 5 
U.S.C. 5382 and 5383; and
    (2) Employees in senior-level (SL) and scientific or professional 
(ST) positions paid under 5 U.S.C. 5376.
    (b) The regulations in this subpart strengthen the application of 
performance-based-pay principles to senior employees. Specifically, the 
statutory provisions that these regulations implement authorize an 
agency to apply a higher maximum rate of basic pay in setting and 
adjusting rates of basic pay for senior employees (consistent with 5 
CFR part 534, subparts D and E) and apply a higher annual aggregate 
limitation on pay (consistent with 5 CFR part 530, subpart B) to its 
senior employees, when OPM, with OMB concurrence, has certified that 
the design and application of the agency's appraisal systems for these 
employees make meaningful distinctions based on relative performance. 
This subpart establishes the certification criteria and procedures that 
OPM will apply in considering agency requests for such certification.


403.402  Definitions.

    In this subpart--
    Agency means an agency as that term is defined in 5 U.S.C. 105 and 
an Office of Inspector General, which is considered a separate agency 
for purposes of applying all provisions relating to the Senior 
Executive Service under the Inspector General Act of 1978 (5 U.S.C. App 
6(d)).
    Agency head means the head of an agency and includes the Inspector 
General when applying the provisions of this subpart to Offices of the 
Inspector General.
    Annual summary rating means the overall rating level that an 
appointing authority assigns at the end of the appraisal period as 
defined in Sec.  430.303.
    Appraisal system means the policies, practices, and procedures an 
agency establishes under 5 U.S.C. chapter 43 and 5 CFR part 430, 
subparts B and C, or other applicable legal authority, for planning, 
monitoring, developing, evaluating, and rewarding employee performance. 
This includes appraisal systems and appraisal programs as defined in 
Sec.  430.203 and performance management systems as defined in Sec.  
430.303.
    Certification criteria means the factors used to determine whether 
an agency appraisal system as designed and applied makes meaningful 
distinctions based on relative performance.
    GPRAMA means the Government Performance and Results Modernization 
Act of 2010.
    OMB means the Office of Management and Budget.
    OPM means the Office of Personnel Management.
    Peer review means the review under Sec.  430.404(a) of performance 
plans by one agency for another agency, both having fully certified 
performance appraisal systems, to determine whether they meet the 
certification criterion for Aligned Results.
    Performance expectations means--
    (1) the critical elements, performance requirements, and 
performance standards that constitute the senior executive performance 
plans, as defined in Sec.  430.303, established for senior executives;
    (2) the performance elements and standards that constitute the 
performance plans, as defined in Sec.  430.203, established for senior 
professionals; or
    (3) other appropriate means authorized under performance appraisal 
systems not covered by 5 U.S.C. chapter 43 for communicating what a 
senior employee is expected to do and the measures that demonstrate 
success, including contribution to agency performance where 
appropriate.
    Program performance measures means results-oriented measures of 
performance, whether at the agency, component, or function level, which

[[Page 6345]]

include, for example, measures under GPRAMA.
    PRB means Performance Review Board, as described in Sec.  430.311.
    Rating of record means the performance rating prepared at the end 
of an appraisal period for performance of agency-assigned duties over 
the entire period as defined in Sec.  430.203.
    Relative performance means the performance of a senior employee 
compared to the performance expectations established for his or her 
position (including contribution to agency performance) and those 
expectations must be set at a level that is sufficiently high to be 
commensurate with the authorities and responsibilities of a senior 
employee in the Federal Government. This does not permit peer ranking 
or peer comparison for rating purposes.
    Senior employee means a senior executive or a senior professional.
    Senior executive means a member of the Senior Executive Service 
(SES) paid under 5 U.S.C. 5382 and 5383.
    Senior professional means an employee in a senior-level (SL) or 
scientific or professional position (ST) paid under 5 U.S.C. 5376.
    SPRP means Senior Professional Review Panel as described in Sec.  
534.505(a)(5).


Sec.  430.403   System certification.

    (a) OPM, with OMB concurrence, will certify an agency appraisal 
system under Sec.  430.408 when a review of that system's design (i.e., 
system documentation), implementation (i.e., performance plans), and 
application (i.e., pay, performance awards, and ratings upon which they 
are based) reveals that the agency meets the certification criteria 
established in Sec. Sec.  430.404 and 430.405 and has followed the 
procedural requirements set forth in Sec.  430.407, and results in a 
finding that the system as designed and applied makes meaningful 
distinctions based on relative performance and otherwise conforms to 
statutory and regulatory requirements relating to performance 
appraisal, pay, and awards.
    (b) Each certification granted shall cover a specific period of 
time and is not renewable.
    (c) Agencies subject to 5 U.S.C. chapter 43 and 5 CFR part 430 
seeking certification of their appraisal systems must submit systems 
that have been approved by OPM under Sec.  430.210 or Sec.  430.314, as 
applicable.
    (d) Agencies not subject to the appraisal provisions of 5 U.S.C. 
chapter 43 and 5 CFR part 430 seeking certification of their appraisal 
system(s) under this subpart must submit appropriate documentation to 
demonstrate that each system complies with the appropriate legal 
authority that governs the establishment, implementation, and 
application of that system.
    (e) For senior professionals, an agency must establish an appraisal 
system(s), as defined in Sec.  430.402, that meets the requirements of 
5 CFR part 430, subpart B, and is separate from the system(s) 
established to cover its SES members under 5 CFR part 430, subpart C. 
At its discretion, an agency may include system features in its senior 
professional appraisal system(s) that are the same as, or similar to, 
the features of its SES appraisal system(s), as appropriate. For the 
purpose of certification under this subpart, such senior professional 
appraisal system(s) with 10 or more senior professionals covered by the 
system(s), must include a requirement for centralized review of senior 
professionals' ratings of record and proposed pay and performance 
awards actions.


Sec.  430.404  Certification criteria verified by OPM/OMB.

    To be certified, an agency's applicable appraisal system(s) for 
senior executives or senior professionals must meet the following 
certification criteria, as verified by OPM, with OMB concurrence:
    (a) Aligned results. (1) Performance expectations for individual 
senior employees must derive from, and clearly align with, the agency's 
mission and organizational goals, such as those communicated through 
GPRAMA strategic goals, program and policy objectives, and/or annual 
performance plans and budget priorities.
    (2) Performance plans must contain performance expectations, 
including at least one critical element focusing on business results, 
that--
    (i) Apply to their respective areas of responsibility and control;
    (ii) Reflect expected agency and/or organizational outcomes and 
outputs, performance targets or metrics, policy/program objectives, 
and/or milestones;
    (iii) Identify specific programmatic crosscutting, external, and 
partnership-oriented goals or objectives, as applicable; and
    (iv) Are stated in terms of observable, measurable, and/or 
demonstrable performance (e.g., quality, quantity, timeliness, or cost 
effectiveness, as applicable).
    (3) OPM may establish additional procedures to allow agencies to 
conduct peer reviews of the performance plans to determine whether the 
plans meet this criterion. When conducting peer review, agencies may 
not conduct concurrent reciprocal reviews.
    (b) Performance distinctions. (1) Appraisal systems must include 
summary levels of performance as described in 5 CFR 430.305(a)(6) for 
senior executives, and for senior professionals at least one summary 
level of performance above fully successful.
    (2) Agency application of performance appraisal systems must--
    (i) Result in meaningful distinctions based on relative 
performance; and
    (ii) Take into account the assessment of the agency's performance 
against relevant program performance measures, as described in Sec.  
430.405(a), employee performance expectations, and such other relevant 
factors as may be appropriate.
    (3) Authorized agency officials, as designated through agency 
delegated authority, must appraise senior employee performance 
accurately and realistically so that senior employees who have 
demonstrated the highest performance and/or exceptional contribution to 
the agency's performance receive the highest annual summary ratings or 
ratings of record, as applicable.
    (4) Agencies with equivalent appraisal systems not otherwise 
subject to this part must provide for clearly distinguishing and 
identifying the rating that reflects the highest level of performance.
    (5) Agencies may not equate the requirement to make distinctions 
based on relative performance to permitting a forced distribution of 
annual summary ratings or ratings of record, which is prohibited under 
Sec. Sec.  430.208(c) and 430.305(a)(5). However, methods used to make 
distinctions among employees or groups of employees such as comparing, 
categorizing, and ranking employees or groups on the basis of their 
performance may be used for purposes other than assigning a summary 
level including, but not limited to, award determinations.
    (c) Pay differentiation. (1) Agencies must ensure senior employees 
who have demonstrated the highest performance receive the highest 
annual summary ratings or ratings of record, as applicable, and the 
largest corresponding performance awards, pay adjustments, and rates of 
pay, in accordance with applicable limitations;
    (2) Agencies must ensure differentiation is evident separately in 
the pay adjustments, performance awards, and rates of pay;
    (3) Agencies must ensure they make pay adjustments and performance 
awards for senior employees in a timely manner.

[[Page 6346]]

    (i) For senior executives, the pay adjustments authorized under 5 
CFR 534.404(b)(3) and the performance awards authorized under 5 U.S.C. 
5384 must have effective dates not later than 5 months after the end of 
the applicable appraisal period;
    (ii) For senior professionals, agencies must make pay adjustments 
in accordance with the requirements in Sec.  534.505(b) and pay 
performance awards as soon as practicable after the end of the 
appraisal period; and
    (4) Agencies must develop processes for making pay decisions and 
granting awards affecting senior employees that comply with 
Governmentwide law, regulation, and guidance. To make these processes 
transparent agencies must provide access to the appraisal and pay 
policies that govern the decisions and communicate the results as 
required in Sec.  430.405(c).


Sec.  430.405  Certification criteria verified by the agency.

    To be certified, an agency's applicable appraisal system(s) for 
senior executives or senior professionals must meet the following 
certification criteria, as verified by the agency in accordance with 
instructions provided by OPM:
    (a) Organizational assessment and guidelines. Agencies must comply 
with all applicable OMB requirements for assessing organizational 
performance and may use those assessments to inform the individual 
ratings of its senior employees. The results of these assessments are 
shared with individuals involved in the rating process through the 
issuance of guidelines based at least in part upon those assessments. 
The guidelines must--
    (1) Address agency performance overall and with respect to each of 
its particular missions, components, programs, policy areas, and 
support functions--such as reports of the agency's GPRAMA goals, annual 
performance plans and targets, program performance measures, and other 
appropriate indicators;
    (2) Be communicated by the agency head, or an individual 
specifically designated by the agency head for such purpose, to 
affected senior employees, their rating and reviewing officials, and 
PRB and SPRP members;
    (3) Be provided at the conclusion of the appraisal period but 
before individual senior employee performance ratings are recommended, 
so that they inform individual performance appraisals; and
    (4) Not take the form of quantitative limitations on the number of 
ratings at any given rating level.
    (b) Oversight. The agency head or the individual specifically 
designated under paragraph (a)(2) of this section must certify for a 
particular senior employee appraisal system that--
    (1) The senior employee rating process makes meaningful 
distinctions based on relative performance;
    (2) The results of the senior employee appraisal process take into 
account the agency's assessment of its performance against program 
performance measures, as well as other relevant considerations, as 
appropriate;
    (3) Performance awards, pay adjustments, and levels of pay based on 
the results of the rating process accurately reflect and recognize 
distinctions in individual performance and/or contribution to the 
agency's performance; and
    (4) Final decisions include PRB or SPRP recommendations regarding 
senior employee ratings and must--
    (i) Be consistent with 5 CFR part 430, subparts B and C; and
    (ii) Appropriately reflect the employee's performance expectations, 
relevant program performance measures, and such other relevant factors 
as the PRB or SPRP may find appropriate.
    (c) Communication of results. Agencies must communicate annually to 
senior employees, rating and reviewing officials, and PRB or SPRP 
members the results of the application of the appraisal process (i.e., 
overall ratings distributions, average adjustment in the rate of basic 
pay for each rating level, and average performance award for each 
rating level, as applicable) while assuring confidentiality of 
protected information.


Sec.  430.406  Additional appraisal system requirements.

    To be certified, an agency's appraisal system must meet the 
requirements of 5 CFR part 430, subparts B or C, as applicable, or 
other applicable legal authority. Agencies are responsible for ensuring 
their senior employee appraisal systems provide for--
    (a) Consultation. Performance expectations for senior employees 
must be developed with the input and involvement of the senior 
employees who are covered thereby;
    (b) Balance. Performance expectations established in the individual 
senior employee appraisal plan must include two parts:
    (1) Expected results; and
    (2) Those technical, leadership and/or managerial competencies or 
behaviors that contribute to, and are necessary to distinguish, levels 
of performance. In addition, for senior employees in supervisory 
positions, their performance expectations also must address appropriate 
measures or indicators of stakeholder and/or employee perspective when 
applicable, such that stakeholder/employee feedback is sought and used 
to inform decisions.
    (c) Accountability for the performance management of subordinates. 
The performance expectations for individual senior employees in 
supervisory positions must clearly communicate their responsibility for 
ensuring--
    (1) The performance expectations for individual subordinate 
employees clearly link to organizational mission, GPRAMA strategic 
goals, or other program or policy objectives; and
    (2) The appraisal of their subordinate employees is based on 
established performance expectations that differentiate among the 
various levels of performance. An appraisal must be a realistic 
assessment of the employees' actual performance, including their 
contribution to organizational goals as measured in GPRAMA and other 
organizational plans.
    (d) Training. Agencies must provide senior employees, rating and 
reviewing officials (including those in other services/appointments 
such as political appointments, Foreign Service, military, etc.), and 
PRB or SPRP members initial training, periodic refresher training, and 
annual reminders on the operation of the applicable agency performance 
management and pay and awards policies.


Sec.  430.407  Agency certification requests.

    To receive system certification, an agency must provide 
documentation demonstrating that its appraisal system(s), in design, 
implementation, and application, meet the certification criteria in 
Sec. Sec.  430.404 and 430.405 as well as the procedural requirements 
set forth in this section.
    (a) In order for an agency's appraisal system to be certified, the 
agency head or designee must submit documentation in accordance with 
OPM instructions, including--
    (1) A written request, which may include signed electronic formats, 
for certification of its appraisal system(s) to the Director of OPM, or 
an OPM official assigned to accept certification requests;
    (2) Separate certification requests for systems applying to senior 
executives, senior professionals, and Offices of the Inspector General;
    (3) A full description of the appraisal system(s) to be certified, 
including--
    (i) Organizational and employee coverage information; and
    (ii) Rating levels as described in Sec.  430.404(b)(1) and (4) that 
establish

[[Page 6347]]

clear distinctions between levels of performance so senior employees 
receive ratings based on assessments of their actual performance 
relative to their established performance expectations in any given 
appraisal period;
    (4) A sample of senior employee performance plans as specified by 
OPM, except as provided in paragraph (b) of this section;
    (5) Documentation of organizational performance results and an 
explanation of how these results support the rating distribution in 
accordance with OPM instructions;
    (6) Data required by the annual reporting requirement in Sec.  
430.409;
    (7) Documentation of the pay policy and procedures for setting and 
adjusting pay and granting performance awards that includes--
    (i) For the agency's senior executives covered by 5 CFR part 534, 
subpart D, the plan for setting and adjusting the rate of basic pay 
described in Sec.  534.404(g);
    (ii) For the agency's senior professionals covered by 5 CFR part 
534, subpart E, the written procedures for setting and adjusting the 
rate of basic pay described in Sec.  534.505; and
    (iii) Policies established for award programs authorized under 
Sec.  534.405 or responsibilities identified in Sec.  451.106, as 
appropriate; and
    (8) Any additional information that OPM and OMB may require to make 
a determination regarding certification.
    (b) Agencies that participate in a peer review under Sec.  
430.404(a) must submit such documentation as OPM requires.


Sec.  430.408  OPM certification actions.

    OPM will certify performance appraisal systems, with OMB 
concurrence, only for those agencies that comply with all related laws 
and regulations.
    (a) Granting certification. At the request of an agency head or 
designee, the Director of OPM, at his or her discretion and in 
accordance with the requirements of this subpart and with OMB 
concurrence, may--
    (1) Grant full certification, which covers a period of 24 months, 
of an agency's senior employee appraisal system(s) when the agency 
has--
    (i) Demonstrated in the initial submission of its documentation, 
and without making any revisions directed by OPM, that it has designed 
and fully operationalized the certification criteria defined in 
Sec. Sec.  430.404 and 430.405;
    (ii) Met the documentation requirements in Sec.  430407; and
    (iii) Demonstrated appropriate system application through the data 
reports required in Sec.  430.409 based on the 2 most recently 
completed performance cycles (2 years of data).
    (2) Grant provisional certification, which covers a period of 12 
months, of an agency's senior employee appraisal system(s) when the 
agency has--
    (i) Designed a senior employee appraisal system(s) that meets the 
certification criteria in Sec. Sec.  430.404 and 430.405; and
    (ii) Revised one or more senior employee performance plans in 
accordance with instructions from OPM in order to meet the 
certification requirements in Sec.  430.404(a); or
    (iii) Demonstrated appropriate system application through the data 
reports required in Sec.  430.409 based on only the most recently 
completed performance cycle (1 year of data).
    (3) Grant provisional certification to an agency more than once.
    (b) Extending certification. (1) Consistent with the requirements 
of this subpart, the Director of OPM, at his or her discretion or upon 
the request of an agency head or designee, may grant a single extension 
of up to six additional months for an agency's appraisal system 
certification. The discretionary use of the Director's extension 
authority will be reserved for rare, exceptional circumstances.
    (2) When requesting an extension, the agency head or designee must 
submit a written request, which may include signed electronic formats, 
to OPM outlining why the agency needs the extension and how the 
extension will support effective performance management. OPM will 
consider requests for extensions on a case-by-case basis.


Sec.  430.409  Annual reporting requirement.

    Agencies must provide OPM with the annual summary ratings or 
ratings of record, as applicable, and rates of basic pay, pay 
adjustments, and performance and cash awards for their senior employees 
in accordance with instructions for OPM's annual data call and at any 
other time as needed to support a certification request.


Sec.  430.410  Termination of certification.

    (a) Any time OPM determines that an agency's certified appraisal 
system is no longer in compliance with certification criteria, OPM, 
with OMB concurrence, may terminate such certification.
    (b) An agency's system certification is terminated automatically 
when OPM withdraws performance appraisal system approval or mandates 
corrective action because of misapplication of the system as authorized 
under Sec.  430.210(c) or Sec.  430.314(c).
    (c) OPM will notify the agency head at least 30 calendar days in 
advance of the termination and the reason(s) for the termination, as 
well as any expected corrective action.
    (d) Upon such termination, and until its system certification is 
reinstated, the agency must--
    (1) Set a senior employee's rate of basic pay under 5 CFR part 534, 
subparts D or E as applicable, at a rate that does not exceed the rate 
for level III of the Executive Schedule.
    (2) Limit aggregate compensation received in a calendar year by a 
senior employee to the rate for level I of the Executive Schedule.
    (e) Performance awards, pay adjustments, and levels of pay in 
effect prior to such termination will remain in effect unless OPM finds 
that any such decision and subsequent action was in violation of law, 
rule, or regulation.
    (f) OPM, with OMB concurrence, may reinstate certification to an 
agency whose certification has been terminated only after the agency 
demonstrates it has taken appropriate corrective action. A restored 
certification will terminate on the same date as the original 
certification. An agency with a terminated certification may choose to 
submit a new certification request once it has corrected the issue(s) 
that led to the termination.
    (g) OPM may reinstate the certification of an appraisal system that 
has been terminated automatically under paragraph (b) of this section 
upon the agency's compliance with the applicable OPM-mandated 
corrective action(s).

PART 534--PAY UNDER OTHER SYSTEMS

0
8. Revise the authority citation for part 534 to read as follows:

    Authority: 5 U.S.C. 1104, 3161(d), 5307, 5351, 5352, 5353, 5376, 
5382, 5383, 5384, 5385, 5541, 5550a, sec. 1125 of the National 
Defense Authorization Act for FY 2004, Pub. L. 108-136, 117 Stat. 
1638 (5 U.S.C. 5304, 5382, 5383, 7302; 18 U.S.C. 207); and Pub. L. 
110-372, 122 Stat. 4043 (5 U.S.C. 5304, 5307, 5376).

Subpart D--Pay and Performance Awards Under the Senior Executive 
Service.

0
9. In Sec.  534.403, revise the first sentence of paragraph (b) to read 
as follows:


Sec.  534.403  SES rate range.

* * * * *
    (b) Termination of certification of performance appraisal system. A 
senior executive whose rate of basic pay is higher than the rate for 
level III of the Executive Schedule may not suffer a

[[Page 6348]]

reduction in pay because his or her agency's applicable performance 
appraisal system certification is terminated under 5 CFR 430.410. * * *
0
10. In Sec.  534.404--
0
a. Revise paragraphs (b)(4)(ii) and (b)(4)(iii);
0
b. Revise paragraphs (c)(1) and (c)(4) and add new paragraph (c)(6);
0
c. Revise paragraph (e)(1);
0
d. Revise paragraph (g)(3);
0
e. Revise paragraph (i)(1).
    The revisions and additions to read as follows:


Sec.  534.404  Setting and adjusting pay for senior executives.

* * * * *
    (b) * * *
    (4) * * *
    (ii) A pay increase under paragraph (b)(4)(i) of this section may 
not be provided to a senior executive whose rate of basic pay is at or 
below the rate for level III of the Executive Schedule if such an 
increase would cause the senior executive's rate of basic pay to exceed 
the rate for level III of the Executive Schedule unless the senior 
executive has received an annual summary rating of outstanding for the 
most recently completed appraisal period and the agency head or 
designee who performs the functions described in 5 CFR 430.405(a)(2) 
and (b) (including the Inspector General, where applicable) has 
approved the increase in pay.
    (iii) A pay increase under paragraph (b)(4)(i) of this section may 
not be provided to a senior executive whose rate of basic pay is above 
the rate for level III of the Executive Schedule unless the senior 
executive has received an annual summary rating of outstanding for the 
most recently completed appraisal period and the agency head or 
designee who performs the functions described in 5 CFR 430.405(a)(2) 
and (b) (including the Inspector General, where applicable) has 
approved the increase in pay. However, in the case of a senior 
executive whose rate of basic pay is above the rate for level III of 
the Executive Schedule and who has been rated below outstanding, but 
above fully successful, for the most recently completed appraisal 
period, the agency head or designee who performs the functions 
described in 5 CFR 430.405(a)(2) and (b) (including the Inspector 
General, where applicable) may approve such a pay increase in limited 
circumstances, such as for an exceptionally meritorious accomplishment.
* * * * *
    (c) 12-month rule. (1) An authorized agency official may adjust 
(i.e., increase or reduce) the rate of basic pay of a senior executive 
not more than once during any 12-month period. However, an agency may 
make a determination to provide an additional pay increase under 
certain conditions as prescribed in paragraphs (c)(3), (c)(4), and 
(c)(6) of this section without regard to whether the senior executive 
has received a pay adjustment during the previous 12-month period.
* * * * *
    (4) An authorized agency official may approve increases in a senior 
executive's rate of basic pay more than once during a 12-month period 
if the agency head or designee who performs the functions described in 
5 CFR 430.405(a)(2) and (b) (including the Inspector General, where 
applicable) determines that--
* * * * *
    (6) When necessary to maintain an annual executive appraisal and 
pay adjustment cycle that permits pay adjustments on the first day of 
the 27th full bi-weekly pay period following the effective date of pay 
adjustments for the previous cycle, an authorized agency official may 
provide a pay adjustment to a senior executive not more than 2 days 
before an applicable 12-month period expires. The pay adjustment begins 
a new 12-month period for the purpose of paragraph (c)(1).
* * * * *
    (e) Adjustments in pay after certification of applicable 
performance appraisal system. (1) In the case of an agency that obtains 
certification of a performance appraisal system for senior executives 
under 5 CFR part 430, subpart D, an authorized agency official may 
subsequently increase a covered senior executive's rate of basic pay 
based upon a performance appraisal under the certified system up to the 
rate for level II of the Executive Schedule, consistent with the 
limitations in Sec.  534.403(a)(3), under the conditions prescribed in 
paragraph (b) of this section, if the senior executive is otherwise 
eligible for such an increase (i.e., he or she did not receive a pay 
adjustment under Sec.  534.404(c) during the previous 12-month period). 
An adjustment in pay made under this paragraph is considered a pay 
adjustment for the purpose of applying Sec.  534.404(c).
* * * * *
    (g) * * *
    (3) The designation of the authorized agency official who has 
authority to set and adjust SES rates of pay for individual senior 
executives, subject to the requirement that the agency head or designee 
who performs the functions described in 5 CFR 430.405(a)(2) and (b) 
(including the Inspector General, where applicable) must approve any 
determination to set a senior executive's rate of basic pay higher than 
the rate for level III of the Executive Schedule and must approve any 
determination to increase a senior executive's rate of basic pay more 
than once in any 12-month period; and
* * * * *
    (i) Setting pay following a break in SES service--(1) General. Upon 
reappointment to the SES, an authorized agency official may set the 
rate of basic pay of a former senior executive at any rate within the 
SES rate range, subject to the limitations in Sec.  534.403(a), if 
there has been a break in SES service of more than 30 days. If there 
has been a break in SES service of 30 days or less, the senior 
executive's rate of basic pay may be set at any rate within the SES 
rate range (without regard to whether the employee received a pay 
adjustment during the previous 12-month period), but not higher than 
the senior executive's former SES rate of basic pay. Where there has 
been a break in service of 30 days or less, the agency head or designee 
who performs the functions described in 5 CFR 430.405(a)(2) and (b) 
(including the Inspector General, where applicable) may approve a 
higher rate than the senior executive's former rate of basic pay, if 
warranted. Setting a rate of basic pay upon reappointment to the SES is 
considered a pay adjustment under Sec.  534.404(c).
* * * * *


Sec.  534.503  [Amended].

0
11. Amend Sec.  534.503 as follows:
0
a. Remove the reference ``Sec.  430.405(h)'' from the definition 
``Certified'' and add in its place ``Sec.  430.410'', and remove from 
that definition the term ``suspension'' and add in its place 
``termination'';
0
b. Remove the reference ``Sec.  430.405(h)'' from the definition ``Not 
certified'' and add in its place ``Sec.  430.410'', and remove from 
that definition the term ``suspended'' and add in its place 
``terminated''; and
0
c. Remove the reference ``Sec.  430.404(a)(1) through (9)'' and add in 
its place ``Sec. Sec.  430.404 and 430.405''.
0
12. Amend Sec.  534.505 as follows:
0
a. Remove the reference ``Sec.  430.404(a)(6)(i), (ii) and (iii)'' and 
add in its place ``Sec.  430.405(b)(1), (2) and (3)''; and
0
b. Remove the reference ``Sec.  430.403(d)'' and add in its place 
``Sec.  430.403(e)''.
0
c. Revise paragraph (a)(5) to read as follows:

[[Page 6349]]

Sec.  534.505  Written procedures.

    (a) * * *
    (5) The administrative and management controls that will be applied 
to assure compliance with applicable statutes, OPM regulations, the 
agency's written procedures established under this section, the 
applicable maximum rate of basic pay inSec.  534.504(a), and, where 
applicable, the certification requirements set forth in part 430, 
subpart D of this chapter. In an agency that employs ten or more senior 
professionals, these controls must include centralized review of 
ratings proposed under Sec.  430.208 of this chapter, pay actions 
proposed under Sec.  534.507, and performance awards under Sec.  
451.104(a)(3) by a panel of individuals designated by the agency head 
to provide advice from an agency-wide perspective for authorized agency 
officials to consider before approving pay adjustments and performance 
awards on whether--
    (i) Ratings of record and performance ratings proposed for senior 
professionals accurately reflect their individual performance, 
contributions to agency performance, or both, and take into account, as 
appropriate, assessment of the agency's performance against program 
performance measures and other relevant considerations; and
    (ii) Proposed pay adjustments and performance awards for senior 
professionals conform to the requirements of Sec. Sec.  534.507 and 
451.104(a)(3) respectively and appropriately correspond to proposed 
ratings of record and performance ratings.
* * * * *


Sec.  534.506  [Amended].

0
13. Amend Sec.  534.506 to remove the reference ``Sec.  
430.404(a)(6)(i), (ii) and (iii)'' and add in its place ``Sec.  
430.405(b)(1), (2) and (3)''.
0
14. In Sec.  534.507, revise paragraph (a)(2) to read as follows:


Sec.  534.507  Annual increases in basic pay.

    (a) * * *
    (2) A determination by an authorized agency official to make a zero 
adjustment in pay after reviewing a senior professional's current 
rating of record or performance rating meets the requirement of 
paragraph (a)(1) of this section only if the notice required by 
paragraph (h) of this section is provided to the senior professional no 
later than 14 days after the date specified in paragraph (a)(1) of this 
section.
* * * * *
0
15. In Sec.  534.509, revise paragraph (b) to read as follows:


Sec.  534.509  Preservation of an established rate of basic pay.

* * * * *
    (b) An SL or ST employee whose rate of basic pay is higher than the 
rate for level III of the Executive Schedule may not suffer a reduction 
in pay because his or her agency's applicable performance appraisal 
system certification expires or is terminated under Sec.  430.410 of 
this chapter. See Sec.  530.203(g) and (h) of this chapter for 
treatment of the aggregate pay limit when certification status changes 
during the calendar year.
* * * * *


Sec.  534.510  [Amended].

0
16. Amend Sec.  534.510 to remove the references ``Sec.  
430.404(a)(6)(i), (ii) and (iii)'' and add in their place ``Sec.  
430.405(b)(1), (2) and (3)'' wherever they occur.

5 CFR Chapter III--Office of Management and Budget

Subchapter C--Joint Regulations With the Office of Personnel 
Management

PART 1330--HUMAN RESOURCES MANAGEMENT

0
17. The authority citation for part 1330 continues to read as follows:

    Authority:  5 U.S.C. chapter 43 and 5307(d).

0
18. Revise Subpart D of part 1330 to to read as follows:

Subparts A--C [Reserved]

Subpart D--Performance Appraisal System Certification
Sec.
1330.401 Purpose.
1330.402 Definitions.
1330.403 System certification.
1330.404 Certification criteria verified by OPM/OMB.
1330.405 Certification criteria verified by the agency.
1330.406 Additional appraisal system requirements.
1330.407 Agency certification requests.
1330.408 OPM certification actions.
1330.409 Annual reporting requirement.
1330.410 Termination of certification.

    Authority:  5 U.S.C. 5307(d).

Subpart D--Performance Appraisal System Certification


Sec.  1330.401  Purpose.

    (a) This subpart implements 5 U.S.C. 5307(d), which provides for 
certification of performance appraisal systems that as designed and 
applied make meaningful distinctions based on relative performance with 
respect to--
    (1) Members of the Senior Executive Service (SES) paid under 5 
U.S.C. 5382 and 5383; and
    (2) Employees in senior-level (SL) and scientific or professional 
(ST) positions paid under 5 U.S.C. 5376.
    (b) The regulations in this subpart strengthen the application of 
performance-based-pay principles to senior employees. Specifically, the 
statutory provisions that these regulations implement authorize an 
agency to apply a higher maximum rate of basic pay in setting and 
adjusting rates of basic pay for senior employees (consistent with 5 
CFR part 534, subparts D and E) and apply a higher annual aggregate 
limitation on pay (consistent with 5 CFR part 530, subpart B) to its 
senior employees, when OPM, with OMB concurrence, has certified that 
the design and application of the agency's appraisal systems for these 
employees make meaningful distinctions based on relative performance. 
This subpart establishes the certification criteria and procedures that 
OPM will apply in considering agency requests for such certification.


Sec.  1330.402  Definitions.

    In this subpart--
    Agency means an agency as that term is defined in 5 U.S.C. 105 and 
an Office of Inspector General, which is considered a separate agency 
for purposes of applying all provisions relating to the Senior 
Executive Service under the Inspector General Act of 1978 (5 U.S.C. App 
6(d)).
    Agency head means the head of an agency and includes the Inspector 
General when applying the provisions of this subpart to Offices of the 
Inspector General.
    Annual summary rating means the overall rating level that an 
appointing authority assigns at the end of the appraisal period as 
defined in Sec.  430.303.
    Appraisal system means the policies, practices, and procedures an 
agency establishes under 5 U.S.C. chapter 43 and 5 CFR part 430, 
subparts B and C, or other applicable legal authority, for planning, 
monitoring, developing, evaluating, and rewarding employee performance. 
This includes appraisal systems and appraisal programs as defined in 
Sec.  430.203 and performance management systems as defined in Sec.  
430.303.
    Certification criteria means the factors used to determine whether 
an agency appraisal system as designed and applied makes meaningful 
distinctions based on relative performance.
    GPRAMA means the Government Performance and Results Modernization 
Act of 2010.
    OMB means the Office of Management and Budget.

[[Page 6350]]

    OPM means the Office of Personnel Management.
    Peer review means the review under Sec.  1330.404(a) of performance 
plans by one agency for another agency, both having fully certified 
performance appraisal systems, to determine whether they meet the 
certification criterion for Aligned Results.
    Performance expectations means--
    (1) the critical elements, performance requirements, and 
performance standards that constitute the senior executive performance 
plans, as defined in Sec.  430.303, established for senior executives;
    (2) the performance elements and standards that constitute the 
performance plans, as defined in Sec.  430.203, established for senior 
professionals; or
    (3) other appropriate means authorized under performance appraisal 
systems not covered by 5 U.S.C. chapter 43 for communicating what a 
senior employee is expected to do and the measures that demonstrate 
success, including contribution to agency performance where 
appropriate.
    Program performance measures means results-oriented measures of 
performance, whether at the agency, component, or function level, which 
include, for example, measures under GPRAMA.
    PRB means Performance Review Board, as described in Sec.  430.311.
    Rating of record means the performance rating prepared at the end 
of an appraisal period for performance of agency-assigned duties over 
the entire period as defined in Sec.  430.203.
    Relative performance means the performance of a senior employee 
compared to the performance expectations established for his or her 
position (including contribution to agency performance) and those 
expectations must be set at a level that is sufficiently high to be 
commensurate with the authorities and responsibilities of a senior 
employee in the Federal Government. This does not permit peer ranking 
or peer comparison for rating purposes.
    Senior employee means a senior executive or a senior professional.
    Senior executive means a member of the Senior Executive Service 
(SES) paid under 5 U.S.C. 5382 and 5383.
    Senior professional means an employee in a senior-level (SL) or 
scientific or professional position (ST) paid under 5 U.S.C. 5376.
    SPRP means Senior Professional Review Panel as described in Sec.  
534.505(a)(5).


Sec.  1330.403  System certification.

    (a) OPM, with OMB concurrence, will certify an agency appraisal 
system under Sec.  1330.408 when a review of that system's design 
(i.e., system documentation), implementation (i.e., performance plans), 
and application (i.e., pay, performance awards, and ratings upon which 
they are based) reveals that the agency meets the certification 
criteria established in Sec. Sec.  1330.404 and 1330.405 and has 
followed the procedural requirements set forth in Sec.  1330.407, and 
results in a finding that the system as designed and applied makes 
meaningful distinctions based on relative performance and otherwise 
conforms to statutory and regulatory requirements relating to 
performance appraisal, pay, and awards.
    (b) Each certification granted shall cover a specific period of 
time and is not renewable.
    (c) Agencies subject to 5 U.S.C. chapter 43 and 5 CFR part 430 
seeking certification of their appraisal systems must submit systems 
that have been approved by OPM under Sec.  430.210 or Sec.  430.314, as 
applicable.
    (d) Agencies not subject to the appraisal provisions of 5 U.S.C. 
chapter 43 and 5 CFR part 430 seeking certification of their appraisal 
system(s) under this subpart must submit appropriate documentation to 
demonstrate that each system complies with the appropriate legal 
authority that governs the establishment, implementation, and 
application of that system.
    (e) For senior professionals, an agency must establish an appraisal 
system(s), as defined in Sec.  1330.402, that meets the requirements of 
5 CFR part 430, subpart B, and is separate from the system(s) 
established to cover its SES members under 5 CFR part 430, subpart C. 
At its discretion, an agency may include system features in its senior 
professional appraisal system(s) that are the same as, or similar to, 
the features of its SES appraisal system(s), as appropriate. For the 
purpose of certification under this subpart, such senior professional 
appraisal system(s) with 10 or more senior professionals covered by the 
system(s), must include a requirement for centralized review of senior 
professionals' ratings of record and proposed pay and performance 
awards actions.


Sec.  1330.404  Certification criteria verified by OPM/OMB.

    To be certified, an agency's applicable appraisal system(s) for 
senior executives or senior professionals must meet the following 
certification criteria, as verified by OPM, with OMB concurrence:
    (a) Aligned results. (1) Performance expectations for individual 
senior employees must derive from, and clearly align with, the agency's 
mission and organizational goals, such as those communicated through 
GPRAMA strategic goals, program and policy objectives, and/or annual 
performance plans and budget priorities.
    (2) Performance plans must contain performance expectations, 
including at least one critical element focusing on business results, 
that--
    (i) Apply to their respective areas of responsibility and control;
    (ii) Reflect expected agency and/or organizational outcomes and 
outputs, performance targets or metrics, policy/program objectives, 
and/or milestones;
    (iii) Identify specific programmatic crosscutting, external, and 
partnership-oriented goals or objectives, as applicable; and
    (iv) Are stated in terms of observable, measurable, and/or 
demonstrable performance (e.g., quality, quantity, timeliness, or cost 
effectiveness, as applicable).
    (3) OPM may establish additional procedures to allow agencies to 
conduct peer reviews of the performance plans to determine whether the 
plans meet this criterion. When conducting peer review, agencies may 
not conduct concurrent reciprocal reviews.
    (b) Performance distinctions. (1) Appraisal systems must include 
summary levels of performance as described in 5 CFR 430.305(a)(6) for 
senior executives, and for senior professionals at least one summary 
level of performance above fully successful.
    (2) Agency application of performance appraisal systems must--
    (i) Result in meaningful distinctions based on relative 
performance; and
    (ii) Take into account the assessment of the agency's performance 
against relevant program performance measures, as described in Sec.  
1330.405(a), employee performance expectations, and such other relevant 
factors as may be appropriate.
    (3) Authorized agency officials, as designated through agency 
delegated authority, must appraise senior employee performance 
accurately and realistically so that senior employees who have 
demonstrated the highest performance and/or exceptional contribution to 
the agency's performance receive the highest annual summary ratings or 
ratings of record, as applicable.
    (4) Agencies with equivalent appraisal systems not otherwise 
subject to this part must provide for clearly

[[Page 6351]]

distinguishing and identifying the rating that reflects the highest 
level of performance.
    (5) Agencies may not equate the requirement to make distinctions 
based on relative performance to permitting a forced distribution of 
annual summary ratings or ratings of record, which is prohibited under 
Sec. Sec.  430.208(c) and 430.305(a)(5). However, methods used to make 
distinctions among employees or groups of employees such as comparing, 
categorizing, and ranking employees or groups on the basis of their 
performance may be used for purposes other than assigning a summary 
level including, but not limited to, award determinations.
    (c) Pay differentiation. (1) Agencies must ensure senior employees 
who have demonstrated the highest performance receive the highest 
annual summary ratings or ratings of record, as applicable, and the 
largest corresponding performance awards, pay adjustments, and rates of 
pay, in accordance with applicable limitations;
    (2) Agencies must ensure differentiation is evident separately in 
the pay adjustments, performance awards, and rates of pay;
    (3) Agencies must ensure they make pay adjustments and performance 
awards for senior employees in a timely manner.
    (i) For senior executives, the pay adjustments authorized under 5 
CFR 534.404(b)(3) and the performance awards authorized under 5 U.S.C. 
5384 must have effective dates not later than 5 months after the end of 
the applicable appraisal period;
    (ii) For senior professionals, agencies must make pay adjustments 
in accordance with the requirements in Sec.  534.505(b) and pay 
performance awards as soon as practicable after the end of the 
appraisal period; and
    (4) Agencies must develop processes for making pay decisions and 
granting awards affecting senior employees that comply with 
Governmentwide law, regulation, and guidance. To make these processes 
transparent agencies must provide access to the appraisal and pay 
policies that govern the decisions and communicate the results as 
required in Sec.  1330.405(c).


Sec.  1330.405  Certification criteria verified by the agency.

    To be certified, an agency's applicable appraisal system(s) for 
senior executives or senior professionals must meet the following 
certification criteria, as verified by the agency in accordance with 
instructions provided by OPM:
    (a) Organizational assessment and guidelines. Agencies must comply 
with all applicable OMB requirements for assessing organizational 
performance and may use those assessments to inform the individual 
ratings of its senior employees. The results of these assessments are 
shared with individuals involved in the rating process through the 
issuance of guidelines based at least in part upon those assessments. 
The guidelines must--
    (1) Address agency performance overall and with respect to each of 
its particular missions, components, programs, policy areas, and 
support functions--such as reports of the agency's GPRAMA goals, annual 
performance plans and targets, program performance measures, and other 
appropriate indicators;
    (2) Be communicated by the agency head, or an individual 
specifically designated by the agency head for such purpose, to 
affected senior employees, their rating and reviewing officials, and 
PRB and SPRP members;
    (3) Be provided at the conclusion of the appraisal period but 
before individual senior employee performance ratings are recommended, 
so that they inform individual performance appraisals; and
    (4) Not take the form of quantitative limitations on the number of 
ratings at any given rating level.
    (b) Oversight. The agency head or the individual specifically 
designated under paragraph (a)(2) of this section must certify for a 
particular senior employee appraisal system that--
    (1) The senior employee rating process makes meaningful 
distinctions based on relative performance;
    (2) The results of the senior employee appraisal process take into 
account the agency's assessment of its performance against program 
performance measures, as well as other relevant considerations, as 
appropriate;
    (3) Performance awards, pay adjustments, and levels of pay based on 
the results of the rating process accurately reflect and recognize 
distinctions in individual performance and/or contribution to the 
agency's performance; and
    (4) Final decisions include PRB or SPRP recommendations regarding 
senior employee ratings and must--
    (i) Be consistent with 5 CFR part 430, subparts B and C; and
    (ii) Appropriately reflect the employee's performance expectations, 
relevant program performance measures, and such other relevant factors 
as the PRB or SPRP may find appropriate.
    (c) Communication of results. Agencies must communicate annually to 
senior employees, rating and reviewing officials, and PRB or SPRP 
members the results of the application of the appraisal process (i.e., 
overall ratings distributions, average adjustment in the rate of basic 
pay for each rating level, and average performance award for each 
rating level, as applicable) while assuring confidentiality of 
protected information.


Sec.  1330.406  Additional appraisal system requirements.

    To be certified, an agency's appraisal system must meet the 
requirements of 5 CFR part 430, subparts B or C, as applicable, or 
other applicable legal authority. Agencies are responsible for ensuring 
their senior employee appraisal systems provide for--
    (a) Consultation. Performance expectations for senior employees 
must be developed with the input and involvement of the senior 
employees who are covered thereby;
    (b) Balance. Performance expectations established in the individual 
senior employee appraisal plan must include two parts:
    (1) Expected results; and
    (2) Those technical, leadership and/or managerial competencies or 
behaviors that contribute to, and are necessary to distinguish, levels 
of performance. In addition, for senior employees in supervisory 
positions, their performance expectations also must address appropriate 
measures or indicators of stakeholder and/or employee perspective when 
applicable, such that stakeholder/employee feedback is sought and used 
to inform decisions.
    (c) Accountability for the performance management of subordinates. 
The performance expectations for individual senior employees in 
supervisory positions must clearly communicate their responsibility for 
ensuring--
    (1) The performance expectations for individual subordinate 
employees clearly link to organizational mission, GPRAMA strategic 
goals, or other program or policy objectives; and
    (2) The appraisal of their subordinate employees is based on 
established performance expectations that differentiate among the 
various levels of performance. An appraisal must be a realistic 
assessment of the employees' actual performance, including their 
contribution to organizational goals as measured in GPRAMA and other 
organizational plans.
    (d) Training. Agencies must provide senior employees, rating and 
reviewing officials (including those in other services/appointments 
such as political appointments, Foreign Service, military, etc.), and 
PRB or SPRP members initial training, periodic refresher training, and

[[Page 6352]]

annual reminders on the operation of the applicable agency performance 
management and pay and awards policies.


Sec.  1330.407  Agency certification requests.

    To receive system certification, an agency must provide 
documentation demonstrating that its appraisal system(s), in design, 
implementation, and application, meet the certification criteria in 
Sec. Sec.  1330.404 and 1330.405 as well as the procedural requirements 
set forth in this section.
    (a) In order for an agency's appraisal system to be certified, the 
agency head or designee must submit documentation in accordance with 
OPM instructions, including--
    (1) A written request, which may include signed electronic formats, 
for certification of its appraisal system(s) to the Director of OPM, or 
an OPM official assigned to accept certification requests;
    (2) Separate certification requests for systems applying to senior 
executives, senior professionals, and Offices of the Inspector General;
    (3) A full description of the appraisal system(s) to be certified, 
including--
    (i) Organizational and employee coverage information; and
    (ii) Rating levels as described in Sec.  1330.404(b)(1) and (4) 
that establish clear distinctions between levels of performance so 
senior employees receive ratings based on assessments of their actual 
performance relative to their established performance expectations in 
any given appraisal period;
    (4) A sample of senior employee performance plans as specified by 
OPM, except as provided in paragraph (b) of this section;
    (5) Documentation of organizational performance results and an 
explanation of how these results support the rating distribution in 
accordance with OPM instructions;
    (6) Data required by the annual reporting requirement in Sec.  
1330.409;
    (7) Documentation of the pay policy and procedures for setting and 
adjusting pay and granting performance awards that includes--
    (i) For the agency's senior executives covered by 5 CFR part 534, 
subpart D, the plan for setting and adjusting the rate of basic pay 
described in Sec.  534.404(g);
    (ii) For the agency's senior professionals covered by 5 CFR part 
534, subpart E, the written procedures for setting and adjusting the 
rate of basic pay described in Sec.  534.505; and
    (iii) Policies established for award programs authorized under 
Sec.  534.405 or responsibilities identified in Sec.  451.106, as 
appropriate; and
    (8) Any additional information that OPM and OMB may require to make 
a determination regarding certification.
    (b) Agencies that participate in a peer review under Sec.  
1330.404(a) must submit such documentation as OPM requires.


Sec.  1330.408  OPM certification actions.

    OPM will certify performance appraisal systems, with OMB 
concurrence, only for those agencies that comply with all related laws 
and regulations.
    (a) Granting certification. At the request of an agency head or 
designee, the Director of OPM, at his or her discretion and in 
accordance with the requirements of this subpart and with OMB 
concurrence, may--
    (1) Grant full certification, which covers a period of 24 months, 
of an agency's senior employee appraisal system(s) when the agency 
has--
    (i) Demonstrated in the initial submission of its documentation, 
and without making any revisions directed by OPM, that it has designed 
and fully operationalized the certification criteria defined in 
Sec. Sec.  1330.404 and1330.405;
    (ii) Met the documentation requirements in Sec.  1330.407; and
    (iii) Demonstrated appropriate system application through the data 
reports required in Sec.  1330.409 based on the 2 most recently 
completed performance cycles (2 years of data).
    (2) Grant provisional certification, which covers a period of 12 
months, of an agency's senior employee appraisal system(s) when the 
agency has--
    (i) Designed a senior employee appraisal system(s) that meets the 
certification criteria in Sec. Sec.  1330.404 and 1330.405; and
    (ii) Revised one or more senior employee performance plans in 
accordance with instructions from OPM in order to meet the 
certification requirements in Sec.  1330.404(a); or
    (iii) Demonstrated appropriate system application through the data 
reports required in Sec.  1330.409 based on only the most recently 
completed performance cycle (1 year of data).
    (3) Grant provisional certification to an agency more than once.
    (b) Extending certification. (1) Consistent with the requirements 
of this subpart, the Director of OPM, at his or her discretion or upon 
the request of an agency head or designee, may grant a single extension 
of up to six additional months for an agency's appraisal system 
certification. The discretionary use of the Director's extension 
authority will be reserved for rare, exceptional circumstances.
    (2) When requesting an extension, the agency head or designee must 
submit a written request, which may include signed electronic formats, 
to OPM outlining why the agency needs the extension and how the 
extension will support effective performance management. OPM will 
consider requests for extensions on a case-by-case basis.


Sec.  1330.409  Annual reporting requirement.

    Agencies must provide OPM with the annual summary ratings or 
ratings of record, as applicable, and rates of basic pay, pay 
adjustments, and performance and cash awards for their senior employees 
in accordance with instructions for OPM's annual data call and at any 
other time as needed to support a certification request.


Sec.  1330.410  Termination of certification.

    (a) Any time OPM determines that an agency's certified appraisal 
system is no longer in compliance with certification criteria, OPM, 
with OMB concurrence, may terminate such certification.
    (b) An agency's system certification is terminated automatically 
when OPM withdraws performance appraisal system approval or mandates 
corrective action because of misapplication of the system as authorized 
under Sec.  430.210(c) or Sec.  430.314(c).
    (c) OPM will notify the agency head at least 30 calendar days in 
advance of the termination and the reason(s) for the termination, as 
well as any expected corrective action.
    (d) Upon such termination, and until its system certification is 
reinstated, the agency must--
    (1) Set a senior employee's rate of basic pay under 5 CFR part 534, 
subparts D or E as applicable, at a rate that does not exceed the rate 
for level III of the Executive Schedule.
    (2) Limit aggregate compensation received in a calendar year by a 
senior employee to the rate for level I of the Executive Schedule.
    (e) Performance awards, pay adjustments, and levels of pay in 
effect prior to such termination will remain in effect unless OPM finds 
that any such decision and subsequent action was in violation of law, 
rule, or regulation.
    (f) OPM, with OMB concurrence, may reinstate certification to an 
agency whose certification has been terminated only after the agency 
demonstrates it has taken appropriate corrective action. A restored 
certification will terminate on the same date as the original 
certification. An agency with a terminated certification may choose to 
submit a new certification request once it has corrected the issue(s) 
that led to the termination.

[[Page 6353]]

    (g) OPM may reinstate the certification of an appraisal system that 
has been terminated automatically under paragraph (b) of this section 
upon the agency's compliance with the applicable OPM-mandated 
corrective action(s).

[FR Doc. 2017-01326 Filed 1-18-17; 8:45 am]
 BILLING CODE 6325-39-P



                                                                                                                                                                                                         6339

                                                      Proposed Rules                                                                                                 Federal Register
                                                                                                                                                                     Vol. 82, No. 12

                                                                                                                                                                     Thursday, January 19, 2017



                                                      This section of the FEDERAL REGISTER                    Director for Senior Executive Services                 cross-references to certain regulations
                                                      contains notices to the public of the proposed          and Performance Management, Suite                      affecting those sections. OPM also
                                                      issuance of rules and regulations. The                  7412, 1900 E Street NW., Washington,                   proposes certain changes to final
                                                      purpose of these notices is to give interested          DC 20415–9700.                                         regulations on 5 CFR 430 subpart C—
                                                      persons an opportunity to participate in the                                                                   Managing Senior Executive Performance
                                                                                                              FOR FURTHER INFORMATION CONTACT:
                                                      rule making prior to the adoption of the final
                                                      rules.                                                  Myriam Mayobre by telephone at (202)                   published September 25, 2015, 80 FR
                                                                                                              606–8046, by FAX at (202) 606–4264, or                 57693 to update citations to the
                                                                                                              by email at myriam.mayobre@opm.gov.                    proposed regulation. Revisions to 5 CFR
                                                      Office of Personnel Management                          SUPPLEMENTARY INFORMATION: This                        430.309(e)(2) would further clarify
                                                                                                              proposal updates current regulations to                higher level review.
                                                      5 CFR Parts 317, 430, and 534                           account for changes in statute, policies,                 OPM is proposing conforming
                                                                                                              and processes that have occurred since                 changes to pay regulations at 5 CFR 534
                                                      Office of Management and Budget                         the current regulation became effective                subparts D and E. For the most part,
                                                                                                              in 2004. This proposal also streamlines                these changes update citations from the
                                                      5 CFR Part 1330                                         the existing process to decrease burden                current regulations with citations to the
                                                      RIN 3206–AL20                                           on agencies while ensuring OPM and                     same or similar material in the proposed
                                                                                                              OMB have information needed for                        regulations or change the existing
                                                      Performance Appraisal System                            certification.                                         references in current regulation to
                                                      Certification                                             On October 8, 2008, the President                    ‘‘suspension’’ of an appraisal system
                                                                                                              signed into law the Senior Professional                certification with the term
                                                      AGENCY:  Office of Personnel                            Performance Act of 2008 (the Act),                     ‘‘termination’’ of certification. In 5 CFR
                                                      Management and Office of Management                     Public Law 110–372. The Act made                       534 subpart D, OPM also proposes to
                                                      and Budget.                                             significant changes in the law governing               revise 5 CFR 534.404(e)(1) to clarify that
                                                      ACTION: Proposed rule with request for                  certification of senior employee                       certification of an appraisal system does
                                                      comments.                                               performance appraisal systems. This                    not provide an immediate opportunity
                                                                                                              rulemaking would revise subpart D of                   to adjust the pay of current senior
                                                      SUMMARY:    The U.S. Office of Personnel                parts 430 and 1330 of title 5, Code of                 executives. Rather, pay adjustments for
                                                      Management (OPM) and the U.S. Office                    Federal Regulations to reflect the                     current senior executives must be based
                                                      of Management and Budget (OMB)                          changes resulting from the Act. Other                  on an annual summary rating and,
                                                      jointly propose to implement certain                    changes to the regulations not related to              therefore, occur only after the
                                                      requirements contained in the Senior                    the Act have been included in this                     completion of a rating cycle under the
                                                      Professional Performance Act of 2008,                   revision to update and simplify the                    newly certified appraisal system. This
                                                      incorporate OPM policies and to                         processes used based on over a decade                  should occur on the normal appraisal
                                                      reorganize information for ease of                      of experience with the certification                   cycle and include a period of
                                                      reading. OPM additionally proposes to                   process and recommendations from an                    performance under the certified system
                                                      make conforming changes and technical                   interagency workgroup. OPM convened                    that is at least equal to the agency’s
                                                      corrections, and to update and simplify                 the workgroup in December 2014 as a                    minimum appraisal period. OPM also
                                                      the processes used based on over a                      result of a President’s Management                     proposes to add new paragraph
                                                      decade of experience with the                           Agenda recommendation made in 2011                     534.404(c)(6) to address a technical
                                                      certification process and                               by a separate workgroup, to follow up                  issue associated with the 12-month rule
                                                      recommendations from an interagency                     on recommendations made by a Chief                     and enable authorized agency officials
                                                      workgroup.                                              Human Capital Officers workgroup held                  to grant a pay adjustment up to 2 days
                                                      DATES:  OPM must receive comments on                    in February 2014, and as part of the                   before the expiration date of the 12-
                                                      or before February 21, 2017.                            current Presidential Management                        month restriction on pay adjustments
                                                      ADDRESSES: You may submit comments,                     Agenda initiatives to improve the Senior               that applies to a senior executive. This
                                                      identified by ‘‘RIN 3206–AL20,’’ using                  Executive Service (SES). The workgroup                 will allow agencies to make a pay
                                                      any of the following methods:                           was comprised of agency subject matter                 adjustment consistent with an otherwise
                                                         Federal eRulemaking Portal: http://                  experts who were tasked to review the                  applicable annual performance and pay
                                                      www.regulations.gov. Follow the                         certification process and provide                      adjustment cycle. OPM finds this
                                                      instructions for submitting comments.                   recommendations regarding the                          appropriate to support agencies in
                                                      All submissions received through the                    certification criteria and streamlining                maintaining a cycle that provides for
                                                      Portal must include the agency name                     the process.                                           granting pay adjustments based upon
                                                      and docket number or Regulation                           While OPM and OMB jointly propose                    performance on the first day of the same
asabaliauskas on DSK3SPTVN1PROD with PROPOSALS




                                                      Identifier Number (RIN) for this                        to amend parts 430 and 1330 of title 5,                bi-weekly pay period each year (e.g., at
                                                      rulemaking.                                             Code of Federal Regulations, OPM                       the time of the statutory annual
                                                         Email: sespolicy@opm.gov. Include                    additionally proposes to make the                      adjustment to General Schedule rates,
                                                      ‘‘RIN 3206–AL20’’ in the subject line of                following changes to parts 317, 430                    which may occur 1 or 2 days short of
                                                      the message.                                            Subpart C, and 534 of title 5, Code of                 a full 12-month period). OPM does not
                                                         Fax: (202) 606–4264.                                 Federal Regulations, for which OPM                     propose to require annual approval and
                                                         Mail, Hand Deliver/Courier                           alone is responsible. OPM proposes                     documentation of the basis for this
                                                      comments: Address comments to Mr.                       changes in 5 CFR 317.501(b)(2) and                     exception prior to its use. In 5 CFR 534
                                                      Stephen T. Shih, Deputy Associate                       317.503(g)(3) to fix erroneous internal                subpart E, OPM proposes to revise 5


                                                 VerDate Sep<11>2014   20:40 Jan 18, 2017   Jkt 241001   PO 00000   Frm 00001   Fmt 4702   Sfmt 4702   E:\FR\FM\19JAP1.SGM   19JAP1


                                                      6340                   Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules

                                                      CFR 534.505(a)(5) to add the review of                  an agency’s system continues to meet                   alignment with mission outcomes and
                                                      proposed performance awards for senior                  the certification criteria. An agency that             organizational results. This first critical
                                                      professionals as a responsibility of the                intends to maintain its certification                  step falls to the rating official, in
                                                      centralized review panel. This creates                  must submit a request for certification                consultation with the senior employee,
                                                      consistency with the duties of the                      in accordance with proposed sections                   followed by the accurate application of
                                                      performance review boards (PRB) for                     430.407 and 1330.407.                                  these standards/requirements when
                                                      senior executives. OPM also proposes to                    OPM proposes to change the                          assessing performance. The proper
                                                      revise 5 CFR 534.507(a)(2) to include a                 requirement of current sections                        development of performance standards/
                                                      14-day time period from the date                        430.404(a)(6) and 1330.404(a)(6) that                  requirements and the accurate
                                                      specified in paragraph (a)(1) of that                   only the agency head or the official                   assessment of performance compared to
                                                      section in which an authorized agency                   designated under paragraph (a)(5) of                   these standards/requirements should
                                                      official must provide notice to a senior                those sections may provide oversight of                lead to meaningful distinctions in
                                                      professional concerning the reasons for                 the agency’s appraisal system and its                  ratings. OPM has found that the role of
                                                      a zero adjustment in pay, as required by                results. The proposed regulations also                 the oversight official provides the
                                                      paragraph (h) of that section. Specifying               add Communication of Results (i.e.,                    appropriate level for ensuring ratings
                                                      a 14-day time period will ensure that                   overall rating distributions, average                  make meaningful distinctions on the
                                                      senior professionals receive such                       adjustment in the rate of basic pay for                basis of actual differences in levels of
                                                      notices in a timely manner.                             each rating level, and average                         performance. Furthermore, OPM
                                                                                                              performance award for each rating level,               proposes to remove the requirement for
                                                      Key Changes to 5 CFR Parts 430 and                      as applicable) as a certification criterion.           an agency to submit, as part of its
                                                      1330                                                    This change is consistent with OPM’s                   certification request, the process for
                                                         The proposed regulations implement                   current guidance that each agency must                 reviewing performance standards,
                                                      the provision in the Act that authorizes                describe the communication of ratings                  requirements, expectations, or ratings of
                                                      agencies to apply higher maximum rates                  and payouts to senior employees and                    employees supervised by senior
                                                      of basic pay for employees in senior-                   other involved officials in its                        employees, because OPM believes this
                                                      level (SL) and scientific or professional               certification request. Additionally, the               too is a review that should be included
                                                      (ST) positions (i.e., senior professionals)             proposed regulations combine the                       in the responsibilities of the Oversight
                                                      paid under 5 U.S.C. 5376. An agency                     criteria for Alignment and Results into                Official.
                                                      without an applicable certified appraisal               a single criterion, Aligned Results.                      The proposed regulations introduce a
                                                      system must use a maximum rate of                          OPM proposes to remove the                          new procedural framework that
                                                      basic pay for senior professionals that                 references that distinguish requests for               provides for shared responsibilities in
                                                      does not exceed the rate for level III of               full certification from requests for                   assessing certification criteria. Instead of
                                                      the Executive Schedule (EX–III). An                     provisional certification. As the                      OPM assessing all criteria, OPM will
                                                      agency with an applicable certified                     certification process has evolved, OPM                 assess Aligned Results, Performance
                                                      appraisal system may use a maximum                      has found that submission of the same                  Distinctions, and Pay Differentiation.
                                                      rate of basic pay for senior professionals              information is needed for all agency                   OPM will seek OMB concurrence on its
                                                      covered by the certified system that                    requests for certification. Based on                   findings. Agencies will verify
                                                      does not exceed the rate for level II of                review of an agency request, OPM, with                 Organizational Assessment and
                                                      the Executive Schedule (EX–II).                         OMB concurrence, may then grant full                   Guidelines, Oversight, and
                                                         The proposed regulation implements                   or provisional certification as                        Communication. The criteria verified by
                                                      a section of the Act providing that                     appropriate. Reasons for which an                      the agency will, however, be subject to
                                                      certification may be granted beginning                  agency would receive provisional rather                periodic spot checks by OPM to ensure
                                                      at any point in the year for a period not               than full certification are specified in               continued compliance. Spot checks will
                                                      to exceed 24 months. Under rare and                     the proposed regulations. OPM also                     not be announced in advance and when
                                                      exceptional circumstances, the Director                 proposes to remove the requirement for                 they occur, agencies will submit to OPM
                                                      of OPM may extend certification for up                  agencies to submit, as part of their                   the documentation they used as the
                                                      to 6 additional months. Full                            certification requests, the process they               basis of their verification of the
                                                      certification will be granted for a period              use for ensuring ratings are not                       applicable criteria. In addition, the
                                                      of 24 months. Provisional certification                 distributed arbitrarily or on a rotational             proposed regulations allow for an
                                                      will be granted for a period of 12                      basis. OPM believes this falls within the              agency to demonstrate compliance with
                                                      months.                                                 responsibilities of the oversight official             the Aligned Results criterion through a
                                                         Since certification no longer expires                to ensure the appraisal system is                      peer review process. This peer review
                                                      at the end of a calendar year, there is no              administered appropriately. OPM                        process will provide the option for an
                                                      need for OPM to extend provisional                      continues to require, as part of the                   agency with full certification to either
                                                      certification into the following calendar               oversight criterion, that an agency                    have its performance plans reviewed by
                                                      year. That extension enabled agencies to                identify the official responsible for                  another agency with a fully certified
                                                      maintain certification long enough to                   certifying that the senior employee                    appraisal system or submit the
                                                      make pay adjustments using the higher                   appraisal process makes meaningful                     performance plans to OPM. Agencies
                                                      maximum rate of the newly adjusted                      distinctions based on relative                         that maintain full certification may
                                                      pay range and continued their access to                 performance. OPM recognizes the                        continuously use this peer review
asabaliauskas on DSK3SPTVN1PROD with PROPOSALS




                                                      the higher pay rate of EX–II.                           ability to make meaningful distinctions                method to demonstrate compliance with
                                                         OPM proposes to remove sections of                   in performance starts with the                         the Aligned Results criterion subject to
                                                      the regulation that governed the renewal                development of performance standards                   spot checks by OPM. To maintain the
                                                      of an already fully certified system and                and requirements that clearly describe                 integrity of the peer review process,
                                                      described a process for automatic                       the different expectations at various                  agencies will not be allowed to conduct
                                                      renewal based on an OPM/OMB review                      performance levels. Agencies should                    reciprocal reviews.
                                                      of the required agency annual report.                   consult their strategic plans and                         OPM proposes to remove
                                                      OPM determined that this information                    objectives when developing                             Consultation, Balance, and
                                                      alone is insufficient to assess whether                 performance requirements to ensure                     Accountability criteria from the


                                                 VerDate Sep<11>2014   20:40 Jan 18, 2017   Jkt 241001   PO 00000   Frm 00002   Fmt 4702   Sfmt 4702   E:\FR\FM\19JAP1.SGM   19JAP1


                                                                                  Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules                                                        6341

                                                      Certification Criteria and move them to                            assess whether an agency is meeting the                       certification process to support the
                                                      a new section, Additional Appraisal                                pay differentiation criterion for                             President’s Management Agenda
                                                      Program Requirements and add the                                   certification, OPM often finds it                             recommendation to improve the SES.
                                                      Training requirement to this same                                  necessary to examine the pay policy to                           • Provides for shared responsibilities
                                                      section. Based on over a decade of                                 understand the context within which                           in assessing certification criteria in
                                                      experience and careful deliberation by a                           the reported pay adjustments have been                        which OPM assesses Aligned Results,
                                                      cross-agency working group of subject                              authorized and performance awards                             Performance Distinctions, and Pay
                                                      matter experts, we have determined                                 have been granted. OPM also proposes                          Differentiation and agencies will verify
                                                      these important aspects of a successful                            that agencies make pay adjustments and                        all other criteria.
                                                      and effective performance management                               performance awards for senior                                    • Adds new option for Peer Review—
                                                      system no longer need to be reviewed by                            employees in a timely manner. These                           this would allow fully certified agencies
                                                      OPM for the purpose of supporting a                                pay adjustments and awards for SES                            to engage in a review of other fully
                                                      certification determination. Since they                            must have an effective date no later than                     certified agencies’ performance plans to
                                                      are vital to the success of a performance                          5 months after the end of the applicable                      determine whether they meet the
                                                      management system, are included in the                             appraisal period. For senior                                  criterion for ‘‘Aligned Results,’’ while
                                                      design and application of the Basic SES                            professionals, agencies must make pay                         prohibiting concurrent reciprocal
                                                      appraisal system, and agencies already                             adjustments, in compliance with                               reviews.
                                                      have incorporated them into their                                  requirements in § 534.505(b), at the                             • Requires timely pay adjustments
                                                      performance cultures, each agency will                             same time as the adjustment to the                            and performance awards for senior
                                                      now be responsible for ensuring they                               General Schedule. This is the only time                       employees; for SES, not later than 5
                                                      continue to be properly applied within                             during the year annual increases in                           months after the end of the appraisal
                                                      their organizations.                                               basic pay for senior professionals are
                                                        OPM proposes to modify the                                                                                                     period.
                                                                                                                         permissible. Performance awards must
                                                      definition of Relative Performance to                              be paid as soon as practicable after the                      Request for Comments
                                                      clarify that a senior employee’s                                   end of the appraisal period. These
                                                      performance is compared to the                                                                                                      In addition to the general request for
                                                                                                                         timeliness requirements support the                           comments on the proposed regulation,
                                                      performance expectations established                               principles of performance-based
                                                      for his or her position, including their                                                                                         we would appreciate feedback focused
                                                                                                                         compensation by ensuring the pay and                          specifically on the following questions:
                                                      contribution to agency performance as                              awards are as close as practicable to the
                                                      appropriate. The definition of Relative                                                                                             • How could agencies best assess and
                                                                                                                         ratings upon which they are based.                            highlight their organizational
                                                      Performance also specifies that it does                              OPM proposes to remove paragraphs
                                                      not permit peer ranking or peer                                                                                                  performance—strengthening alignment
                                                                                                                         addressing the limits on basic pay and
                                                      comparison for rating purposes. OPM                                                                                              to individual SES performance
                                                                                                                         aggregate total compensation because
                                                      also proposes to remove Outstanding                                                                                              requirements—to distinguish between
                                                                                                                         they are contained in 5 CFR part 534,
                                                      Performance from the definitions to                                                                                              SES performance levels and/or to
                                                                                                                         subparts D and E and § 530.203(b)
                                                      avoid confusion with the commonly                                                                                                objectively set high performance
                                                                                                                         respectively.
                                                      used Level 5 rating label—Outstanding.                                                                                           expectations for individual SES?
                                                      As used in the certification regulations,                          Summary of Major Changes                                         • Are there additional ways, or
                                                      Outstanding Performance originally was                               These proposed regulations make the                         alternatives, OMB and OPM should
                                                      intended to allow for separately                                   following major changes:                                      consider to make the SES and SL/ST
                                                      identifying the highest performers even                              1. Proposed revisions make                                  performance appraisal system
                                                      within the highest performance level,                              conforming changes as a result of Public                      certification process less resource-
                                                      usually Level 5, which often uses the                              Law 110–372, Senior Professional                              intensive, while still achieving the goal
                                                      label Outstanding. Some additional                                 Performance Act of 2008.                                      of tying performance to agency
                                                      terms have been defined, as noted in the                             • Adds that an agency with an                               outcomes, and making meaningful
                                                      table of changes. OPM also proposes to                             applicable certified appraisal system                         distinctions amongst individuals’
                                                      revise the title of this subpart from                              may apply the higher maximum rate of                          performance levels?
                                                      Performance Appraisal Certification for                            basic pay for senior professionals                            Complete Table of Changes
                                                      Pay Purposes to Performance Appraisal                              covered by the certified system.
                                                      System Certification for accuracy.                                   • Implements the provision of the Act                          The following table lists all the
                                                        Agencies will also be required to                                where certification may be granted                            proposed changes to the current
                                                      submit, as part of the certification                               beginning at any point in the year for a                      regulations. The ‘‘current rule’’ column
                                                      request, the applicable agency SES or                              period not to exceed 24 months as                             lists the regulations in the current
                                                      SL/ST pay setting and adjustment                                   opposed to a calendar-year basis.                             subpart D. The ‘‘proposed rule’’ column
                                                      policy required under 5 CFR part 534                                 2. Proposed revisions address                               indicates where matters addressed in
                                                      and the policy and procedures for                                  recommendations stemming from over a                          the current regulation are addressed in
                                                      granting performance awards under                                  decade of experience with certification                       the proposed regulation and where new
                                                      § 534.405 for SES or §§ 451.101(e) and                             as well as from an interagency work                           material is being added. The third
                                                      451.104(a)(3) for SL/ST. In order to                               group tasked to design an improved                            column explains each change.
asabaliauskas on DSK3SPTVN1PROD with PROPOSALS




                                                                      Current rule                                       Proposed rule                                                 Explanation of change

                                                                                                                                           Part 430, subpart D

                                                      430.401(a) .......................................   430.401(a) and (b) .........................       Divides paragraph into multiple sections to increase clarity.
                                                      430.401(b) .......................................   Removed .......................................    Removes paragraphs addressing the limits on basic pay and aggre-
                                                                                                                                                                gate compensation because they are contained in 5 CFR part 534,
                                                                                                                                                                subparts D and E and § 530.203(b) respectively.




                                                 VerDate Sep<11>2014       20:40 Jan 18, 2017      Jkt 241001     PO 00000     Frm 00003      Fmt 4702       Sfmt 4702   E:\FR\FM\19JAP1.SGM   19JAP1


                                                      6342                          Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules

                                                                       Current rule                                            Proposed rule                                                   Explanation of change

                                                      430.402 ...........................................       430.402 ..........................................    Adds definitions for Agency, Agency Head, Annual Summary Rating,
                                                                                                                                                                        Appraisal, Certification Criteria, Peer Review, Rating of Record,
                                                                                                                                                                        Senior Professional Review Panel (SPRP), updates GPRA to
                                                                                                                                                                        GPRAMA, clarifies the definitions of Performance Expectations,
                                                                                                                                                                        Relative Performance, and Senior Executive. Removes the defini-
                                                                                                                                                                        tion for Outstanding Performance.
                                                      430.403(a) .......................................        430.403(a) .....................................      Edits made to increase clarity.
                                                                                                                430.403(b) .....................................      Adds provision that certifications are not renewable.
                                                      430.403(b) .......................................        430.403(c) ......................................     Moves requirement that agencies seeking certification must submit
                                                                                                                                                                        systems that have been approved by OPM.
                                                      430.403(c) .......................................        Removed .......................................       Removes option for agencies to submit a new appraisal system(s) for
                                                                                                                                                                        certification that has not yet been approved by OPM.
                                                      430.403(d) .......................................        430.403(e) .....................................      Moves requirement that agencies submit for certification, separate
                                                                                                                                                                        systems for their senior professionals and SES members. Adds
                                                                                                                                                                        new requirement for a centralized review panel for agencies with
                                                                                                                                                                        10 or more senior professionals. Also moves the option to include
                                                                                                                                                                        features in the senior professional appraisal system that are similar
                                                                                                                                                                        to the SES system.
                                                      430.403(e) .......................................        430.403(c) and (d) .........................          Splits paragraph into two sections.
                                                      430.404(a) .......................................        430.404 ..........................................    Edits made to increase clarity.
                                                      430.404(a)(1) ...................................         430.404(a)(1) .................................       Moves certification criterion and changes name from Alignment to
                                                                                                                                                                        Aligned Results.
                                                      430.404(a)(2) ...................................         430.406(a) .....................................      Moves to Additional Appraisal System Requirements and clarifies.
                                                      430.404(a)(3) ...................................         430.404(a)(2) .................................       Moves certification criterion and changes name from Results to
                                                                                                                                                                        Aligned Results.
                                                                                                                430.404(a)(3) .................................       New provision allowing for peer review of aligned results.
                                                      430.404(a)(4)       ...................................   430.406(b) .....................................      Moves to Additional Appraisal System Requirements and clarifies.
                                                      430.404(a)(5)       ...................................   430.405(a) .....................................      Moves certification criterion and simplifies.
                                                      430.404(a)(6)       ...................................   430.405(b) .....................................      Moves certification criterion and clarifies.
                                                      430.404(a)(7)       ...................................   430.406(c) ......................................     Moves to Additional Appraisal System Requirements, changes name
                                                                                                                                                                        from Accountability to Accountability for the Performance Manage-
                                                                                                                                                                        ment of Subordinates, and clarifies.
                                                      430.404(a)(8) ...................................         430.404(b)(2) .................................       Moves the certification criterion, changes the name from Performance
                                                                                                                                                                        Differentiation to Performance Distinctions, and simplifies.
                                                      430.404(a)(9) ...................................         430.404(c)(1) and (2) ....................            Moves certification criterion and clarifies.
                                                                                                                430.404(c)(3) .................................       Adds specific timeframe for making pay adjustments and awards in a
                                                                                                                                                                        timely manner.
                                                      430.404(a)(9) ...................................         430.404(c)(4) .................................       Moves certification criterion and clarifies transparency in the process
                                                                                                                                                                        for making pay and awards decisions.
                                                      430.404(b) .......................................        Removed .......................................       Addressed by defining agency head to mean an Inspector General
                                                                                                                                                                        when applying these provisions to Offices of the Inspector General.
                                                                                                                430.405(c) ......................................     Adds Communication of Results as a certification criterion.
                                                                                                                430.406(d) .....................................      Adds Training to Additional Appraisal System Requirements.
                                                                                                                430.405 ..........................................    Adds new section titled Certification Criteria Verified by the Agency.
                                                      430.405(a) .......................................        430.407 ..........................................    Moves and clarifies.
                                                      430.405(b) .......................................        430.407(a) .....................................      Moves and removes the requirement to identify whether the request
                                                                                                                                                                        is for full or provisional certification. Removes requests covering an
                                                                                                                                                                        agencywide system or a system that applies to one or more agen-
                                                                                                                                                                        cy organizations or components. Specifies who must submit certifi-
                                                                                                                                                                        cation requests.
                                                      430.405(b)(1) ...................................         430.407(a)(1) .................................       Moves and remains unchanged.
                                                                                                                430.407(a)(2) .................................       Adds new paragraph explicitly requiring separate certification re-
                                                                                                                                                                        quests for Offices of Inspectors General.
                                                      430.405(b)(1)(i) ...............................          430.407(a)(3)(i) ..............................       Moves and remains unchanged.
                                                      430.405(b)(1)(ii) ...............................         Removed .......................................       Removes applicable administrative instructions and implementing
                                                                                                                                                                        guidance from written requests for certification.
                                                      430.405(b)(1)(iii) ..............................         430.407(a)(3)(ii) .............................       Moves and edits made to increase clarity.
                                                      430.405(b)(1)(iii)(A) and (B) ............                430.404(b)(1) .................................       Moves and clarifies.
                                                                                                                430.404(b)(3) .................................       Adds provision requiring agencies to appropriately assign the highest
                                                                                                                                                                        ratings to the best performers.
                                                      430.405(b)(1)(iii)(C) .........................           430.404(b)(4) .................................       Moves and replaces Outstanding Performance with the highest level
                                                                                                                                                                        of performance.
asabaliauskas on DSK3SPTVN1PROD with PROPOSALS




                                                      430.405(b)(2) ...................................         Removed .......................................       Removes requirement to submit a clearly defined process for review-
                                                                                                                                                                        ing initial ratings as well as the requirement to submit a review of
                                                                                                                                                                        supervised employees’ performance standards, requirements, and
                                                                                                                                                                        ratings.
                                                      430.405(b)(3) ...................................         430.407 ..........................................    Moves and simplifies.
                                                      430.405(b)(3)(i) and (ii) ...................             Removed .......................................       Removes distinction between requirements associated with full and
                                                                                                                                                                        provisional certification requests.
                                                                                                                430.407(a)(4) .................................       New requirement to include a sample of performance plans.
                                                                                                                430.407(a)(5) .................................       New requirement to include documentation of organizational perform-
                                                                                                                                                                        ance results and relationship with ratings distribution.



                                                 VerDate Sep<11>2014       20:40 Jan 18, 2017          Jkt 241001      PO 00000       Frm 00004      Fmt 4702        Sfmt 4702   E:\FR\FM\19JAP1.SGM   19JAP1


                                                                                  Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules                                                                6343

                                                                      Current rule                                        Proposed rule                                                   Explanation of change

                                                      430.405(b)(4) ...................................    430.407(a)(6) and (7) ....................            Moves and references the annual reporting requirement. Moves ref-
                                                                                                                                                                   erences to full certification and the two appraisal periods, by requir-
                                                                                                                                                                   ing data reported in the annual data call.
                                                                                                           430.407(a)(7) .................................       New requirement to submit documentation of the pay policy and pro-
                                                                                                                                                                   cedures as well as policies established for awards programs.
                                                      430.405(b)(5) ...................................    430.407(a)(8) .................................       Moves and remains unchanged.
                                                                                                           430.407(b) .....................................      Requires agencies participating in peer review to submit such docu-
                                                                                                                                                                   mentation as OPM requires.
                                                      430.405(c) .......................................   430.408(a) .....................................      Moves and simplifies.
                                                      430.405(c)(1) ...................................    430.408(a)(1) .................................       Moves, redefines the certification period from 2 calendar years to 24
                                                                                                                                                                   months, and clarifies the requirements for full certification.
                                                      430.405(c)(2) ...................................    430.408(a)(2) .................................       Moves, deletes the option for OPM to extend provisional certification
                                                                                                                                                                   into the following calendar year, redefines the certification period
                                                                                                                                                                   from 1 calendar year to 12 months, and specifies reasons an agen-
                                                                                                                                                                   cy would receive provisional rather than full certification.
                                                      430.405(c)(3) ...................................    430.410(a) .....................................      Moves and changes the word suspend to terminate.
                                                                                                           430.408(b)(1) .................................       Implements statutory authority of OPM Director to provide certification
                                                                                                                                                                   extensions.
                                                                                                           430.408(b)(2) .................................       New provision providing requirements for requesting a certification
                                                                                                                                                                   extension.
                                                      430.405(d) .......................................   Removed .......................................       Removes paragraphs addressing the limits on basic pay and aggre-
                                                      430.405(e)(2)                                                                                                gate compensation because they are contained in 5 CFR part 534,
                                                      430.405(f)(2)                                                                                                subparts D and E and § 530.203(b), respectively.
                                                      430.405(e)(1) ...................................    430.408(a)(1)(i)–(iii) .......................        Moves and restructures for clarity. Adds as a requirement for full cer-
                                                                                                                                                                   tification, demonstration of appropriate system application based on
                                                                                                                                                                   data reports for the two most recent completed performance cy-
                                                                                                                                                                   cles.
                                                      430.405(e)(3) ...................................    Removed .......................................       Removes automatic renewal of full certification.
                                                      430.405(f)(1) ....................................   430.408(a)(2)(i) and (ii) .................           Moves and restructures for clarity.
                                                                                                           430.408(a)(2)(iii) ............................       Adds as a reason for receiving provisional rather than full certifi-
                                                                                                                                                                   cation, the demonstration of appropriate system application based
                                                                                                                                                                   on data reports for only the most recent completed performance
                                                                                                                                                                   cycle.
                                                      430.405(f)(3) ....................................   Removed .......................................       Removes requirement to resubmit application requesting provisional
                                                                                                                                                                   certification.
                                                      430.405(g) .......................................   430.409 ..........................................    Moves and edits for increased clarity. Also removes the requirement
                                                                                                                                                                   to report aggregate total compensation.
                                                      430.405(h)(1) ...................................    430.410(a) .....................................      Combines redundant provisions previously at 430.405(c)(3) and
                                                                                                                                                                   430.405(h)(1).
                                                      430.405(h)(2) ...................................    430.410(b) .....................................      Moves and changes the word suspension to termination.
                                                      430.405(h)(3) ...................................    430.410(c)–(e) ...............................        Moves and restructures for increased clarity. Changes the word sus-
                                                                                                                                                                   pension to termination.
                                                      430.405(h)(4) ...................................    430.410(f) ......................................     Moves, changes the word suspension to termination, and clarifies
                                                                                                                                                                   that a restored certification will terminate on the same date as the
                                                                                                                                                                   original certification.
                                                      430.405(h)(5) ...................................    430.410(g) .....................................      Moves and changes the word suspension to termination.



                                                      Regulatory Flexibility Act                                          U.S. Office of Management and Budget.                             Authority: 5 U.S.C. 3392, 3393, 3395,
                                                                                                                          Shaun Donovan,                                                  3397, 3592, 3593, 3595, 3596, 8414, and
                                                         I certify that these regulations will not                                                                                        8421.
                                                      have a significant economic impact on                               Director.
                                                      a substantial number of small entities,                             U.S. Office of Personnel Management.                            Subpart E—Career Appointments
                                                      because they will apply only to Federal                             Beth F. Cobert,
                                                      agencies and employees.                                                                                                             ■ 2. In § 317.501, revise paragraph (b)(2)
                                                                                                                          Acting Director.                                                to read as follows:
                                                      E.O. 12866, Regulatory Review                                          Accordingly, OPM and OMB are                                 § 317.501 Recruitment and selection for
                                                        This rule has been reviewed by the                                proposing jointly to amend parts 430                            initial SES career appointment be achieved
                                                      U.S. Office of Management and Budget                                and 1330 of title 5 of the Code of                              from the brightest and most diverse pool
                                                      in accordance with E.O. 12866.                                      Federal Regulations, and OPM proposes                           possible.
                                                      List of Subjects                                                    to amend parts 317, 430, and 534 of title                       *     *      *    *     *
                                                                                                                          5, Code of Federal Regulations as                                 (b) * * *
asabaliauskas on DSK3SPTVN1PROD with PROPOSALS




                                                      5 CFR Parts 317 and 1330                                            follows:                                                          (2) Before an agency may fill an SES
                                                         Government employees.                                            5 CFR Chapter I—Office of Personnel                             vacancy by an initial career
                                                                                                                          Management                                                      appointment, it must post a vacancy
                                                      List of Subjects in 5 CFR Parts 430                                                                                                 announcement in USAJOBS for at least
                                                         Decorations, Government employees.                               PART 317—EMPLOYMENT IN THE                                      14 calendar days, including the date of
                                                                                                                          SENIOR EXECUTIVE SERVICE                                        publication. Each agency’s SES vacancy
                                                      List of Subjects in 5 CFR Part 534                                                                                                  announcement must comply with
                                                        Government employees, Hospitals,                                  ■ 1. The authority citation for part 317                        criteria in § 330.104 of subpart A of this
                                                      Students, and Wages.                                                continues to read as follows:                                   chapter, except for criteria pertaining to


                                                 VerDate Sep<11>2014       20:40 Jan 18, 2017      Jkt 241001     PO 00000       Frm 00005      Fmt 4702        Sfmt 4702   E:\FR\FM\19JAP1.SGM   19JAP1


                                                      6344                   Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules

                                                      veterans’ preference, the Career                        PART 430—PERFORMANCE                                   purposes of applying all provisions
                                                      Transition Assistance Program, and the                  MANAGEMENT                                             relating to the Senior Executive Service
                                                      Interagency Career Transition                                                                                  under the Inspector General Act of 1978
                                                      Assistance Program.                                     ■ 6. The authority citation for part 430               (5 U.S.C. App 6(d)).
                                                                                                              continues to read as follows:                            Agency head means the head of an
                                                      *     *     *     *     *
                                                                                                                  Authority: 5 U.S.C. chapter 43 and 5307(d).        agency and includes the Inspector
                                                      ■ 3. In § 317.503, revise paragraph (g)(3)
                                                      to read as follows:                                     ■   7. Revise subpart D to read as follows.            General when applying the provisions
                                                                                                                                                                     of this subpart to Offices of the
                                                                                                              Subpart D—Performance Appraisal System                 Inspector General.
                                                      § 317.503    Probationary period.
                                                                                                              Certification
                                                      *     *     *     *    *                                                                                         Annual summary rating means the
                                                                                                              Sec.                                                   overall rating level that an appointing
                                                        (g) * * *                                             430.401 Purpose.
                                                                                                                                                                     authority assigns at the end of the
                                                        (3) The break in SES service was the                  430.402 Definitions.
                                                                                                              430.403 System certification.                          appraisal period as defined in § 430.303.
                                                      result of military duty or compensable                                                                           Appraisal system means the policies,
                                                                                                              430.404 Certification criteria verified by
                                                      injury, and the time credited under                                                                            practices, and procedures an agency
                                                                                                                   OPM/OMB.
                                                      paragraph (d)(3) of this section was not                430.405 Certification criteria verified by the         establishes under 5 U.S.C. chapter 43
                                                      sufficient to complete the probationary                      agency.                                           and 5 CFR part 430, subparts B and C,
                                                      period.                                                 430.406 Additional appraisal system                    or other applicable legal authority, for
                                                                                                                   requirements.                                     planning, monitoring, developing,
                                                      PART 430—MANAGING SENIOR                                430.407 Agency certification requests.
                                                      EXECUTIVE PERFORMANCE                                   430.408 OPM certification actions.
                                                                                                                                                                     evaluating, and rewarding employee
                                                                                                              430.409 Annual reporting requirement.                  performance. This includes appraisal
                                                      ■ 4. The authority citation for Part 430                430.410 Termination of certification.                  systems and appraisal programs as
                                                      continues to read as follows:                                                                                  defined in § 430.203 and performance
                                                                                                              Subpart D—Performance Appraisal                        management systems as defined in
                                                        Authority: 5 U.S.C. chapter 43 and
                                                      5307(d).
                                                                                                              System Certification                                   § 430.303.
                                                                                                                                                                       Certification criteria means the factors
                                                                                                              § 403.401    Purpose.                                  used to determine whether an agency
                                                      ■ 5. In § 430.309, revise the last
                                                      sentence of the introductory text in                       (a) This subpart implements 5 U.S.C.                appraisal system as designed and
                                                      paragraph (e)(2), paragraph (e)(2)(ii),                 5307(d), which provides for certification              applied makes meaningful distinctions
                                                      and the first sentence in paragraph                     of performance appraisal systems that as               based on relative performance.
                                                      (e)(2)(iii) to read as follows:                         designed and applied make meaningful                     GPRAMA means the Government
                                                                                                              distinctions based on relative                         Performance and Results Modernization
                                                      § 430.309.   Rating Performance                         performance with respect to—                           Act of 2010.
                                                      *       *      *    *     *                                (1) Members of the Senior Executive                   OMB means the Office of Management
                                                         (e) * * *                                            Service (SES) paid under 5 U.S.C. 5382                 and Budget.
                                                                                                              and 5383; and                                            OPM means the Office of Personnel
                                                         (2) * * * The agency must provide                       (2) Employees in senior-level (SL) and
                                                      each senior executive an opportunity for                                                                       Management.
                                                                                                              scientific or professional (ST) positions
                                                      review of the initial summary rating by                                                                          Peer review means the review under
                                                                                                              paid under 5 U.S.C. 5376.
                                                      an employee, or (with the consent of the                   (b) The regulations in this subpart                 § 430.404(a) of performance plans by
                                                      senior executive) a commissioned                        strengthen the application of                          one agency for another agency, both
                                                      officer in the uniformed services on                    performance-based-pay principles to                    having fully certified performance
                                                      active duty in the agency, in a higher                  senior employees. Specifically, the                    appraisal systems, to determine whether
                                                      level in the agency than the official who               statutory provisions that these                        they meet the certification criterion for
                                                      prepared the initial rating.                            regulations implement authorize an                     Aligned Results.
                                                      *       *      *    *     *                             agency to apply a higher maximum rate                    Performance expectations means—
                                                                                                              of basic pay in setting and adjusting                    (1) the critical elements, performance
                                                         (ii) When an agency cannot provide                                                                          requirements, and performance
                                                      review by a higher-level official for a                 rates of basic pay for senior employees
                                                                                                              (consistent with 5 CFR part 534,                       standards that constitute the senior
                                                      senior executive who receives an initial                                                                       executive performance plans, as defined
                                                      summary rating from the agency head                     subparts D and E) and apply a higher
                                                                                                              annual aggregate limitation on pay                     in § 430.303, established for senior
                                                      because no such official exists in the                                                                         executives;
                                                      agency, the agency must offer an                        (consistent with 5 CFR part 530, subpart
                                                                                                              B) to its senior employees, when OPM,                    (2) the performance elements and
                                                      alternative review as it determines                                                                            standards that constitute the
                                                      appropriate; however, neither HLR nor                   with OMB concurrence, has certified
                                                                                                              that the design and application of the                 performance plans, as defined in
                                                      alternative review may be provided by                                                                          § 430.203, established for senior
                                                      a member of the PRB that will make a                    agency’s appraisal systems for these
                                                                                                              employees make meaningful                              professionals; or
                                                      recommendation under § 430.311(b)(2)                                                                             (3) other appropriate means
                                                      concerning the senior executive or by an                distinctions based on relative
                                                                                                              performance. This subpart establishes                  authorized under performance appraisal
                                                      official who participated in determining                                                                       systems not covered by 5 U.S.C. chapter
asabaliauskas on DSK3SPTVN1PROD with PROPOSALS




                                                      the initial summary rating.                             the certification criteria and procedures
                                                                                                              that OPM will apply in considering                     43 for communicating what a senior
                                                         (iii) If a senior executive declines                                                                        employee is expected to do and the
                                                      review by agency-designated higher-                     agency requests for such certification.
                                                                                                                                                                     measures that demonstrate success,
                                                      level officials, the agency may offer an                403.402     Definitions.                               including contribution to agency
                                                      alternative review but is not obligated to                 In this subpart—                                    performance where appropriate.
                                                      do so unless the only official in a higher                 Agency means an agency as that term                   Program performance measures
                                                      level than the initial rater is the head of             is defined in 5 U.S.C. 105 and an Office               means results-oriented measures of
                                                      the agency. * * *                                       of Inspector General, which is                         performance, whether at the agency,
                                                      *       *      *    *     *                             considered a separate agency for                       component, or function level, which


                                                 VerDate Sep<11>2014   20:40 Jan 18, 2017   Jkt 241001   PO 00000   Frm 00006   Fmt 4702   Sfmt 4702   E:\FR\FM\19JAP1.SGM   19JAP1


                                                                             Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules                                           6345

                                                      include, for example, measures under                    appropriate documentation to                           review, agencies may not conduct
                                                      GPRAMA.                                                 demonstrate that each system complies                  concurrent reciprocal reviews.
                                                         PRB means Performance Review                         with the appropriate legal authority that                (b) Performance distinctions. (1)
                                                      Board, as described in § 430.311.                       governs the establishment,                             Appraisal systems must include
                                                         Rating of record means the                           implementation, and application of that                summary levels of performance as
                                                      performance rating prepared at the end                  system.                                                described in 5 CFR 430.305(a)(6) for
                                                      of an appraisal period for performance                    (e) For senior professionals, an agency              senior executives, and for senior
                                                      of agency-assigned duties over the entire               must establish an appraisal system(s), as              professionals at least one summary level
                                                      period as defined in § 430.203.                         defined in § 430.402, that meets the                   of performance above fully successful.
                                                         Relative performance means the                       requirements of 5 CFR part 430, subpart                  (2) Agency application of performance
                                                      performance of a senior employee                        B, and is separate from the system(s)                  appraisal systems must—
                                                      compared to the performance                             established to cover its SES members                     (i) Result in meaningful distinctions
                                                      expectations established for his or her                 under 5 CFR part 430, subpart C. At its                based on relative performance; and
                                                      position (including contribution to                     discretion, an agency may include                        (ii) Take into account the assessment
                                                      agency performance) and those                           system features in its senior professional             of the agency’s performance against
                                                      expectations must be set at a level that                appraisal system(s) that are the same as,              relevant program performance
                                                      is sufficiently high to be commensurate                 or similar to, the features of its SES                 measures, as described in § 430.405(a),
                                                      with the authorities and responsibilities               appraisal system(s), as appropriate. For               employee performance expectations,
                                                      of a senior employee in the Federal                     the purpose of certification under this                and such other relevant factors as may
                                                      Government. This does not permit peer                   subpart, such senior professional                      be appropriate.
                                                      ranking or peer comparison for rating                   appraisal system(s) with 10 or more                      (3) Authorized agency officials, as
                                                      purposes.                                               senior professionals covered by the                    designated through agency delegated
                                                         Senior employee means a senior                       system(s), must include a requirement                  authority, must appraise senior
                                                      executive or a senior professional.                     for centralized review of senior                       employee performance accurately and
                                                         Senior executive means a member of                   professionals’ ratings of record and                   realistically so that senior employees
                                                      the Senior Executive Service (SES) paid                 proposed pay and performance awards                    who have demonstrated the highest
                                                      under 5 U.S.C. 5382 and 5383.                           actions.                                               performance and/or exceptional
                                                         Senior professional means an                                                                                contribution to the agency’s
                                                      employee in a senior-level (SL) or                      § 430.404 Certification criteria verified by           performance receive the highest annual
                                                      scientific or professional position (ST)                OPM/OMB.                                               summary ratings or ratings of record, as
                                                      paid under 5 U.S.C. 5376.                                  To be certified, an agency’s applicable             applicable.
                                                         SPRP means Senior Professional                       appraisal system(s) for senior executives                (4) Agencies with equivalent appraisal
                                                      Review Panel as described in                            or senior professionals must meet the                  systems not otherwise subject to this
                                                      § 534.505(a)(5).                                        following certification criteria, as                   part must provide for clearly
                                                                                                              verified by OPM, with OMB                              distinguishing and identifying the rating
                                                      § 430.403   System certification.                       concurrence:                                           that reflects the highest level of
                                                         (a) OPM, with OMB concurrence, will                     (a) Aligned results. (1) Performance                performance.
                                                      certify an agency appraisal system                      expectations for individual senior                       (5) Agencies may not equate the
                                                      under § 430.408 when a review of that                   employees must derive from, and                        requirement to make distinctions based
                                                      system’s design (i.e., system                           clearly align with, the agency’s mission               on relative performance to permitting a
                                                      documentation), implementation (i.e.,                   and organizational goals, such as those                forced distribution of annual summary
                                                      performance plans), and application                     communicated through GPRAMA                            ratings or ratings of record, which is
                                                      (i.e., pay, performance awards, and                     strategic goals, program and policy                    prohibited under §§ 430.208(c) and
                                                      ratings upon which they are based)                      objectives, and/or annual performance                  430.305(a)(5). However, methods used
                                                      reveals that the agency meets the                       plans and budget priorities.                           to make distinctions among employees
                                                      certification criteria established in                      (2) Performance plans must contain                  or groups of employees such as
                                                      §§ 430.404 and 430.405 and has                          performance expectations, including at                 comparing, categorizing, and ranking
                                                      followed the procedural requirements                    least one critical element focusing on                 employees or groups on the basis of
                                                      set forth in § 430.407, and results in a                business results, that—                                their performance may be used for
                                                      finding that the system as designed and                    (i) Apply to their respective areas of              purposes other than assigning a
                                                      applied makes meaningful distinctions                   responsibility and control;                            summary level including, but not
                                                      based on relative performance and                          (ii) Reflect expected agency and/or                 limited to, award determinations.
                                                      otherwise conforms to statutory and                     organizational outcomes and outputs,                     (c) Pay differentiation. (1) Agencies
                                                      regulatory requirements relating to                     performance targets or metrics, policy/                must ensure senior employees who have
                                                      performance appraisal, pay, and awards.                 program objectives, and/or milestones;                 demonstrated the highest performance
                                                         (b) Each certification granted shall                    (iii) Identify specific programmatic                receive the highest annual summary
                                                      cover a specific period of time and is                  crosscutting, external, and partnership-               ratings or ratings of record, as
                                                      not renewable.                                          oriented goals or objectives, as                       applicable, and the largest
                                                         (c) Agencies subject to 5 U.S.C.                     applicable; and                                        corresponding performance awards, pay
                                                      chapter 43 and 5 CFR part 430 seeking                      (iv) Are stated in terms of observable,             adjustments, and rates of pay, in
asabaliauskas on DSK3SPTVN1PROD with PROPOSALS




                                                      certification of their appraisal systems                measurable, and/or demonstrable                        accordance with applicable limitations;
                                                      must submit systems that have been                      performance (e.g., quality, quantity,                    (2) Agencies must ensure
                                                      approved by OPM under § 430.210 or                      timeliness, or cost effectiveness, as                  differentiation is evident separately in
                                                      § 430.314, as applicable.                               applicable).                                           the pay adjustments, performance
                                                         (d) Agencies not subject to the                         (3) OPM may establish additional                    awards, and rates of pay;
                                                      appraisal provisions of 5 U.S.C. chapter                procedures to allow agencies to conduct                  (3) Agencies must ensure they make
                                                      43 and 5 CFR part 430 seeking                           peer reviews of the performance plans                  pay adjustments and performance
                                                      certification of their appraisal system(s)              to determine whether the plans meet                    awards for senior employees in a timely
                                                      under this subpart must submit                          this criterion. When conducting peer                   manner.


                                                 VerDate Sep<11>2014   20:40 Jan 18, 2017   Jkt 241001   PO 00000   Frm 00007   Fmt 4702   Sfmt 4702   E:\FR\FM\19JAP1.SGM   19JAP1


                                                      6346                   Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules

                                                        (i) For senior executives, the pay                      (b) Oversight. The agency head or the                supervisory positions, their performance
                                                      adjustments authorized under 5 CFR                      individual specifically designated under               expectations also must address
                                                      534.404(b)(3) and the performance                       paragraph (a)(2) of this section must                  appropriate measures or indicators of
                                                      awards authorized under 5 U.S.C. 5384                   certify for a particular senior employee               stakeholder and/or employee
                                                      must have effective dates not later than                appraisal system that—                                 perspective when applicable, such that
                                                      5 months after the end of the applicable                  (1) The senior employee rating                       stakeholder/employee feedback is
                                                      appraisal period;                                       process makes meaningful distinctions                  sought and used to inform decisions.
                                                        (ii) For senior professionals, agencies               based on relative performance;                            (c) Accountability for the performance
                                                      must make pay adjustments in                              (2) The results of the senior employee               management of subordinates. The
                                                      accordance with the requirements in                     appraisal process take into account the                performance expectations for individual
                                                      § 534.505(b) and pay performance                        agency’s assessment of its performance                 senior employees in supervisory
                                                      awards as soon as practicable after the                 against program performance measures,                  positions must clearly communicate
                                                      end of the appraisal period; and                        as well as other relevant considerations,              their responsibility for ensuring—
                                                        (4) Agencies must develop processes                   as appropriate;                                           (1) The performance expectations for
                                                      for making pay decisions and granting                     (3) Performance awards, pay                          individual subordinate employees
                                                      awards affecting senior employees that                  adjustments, and levels of pay based on                clearly link to organizational mission,
                                                      comply with Governmentwide law,                         the results of the rating process                      GPRAMA strategic goals, or other
                                                      regulation, and guidance. To make these                 accurately reflect and recognize                       program or policy objectives; and
                                                      processes transparent agencies must                     distinctions in individual performance                    (2) The appraisal of their subordinate
                                                      provide access to the appraisal and pay                 and/or contribution to the agency’s                    employees is based on established
                                                      policies that govern the decisions and                  performance; and                                       performance expectations that
                                                      communicate the results as required in                    (4) Final decisions include PRB or                   differentiate among the various levels of
                                                      § 430.405(c).                                           SPRP recommendations regarding                         performance. An appraisal must be a
                                                                                                              senior employee ratings and must—                      realistic assessment of the employees’
                                                      § 430.405 Certification criteria verified by              (i) Be consistent with 5 CFR part 430,               actual performance, including their
                                                      the agency.                                             subparts B and C; and                                  contribution to organizational goals as
                                                         To be certified, an agency’s applicable                (ii) Appropriately reflect the                       measured in GPRAMA and other
                                                      appraisal system(s) for senior executives               employee’s performance expectations,                   organizational plans.
                                                      or senior professionals must meet the                   relevant program performance                              (d) Training. Agencies must provide
                                                      following certification criteria, as                    measures, and such other relevant                      senior employees, rating and reviewing
                                                      verified by the agency in accordance                    factors as the PRB or SPRP may find                    officials (including those in other
                                                      with instructions provided by OPM:                      appropriate.                                           services/appointments such as political
                                                         (a) Organizational assessment and                      (c) Communication of results.                        appointments, Foreign Service, military,
                                                      guidelines. Agencies must comply with                   Agencies must communicate annually                     etc.), and PRB or SPRP members initial
                                                      all applicable OMB requirements for                     to senior employees, rating and                        training, periodic refresher training, and
                                                      assessing organizational performance                    reviewing officials, and PRB or SPRP                   annual reminders on the operation of
                                                      and may use those assessments to                        members the results of the application                 the applicable agency performance
                                                      inform the individual ratings of its                    of the appraisal process (i.e., overall                management and pay and awards
                                                      senior employees. The results of these                  ratings distributions, average adjustment              policies.
                                                      assessments are shared with individuals                 in the rate of basic pay for each rating
                                                                                                              level, and average performance award                   § 430.407   Agency certification requests.
                                                      involved in the rating process through
                                                                                                              for each rating level, as applicable)                    To receive system certification, an
                                                      the issuance of guidelines based at least
                                                                                                              while assuring confidentiality of                      agency must provide documentation
                                                      in part upon those assessments. The
                                                                                                              protected information.                                 demonstrating that its appraisal
                                                      guidelines must—
                                                                                                                                                                     system(s), in design, implementation,
                                                         (1) Address agency performance                       § 430.406 Additional appraisal system                  and application, meet the certification
                                                      overall and with respect to each of its                 requirements.                                          criteria in §§ 430.404 and 430.405 as
                                                      particular missions, components,                          To be certified, an agency’s appraisal               well as the procedural requirements set
                                                      programs, policy areas, and support                     system must meet the requirements of 5                 forth in this section.
                                                      functions—such as reports of the                        CFR part 430, subparts B or C, as                        (a) In order for an agency’s appraisal
                                                      agency’s GPRAMA goals, annual                           applicable, or other applicable legal                  system to be certified, the agency head
                                                      performance plans and targets, program                  authority. Agencies are responsible for                or designee must submit documentation
                                                      performance measures, and other                         ensuring their senior employee                         in accordance with OPM instructions,
                                                      appropriate indicators;                                 appraisal systems provide for—                         including—
                                                         (2) Be communicated by the agency                      (a) Consultation. Performance                          (1) A written request, which may
                                                      head, or an individual specifically                     expectations for senior employees must                 include signed electronic formats, for
                                                      designated by the agency head for such                  be developed with the input and                        certification of its appraisal system(s) to
                                                      purpose, to affected senior employees,                  involvement of the senior employees                    the Director of OPM, or an OPM official
                                                      their rating and reviewing officials, and               who are covered thereby;                               assigned to accept certification requests;
                                                      PRB and SPRP members;                                     (b) Balance. Performance expectations                  (2) Separate certification requests for
asabaliauskas on DSK3SPTVN1PROD with PROPOSALS




                                                         (3) Be provided at the conclusion of                 established in the individual senior                   systems applying to senior executives,
                                                      the appraisal period but before                         employee appraisal plan must include                   senior professionals, and Offices of the
                                                      individual senior employee                              two parts:                                             Inspector General;
                                                      performance ratings are recommended,                      (1) Expected results; and                              (3) A full description of the appraisal
                                                      so that they inform individual                            (2) Those technical, leadership and/or               system(s) to be certified, including—
                                                      performance appraisals; and                             managerial competencies or behaviors                     (i) Organizational and employee
                                                         (4) Not take the form of quantitative                that contribute to, and are necessary to               coverage information; and
                                                      limitations on the number of ratings at                 distinguish, levels of performance. In                   (ii) Rating levels as described in
                                                      any given rating level.                                 addition, for senior employees in                      § 430.404(b)(1) and (4) that establish


                                                 VerDate Sep<11>2014   20:40 Jan 18, 2017   Jkt 241001   PO 00000   Frm 00008   Fmt 4702   Sfmt 4702   E:\FR\FM\19JAP1.SGM   19JAP1


                                                                             Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules                                              6347

                                                      clear distinctions between levels of                    most recently completed performance                    the termination and the reason(s) for the
                                                      performance so senior employees                         cycles (2 years of data).                              termination, as well as any expected
                                                      receive ratings based on assessments of                   (2) Grant provisional certification,                 corrective action.
                                                      their actual performance relative to their              which covers a period of 12 months, of                    (d) Upon such termination, and until
                                                      established performance expectations in                 an agency’s senior employee appraisal                  its system certification is reinstated, the
                                                      any given appraisal period;                             system(s) when the agency has—                         agency must—
                                                        (4) A sample of senior employee                         (i) Designed a senior employee                          (1) Set a senior employee’s rate of
                                                      performance plans as specified by OPM,                  appraisal system(s) that meets the                     basic pay under 5 CFR part 534,
                                                      except as provided in paragraph (b) of                  certification criteria in §§ 430.404 and               subparts D or E as applicable, at a rate
                                                      this section;                                           430.405; and                                           that does not exceed the rate for level III
                                                        (5) Documentation of organizational                     (ii) Revised one or more senior                      of the Executive Schedule.
                                                      performance results and an explanation                  employee performance plans in                             (2) Limit aggregate compensation
                                                      of how these results support the rating                 accordance with instructions from OPM                  received in a calendar year by a senior
                                                      distribution in accordance with OPM                     in order to meet the certification                     employee to the rate for level I of the
                                                      instructions;                                           requirements in § 430.404(a); or                       Executive Schedule.
                                                        (6) Data required by the annual                         (iii) Demonstrated appropriate system                   (e) Performance awards, pay
                                                      reporting requirement in § 430.409;                     application through the data reports                   adjustments, and levels of pay in effect
                                                        (7) Documentation of the pay policy                   required in § 430.409 based on only the                prior to such termination will remain in
                                                      and procedures for setting and adjusting                most recently completed performance
                                                                                                                                                                     effect unless OPM finds that any such
                                                      pay and granting performance awards                     cycle (1 year of data).
                                                                                                                                                                     decision and subsequent action was in
                                                      that includes—                                            (3) Grant provisional certification to
                                                                                                              an agency more than once.                              violation of law, rule, or regulation.
                                                        (i) For the agency’s senior executives                                                                          (f) OPM, with OMB concurrence, may
                                                      covered by 5 CFR part 534, subpart D,                     (b) Extending certification. (1)
                                                                                                              Consistent with the requirements of this               reinstate certification to an agency
                                                      the plan for setting and adjusting the                                                                         whose certification has been terminated
                                                                                                              subpart, the Director of OPM, at his or
                                                      rate of basic pay described in                                                                                 only after the agency demonstrates it
                                                                                                              her discretion or upon the request of an
                                                      § 534.404(g);                                                                                                  has taken appropriate corrective action.
                                                        (ii) For the agency’s senior                          agency head or designee, may grant a
                                                                                                              single extension of up to six additional               A restored certification will terminate
                                                      professionals covered by 5 CFR part                                                                            on the same date as the original
                                                                                                              months for an agency’s appraisal system
                                                      534, subpart E, the written procedures                                                                         certification. An agency with a
                                                                                                              certification. The discretionary use of
                                                      for setting and adjusting the rate of basic                                                                    terminated certification may choose to
                                                                                                              the Director’s extension authority will
                                                      pay described in § 534.505; and                                                                                submit a new certification request once
                                                                                                              be reserved for rare, exceptional
                                                        (iii) Policies established for award                                                                         it has corrected the issue(s) that led to
                                                                                                              circumstances.
                                                      programs authorized under § 534.405 or                                                                         the termination.
                                                                                                                (2) When requesting an extension, the
                                                      responsibilities identified in § 451.106,               agency head or designee must submit a                     (g) OPM may reinstate the
                                                      as appropriate; and                                     written request, which may include                     certification of an appraisal system that
                                                        (8) Any additional information that                                                                          has been terminated automatically
                                                                                                              signed electronic formats, to OPM
                                                      OPM and OMB may require to make a                                                                              under paragraph (b) of this section upon
                                                                                                              outlining why the agency needs the
                                                      determination regarding certification.                  extension and how the extension will                   the agency’s compliance with the
                                                        (b) Agencies that participate in a peer                                                                      applicable OPM-mandated corrective
                                                                                                              support effective performance
                                                      review under § 430.404(a) must submit                                                                          action(s).
                                                                                                              management. OPM will consider
                                                      such documentation as OPM requires.
                                                                                                              requests for extensions on a case-by-case
                                                      § 430.408   OPM certification actions.                  basis.                                                 PART 534—PAY UNDER OTHER
                                                                                                                                                                     SYSTEMS
                                                        OPM will certify performance                          § 430.409    Annual reporting requirement.
                                                      appraisal systems, with OMB                               Agencies must provide OPM with the                   ■ 8. Revise the authority citation for part
                                                      concurrence, only for those agencies                    annual summary ratings or ratings of                   534 to read as follows:
                                                      that comply with all related laws and                   record, as applicable, and rates of basic                Authority: 5 U.S.C. 1104, 3161(d), 5307,
                                                      regulations.                                            pay, pay adjustments, and performance                  5351, 5352, 5353, 5376, 5382, 5383, 5384,
                                                        (a) Granting certification. At the                    and cash awards for their senior                       5385, 5541, 5550a, sec. 1125 of the National
                                                      request of an agency head or designee,                  employees in accordance with                           Defense Authorization Act for FY 2004, Pub.
                                                      the Director of OPM, at his or her                      instructions for OPM’s annual data call                L. 108–136, 117 Stat. 1638 (5 U.S.C. 5304,
                                                      discretion and in accordance with the                                                                          5382, 5383, 7302; 18 U.S.C. 207); and Pub.
                                                                                                              and at any other time as needed to                     L. 110–372, 122 Stat. 4043 (5 U.S.C. 5304,
                                                      requirements of this subpart and with                   support a certification request.
                                                      OMB concurrence, may—                                                                                          5307, 5376).
                                                        (1) Grant full certification, which                   § 430.410    Termination of certification.
                                                                                                                                                                     Subpart D—Pay and Performance
                                                      covers a period of 24 months, of an                        (a) Any time OPM determines that an                 Awards Under the Senior Executive
                                                      agency’s senior employee appraisal                      agency’s certified appraisal system is no              Service.
                                                      system(s) when the agency has—                          longer in compliance with certification
                                                        (i) Demonstrated in the initial                       criteria, OPM, with OMB concurrence,                   ■ 9. In § 534.403, revise the first
                                                      submission of its documentation, and                    may terminate such certification.                      sentence of paragraph (b) to read as
asabaliauskas on DSK3SPTVN1PROD with PROPOSALS




                                                      without making any revisions directed                      (b) An agency’s system certification is             follows:
                                                      by OPM, that it has designed and fully                  terminated automatically when OPM
                                                      operationalized the certification criteria              withdraws performance appraisal                        § 534.403   SES rate range.
                                                      defined in §§ 430.404 and 430.405;                      system approval or mandates corrective                 *     *    *     *     *
                                                        (ii) Met the documentation                            action because of misapplication of the                  (b) Termination of certification of
                                                      requirements in § 430407; and                           system as authorized under § 430.210(c)                performance appraisal system. A senior
                                                        (iii) Demonstrated appropriate system                 or § 430.314(c).                                       executive whose rate of basic pay is
                                                      application through the data reports                       (c) OPM will notify the agency head                 higher than the rate for level III of the
                                                      required in § 430.409 based on the 2                    at least 30 calendar days in advance of                Executive Schedule may not suffer a


                                                 VerDate Sep<11>2014   20:40 Jan 18, 2017   Jkt 241001   PO 00000   Frm 00009   Fmt 4702   Sfmt 4702   E:\FR\FM\19JAP1.SGM   19JAP1


                                                      6348                   Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules

                                                      reduction in pay because his or her                     or reduce) the rate of basic pay of a                  described in 5 CFR 430.405(a)(2) and (b)
                                                      agency’s applicable performance                         senior executive not more than once                    (including the Inspector General, where
                                                      appraisal system certification is                       during any 12-month period. However,                   applicable) must approve any
                                                      terminated under 5 CFR 430.410. * * *                   an agency may make a determination to                  determination to set a senior executive’s
                                                      ■ 10. In § 534.404—                                     provide an additional pay increase                     rate of basic pay higher than the rate for
                                                      ■ a. Revise paragraphs (b)(4)(ii) and                   under certain conditions as prescribed                 level III of the Executive Schedule and
                                                      (b)(4)(iii);                                            in paragraphs (c)(3), (c)(4), and (c)(6) of            must approve any determination to
                                                      ■ b. Revise paragraphs (c)(1) and (c)(4)                this section without regard to whether                 increase a senior executive’s rate of
                                                      and add new paragraph (c)(6);                           the senior executive has received a pay                basic pay more than once in any 12-
                                                      ■ c. Revise paragraph (e)(1);                           adjustment during the previous 12-                     month period; and
                                                      ■ d. Revise paragraph (g)(3);                           month period.                                          *      *     *     *    *
                                                      ■ e. Revise paragraph (i)(1).
                                                                                                              *      *     *     *    *                                 (i) Setting pay following a break in
                                                        The revisions and additions to read as                   (4) An authorized agency official may
                                                      follows:                                                                                                       SES service—(1) General. Upon
                                                                                                              approve increases in a senior                          reappointment to the SES, an authorized
                                                      § 534.404 Setting and adjusting pay for                 executive’s rate of basic pay more than                agency official may set the rate of basic
                                                      senior executives.                                      once during a 12-month period if the                   pay of a former senior executive at any
                                                      *      *      *     *     *                             agency head or designee who performs                   rate within the SES rate range, subject
                                                        (b) * * *                                             the functions described in 5 CFR                       to the limitations in § 534.403(a), if
                                                        (4) * * *                                             430.405(a)(2) and (b) (including the                   there has been a break in SES service of
                                                        (ii) A pay increase under paragraph                   Inspector General, where applicable)                   more than 30 days. If there has been a
                                                      (b)(4)(i) of this section may not be                    determines that—                                       break in SES service of 30 days or less,
                                                      provided to a senior executive whose                    *      *     *     *    *                              the senior executive’s rate of basic pay
                                                      rate of basic pay is at or below the rate                  (6) When necessary to maintain an                   may be set at any rate within the SES
                                                      for level III of the Executive Schedule if              annual executive appraisal and pay                     rate range (without regard to whether
                                                      such an increase would cause the senior                 adjustment cycle that permits pay                      the employee received a pay adjustment
                                                      executive’s rate of basic pay to exceed                 adjustments on the first day of the 27th               during the previous 12-month period),
                                                      the rate for level III of the Executive                 full bi-weekly pay period following the                but not higher than the senior
                                                      Schedule unless the senior executive                    effective date of pay adjustments for the              executive’s former SES rate of basic pay.
                                                      has received an annual summary rating                   previous cycle, an authorized agency                   Where there has been a break in service
                                                      of outstanding for the most recently                    official may provide a pay adjustment to               of 30 days or less, the agency head or
                                                      completed appraisal period and the                      a senior executive not more than 2 days                designee who performs the functions
                                                      agency head or designee who performs                    before an applicable 12-month period                   described in 5 CFR 430.405(a)(2) and (b)
                                                      the functions described in 5 CFR                        expires. The pay adjustment begins a                   (including the Inspector General, where
                                                      430.405(a)(2) and (b) (including the                    new 12-month period for the purpose of                 applicable) may approve a higher rate
                                                      Inspector General, where applicable)                    paragraph (c)(1).                                      than the senior executive’s former rate
                                                      has approved the increase in pay.                       *      *     *     *    *                              of basic pay, if warranted. Setting a rate
                                                        (iii) A pay increase under paragraph                     (e) Adjustments in pay after                        of basic pay upon reappointment to the
                                                      (b)(4)(i) of this section may not be                    certification of applicable performance                SES is considered a pay adjustment
                                                      provided to a senior executive whose                    appraisal system. (1) In the case of an                under § 534.404(c).
                                                      rate of basic pay is above the rate for                 agency that obtains certification of a                 *      *     *     *    *
                                                      level III of the Executive Schedule                     performance appraisal system for senior
                                                      unless the senior executive has received                executives under 5 CFR part 430,                       § 534.503   [Amended].
                                                      an annual summary rating of                             subpart D, an authorized agency official               ■  11. Amend § 534.503 as follows:
                                                      outstanding for the most recently                       may subsequently increase a covered                    ■  a. Remove the reference
                                                      completed appraisal period and the                      senior executive’s rate of basic pay                   ‘‘§ 430.405(h)’’ from the definition
                                                      agency head or designee who performs                    based upon a performance appraisal                     ‘‘Certified’’ and add in its place
                                                      the functions described in 5 CFR                        under the certified system up to the rate              ‘‘§ 430.410’’, and remove from that
                                                      430.405(a)(2) and (b) (including the                    for level II of the Executive Schedule,                definition the term ‘‘suspension’’ and
                                                      Inspector General, where applicable)                    consistent with the limitations in                     add in its place ‘‘termination’’;
                                                      has approved the increase in pay.                       § 534.403(a)(3), under the conditions                  ■ b. Remove the reference
                                                      However, in the case of a senior                        prescribed in paragraph (b) of this                    ‘‘§ 430.405(h)’’ from the definition ‘‘Not
                                                      executive whose rate of basic pay is                    section, if the senior executive is                    certified’’ and add in its place
                                                      above the rate for level III of the                     otherwise eligible for such an increase                ‘‘§ 430.410’’, and remove from that
                                                      Executive Schedule and who has been                     (i.e., he or she did not receive a pay                 definition the term ‘‘suspended’’ and
                                                      rated below outstanding, but above fully                adjustment under § 534.404(c) during                   add in its place ‘‘terminated’’; and
                                                      successful, for the most recently                       the previous 12-month period). An                      ■ c. Remove the reference
                                                      completed appraisal period, the agency                  adjustment in pay made under this                      ‘‘§ 430.404(a)(1) through (9)’’ and add in
                                                      head or designee who performs the                       paragraph is considered a pay                          its place ‘‘§§ 430.404 and 430.405’’.
                                                      functions described in 5 CFR                            adjustment for the purpose of applying                 ■ 12. Amend § 534.505 as follows:
asabaliauskas on DSK3SPTVN1PROD with PROPOSALS




                                                      430.405(a)(2) and (b) (including the                    § 534.404(c).                                          ■ a. Remove the reference
                                                      Inspector General, where applicable)                    *      *     *     *    *                              ‘‘§ 430.404(a)(6)(i), (ii) and (iii)’’ and add
                                                      may approve such a pay increase in                         (g) * * *                                           in its place ‘‘§ 430.405(b)(1), (2) and
                                                      limited circumstances, such as for an                      (3) The designation of the authorized               (3)’’; and
                                                      exceptionally meritorious                               agency official who has authority to set               ■ b. Remove the reference
                                                      accomplishment.                                         and adjust SES rates of pay for                        ‘‘§ 430.403(d)’’ and add in its place
                                                      *      *      *     *     *                             individual senior executives, subject to               ‘‘§ 430.403(e)’’.
                                                        (c) 12-month rule. (1) An authorized                  the requirement that the agency head or                ■ c. Revise paragraph (a)(5) to read as
                                                      agency official may adjust (i.e., increase              designee who performs the functions                    follows:


                                                 VerDate Sep<11>2014   20:40 Jan 18, 2017   Jkt 241001   PO 00000   Frm 00010   Fmt 4702   Sfmt 4702   E:\FR\FM\19JAP1.SGM   19JAP1


                                                                             Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules                                            6349

                                                      § 534.505   Written procedures.                         § 534.509 Preservation of an established                  (2) Employees in senior-level (SL) and
                                                        (a) * * *                                             rate of basic pay.                                     scientific or professional (ST) positions
                                                        (5) The administrative and                            *      *     *     *    *                              paid under 5 U.S.C. 5376.
                                                      management controls that will be                           (b) An SL or ST employee whose rate                    (b) The regulations in this subpart
                                                      applied to assure compliance with                       of basic pay is higher than the rate for               strengthen the application of
                                                      applicable statutes, OPM regulations,                   level III of the Executive Schedule may                performance-based-pay principles to
                                                      the agency’s written procedures                         not suffer a reduction in pay because his              senior employees. Specifically, the
                                                      established under this section, the                     or her agency’s applicable performance                 statutory provisions that these
                                                      applicable maximum rate of basic pay                    appraisal system certification expires or              regulations implement authorize an
                                                      in§ 534.504(a), and, where applicable,                  is terminated under § 430.410 of this                  agency to apply a higher maximum rate
                                                      the certification requirements set forth                chapter. See § 530.203(g) and (h) of this              of basic pay in setting and adjusting
                                                      in part 430, subpart D of this chapter. In              chapter for treatment of the aggregate                 rates of basic pay for senior employees
                                                      an agency that employs ten or more                      pay limit when certification status                    (consistent with 5 CFR part 534,
                                                      senior professionals, these controls must               changes during the calendar year.                      subparts D and E) and apply a higher
                                                      include centralized review of ratings                   *      *     *     *    *                              annual aggregate limitation on pay
                                                      proposed under § 430.208 of this                                                                               (consistent with 5 CFR part 530, subpart
                                                                                                              § 534.510    [Amended].                                B) to its senior employees, when OPM,
                                                      chapter, pay actions proposed under
                                                      § 534.507, and performance awards                       ■  16. Amend § 534.510 to remove the                   with OMB concurrence, has certified
                                                      under § 451.104(a)(3) by a panel of                     references ‘‘§ 430.404(a)(6)(i), (ii) and              that the design and application of the
                                                      individuals designated by the agency                    (iii)’’ and add in their place                         agency’s appraisal systems for these
                                                      head to provide advice from an agency-                  ‘‘§ 430.405(b)(1), (2) and (3)’’ wherever              employees make meaningful
                                                      wide perspective for authorized agency                  they occur.                                            distinctions based on relative
                                                      officials to consider before approving                  5 CFR Chapter III—Office of Management                 performance. This subpart establishes
                                                      pay adjustments and performance                         and Budget                                             the certification criteria and procedures
                                                      awards on whether—                                                                                             that OPM will apply in considering
                                                        (i) Ratings of record and performance                 Subchapter C—Joint Regulations With                    agency requests for such certification.
                                                      ratings proposed for senior professionals               the Office of Personnel Management
                                                                                                                                                                     § 1330.402   Definitions.
                                                      accurately reflect their individual
                                                                                                              PART 1330—HUMAN RESOURCES                                 In this subpart—
                                                      performance, contributions to agency
                                                                                                              MANAGEMENT                                                Agency means an agency as that term
                                                      performance, or both, and take into
                                                      account, as appropriate, assessment of                  ■ 17. The authority citation for part                  is defined in 5 U.S.C. 105 and an Office
                                                      the agency’s performance against                        1330 continues to read as follows:                     of Inspector General, which is
                                                      program performance measures and                                                                               considered a separate agency for
                                                                                                                Authority: 5 U.S.C. chapter 43 and
                                                      other relevant considerations; and                      5307(d).                                               purposes of applying all provisions
                                                        (ii) Proposed pay adjustments and                                                                            relating to the Senior Executive Service
                                                                                                              ■ 18. Revise Subpart D of part 1330 to                 under the Inspector General Act of 1978
                                                      performance awards for senior
                                                                                                              to read as follows:                                    (5 U.S.C. App 6(d)).
                                                      professionals conform to the
                                                      requirements of §§ 534.507 and                          Subparts A—C [Reserved]                                   Agency head means the head of an
                                                      451.104(a)(3) respectively and                                                                                 agency and includes the Inspector
                                                      appropriately correspond to proposed                    Subpart D—Performance Appraisal System                 General when applying the provisions
                                                      ratings of record and performance                       Certification                                          of this subpart to Offices of the
                                                      ratings.                                                Sec.                                                   Inspector General.
                                                                                                              1330.401 Purpose.                                         Annual summary rating means the
                                                      *      *     *    *     *
                                                                                                              1330.402 Definitions.                                  overall rating level that an appointing
                                                      § 534.506   [Amended].                                  1330.403 System certification.                         authority assigns at the end of the
                                                                                                              1330.404 Certification criteria verified by
                                                      ■  13. Amend § 534.506 to remove the                         OPM/OMB.
                                                                                                                                                                     appraisal period as defined in § 430.303.
                                                      reference ‘‘§ 430.404(a)(6)(i), (ii) and                1330.405 Certification criteria verified by               Appraisal system means the policies,
                                                      (iii)’’ and add in its place                                 the agency.                                       practices, and procedures an agency
                                                      ‘‘§ 430.405(b)(1), (2) and (3)’’.                       1330.406 Additional appraisal system                   establishes under 5 U.S.C. chapter 43
                                                      ■ 14. In § 534.507, revise paragraph                         requirements.                                     and 5 CFR part 430, subparts B and C,
                                                      (a)(2) to read as follows:                              1330.407 Agency certification requests.                or other applicable legal authority, for
                                                                                                              1330.408 OPM certification actions.                    planning, monitoring, developing,
                                                      § 534.507   Annual increases in basic pay.              1330.409 Annual reporting requirement.
                                                                                                              1330.410 Termination of certification.
                                                                                                                                                                     evaluating, and rewarding employee
                                                        (a) * * *                                                                                                    performance. This includes appraisal
                                                        (2) A determination by an authorized                      Authority: 5 U.S.C. 5307(d).                       systems and appraisal programs as
                                                      agency official to make a zero                                                                                 defined in § 430.203 and performance
                                                      adjustment in pay after reviewing a                     Subpart D—Performance Appraisal
                                                                                                                                                                     management systems as defined in
                                                      senior professional’s current rating of                 System Certification
                                                                                                                                                                     § 430.303.
                                                      record or performance rating meets the                  § 1330.401    Purpose.                                    Certification criteria means the factors
asabaliauskas on DSK3SPTVN1PROD with PROPOSALS




                                                      requirement of paragraph (a)(1) of this                   (a) This subpart implements 5 U.S.C.                 used to determine whether an agency
                                                      section only if the notice required by                  5307(d), which provides for certification              appraisal system as designed and
                                                      paragraph (h) of this section is provided               of performance appraisal systems that as               applied makes meaningful distinctions
                                                      to the senior professional no later than                designed and applied make meaningful                   based on relative performance.
                                                      14 days after the date specified in                     distinctions based on relative                            GPRAMA means the Government
                                                      paragraph (a)(1) of this section.                       performance with respect to—                           Performance and Results Modernization
                                                      *     *     *     *     *                                 (1) Members of the Senior Executive                  Act of 2010.
                                                      ■ 15. In § 534.509, revise paragraph (b)                Service (SES) paid under 5 U.S.C. 5382                    OMB means the Office of Management
                                                      to read as follows:                                     and 5383; and                                          and Budget.


                                                 VerDate Sep<11>2014   20:40 Jan 18, 2017   Jkt 241001   PO 00000   Frm 00011   Fmt 4702   Sfmt 4702   E:\FR\FM\19JAP1.SGM   19JAP1


                                                      6350                   Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules

                                                         OPM means the Office of Personnel                    § 1330.403    System certification.                    verified by OPM, with OMB
                                                      Management.                                                (a) OPM, with OMB concurrence, will                 concurrence:
                                                         Peer review means the review under                   certify an agency appraisal system                        (a) Aligned results. (1) Performance
                                                      § 1330.404(a) of performance plans by                   under § 1330.408 when a review of that                 expectations for individual senior
                                                      one agency for another agency, both                     system’s design (i.e., system                          employees must derive from, and
                                                      having fully certified performance                      documentation), implementation (i.e.,                  clearly align with, the agency’s mission
                                                      appraisal systems, to determine whether                 performance plans), and application                    and organizational goals, such as those
                                                      they meet the certification criterion for               (i.e., pay, performance awards, and                    communicated through GPRAMA
                                                      Aligned Results.                                        ratings upon which they are based)                     strategic goals, program and policy
                                                         Performance expectations means—                      reveals that the agency meets the                      objectives, and/or annual performance
                                                         (1) the critical elements, performance               certification criteria established in                  plans and budget priorities.
                                                      requirements, and performance                           §§ 1330.404 and 1330.405 and has                          (2) Performance plans must contain
                                                      standards that constitute the senior                    followed the procedural requirements                   performance expectations, including at
                                                      executive performance plans, as defined                 set forth in § 1330.407, and results in a              least one critical element focusing on
                                                      in § 430.303, established for senior                    finding that the system as designed and                business results, that—
                                                                                                              applied makes meaningful distinctions                     (i) Apply to their respective areas of
                                                      executives;
                                                                                                              based on relative performance and                      responsibility and control;
                                                         (2) the performance elements and                                                                               (ii) Reflect expected agency and/or
                                                      standards that constitute the                           otherwise conforms to statutory and
                                                                                                              regulatory requirements relating to                    organizational outcomes and outputs,
                                                      performance plans, as defined in                                                                               performance targets or metrics, policy/
                                                      § 430.203, established for senior                       performance appraisal, pay, and awards.
                                                                                                                                                                     program objectives, and/or milestones;
                                                      professionals; or                                          (b) Each certification granted shall                   (iii) Identify specific programmatic
                                                         (3) other appropriate means                          cover a specific period of time and is                 crosscutting, external, and partnership-
                                                      authorized under performance appraisal                  not renewable.                                         oriented goals or objectives, as
                                                      systems not covered by 5 U.S.C. chapter                    (c) Agencies subject to 5 U.S.C.                    applicable; and
                                                      43 for communicating what a senior                      chapter 43 and 5 CFR part 430 seeking                     (iv) Are stated in terms of observable,
                                                      employee is expected to do and the                      certification of their appraisal systems               measurable, and/or demonstrable
                                                      measures that demonstrate success,                      must submit systems that have been                     performance (e.g., quality, quantity,
                                                      including contribution to agency                        approved by OPM under § 430.210 or                     timeliness, or cost effectiveness, as
                                                      performance where appropriate.                          § 430.314, as applicable.                              applicable).
                                                         Program performance measures                            (d) Agencies not subject to the                        (3) OPM may establish additional
                                                      means results-oriented measures of                      appraisal provisions of 5 U.S.C. chapter               procedures to allow agencies to conduct
                                                      performance, whether at the agency,                     43 and 5 CFR part 430 seeking                          peer reviews of the performance plans
                                                      component, or function level, which                     certification of their appraisal system(s)             to determine whether the plans meet
                                                      include, for example, measures under                    under this subpart must submit                         this criterion. When conducting peer
                                                      GPRAMA.                                                 appropriate documentation to                           review, agencies may not conduct
                                                         PRB means Performance Review                         demonstrate that each system complies                  concurrent reciprocal reviews.
                                                      Board, as described in § 430.311.                       with the appropriate legal authority that                 (b) Performance distinctions. (1)
                                                         Rating of record means the                           governs the establishment,                             Appraisal systems must include
                                                      performance rating prepared at the end                  implementation, and application of that                summary levels of performance as
                                                      of an appraisal period for performance                  system.                                                described in 5 CFR 430.305(a)(6) for
                                                      of agency-assigned duties over the entire                  (e) For senior professionals, an agency             senior executives, and for senior
                                                      period as defined in § 430.203.                         must establish an appraisal system(s), as              professionals at least one summary level
                                                         Relative performance means the                       defined in § 1330.402, that meets the                  of performance above fully successful.
                                                      performance of a senior employee                        requirements of 5 CFR part 430, subpart                   (2) Agency application of performance
                                                      compared to the performance                             B, and is separate from the system(s)                  appraisal systems must—
                                                                                                              established to cover its SES members                      (i) Result in meaningful distinctions
                                                      expectations established for his or her
                                                                                                              under 5 CFR part 430, subpart C. At its                based on relative performance; and
                                                      position (including contribution to
                                                                                                              discretion, an agency may include                         (ii) Take into account the assessment
                                                      agency performance) and those
                                                                                                              system features in its senior professional             of the agency’s performance against
                                                      expectations must be set at a level that
                                                                                                              appraisal system(s) that are the same as,              relevant program performance
                                                      is sufficiently high to be commensurate
                                                                                                              or similar to, the features of its SES                 measures, as described in § 1330.405(a),
                                                      with the authorities and responsibilities
                                                                                                              appraisal system(s), as appropriate. For               employee performance expectations,
                                                      of a senior employee in the Federal
                                                                                                              the purpose of certification under this                and such other relevant factors as may
                                                      Government. This does not permit peer
                                                                                                              subpart, such senior professional                      be appropriate.
                                                      ranking or peer comparison for rating                                                                             (3) Authorized agency officials, as
                                                      purposes.                                               appraisal system(s) with 10 or more
                                                                                                              senior professionals covered by the                    designated through agency delegated
                                                         Senior employee means a senior                                                                              authority, must appraise senior
                                                                                                              system(s), must include a requirement
                                                      executive or a senior professional.                                                                            employee performance accurately and
                                                                                                              for centralized review of senior
                                                         Senior executive means a member of                                                                          realistically so that senior employees
asabaliauskas on DSK3SPTVN1PROD with PROPOSALS




                                                                                                              professionals’ ratings of record and
                                                      the Senior Executive Service (SES) paid                 proposed pay and performance awards                    who have demonstrated the highest
                                                      under 5 U.S.C. 5382 and 5383.                           actions.                                               performance and/or exceptional
                                                         Senior professional means an                                                                                contribution to the agency’s
                                                      employee in a senior-level (SL) or                      § 1330.404 Certification criteria verified by          performance receive the highest annual
                                                      scientific or professional position (ST)                OPM/OMB.                                               summary ratings or ratings of record, as
                                                      paid under 5 U.S.C. 5376.                                 To be certified, an agency’s applicable              applicable.
                                                         SPRP means Senior Professional                       appraisal system(s) for senior executives                 (4) Agencies with equivalent appraisal
                                                      Review Panel as described in                            or senior professionals must meet the                  systems not otherwise subject to this
                                                      § 534.505(a)(5).                                        following certification criteria, as                   part must provide for clearly


                                                 VerDate Sep<11>2014   20:40 Jan 18, 2017   Jkt 241001   PO 00000   Frm 00012   Fmt 4702   Sfmt 4702   E:\FR\FM\19JAP1.SGM   19JAP1


                                                                             Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules                                           6351

                                                      distinguishing and identifying the rating               all applicable OMB requirements for                    reviewing officials, and PRB or SPRP
                                                      that reflects the highest level of                      assessing organizational performance                   members the results of the application
                                                      performance.                                            and may use those assessments to                       of the appraisal process (i.e., overall
                                                        (5) Agencies may not equate the                       inform the individual ratings of its                   ratings distributions, average adjustment
                                                      requirement to make distinctions based                  senior employees. The results of these                 in the rate of basic pay for each rating
                                                      on relative performance to permitting a                 assessments are shared with individuals                level, and average performance award
                                                      forced distribution of annual summary                   involved in the rating process through                 for each rating level, as applicable)
                                                      ratings or ratings of record, which is                  the issuance of guidelines based at least              while assuring confidentiality of
                                                      prohibited under §§ 430.208(c) and                      in part upon those assessments. The                    protected information.
                                                      430.305(a)(5). However, methods used                    guidelines must—
                                                      to make distinctions among employees                       (1) Address agency performance                      § 1330.406 Additional appraisal system
                                                                                                                                                                     requirements.
                                                      or groups of employees such as                          overall and with respect to each of its
                                                      comparing, categorizing, and ranking                    particular missions, components,                          To be certified, an agency’s appraisal
                                                      employees or groups on the basis of                     programs, policy areas, and support                    system must meet the requirements of 5
                                                      their performance may be used for                       functions—such as reports of the                       CFR part 430, subparts B or C, as
                                                      purposes other than assigning a                         agency’s GPRAMA goals, annual                          applicable, or other applicable legal
                                                      summary level including, but not                        performance plans and targets, program                 authority. Agencies are responsible for
                                                      limited to, award determinations.                       performance measures, and other                        ensuring their senior employee
                                                        (c) Pay differentiation. (1) Agencies                 appropriate indicators;                                appraisal systems provide for—
                                                      must ensure senior employees who have                      (2) Be communicated by the agency                      (a) Consultation. Performance
                                                      demonstrated the highest performance                    head, or an individual specifically                    expectations for senior employees must
                                                      receive the highest annual summary                      designated by the agency head for such                 be developed with the input and
                                                      ratings or ratings of record, as                        purpose, to affected senior employees,                 involvement of the senior employees
                                                      applicable, and the largest                             their rating and reviewing officials, and              who are covered thereby;
                                                      corresponding performance awards, pay                   PRB and SPRP members;                                     (b) Balance. Performance expectations
                                                      adjustments, and rates of pay, in                          (3) Be provided at the conclusion of                established in the individual senior
                                                      accordance with applicable limitations;                 the appraisal period but before                        employee appraisal plan must include
                                                        (2) Agencies must ensure                              individual senior employee                             two parts:
                                                      differentiation is evident separately in                performance ratings are recommended,                      (1) Expected results; and
                                                      the pay adjustments, performance                        so that they inform individual                            (2) Those technical, leadership and/or
                                                      awards, and rates of pay;                               performance appraisals; and                            managerial competencies or behaviors
                                                        (3) Agencies must ensure they make                       (4) Not take the form of quantitative               that contribute to, and are necessary to
                                                      pay adjustments and performance                         limitations on the number of ratings at                distinguish, levels of performance. In
                                                      awards for senior employees in a timely                 any given rating level.                                addition, for senior employees in
                                                      manner.                                                    (b) Oversight. The agency head or the               supervisory positions, their performance
                                                        (i) For senior executives, the pay                    individual specifically designated under               expectations also must address
                                                      adjustments authorized under 5 CFR                      paragraph (a)(2) of this section must                  appropriate measures or indicators of
                                                      534.404(b)(3) and the performance                       certify for a particular senior employee               stakeholder and/or employee
                                                      awards authorized under 5 U.S.C. 5384                   appraisal system that—                                 perspective when applicable, such that
                                                      must have effective dates not later than                   (1) The senior employee rating                      stakeholder/employee feedback is
                                                      5 months after the end of the applicable                process makes meaningful distinctions                  sought and used to inform decisions.
                                                      appraisal period;                                       based on relative performance;                            (c) Accountability for the performance
                                                        (ii) For senior professionals, agencies                  (2) The results of the senior employee              management of subordinates. The
                                                      must make pay adjustments in                            appraisal process take into account the                performance expectations for individual
                                                      accordance with the requirements in                     agency’s assessment of its performance                 senior employees in supervisory
                                                      § 534.505(b) and pay performance                        against program performance measures,                  positions must clearly communicate
                                                      awards as soon as practicable after the                 as well as other relevant considerations,              their responsibility for ensuring—
                                                      end of the appraisal period; and                        as appropriate;                                           (1) The performance expectations for
                                                        (4) Agencies must develop processes                      (3) Performance awards, pay                         individual subordinate employees
                                                      for making pay decisions and granting                   adjustments, and levels of pay based on                clearly link to organizational mission,
                                                      awards affecting senior employees that                  the results of the rating process                      GPRAMA strategic goals, or other
                                                      comply with Governmentwide law,                         accurately reflect and recognize                       program or policy objectives; and
                                                      regulation, and guidance. To make these                 distinctions in individual performance                    (2) The appraisal of their subordinate
                                                      processes transparent agencies must                     and/or contribution to the agency’s                    employees is based on established
                                                      provide access to the appraisal and pay                 performance; and                                       performance expectations that
                                                      policies that govern the decisions and                     (4) Final decisions include PRB or                  differentiate among the various levels of
                                                      communicate the results as required in                  SPRP recommendations regarding                         performance. An appraisal must be a
                                                      § 1330.405(c).                                          senior employee ratings and must—                      realistic assessment of the employees’
                                                                                                                 (i) Be consistent with 5 CFR part 430,              actual performance, including their
                                                      § 1330.405 Certification criteria verified by           subparts B and C; and                                  contribution to organizational goals as
asabaliauskas on DSK3SPTVN1PROD with PROPOSALS




                                                      the agency.                                                (ii) Appropriately reflect the                      measured in GPRAMA and other
                                                        To be certified, an agency’s applicable               employee’s performance expectations,                   organizational plans.
                                                      appraisal system(s) for senior executives               relevant program performance                              (d) Training. Agencies must provide
                                                      or senior professionals must meet the                   measures, and such other relevant                      senior employees, rating and reviewing
                                                      following certification criteria, as                    factors as the PRB or SPRP may find                    officials (including those in other
                                                      verified by the agency in accordance                    appropriate.                                           services/appointments such as political
                                                      with instructions provided by OPM:                         (c) Communication of results.                       appointments, Foreign Service, military,
                                                        (a) Organizational assessment and                     Agencies must communicate annually                     etc.), and PRB or SPRP members initial
                                                      guidelines. Agencies must comply with                   to senior employees, rating and                        training, periodic refresher training, and


                                                 VerDate Sep<11>2014   20:40 Jan 18, 2017   Jkt 241001   PO 00000   Frm 00013   Fmt 4702   Sfmt 4702   E:\FR\FM\19JAP1.SGM   19JAP1


                                                      6352                     Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules

                                                      annual reminders on the operation of                        (8) Any additional information that                  written request, which may include
                                                      the applicable agency performance                         OPM and OMB may require to make a                      signed electronic formats, to OPM
                                                      management and pay and awards                             determination regarding certification.                 outlining why the agency needs the
                                                      policies.                                                   (b) Agencies that participate in a peer              extension and how the extension will
                                                                                                                review under § 1330.404(a) must submit                 support effective performance
                                                      § 1330.407       Agency certification requests.           such documentation as OPM requires.                    management. OPM will consider
                                                        To receive system certification, an                                                                            requests for extensions on a case-by-case
                                                      agency must provide documentation                         § 1330.408    OPM certification actions.
                                                                                                                                                                       basis.
                                                      demonstrating that its appraisal                            OPM will certify performance
                                                      system(s), in design, implementation,                     appraisal systems, with OMB                            § 1330.409   Annual reporting requirement.
                                                      and application, meet the certification                   concurrence, only for those agencies                     Agencies must provide OPM with the
                                                      criteria in §§ 1330.404 and 1330.405 as                   that comply with all related laws and                  annual summary ratings or ratings of
                                                      well as the procedural requirements set                   regulations.                                           record, as applicable, and rates of basic
                                                      forth in this section.                                      (a) Granting certification. At the                   pay, pay adjustments, and performance
                                                        (a) In order for an agency’s appraisal                  request of an agency head or designee,                 and cash awards for their senior
                                                      system to be certified, the agency head                   the Director of OPM, at his or her                     employees in accordance with
                                                      or designee must submit documentation                     discretion and in accordance with the                  instructions for OPM’s annual data call
                                                      in accordance with OPM instructions,                      requirements of this subpart and with                  and at any other time as needed to
                                                      including—                                                OMB concurrence, may—                                  support a certification request.
                                                        (1) A written request, which may                          (1) Grant full certification, which
                                                      include signed electronic formats, for                    covers a period of 24 months, of an                    § 1330.410   Termination of certification.
                                                      certification of its appraisal system(s) to               agency’s senior employee appraisal                        (a) Any time OPM determines that an
                                                      the Director of OPM, or an OPM official                   system(s) when the agency has—                         agency’s certified appraisal system is no
                                                      assigned to accept certification requests;                  (i) Demonstrated in the initial                      longer in compliance with certification
                                                        (2) Separate certification requests for                 submission of its documentation, and                   criteria, OPM, with OMB concurrence,
                                                      systems applying to senior executives,                    without making any revisions directed                  may terminate such certification.
                                                      senior professionals, and Offices of the                  by OPM, that it has designed and fully                    (b) An agency’s system certification is
                                                      Inspector General;                                        operationalized the certification criteria             terminated automatically when OPM
                                                        (3) A full description of the appraisal                 defined in §§ 1330.404 and1330.405;                    withdraws performance appraisal
                                                      system(s) to be certified, including—                       (ii) Met the documentation                           system approval or mandates corrective
                                                        (i) Organizational and employee                         requirements in § 1330.407; and                        action because of misapplication of the
                                                      coverage information; and                                   (iii) Demonstrated appropriate system                system as authorized under § 430.210(c)
                                                        (ii) Rating levels as described in                      application through the data reports                   or § 430.314(c).
                                                      § 1330.404(b)(1) and (4) that establish                   required in § 1330.409 based on the 2                     (c) OPM will notify the agency head
                                                      clear distinctions between levels of                      most recently completed performance                    at least 30 calendar days in advance of
                                                      performance so senior employees                           cycles (2 years of data).                              the termination and the reason(s) for the
                                                      receive ratings based on assessments of                     (2) Grant provisional certification,                 termination, as well as any expected
                                                      their actual performance relative to their                which covers a period of 12 months, of                 corrective action.
                                                      established performance expectations in                   an agency’s senior employee appraisal
                                                                                                                                                                          (d) Upon such termination, and until
                                                      any given appraisal period;                               system(s) when the agency has—
                                                                                                                                                                       its system certification is reinstated, the
                                                        (4) A sample of senior employee                           (i) Designed a senior employee
                                                                                                                                                                       agency must—
                                                      performance plans as specified by OPM,                    appraisal system(s) that meets the
                                                      except as provided in paragraph (b) of                    certification criteria in §§ 1330.404 and                 (1) Set a senior employee’s rate of
                                                      this section;                                             1330.405; and                                          basic pay under 5 CFR part 534,
                                                        (5) Documentation of organizational                       (ii) Revised one or more senior                      subparts D or E as applicable, at a rate
                                                      performance results and an explanation                    employee performance plans in                          that does not exceed the rate for level III
                                                      of how these results support the rating                   accordance with instructions from OPM                  of the Executive Schedule.
                                                      distribution in accordance with OPM                       in order to meet the certification                        (2) Limit aggregate compensation
                                                      instructions;                                             requirements in § 1330.404(a); or                      received in a calendar year by a senior
                                                        (6) Data required by the annual                           (iii) Demonstrated appropriate system                employee to the rate for level I of the
                                                      reporting requirement in § 1330.409;                      application through the data reports                   Executive Schedule.
                                                        (7) Documentation of the pay policy                     required in § 1330.409 based on only the                  (e) Performance awards, pay
                                                      and procedures for setting and adjusting                  most recently completed performance                    adjustments, and levels of pay in effect
                                                      pay and granting performance awards                       cycle (1 year of data).                                prior to such termination will remain in
                                                      that includes—                                              (3) Grant provisional certification to               effect unless OPM finds that any such
                                                        (i) For the agency’s senior executives                  an agency more than once.                              decision and subsequent action was in
                                                      covered by 5 CFR part 534, subpart D,                       (b) Extending certification. (1)                     violation of law, rule, or regulation.
                                                      the plan for setting and adjusting the                    Consistent with the requirements of this                  (f) OPM, with OMB concurrence, may
                                                      rate of basic pay described in                            subpart, the Director of OPM, at his or                reinstate certification to an agency
                                                      § 534.404(g);                                             her discretion or upon the request of an               whose certification has been terminated
asabaliauskas on DSK3SPTVN1PROD with PROPOSALS




                                                        (ii) For the agency’s senior                            agency head or designee, may grant a                   only after the agency demonstrates it
                                                      professionals covered by 5 CFR part                       single extension of up to six additional               has taken appropriate corrective action.
                                                      534, subpart E, the written procedures                    months for an agency’s appraisal system                A restored certification will terminate
                                                      for setting and adjusting the rate of basic               certification. The discretionary use of                on the same date as the original
                                                      pay described in § 534.505; and                           the Director’s extension authority will                certification. An agency with a
                                                        (iii) Policies established for award                    be reserved for rare, exceptional                      terminated certification may choose to
                                                      programs authorized under § 534.405 or                    circumstances.                                         submit a new certification request once
                                                      responsibilities identified in § 451.106,                   (2) When requesting an extension, the                it has corrected the issue(s) that led to
                                                      as appropriate; and                                       agency head or designee must submit a                  the termination.


                                                 VerDate Sep<11>2014     20:40 Jan 18, 2017   Jkt 241001   PO 00000   Frm 00014   Fmt 4702   Sfmt 4702   E:\FR\FM\19JAP1.SGM   19JAP1


                                                                             Federal Register / Vol. 82, No. 12 / Thursday, January 19, 2017 / Proposed Rules                                                 6353

                                                        (g) OPM may reinstate the                             946), hereinafter referred to as the                     Ballots will be mailed to all producers
                                                      certification of an appraisal system that               ‘‘order,’’ and the applicable provisions               of record and may also be obtained from
                                                      has been terminated automatically                       of the Agricultural Marketing                          the referendum agents or from their
                                                      under paragraph (b) of this section upon                Agreement Act of 1937, as amended (7                   appointees.
                                                      the agency’s compliance with the                        U.S.C. 601–674), hereinafter referred to
                                                                                                                                                                     List of Subjects in 7 CFR Part 946
                                                      applicable OPM-mandated corrective                      as the ‘‘Act,’’ it is hereby directed that
                                                      action(s).                                              a referendum be conducted to ascertain                   Marketing agreements, Potatoes,
                                                      [FR Doc. 2017–01326 Filed 1–18–17; 8:45 am]             whether continuance of the order is                    Reporting and recordkeeping
                                                      BILLING CODE 6325–39–P
                                                                                                              favored by producers. The referendum                   requirements.
                                                                                                              shall be conducted from June 9 through                   Authority: 7 U.S.C. 601–674.
                                                                                                              June 23, 2017, among eligible
                                                                                                                                                                       Dated: January 12, 2017.
                                                                                                              Washington potato producers. Only
                                                      DEPARTMENT OF AGRICULTURE                                                                                      Elanor Starmer,
                                                                                                              current producers that were also
                                                                                                              engaged in the production of fresh                     Administrator, Agricultural Marketing
                                                      Agricultural Marketing Service                                                                                 Service.
                                                                                                              potatoes in Washington during the
                                                                                                              period of July 1, 2015, through June 30,               [FR Doc. 2017–01022 Filed 1–18–17; 8:45 am]
                                                      7 CFR Part 946
                                                                                                              2016, may participate in the                           BILLING CODE 3410–02–P
                                                      [Doc. No. AMS–SC–16–0110; SC17–946–1                    continuance referendum.
                                                      CR]                                                        USDA has determined that
                                                                                                              continuance referenda are an effective                 DEPARTMENT OF TRANSPORTATION
                                                      Irish Potatoes Grown in Washington;
                                                      Continuance Referendum                                  means for determining whether
                                                                                                              producers favor the continuation of                    Federal Aviation Administration
                                                      AGENCY:    Agricultural Marketing Service,              marketing order programs. USDA would
                                                      USDA.                                                   consider termination of the order if less              14 CFR Part 71
                                                      ACTION: Referendum order.                               than two-thirds of the producers voting                [Docket No. FAA–2016–8944; Airspace
                                                                                                              in the referendum and producers of less                Docket No. 16–AGL–21]
                                                      SUMMARY:   This document directs that a                 than two-thirds of the volume of                       RIN 2120–AA66
                                                      referendum be conducted among                           Washington potatoes represented in the
                                                      eligible Washington potato producers to                 referendum favor continuance of their                  Proposed Modification and
                                                      determine whether they favor                            program. In evaluating the merits of                   Establishment of Air Traffic Service
                                                      continuance of the marketing order                      continuance versus termination, USDA                   (ATS) Routes; Northcentral United
                                                      regulating the handling of Irish potatoes               will not exclusively consider the results              States
                                                      grown in Washington.                                    of the continuance referendum. USDA
                                                      DATES: The referendum will be                           will also consider all other relevant                  AGENCY: Federal Aviation
                                                      conducted from June 9 through June 23,                  information regarding operation of the                 Administration (FAA), DOT.
                                                      2017. Only current producers that were                  order and relative benefits and                        ACTION: Notice of proposed rulemaking
                                                      engaged in the production of fresh                      disadvantages to producers, handlers,                  (NPRM).
                                                      potatoes in Washington during the                       and consumers to determine whether
                                                      period of July 1, 2015, through June 30,                continuing the order would tend to                     SUMMARY:   This action proposes to
                                                      2016, are eligible to vote in this                      effectuate the declared policy of the Act.             modify one jet route and five VHF
                                                      referendum.                                                In accordance with the Paperwork                    Omnidirectional Range (VOR) Federal
                                                                                                              Reduction Act of 1995 (44 U.S.C.                       airways, and establish three Area
                                                      ADDRESSES:   Copies of the marketing                                                                           Navigation (RNAV) T-routes in the
                                                                                                              Chapter 35), the ballot materials used in
                                                      order may be obtained from the                                                                                 northcentral United States. The FAA is
                                                                                                              the referendum herein ordered have
                                                      Northwest Marketing Field Office,                                                                              proposing this action due to the planned
                                                                                                              been submitted to and approved by the
                                                      Marketing Order and Agreement                                                                                  decommissioning of the Brainerd, MN
                                                                                                              Office of Management and Budget
                                                      Division, Specialty Crops Program,                                                                             (BRD), VHF Omnidirectional Range/
                                                                                                              (OMB) and have been assigned OMB
                                                      AMS, USDA, 1220 SW 3rd Avenue,                                                                                 Tactical Air Navigation (VORTAC)
                                                                                                              No. 0581–0178, Vegetable and Specialty
                                                      Suite 305, Portland, OR 97204;                                                                                 navigation aid (NAVAID), which
                                                                                                              Crops. It has been estimated that it will
                                                      Telephone: (503) 326–2724; from the                                                                            provides navigation guidance for
                                                                                                              take an average of 20 minutes for each
                                                      Office of the Docket Clerk, Marketing                                                                          portions of the ATS routes proposed to
                                                                                                              of the approximately 270 Washington
                                                      Order and Agreement Division,                                                                                  be amended by this action. The T-routes
                                                                                                              potato producers to cast a ballot.
                                                      Specialty Crops Program, AMS, USDA,                                                                            proposed to be established by this
                                                                                                              Participation is voluntary. Ballots
                                                      1400 Independence Avenue SW., STOP                                                                             action would mitigate potential issues to
                                                                                                              postmarked after June 23, 2017, will not
                                                      0237, Washington, DC 20250–0237; or                                                                            the National Airspace System (NAS)
                                                                                                              be included in the vote tabulation.
                                                      on the Internet: http://                                                                                       route structure that may be caused by
                                                      www.regulations.gov.                                       Teresa Hutchinson and Gary D. Olson
                                                                                                              of the Northwest Marketing Field Office,               the proposed ATS route amendments.
                                                      FOR FURTHER INFORMATION CONTACT:                        Specialty Crops Program, AMS, USDA,                    Overall, this action would enhance the
                                                      Teresa Hutchinson or Gary D. Olson,                     are hereby designated as the referendum                safety and efficient management of
asabaliauskas on DSK3SPTVN1PROD with PROPOSALS




                                                      Northwest Marketing Field Office,                       agents of the Secretary of Agriculture to              aircraft within the NAS.
                                                      Marketing Order and Agreement                           conduct this referendum. The procedure                 DATES: Comments must be received on
                                                      Division, Specialty Crops Program,                      applicable to the referendum shall be                  or before March 6, 2017.
                                                      AMS, USDA; Telephone: (503) 326–                        the ‘‘Procedure for the Conduct of                     ADDRESSES: Send comments on this
                                                      2724, Fax: (503) 326–7440, or Email:                    Referenda in Connection With                           proposal to the U.S. Department of
                                                      Teresa.Hutchinson@ams.usda.gov or                       Marketing Orders for Fruits, Vegetables,               Transportation, Docket Operations, 1200
                                                      GaryD.Olson@ams.usda.gov.                               and Nuts Pursuant to the Agricultural                  New Jersey Avenue SE., West Building
                                                      SUPPLEMENTARY INFORMATION: Pursuant                     Marketing Agreement Act of 1937, as                    Ground Floor, Room W12–140,
                                                      to Marketing Order No. 946 (7 CFR part                  Amended’’ (7 CFR part 900.400 et seq.).                Washington, DC 20590; telephone:


                                                 VerDate Sep<11>2014   20:40 Jan 18, 2017   Jkt 241001   PO 00000   Frm 00015   Fmt 4702   Sfmt 4702   E:\FR\FM\19JAP1.SGM   19JAP1



Document Created: 2018-02-01 15:16:23
Document Modified: 2018-02-01 15:16:23
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionProposed Rules
ActionProposed rule with request for comments.
DatesOPM must receive comments on or before February 21, 2017.
ContactMyriam Mayobre by telephone at (202) 606-8046, by FAX at (202) 606-4264, or by email at [email protected]
FR Citation82 FR 6339 
RIN Number3206-AL20
CFR Citation5 CFR 1330
5 CFR 317
5 CFR 430
5 CFR 534
CFR AssociatedGovernment Employees; Decorations; Hospitals; Students and Wages

2025 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR