OPM drafts bills to boost bonuses, fix demo projects

OPM drafts bills to boost bonuses, fix demo projects

Federal managers could offer bigger bonuses to recruit and retain employees under draft legislation being circulated by the Office of Personnel Management.

In two draft bills obtained by GovExec.com, OPM outlines ways to overhaul outdated rules governing employee bonuses and improve personnel demonstration projects. Agencies would also be able to offer more vacation time to executives under the first bill.

The first draft bill, whose working title is the "Civil Service Recruitment and Retention Incentives Act of 2000," would expand agencies' authority to offer recruitment, relocation and retention bonuses.

In recent weeks, Comptroller General David Walker has hinted that human capital planning may be added to the General Accounting Office's list of the worst management problems in the federal government. According to Walker and other experts, an aging federal workforce, an extremely competitive job market and a knowledge drain due to years of government downsizing have added up to a personnel crisis.

OPM hopes that new flexibilities will make it easier for agencies to create attractive recruitment packages and to keep current employees from seeking work elsewhere. The draft legislation is still in the early stages of consideration at OPM.

"This proposal will give agencies compensation tools that are more like incentives used in the private sector and will go a long way toward helping federal agencies be more competitive in recruiting and retaining the skilled, diverse workforce they will need in the 21st century," the draft justification for the bill says.

Current legislation allows agencies to offer lump-sum recruitment bonuses only to newly appointed employees-not those who already work for the government. Retention, recruitment and one-time relocation bonuses are capped at 25 percent of an employee's annual rate of basic pay.

Retention bonuses can now only be offered in special circumstances to keep employees with unique qualifications from leaving government.

Federal managers have complained that the current limitations on bonuses render them ineffective. In the private sector, for example, retention bonuses are often paid at the end of an agreed-upon length of service, which makes them much more effective at keeping people on the job. Agencies also lose employees to other agencies and cannot offer retention bonuses unless the employee is leaving government altogether.

Under the draft bill, bonuses can be tied to length of service-up to 25 percent of an employee's starting annual rate multiplied by the number of years the employee agrees to serve. Terms of service would be limited to four years. Under this formula, the total bonus could be as high as 100 percent of an employee's starting annual pay, and would be paid out over four years.

Agencies could also offer recruitment bonuses to entice current employees to accept hard-to-fill jobs.

Under the draft bill, agencies also would be able to:

• Offer bigger bonuses based on how long an employee agrees to work.
• Pay off bonuses in installments, offering the final payment at the end of an agreed-upon service period.
• Exceed the bonus caps for certain critical staffing needs, as long as the total amount of the bonus does not exceed 100 percent of the employee's basic pay.
• Give bonuses to current federal employees under certain circumstances, such as when an employee changes career fields.
• Delay bonus payments until a certain requirement, such as training, has been met.
• Give retention bonuses to employees likely to leave for other federal jobs.
• Offer beefed-up annual leave incentives to highly qualified senior executives.

The annual leave incentive was proposed because, in the Senior Executive Service, recruitment is limited by rules governing vacation time. New SESers who arrive from the private sector earn annual leave hours at the same rate as entry-level federal employees. Meanwhile, most career SESers have accrued enough federal working time to earn vacation at twice that rate. Vacation time, managers complain, serves as a disincentive to recruiting executives from the private sector.

OPM's other draft bill, the "Federal Human Resources Management Innovation Act of 2000," aims to simplify rules governing federal demonstration projects. Demonstration projects are small-scale experiments used to test new personnel ideas, with successful innovations to be applied governmentwide.

Current demonstration project regulations are too restrictive and stymie creativity, critics say. Only 10 such projects are allowed at any given time, permanently implementing improvements ot extending them to other agencies requires an act of Congress, and cumbersome rules prevent agencies from using demonstration project authority.

In one case, it took the Naval Research Laboratory six years to complete the application for and implement its demonstration project.

"The more complete innovation authority proposed in this legislation would provide strong support for agencies to test and use successful innovations and flexibilities," the draft legislation said.

To speed up demonstration project timelines, the proposed legislation suggests shortening the time period required to give affected employees advance notice of the changes and eliminating the requirement for a public hearing for each proposal.

The bill would raise the cap on the number of employees who can participate in a project from 5,000 to 25,000, eliminate the current cap on the number of projects that can be run at the same time, and give OPM the authority to extend demonstration project innovations to other agencies.

According to OPM, details on the individual pieces of the legislation may change, but officials seem to be reaching a consensus on key goals.