OPM's subtle shifts could redefine federal HR

A few weeks ago, the Office of Personnel Management (OPM) published proposed regulations that would, among other things, give its director "delegated" authority to approve agency requests for critical pay (that is, an annual salary equivalent to the vice president's) for certain specified positions. That authority is currently vested expressly with the president, according to the Federal Employee Pay Comparability Act of 1991 (or FEPCA), which established an upper limit of some 800 such critical pay positions governmentwide, although less than a dozen of those have ever actually been approved in that regard.

But as noted, OPM's proposed rules rely on an "implied" delegation of that critical pay authority from the president to the OPM director — after all, the proposed rules in the Federal Register argue that the director is the president's statutory agent, complete with the administrative equivalent of power of attorney when it comes to such matters — and those rules further imply that absent some good and compelling reason, the OPM director will approve those requests. I guess the goal here is to make better use of that extraordinary pay authority, in large part because it has been so little used in the past. That's an understatement if there ever was one(!), and in this narrow instance, I say let's "just do it!"

My own history with critical pay

At the risk of sounding a bit self-serving, I should know what I'm talking about when it comes to critical pay. I was the IRS's first chief HR officer when the Congress gave that agency "streamlined" critical pay authority for 50 positions in the now-vintage IRS Restructuring and Reform Act of 1998, thus allowing it to hire folks at a much higher salary than a regular SES position at the time and (more importantly) without all the OPM justification and red tape involved ... to be sure, the critical pay of many of those execs was not as high as the salaries some of them were getting in their private sector jobs, but the psychic value of telling one of those executive recruits that "we'll pay you as much as Vice President Al Gore is getting" did the trick for most of them. And our ability to land them is evidence of how successful we were.

And then, when I went to OPM in 2002, I persuaded my boss, then-Director Kay Coles James, to use the "regular" FEPCA-authorized critical pay authority (one of the very few agency heads to do so) to justify paying that higher salary to OPM's vacant chief actuary position, one that actually reported to me. The person encumbering that position would determine the rates that insurance carriers could charge federal employees for their health benefits, so in our view, critical pay was imminently justified thus, it was far less than a nationally known actuary could command in the labor market. But as with IRS, it was of enormous psychic value, and Director James was successful!

Truth in advertising: I also "owned" the OPM policy and regulations on critical pay when I was associate director of that agency.

However, it was almost 10 years later, when I chaired the Federal Salary Council as a fledgling political appointee in the first Trump administration (from 2018 until I resigned in late 2020 over the then-unadulterated Schedule F), that I really got to know about FEPCA, critical pay and all of its limitations; indeed, despite much official carping to the contrary, I found that the latter authority had barely been used in the time since I had been a career OPM employee. Indeed, it's never ever covered more than a dozen positions out of the 800 authorized, and I convinced the Federal Pay Agent — the directors of OPM and OMB, as well as the secretary of Labor — to include various critical pay "reforms" in their annual report to the Congress. Those reforms would have expanded its use exponentially, albeit through legislation rather than regulatory fiat, but they went nowhere.

Those reforms have been repeated in one form or another ever since, including in various Pay Agent reports, but to no avail. FEPCA and its critical pay positions have remained intact, this despite the fact that they are both woefully obsolete, but that's another story.

And since then, as a private citizen back in 2023, I was part of small group of IRS "formers" who, on behalf of Commissioner Werfel and his team, lobbied the U.S. Congress to provide that agency with the same independent "streamlined" critical pay authority that it once had back in 1998, only to find that our principle opponent on the Hill was not OMB or the Treasury Department — both of them supported the flexibility — but rather, OPM itself (in this case, the Biden OPM) ... they were the ones that argued that IRS did not need such independent authority, as it already existed in OPM. According to them, all IRS needed to do was ask for it.

Hah, fat chance! But its miserly history notwithstanding, that was enough of an argument to prevail, at least as far as the Senate parliamentarian was concerned, and critical pay approval remained with OPM, along with its historically cheapskate attitude! Until now.

Approve the proposed critical pay rules, but narrowly

So, if it were me, I would unequivocally support the proposed OPM rules, IF they're going to be used to narrowly expand (dare I say, liberalize?) the use of critical pay in the federal government. And I would encourage agency heads and their senior career advisors to take the OPM director at his word and submit lots of critical pay requests ... all justified, of course. Hopefully, most will be approved as promised, and we'll approach the 800-position limit in FEPCA.

But I have some reservations that go beyond critical pay, especially with this notion that the OPM director can speak and act for the president under a doctrine of "implied" delegation. That's a very sharp two-edged sword, depending on who's wielding it, so while I personally trust Scott Kupor and his team to wield it as he has so stated in this instance, I'd need to see how else that implied delegation may be used or abused, depending on how it's going to be exercised.

Thus, while I would love to see greater flexibility with respect to FEPCA's (and OPM's) critical pay authority, we need to worry about the precedential price we would pay in so doing. In his recent blog, aptly entitled "Secrets of OPM," Director Kupor asks us to calm down and carry on in that regard, and I agree with him, but actions will speak louder than words, so we shall see.

For example, the other regulatory change recently proposed by OPM — the abolition of the long-standing (but also obsolete) one-year time-in-grade waiting period for promotions under the General Schedule (GS) — should also be approved right away. Indeed, in my view, it should have been abolished years ago. More on that in a subsequent commentary, but what started decades ago as a simple rule of thumb has, in typical OPM fashion, become blindingly formulaic, forcing every federal employee to wait a year before they can be promoted, even if they could demonstrably do that higher-graded work involved from the get-go.

Why? What's so magical about a year? If someone can do the job, let them do it and pay them for it. So, kill it or at least give agencies the opportunity to do so if they so choose.

A subtle shift at OPM?

That said, in a broader sense, the changes I mention here are a great example of an apparent and positive OPM shift, however subtle it may be, if I'm right, that is. For example, the liberalization of critical pay, the recent proposed elimination of the "one-year" promotion rule and even more recently, the "edict" to require some federal employees to sign a nondisclosure agreement (NDA) — and Director Kupor's contemporaneous blog explaining it — are all potential examples of a recognition that agencies need lots of maneuvering room, that their missions are just too diverse for a "one size fits all" model. I hope OPM's latest missives acknowledge that fact.

To be sure, those headlines can be misleading, and I'm wondering how many other times we've been duped. Take the NDA edict. The headlines say that it covers all federal employees, even though it clearly does not. It is NOT a blanket order, as some have reported. Rather, the edict is at an agency head's discretion, and it is limited to those federal employees that have access to sensitive, confidential (not to mention classified) information. Of course, even in limited form, such a restriction is problematic, but it is certainly less so than the headlines would suggest.

There may be better, less litigious ways to plug leaks to the media, especially given the implications for recruiting talent to civil service ranks, a job already made difficult by the Trump administration, and I fear that many of OPM's changes have been exaggerated and hyperbolized in the same way. But as a "glass half full" person, I'll take what seems to be going on with some optimism. I hope it isn't misplaced.

Ron Sanders is a 2006 Fellow of the National Academy of Public Administration and served on the National Council of the American Society for Public Administration, as well as associate editor of its Public Administration Review. A career civil servant of more than 37 years (and over two decades as a member of the Senior Executive Service), he was DOD’s director of Civilian Personnel; IRS’s chief human resources officer; senior associate director of OPM; chief human capital officer for the intelligence community; and later, the presidentially appointed chairman of the Federal Salary Council. With a doctorate in public administration, he also served as director of the University of South Florida’s School of Public Affairs and as executive director of the Florida Center for Cybersecurity.