OMB Reinforces Cap on Bonuses

Memo directs agencies to 'be prudent' with performance awards.

Citing an ongoing “need to manage budget resources carefully,” the White House budget office joined with the Office of Personnel Management on Friday in directing all agency heads to stick with existing limits on individual performance awards.

“Agencies are encouraged to be prudent in their awards spending,” wrote Office of Management and Budget Director Sylvia Mathews Burwell and then-acting OPM Director Elaine Kaplan in a memo that continues a two-year-old policy of limiting total spending on awards to Senior Executive Service and senior-level scientific and professional employees to no more than 5 percent of their aggregate salaries.

The cap is set at 1 percent for other agency employees. Agencywide spending on awards for fiscal 2014 may not exceed levels of fiscal 2012, the memo said, noting that if the ongoing congressional budget talks result in a continuation of sequestration under the 2011 Budget Control Act, then performance awards would be reduced for both categories commensurately.

“Given the current fiscal environment and the budget constraints agencies will operate under in fiscal 2014, it is critical that agencies’ use of performance awards be managed in a manner that is cost-effective and leads to increased employee performance and organizational results,” the officials wrote.

Group awards and awards to acknowledge suggestions for agency improvements are frozen at 2010 levels, and “agencies are encouraged to leverage existing award programs to reward employees who identify improvements that result in documented, validated cost savings and productivity improvements,” the memo said.

The guidance does not apply to political appointees but continues President Obama’s Aug. 3, 2010, memorandum that freezes awards to such appointees in accordance with OPM guidance.

Recruitment, retention and relocation bonuses are not capped, but the guidance directs that such expenditures be confined to 2010 levels. Time-off awards, though not capped, should be used “judiciously,” the guidance said.

In exercising their discretion, agencies are reminded to discuss all awards issues in labor-management forums and honor collective bargaining agreements.

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