Federal Agencies Can Spend More on Executive Bonuses

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By Louis C. LaBrecque

Aug. 16 — Federal agencies can spend more on bonuses for their senior executives, according to new Obama administration guidance.

Beginning Oct. 1, agencies can offer bonuses that together equal up to 7.5 percent of their aggregate spending on salaries for career members of the Senior Executive Service and senior professional and scientific employees, the Office of Personnel Management and the White House Office of Management and Budget said in a joint Aug. 12 memorandum to agency heads.

The statute governing compensation for the SES, along with senior-level and professional or scientific employees, says agencies can spend up to 10 percent of aggregate pay to reward deserving career executives via performance awards.

However, since 2011, the administration has limited performance award funding for federal executives and senior-level employees to 4.8 percent of aggregate salaries, so the new guidance means more money will be available for bonuses.

Agencies should ensure that they're providing “substantial monetary awards for the very best” SES and senior-level employees while “allowing more variance of award amounts among rating levels,” the memo from OPM Acting Director Beth Cobert and OMB Director Shaun Donovan said.

“Agencies are encouraged to support good performance management throughout the year by providing ongoing feedback and promptly and appropriately recognizing excellent achievements,” the two officials wrote. “Agencies should use all authorized categories of awards, as appropriate, to recognize the accomplishments of their executives throughout the year, including time-off and individual contribution awards (e.g., special act, suggestion, invention, etc.).”

‘Special Act Awards.'

In addition to “individual rating-based performance awards” for SES and senior-level employees, which beginning in October will be capped at 7.5 percent of aggregate salaries, federal agencies can spend up to 1 percent of their aggregate spending on salaries for SES and senior-level employees for “individual contribution awards,” also known as “special act awards,” the memo said.

Unlike performance awards, which are based on the employee's performance during the previous fiscal year, special act awards can be used to reward individual contributions during the current fiscal year, it said.

The new guidance is intended to implement Executive Order 13,714, issued by President Barack Obama last December. A freeze on bonuses for political appointees that was put into place by Obama in August 2010 remains in effect, the memo said.

Jason Briefel, interim president of the Senior Executives Association, told Bloomberg BNA Aug. 16 that the new guidance will help the government address the issue of stagnant salaries for career federal executives by making additional funds available for bonuses.

Some top federal employees have been reluctant to become agency executives because the pay differential doesn't make it worthwhile to accept these positions, he said.

“Given the fiscal constraints that agencies have been under for several years, it makes sense to provide agencies the flexibility in the performance award allocations,” Briefel said.

The SEA is a Washington-based professional association that represents the interests of about 7,000 career senior executives and 1,100 senior professional and scientific employees in the federal government.

To contact the reporter on this story: Louis C. LaBrecque in Washington at llabrecque@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

For More Information

Text of the guidance is available at http://src.bna.com/hKY.

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