[Material Transmitted]{.underline}

HHS Instruction 338-2, Appointments Above the Minimum Rate Because of
Superior Qualifications (pages 1-3)

[Material Superseded]{.underline}

HHS Instruction 338-2 (pages 1-6 and Exhibit, dated March 1, 1983 and as
amended)

[Background]{.underline}

This Instruction has been revised in accordance with the OASPER
revitalization effort to streamline the HHS human resource policy
issuance system.

Previous delegations of the authority to approve appointments above the
minimum rate from ASPER to the Heads of Operating Divisions and the
Regional Directors are superseded. To the extent that existing
redelegations of this authority are in accordance with the provisions of
this delegation they may remain in effect.

Thomas S. McFee

Assistant Secretary for

Personnel Administration, OS

Distribution: MS(PERS):HRFC-001

HHS INSTRUCTION 338-2

APPOINTMENTS ABOVE THE MINIMUM RATE

BECAUSE OF SUPERIOR QUALIFICATIONS

REFERENCES

5 USC 5333, Minimum Rate for New Appointments

5 CFR 531, Subpart B, Determining Rate of Basic Pay

5 USC 5532, Employment of Retired Members of the

Uniformed Services; Reduction in Retired or

Retainer Pay

5 CFR 553, Reemployment of Military and Civilian

Retirees to Meet Exceptional Employment Needs

338-2-00 PURPOSE AND COVERAGE

A.  This Instruction outlines the requirements for approving
    appointments above the minimum salary rate of the appropriate grade
    because of superior qualifications or a special need of the agency
    for a candidate\'s services.

B.  This Instruction covers the filling of temporary or permanent
    competitive and excepted service positions in DHHS with candidates
    who are not currently Federal employees. Former Federal employees
    may qualify for an appointment above the minimum rate because of
    superior qualifications if they meet the requirements in 5 CFR Part
    531 Subpart B. This Instruction does not apply to members of the
    Senior Executive Service.

HHS :

338-2-10 POLICY AND GUIDANCE

A.  An appointment above the minimum rate may not be effected until the
    advanced rate is approved by an official with delegated approval
    authority.

B.  In setting the appropriate step, consideration should be given to
    the availability of highly-qualified candidates, the existing
    compensation of the candidate (including any bona fide fringe
    benefits not offset by Federal benefits), and legitimate and
    confirmed competing offers.

C.  In determining the forfeited compensation which is to be offset by
    the advanced rate, only the candidate\'s existing compensation may
    be considered. Any income from outside employment which forms a
    regular, continuing portion of the candidate\'s total income and
    which the candidate will not be able to continue as a\
    \
    Federal employee may be considered in setting the pay rate. A
    written statement signed and dated by the candidate stating that the
    compensation will be forfeited must be included with the request for
    approval of an above the minimum appointment. Salary claims must be
    verified to ensure that only actual earnings are included. Income
    from other sources that will continue during Federal employment may
    not be considered.

D.  A candidate who has retired or resigned from a uniformed service may
    not qualify for an advanced rate on the basis of former uniformed
    service pay. Pay must be based on a current non-Federal employment
    offer. Once the candidate has retired or resigned from active
    service, he/she would be considered to not be earning any income
    from the previous employment. A superior qualifications appointment
    is not to be used to counteract the reduction in uniformed service
    retirement pay provisions of 5 USC 5532.

E.  It is not appropriate to use the salary earned as a former expert or
    consultant for the Federal Government appointed under 5 USC 3109 to
    justify an advanced rate when an individual\'s last position is that
    of an expert or consultant for the Federal Government. Income
    forfeited at the time the individual became an expert or consultant
    may be used for determining the appropriate step.

F.  An advanced rate may be based on earnings as an expert or consultant
    outside the Federal government. The advanced rate should take into
    account average income earned by the candidate over the past few
    years and other legitimate and confirmed consulting offers the
    candidate may have.

G.  An appointment above the minimum based on superior qualifications
    can be made for special experts appointed under specific legislative
    authority, e.g., the Public Health Service Act, Title 42 USC, only
    if the expert has a 90-day break in service.

H.  A rate that was earned on a part-time basis or for only part of a
    year cannot be annualized to justify the advanced rate.

I.  Retroactive appointment above step one because of superior
    qualifications cannot be made once the candidate has been appointed
    at step one. In rare cases, the Department may request a variation
    from the U.S. Office of Personnel Management (USOPM) to permit the
    employees salary to be prospectively raised to a higher step. USOPM
    publishes descriptions of variations which they approve, and these
    become precedents.

HHS :

338-2-20 DOCUMENTATION AND RECORD-KEEPING

A.  Each Operating Division must establish documentation and
    record-keeping requirements and internal guidelines and evaluation
    procedures to ensure compliance with the law and regulations.

B.  Written documentation sufficient to allow reconstruction of the
    action taken in each case must be maintained for a minimum of three
    years. Each request must include: (1) a description of the superior
    qualifications of the individual or the special need of the
    agency; (2) the factors considered in determining the individual\'s
    existing pay and the reason for setting pay at a rate higher than
    that needed to match existing pay; and, (3) the reasons for
    authorizing an advanced rate instead of (or in addition to) a
    recruitment bonus.

HHS :

338-2-30 DELEGATION OF AUTHORITY

A.  The authority to approve an appointment at a rate above the minimum
    rate of the appropriate grade, under 5 USC 5333 based on the
    superior qualifications of the candidate or a special need of the
    agency for the candidate\'s services, is hereby delegated to the
    Heads of Operating Divisions and the Regional Directors for
    employees and positions within their appointing authority. Further
    redelegation is authorized.

B.  Previous delegations of the authority to approve appointments above
    the minimum rate from ASPER to the Heads of Operating Divisions and
    the Regional Directors are superseded. To the extent that existing
    redelegations of this authority are in accordance with the
    provisions of this delegation they may remain in effect.