Analysis of Civilian 

Payroll Processing 

in the Federal 

Government

JFMIP Staff Interagency 

Study for OMB

iii 

Executive Summary 

OVERVIEW

The primary purpose of this analysis is to examine Federal civilian payroll service 

delivery from a Government-wide perspective in order to develop options and 

recommendations for the future investment in modernization and improvement of 

payroll systems and processes. The analysis and recommendations emerging from 

this report are intended to provide the comprehensive, focused path that will, if 

persistently implemented through strong leadership from the Office of Management and Budget (OMB) and the Office of Personnel Management (OPM), enable 

a cost-effective solution for payroll delivery across Government. These actions 

will also set the stage for greater integration of human resources (HR) and payroll 

activities. 

BACKGROUND 

The current payroll service delivery environment evolved over many years, reflecting incremental changes that have been implemented in different ways across 

Government. The influences of agency-unique interpretation of legislation, regulation, labor-management agreements, and HR policies have all contributed to a 

complex set of requirements that, when taken together, provide a barrier to the 

modernization of payroll systems and processes. 

Fourteen internal Government providers deliver Federal civilian payroll services. 

The four largest—Defense Finance and Accounting Service, Department of Veterans Affairs, Department of the Interior, and Department of Agriculture—service 

over 80 percent of the total civilian payroll, accommodating more than 190 different pay plans. Because of age and capacity limitations of the current processing 

environment, many of the fourteen payroll service providers are considering capital investments in payroll systems infrastructure. Others are nearing completion of 

such investments. Three of the four major providers report that new systems are 

urgently needed. Capital investments for new systems software and implementation are complex and time-consuming, and can cost up to $200 million per integrated system. 

Over the years, Federal agencies have attained cost savings through crossservicing their payroll operations to Federal providers. The recommendations in 

this analysis are intended to support decision-making for capital investment, with 

the goal of achieving cost avoidance in both capital investment as well as operations. 
Executive Summary 

iv 

SCOPE AND APPROACH 

OMB, in response to the Administration’s Management Agenda, directed the 

Joint Financial Management Improvement Program (JFMIP) to establish and lead 

a working group to analyze payroll processing and systems. The working group 

consisted of representatives from JFMIP, OMB (Office of Federal Financial Management, Office of Federal Procurement Policy, Office of Information and Regulatory Affairs, and Resource Management Offices, Personnel Branch), major 

providers (Defense Finance and Accounting Service, Department of Veterans Affairs, Department of the Interior, Department of Agriculture, and General Services 

Administration), other CFO offices, and small agencies. 

The options and recommendations presented in this report are based on the efforts 

of the working group. Information supporting this effort was collected through a 

variety of methods, including the following: 

◆ A review of recent studies and analyses in the payroll area 

◆ A formal survey of payroll providers 

◆ Workshops conducted with representative payroll stakeholders. 

The working group prepared a comprehensive set of payroll investment and modernization options for consideration, assessed the benefits and considerations, analyzed and compared the options, and identified recommended actions. 

FINDINGS AND RECOMMENDATIONS

Action to improve payroll service delivery must be comprehensive, focused, and 

persistent, and a new governance model for payroll policy and administration 

must be established through the leadership of the President’s Management Council. The elements of modernizing payroll must include concurrent attention to issues of changing the marketplace within which payroll operates, simplifying and 

standardizing payroll policies and procedures, and strengthening the integration 

among payroll, HR, and finance functions. These opportunities cover the spectrum of three critical components for success: 

◆ Establishing central governance over the payroll function 

◆ Developing an integrated Government-wide payroll/HR enterprise architecture 

◆ Strengthening payroll service delivery for government. 
 Executive Summary 

v 

The working group evaluated several options within each of these key components. The working group’s key recommendations can be summarized as follows.1

 

Establishing Governance 

◆ Establish a governance framework. 

! Designate OPM as the central agency with “ownership” of the payroll function. 

! Create a stakeholder Payroll Council as an advisory body to assess 

policy impact on payroll. 

! Create a payroll users network consisting of current providers and 

cross-serviced agencies. 

! Establish a joint capital investment and budgeting capability within 

OMB capital planning and budgetary procedures. 

◆ Establish a governance structure to support cross-agency management 

of payroll investment and processing decisions. 

Developing an Enterprise Architecture 

◆ Develop an integrated architecture. 

! Develop an integrated Government-wide architecture for HR and 

payroll. 

! Establish ownership of the architecture with the Payroll Council. 

! Develop a process for including the payroll architecture in decision-making. 

◆ Standardize Federal payroll policies and processes across Government. 

! Set clear goals and timelines for standardization. 

! Designate OPM and OMB as champions for implementing low 

cost, high impact recommendations and eliminating “silly” rules. 

! Direct the payroll users network to review agency payroll policies 

and procedures to eliminate unneeded rules and standardize where 

possible. 

 1

 Detailed descriptions of these options and opportunities, as well as a discussion of benefits 

and considerations for implementation, are provided in the full report. 
Executive Summary 

vi 

! Establish a process for full impact assessment of all new policies 

affecting payroll processes and systems. 

! Review current payroll data elements and functionality and HR 

standards for simplification. 

◆ Remove barriers to increased reliance on e-commerce. 

Improving Service Delivery 

◆ Strengthen service delivery through consolidation of payroll service 

providers and systems. 

! Set a goal to have a single integrated HR and payroll system (software) for the Federal Government, leveraging a commercial offthe-shelf software product, that may be offered at multiple Government or commercial locations. 

! Direct agencies to two or three approved payroll service providers. 

Each provider would have its own systems software and operation. 

◆ Evaluate the capabilities of the commercial marketplace to provide 

Government payroll services using a direct privatization strategy that 

consolidates all or a significant portion of current payroll operations 

and uses a single software system. 

◆ Undertake a more detailed study of the capital investment framework 

to facilitate the timing of decisions. 

These recommendations, if adopted, change status quo practices in a manner that 

supports all five dimensions of the President’s Management Agenda: strategically 

manage human capital, competitively source commercial activities, improve financial management, expand e-Government, and integrate budget and performance information. 

NEXT STEPS

This paper is a foundation for a comprehensive business case to support future 

decisions on capital investment, consolidation, and outsourcing of Federal payroll 

processing. Further research and verification of the costing information is needed. 

In order to evaluate the various payroll options presented in this paper, a business 

case is needed. This business case would allow the Administration to make a decision on the different payroll options presented in this paper by presenting the 

following information: (1) definition of the strategic business needs; (2) definition 

of the technical alternatives; (3) illustration of how the capital planning and investment control process would be used; (4) a benefit/cost analysis; and (5) 

definitions of the acquisition, management plan, and risks for each alternative. 
 iii 

Contents 

Chapter 1 Introduction..................................................................................1-1

SCOPE ..............................................................................................................................1-2 

PRESIDENT’S MANAGEMENT AGENDA ..............................................................................1-2 

ANALYTICAL APPROACH...................................................................................................1-3 

REPORT ORGANIZATION....................................................................................................1-4 

Chapter 2 Current Environment ...................................................................2-1

FEDERAL PAYROLL PROCESSING PROFILE.........................................................................2-1 

OVERVIEW OF THE PAYROLL PROCESS..............................................................................2-2 

CAPITAL INVESTMENT FRAMEWORK AND COST OF PAYROLL PROCESSING ......................2-6 

Chapter 3 Opportunities: Establishing Governance .....................................3-1

GOVERNANCE AND POLICY FORMULATION.......................................................................3-1 

IMPLEMENTATION OF POLICY............................................................................................3-4 

SYSTEM STANDARDIZATION..............................................................................................3-6 

RECOMMENDATIONS FOR ESTABLISHING GOVERNANCE...................................................3-8 

Chapter 4 Opportunities: Developing an Integrated Enterprise 

Architecture ............................................................................................4-1

GOVERNMENT-WIDE ARCHITECTURE................................................................................4-1 

INTEGRATION WITH HUMAN RESOURCES ..........................................................................4-2 

PROLIFERATION OF INTERFACES .......................................................................................4-3 

BARRIERS TO ELECTRONIC COMMERCE ............................................................................4-5 

RECOMMENDATIONS FOR DEVELOPING AN INTEGRATED ENTERPRISE 

ARCHITECTURE .....................................................................................................4-6 

Chapter 5 Opportunities: Strengthening Payroll Service Delivery ..............5-1

CONSOLIDATION ...............................................................................................................5-1 

PRIVATIZATION .................................................................................................................5-7 

RECOMMENDATIONS FOR STRENGTHENING PAYROLL SERVICE DELIVERY .....................5-10 
Contents 

iv 

Chapter 6 Recommendations........................................................................6-1

SUMMARY OF RECOMMENDATIONS...................................................................................6-1 

COMPREHENSIVE LIST OF RECOMMENDATIONS ................................................................6-2 

ANALYSIS OF SERVICE DELIVERY OPTIONS ......................................................................6-4 

HOW SERVICE DELIVERY OPTIONS SUPPORT THE PRESIDENT’S MANAGEMENT 

AGENDA................................................................................................................6-6 

Appendix A Participants with Roles 

Appendix B Inventory of Payroll Initiatives 

Appendix C Survey Questionnaire and Responses 

Appendix D Rules and Regulations 

Appendix E Inventory of Agency Payroll Systems 

Appendix F Payroll System Model 

Appendix G “Silly” Payroll Rules 

Appendix H Low Cost, High Impact Recommendations 

Appendix I Abbreviations 

FIGURES

Figure 1-1. Payroll Initiative—Project Phases...........................................................1-4 

Figure 2-1. CFO-wide General Schedule Payroll Systems........................................2-1 

Figure 2-2. Overview of Agency Interfaces for Payroll Processing ..........................2-3 

Figure 2-3. High-Level Payroll Process Flow............................................................2-4 

Figure 2-4. Government-wide Payroll External Interfaces ........................................2-5 
Contents 

v 

TABLES

Table 2-1. Example Operating Costs of Payroll Services..........................................2-6 

Table 2-2. Current and Planned Investments in Payroll Processing Systems............2-7 

Table 6-1. Summary of Recommendations................................................................6-1 

Table 6-2. Overview of Options/Recommendations..................................................6-2 

Table 6-3. Analysis of Options Compared to the Current Environment 

(Status Quo)....................................................................................................6-4 

Table 6-4. Analysis of Options’ Support of the President’s Management 

Agenda ...........................................................................................................6-6 
Contents 

vi 
 1-1 

Chapter 1 

Introduction 

The primary purpose of this analysis is to examine Federal civilian payroll service 

delivery from a Government-wide perspective (as opposed to that of an individual 

agency) in order to develop options for the future investment in modernization 

and improvement of payroll systems and processes. Today, 14 internal Government providers deliver Federal civilian payroll services. The four largest—

Defense Finance and Accounting Service (DFAS), Department of Veterans Affairs (VA), Department of the Interior (DOI), and Department of Agriculture 

(USDA)—handle over 80 percent of the total civilian payroll, accommodating 

more than 190 different pay plans. Implementations are expensive (ranging up to 

$200 million per integrated system) and take years to complete. 

The payroll function is not a mission-critical activity for Federal agencies. Only 

three aspects of payroll—certification of time, certification of payroll, and certification of disbursement—are inherently governmental. However, the sensitivity of 

timely and accurate payroll results makes it a high visibility function when problems occur, and the need to address problems immediately can be a major distraction to program and administrative managers. While much improvement is 

possible within the next 1 to 3 years, Federal leaders should not anticipate a simple, easy path to modernization of this function. 

The current payroll service delivery environment evolved over many years, reflecting countless incremental changes that have been implemented in different 

ways across Government. The influences of agency-unique interpretation of legislation, regulation, labor-management agreements, and human resources (HR) 

policies have all contributed to a complex nest of requirements that, when taken 

together, unduly complicate payroll administration and modernization. 

Action to improve payroll service delivery must be comprehensive, focused, and 

persistent. The elements of modernizing payroll must include concurrent attention 

to issues of changing the marketplace within which payroll operates, simplifying 

and standardizing payroll policies and procedures, managing change, and 

strengthening the intersects among payroll, human resources, and finance functions. A new governance model for payroll policy and administration must be established through the leadership of the President’s Management Council. 

The analysis and recommendations emerging from this report are intended to provide the comprehensive, focused path that will, if persistently implemented 

through strong leadership from the Office of Management and Budget (OMB) and 

the Office of Personnel Management (OPM), enable a cost-effective solution for 
Introduction 

 1-2 

payroll delivery across Government. These actions will also set the stage for 

greater integration of HR and payroll activities. 

SCOPE

The scope of this analysis includes civilian payroll processing in the Federal Government. The analysis does not address payroll for military personnel, intelligence 

agencies, foreign nationals, and foreign service personnel. Further analysis is necessary to determine how these groups should be incorporated, if at all, into this 

initiative. This discussion will also need to examine security issues surrounding 

employees with SI clearance. 

The analysis presented in this paper incorporates recent studies and experiences of 

Federal agencies regarding time and attendance (T&A) and payroll processing 

systems. Time constraints on this initial strategic analysis precluded the development of comprehensive business cases to support the recommendations. In order 

to evaluate the various payroll options presented in this paper, a business case is 

needed. This business case would allow the Administration to make a decision on 

the different payroll options presented in this paper by presenting the following 

information: (1) definition of the strategic business needs; (2) definition of the 

technical alternatives; (3) illustration of how the capital planning and investment 

control process would be used; (4) a benefit/cost analysis; and (5) definitions of 

the acquisition, management plan, and risks for each alternative. This paper is a 

foundation for the business case, but further research and verification of the costing information is needed. 

PRESIDENT’S MANAGEMENT AGENDA

The President’s Management Agenda recognizes that strategic investment in payroll systems could provide significant returns in cost avoidance and in better Federal management. Payroll processing lends itself to opportunities for publicprivate partnerships and strategic outsourcing options, which may provide a better 

value for the Government and allow resources to be better focused on mission delivery. This initiative recognizes strategic opportunities. The majority of the workforce that maintains current legacy payroll systems and supports payroll 

operations will be eligible for retirement in the next 5 years. Eighty percent of 

payroll transactions are supported by software systems that are 13 to 35 years old. 

Consolidation and standardization of payroll data across the Federal Government 

will also improve the link between performance and budgets, and improve financial management by providing both managers and finance officers with the information needed to make timely and well-informed decisions. The consolidated and 

standardized payroll process will also provide an infrastructure that can assist the 

Government in advancing its e-Government agenda. 

OMB Memorandum 01-28 set in motion an interagency Task Force to focus on 

the transformation to e-Government, directed by the Associate Director for 
Introduction 

 1-3 

Information Technology (IT). The Task Force identified high-payoff eGovernment opportunities that could galvanize future e-Government work. The 

President’s Management Agenda section on e-Government provided the general 

direction that the Task Force defined with an action plan. The President’s 

Management Council selected 23 initiatives that constitute the heart of the eGovernment strategy. These initiatives were divided into four groups. Enterprise 

HR Integration was one of the projects selected as part of the Internal Efficiency 

and Effectiveness group. Efforts of the Federal Civilian Payroll and Enterprise 

HR Integration initiatives will be closely coordinated. 

ANALYTICAL APPROACH

OMB, in response to the Administration’s Management Agenda, directed the 

Joint Financial Management Improvement Program (JFMIP) to establish and lead 

a working group to address these issues.2

 The working group for this analysis 

consisted of representatives from JFMIP, OMB (Office of Federal Financial Management, Office of Federal Procurement Policy, Office of Information and Regulatory Affairs, and Resource Management Offices, Personnel Branch), major 

providers of payroll (DFAS, VA, DOI, USDA, and General Services Administration, or GSA), other Chief Financial Officer (CFO) offices, and small agencies. 

The members of the working group and their roles are described in Appendix A. 

The analysis presented in this report is a result of the efforts from the work group. 

Information supporting this effort was collected through a variety of methods: 

◆ A review of recent analyses in the payroll area.3 (Citations to previous 

studies are included in Appendix B.)

◆ Two workshops conducted with representative payroll stakeholders. 

◆ A survey questionnaire identifying the current environment, capital investment framework, opportunities for improvement and reengineering, 

etc., for various agencies. (The survey questionnaire and the agency responses are included in Appendix C.) 

 2

 For more details see OMB decision memorandum for Sean O’Keefe dated September 24, 

2001. 3

 Representatives from approximately 25 Federal agencies met on July 20 and 21, 2000, to 

examine the opportunities for improvement in Federal payroll operations. The results of the meeting were documented in Proceedings of the Payroll/Human Resources Retreat, July 2000, Logistics Management Institute report CF002L1. 
Introduction 

 1-4 

The approach taken by the working group is depicted in Figure 1-1. 

Figure 1-1. Payroll Initiative—Project Phases 

Planning Collecting Data

• Agency Survey

• Existing Studies

Analysis

Document “As Is” 

• Major Processors 

• Payroll Intersects

Identify Solutions

• In House

• Private Sector

Reengineer

Decision Criteria

Determine Appropriate 

Sourcing Method

• A-76

• Privatization

• Public/Private Venture

Decision Criteria

Develop Strategic 

Sourcing Plan and 

Briefing

Produce Final 

Report and Briefing

• Options

•Recommendations

•Next Steps

REPORT ORGANIZATION

This report presents the results of the working group’s analysis. The report is organized as follows: 

◆ Chapter 2 contains observations about the current payroll systems and 

processing environment. 

◆ Chapters 3 through 5 describe the opportunities for improvement and reengineering options available for establishing appropriate governance for 

the payroll function, developing an integrated enterprise architecture for 

payroll and human resources across the Government, and strengthening 

payroll service delivery to the Government, respectively. 

◆ Chapter 6 contains a summary of options and opportunities arising from 

this analysis. 

The appendixes provide background information and data in support of the analysis. 
 

 2-1 

Chapter 2 

Current Environment 

This chapter characterizes current payroll systems and processing environments. 

It includes a profile of the current payroll providers, a Government-wide view of 

the payroll process, and the costs associated with payroll processing. 

FEDERAL PAYROLL PROCESSING PROFILE

Figure 2-1 illustrates the payroll systems owned and operated by 14 of the 24 

agencies defined by the CFO Act of 1990. In processing payroll, these agencies 

must accommodate 192 different pay plans and meet the legislative requirements 

outlined in Appendix D of this document. Currently, 8 Federal agencies maintain 

their own civilian payroll systems, and 6 agencies provide payroll for other CFO 

Act agencies. These cross-service providers include the USDA, GSA, DOI, VA, 

Department of Defense (DoD), and Environmental Protection Agency (EPA). 

These providers serve over 85 percent of the Federal civilian workforce. 

Figure 2-1. CFO-wide General Schedule Payroll Systems 

USDA GSA Interior

*HHS

*Nuclear Reg.

Comm

N. Science 

Foundation

DOJ

Treasury

HUD Commerce

AID

Others

450,000 25,000

EEOC Others

National

Archives

225,000

SSA

Others

Education

* Agencies planning/working on replacement systems.

**DOE is considering outsourcing options.

+ VA has been established as a franchise fund, and currently processes payroll for one other agency. @ EPA provides payroll processing to the National Surface Transportation Board.

Cross Service Providers

Cross Serviced Agencies

Own Payroll System > 5,000

Own Payroll System < 5,000

18,000 220,000

125,000

647,000

60,000

12,000

15,000

23,000 3,000

1,250

SBA

FEMA

OPM

7,500

State *DOT

*NASA **DOE

*Labor

DOD EXOP *+ VA

Others

*@EPA
Current Environment 

 2-2 

Each of the six providers has its own payroll system and offers a range of services, including pay, benefits administration, T&A, leave administration, debt 

management, tax administration, payroll accounting, and internal and external reporting. 

As shown in Appendix E, most of the 24 CFO Act agencies are relying on homegrown, custom applications that are hosted on mainframes. Four agencies (DOI, 

DOL, NRC, and GSA) have recently made significant investment to replace legacy systems. The lack of a modernized system still impacts many agencies, including four of the five largest providers. The systems for these agencies (DoD, 

USDA, HHS, and VA), which process payroll for more than 1.5 million Federal 

civilian employees, average over 20 years old. In developing replacement plans, 

agencies are examining alternative methods of service delivery, including the introduction of commercial off-the-shelf (COTS) products (which provide an integrated HR/payroll package), government off-the-shelf (GOTS) software, or 

application service providers (ASPs), in addition to continued use of cross-service 

providers. 

OVERVIEW OF THE PAYROLL PROCESS

The payroll system is a component of an enterprise financial management system. 

Payroll system operations use outputs provided by HR and T&A systems. Downstream processes, including core accounting, depend upon outputs of the payroll 

system. Figure 2-2 depicts the different intersects that must occur in order to pay 

Federal civilian employees accurately and on time. The left side of the figure 

shows major agency inputs to payroll; the right side portrays its major outputs. 
Current Environment 

 2-3 

Figure 2-2. Overview of Agency Interfaces for Payroll Processing 

Customer Service

Representatives/

Employee Express

Time and Attendance

Payments

• EFT

• Checks

• Others

Accounting/

Core Financial 

Management

Other Adjustments

External 

Interfaces

Human Resources Personnel

Actions

Employee 

Information

Updates

Time &

 Attendance

Data

Net Pay &

Deduction 

Summary

Accounting

Data

Required 

Reporting

Data & 

Deduction 

Payments

Travel, Debts to

Government, etc.

Individual Agency 

Processes

Individual Agency 

Processes

Other

OPM

DOT

 Other

 DOI

 USDA

Payroll

Cross Service

Provider

GSA

Payroll

Agency’s

Own

System

DOD

Individual Provider 

Processes

Inputs from HR include personnel actions—employees provide information on 

their choices for payroll deductions such as withholding for taxes, health insurance, savings bonds, and union dues. HR information, such as address changes, 

can be updated throughout a pay period. Employees may also change information, 

such as deductions, throughout the pay period. These changes may be submitted 

through HR or directly by the employee through a portal system such as Employee Express. For this reason, agencies in the process of implementing a new 

payroll system are selecting a software package that integrates HR and payroll. 

In addition to HR information, payroll processing requires information about an 

employee’s time. T&A data include hours worked by date, charge number or project, and shift or overtime information. Other adjustments must also be sent to a 

payroll system, including travel payments, debt management deductions for tax 

levies or other outstanding debts due to the Government and other third parties. 

While many steps are required before an employee can be paid, the main processes involved in payroll include T&A processing, leave processing, and pay 

processing. Figure 2-3 represents a high-level information flow for these common 

core processes. 
Current Environment 

 2-4 

Figure 2-3. High-Level Payroll Process Flow 

Leave

Processing

Time & Attendance

Processing

Pay

Processing

Validated

T&A Data

Payroll

Data

Paycheck & 

Stub Data

Accounting

Data

Deduction

Payments &

External

Reporting

Updated

Leave

Balances

T&A

Data

T&A

Corrections

Authorized

Approvals Validated

T&A Data

•HR Data

•employee name and

address

•taxation info

•bonds

•health & life insurance

•savings plan

•personnel actions

Employee

Data

•Adjustments

•monetary awards

•severance pay

•reimbursements

•debts to government

•other one-time adjustments

T&A Reporting

Accounting

& Payment

Processing

Time and attendance processing includes collecting all the T&A data from agency 

sources by pay period, editing and correcting the data as necessary, and, on approval from authorized approving officials, releasing the complete and accurate 

T&A data to other payroll processing functions. Labor distribution is a subset of 

T&A and is given to payroll so labor cost can be distributed to the core accounting system. Leave processing includes calculating leave accrued per pay period 

and updating leave balances appropriately, taking adjustments into account as 

necessary. Pay processing includes calculating gross pay and deductions, making 

adjustments and calculating net pay, maintaining payroll-related data (such as information on employees’ discretionary deductions), and generating output in the 

form of electronic payments, paychecks, earning and leave information, accounting data, and external reporting. 

Once an employee’s pay has been calculated, many outputs are created. As shown 

on the right side of Figure 2-2, these outputs include net salary payments to the 

employees, general ledger and other accounting data to the agency core financial 

management systems, and required reporting and deduction payments to external 

Federal agencies and non-Federal organizations. The various outputs produced 

from payroll are sent to a variety of external organizations. Figure 2-4 illustrates 

these interfaces, which can be divided into six Federal agencies and five nonFederal organizations. 
Current Environment 

 2-5 

Figure 2-4. Government-wide Payroll External Interfaces 

Federal Interfaces

Non-Federal Interfaces

Unemployment

Health 

Insurance

Social Security

Administration

National 

Finance 

Center

Office of 

Personnel

Management

Labor

Treasury State & Local

Taxes

Unions

Payroll

Agency In-House

or

Cross Service

 Provider

The external Federal reporting requirements are similar across payroll processes, 

but the requirements of the non-Federal organizations differ by geographical location of the employee and by employing agency. Each of the interfaces with Federal agencies is complex and represents several sets of data exchanges. For 

example, specific data that need to be reported to Treasury include Federal employment tax information, salary information, savings bond information, state and 

local tax information, and IRS form 941. Each data exchange may require a different business cycle (e.g., quarterly versus by pay period). (More details of these 

data exchanges are illustrated in Appendix F.) 

These high-level views of the interactions between payroll and related processes 

may oversimplify the true payroll environment since the core processes of payroll 

and related areas of HR and finance are not standardized at a Government-wide 

level. The development and implementation of these processes differ from agency 

to agency, as well as within an agency. For example, more than 100 different 

T&A applications must be maintained and updated as payroll requirements 

change, even though there are only 14 Federal payroll processors. 
Current Environment 

 2-6 

CAPITAL INVESTMENT FRAMEWORK AND COST OF 

PAYROLL PROCESSING 

The cost of payroll processing under the current environment varies by service 

provider. Table 2-1 illustrates annual operating costs of providing payroll service, 

as reported by the service providers in response to the surveys. 

Table 2-1. Example Operating Costs of Payroll Services 

Service provider 

Payees 

served 

Annual 

operating 

cost ($000) a

Average 

annual cost 

per payeeb

Department of Defense 680,000 $30,661 $45 

Department of Energy 12,000 $3,878 $323 

Department of the Interior 225,000 $33,000 $147 

Department of Labor 15,000 $2,676 $178 

Department of State 23,000 

Department of Transportation 60,000 $8,713 $145 

Environmental Protection Agency 18,000 $921 $51 

Federal Energy Regulatory Commission 1,150 $762 $663 

General Services Administration 25,000 $2,941 $118 

Health and Human Services 125,000 $12,056 $96 

National Air and Space Administration 7,500 $1,946 $260 

Nuclear Regulatory Commission 3,200 

National Science Foundation 1,250 $237 $190 

Department of Agriculture 565,000 $27,422 $49 

Department of Veterans Affairs 220,000 $7,000 $32 

a

 Annual operating costs reported by representatives of individual agencies are for FY01 and 

include pay and compensation, hardware and software maintenance, telecommunications, depreciation, supplies and materials, non-capital equipment, and miscellaneous expenses. The costs do 

not include HR, functional, accounting, or finance functions. b

 Calculated based on FY01 operating costs divided by number of payees served. 

It should be noted that the data shown in Table 2-1 may not represent homogeneous services provided across each agency, which may explain some of the variations in unit cost. Agencies provided cost information within a very short 

turnaround and with limited guidance in preparing information useful for accurate 

comparison. The payroll operations cost information presented is at a rough order 

of magnitude, suggesting annual expenditures of about $100 million. 

Because of age and capacity limitations of the current processing environment, 

many of the principal payroll service providers are considering investments in 

payroll systems infrastructure. Others are nearing completion of such investments. 
Current Environment 

 2-7 

Table 2-2 summarizes ongoing and planned payroll system projects for the 

principal payroll service providers. 

Table 2-2. Current and Planned Investments in Payroll Processing Systems 

Agency Future plans 

Planned 

investmenta

Department of Defense New functionality for Defense Civilian Pay System $29.5 million 

Department of Energy Possible outsourcing with GSA $0 

Department of the Interior Upgrade planned 

Department of Labor Replacing with PP2K in 2002—PeopleSoft $9 million 

Department of State Will replace three systems by 2005 

Department of Transportation Replacement or upgrade is expected, but plans 

are not developed 

$0 

Environmental Protection Agency Payroll replacement system will be installed by 

2004 

$4.4 million 

Federal Energy Regulatory 

Commission 

Upgrade of software to newest version on or about 

fourth quarter FY02 

$0 

General Services Administration PAR upgrade $0 

Department of Health and Human Services Upgrade to EHRP in 2003 $1.4 million 

NASA Replacement planned with COTS in 2006 $0 

Nuclear Regulatory Commission Agency-wide Financial and Resource Management 

System (STARFIRE) 

$12.2 million 

National Science Foundation None planned $0 

Department of Agriculture Replacement planned by 2010—not identified $46.0 million to 

$124.6 million 

Department of Veterans Affairs Replacement planned with HRLINK$ (HR and payroll system) for 2004—PeopleSoft $100 million to 

$600 million 

a

 Planned investments were derived from the following sources: agency responses to the survey questionnaire, 

websites, OMB 300s, and agency cost/benefit studies. With the exception of NRC and VA, the total investment costs 

for payroll systems are not available, and therefore not reflected, in these figures.

Full capital investment costs that would be necessary to support replacement of 

the nine legacy systems that are 13 or more years old are not reflected in planned 

investments. This is only a small subset of the investment that would be required. 

The capital investment projects shown are at various stages of development. Some 

will be implemented as early as 2002; others are still being planned and analyzed. 

Because some planned improvements are years from implementation, an opportunity exists for OMB to affect the development—and ultimately the cost—of payroll to the Government. 
Current Environment 

 2-8 
 3-1 

Chapter 3 

Opportunities: Establishing Governance 

This chapter describes the options for establishing governance. Within governance, options regarding standardization of policies and practices are also described. For each option, the associated benefits and considerations are presented. 

Recommendations for establishing governance are presented at the end of this 

chapter. A summary of all recommendations in this report is presented in Chapter 

6. 

The opportunities described in this chapter have been categorized as follows: 

◆ Governance and policy formulation 

◆ Implementation of policy 

◆ Systems standardization. 

GOVERNANCE AND POLICY FORMULATION

Agencies are allowed flexibility in interpreting and implementing payroll policy. 

The working group recognizes, however, that despite the benefits of this flexibility, decentralized interpretation is contributing 

to a lack of standardization. Central agencies 

such as OPM and OMB manage legislative initiatives and create policy that affects agency 

payroll processes and systems. There is an opportunity to improve standardization with a 

more disciplined approach to assessing the full 

impact on implementation. 

The working group discussed three options for coordinating policy formulation 

while assessing the impact on costs. 

Option: Establish a centralized payroll authority to ensure sound, 

consistent policy across Government. 

Although OMB has overall Government-wide authority over financial management policy that includes payroll, the problem calls for a more direct focus on 

payroll policy and systems. OMB’s current responsibilities for payroll as a financial management system need to be moved to an organization more directly 

aligned with HR policy formulation. OPM could fulfill this role if directed to do 

so. 

Payroll systems 

accommodate 192 

different pay plans. 
 Opportunities: Establishing Governance 

 3-2 

Benefits and considerations are as follows: 

◆ Benefits 

! Aligning policy control over human resources issues and payroll issues 

into a single organization would facilitate the creation and implementation of payroll policy. The single organization would be uniquely positioned to have a strategic view of 

how emerging HR policy changes 

would affect payroll systems and 

processes. The organization would 

be a single touch point for Government-wide councils regarding payroll issues and the coordination 

among payroll, HR, and systems. It 

would have the final authority on 

policy interpretations, allowing for a more clearly defined set of business rules for policy implementation. 

◆ Considerations 

! While this new responsibility alignment would lead to more standardization across the Government, care would be needed to balance the 

benefits of agency creativity and uniqueness. 

Option: Establish a process for full impact assessment of all new 

policies affecting payroll processes and systems. 

The impact assessment should be broadened beyond what is viable within the current system’s limited focus to also consider economic impact on payroll service 

delivery as well as strategies for interpretation and implementation. 

In addition, a single focal point for payroll governance would create the opportunity to simplify and standardize the wide 

array of payroll policies and procedures 

that have evolved over many years. OPM 

could become the champion for addressing 

the low cost, high impact opportunity to 

review and eliminate the silly rules. Appendix H lists low cost, high impact recommendations identified by staffs at 

stakeholder agencies. 

The creation of a stakeholder Payroll 

Council could provide support to OPM as 

an advisory body to address and assess the Government-wide impact of proposed 

policy on payroll processes and systems. Council membership could include the 

Some employees’ salaries 

are computed using 2080 

hours per year; others use 

2087 hours resulting in 

different gross salaries for 

people in the same grade 

and step. 

Laws become effective 

at times other than the 

beginning of the pay 

cycle resulting in multiple pay calculations. 
Opportunities: Establishing Governance 

 3-3 

Human Resources Technology Council (HRTC), Chief Information Officers 

(CIO) Council, and CFO Council, as well as selected service providers and small 

independent processors. 

Finally, the establishment of a payroll users network (PUN) could serve as a vehicle for increasing communication and cooperation across the payroll community. 

It would coordinate the action items emanating from legislative and policy proposals. Payroll processing representatives from 

across the Government would be invited to participate. 

Anticipated responsibilities for the PUN would 

include acting as a clearinghouse for development efforts, sharing best practices, and identifying enhancements to payroll systems 

functionality. The PUN would be organized and 

staffed by the Payroll Council to ensure sound 

support and guidance from the Council to OPM 

as the “owner” of the payroll function and to OMB as the central reviewing authority for Government policy initiatives. 

Benefits and considerations are as follows: 

◆ Benefits 

! An impact assessment would enable the Government to approach a 

consistent global perspective regarding the impact and implementation 

of policy changes on payroll service delivery. Guiding policy changes 

in this manner could help the Government achieve the desired goal of 

more standardization in payroll processing. 

! Consistent and comprehensive guidance on implementation of new policies would provide for more effective 

and efficient policy implementation. 

! Elimination of unnecessary rules 

would make payroll service delivery 

more efficient and simplify development of modern systems. 

◆ Considerations 

! A full impact assessment could cause longer lead times for policy 

creation and implementation. 

! The extra reviews and analysis may require additional staff time to 

complete. 

At least ten (one, two, 

five, six, eight, ten, fifteen, twenty-four, 

thirty, or sixty minutes) 

increments are used to 

compute leave usage 

and pay. 

Different agencies 

choose to pay employees in the same geographic different 

amounts of locality 

pay. 
 Opportunities: Establishing Governance 

 3-4 

! OPM allows agencies the discretion for interpretation, resulting in inconsistent implementation of policy. Achieving standardization may 

limit agency flexibility. 

Option: Establish a unified OMB oversight process to align 

resources, budgeting, capital planning and investment, and/or 

contracting to support joint investment in payroll systems and/or 

joint procurement of payroll services to facilitate consolidation and 

leveraging in the marketplace. 

Current OMB capital planning guidance requires agencies to identify their 

agency-specific architecture and satisfy Clinger-Cohen Act requirements. Before 

agencies can approve capital investments, the Clinger Cohen Act and implementing guidance require that they develop a capital investment plan and business case 

that answers questions from an agency perspective. The agency must determine 

(1) whether the function is necessary, (2) if there are cross-servicing or outsourcing opportunities, (3) the return on investment, and (4) risk prior to investing in 

information technology. This process does not raise questions from a broader perspective or organize cross-agency funding of joint investments or joint contracting 

for services. 

Agency-specific budget targets and ceilings make it more difficult for a single 

agency to take the lead in capital investment that will benefit many multiple agencies. Similarly, an agency may enter into contracts for services, but must have additional authority to negotiate contracts for services on behalf of other agencies. 

Benefits and considerations are as follows: 

◆ Benefits 

! A unified oversight process would remove barriers for agencies considering joint investment and joint contracting. 

◆ Considerations 

! This option would require congressional consultation. Appropriations 

committees are averse to funding joint initiatives within their “top 

lines.” 

IMPLEMENTATION OF POLICY

Internal agency policies are not always coordinated across HR and payroll. Agencies develop varying interpretations of policies, have differing systems capabilities, and follow different business models. These factors lead to agencyindividualized customization, non-standard requirements, and increased costs. 
Opportunities: Establishing Governance 

 3-5 

The working group discussed two options for reengineering agency-specific implementation of policy. These actions would be fostered under the direction of the 

payroll policy governance body discussed above. 

Option: Review existing agency business models and policy 

interpretations and implementations, looking for opportunities to 

standardize. 

In order to standardize payroll processing, payroll policy and regulations promulgated by the central agencies need to be standardized and implemented uniformly 

throughout all Federal agencies. 

Benefits and considerations are as follows: 

◆ Benefits 

! A review would create a baseline for 

standardization efforts. While there 

would be no effort to retrofit systems 

or processes to comply with the standards lists, no new changes could be 

implemented that did not comply with the established standard. 

! Standardization across agencies would lead to cost savings and a 

common methodology for delivering 

payroll services. 

◆ Considerations 

! A review would require identification 

of an executive agent to lead a Government-wide effort and resources. 

Option: Pursue common implementation strategies across 

Government through the PUN. 

Based upon the review described above, the PUN could identify and prioritize 

common business rules and procedures to facilitate efficient and effective payroll 

operations and systems. By moving toward common implementation strategies, 

the payroll community will move toward greater standardization of processes and 

procedures. Over time, common practices for payroll services across agencies will 

materialize. 

Some agencies round 

fractions of cents up

during pay and deduction calculations 

and others round 

down. 

There are over a 

dozen operational 

processes to accommodate special work 

allowances (horse, 

scuba diving, porpoise observers, etc.).
 Opportunities: Establishing Governance 

 3-6 

Benefits and considerations are as follows: 

◆ Benefits 

! Common practices and standardization would lead to cost efficiencies. 

! Government-wide implementation 

strategies would reduce the need to 

coordinate policy change implementation within an agency. 

! Improves opportunity for investing in a common system. 

◆ Considerations 

! Creating common implementation strategies would reduce the latitude 

payroll service providers and systems developers have in creating individualized solutions for their customer accounts. 

! The move toward common practices may lead to the lowest common 

denominator approach to the implementation of policy changes, so that 

all providers can comply with the standard. 

SYSTEM STANDARDIZATION

Data standards are not fully coordinated between HR and payroll, and payroll service providers do not observe data or functionality standards. The working group 

discussed two options for reengineering system standardization. 

There are several permutations to manage 

leave transfer (one for 

one accounting, donated 

into pool, etc.) resulting 

in different systems to 

manage leave policy. 
Opportunities: Establishing Governance 

 3-7 

Option: Update and add clarity and specificity to the current 

JFMIP payroll systems requirements document. 

JFMIP issues functional system requirements documents that describe what Federal financial systems must do and consist of the minimum functionality necessary to establish a system and comply with Federal laws and regulations. The 

JFMIP issued Human Resources & Payroll Systems Requirements in 1999.4

 It 

identifies high-level functional requirements for Federal human resources and 

payroll systems. However, the document does not standardize on a specific approach when the underlying regulation provides discretion. The recommendation 

is to define more specific approaches and/or data requirements in an update of the 

document to incorporate the recommendations of a PUN group. 

Benefits and considerations are as follows: 

◆ Benefits 

! Together with an effective PUN, an updated JFMIP payroll system requirements document would reduce lead times and the cost of implementing future payroll policy changes. 

! Updated requirements would provide the opportunity to integrate HR 

and payroll systems at the data element level, thereby reducing system 

redundancy and overhead. 

! Because all systems would be implementing changes using the same 

standards, better decisions would be facilitated regarding the wisdom 

of continued capital investment in more expensive systems. 

◆ Considerations 

! It is likely there would be a natural resistance to any effort that will 

fundamentally alter the way payroll providers do their business. 

! If the number of payroll providers remains relatively fixed, the cost of 

retrofitting legacy systems to more tightly defined standards could be 

high. 

 4

 JFMIP, Human Resources & Payroll Systems Requirements, JFMIP-SR-5, April 1999 

(www.jfmip.gov). 
 Opportunities: Establishing Governance 

 3-8 

Option: Create a set of data element standards to be shared by 

payroll and HR systems. 

Benefits and considerations are as follows: 

◆ Benefits 

! A set of data element standards shared by payroll and HR across Government would facilitate collection and collation of consistent data 

Government-wide. 

! Adopting a single set of data element standards could help in fully integrating HR and payroll systems. This level of integration would lead 

to a greater purity of data, would facilitate and simplify data interchange, would facilitate Government-wide application development 

(e.g., HRDN and Thrift Savings Plan) and would significantly reduce 

the need for rework typically associated with interfacing systems that 

require some level of data conversion. 

◆ Considerations 

! The transition to Government-wide use of standard data elements may 

be costly and should coincide with systems integration to be effective. 

! Many components of HR do not directly impact on payroll so the 

scope of the architecture should be carefully drawn to address the integration of those HR processes (employee data and personnel actions) 

that affect employee payroll. 

! Civilian HR and payroll are complex and any effort to bring standard 

data and processes will be very difficult. 

RECOMMENDATIONS FOR ESTABLISHING 

GOVERNANCE

The following recommendations address the opportunity for establishing governance: 

◆ Designate OPM as the policy owner of payroll policy and operations. 

OPM in conjunction with the recommended payroll governance body, 

would have the responsibility to set clear goals and timelines for standardizing payroll processes and the payroll processing business model. 

◆ Designate OMB and OPM as champions for addressing the low cost, high 

impact recommendations identified in Appendixes G and H. 
Opportunities: Establishing Governance 

 3-9 

◆ Create a stakeholder Payroll Council, supported by a PUN as an advisory 

body, to address and assess proposed policy Government-wide impact on 

payroll processes and systems. Include in the council membership the 

HRTC, CIO Council, and CFO Council, as well as selected service providers and small independent processors. 

◆ Establish joint capital investment and budgeting capability within OMB’s 

capital planning and budgeting procedures. 

◆ Establish governance to facilitate acquisition of privatized services on behalf of multiple agencies. 

◆ Create a PUN consisting of the current providers of payroll and selected 

cross-serviced agencies. 

◆ Direct the PUN to review a select list of agency payroll policies and procedures and to develop a set of standards to be followed. 

◆ Review current payroll data elements and functionality and HR data standards for simplification and standardization. 

◆ Set clear goals and timelines for standardization. 

◆ Form a public-private strategic alliance, championed by a central agency, 

to develop a single standard system to be used Government-wide.

 

 4-1 

Chapter 4 

Opportunities: Developing an Integrated 

Enterprise Architecture 

This chapter describes the options for developing an integrated enterprise architecture. For each option, the associated benefits and considerations are presented. 

Recommendations for developing an integrated enterprise architecture are presented at the end of this chapter. A summary of all recommendations in this report 

is presented in Chapter 6. 

The opportunities described in this chapter are categorized as follows: 

◆ Government-wide architecture 

◆ Integration with human resources 

◆ Proliferation of interfaces 

◆ Barriers to electronic commerce. 

GOVERNMENT-WIDE ARCHITECTURE

Responsibility for defining a Government-wide architecture has not been established. Under the current process, each agency has its own view, and that view 

may not contain all the elements of an architecture. In April 1998, the CIO Council directed the development and maintenance of a Federal Enterprise Architecture 

to maximize the benefits of information technology within the Government. The 

Federal Enterprise Architecture is a strategic information asset base that defines 

the business, information necessary to operate the business, technologies to support the business operations, and transitional processes for implementing new 

technologies in response to the changing needs of the business. 

The working group discussed one option for a Government-wide architecture. 

Option: Develop Government-wide payroll architecture to be used 

for investment decisions and technical guidance. 

The architecture includes as-is and to-be business processes, data used, systems, 

interfaces, infrastructure needed, locations, organizational involvement, standards, 

and a transition plan for moving from the as-is model to the to-be model. The 

Government-wide payroll architecture forms a portion of the Federal Enterprise 

Architecture Framework (FEAF) Financial Management Segment. The FEAF 
 Opportunities: Developing an Integrated Enterprise Architecture 

 4-2 

provides an organized structure and a collection of common terms by which Federal segments can integrate their respective architectures into the Federal Enterprise Architecture.5

Benefits and considerations are as follows: 

◆ Benefits 

! Use of a Federal Enterprise Architecture would facilitate long-term 

capital investment decisions and the identification of costs by identifying dependencies and providing sequencing information to assess the 

impact of financial decisions. 

! A Government-wide architecture would provide standards and technical guidance for system implementation efforts. 

! A shared description and defined terminology would improve communication across agencies and across professional groups (end users, IT 

professionals, planners, etc.). 

! Adherence to a Federal Enterprise Architecture would increase visibility of uncontrolled and uncoordinated elements of the business and IT 

environments; it also would increase control over the evolution of 

business processes and IT capabilities. 

◆ Considerations 

! A decision-making process that incorporates the payroll architecture 

must be developed and followed. 

! Ownership and maintenance of the architecture must be established. 

INTEGRATION WITH HUMAN RESOURCES

Most of the employee/management decision points and data elements affecting 

pay are initiated under laws and regulations governing Federal personnel actions. 

Therefore, human resources actions (appointments, positions changes, separations, awards, within-grade increases) are inextricably linked to the calculation of 

Federal employee pay. To achieve the necessary level of efficiency and effectiveness, the maximum possible level of integration between HR and payroll services 

and systems is needed. 

The working group discussed one option for integration with human resources. 

 5

 For more information about the Federal Enterprise Architecture Framework, visit the CIO 

Council’s website at www.cio.gov. 
Opportunities: Developing an Integrated Enterprise Architecture 

4-3 

Option: Agencies should implement an integrated payroll/HR 

solution based upon a set of Government-wide data and 

functionality standards. 

Benefits and considerations are as follows:

◆ Benefits 

! An integrated solution based on a set of common data and functionality standards would reduce the costs of developing, maintaining, and 

implementing interfaces. 

! Common standards and functionality would allow the payroll community to fully leverage the use of the PUN to address common issues. 

! The payroll community would have a unified voice in addressing policy and legislative changes. 

! Significant savings would be achieved and customer service enhanced 

by eliminating dual entry of the same or related data into separate payroll and HR systems, which would, in turn, eliminate pay discrepancies and errors that result from conflicting or inaccurate data in either 

human resources or payroll processing. 

◆ Considerations 

! Full integration could require service recipients to have less flexibility 

in their choice of an HR and payroll provider. An integrated human resources/payroll system might not be severable, therefore requiring the 

service recipient to get both services from the same provider. 

! With an integrated system, the primary system owner would have to be 

identified. Differences in primary system ownership between HR and a 

finance organization could lead to differences in priorities and implementation schedules. (Such differences exist even in current models, 

inasmuch as human resources priorities must be reflected in payroll 

processes, whether or not system integration is in place.) 

PROLIFERATION OF INTERFACES

Interfaces for HR, payroll, and time and labor have different file formats and are 

complex and numerous. Systems have different nomenclature and data elements. 

Development of interfaces adds costs. The availability of standardized interfaces 

impacts options. 

The working group discussed two options for reengineering interfaces. 
 Opportunities: Developing an Integrated Enterprise Architecture 

 4-4 

Option: Update to add clarity and specificity to the existing JFMIP 

payroll systems requirement document to include subsystems like 

T&A and labor cost accounting. 

Benefits and considerations are as follows: 

◆ Benefits 

! Together with an effective PUN, standardized interfaces would reduce 

lead times and the cost of implementing future payroll policy changes. 

! The opportunity to integrate HR and payroll systems at the data element level would be enhanced by reducing system redundancy, overhead, and the lead time for implementing future changes. 

! Decisions regarding the wisdom of continued capital investment in 

more expensive systems would be facilitated, because all systems 

would be implementing changes using the same standards. 

◆ Considerations 

! It is likely that there would be a natural resistance to any effort that 

will fundamentally alter the way payroll providers do their business. 

! If the number of payroll providers remains relatively fixed, the transition to standards would be costly. 

! It does not adequately address the problem. 

Option: In conjunction with HR, create a set of data standards for 

use by payroll and HR. 

Benefits and considerations are as follows: 

◆ Benefits 

! Standards would facilitate collection and collation of consistent data 

Government-wide. 

! The HR and payroll system could be fully integrated. This level of integration would lead to a greater purity of data, and it would significantly reduce the need for rework typically associated with interfacing 

systems that require some level of data conversion. 
Opportunities: Developing an Integrated Enterprise Architecture 

4-5 

◆ Considerations 

! Requiring agencies to transition to a set of standard data elements will 

create a cost associated with the transition. 

BARRIERS TO ELECTRONIC COMMERCE

Rules and regulations currently prevent the full integration of electronic commerce in payroll processing, such as electronic signature and W-2 forms mailed to 

employees. Greater penetration of electronic commerce practices and procedures 

within the HR and payroll areas will lead to greater efficiencies and cost savings. 

Some examples of barriers to electronic commerce are included in Appendix G. 

The working group discussed one option for electronic commerce reengineering. 

Option: Systematically identify and eliminate the barriers to 

greater reliance on electronic commerce. 

Benefits and considerations are as follows: 

◆ Benefits 

! The use of e-commerce would eliminate manual and paper-based 

processes, give the payroll customer greater control over selected personnel and payroll data elements, and reduce costs associated with 

these operations. 

◆ Considerations 

! Some of the barriers to e-commerce are grounded in legislation and 

central agency policy. 

! Effecting change could be a long and tedious process. 

! Some agencies may not possess the technical capability to deal with 

the new technologies associated with e-commerce. 

! Expanding e-commerce changes the landscape of command and control and could threaten the security of some systems and process owners. 

! E-commerce represents a major culture shift for HR and payroll processors. 
 Opportunities: Developing an Integrated Enterprise Architecture 

 4-6 

RECOMMENDATIONS FOR DEVELOPING AN 

INTEGRATED ENTERPRISE ARCHITECTURE

The following recommendations address the opportunity to develop an integrated 

enterprise architecture: 

◆ Develop a payroll Government-wide architecture with as-is and to-be 

models and a transition plan. 

◆ Establish ownership over the development of the payroll Governmentwide architecture with the Payroll Council. 

◆ Develop a process to include the payroll architecture in decision-making 

processes. 

◆ Ensure that any provider or system solution adopted for Government-wide 

or multi-agency use has the capability to fully integrate processing of human resources and payroll actions. 

◆ Review current payroll data elements and functionality and HR data standards for simplification and standardization. 

◆ Set clear goals and timelines for standardization. 

◆ Aggressively move forward with an effort to overcome the barriers to increased reliance on e-commerce. 
 

 5-1 

Chapter 5 

Opportunities: Strengthening Payroll 

Service Delivery 

This chapter describes the options for strengthening payroll service delivery. For 

each option, the associated benefits and considerations are presented. The options 

are based on the assumptions that (1) the payroll function in the Federal Government is too widely dispersed, (2) legacy systems currently serving more than 

three-fourths of the workforce are at the point where there will need to be a reinvestment, and (3) a Government-wide strategic replacement of legacy systems 

would be less costly than individual agency efforts. Recommendations for 

strengthening payroll service delivery are presented at the end of this chapter. A 

summary of all recommendations in this report is presented in Chapter 6. 

The opportunities described in this chapter are categorized as follows: 

◆ Consolidation 

◆ Privatization. 

CONSOLIDATION

Over the past 18 years, Federal agencies have attained cost savings and cost 

avoidance through cross-servicing their payroll operations to Federal providers. A 

1989 General Accounting Office report identified a $52 million operational savings over a 10-year period based on the Department of Treasury’s decision to 

move its payroll operations to the USDA’s National Finance Center (NFC). In 

addition, Treasury reported a cost avoidance of more than $32 million in system 

capital investments associated with the move. In fact, the five largest organizations that migrated their payroll operations to the NFC cited combined operational 

savings of more than $15 million annually and avoided more than $60 million in 

systems modernization costs (stated in 1992 dollars). More than 100 Federal organizations have achieved comparable savings by opting to obtain quality and 

cost-effective payroll services from a core group of primarily five Federal payroll 

providers. 

The issue at hand is to determine the appropriate approach for obtaining the additional operational cost savings through economies of volume, obtaining additional 

cost avoidance by limiting the places capital system modernization activities have 

to take place, and increasing standardization by limiting the number of systems. 
 Opportunities: Strengthening Payroll Service Delivery 

 5-2 

The working group discussed three options representing the alternative “to-be” 

scenarios for Federal payroll processing transition. 

Option: Direct agencies to an approved existing cross-servicer. 

Currently, there are 14 Federal payroll offices. The five primary providers—

DFAS, USDA, VA, DOI, and GSA—service 1.58 million Federal (non-uniformed 

military and non-postal) employees, or 85 percent. Payroll services for another 

265,000 Federal (non-uniformed military and non-postal) employees are provided 

by their own agency or department. The implementation time for a single agency 

to migrate to another provider is approximately 6 months to 1 year, because of the 

need for requirements analysis, data mapping, data conversion, reports development, testing, training, etc. At the same time, the provider may be required to develop software and interfaces to accommodate unique requirements unless 

ameliorated through standardization, adding additional cost and complexity. 

Benefits and considerations are as follows: 

◆ Benefits 

! Consolidation to five providers would reduce capital investment needs 

and achieve significant standardization. Fourteen agencies provide 

payroll services. Five providers service 1.58 million payees. The remaining nine service 265,000. If, through consolidation and standardization, savings of $100 per serviced employee could be achieved, 

overall annual savings would amount to approximately $26.5 million. 

The larger benefit is achieved through cost avoidance, by eliminating 

multiple investments to modernize payroll systems. (For example, four 

system replacements averaging $25 million each would cost $100 million.) 

! It is the most feasible option in terms of risk and difficulty and could 

be accomplished in the FY03 to FY04 time frame. (This assumes that 

one of the current cross-servicers can support Title 38 and Title 42.) 

! Agencies would have more choice and flexibility to select the best 

provider based on competition. 

◆ Considerations 

! Significant implementation and development costs would be incurred 

over a 1- to 2-year time frame in order to move to one of the five existing providers. The working group concluded that this option is feasible 

but less desirable than consolidation to two to three providers. 
Opportunities: Strengthening Payroll Service Delivery 

5-3 

Option: Develop a single software system.

This option involves building a single integrated payroll system software (versus 

multiple systems) that (1) would leverage COTS and private-sector integrators, 

(2) would comply with the newly defined Government-wide architecture, 

(3) would be enabled by standardized requirements and reengineered business 

practices, and (4) may be offered at multiple Government or commercial locations. 

The general business case for using COTS software rests on the ability to spread 

research and development costs over a large customer base and benefit from systematic upgrades of software that incorporate best business practices. However, to 

take advantage of economies of scale in vendor software development, Federal 

agencies must be able to use the software with limited customization. Existing 

COTS providers do not support the full range of Federal payroll processing requirements. At present market research indicates limited commercial options. 

PeopleSoft, Oracle, and SAP are enterprise resource planning software solutions 

that include HR, payroll, and other financial functionality where the HR functionality has been used in a Federal agency. 

Two fundamental factors account for the gap between Federal payroll requirements and the capabilities of COTS solutions. The primary factor is the lack of 

standardization, resulting in excessive and complex Federal requirements and increasing the requirements that vendors must meet. The second is the lack of marketplace incentives for providers of COTS packages to invest and increase 

capabilities. 

Benefits and considerations are as follows: 

◆ Benefits 

! A single software system would impose a standardized Federal payroll 

process on a Government-wide basis by default. The disparate implementation of payroll policies in agency payroll systems would be resolved by virtue of one payroll system. 

! The system, with strong configuration management, would not necessarily be limited in terms of geographical locations of operation. 

! A single system would provide the best opportunity to minimize nearterm capital investment cost in software development in the commercial market place to meet Federal needs while, at the same time, setting 

powerful incentives for the COTS market to become responsive to 

Federal needs. 
 Opportunities: Strengthening Payroll Service Delivery 

 5-4 

◆ Considerations 

! A single software system may be less feasible in terms of meeting requirements, technology, and capacity. It would require visibility of the 

full range of functional requirements in order for the market to respond. 

! An aggressive acquisition strategy would be needed to engage the 

market to close the functionality gap in commercial software. The 

COTS model of “best fit” and business process reengineering is effective only when the product supports most critical functionality without 

customization. 

! Integration and standardization of HR systems is a desirable prerequisite to a single payroll system. At a minimum, a standard interface between HR and payroll must be defined. An incremental approach to 

integration with HR systems should be part of the migration strategy. 

Since it will take several years to consolidate payroll systems, the near 

term should be seen as a prime opportunity to orchestrate common investments in HR systems. 

! Governance issues defining roles, responsibilities, and resources to 

support a common software system development effort must be defined in advance and an acquisition strategy developed. 

! The single system option represents a very large risk and responsibility 

without first evolving to the point where the requirements, capacity, 

and technology are more feasible and issues of ownership, standardization, architecture, and HR/payroll integration can be more easily resolved. Risk may be mitigated, however, with multiple providers of 

the same system. 

! There are risks inherent with a monopoly, including the lack of incentives to control costs, refresh technology, and meet customer service 

expectations. 

! A single standardized software system must be designed to be flexible 

and nimble to accommodate unique needs and changing HR policies 

that will occur over time. 

! A single software system could be achieved in the next 5 years for 

agencies that must move off of legacy systems. However, it could take 

many additional years to implement the entire civilian sector onto the 

system if the current state of differences remains. 
Opportunities: Strengthening Payroll Service Delivery 

5-5 

Option: Direct all agencies to two to three providers. 

Agencies could be directed to choose among two or three approved payroll providers within an agreed upon time frame. Each provider would have its own systems software and operation. Capital investment in payroll systems would be 

redirected in accordance with those migration decisions. The timing of when each 

agency migrates to the approved provider would be influenced by the state of that 

agency’s return on investment already made or in process. Agencies that are planning investment in new systems or upgrades would likely be earlier candidates 

than those who have recently completed upgrades. 

There are several approaches for selecting the two or three payroll providers. The 

first can be a mandate by OMB. The provider selection criteria would be based on 

the minimum payroll processing requirements needed for the approximately 

2 million Federal civilian employees. The directive can be based on a more detailed business case, input from the President’s Management Council or other 

councils, or other methods. This directive would enable a decision to be made 

quickly and allow the process for consolidation to move quickly; however, there 

is a low level of competition involved. The lack of a federalized software product 

may also limit the amount of commercial-sector involvement. 

A second alternative is to have a competition (similar to A-76) in which the 

minimum requirements are defined and agencies, commercial entities, or publicprivate joint ventures submit bids. Although this method allows for a high level of 

competition and a lower cost to the Government, this involves a longer time 

frame. The A-76 competition process is lengthy and may not result in enough 

bidders to make the process worthwhile. 

Regardless of which approach is taken in determining the two or three providers, 

the following benefits and considerations hold true: 

◆ Benefits 

! Reduced capital investment, operating, and maintenance costs would 

achieve significant long-term cost avoidance. 

! A high degree of standardization would be imposed by default as more 

agencies use the same system. 

! Agencies may choose the best provider. Each provider has its own 

software and operation. 

! Having two or three systems may be more feasible than having a single system in terms of meeting requirements, technology, and capacity. 

Currently, no single system supports the range of functional requirements found across Federal payroll operations. 
 Opportunities: Strengthening Payroll Service Delivery 

 5-6 

◆ Considerations 

! Short-term transition costs will increase near-term operational costs 

while reducing near-term capital investment requirements. Note: OMB 

should be cautioned on taking savings earlier based on less than the 

full known costs to be incurred in the out-years. To support the decision, the Government-wide requirements as a whole need to be evaluated and matched against current capabilities. 

! Achieving significant progress in the FY03 to FY05 time frame requires a strong governance structure, sustained leadership, a defined 

architecture, and standardization. 

! Customer service and continuity of operations risks are lessened and 

somewhat mitigated by having two or three providers as opposed to a 

single system. However, consolidation options that require modifying 

old legacy systems to expand functionality to meet incremental needs 

(e.g., Title 42 employees) may pose unacceptable risk. Older systems 

are less able to expand functionality. The ability to manage any exponential increase in workload created by a short time frame should be 

carefully considered. 

! Payroll and HR processes should be integrated. Separating payroll 

from HR presents problems because HR systems drive payroll systems. Some agencies have integrated payroll and HR systems. For 

them, being directed to a different provider may drive up costs in related functions such as HR. Four agencies that currently provide HR 

and payroll support to about 20 percent of the workforce have already 

invested in modern integrated systems. Others are seeking funding for 

upgrades. The definition of what is included as operating costs varies 

(e.g., some include T&A, others do not). This analysis makes generalities about the Government-wide capital investment framework (Chapter 2), but the information is insufficient to make any final 

determination. Significant additional cost analysis needs to be done to 

support further decisions on who the providers will be and how they 

are funded. 

! A more in-depth assessment should be made to determine the capabilities of the two or three potential providers to meet expected timelines 

for accepting new customers. The migration and implementation 

should be incremental and achievable. Options include consolidation 

of particular agencies, all of Title 5 or other titles, etc. The requirements for implementing all titles must be identified to determine the 

providers with the best capabilities. A detailed migration plan should 

be developed early. 
Opportunities: Strengthening Payroll Service Delivery 

5-7 

! Additional transition costs and delays should be expected in areas of 

labor relations, reductions in force, union negotiations, and other human factors associated with reductions in force. 

! Adoption of recommendations in this report is proposed to produce 

tangible savings or cost avoidance in Government payroll IT outlays 

and improve operations. If budgets are reduced at the onset of the initiatives, payroll operations will suffer at the expense of estimated savings in future years. Timing of reallocating or eliminating current 

budget requirements for payroll operations that will be affected by estimated cost savings should coincide with actual or imminent cost savings. Imminent cost savings would be based on an initiative’s progress 

in meeting schedule, performance, and cost estimates (earned value). 

PRIVATIZATION

A privatization strategy assumes that the Government will get out of the software 

system development process and the service delivery process for the following 

reasons: systems and payroll service are not core Government missions; the workforce and resources supporting the legacy systems servicing 80 percent of current 

workload are not aligned to support modern systems; and the Government wants 

to orchestrate a performance based contracting strategy to set combined system 

modernization and service best value over a period of time. Privatization would 

consolidate workload to maximize incentives in the marketplace. 

The working group discussed one option for privatization. 

Option: Privatize Federal payroll processing. 

Virtually all of the current providers are operated in the Government, even though 

Government providers engage in public-private partnerships with contractors or 

ASPs to perform various services related to the overall pay process. Many of the 

direct cost savings from privatization would materialize whether the outsourced 

provider is a Government or non-Government entity. 

Among the marketplace options reviewed for this study was that of outsourcing or 

privatizing Federal civilian payroll functions through such mechanisms as the 

A-76 process, use of ASPs, or conversion of existing Federal staff and functions 

through an Employee Stock Ownership Plan (ESOP). Privatization could be considered for all functions except certification of time, payroll, and disbursements, 

which are required by statute and regulation to be performed by delegated Federal 

certifying officials. Under the privatization scenario, the Government would contract in some manner with a private entity to provide pay services currently performed by the Federal payroll community. 

Using the A-76 process poses significant challenges to achieving payroll services 

while minimizing future payroll information technology investment (by Govern-
 Opportunities: Strengthening Payroll Service Delivery 

 5-8 

ment or on behalf of Government). Given that legacy systems are diverse, the 

goal of pooling future system development costs could not be achieved unless 

there was some way to organize public-private competitions while combining 

most efficient organization (MEO) bids across more than one agency. This is feasible, but unprecedented. Organizing such a competition using A-76 procedures 

would be difficult and time-consuming. 

More suitable models for privatization can be found in existing efforts in other 

functional areas. For instance, the U.S. Army Logistics Modernization program 

may provide an example of the type of effort that would be required. Under that 

initiative, the Army determined its workforce did not have the necessary skills to 

modernize the logistics systems and the Army did not have the resources to maintain the current legacy system and to adopt a modern system unless it leveraged 

the knowledge of the current workforce and the capabilities of leading COTS 

software and integrators that could support it. The Army selected the best-fit 

software, then, using performance-based contracting, selected a business partner 

that took over operation of the existing systems and hired displaced Army personnel, guaranteeing 3 years at comparable salaries and benefits. The contract sets 

financial incentives to rapidly transition to the new software system. 

While full privatization would be difficult to achieve in the short term, it offers 

potential future cost savings. It also provides a more manageable method of organizing payroll systems of more than one agency under a single executive agent as 

a way of organizing the privatization effort. As progress is made toward a single 

system, reengineered business practices, and increased standardization, privatization becomes more feasible. 

Benefits and considerations are as follows: 

◆ Benefits 

! The primary benefit of full privatization would be in passing the capital investment and operating cost to the private sector, possibly resulting in savings to the Government. 

! With the proper contracting incentives and integration of private-sector 

software and operations teams, the private sector may be able to introduce cost and performance innovations faster than would be true in the 

Federal sector. 

◆ Considerations 

! Outsourcing payroll becomes more feasible as payroll processes are 

further integrated, standardized, reengineered, and consolidated among 

existing providers. 
Opportunities: Strengthening Payroll Service Delivery 

5-9 

! The privatization strategy may be the final phase of a modular implementation strategy, and not an option that competes with the two to 

three service providers option. 

! Currently, no private-sector vendor has been identified that can meet 

the civilian payroll processing requirements of the Federal community. 

A recent A-76 study by DFAS resulted in no bidders for the civilian 

payroll function. Organizing a single A-76 competition for the same 

function across organizations would require combined MEO bids by 

Government. This is theoretically possible, but unprecedented and 

would be very time-consuming. 

! Articulating Government-wide payroll requirements and transforming 

them into a unified pay processing capability would require careful 

management and an innovative acquisition strategy. 

! Overarching project management and contract management skills 

would be needed to meet multi-agency requirements. 

! In order to privatize payroll, numerous transition issues—such as recognizing and satisfying requirements of union contracts; meeting 

multi-agency legislative, regulatory, and policy requirements; and 

maintaining acceptable base levels of customer service—would need 

to be resolved before the transition to a private provider could be implemented. Difficulties could also be encountered in maintaining Government ownership of the pay process and securing and protecting 

private and confidential data maintained in the pay system, especially 

information covered by the Privacy Act of 1973. On the other hand, it 

has been argued that by integrating HR and payroll and moving closer 

to a single system, payroll processing will become more attractive for 

potential privatization. The timeline for privatization is reduced in 

proportion to standardization and consolidation of legacy operations. 

! Outsourcing payroll is a high-risk option in that the Government may 

lose its recourse to provide services to itself, should outsourcing fail. A 

risk mitigation strategy would be critical. Acquisition strategy must 

place high emphasis on business partner capabilities, including scalability of operations, performance, and viability. 

! Key consideration must be given to retaining the existing knowledgebase, both in project management and operational skills. A single system requires knowledge management, far over and above a 

requirements document, to retain the vast knowledge the Government 

has acquired over the years. 
 Opportunities: Strengthening Payroll Service Delivery 

 5-10 

RECOMMENDATIONS FOR STRENGTHENING PAYROLL 

SERVICE DELIVERY

The following recommendations address the transition options—both consolidation and privatization—for improving service delivery: 

◆ Establish a governance structure to support multi-agency management of 

payroll investment and processing decisions. OMB should direct and 

communicate the decision to consolidate the number of payroll providers 

and charter OPM as owner of the payroll policy function. OMB should 

sponsor a strategic alliance with the major payroll providers to determine 

the most cost-effective way to consolidate to the desired number. All Federal agencies should be directed to develop milestones to migrate to one of 

the remaining providers based on a timeline that conforms to the goals and 

objectives. Future capital investments should be redirected to support the 

new strategic objectives. The factors most critical to success are central 

authority and leadership. The task of consolidating providers on a Government-wide level is significantly beyond the capabilities of any individual agency or market forces to enable. Leadership and authority need to be 

clearly identified and the decision needs to be communicated. 

◆ Set a goal to have a single integrated HR and payroll system (software) for 

the Federal Government. Incremental investments should be governed by 

this goal. 

◆ Direct agencies using competitive processes to two or three approved payroll service providers. It is feasible to make significant progress toward 

consolidating to two or three providers by FY05. Significant progress in 

FY04 and FY05 can be made if there is a mandate, pooled resources 

across agencies, and a structured approach. 

◆ Undertake a more detailed study of the capital investment framework 

(Chapter 2) to facilitate the timing of decisions. The payroll working 

group encountered difficulties with availability, accuracy, and consistency 

of cost and investment data available from agencies and provided by 

OMB. Significant effort is needed to ensure that cost-benefit data can be 

applied uniformly. 

◆ OMB, in conjunction with OPM, the CFO Council, the CIO Council, 

HRTC, and existing related councils and workgroups, must ensure that the 

communication and change management strategies are effective and universally embraced, that authorities are clear, and that there is strong and 

continued leadership to champion progress toward the goal. 

◆ Evaluate the capabilities of the commercial marketplace to provide Government payroll services using a direct privatization strategy that consoli-
Opportunities: Strengthening Payroll Service Delivery 

5-11 

dates all, or a significant portion of, current payroll operations and uses a 

single software system. Action on this strategy requires designation of an 

executive agent with authority to act on behalf of multiple agencies. This 

acquisition strategy could take advantage of performance-based contracting strategies but would require overcoming cross-agency contracting and 

governance barriers. 

◆ Develop a strong change management strategy to support the capital investment strategy selected. Regardless of which transition option is selected, a strong change management strategy must be in place. 

◆ Develop a task force for implementation, as well as strong project management leadership and other resources. It should be recognized that there 

is a limited supply of qualified project managers to meet an accelerated 

demand for implementation. Utilizing the current knowledgebase is also 

important. The transition should be facilitated by pooling a task force of 

talented people in the Government. 
 Opportunities: Strengthening Payroll Service Delivery 

 5-12 
 6-1 

Chapter 6 

Recommendations 

In this chapter, the recommendations for establishing governance, developing an 

integrated enterprise architecture, and strengthening payroll service delivery are 

presented. The purpose of this chapter is to provide an overview of all recommendations and to provide some additional comparative analysis. 

The recommendations are presented as follows: 

◆ Summary of recommendations 

◆ Comprehensive list of recommendations 

◆ Supporting analysis of the four leading service delivery options compared 

to the current environment (status quo) 

◆ Supporting analysis of options in support of the President’s Management 

Agenda. 

SUMMARY OF RECOMMENDATIONS

Table 6-1 summarizes the recommendations from Chapters 3, 4 and 5. 

Table 6-1. Summary of Recommendations 

Opportunity Recommendation 

Establishing Governance Establish a governance framework 

Developing an Integrated Enterprise Architecture Develop a Government-wide architecture for HR and payroll processing 

 Standardize Federal payroll policies and processes 

Strengthening Service Delivery Consolidation/outsourcing: 

Set a goal to develop a single integrated system (software) leveraging COTS product 

Direct agencies to two or three approved public or private payroll service providers based on competition 

 Privatization: 

Privatize payroll services. Select a single integrated system (software) and competitively select a service provider to conduct payroll 

operations. Set performance incentives to optimize services. 
 Recommendations 

 6-2 

COMPREHENSIVE LIST OF RECOMMENDATIONS

Table 6-2 provides an overview of options and recommendations for establishing 

governance, developing an integrated enterprise architecture, and improving service delivery. These actions should consider foundation elements for single software development, consolidation, and/or privatization options presented in Table 

6-3. 

Table 6-2. Overview of Options/Recommendations 

Opportunity Option/recommendation 

Establishing Governance Designate OPM as the owner of payroll policies and operations. 

 Create a stakeholder payroll council as an advisory body, to assess 

policy impact on payroll. 

 Create a payroll users network consisting of current providers and 

cross-serviced agencies. 

 Establish a joint capital investment and budgeting capability within OMB 

capital planning and budgetary procedures. Establish a unified OMB 

oversight process to align resources, budgeting, capital planning, investment/contracting to support joint capital investment. 

 Designate OPM and OMB as champions for implementing high impact 

low cost recommendations, and “silly rules” for dispensation 

 Direct the Payroll Users Network to conduct a review of agency payroll 

policies and procedures and to develop standards. 

 Review current payroll data elements and functionality and HR standards for simplification. 

 Set clear goals and timelines for standardization 

 Form a private-public strategic alliance, championed by a central 

agency, to develop a single, standard, Government-wide system. 

Developing an Integrated Enterprise Architecture Develop Government-wide payroll architecture with as is and to be 

models and a transition plan. 

 Establish ownership over the development of the payroll Governmentwide architecture with the Payroll Council. 

 Develop a process for including the payroll architecture in decisionmaking. 

 Any provider or system solution adopted for Government-wide use must 

provide the capability to fully integrate payroll and HR. 

 Aggressively move forward with an effort to remove the barriers to increased reliance on e-commerce. 

Strengthening Service Delivery Establish a governance structure to support multi-agency management 

of payroll investment and processing decisions. 

 Set as a goal, to have a single integrated HR and payroll system (software) for the Federal Government, leveraging a COTS software product. 

 Direct Agencies to two to three approved payroll service providers. 
Recommendations 

6-3 

Table 6-2. Overview of Options/Recommendations 

Opportunity Option/recommendation 

 Undertake a more detailed study of the Capital Investment Framework 

(Chapter 2) to facilitate the timing of decisions. 

 Develop a strong change management and communication strategy. 

OMB, in conjunction OPM, the CFO Council, CIO Council must ensure 

effective change management and leadership. 

 Evaluate the option of direct conversion of payroll using a single system 

to assess market acceptance issues. 

 Develop a task force for implementation. 

 Evaluate the capabilities of the commercial marketplace to provide 

Government payroll services using a direct privatization strategy that 

consolidates all or a significant portion of current payroll operations and 

uses a single software system. 
 Recommendations 

 6-4 

ANALYSIS OF SERVICE DELIVERY OPTIONS

Table 6-3 presents an analysis of the options, compared to the current environment. 

Table 6-3. Analysis of Options Compared to the Current Environment (Status Quo) 

Option 

Feasibility (requirements, technology, 

capacity) 

Cost (transition, operational, capital 

investment) 

Cost savings (transition, operational, 

capital investment) Risk 

Time 

frame 

Current 

environment 

Current environment 

will continue to meet 

payroll requirements. 

Highest cost due to 

multiple capital investments and operations. 

Limited opportunity 

for cost avoidance 

due to multiple capital investments and 

operations. 

Difficulties 

with standardization 

and integration continue 

to drive costs 

up. Shortage 

of project 

management 

skills. 

FY02 

Single integrated 

system 

(software) 

Higher: 

Can be accomplished. A single 

software system is 

highly dependent on 

an enterprise architecture and standardization. The 

migration to the single system is highly 

dependent on a 

successful governance model. 

Lowest capital investment cost. Implementation cost 

may be high due to 

the high number of 

migrations that must 

occur. However, 

standard interfaces 

present opportunity 

for efficiency. 

Highest potential 

long-term cost 

avoidance through 

common system 

maintenance and 

enhancement. 

Medium FY04 

FY06 

Direct 

agencies 

to 2 or 3 

approved 

providers 

High : 

Can be accomplished if directed. 

Servicing agencies 

may need resources 

to meet incremental 

capacity or functionality. Workload 

allocation may be 

through competition 

(e.g., Franchise 

Fund). 

Potential higher 

capital investment 

than single system if 

system upgrades 

required for 2–3 

systems. Lower cost 

if single software 

development mandated. Transition 

costs due to increased number of 

migrations. 

Higher potential 

long-term cost savings with centralized 

investment and operations. 

Medium. 

Requires that 

consolidated 

systems have 

functionality 

and scalability to meet 

the needs of 

customer 

agencies. 

FY03 

FY06 
Recommendations 

6-5 

Table 6-3. Analysis of Options Compared to the Current Environment (Status Quo) 

Option 

Feasibility (requirements, technology, 

capacity) 

Cost (transition, operational, capital 

investment) 

Cost savings (transition, operational, 

capital investment) Risk 

Time 

frame 

Privatize 

payroll 

operations 

with a 

standardized system 

software 

based on 

COTS 

product 

Medium: 

Can be accomplished but is dependent on 

innovative acquisition strategy, effective project 

management, and 

marketplace capability. 

Potential capital 

investment savings 

if competed for single system software. 

Incremental savings 

for operations. 

Highest potential 

cost savings with 

contract incentives 

to take advantage of 

optimal IT and operations improvements overtime.. 

High: 

Must have 

opportunity to 

capture 

knowledgebase of current Federal 

payroll providers to accomplish 

transition. 

FY06 
 Recommendations 

 6-6 

HOW SERVICE DELIVERY OPTIONS SUPPORT THE 

PRESIDENT’S MANAGEMENT AGENDA

Table 6-4 presents an analysis of how the options presented in this report impact 

the President’s Management Agenda. 

Table 6-4. Analysis of Options’ Support of the President’s Management Agenda 

Option 

Strategic 

management 

of human 

capital 

Competitive 

sourcing 

Improved financial 

performance 

Expanded Egovernment 

Budget and performance integration 

Continue 

payroll processing in the 

current environment 

(status quo) 

Low Low Lower Low Low 

Establish a 

governance 

framework 

Improves the 

opportunity to 

use personnel more effectively 

Enables Government-wide planning for 

privatization 

Enables focused 

planning and 

oversight to support goal 

Enables focused 

planning and 

oversight to meet 

goal 

Enables more 

accurate performance measures 

Develop a 

Governmentwide architecture for 

HR and payroll processing 

Improves the 

capability to 

make human 

resource decisions in 

support of 

systems 

 

Critical to achieving the outcome of 

any competition 

that meets customer needs for 

seamless information flow 

Critical enabler Critical enabler Better cost information possible, if 

architecture 

specifies data 

standards and 

business rules to 

support cost accounting and full 

cost budgeting 

Standardize 

Federal payroll policies 

and processes 

Reduces 

manpower 

requirements 

and enables 

automated 

capture for 

knowledge 

management 

Communicates 

common requirements, which 

helps organize the 

market 

Process reengineering enables 

automated, integrated solutions 

supporting timely 

accurate management information 

Requires unification and simplification to optimize 

e-government 

Enables timely 

accurate information to inform full 

cost of programs 
Recommendations 

6-7 

Table 6-4. Analysis of Options’ Support of the President’s Management Agenda 

Option 

Strategic 

management 

of human 

capital 

Competitive 

sourcing 

Improved financial 

performance 

Expanded Egovernment 

Budget and performance integration 

Develop a 

single integrated system 

leveraging 

COTS product 

Reduces 

manpower 

requirements 

for multiple 

system development 

and maintenance efforts 

Higher (incentives 

the COTS market) 

Higher (potential 

for better cost information) 

Requires unification and simplification for common 

system 

Has potential for 

better information 

if integrated with 

standard HR, 

time and labor, 

and core financial system 

requirements 

Direct agencies to 2–3 

approved 

providers 

Reduces operating staff 

devoted to 

non-core 

missions 

 Higher (potential 

for better cost information) 

Higher medium impact 

Privatize 

payroll operations 

Highest reduction of 

Federal manpower devoted to 

commercial 

activity (focus 

government 

manpower on 

core missions) 

Highest (use direct privatization 

model) 

Potentially higher Higher (set specific contract 

goals) 

Potential for full 

cost of service 

visible and full 

accounting information possible 
 A-1 

Appendix A 

Participants with Roles 

The working group for this analysis consisted of representatives from JFMIP, 

OMB (Office of Federal Financial Management, Office of Federal Procurement 

Policy, Office of Information and Regulatory Affairs, and Resource Management 

Offices, Personnel Branch), major stakeholders (DFAS, VA, DOI, USDA, and 

GSA), other CFO offices, and small agencies. Table A-1 lists the working group 

members and their roles. 

Table A–1. Payroll ProcessingBusiness Case Working Group 

Name Role Agency 

Karen Cleary Alderman Executive Project Leader JFMIP 

Julie Basile Advisor Acquisition Strategy OMB Office of Federal Procurement Policy 

Richard Bennett Payroll Provider Cross Servicer EPA 

Bob Bird Advisor DOD Military/Civilian 

Payroll 

Defense Finance and Accounting Service 

Anh Bolles Agency Payroll Owner DOT 

Ken Bresnahan Contractor Support PriceWaterhouseCoopers 

Milton Brown Payroll Provider Cross Servicer EPA 

George Brundage CIO Council Advisor Treasury 

John Bunnell Advisor DOD Policy DOD/OSD 

Tom Caporizzo Payroll Provider Cross Servicer Defense Finance and Accounting Service 

Craig Chapman Agency Payroll Provider Federal Energy Regulatory Commission 

Daniel Chenok Advisor Technology Solutions OMB Office of Information and Regulatory 

Affairs 

David Childs Advisor for Outsourcing OMB Office of Federal Procurement Policy 

Joe Colantuoni Agency Payroll Owner HHS 

Dan Costello Staff Support JFMIP 

Debbie Dennie Contractor Support LMI 

John DiLuccio Payroll Provider Cross Servicer VA 

Janet Dubbert Agency Payroll Provider Federal Energy Regulatory Commission 

Vidal Falcon Payroll Provider Cross Servicer Veterans Affairs 

Dan Fink Agency Payroll Owner HHS 

Yvette Garner Advisor Acquisition Strategy OMB Office of Federal Procurement Policy 

Paula Hagan Contractor Support MITRE 

Lillie Haggins Agency Payroll Owner National Science Foundation 

Teresa Hannan Agency Payroll Owner DOL 
 

 A-2 

Table A–1. Payroll ProcessingBusiness Case Working Group 

Name Role Agency 

Jerry Hinton Advisor DOD Military/Civilian 

Payroll 

Defense Finance and Accounting Service 

Rick Koebert Payroll Provider Cross Servicer DOI/National Business Center 

Brenda Kyle Agency Payroll Owner DOL 

Jerry Lohfink Payroll Provider Cross Services USDA/National Finance Center 

William McVay Advisor Technology Solutions OMB Office of Information and Regulatory 

Affairs 

John Moseley Advisor Program Executive for 

Human Resources Network 

OPM 

Edward Murray Payroll Provider Cross Servicer Veterans Affairs 

Ed Nasalik Payroll Provider Cross Services GSA 

Aromie Noe Advisor HR/Payroll Laws and 

Regulations 

OMB–Personnel Branch 

Ann Overly Contractor Support MITRE 

Jo Ann Perrini Advisor HR Policy OPM 

Dr. Ann Reedy Advisor Enterprise Architecture MITRE 

Ron Rhodes Contractor Support LMI 

Diane Schenk OMB Staff Support OMB Office of Federal Financial Management 

Albert Seferian Advisor HR/Payroll Laws and 

Regulations 

OMB–Personnel Branch 

Rich Shepherd Contractor Support LMI 

Susan Smith Contractor Support LMI 

P. Katie Sowell Advisor Enterprise Architecture MITRE 

Gerry Stoopman Advisor Technology Solutions OMB Office of Information and Regulatory 

Affairs 

Don Titus Payroll Provider Cross Services DOI/National Business Center 

Bruce Turner JFMIP Project Leader JFMIP 

Jerry Williams Executive OMB Guidance OMB 
 B-1 

Appendix B 

Inventory of Payroll Initiatives 

Table B-1 lists recent studies, articles, and business cases relating to payroll systems and processes. It includes a document summary, key findings and conclusions, as well as source information and contacts. Our key findings and 

conclusions are divided, where applicable, into three categories: issues in current 

environment, benefits, and recommendations. Many common benefits appear for 

payroll processes and systems changes, while issues in current environment and 

recommendations vary. 

Table B−1. Recent Payroll Studies, Articles, and Business Cases 

No. Document title Document summary Key findings and conclusions 

Reference 

point or hyperlink path Source 

contact 

1 HR LINK$ Cost 

Benefit Analysis 

A Cost Benefit 

Analysis of HR 

LINK$, a new commercial Human Resources (HR) and 

Payroll (P) system 

(PeopleSoft) that 

simultaneously reengineers how HR/P 

services are delivered at the Department of Veterans 

Affairs. 

All financial metrics 

(NPV, BCR, IRR & 

Payback Period) 

review project favorably. 

Issues in Current Environment: 

Requires 9 years to develop/implement and has a projected 

10 year operation cycle. VA IT Investment Guide states hardware life 

cycle should be ~10-12 years, including development and implementation. 

Scalability Issues—slow implementation and constant upgrading by 

vendor pushes VA behind technological improvements and functionality enhancements. 

Benefits: 

Project will increase legislative compliance, has better system supportability, reduces chance of system 

failure, HR and Payroll done centrally rather than locally. 

Science Applications 

International 

Corporation, 

Holder Hinch, 

(703) 676-

4628 

Vidal Falcon, 

VA: (202) 

273-9457 

2 Governmentwide Human Resources 

Information Systems Study 

Outlines core HR 

functions and 

requirements 

common across 

government and 

evaluates current 

and developing HR 

systems against 

those requirements. 

Issues in Current Environment: 

The systems being built have functionality and flexibility that may not 

be fully used for several years. 

Small agencies are at a disadvantage in attempting to obtain new HR 

systems. They often lack the inhouse resources and funding to design and implement complete systems to meet their needs. Crossservicing providers is not always a 

solution, but these are not always 

viewed as satisfactory solutions. 

Other system characteristics include: 

Human Resource Technology 

Council 

(OPM) 

Mary Lou 

Lindholm, 

Associate 

Director for 

Employment, 

and Janet 

Barnes, Chief 

Information 

Officer, CoChairs of the 

Human Resources 

Technology 

Council 
 

 B-2 

Table B−1. Recent Payroll Studies, Articles, and Business Cases 

No. Document title Document summary Key findings and conclusions 

Reference 

point or hyperlink path 

Source 

contact 

time consuming and expensive 

maintenance, duplicate data entry, 

repetitive databases, difficultly in 

use, deferred batch processing 

which precludes real-time data retrieval, multiple systems which are 

not interoperable and have high 

maintenance costs, system architecture which is too complex to retrieve 

information easily, lack of management information and decision support capability, limited access for 

managers, no access for employees, 

and old system designs were based 

on automating old paper flows. 

Benefits: 

Encourages competition for COTS 

products. 

Development of new agency human 

resources systems will meet core 

information system requirements, 

but their means for doing so varies 

considerably (in-house development, 

minimally customized COTS) and 

substantially customized COTS software). 

Recommendations: 

Systems should accommodate the 

flexibility and discretion needed by 

agency management. 

Agencies should adopt standard 

data elements to have degree of 

interoperability and compatibility with 

human resource systems across 

government. 

Analytical processes should be used 

to critically examine agency HR 

management programs before embarking on development of new information systems. 

Agencies should review existing 

information systems to see if any 

can satisfy needs before purchase/development of new system. 

Agencies decisions to replace systems need to be based upon business case analysis. 
Inventory of Payroll Initiatives 

 B-3 

Table B−1. Recent Payroll Studies, Articles, and Business Cases 

No. Document title Document summary Key findings and conclusions 

Reference 

point or hyperlink path 

Source 

contact 

3 Comparison 

Study: PeopleSoft Capabilities 

Vs. JFMIP Requirements 

Compares payroll 

functions and capabilities of PeopleSoft’s payroll 

product with that of 

JFMIP’s Human 

Resources and Payroll System Standard Requirements. 

Supports DOL’s decision to implement the PeopleSoft payroll in January 2001 (Phase II). http://www.jfm

ip.gov/jfmip/ 

RoadMapRec.asp?

rec=81 

Bruce Turner, 

(202) 219-

0533 

4 1994 Study of 

NFC as payroll 

provider 

Congressionally 

mandated study 

conducted by PA&E 

to determine if NFC 

could provide payroll 

services for DoD 

Concluded that system did not accommodate DoD-unique requirements.  

5 1996 Feasibility 

study to contract our civilian 

pay 

Congressionally 

mandated study 

conducted by DFAS 

and Arthur Anderson 

to determine if outsourcing was 

cheaper. 

Concluded that overall, DoD was 

cheaper. 

 

6 1999 A-76 Secretary of Defense mandated 

study conducted in 

accordance with A76 circular guidelines. 

Cancelled after industry criticisms. 

7 2000 A-76 Follow on to the 

1999 study using 

streamlined study 

criteria that resulted 

in a solicitation being issued. 

No bidders, solicitation cancelled. 

8 Proceedings of 

the Payroll/Human Resources 

Retreat, July 

2000 

Retreat organized 

by several federal 

agencies to bring 

together key individuals from the 

major payroll agencies and some key 

HR personnel to 

examine the current 

status of and identify 

opportunities for 

improving payroll/HR operations. 

Issues in Current Environment: 

Standardization Issues: 

Standardization of payroll procedures and policies across the federal 

government is desired, but there are 

too may obstacles to make this a 

reality. Obstacles include: 

No single owner of payroll; 

Differences in polices, procedures, 

business practices, and interpretations of regulations among agencies; 

Limited interaction between payroll, 

finance, HR, and T&A; 

Difficulty in implementing executive 

orders; 

Lack of infrastructure hardware and 

Logistics 

Management 

Institute 

Ron Rhodes, 

(703) 917-

7505 
 

 B-4 

Table B−1. Recent Payroll Studies, Articles, and Business Cases 

No. Document title Document summary Key findings and conclusions 

Reference 

point or hyperlink path 

Source 

contact 

communication lines to support 

standards. 

Intersection Issues: 

Issues related to where systems 

interact or intersect with each other: 

Systems are no longer stovepipes; 

Core processes lack consistent 

standardization; 

Barriers to electronic commerce 

must be removed to facilitate automation; 

Highly diverse technical infrastructure presents challenges; 

Federal “councils” are not engaged 

to foster cooperation or full review; 

There is no approach to motivate the 

private sector to build systems for 

the federal government. 

Marketplace Issues: 

What operating models should be 

considered for payroll operations? 

How can agencies work with vendors to ensure they receive a quality 

product at a fair price? 

What direction needs to be given to 

the payroll cross-servicing agencies 

to address the needs of other functional groups? 

Due to the limited marketplace for 

payroll software, it is unlikely that 

many vendors will be entering the 

market. 

Recommendations: 

Standardization Recommendations: 

Approach OMB with a proposal of a 

unified payroll HRTC-like group; 

Identify council user groups that are 

available and already functioning, 

and leverage their goals and objectives with payroll’s goals and objectives; 

Identify an overall champion or cochampions; 

Develop a subgroup to manage legislative concerns; 

Develop a subgroup to study the 

feasibility of developing a payroll 

certification process; 
Inventory of Payroll Initiatives 

 B-5 

Table B−1. Recent Payroll Studies, Articles, and Business Cases 

No. Document title Document summary Key findings and conclusions 

Reference 

point or hyperlink path 

Source 

contact 

Develop a subgroup to look at commonalities and differences in interpretation and implementation of 

payroll policy; 

Develop a subgroup to take JFMIP’s 

document of requirements and flush 

them out to create a detailed minimum requirements document for an 

automated payroll system. 

Intersection Recommendations: 

Define data and process intersections between all administrative systems; 

Define core process and commonality, while remaining cognizant of 

agency exceptions; 

Implement the following overarching 

tenet: “Where possible, core processes should be standardized to 

achieve efficiencies and savings 

across the federal government”; 

All federal councils need to unilaterally share proposals with each other 

to facilitate review at the early proposal/conceptual stage; 

The key councils need to push Congress to take advantage of the 

councils to vet proposals and legislation; 

Identify processes that require supporting paper-based forms and obtain waivers for them; 

Recognize that the objective of 

common solutions across federal 

agencies requires interoperability; 

Recognize and support each 

agency’s needs (relating to technical 

architectures). 

Marketplace Recommendations: 

Create the Payroll Users Network to 

serve as the primary organization in 

the federal government to deal with 

payroll issues; 

Establish a payroll policy board to 

issue guidelines for implementing 

legislation; 

Develop a payroll systems boundary 

document to facilitate agencies undergoing payroll systems implementation; 
 

 B-6 

Table B−1. Recent Payroll Studies, Articles, and Business Cases 

No. Document title Document summary Key findings and conclusions 

Reference 

point or hyperlink path 

Source 

contact 

Establish a payroll systems certification process. 

9 Statement of 

Work (SOW) for 

Federal Energy 

Regulatory 

Commission’s 

(FERC) contract 

with Accenture/USi. 

SOW which details 

services required to 

provide management, support and 

hosting of the hardware, database, and 

PeopleSoft related 

application software 

used in Financial 

Management and 

Human Resource 

Management at the 

FERC. 

Issues in Current Environment: 

FERC’s desire to migrate both Financial Management and Human 

Resource Management environments to a designated Contractor 

site where hardware, database and 

application support for both business 

lines may be performed by a single 

Application Service Provider (ASP). 

Federal Energy Regulatory 

Commission 

Janet M. 

Dubbert, 

Director, Div 

of MAPS at 

(202) 219-

2967 

10 Draft Assessment of the National Finance 

Center’s (NFC) 

Financial Operations Final 

Report 

Report prepared by 

PricewaterhouseCoopers (PwC) that 

provides the results 

of the operational 

assessment of the 

NFC Payroll/Personnel and 

Direct Premium 

Remittance (DPRS) 

operations and includes the results of 

the expended NFC 

Activity Based Costing (ABC) model. 

PwC, as part of this 

study, determined 

the costs of NFC’s 

payroll/personnel 

and DPRS operations. 

Issues in Current Environment: 

In addition to specific costs, the cost 

model generated the top 10 FTE 

assignments for the 457 Payroll/Personnel FTE. The Top 10 activities represent 51% of FTE 

assigned to the function. The analysis shows that the top 2 activities, 

23% of FTE assigned to Payroll/Personnel, support activities that 

involve manual processes, error 

correction, and response to customer inquiries. 

Recommendations: 

Improve customer focus of NFC 

operations; 

Manage risks by minimizing series of 

manual and duplicative processes; 

Build organizational capacity; 

Utilize and leverage technology; 

Standardize manual processes; 

Reinvest into product lines and new 

business; 

Align framework that NFC can recapture and apply to its product 

lines; 

Strategic plan of NFC to lead government; 

Empower customers and strengthen 

satisfaction through improved relationships. 

PricewaterhouseCoopers, LLP 

USDA 

Morgan Kinghorn, (703) 

741-2322, or 

David Loerzel, (703) 

322-5127 

Patricia 

Healy, Deputy 

Chief Financial Officer, 

USDA 
Inventory of Payroll Initiatives 

 B-7 

Table B−1. Recent Payroll Studies, Articles, and Business Cases 

No. Document title Document summary Key findings and conclusions 

Reference 

point or hyperlink path 

Source 

contact 

11 Federal Personnel Payroll 

System 

Slide presentation of 

a fully integrated 

Personnel and Payroll System for 

DFAS. System is 

customer driven and 

has operational 

flexibility and maintainability, online 

database with realtime update and 

retrieval capabilities. 

 Don Titus, 

NBC 

12 FUN Payroll 

Focus Group 

The Federal users 

Network conducted 

a payroll focus 

group to review the 

Enhancements and 

Incidents to the 

HRMS Payroll Module. The purpose of 

review was to prioritize issues that have 

not been established 

as “incidents.” 

Issues in Current Environment: 

A total of 26 issues have been 

identified and collectively agreed 

upon by the Federal community, 14 

categorized as “high”—unacceptable 

deficiencies within the Federal 

HRMS Payroll Product. These include issues in: Off-Cycle Disbursements, Pay Caps, Annual and 

biweekly Pay Limits, Leave Administration, Prior Year Adjustments, 

Retro Benefits, Reports/Interfaces, 

Retirement Processing, Union Dues 

Calculation, Bond Addresses, Benefits, Deduction Subset, Interest Calculations, and Treasury Interface. 

12 issues are categorized as medium, or significant; not mandated by 

law but have become the normal 

way of processing within the Federal 

government. 

Recommendations: 

All “high” issues should be corrected 

in the core product and receive immediate attention or else agencies 

will have to develop manual workarounds and processes in order to 

use the software. 

Janet Dubbert, FERC, 

OED, Director 

of Management, Administrative and 

Payroll Support, (202) 

219-2967 

janet.dubbert

@ferc.fed.us 

Terry Hannan, Department of 

Labor, Focus 

Group Leader 

13 Selected Agencies’ Use of 

Commercial Offthe-Shelf 

(COTS) Software for Human 

Resources 

Functions 

Report by the General Accounting Office (GAO) to the 

Chairman, Committee on Government 

Reform, House of 

Representatives. 

Objectives of the 

report were to determine how the five 

agencies reviewed 

(Department of 

Health and Human 

S i ’ (HHS)

Issues in Current Environment: 

The five agencies have acquired the 

services of two primary HR COTS 

vendors—Oracle and PeopleSoft—

to provide most of the functional 

system requirements called for by 

the federal Joint Financial Management Improvement Program 

(JFMIP). DOD, CDC, and VA have 

contracted with Avue and Resumix 

to augment the services of the primary vendors in areas such as recruitment. 

General Accounting Office Randall Tabor, Project 

Control Officer, Pay Engine/PayMint 

Project Staff, 

(504) 255-

6647 

Joel C. Willemssen, Director, Civil 

Agencies 

Information 
 

 B-8 

Table B−1. Recent Payroll Studies, Articles, and Business Cases 

No. Document title Document summary Key findings and conclusions 

Reference 

point or hyperlink path 

Source 

contact 

Services’ (HHS) 

Centers for Disease 

Control and Prevention (CDC), Department of Veterans 

Affairs (VA), Department of Defense 

(DOD), General 

Services Administration (GSA), and the 

Department of Labor 

(DOL)) were using 

COTS systems/applications to 

improve their human 

resources (HR) 

functions and to 

identify the agencies’ reported estimated costs and 

expected benefits 

from using HR 

COTS systems. 

cruitment. 

Four of the five agencies’ systems 

efforts have encountered delays, 

while three of the four agencies have 

increased cost estimates. 

Benefits: 

At the time of the report, three of the 

five agencies—DOD, DOL, and 

VA—had reportedly achieved quantifiable benefits, such as full-time 

equivalent (FTE) reductions from 

their HR COTS systems or related 

efforts. 

Nonquantifiable benefits include: a 

more user-friendly environment, 

easier manager/employee access, 

better decision making and data 

analysis, improved data accuracy, 

and better information sharing. 

Systems, 

(202) 512-

6253 

14 Sourcing Options ...using a 

strategic sourcing approach 

Presentation on 

strategic sourcing 

prepared by Grant 

Thornton. Strategic 

sourcing being the 

systematic method 

of determining the 

most appropriate 

source for improving 

delivery of goods 

and services to customers. The presentation focuses on the 

logic behind strategic sourcing, sourcing alternatives, 

lessons learned, and 

how to start. It also 

lists potential alternatives: elimination 

of service, perform 

an A-76 study, direct 

conversion, and 

Inter-Service Support Agreements 

(ISSA). 

Recommendations: 

Step one is to perform a Functionality Assessment (FA). This is a systematic and process-based 

assessment that results in performance by: 

Assessing the current state; 

Determining if work should be done 

in-house, by the private sector, or 

competed; 

Selecting appropriate sourcing for 

activities not done in-house; 

Reengineering remaining in-house 

processes and overall organization. 

Grant Thornton LLP Carl A. 

(Stagg) Christian, (703) 

847-7500, or 

Alvin Tucker, 

(202) 296-

7800 
Inventory of Payroll Initiatives 

 B-9 

Table B−1. Recent Payroll Studies, Articles, and Business Cases 

No. Document title Document summary Key findings and conclusions 

Reference 

point or hyperlink path 

Source 

contact 

15 Strategic Sourcing Decision 

Tree 

DoD Strategic 

Sourcing Program 

Diagram of decision 

process for Strategic 

Sourcing. 

 http://gravity.l

mi.org/ec003/

website/web/Hot/I

nterimGuidanceonStrategicSour

cing.pdf 

Jack Padgett, 

Grant Thornton LLP 

16 Privatization 

Alternative for 

Civilian Pay 

Function 

White paper prepared by Grant 

Thornton addresses 

the option of transferring the processing of U.S. civilian 

payroll to the private 

sector 

Recommendations: 

Government must retain control over 

the rules for pay computation and 

ensure they can monitor contractor’s 

compliance with said rules. 

The existing government workforce 

that processes civilian payroll is a 

commercially viable entity that would 

be attractive as an Employee Stock 

Ownership Company (ESOP); 

A merger or acquisition target for an 

existing private sector firm interested 

in entering the market should follow 

this methodology: 

Conduct a feasibility study; 

Develop justification for exploring 

ESOP and/or acquisition competition 

based on results of feasibility study; 

Follow established rules for an 

ESOP based on OPM precedent or 

conduct an acquisition competition 

based on NAVSEA, NSA, and 

LOGMOD precedents. 

Grant Thornton LLP Carl A. 

(Stagg) Christian, (703) 

847-7500, or 

Alvin Tucker, 

(202) 296-

7800 

17 E-Government 

Initiative Assessment of 

Pay.gov and 

PCC 

Assesses electronic 

collections initiatives 

Pay.gov and Paper 

Check Conversion 

(PCC) to collect 

payments to government in electronic and unified 

way. 

Issues in Current Environment: 

Agencies may overlook value inherent in electronic collections, not 

place a priority in integrating their 

systems and financial data. 

It is hard in PCC to save information 

at remote locations. 

Benefits: 

Will provide processing cost and 

float savings for the government. 

Anticipates that Treasury can save 

at least a dollar for every form and 

collection authorization that is received in electronic format. 

Eliminates paper, integrates financial 

systems, improves cash forecasting, 

timing and availability of funds. 

Julie Basile, 

OFPP/OMB, 

(202) 395-

4821 or 

jbasile@omb.

eop.gov 

Segment 

Team Leader: 

Melissa Rider 

(DoD) 
 

 B-10 

Table B−1. Recent Payroll Studies, Articles, and Business Cases 

No. Document title Document summary Key findings and conclusions 

Reference 

point or hyperlink path 

Source 

contact 

Recommendations: 

Business process simplification/reengineering must occur and 

FMS and customer agencies need to 

work closely together to conduct 

workflow analysis. 

Create enterprise level financial data 

integration initiative. 

18 National Science Foundation Integrated 

Payroll System 

(IPAY) 

The new Integrated 

Payroll System 

(IPAY) is a client/server platform 

system which integrates with NSFís 

operational Integrated Personnel 

(IPERS) and Time 

and Attendance 

System (ITAS) systems for personnel 

and time and attendance data. 

Benefits: 

IPAY will reduce need for redundant 

entry and provide core payroll functionality resulting in accurate, complete, timely payroll calculations. 

Will seamlessly interface with NSFís 

Financial Accounting System (FAS) 

to post, validate, and control pay 

data for financial reporting and 

analysis. 

Will provide electronic transfers of 

payroll and financial information to 

other government agencies and 

commercial financial institutions to 

minimize or eliminate manual payroll 

processes. 

Will provide self-service capabilities 

by putting NSF employees in control 

of processing their own discretionary 

personnel-payroll data without using 

a paper form. 

National Science Foundation website: 

http://www.nsf

.gov/search97

cgi/vtopic 

19 Market Survey/Evaluation 

for NSF Integrated Payroll 

System 

This document identifies Federal agency 

and commercial offthe-shelf (COTS) 

payroll systems that 

currently exist in the 

marketplace, and 

assess their ability 

to meet NSF’s requirements for a 

new payroll system. 

Issues in Current Environment: 

The application system design must 

not require additional database licensing. 

A system that combined both personnel and payroll functionality such 

that payroll could not be used alone 

was not an option. 

The payroll functionality provided by 

any Federal or COTS system had to 

accommodate NSF’s business practices, insofar as those practices assign specific work functions to the 

Payroll office rather than to the Personnel office. 

The application had to run on the 

following platform: 

- Sun Server running Solaris operating system 

- Sybase database management 

system 

ANDRULIS 

Corporation 

2800 Shirlington Road, 

Suite 600 

Arlington, VA 

22206 

Lillie Haggins, 

lhaggins@ 

nsf.gov 
Inventory of Payroll Initiatives 

 B-11 

Table B−1. Recent Payroll Studies, Articles, and Business Cases 

No. Document title Document summary Key findings and conclusions 

Reference 

point or hyperlink path 

Source 

contact 

- IBM compatible client PCs running 

Windows 95 or higher. 

For Federal payroll processing systems, the source code had to be 

available to NSF to bring operations 

in-house. 

Cross-servicing from another Federal agency is not an option 

Benefits: 

Automation of retirement records; 

Retroactive pay adjustment capability; 

Single source data entry and update 

for data elements common to IPERS 

and IPAY; 

Employee self-service for entry of 

data for selected data fields for 

which the employee determines the 

content of the data; 

Minimization or elimination of manual payroll processes; 

Migration of payroll processing to a 

client-server environment in order to 

achieve closer integration with other 

NSF systems. 

Recommendations: 

No federal systems were found that 

meet NSF’s requirements. 

Commercial product from PeopleSoft showed great promise, but was 

rejected because functionality partitioned between personnel and payroll modules is not well aligned with 

NSF’s business processes and existing information technology systems. 

Two commercial supplemental products, OmniForm and ALLTAX2, are 

recommended. 
 

 B-12 

Table B−1. Recent Payroll Studies, Articles, and Business Cases 

No. Document title Document summary Key findings and conclusions 

Reference 

point or hyperlink path 

Source 

contact 

20 US Mint 

Paymint 

A project of US Mint 

to implement a fully 

integrated PeopleSoft federal HRMS 

product with these 

modules: 

Basic Human Resources (PAR, position management) 

Base Benefits (enrollment) 

Time & Labor 

Payroll 

The project is a joint 

effort of the Mint, 

Treasury and National Finance Center. There is a 

positive ROI. 

Benefits: 

Reengineered business practices 

resulting in high performing and productive HR organizations; 

Transformed HR service delivery; 

Implementation of best practices 

inherent in COTS products; 

Investment in infrastructure and 

business processes in line with private sector practices; 

Empowerment of employees/managers to directly access 

needed information and to execute a 

range of individual HR transactions; 

Electronic information and automated tools for strategic workforce 

management; 

Reduction of non-value added work 

so that resources can be redirected 

to value-added use; 

More accurate, timely and less 

costly HR and payroll information; 

Marked improvement in user and 

Department customer satisfaction; 

and 

Development of HR programs, practices and services that enable the 

Department to meet its mission. 

Eleanor 

Braun, Manager, HR/PY/

PayMint, Office of Application 

Development/ 

OCIO, U.S. 

Mint, (202) 

312-0331 or 

ebraun 

@usmint. 

treas.gov 

Eleanor 

Braun 

21 U.S. Department of Treasury—Capital 

Planning Business Case 

Treasury and its 

bureaus have undertaken efforts to reengineer human 

resources (HR) 

management and to 

design, develop and 

implement HR Connect, a new automated human 

resources system 

(HRS), which is 

based on a suite of 

commercial-off-theshelf (COTS) products. HR Connect is 

a key information 

technology initiative 

in bringing about 

process changes to 

Treasury and its 

bureaus. 

Issues in Current Environment: 

The current configuration of human 

resources systems is extremely expensive to use and maintain, uses 

inefficient processes and in most 

cases relies on grossly outdated 

technology, requires too much specialized knowledge to operate, offers 

limited access, and does not provide 

adequate accurate or timely information and mission support. 

Benefits: 

Reengineered business practices 

resulting in high performing and productive HR organizations; 

Transformed HR service delivery; 

Implementation of best practices 

inherent in COTS products; 

Investment in infrastructure and 

business processes in line with private sector practices; 

Eleanor 

Braun Manager, HR/PY/

PayMint, Office of Application 

Development/ 

OCIO, U.S. 

Mint, (202) 

312-0331 or 

ebraun@ 

usmint. 

treas.gov 

Project Lead: 

Todd Turner, 

Director, Human Resources 

Enterprise 

Solutions 
Inventory of Payroll Initiatives 

 B-13 

Table B−1. Recent Payroll Studies, Articles, and Business Cases 

No. Document title Document summary Key findings and conclusions 

Reference 

point or hyperlink path 

Source 

contact 

 Empowerment of employees/managers to directly access 

needed information and to execute a 

range of individual HR transactions; 

Electronic information and automated tools for strategic workforce 

management; 

Reduction of non-value added work 

so that resources can be redirected 

to value-added use; 

More accurate, timely and less 

costly HR and payroll information; 

Marked improvement in user and 

Department customer satisfaction; 

and 

Development of HR programs, practices and services that enable the 

Department to meet its mission. 

22 Innovative Contracting Approaches: A 

Contractor’s 

Perspective 

Proposal of US 

Army Communications-Electronics 

Command 

(CECOM) changes 

to acquisition process for the Wholesale Logistics 

Modernization Program (WLMP). 

Issues in Current Environment: 

Need to communicate clearly and 

openly to avoid ambiguous presentation of Government objectives and 

offerors capacities. 

Benefits: 

Offerors can compete more intelligently and aggressively; 

Performance-Based contracting 

method; 

CECOM’s open, fair, and thorough 

communication with all contractors in 

regards to Government’s requirements. 

http://wlmppor

talprod.wlmp. 

com/ 

Craig A. Mattice, Computer 

Sciences 

Corporation, 

Federal Sector—Defense 

Group 
 

 B-14 

Table B−1. Recent Payroll Studies, Articles, and Business Cases 

No. Document title Document summary Key findings and conclusions 

Reference 

point or hyperlink path 

Source 

contact 

23 1989 GAO Report: “Treasury’s 

Efforts to Improve Its Payroll 

and Personnel 

Systems” 

A review of the 

Treasury’s past efforts to develop payroll and personnel 

systems. It describes the past 

efforts to improve 

the systems, characteristics of existing 

systems, current 

efforts to improve 

payroll and personnel processing, and 

observations on 

factors important to 

the success of the 

current effort. 

Issues in Current Environment: 

Current payroll and personnel systems are labor intensive, require 

substantial manual operation, and 

are inadequate to meet agency 

needs. 

Study conducted in 1988 reviewing 

possible conversion to NFC met the 

majority of personnel and payroll 

requirements, was operational and 

did not pose risk of failure, and could 

provide significant cost savings over 

10 year period ($21-52 million). 

Two conversions currently underway; one for all bureaus and agencies, and the other for IRS. 

Treasury and IRS faced funding 

shortfalls in their planned conversion 

effort. 

Conversion efforts at IRS were understaffed and under funded at time 

of report. 

A system for transmitting IRS time 

and attendance data to NFC had not 

been selected. 

GAO Randall Tabor, Project 

Control Officer, Pay Engine/PayMint 

Project Staff 

24 Government 

Executive Article: “Pay Dirt” 

Efforts to streamline 

human resources 

operations and cut 

payroll costs are 

opening market for 

federal pay processing. Article discusses movement to 

commercial payroll 

servicers for big 

payroll players, their 

business needs in 

HR and the considerations they face. 

Issues in Current Environment: 

Government organizations have felt 

more comfortable broaching outsourcing with another government 

organization because they have a 

better understanding of government 

business processes. 

Agencies want to reduce repetitive 

data entry, have better handle on 

HR management information and 

enable employees and managers to 

conduct basic HR transactions themselves. 

Benefits: 

A) Enterprise systems will allow 

managers to: 

Use desktop computers to design 

organizational models; 

Do “what-if” HR analysis; 

Create position descriptions; 

Classify jobs; Conduct personnel 

actions; 

Manage recruitment; 

Administer training, benefits and 

http://www. 

govexec.com/

features/ 

0699/0699s2.

htm 

Randall Tabor, Project 

Control Officer, Pay Engine/PayMint 

Project Staff 
Inventory of Payroll Initiatives 

 B-15 

Table B−1. Recent Payroll Studies, Articles, and Business Cases 

No. Document title Document summary Key findings and conclusions 

Reference 

point or hyperlink path 

Source 

contact 

pay; 

Track salaries; 

Handle performance reviews and 

evaluations, union agreements and 

grievances, disciplinary actions and 

discrimination complaints; 

Can reduce operating costs and 

improve productivity. 

B) Client server technology is easier 

to use and change, cheaper to run 

and permits more access to information. 

25 Government 

Executive Article: “Buyers 

Beware” 

A summary of the 

GAO report on DoD 

decision to purchase 

Oracle software for 

HR applications. 

Issues in Current Environment: 

There was a failure to consider all 

possible alternatives for improving 

personnel management; 

DoD made its decision too quickly 

without cost and performance data; 

DoD committed to buying Oracle 

before they modified to meet DoDspecific requirements; 

DoD did not fully mitigate system 

security risks. 

Recommendations: 

Before considering HR improvements, rigorously evaluate all business and system alternatives as 

directed by the 1996 Clinger-Cohen 

information technology management 

reform law; 

Use data generated during this 

evaluation to select the most costbeneficial business and system alternatives; 

Develop a transition plan to the alternative selected; 

In analyzing commercial products, 

consider costs, benefits and return 

on investment for all personnel 

management products. Also consider technical risks, including 

whether each product can support 

agency needs and can be modified 

at reasonable cost; 

In analyzing commercial products, 

consider the amount invested in any 

existing system. 

http://www.go

vexec.com/fe

atures/0699/0

699s2.htm 

Randall Tabor, Project 

Control Officer, Pay Engine/PayMint 

Project Staff 
 

 B-16 

Table B−1. Recent Payroll Studies, Articles, and Business Cases 

No. Document title Document summary Key findings and conclusions 

Reference 

point or hyperlink path 

Source 

contact 

26 DOD Personnel/Payroll 

Functional Requirements 

Checklist 

This document includes functional 

requirements in the 

following areas of 

Personnel: position 

management, staffing, personnel activities, employee 

relations, labor relations, training, EEO 

support, retirement, 

information access, 

other. 

It also includes functional requirements 

in the following areas of Payroll: time 

and attendance, pay 

processing, leave 

processing, labor 

distribution, and 

information access. 

 Bob Bird, 

DFAS, robert.

bird@dfas.mil 

Jerry Hinton, 

DFAS, 

jerry.hinton@

dfas.mil, or 

(703) 607-

0328 

27 Alternative Payroll Provider 

Team (DOE & 

FERC) review 

of DOI capacity 

to manage 

FERC payroll/personnel 

system. 

The Alternative Personnel/Payroll Provider Team (APPT) 

was created to review DOI ability to 

uphold Memorandum of Understanding with DOE to 

outsource DOE payroll services. This 

document reviews, 

evaluates, and provides recommendations for a potential 

payroll provider. 

These include: DOI, 

NFC, GSA, VA, 

Anderson Consulting, and DOE. 

Benefits: 

Increases accuracy and efficiency 

within an agency by eliminating duplicative processes and automating 

workflows; 

Eliminates obsolete functions by 

reengineering processes; 

Improves information management 

by providing under one system data 

maintenance and access to all levels 

of the organization.

Recommendations:

APPT determined that DOE would 

achieve the benefits of an integrated 

HR and Payroll system by using the 

entire suite of PeopleSoft HRMS 

Federal. 

APPT identified the following steps 

required to implement effectively and 

efficiently an integrated system solution using PeopleSoft HRMS Federal: 

DOE budget for, identify, and select 

a staff to implement the PeopleSoft 

integrated solution; 

DOE implement and interim DOE 

solution to upgrade current payroll/personnel system, and develop

 Janet Dubbert, FERC, 

(202) 219-

2967, or 

janet.dubbert

@ferc.fed.us 
Inventory of Payroll Initiatives 

 B-17 

Table B−1. Recent Payroll Studies, Articles, and Business Cases 

No. Document title Document summary Key findings and conclusions 

Reference 

point or hyperlink path 

Source 

contact 

interface with current system to 

(CHRIS) Corporate Human Resource Information System; 

DOE choose between outsourcing 

payroll, retaining the function inhouse, or using the next nine 

months to acquire and assess the 

PeopleSoft Federal Payroll and Time 

and Labor modules and readdress 

outsourcing versus in-house processing of payroll later. 

APPT identified three options: 

If decision is to outsource payroll, 

VA is the best alternative to meet an 

integrated system solution; 

If decision is to retain in-house payroll, APPT identified potential cost 

savings and reductions of risk. 

28 FERC’s Management, Administrative, and 

Payroll System 

(MAPS) Strategic Plan 

A blueprint that depicts the future vision of the FERC’s 

MAPS. The plan 

presents an operational strategy and 

implementation plan 

for reengineering 

select business 

processes within HR 

and financial management, specifically processes 

within OED/CFO to 

maximize benefits of 

an integrated system solution. 

Issues in Current Environment: 

How to define an operating vision 

and strategy for human resources 

and financial management; 

How to define future business processes that leverage the PeopleSoft 

HRMS, Time and Labor, and payroll 

applications; 

How to develop an implementation 

plan to achieve the operating vision 

and realize future business processes. 

Benefits: 

Streamlines activities; 

Maximizes the uses of resources; 

Improves communication and workflow. 

 Janet Dubbert, FERC, 

(202) 219-

2967, or 

janet.dubbert

@ferc.fed.us 
 

 B-18 

Table B−1. Recent Payroll Studies, Articles, and Business Cases 

No. Document title Document summary Key findings and conclusions 

Reference 

point or hyperlink path 

Source 

contact 

29 Federal Human 

Resources Data 

Network 

(HRDN) Status 

Report 

A slide presentation 

on the status of the 

HRDN Program and 

includes a summary 

of the HRDN business case. The 

HRDN Program is 

an effort to more 

effectively transfer 

HR records electronically between 

Federal Government 

Agencies. 

Issues in Current Environment: 

The HR process is paper-bound, 

labor intensive and inefficient. Employees are negatively affected upon 

transfers between agencies. 

Benefits: 

The Network eliminates the need for 

a paper employee record, enables 

the electronic transfer of HR data, 

streamlines and improves Government reporting, complements and 

incorporates agency HRIS capabilities, provides technology flexibility 

and support the President’s Management Initiatives on eGovernment. 

 John Moseley, Program 

Executive, 

HRDN 

30 Report on Department of 

Health and Human Services, 

Human Resources Services Controls 

Placed in Operation and 

Tests of Operating Effectiveness for the 

Central Personnel and Payroll 

System for the 

Period October 

1, 1999, to September 30, 

2000. 

A report of the examination by PriceWaterhouseCoopers 

of the Human Resources Services 

central personnel 

and payroll system 

(HRS) controls 

placed in operation. 

The firm concluded that the description of the central personnel and 

payroll system application presented 

fairly the relevant aspects of the 

HRS system controls placed in operation as of September 30, 2000. 

The controls were suitably designed 

to provide reasonable assurance 

that the related control objectives 

would be achieved if user organizations satisfactorily complied with 

them. Finally, the controls tested 

were operating with sufficient effectiveness to provide reasonable assurance that the control objectives 

specified were achieved during the 

specified period. 

 Joseph E. 

Vengrin, Assistant Inspector 

General for 

Audit Operations and 

Financial 

Statement 

Activities, 

(202) 619-

1157 

Refer to 

common 

identification 

number: A17-00-00012 

31 Department of 

Labor Payroll 

Processing Alternatives 

Comparison of 

cross-servicing options to PeopleSoft 

option in order to 

select the most costeffective, customeroriented solution. 

LMI interviewed 16 

agencies at DOL to 

identify issues within 

the current payroll 

processing environment that need to be 

addressed by a 

modernized process 

and to define the 

criteria to be used in 

evaluating GSA’s 

Issues in Current Environment: 

5 evaluation criteria were identified: 

interoperability and integration with 

PeoplePower; functionality; technology and the ability to keep up with 

advances in information technology; 

customer service; costs (developmental and operational). 

Recommendations: 

LMI believes DOL should move forward in its implementation of PeopleSoft. 

 Ron Rhodes, 

Logistics 

Management 

Institute, 703-

917-7505 

Teresa Hannan, DOL, 

202-693-6800 
Inventory of Payroll Initiatives 

 B-19 

Table B−1. Recent Payroll Studies, Articles, and Business Cases 

No. Document title Document summary Key findings and conclusions 

Reference 

point or hyperlink path 

Source 

contact 

payroll services. 

32 Department of 

Labor Timekeeping Process; 

Modernizing 

Existing Operations 

DOL asked LMI to 

analyze alternatives 

to the current ATA 

(a custom-built, client-server application developed using 

PowerBuilder) 

application and recommend business 

process improvements. These included: GSA’s 

Electronic Time and 

Management System, GOTS and 

COTS. 

Issues in Current Environment: 

ATA processing at DOL does not 

meet all needs and is not sufficiently 

integrated with other DOL systems, 

notably the payroll and HR systems. 

Recommendations: 

DOL should modernize its internal 

ATA application rather than acquire 

a new COTS/GOTS product alternative. The ATA application needs 

functional enhancement and could 

benefit from an operational makeover. 

 Ron Rhodes, 

Logistics 

Management 

Institute, 703-

917-7505 

Teresa Hannan, DOL, 

202-693-6800 

33 Evaluation of 

Services from 

the National 

Finance Center 

Describes the process employed to 

evaluate the functional and technical 

capabilities of each 

solution being considered as a replacement solution 

for FAA legacy personnel and payroll 

systems. 

Issues in Current Environment: 

6 alternatives were researched: 

COTS HR and Payroll, VA, GSA, 

DOI, NFC and COTS HR with Legacy Payroll. 

Recommendations: 

Cross-servicing by the Veteran’s 

Administration using PeopleSoft HR 

and Payroll provides the most functionally rich alternative to FAA’s legacy systems. 

 Anh Bolles, 

DOT, 202-

366-5564, 

Anh.bolles@o

st.dot.gov 

34 Report on the 

FAA’s Assessment of the National Finance 

Center (NFC), 

Focus on Personnel and Payroll Systems 

 A slide presentation 

of FAA evaluation of 

NFC to cross service personnel and 

payroll systems. 

Identifies pros and 

cons of crossservicing with NFC. 

Issues in Current Environment: 

FAA experiences personnel reform 

changes without the benefit of modern automation that is flexible to 

accommodate these changes. Previous studies identify major gaps 

existing between FAA requirements 

and NFC capabilities. These include: automated requests for personnel actions, automated training 

enrollments, validation of time and 

leave data at point of entry, electronic approvals of time and labor, 

personnel requests, and training 

enrollments. 

 Anh Bolles, 

DOT, 202-

366-5564, 

Anh.bolles@o

st.dot.gov 

35 Requirements 

Analysis FAA 

Legacy Systems. 

Gap analysis of the 

FAA requirements to 

FAA legacy systems. Significant 

gaps are identified 

and concludes that 

the current system 

would not be able to 

accommodate 

h i db

Issues in Current Environment: 

Substantial material weaknesses in 

the current systems developed by 

FAA in the 1970’s have grown after 

the stalling of the Integrated Personnel and Payroll System project 

(IPPS) initiated in 1991. There are 

now 3 non-integrated human resources and payroll systems, all of 

 Anh Bolles, 

DOT, 202-

366-5564, 

Anh.bolles@o

st.dot.gov 
 

 B-20 

Table B−1. Recent Payroll Studies, Articles, and Business Cases 

No. Document title Document summary Key findings and conclusions 

Reference 

point or hyperlink path 

Source 

contact 

changes required by 

personnel reform. 

which are unduly complex, costly 

and inefficient. 

36 GAP Analysis – 

General Services Administration 

A gap analysis of 

FAA requirements to 

GSA functionality 

highlights a number 

of concerns in cross 

servicing. 

The lack of integration between 

GSA’s HR and Payroll system is a 

cause for concern, among others, 

since it would not address the “lack 

of integration” material weakness of 

the current systems. 

 Anh Bolles, 

DOT, 202-

366-5564, 

Anh.bolles@o

st.dot.gov 
Survey Questionnaire and Responses

Question 1A Describe the business functions supported in your current payroll processing environment.

GSA Pay, Title V, benefits administration, time and labor

DOI Pay, time and attendance, leave administration, debt management, tax administration, payroll accounting, 

benefits, emergency fire fighter (EFF) pay, internal and external reporting

DFAS T&A, leave processing, pay processing, report processing and reconciliation, Title V, benefits administration, 

time and labor, Title 20.

USDA Pay, Title V, benefits administation, time and labor

VA Pay, Title V, Title 38, benefits administation, time and labor

NSF No response

FERC Title V, SF-52/50 processing and associated HR transactional processes, time and labor, pay

DOT Pay, time and attendance, leave administration, debt management, tax administration, benefits administration, 

Title V. In addition, the Federal Aviation Administration (FAA) falls under the Department of Transportation 

(DOT) and comprises approximately 76 percent of the employees (over 49,000) paid by DOT’s Consolidated 

Uniform Payroll System. As a result of the 1996 DOT Appropriations Act, FAA was given the authority to 

develop and implement a new personnel management system. With this change, FAA was exempted from a 

good portion of Title 5. 

DOL The Department currently handles all payroll processing with a legacy system that is over 25 years old. We are 

addressing the challenges of the current legacy systems with a COTS solution for integrated HR/Payroll 

functionality.

Question 1B What major challenges do you have with those functions?

GSA No response

DOI New or unique statutory and/or regulatory requirements affecting all or part of our client base that must be 

addressed by the system and in operational processing interfaces; agency and organizational flexibility in 

utilizing and implementing personnel and pay authorities; since FPPS and the overall pay process are 

“customer driven” through personnel action and time and attendance input, the system and payroll processing 

staff must deal with changes, errors, and lack of timeliness in client input on a continuous basis; payroll 

processing staff must work with agency personnel offices and managers to audit and calculate numerous back 

pay entitlements resulting from court cases, labor arbitration, Equal Employment Opportunity complaints, etc.

DFAS No response

USDA Major challenges presented to payroll processing center around legislation, laws, rules, regulations, executive 

orders, labor agreements, etc. Examples of some of the complexities are: Different rules between the various 

branches of the government (executive, legislative, judicial); requirements specific to an agency or grouping of 

employees across agencies; Small groupings of employees who are subsets of larger groups of employees, yet 

are subject to different payroll requirements (e.g., the Smithsonian Institution’s Zoo Police are paid differently 

from other law enforcement officers); short time-frames for implementation; retroactive effective dates; 

interpretations which often vary by department, agency, and bureau; lack of sufficient federal personnel with 

the institutional knowledge necessary to analyze and interpret legislation; union-specific labor agreements

VA Size of VA; diversity of multiple pay authorities with varying rules and computations; keeping old system 

current with policy and regulatory changes; keeping old system current with nuances and payment rules specific 

to VA; electronic T&A is decentralized with no rollup data capability.

NSF No response

FERC Some pay provisions are not provided in the COTS product. Liquidation of compensatory time is optional and 

can hinder system development for multiple clients with varying procedures.

DOT With the FAA under Excepted Service and the remainder of the Department under Title 5, our requirements are 

unique. While our payroll system and time collection system must pay employees covered under Title 5, it must 

also accommodate FAA’s specific pay and leave entitlements resulting from FAA’s personnel reform. To date, 

our payroll system covers 57 different Federal Pay System codes (these codes were established by the Office of 

Personnel Management for all Federal pay systems). In addition, the FAA alone has 50 different bargaining 

units with differing requirements based on their contractual agreements. Changes to pay, benefits and leave 

must be negotiated accordingly with these entities.

DOL No response

C-3
Survey Questionnaire and Responses

Question 2 What are the performance metrics for your payroll system and processes?

GSA No response

DOI Processing time of 1 second per transaction; security at the application level; Privacy Act; OMB A-130 

compliance; continuity of operations plan; 99.9% on-time pay; 24 hour notification of non-payment

DFAS On-line response time less than 2 seconds 95% of the time; process and programs must run within time frames 

established; agency-level performance measures indicators; internal performance metrics reported monthly; inhouse managerial reports by product line. (Numerous specific performance metrics submitted.)

USDA NFC monitors the following performance metrics: Payment of employees in a timely and accurate manner; 

customer service satisfaction; availability of mainframe computer (up-time); payroll/personnel processing costs 

per disbursement event; payroll/personnel processing costs per W-2 issued; system development and 

enhancements in accordance with project plan target dates; number of inquiries resolved within established 

time frames; number of manual payments within established time frames; number of debts managed within 

established time frames; number of retirements processed within established time frames; number of 

separations processed within established time frames

VA Payroll cycle completed within 48 hours of final HR data entry; final pay calculations completed under 25 

minutes for 220,000 employees; payroll is $248 million per pay period

NSF No response

FERC Examples: 100% accuracy of Treasury disbursements; 95% accuracy of post-payroll disbursement interfaces; 

98% accuracy of periodic reporting on disbursements; 98% completion of payroll processes within specified 

time frames; 97% availability of payroll services; 99% completion within one business day of unscheduled 

payments; 99% availability of payroll program staff during scheduled hours; 100% availability of help desk 

support during scheduled hours.

DOT

Chart number of system changes made in a year’s time; compare volume and whether target date was met for 

each change; use customer satisfaction surveys; assess Employee Express usage (i.e., paper v. electronic).

DOL The goal of the Department’s OCFO/Payroll Services is to follow all legal and regulatory requirements to pay 

Department employees timely and accurately every biweekly pay period and to comply with all legal and 

regulatory Federal, State, and local reporting requirements. The Office’s standard is 99%, but our goal is 

100%. Within that overall goal we have other metrics listed below:Pay manual or off-cycle salary payments or 

adjustments within two days of receipt in the OCFO Payroll Office; Process back-pay and settlement actions, 

including interest when appropriate, within 10 days or court order due dates; Process TSP loan transactions 

within five days, and within the pay period in which it was received in the OCFO Payroll Office; Correct ACH 

errors within the pay period received; Respond to salary-related debt collection requests within ten days of 

receipt; complete waiver requests within 30 days of receipt; Take initial action and send employee notification 

on garnishments, tax levies, or child support orders within five workdays of receipt. Enter collection actions 

into the payroll system within 30 days or the date established by the court; Process retirement and separation actio

C-4
Survey Questionnaire and Responses

Question 3 Describe your payroll systems environment. Include system name(s), location of operation; platform; 

capacity; number of employees paid; and internal and external interfaces (finance, time and attendance, 

personnel, OPM, Treasury, etc.). Include graphic presentations if available.

GSA —Updates in real time. 

—System name: Payroll and Accounting Reporting System

—Oracle Version 8.17 IBM RS/6000–AIX Client server

—Capacity with current equipment: 100,000

—Current employees paid: 25,000

—Interfaces: time & attendance, accounting, Labor, Treasury, HR

DOI —Fully integrated personnel and payroll systems environment, utilizing FPPS; located in Denver; developed 

and maintained by the Personnel and Payroll Systems Division. 

—IBM mainframe platform; capacity limited only by computer size, disk array, storage requirements and staff. 

—About 225,000 employees are paid, including workers under EFF/Vendor Pay System. 

—Interfaces: financial and human resources systems of various client agencies, time and attendance systems, 

Office of Personnel Management, Department of Treasury, National Finance Center, our unemployment 

services contractor, the TALX employment verification system, Employee Express, various unions, and the 

Payroll Operations Division’s Debt Management System.

DFAS —Defense Civilian Pay System (DCPS) runs at a Defense Information Systems Agency (DISA) facility in 

Mechanicsburg, PA. 

—Mainframe-based, in-house and custom developed. 

—Interfaces: Defense Automated Printing service; OPM; Integrated Garnishment; NFC; Operation Mongoose; 

Savings Bonds; IRS; state tax; local tax; T&A; accounting; departmental accounting; disbursing; Federal 

Reserve Bank; unemployment compensation; Defense Civilian Personnel System.

USDA —NFC payrolls over 450,000 employees of more than 100 federal organizations

—System expanded to accommodate "average" federal employees as well as over 100 types of federal and quasifederal employees

—PPS is a three-tiered system hosted at NFC in New Orleans

—Multiple user interfaces which enable field offices/user agencies to access PPS via the Internet, 3270 

emulation, or client/server

—NFC’s Front-End System Interface (FESI) middleware enables clients to use their choice of HR systems (i.e., 

agency developed or COTS) and interface with PPS

—Application server is an IBM MVS CMOS machine, which routinely processes large quantities of data 

received through various feeder systems. With appropriate central processing units (CPU) and storage 

availability NFC payroll processing capacity could easily accommodate over 1 million employees VA —Payroll and HR management system on mainframe under OS390

—Processing at the Austin Automation Center

—Custom-built on-line data entry system (OLDE); electronic T&A custom-built using MUMPS

—220,000 employees paid per pay period

—Interfaces with NFC for TSP, Treasury, several departmental financial systems, OPM, SSA

NSF —1,250 employees

—IPAY system

—Interfaces: Payroll User Interface, which uses employee self service model; IPERS (HR); ITAS; Treasury; 

OPM; federal tax; state and local taxes. Employee Self Service (ESS) allows employees to enter new changes 

and modify existing data for their individual records.

FERC —Payroll performed with PeopleSoft HRMS COTS software

—Integrated solution with HR, time and attendance, payroll

—Use an ASP (USi in Annapolis, MD)

—1,150 employees paid

—Internal interfaces: DOE Information System, Workload Tracking System

—External interfaces: Treasury, TSP, OPM

C-5
Survey Questionnaire and Responses

DOT System name: Consolidated Uniform Payroll System (CUPS) – DOT legacy system built in-house and 

implemented in 1978 

- Location: Payroll services/operations - Oklahoma City, OK & Atlanta, Georgia 

- Payroll systems development - Oklahoma City, OK 

- Platform: ICEMAN (IBM mainframe) 

- Number paid: approx. 65,000 employees in DOT and cross-servicing for NTSB 

- Internal Interfaces: Personnel system (CPMIS) & IPPS, financial systems (DAFIS/DELPHI) 

- External Interfaces: Treasury, OPM, Employee Express, NFC SSA, HHS, Frick, etc. 

- NOTE: time collection system is integrated with HR system which interfaces with payroll system.

DOL The Interactive Payroll System (IPS) handles the general processes of issuing salary payments, calculating and 

recording leave, producing payroll reports, and tracking personnel changes that affect salary payments for the 

Department of Labor. The core processing of IPS is to update the IPS database with personnel actions, time 

and attendance data, computation of pay, reporting pay computation results, leave, year-end processing and W2 creation and separation processing. Other IPS subsystems support a variety of payroll related activities. 

Support for IPS is provided via a contract with SunGuard Computer Services, Inc., for ADP timeshare services 

at their site in Voorhees, NJ. The hardware consists of multiple IBM mainframe processors, over 6 terabytes of 

online file storage, multiple communications front-end processors and a host of peripheral device support for 

tapes, etc. IPS, residing on the SunGuard mainframe, is accessed through the DOL Employee Computer 

Network (ECN). A user is required to have a LAN userid and password to access the DOL network.

C-6
Survey Questionnaire and Responses

Question 4 What are the current funding sources (budget authority, revenue) and expenditures for payroll 

processing and systems, including IT and staffing?

GSA fee-for-service revenue and budget authority; no capital investments planned

DOI 100% reimbursable fee-for-service; working capital fund

DFAS Defense Working Capital Fund. Customers are charged a standard billing rate per account serviced. Payroll 

processing actual costs for FY 2001 for the three payroll offices were $22,760,997. Systems costs in FY 2001: 

information processing costs were $3.8 million; systems development costs, funded by capital investment, were 

$7.6 million; software maintenance and other system production costs were approximately $4.1 million. 

Approximately 134 IT staff years were used to support development and maintenance.

USDA NFC, part of the USDA Working Capital Fund (WCF) authorized by 7 U.S.C. 2235. The WCF also has funds 

available for capitalized expenses. These funds were originally provided from appropriations or from growth 

capital assessments in prior years. There has been no new infusion of growth capital since the early 1990s. As 

capitalized items are depreciated, the depreciation is included in user fees, and the related revenue is reinvested 

in the capital fund.

VA VA franchise fund

NSF 5 employees funded from S&E. Systems and IT cost are broken down into two components, development and 

maintenance. Development costs include new systems, modules, and upgrades. Development costs are funded 

through our S&E appropriation for payroll. Program costs are used to fund development IT projects. The 

funding is spread over program appropriations, so at NSF two-year and no-year funding is available. 

Maintenance costs are funded out of our salaries and expense appropriation.

FERC $1.6 million for ASP and payroll services

DOT Funding for our payroll processing, systems, etc., is provided through reimbursable agreement between the 

Operating Administrations and other organizations and the Federal Aviation Administration.

DOL The payroll implementation effort is currently funded in the working capital fund, through fiscal year 2002. 

The current legacy payroll system support requirements are 21 FTEs, an operational cost of $1.16 million and a 

systems (maintenance) cost of $0.65 million. As referenced in the opening remarks to this document, one of the 

Department’s goals is to have an integrated HR/Payroll system. This will provide common administrative data 

elements and eliminate data redundancy and the need for reconciliation

Question 5 Which of the following strategic options for payroll processing are feasible cost reduction considerations 

for your agency? Simplification of requirements / Outsourcing to an ASP / Outsourcing to a federal crossservicer / Replacement of in-house systems / Replacement of in-house systems with a COTS product / 

Consolidation of processing / Other

GSA No response

DOI No response

DFAS DoD has made considerable cost reductions through its recently completed civilian payroll consolidations. 

Further efficiencies are expected through an end-to-end review of the civilian payroll process. The review will 

examine the "as is" state of the payroll business processes and the current business model to develop 

alternatives that may be implemented within 12 to 18 months. In addition, the review will also examine 

government and private-sector best practices, available technology, and existing systems to recommend 

alternative solutions to make payroll operations an integral part of the department's human resources automated 

system

USDA As part of the business case development for its PPS replacement, referred to as the Pay Engine Project, NFC 

has identified the following cost reduction approaches: 1) additional agencies outsourcing payroll processes to 

NFC, 2) enhancing existing system to provide employee self-service and Web deployment of payroll/personnel 

functions, 3) replacement of in-house systems using in-house and contract development resources, and 4) 

replacement of in-house systems with a COTS product.

VA Simplification of requirements; replacement of in-house systems; replacement of in-house systems with COTS 

products (under way); consolidation of processing (in process of centralizing).

NSF N/A

FERC N/A

C-7
Survey Questionnaire and Responses

DOT

simplification of requirements; outsourcing to an ASP; outsourcing to a federal cross-servicer; replacement of 

in-house systems; replacement of in-house systems with a COTS product; consolidation of processing; other.

DOL simplification of requirements, replacement of in-house systems, replacement of in-house systems with a COTS 

product, consolidation of processing.

C-8
Survey Questionnaire and Responses

Question 6A Have you determined that any options are not feasible?

GSA No response

DOI No response

DFAS Yes.

USDA Yes, NFC has determined that the following options are not feasible: 1) Simplification of requirements—NFC 

simplifies requirements when possible, but as a customer service organization, it delivers services that must 

meet customers’ unique simple and/or complex requirements; 2) Outsourcing to an ASP—NFC has researched 

the available ASP market, and found none that currently service federal agencies.

VA Yes—ASP

NSF N/A

FERC N/A

DOT Yes.

DOL The General Services Administration (GSA) payroll system was considered the only viable option for DOL.

Question 6B How were those determinations made, and what were the reasons the options are not feasible?

GSA No response

DOI No response

DFAS It is unlikely that outsourcing to an ASP would be an outcome. The department has conducted an A-76 study of 

its payroll operations, including the issuance of a formal solicitation seeking a service provider. There were no 

responses to the solicitation from the private sector.

USDA Due to rules, legislation, laws, regulations, executive orders, etc., different customers require unique processing, 

thereby making simplification nearly impossible. Since federal payroll processing is so unique, it would be a 

major organizational and procedural change for a private-sector ASP to process federal payroll.

VA Outsourcing to an ASP or to another cross servicer were considered in the past. They were determined not to be 

feasible due to the size of VA and the complexity of its payroll rules.

NSF N/A

FERC N/A

DOT Based on a study conducted in 1998, we determined that the following were non-viable alternatives: complete 

cross-servicing with the USDA (i.e., NFC) (Reason: failed to meet our functionality requirements); engaging in 

commercial ASP (Reason: none had federal solution available); outsourcing HR & payroll (Reason: none had 

federal solution available for payroll); internal development (Reason: limited resources).

DOL Other cross-servicing agencies were ruled out because of their bundling of services, use of legacy systems, or 

other reasons. Further, GSA was deemed a less feasible option than the purchase of the COTS product 

(PeopleSoft Payroll). PeopleSoft Payroll will give DOL greater interoperability, as well as, integration with its 

existing HR system. GSA’s expected growth in its customer base might limit its ability to maintain a high level 

of customer service. GSA’s biweekly processing schedule and the closing of DOL servicing payroll offices 

would require business process changes in DOL. Also, GSA’s ETAM (time and attendance system) was not 

considered user friendly requiring interfaces to be developed from and to DOL’s Automated Time and 

Attendance System, as well as, the HR system.

C-9
Survey Questionnaire and Responses

Question 7 What are the key investment decisions your agency is considering (new systems, IT, people, fee-forservice opportunities, outsourcing, service provider, etc.)?

GSA No response

DOI Department of the Interior, National Business Center is not currently considering capital investment in payroll 

systems, since the fully integrated FPPS payroll/personnel action system has been recently implemented and 

continues to meet client agency needs.

DFAS Replacing its current civilian payroll system and integrating with HR

USDA Alternatives: Complete the development of Web access to NFC’s PPS from user locations and provide employee 

self-service via the Internet (short term); acquire COTS Human Resources/Payroll (HR/PR) software and work 

with a contractor to develop integrated federal HR/PR applications for the user community; rewrite the existing 

system in-house using modern programming languages, techniques, and data structures with contractual 

support.

VA VA is currently developing and implementing a new HR/payroll system (HR LINK$) around the PeopleSoft 

application. A shared service center has been established in Topeka, Kansas. Employee self-service 

functionality has been deployed to the entire VA.

NSF N/A

FERC N/A

DOT DOT is open to alternatives that meet our complex pay requirements and prove cost effective.

DOL DOL considered outsourcing to a Federal cross-servicer and the purchase of a new system. The decision was 

made to purchase and develop the PeopleSoft Payroll system to meet Federal and DOL requirements.

Question 8 What is your capital investment plan for payroll processing and systems? Include amounts, purpose, 

items, and year in which the investment is planned and acquisition strategy.

GSA No response

DOI No response

DFAS The planned capital investment for payroll systems in DFAS is approximately $6.5 million in FY 02 and FY 

03. This funding will be used to include new functionality in the DCPS payroll system that either: 1) is required 

by new legislation and policy; 2) is requested by our customers; or 3) will reduce manual efforts in our payroll 

operations offices or in customer and timekeeper offices. We plan a similar level of investment for these 

purposes in the outyears. However, beginning in FY 04, we have requested additional capital investment funds 

of $23 million over a four-year period to modernize the existing payroll system.

USDA The Pay Engine Project is NFC’s long-range payroll processing capital investment. Its capital investment plan 

is included in the preliminary business case for the project.

VA VA is currently developing and implementing a new HR/payroll system (HR LINK$) around the PeopleSoft 

application. A shared service center has been established in Topeka, Kansas. Employee self-service 

functionality has been deployed to the entire VA. Development, testing, and implementation are scheduled to be 

completed by January 2004.

NSF N/A

FERC N/A

DOT The Federal Aviation Administration (the largest organization within DOT) is currently developing a new HR 

and time collection system using the Oracle application. An investment analysis of a

payroll solution is planned for 2003. The vision is to integrate HR and payroll.

DOL Through the end of FY01, the Department has expended $3.3 million on the current development effort for the 

payroll system. In addition, $0.3 million has been expended on the ATA replacement product, PeopleTime 

through the same time period ( Figures for FY01 expenditures are actuals through August 2001 and projections 

for September 2001). DOL will invest an estimated $5.5 million to develop PeopleSoft Payroll during FY01 – 

FY02. Based on historical costs for its payroll operations, DOL will invest an estimated $3.3 million annually 

to perform payroll processing with PeopleSoft Payroll.

C-10
Survey Questionnaire and Responses

Question 9 What is the business case (please provide) for the currently planned capital investment described above?

GSA No response

DOI No response

DFAS Business case provided under separate attachment

USDA In accordance with Chapter 2 of the USDA Information Technology Capital Planning and Investment Control 

(CPIC) Guide, the Pay Engine Project is in the Pre-Select Phase of the CPIC Process. This phase entails 

development of a “preliminary” business case, which is intended to build support and enable funding decisions 

for the investment. The Pay Engine Project Preliminary Business case is included as Appendix 2 to this 

document.

VA SAIC recently completed an updated cost-benefit analysis for the HR/payroll system. Their report documented a 

benefit-cost ratio of 1.63, a net present value of $159,704,000, and an internal rate of return of 151%.

NSF N/A

FERC N/A

DOT N/A

DOL DOL contracted a study with Logistics Management Institute (LMI) to compare outsourcing with the 

PeopleSoft Payroll option in order to select the most cost-effective, customer-oriented solution. LMI 

recommended DOL move forward with its implementation of PeopleSoft Payroll as a result of an agreement 

with DOL by PeopleSoft to make most of the necessary enhancements to its payroll product. By contrast, LMI 

expressed reservations about whether GSA could meet DOL’s specific needs

Question 10 What will be the impact if it is not funded?

GSA No response

DOI No response

DFAS System is at the end of its life cycle. Without system modernization, the payroll system will not be able to 

garner efficiencies made possible through modern, integrated software.

USDA Status quo is not a viable long-range option for the PPS. Modification and implementation costs cannot be 

avoided indefinitely. They can only be temporarily deferred until the department is forced to move to a 

replacement system. Replacement of an application as complex and widely deployed as the current PPS is a 

massive, multi-year undertaking. Aggressive planning must begin while experienced staffs are still available for 

information transfer and before system functionality issues become critical. Over the next few years, USDA can 

expect the problems cited below. Problems will increase over time: Increased instances of system problems; 

NFC being unable to meet program managers’ expanding information needs; decreased ability to modify PPS to 

systematically process payroll in accordance with new legislation; difficulty meeting service expectations; 

clients taking their business elsewhere; loss of economies of volume; higher unit costs for service.

VA The existing legacy system would have to be revitalized and brought into regulatory compliance. This will 

require new funding and 2 years of development for a system that is 36 years old.

NSF N/A

FERC N/A

DOT N/A

DOL The implementation of the PeopleSoft payroll system has been fully funded by the Department. The Department 

handles all payroll processing internally for all agencies and subagencies, from time entry through EFT for all 

16,000 Department staff. The Department does NOT provide payroll services for any agencies outside of DOL. 

The funding for this is provided out of working capital and accommodations are made for various non-standard 

requirements.

C-11
Survey Questionnaire and Responses

Question 11 Summarize your payroll business operations, including services provided, customers, authority and 

funding source (appropriated funds, franchise fund, revolving fund). Provide financial statements.

GSA GSA’s National Payroll Center provides the full range of payroll services from initial hire through separation 

and submission of retirement records to OPM. In addition to GSA employees the NPC also provides these same 

services to 34 independent commissions or presidential agencies. Operations are funded through appropriated 

funds and fee-for-service revenue.

DOI Payroll services provided include FPPS as the primary integrated tool for agency payroll database maintenance 

and pay calculation, Payroll Operations Division services in all of the functional areas described under Question 

1, ADP center and telecommunications support, and logistical support for mailing of leave and earning 

statements, W-2s, etc. Services are provided to 30 customer agencies, with about 28,000 system users.

DFAS DFAS provides payroll processing to DOD and non-DOD civilian employees located throughout the 

Continental United States (CONUS) and overseas (OCONUS). Customer funds are directly charged in the 

disbursement of biweekly payroll. Payroll operations and systems support is funded from the working capital 

fund.

USDA NFC's Payroll/Personnel System (PPS) is a full-service, integrated payroll/personnel system offering a full 

range of personnel and payroll processing. Biweekly, NFC payrolls an average of 450,000 employees and 

maintains their personnel records. NFC also transfers voluntary and mandatory deductions to the proper 

organizations, and produces reports required by those organizations and other federal regulatory organizations. 

The vast majority of payroll and personnel transactions are electronically entered from agency offices to NFC 

for processing in the integrated Payroll/Personnel System. All data is defined to one of three databases: USDA 

employees, Treasury employees, or all other agency employees. In addition to entry of data at the field level, 

agencies can make inquiries, correct most types of transactions, and generate reports electronically from their 

remote locations

VA VA payroll is currently processed biweekly using the Personnel and Accounting Integrated Data (PAID) 

System. PeopleSoft payroll processing is currently being accomplished for FERC. There are approximately 

1,250 W-2 statements for this organization. The PeopleSoft implementation also includes HR and time and 

labor modules. The Financial Services Center provides local payroll services for five VA stations. Funded 

through a franchise fund.

NSF N/A

FERC N/A

DOT CUPS systems functionality: payroll processing for DOT & NTSB; centralized retirement processing; 

centralized TSP processing; centralized tax reporting; retroactive pay calculations – system generated for 25 

pay periods; EFT capability for all payments; Detailed earnings and leave statement with messaging. 

Customers: Federal Aviation Administration (service providers); Office of the Secretary; Bureau 

Transportation and Statistics; Transportation Administrative Service Center; Office of the Inspector General; 

Federal Highway Administration; United States Coast Guard; Federal Rail Administration; Federal Transit 

Administration; Maritime Administration; National Highway; Traffic Safety Administration; Research and 

Special Programs; Volpe National Transportation Systems Center; National Transportation Safety Board 

(external to DOT but pending transition to DOI ); International Broadcasters Bureau (external to DOT and 

pending inclusion). Funding Source: appropriated funds (i.e., reimbursable agreement between the FAA & 

other organizations for payroll services).

DOL N/A

C-12
Survey Questionnaire and Responses

Question 12 If you are a fee-for-service provider, describe your pricing structure and methodology including total 

costs, components of total costs, how costs are tracked for all components (including overhead, IT usage, 

salaries and expense, etc.), and how charges to customers are derived, billed, and collected. Note whether 

investment in information technology are a component of the cost.

GSA Fee-for-service provider. Our pricing structure is based upon a flat rate per year for each W-2 issued. Our 

pricing structure is derived from using ativity-based costing methodologies. We charge an additional flat rate 

for our electronic time and attendance system. Customers are billed on a quarterly basis, and revenues are 

collected via the OPAC process.

DOI FPPS clients are charged a standard unit cost per W-2 issued, which includes personnel action processing and 

management information system tools in addition to payroll processing. All direct and indirect costs of these 

products are included in the unit cost. The NBC does not receive appropriated funds to cover the costs of FPPS. 

Each client has an individual support agreement for NBC services and is billed on a quarterly basis. IT costs are 

included in the unit price, including depreciation and replacement costs.

DFAS DFAS operates as part of the Defense Working Capital Fund and is funded through fee-for-service 

arrangements. It operates on an expense basis. Based on customer orders, DFAS provides services which are 

billed back to customers. Total expenses are projected as part of the budget process. Information technology 

investment costs are captured via the depreciation expense component of the total expense. Profit and loss is 

factored back into pricing. DFAS has an accounting system/management information system (MIS) which 

tracks all expenses by output on a cost accounting basis. The customer funds are billed monthly for the actual 

workload (services) provided. The actual collection occurs through the DoD interfund process or via Treasury's 

OPAC system

USDA NFC is a fee-for-service provider. It recovers all its costs through user fees. There are two broad cost recovery 

categories: processing service and agency-specific special requests.

VA Costs are pro-rated in VA by W-2 count.

NSF N/A

FERC N/A

DOT Clients make payments to FAA quarterly for the full cost of services based on a prorated share of costs. The 

prorated share is derived from the total pay accounts maintained for employees in paid and non-paid status. 

Each of the clients share is the ratio of the number of its pay accounts to the total number of pay accounts of all 

of the clients. Appropriate deductions are taken from the subtotal costs of CUPS for clients that make Employee 

Express mandatory. The total annual costs includes salary and expenses, administrative overhead, the cost for 

payroll policy, IT, and special services. A client that requires a special service funds that service for an 

additional charge

DOL N/A

C-13
Survey Questionnaire and Responses

Question 13A How do you fund capital investment for maintaining and upgrading systems?

GSA Included as cost component in current pricing

DOI The majority of capital enhancements are handled through the flat fee charged to each client. If a client desires 

a system enhancement that is unique to that agency, the client may provide investment funds in advance to pay 

for the change. If the consensus of the entire user group is to make a change that benefits all users and cannot 

be funded as part of the standard unit costs, all clients participate in separate funding for the project.

DFAS The costs of operating and maintaining software are included in the billing rate. Upgrade costs are funded by 

using contract obligation authority that is budgeted for and approved by the OUSD Comptroller. The actual 

obligation for the investment is not included in the current pricing (billing rates). Instead the obligation amount 

is recovered through the depreciation expense included in the price/billing rate.

USDA USDA's WCF has limited funds available for capitalized expenses. At the present time, these capital funds must 

cover all USDA WCF system modernization investment needs, as well as ongoing capital equipment 

requirements. There is no WCF for the exclusive use of NFC. Approval of all major capital investment projects 

also requires adherence to the USDA CPIC Guide (see Question 9) and concurrence of the USDA Executive 

Information Technology Investment Review Board.

VA IT costs are contained in the billing structure.

NSF N/A

FERC N/A

DOT DOT's funding for capital investments are covered by directly charging each client a flat fee. We require clients 

that request system changes to fund those special services that are deemed extraordinary before the changes are 

made.

DOL N/A

Question 13B Are funds for future capital investment included as a cost component in current pricing?

GSA Yes.

DOI Yes. See response to 13A.

DFAS Yes.

USDA No. USDA has not authorized WCF activity centers to assess growth capital fees as a component of their user 

fees since the early 1990s. Legislative authority was also recently restricted.

VA No response

NSF N/A

FERC N/A

DOT No 

DOL N/A

Question 13C Are you allowed to carry forward cumulative results of operations (retained earnings) to fund capital 

investments?

GSA No. At this time we are not able to carry forward cumulative results of operations; however, it is currently under 

discussion within GSA.

DOI No. We have no retained earnings or franchise fund.

DFAS No. Under DoD policy, DFAS is not allowed to carry over cumulative profits and use them to fund capital 

investments.

USDA No.

VA No response

NSF N/A

FERC N/A

DOT Retained earnings can be utilized but are not (see #13A).

DOL N/A

Question 13D What is your limitation?

GSA No response

DOI N/A

DFAS N/A

USDA N/A

VA No response

C-14
Survey Questionnaire and Responses

NSF N/A

FERC N/A

DOT No response

DOL N/A

Question 13E Do you have the current capability to capture system modernization costs in your pricing structure?

GSA No response

DOI Yes. See response to 13A.

DFAS Yes. DFAS can capture the costs of system modernization through its accounting system.

USDA If given the authority, NFC could add a growth capital assessment to its user fees which would be used 

exclusively for system modernization at NFC. Further authority would be required to restrict the capital 

assessment for system modernization at NFC.

VA No response

NSF N/A

FERC N/A

DOT Yes (see #13A)

DOL N/A

Question 13F If yes, what percentage of cost/price is or would be system modernization?

GSA No response

DOI No response

DFAS Capital investment obligations are 13 percent of DFAS combined operating and capital budgets. These 

obligations are recovered from the customer through depreciation expenses in the operating budget. 

Depreciation expenses comprise about 10 percent of the operating budget.

USDA NFC has no estimate of an appropriate level of assessment for future system modernization. A 5 percent 

assessment on current NFC payroll/personnel customers would yield approximately $2.5 to $3.0 million 

annually.

VA No response

NSF N/A

FERC N/A

DOT This is dependent on the specific customer for specific enhancements and will differ for each customer.

DOL N/A

C-15
Survey Questionnaire and Responses

Question 14A Are services standardized or customer-specific?

GSA Both.

DOI Standardized.

DFAS Standardized.

USDA Much of our payroll services are standardized, but many are customer-specific.

VA No response

NSF N/A

FERC N/A

DOT Customer specific.

DOL N/A

Question 14B Do you accommodate customers with different requirements?

GSA Yes. However, we encourage reengineering and make every attempt to keep customization to a minimum in 

order to standardize payroll processes.

DOI Yes. The table-driven methodology of the integrated FPPS database enables our standardized services to be 

customer-specific in that unique requirements, such as new pay plans, can be incorporated into existing or new 

tables.

DFAS Yes. Unique requirements for different customers are incorporated into the pay system.

USDA Yes.

VA No response

NSF N/A

FERC N/A

DOT Customers are given the option to change their policy, and if they are unable to do so then we charge them 

accordingly for the time and effort it costs us to make the changes to meet their needs.

DOL N/A

Question 14C How do you handle unique requirements (different pay plans, etc.)?

GSA For unique requirements base upon legislative initiatives, we always make the necessary changes to our system.

DOI Our business practices are centered around a change request process which defines regulatory and user-driven 

changes. A user-driven system allows FPPS to continually change to meet the business requirements of the 

client base. A user group with representatives from each client agency meets 3 to 4 times per year.

DFAS Customer-unique requirements which have not been accommodated within the payroll system are handled 

manually by our payroll operations offices.

USDA We work with our clients to standardize unique requirements when possible, but if standardization is not 

feasible, we will implement the agency-unique requirements, and the agency will pay the applicable costs.

VA No response

NSF N/A

FERC N/A

DOT N/A

DOL N/A

Question 14D Are interfaces standardized (human resources, time and attendance, accounting)?

GSA Not all interfaces are standardized with respect to human resources.

DOI Yes, interfaces are standardized.

DFAS Yes, we have standard interfaces with HR, T&A, and accounting systems.

USDA NFC’s Front-End System Interface (FESI) enables clients to use their choice of HR systems and interface with 

PPS. NFC accepts T&A information in a specified format regardless of source. NFC provides detailed 

accounting interface records in customer-specified formats.

VA No response

NSF N/A

FERC N/A

DOT Interfaces are standardized since we tell our customers that they must make their data fit our interface.

DOL N/A

C-16
Survey Questionnaire and Responses

Question 15 How do you recover costs of interfaces or non-standard service requirements?

GSA Agencies requiring interfaces currently pay for the customization.

DOI Most issues of this nature are covered in the standard unit cost. However, if a client agency has special or 

unique requirements that carry a significant cost burden, agreement will be reached to bill the agency separately 

for the cost of the service or interface.

DFAS We charge all of our customers one standard billing rate per account serviced. However, there have been 

occasions when a customer has requested assistance or research beyond the level foreseen in the billing rate 

development process. On those occasions, and depending on the level of effort involved, we have asked the 

customers to transfer additional funding to us to cover the cost.

USDA Development costs for non-standard requirements are borne by the requesting organization. They are charged 

on an actual time and materials basis.

VA No response

NSF N/A

FERC N/A

DOT No response

DOL N/A

C-17
Survey Questionnaire and Responses

Question 16A Could your payroll processing costs be reduced through standardization? Standardization is defined as 

finding commonalities and reducing redundancy in policies and procedures and data.

GSA Yes.

DOI The recent implementation of FPPS resulted in standardization.

DFAS The department has already reduced payroll processing costs by implementing a significant degree of system, 

process, procedure, and data standardization during its consolidation of payroll operations. It expects to identify 

further cost reduction opportunities in the upcoming end-to-end review.

USDA Yes, depending on the degree of standardization.

VA Yes.

NSF NSF reduced the redundancy in the payroll procedures with the implementation of the new payroll system. 

IPAY eliminated the need for the payroll staff to enter the same data that was entered by HRM. The interface 

with the personnel system updates IPAY with the employee information. The update for employee self-service 

eliminated the necessity for employees to complete paper forms and bring them to payroll for data entry.

FERC Yes.

DOT Standardization might prove challenging due to the complexity of our requirements with our largest 

organization (FAA) falling under the Excepted Service and the remainder of the employees covered under Title 

5. 

DOL Standardized policies and procedures would generate cost savings in implementing and operating a time and 

attendance and payroll system.

Question 16B What are your payroll simplification/reengineering opportunities and constraints (legislative, cost, 

authority, capacity)?

GSA The cost could be prohibitive to comply with the new procedures.

DOI There are not significant additional payroll simplification/reengineering opportunities that need to be 

implemented at this time.

DFAS No response

USDA NFC currently has an opportunity to introduce more simplification and standardization in its proposed 

replacement system, the Pay Engine. The constraints to accomplishing this simplification and standardization 

are several, such as existing laws, rules, regulations, and policies; resistance to change within the customer 

community; the customer’s willingness to standardize, provided their method is chosen as the way everyone 

else should do it; and the belief within customer agencies that they are so unique that the normal requirements 

for the rest of government do not exactly apply to them.

VA Time and labor: legislative and policy changes could standardize divisor rules (2080, 2087, 2088 hours per 

year) for various premium pay groups. Benefits: simplified leave rules.

NSF No response

FERC Opportunities: Compensatory time; eliminate options for implementing advanced leave procedures. 

Constraints: limit options for COTS products and implement them as designed; if COTS selected, limit number 

of COTS products to manage and be efficient; lack of competition adversely affects costs.

DOT Standardization can be achieved if flexibility is built in to accommodate the needs of our customers.

DOL Within a time and attendance and payroll system cost savings would be realized with streamlined leave 

administration policies. Also within a payroll system cost saving would occur by standardization of calculations 

such as the FEGLI calculation for wage grade employees, and also having all employees paid in the same 

timeframe as all other DOL employees.

C-18
Survey Questionnaire and Responses

Question 17 What is the impact of non-standard requirements (i.e., those driven by legislation, HR, unions, 

management decisions) on systems cost and sourcing options (COTS, outsourcing, etc.)?

GSA Continue to realize additional systems costs to comply; sourcing options will be limited.

DOI FPPS was specifically designed to provide maximum flexibility for accommodating non-standard requirements 

and changing business practices, so the impact of such requirements is relatively negligible from a systems 

standpoint.

DFAS The greater the number of non-standard requirements, the greater the cost to modify our payroll system to 

include those requirements. However, rather than increase our standard billing rates to our customers, our 

normal business practice has been to forgo making discretionary enhancements to the system, in order to free 

up capability to make the required changes.

USDA The impact of non-standard requirements on systems costs includes (1) increased requirements and 

development staff who must analyze all future enhancements against existing sets of codes and programs to 

ensure that implementation does not disrupt any pre-existing unique processing capabilities; (2) longer time to 

resolve program “abnormal ends” during processing, due to the multitude of unique methods of processing 

required; (3) more experienced HR and payroll operational staffs are needed who must understand all the 

unique processes to ensure that data is properly processed against the unique business rules of the customers; 

(4) training of replacement HR and payroll staff takes more time and is more costly to make them aware of the 

unique business rules; (5) increased difficulty in reassigning or transferring staff from one operational office to 

another without additional training; and (6) loss of expertise as the current HR and payroll staffs within 

government who possess the institutional knowledge of the “how” and “why” of the multiple complex federal 

rules and regulations near retirement age The impact of non standard requirements on sourcing options is that it l VA These requirements result in adding complexity to existing systems, resulting in difficulty for maintenance and 

testing. In addition, there are significant needs for modification to COTS products.

NSF No response

FERC Non-standard requirements add costs to modify COTS or GOTS.

DOT No response

DOL There are a number of non-standard requirements that the Department has to address. These include union 

requirements as the result of bargaining agreements; special time reporting for certain agencies; handling of 

special-situation part-time employees in other agencies. Legislation does not consider the end users or 

implementers when changes are made. Rules need to be simplified to reverse this challenge. Leave 

administration is an example of a major, non-standard requirement for the Department (and other Federal 

agencies).

C-19
Survey Questionnaire and Responses

Question 18A What percent of employees are in payroll plans that have agency-specific nonstandard requirements 

(pay/benefits plans, etc.)?

GSA 10% to 15%.

DOI Approximately 21%. In the most recent pay period, about 8,000 out of 155,000 employees paid, or 

approximately 5% of the total, were in agency-unique pay plans. In addition, almost 25,000 employees are paid 

under special pay provisions for emergency fire fighters during the course of the year.

DFAS Approximately 12% of the department's employees are in payroll plans that have agency-specific requirements.

USDA 47.5%, ranging from minor unique to extensive agency requirements.

VA 32%.

NSF No response

FERC 0%.

DOT 76% of employees in DOT fall under FAA’s personnel reform

DOL small

Question 18B What are the drivers for the variation (statute/executive order/labor agreements/agency business 

practices, etc.)?

GSA No response

DOI Many other employees have unique benefits, entitlements, leave and hours programs, or other unique payrelated situations stemming from exercise of agency and management flexibilities in human resources program 

areas.

DFAS The drivers are primarily attributed to statute and labor agreeements.

USDA The drivers for these nonstandard requirements are: special acts or laws, such as pay banding and hazardous 

duty; agency policies; job functions; occupational series special pay; geographical adjustments; unique benefits; 

quasi-federal entitlements.

VA Title 38 requirements.

NSF NSF employs a wide variety of scientific and technical employees; the salary for these employees is 

administratively determined by HRM. The length of their appointment determines their benefits, which usually 

is for one year. If the appointment is extended, their entitlement to benefits changes. This is controlled by HRM 

and the personnel system.

FERC N/A

DOT

DOT Authorization Act of 1996 allowed for the personnel reform that resulted in an increasing number of 

employees who elected to be covered under bargaining units within the FAA, and a growing number of labor 

unions (presently 50) being established. Bargaining units have their own specific nonstandard requirements for 

pay/benefits plans, etc. Any matters pertaining to pay must be negotiated with these bargaining units.

DOL While the number of employees affected by exception requirements is small (in some cases as small as 500 out 

of 16,000), the fact that the requirements must be each time they are met. There are many examples of these – 

BLS part-time employees, wage-hour OSHA rescheduling, ‘First 40’ workers in MSHA, semi-monthly pay 

requirements when standard pay is bi-weekly, wage-rate (FEGLI) special handling, OSHA/MSHA emergency 

overtime.

C-20
Survey Questionnaire and Responses

Question 19 Estimate the cost savings that could be achieved by eliminating variable requirements such as pay/benefit 

practices: using current systems; future systems; and outsourcing.

GSA Unable to answer at this time.

DOI It would actually cost money to reprogram the system to eliminate variable features. Since FPPS is a new 

system, no major cost-saving enhancements are envisioned in the relatively near future.

DFAS When the end-to-end review has been completed, the recommended solutions will be analyzed and cost savings 

will be identified.

USDA The primary impact of standardized requirements is cost avoidance from not having to customize existing 

programs and processes to accommodate myriad unique variations. For current systems, NFC estimates modest 

additional processing efficiencies of approximately 5 percent due to simpler requirements for ongoing 

maintenance (annual pay raises, for example) and fewer processing errors. For future systems, NFC estimates 

potential one-time development and implementation savings of approximately 20 percent, and ongoing 

operational savings of 15-20 percent assuming the current baseline of service and operating costs. For 

outsourcing GOTS, approximately 5 percent savings in operating costs could be achieved due to simpler 

requirements for ongoing maintenance and fewer processing errors.

VA Not possible unless VA decides not to support Title 38 requirements.

NSF NSF staff cost for testing IPAY before implementation for October 2000 to June 2001 was $800,000. With the 

elimination of the different pay/benefit plans the cost for testing would decrease to about 1/3 the cost.

FERC $400,000, if other payroll choices available.

DOT Existence of bargaining units in FAA poses a major challenge to cost savings since we must meet their 

contractual agreements dealing with pay, benefits and entitlements. 

DOL As stated in the previous question, the Department does not have the ability to eliminate most of the nonstandard requirements. The cost savings to be realized will be the adoption of a COTS product that has the 

capabilities to handle these requirements within the delivered product. The integrated HR/payroll solution will 

eliminate redundancy of data in the Department as well as provide the ability to migrate to a ‘one-stop service 

center.’DOL anticipates cost savings by establishing a one-stop service environment, within the human resource 

delivery structure, for management and employees to help DOL achieve the significant benefits made possible 

by an integrated HR and Payroll system. The one-stop service concept repeatedly surfaced among stakeholders 

and users as a solution to the problems identified in the current processes. DOL envisions that one stop service 

means that the front-end processing work regarding who gets paid, the rate they are paid, and the number of 

hours actually worked will be handled in one place. Within the integrated model this will naturally fall to the 

operating personnel office of the employee

(continued) The following benefits and cost savings will emerge: Improved customer service: One-stop service centers allow 

employees to be able to turn to one place to handle their HR and Payroll tasks and problems. This can be 

achieved because the areas that directly involve employees will be handled by the one stop service center; 

Reduced unnecessary work: One-stop service centers make it possible to eliminate organizational barriers that 

tend to prevent cooperation, and lead to multiple processing steps that will no longer add value once the system 

functions have been integrated. Eliminates the need for redundant data entry in multiple systems; Reduced 

customization: The one-stop service approach fits with the design of the PeoplePower system, and could reduce 

the amount of customization required; Reduced reconciliation and maintenance: The integrated HR/Payroll 

system will eliminate the need for reconciliation activities between systems and reduce the maintenance 

associated with multiple systems to process HR, Payroll, and Time and Attendance.

C-21
Survey Questionnaire and Responses

Question 20 What has to happen to remove barriers to achieving standardization of requirements, i.e., what 

authority/accountability structure should be in place to achieve simplification?

GSA A work group to provide oversight of changes and the effects of these changes on payroll providers prior to 

their implementation or enactment.

DOI OMB would need to take the lead in identifying and working to influence Congress and the executive branch to 

change or eliminate legislation and executive orders that provide for specific pay plans or authorities for 

individual groups. Special difficulty could be encountered in dealing with the numerous pay practices and 

authorities that stem from longstanding negotiated union agreements. Our sense is that, while standardization 

may be possible or desirable in some instances, more emphasis should be placed on designing and 

implementing pay systems and processes that are sufficiently flexible to meet legitimate diverse needs of 

agencies and managers

DFAS Federal-wide non-standardization oftentimes occurs when legislation and/or regulation are sufficiently 

ambiguous to allow for multiple interpretations and implementations. Likewise, multiple labor organizations 

each negotiating the same item may have different results. A possible solution would be the formation of a 

federal-wide payroll group, perhaps modeled on the Human Resources Technology Council, that could deal 

with legislative concerns and develop guidelines and recommendations to assist agencies in interpreting and 

deciphering legislation.

USDA First of all, a task group would need to review existing legislation, rules, regulations, executive orders, and 

policies to determine where there are differing and similar requirements. Once the sources of the unique 

requirements are identified, this task group would need to prepare the appropriate action to have the relative 

law, rule, policy, etc. modified or rescinded. A significant change management plan will be needed to convince 

the various departments and agencies of the benefits of the change in business rules and procedures. Also, a 

task force would be needed to negotiate with employee unions to get their acceptance for the changes. Equally 

important is to find a way to prevent additional unique business rules from being established in the future. This 

will require a central organization or body of some type to act as a watchdog to prevent the passage of future 

regulations and policies that would establish similar situations. This central organization would need broad 

power and authority to standardize or it will be ignored by the various departments and agencies.

VA An OPM solution for HR/Payroll would be a start.

NSF OPM would need to consolidate all of the pay schedules and standardize the pay scale for all government 

employees. The elimination of part-time tours would help to simplify the payroll process.

FERC Policy agencies issue specific criteria limiting options and, in cases where options are still available, allow a 

longer period of time to implement; Treasury acceptance of non-federal payroll providers.

DOT Flexibility is sacrificed in the face of standardization of requirements. 

DOL A government-wide organization to review, evaluate and respond to new and modified time and attendance and 

payroll policies and procedures needs to be established to communicate back to the policy makers any issues 

that may arise with the new or modified policy.

C-22
Survey Questionnaire and Responses

Question 21A Could payroll processing done by your agency be consolidated internally or with another currently 

providing payroll processing?

GSA This would require a detailed analysis before we could provide an adequate answer. We do not feel this is a 

feasible option at this time. We are currently a payroll provider to 34 other agencies or presidential 

commissions in addition to GSA.

DOI Payroll processing is already completely consolidated at the NBC for all bureaus of the Department of the 

Interior and all of our client agencies. At this time, the primary impediment to consolidating with another 

provider would be that we know of none that provides fully integrated, real-time online payroll and personnel 

actions processing.

DFAS The Department of Defense has consolidated from 351 decentralized payroll offices to three operating locations. 

Further internal consolidations may be feasible and will be examined in the end-to-end study.

USDA USDA payroll processing has already been consolidated within NFC. NFC has already simplified and 

standardized requirements to the extent possible, as we have consolidated more than 100 federal organizations 

into the PPS.

VA No.

NSF No, the payroll system was developed and designed to NSF specifications using a client-server platform based 

on Powerbuilder software that is used as the front-end tool in both Windows and Macintosh environments.

FERC Payroll operations are outsourced to VA.

DOT DOT engaged in consolidation of payroll processing in the 1980s and reduced the number of payroll processing 

centers from about 20 to 2 with one systems office

DOL Department of Labor (DOL) payroll processing is already consolidated internally, and as stated above, the 

Department has been working actively with a number of other Federal agencies and a COTS vendor to develop 

a standardized Federal payroll product meeting multi-agency needs.

Question 21B What would be the impediments to doing so?

GSA No response

DOI We would be in the position of losing the flexibility and responsiveness that FPPS was designed to provide.

DFAS Consolidation of processing with another agency could be impeded due to the lack of system functionality to 

process departmental unique requirements.

USDA No response

VA The size of VA and the complexity of its payroll requirements do not make this a viable option.

NSF No response

FERC N/A

DOT No response

DOL No response

C-23
Survey Questionnaire and Responses

Question 22A Could your payroll costs be reduced by outsourcing to either an ASP or federal cross-servicer?

GSA Same response as in #21

DOI Currently, no ASP provider offers federalized payroll services of the type provided by NBC.

DFAS We have been through a number of outsourcing studies in DoD civilian pay in recent years. Invariably, we have 

found that the number of complex and unique requirements and rules in federal civilian pay, driven by the 

factors mentioned in the question above, have impeded the private sector from wanting to participate in DoD 

civilian payroll. The department's experience with its A-76 study would indicate that outsourcing to an ASP 

would not likely occur. The department's costs are already competitive with other federal cross-servicers, and 

considering the cost to modify another system with the department's unique requirements would most likely 

increase the overall cost, as has been indicated in previous studies. Since the federal workforce is continuing to 

decline, it is less attractive for an ASP to assume the workload of individual agencies.

USDA We do not believe that outsourcing to an ASP or other federal cross-service agency is a viable option. Research 

indicates that outsourcing for comparable services in the private sector would result in significantly higher 

processing costs to our customers.

VA No.

NSF Don’t know what the savings would be for NSF. There would be an increase in cost to the funds used to 

develop, design, and implement the current system for outsourcing.

FERC Payroll operations are outsourced to VA.

DOT

In 1999, we conducted an evaluation of payroll services provided by other federal cross-servicing agencies (e.g., 

NFC, VA, GSA, DOI). Cost Analysis of in evaluation indicated consolidation would not reduce our costs.

DOL The Department of Labor (DOL) commissioned a study with LMI to examine its payroll processing options. 

The study concluded that utilization of a COTS product, integrated with HR, was the most viable and costeffective option. The human resource functionality was implemented at the Department in June of 1999. The 

Department is currently implementing the integrated HR/Payroll portion of the LMI recommendation, and 

testing of the new COTS payroll system is underway, with full implementation scheduled for June 2002. A 

copy of the study is attached.

Question 22B What are the impediments to outsourcing?

GSA Same response as in #21

DOI No response

DFAS No response

USDA There is no known existing ASP operating a federalized payroll system, and certainly not one approaching the 

functionality of NFC’s current PPS.

VA The size of VA and the complexity of its payroll requirements.

NSF I don’t think outsourcing is an option; NSF is in the maintenance stage with IPAY. NSF would lose the control 

over the payroll process, and employee direct contact with payroll personnel would be eliminated.

FERC N/A

DOT Risk analysis – posed significant risk factors such as: cross-servicer could not accommodate FAA specific pay 

and leave entitlements; cross-servicer could not support a to-the-minute based pay entitlement system.

DOL See related study

Question 22C What would have to be done to make outsourcing a feasible option?

GSA Same response as in #21

DOI A valid cost comparison with another federal cross-servicer would require analysis of the total cost of achieving 

services comparable to those provided in the entire integrated FPPS environment.

DFAS ASPs possibly would be more inclined to assume the workload if the possibility of servicing the entire federal 

workforce existed.

USDA No response

VA Simplification of rules.

NSF No response

FERC N/A

DOT No response

DOL See related study

C-24
Survey Questionnaire and Responses

Question 23A If your agency has recently been through a major change in payroll processing, i.e. implemented a new 

payroll system or changed service providers, summarize the major strategic drivers, business case, 

decision criteria, and results supporting your decision.

GSA N/A

DOI Improved service; enhanced integration of human resources and payroll processing to do away with the 

stovepipe between the two functional areas; more flexibility to address unique and diverse user policies and 

procedures; more real-time processing capability; more paperless processing and reporting; and less manual 

intervention. An evaluation of the system baseline after full implementation in FY 1999 resulted in the 

conclusion that FPPS reduced unit costs by 25% and increased system functionality by 300%. The NBC will 

continue to utilize and enhance FPPS as long as it remains the most cost-effective and efficient integrated 

system option. We will continue to evaluate COTS products to assess their capabilities to meet our strategic 

objectives. At the present time, our primary strategic emphasis is the achievement of even more integration of 

human resources management and payroll processing DFAS DCPS was selected as the standard migratory civilian payroll system for the Department of Defense in 1991.

USDA USDA has not recently implemented a major change in its payroll system; however, we have a project 

underway to replace the payroll engine of the current PPS. The Pay Engine Project is in the Pre-Select Phase of 

USDA’s CPIC Process.

VA Payroll processing for VA must meet the needs of paying all VA employees as is implemented today.

NSF NSF implemented a new payroll system (IPAY) on June 17, 2001; the old system was used from the mid-Sixties 

until that time. The new laws and changes in benefits for employees created havoc with the old system. The 

system was basically a manual system and required a lot of manual entries, and maintenance by the payroll staff 

and our computer systems staff. The accuracy of the system was not very good and frequently generated 

payment errors.

FERC Legacy provider terminated services; need for eliminating duplicative administrative systems; finding 

application to strategically align with commission to better manage labor distribution and financial reporting.

DOT N/A

DOL See related study

Question 23B Do you have any resulting studies and analyses used to support the decision?

GSA N/A

DOI No response

DFAS A comprehensive study, documented in the “Report on the Consolidation and Standardization of Civilian 

Payroll within DoD,” was the basis for that decision.

USDA In accordance with the USDA CPIC Guide, NFC developed a preliminary business case, in which the 

business/mission need is identified and relationships to the department and/or agency strategic planning efforts 

are established.

VA Yes—SAIC cost-benefit analysis study.

NSF A market survey was completed on April 21, 1999; I will send you a copy by email when I receive it.

FERC Strategic plan developed, outlining business drivers for COTS and payroll providers selection.

DOT N/A

DOL See related study

C-25
Survey Questionnaire and Responses

Question 23C What were the key limitations of the options not selected?

GSA N/A

DOI No response

DFAS No response

USDA No response

VA Not a viable option due to the size of VA and the complexity of its payroll requirements.

NSF No response

FERC Lack of competition directly affects costs; no efficiencies gained.

DOT N/A

DOL See related study

C-26
Survey Questionnaire and Responses

Question 24A Has your agency conducted a pilot or other evaluation of a COTS product?

GSA N/A

DOI Yes. During the latter stages of FPPS development, in 1998, a contractor was commissioned to study COTS 

products to determine if any were available to provide similar functionality to that offered by FPPS. We have 

not conducted any more recent studies of payroll COTS providers.

DFAS We have not evaluated any COTS payroll systems. However, we have evaluated several COTS time and 

attendance systems. We know there is at least one COTS T&A package on the market, which meets many of 

the functional requirements for a federal T&A system. Although we have not evaluated any COTS payroll 

systems for use in DoD civilian payroll, a COTS package (PeopleSoft) has been purchased and is being 

customized as a military pay and personnel system. This system, referred to in DoD as the Defense Integrated 

Military Human Resources System (DIMHRS), is ultimately planned to replace the current military pay and 

personnel systems in use today

USDA Yes, market survey.

VA Yes.

NSF Yes. NSF evaluated several COTS products before making the decision to develop our payroll system.

FERC Yes. Prior to selecting PeopleSoft, several COTS products were evaluated in collaboration with DOE.

DOT In 1998, conducted a feasibility study of the Peoplesoft COTS product for personnel and payroll. 

DOL The Department has accepted the recommendation of an independently conducted alternatives analysis and is 

currently implementing a COTS solution from PeopleSoft that was developed specifically for the Federal sector.

Question 24B If so, what product and what were the findings?

GSA N/A

DOI The contractor concluded that there was no COTS product available to perform federal payroll functionality. It 

was recommended that FPPS be utilized for integrated payroll/personnel capability and that we look at COTS 

products that could perform additional specific human resources functions to interface with FPPS. This course 

of action was adopted.

DFAS N/A

USDA They relied on GAO evaluation of five federal agency HR system implementations and documentation of results 

from the payroll retreat.

VA PeopleSoft HR, Payroll, and Time and Labor was selected.

NSF No response

FERC COTS scope narrowed to three vendors: PeopleSoft, Oracle, and Impower. PeopleSoft met 85% of federal 

requirements and allowed integrated solution with flexibility.

DOT Peoplesoft payroll portion was not ready unless significant customization & expense took place.

DOL No response

C-27
Survey Questionnaire and Responses

Question 24C In your opinion, what are the pros and cons of COTS versus GOTS?

GSA N/A

DOI No response

DFAS Pros associated with the use of COTS are as follows: Allows federal agencies to focus on their core business; 

leverages commercial best practices; enforces standardization of rules and business practices across the federal 

government; leverages technology and technological currency of systems; provides greater visibility over system 

costs; forces business case analysis of all system changes. Cons associated with COTS: Cannot respond as 

quickly to legislative changes, particularly those applicable to only one customer or sub-set of federal 

employees; does not allow for unique requirements, forcing a degree of standardization across the federal 

government which may be difficult, if not impossible, to achieve. Pros associated with GOTS: Can be built 

around unique requirements; more responsive to today’s rules and requirements; more responsive to quickly 

making required system changes. Pros associated with either COTS or GOTS: Economies of scale.

USDA Disadvantages of COTS: out-of-the-box capability of PeopleSoft's federal version does not meet all of the needs 

of the federal sector; COTS best practices are not based on processes and therefore do not comply with the 

number and variety of laws, rules, and regulations required to pay employees; COTS systems are attempting to 

retrofit payroll processing requirements; lack of scalability results in a serious degradation with a large number 

of simultaneous users. Advantage of GOTS: rule-based systems allow for real-time editing and error avoidance.

VA Advantages of COTS: shorter development timeline; incorporation of best practices. Disadvantages of COTS: 

requires ongoing product upgrades; cultural resistance to changes that result from the implementation of 

commercial best practices. Advantages of GOTS: provides a full solution for Title 38 requirements.

NSF The COTS products did not provide the interfaces to NSF’s current systems; it would be necessary to purchase 

the software and build a customized interface to the other systems. The COTS products would also require 

customizing to meet NSF’s payroll processing requirements. This would involve significant effort to complete. 

Some of the COTS products would require annual maintenance fees to provide system upgrades and forms 

updates. The COTS products were not flexible, and customizing could not be done by a third party.

FERC Disadvantage of GOTS: become outdated and are not updated due to high costs associated with design/redesign 

and development.

DOT Evaluated Oracle HR (no payroll available at that time) and later on selected it. (Nice fit with Oracles financial 

system which DOT selected.)

DOL No response

Question 24D If COTS was not selected as a viable alternative, what has to happen for it to become one?

GSA N/A

DOI No response

DFAS No response

USDA Needs to become rule-based.

VA N/A

NSF No response

FERC N/A

DOT No COTS payroll product exists that handles the volume of transactions and the complexity of DOT’s pay 

requirements.

DOL No response

C-28
Survey Questionnaire and Responses

Question 24E In your opinion, what is the current capability of COTS products to meet current federal requirements?

GSA N/A

DOI See response to 24B.

DFAS No response

USDA No response

VA No response

NSF No response

FERC See response to 24B.

DOT See response to 24D.

DOL No response

Question 24F What would have to be done to make COTS products a more viable alternative?

GSA N/A

DOI No response

DFAS No response

USDA Needs to become rule-based.

VA No response

NSF No response

FERC No response

DOT No response

DOL No response

C-29
Survey Questionnaire and Responses

Question 25A Do you have any experience using a commercial application service provider (ASP)? Describe pros and 

cons of experience.

GSA N/A

DOI In our opinion, application service providers are a valuable tool for performing specific functions that are 

appropriate to the system and processing environment. We are currently utilizing the Frick Company to provide 

unemployment insurance services, OPM’s Employee Express for employee self-service activities and electronic 

leave and earnings statements, and TALX for employment verification services.

DFAS We use the BSI Corporation's Standard Tax Package for tax computation. The obvious advantage is that the 

company maintains the currency of all tax rates for state and local taxing authorities, taking this burden off inhouse resources. We also have found it to be very cost-effective compared to in-house maintenance of the tax 

rates.

USDA USDA has researched the available ASP market and found that none currently service federal agencies.

VA No.

NSF No experience using a commercial application service provider.

FERC Yes. A commercial application service provider currently services FERC's payroll/HR/time COTS product. ASP 

is used to manage COTS application as well as providing the hosting technical solution.

DOT In 1999, investigated this but couldn’t find any that had a federal HR or payroll solution at the time.

DOL In the past, a service provider was used for time and attendance processing. DOL used the service provider to 

enter the time data for everyone.

Question 25B In your opinion, what are the limitations of using ASPs to reduce the cost of federal payroll processing?

GSA N/A

DOI Our experience to date has led us to the conclusion that ASPs do not generally provide a full range of services 

that meet the total scope of client needs. A tool that only accomplishes 85% of our integrated processing 

requirements, for example, would require manual and supplemental system intervention to the extent that it 

would not be a productive alternative to our current FPPS capabilities.

DFAS No response

USDA Since federal payroll processing is so unique, it would be a major organizational and procedural change for a 

private-sector ASP to process federal payroll.

VA No response

NSF Privacy would be an issue and control over the payroll process would be lost. For NSF to use a commercial 

application service to process the payroll, with the funds already invested in the current payroll system, would 

save no cost.

FERC No response

DOT No response

DOL The service was not cost-effective since the time taken to correct data-entry mistakes by the service provider 

(and corresponding cost) was extensive. The service was abandoned when an electronic in-house solution was 

developed. For a discussion of the possibility of using an ASP, the reader is directed to the LMI study.

C-30
 D-1 

Appendix D 

Rules and Regulations 

Rules and regulations for payroll processing are governed by guidance from a 

number of agencies, in particular, the Department of the Treasury. The Treasury 

Financial Manual (TFM) Volume I, Part 3, Chapter 2000, “Payroll Vouchers,” is 

reproduced below in its entirety. The complete TFM is available on the Treasury 

Department’s website at www.treasury.gov, under Financial Management Service. 

The Office of Personnel Management (OPM) also provides certain guidance related to payroll. For example, OPM establishes regulations (5 CFR. 1-990) in regard to pay setting (530), pay administration and hours of duty (530, 550), and 

processing of garnishment orders for child support or alimony (581). OPM manages regulations for leave administration (630). Indices of laws, regulations, and 

other references relating to pay and leave administration are provided below. Additional information can be found on OPM’s website at www.opm.gov. 

Functional standards for payroll systems have been developed by OMB, OPM, 

and other agencies and published as a JFMIP Federal Financial Management System Requirements document, Human Resources and Payroll Systems Requirements (JFMIP SR-99-5). 

Other agencies, like the Department of Labor, have rules here as well, as in the 

case of implementing the Fair Labor Standards Act. 

Rules and Regulations 

 D-3 

Vol 1Part 3Chapter 2000 (T/L 534 4-12-94)

PAYROLL VOUCHERS 

This chapter prescribes the procedures to be followed and the standard forms to be used in preparing payrolls for civilian employees of the executive agencies. 

SECTION 2010—AUTHORITY

The head of each executive agency is responsible for establishing and maintaining an adequate 

payroll system covering pay, leave, and allowances, as a part of the system of accounting and 

internal control required by the Accounting and Auditing Act of 1950 (31 U.S.C. 3513). The system must conform to the principles, standards, and related requirements prescribed by the Comptroller General. 

Regulations relating to the preparation of payroll vouchers are issued by the Office of Personnel 

Management (OPM), the Office of Management and Budget, the Department of Labor, and the 

Department of the Treasury (Treasury). Decisions of the Comptroller General, and the General 

Accounting Office (GAO) Policy and Procedures Manual for Guidance of Federal Agencies also 

govern payroll preparation. 

SECTION 2015—STANDARD FORMS

The following standard forms are prescribed: 

◆ SF 1166: Voucher and Schedule of Payments. 

◆ SF 1167: Voucher and Schedule of Payments—Continuation Sheet. 

Standard forms prescribed by this chapter are available at the Federal Supply Service, General 

Services Administration (GSA). Overprinting of the agency name, bureau, or other recurring information is permitted. Changes or modification of these forms by agencies will require prior 

concurrence by the Financial Management Service (I TFM 1-2000). 

Treasury, GAO, GSA, OPM, and the Department of State prescribe other forms used in payroll 

preparation. 

SECTION 2020—VOUCHER VERIFICATION AND CERTIFICATION

2020.10—Voucher Verification 

The SF 1166 OCR and SF 1167 OCR (for nontape payments), and the SF 1166 OCR (or SF 

1166 EDP) and the related magnetic tape (for tape submissions) prepared for the creation of 

checks or Electronic Funds Transfer (EFT) payments should be verified prior to certification. 

Verification must be performed to provide a cross-check for accuracy and to reduce the possibility of unauthorized, fraudulent, and other irregular acts. 
 

 D-4 

2020.20—Voucher Certification 

Payroll vouchers prepared as authority for recording and payment of the payroll will be signed 

before payment by an authorized certifying officer who does not compute the individual amounts 

payable, maintain the payroll records, or distribute the paychecks. The vouchers will show the 

net amount of payments to employees and the amounts withheld for each type of deduction. 

The certifying officer will make an examination of the facts underlying the vouchers as is necessary to assure the correctness and validity of the payments. 

SECTION 2025—METHOD OF PAYMENT

Agencies will make all payments by check or EFT. Agencies should encourage employees to 

have their net pay sent directly to accounts in a financial organization, as this method of payment 

is more advantageous to both the Government and the employee. 

When salary payments are delivered to the employees, at the worksite, each employee must be 

properly identified to the person who delivers the paychecks. 

Agencies will access the Government On-Line. 

Accounting Link System (GOALS) to obtain the inclusive check numbers assigned to the SF1166 schedule. 

Agencies will use the inclusive check numbers to identify the checks, should it be necessary to 

process a nonreceipt claim (I TFM 4-7060). 

SECTION 2030—VOUCHER PREPARATION AND SCHEDULING

Agencies will use SF 1166 OCR, SF 1167 OCR, or when authorized, SF 1166 EDP (I TFM 4-

2000), for scheduling all regular biweekly payroll tape submissions. Every effort should be made 

to schedule all salary check payments on a single tape submission each pay period. Similarly, all 

EFT payments should be included on a single tape submission each pay period. 

The magnetic tape and the SF 1166 OCR, or SF 1166 EDP (original only) will be delivered to 

the financial center according to a prearranged schedule agreed to between the head of the 

agency and the Chief Disbursing Officer. 

All payment items to be made by check should be included on the same SF 1166 OCR (or SF 

1166 EDP). The “no-check” voucher deductions can be documented on SF 2812 (for OPM withholdings and contributions only), Optional Form 1017G, or other agency-approved journal 

voucher form, and the payroll scheduled net. The SF 1166 OCR (or SF 1166 EDP) will be prepared as follows: 

◆ A single line entry will be recorded for each type of payment. 

◆ The “no check” deductions will be identified in the appropriate column. 
Rules and Regulations 

 D-5 

◆ Withheld Federal taxes will be recorded on the SF 1166 OCR (or SF 1166 EDP). A Federal Tax Deposit (FTD) form will accompany an SF 1166 OCR (or SF 1166 EDP) containing withheld Federal taxes. If the agency has no FTD forms on hand, or has FTD 

forms with incorrect data, the procedures prescribed in I TFM 3-4050.20 will be followed. 

◆ Individual payments of $10 million or more will be scheduled on a separate SF 1166 

OCR. These payments cannot be included on tape and should not be reflected on the 

voucher-schedule covering payments submitted on tape. 

◆ SF 2812 “Report of Withholdings and Contributions for Health Benefits, Group Life 

Insurance, and Civil Service Retirement” will be sent directly to OPM at the same time as the 

payroll schedule is sent to the disbursing center (I TFM 3-3060). 

The SF 1167 OCR will be used when it is not possible to include all payroll items on one SF 

1166 OCR. The SF 1166 OCR (or SF 1166 EDP) covering EFT payments will reflect only the 

net amount of the EFT payments. All authorized check enclosures will be sent to the financial 

center with the appropriate SF 1166 OCR. The enclosures will be aligned in the order in which 

they appear on the agency’s magnetic tape. 

2035.10—Magnetic Tape Submission 

Magnetic tape is the medium most commonly used for submission of payment issue data to the 

Treasury financial centers. EFT payments will be scheduled on magnetic tape. Check issue tapes 

should contain a minimum of 100 payment items. Tape submissions of fewer than 100 payments 

will require the approval of the director of the processing financial center. 

If an agency is unable to provide magnetic tape, or if the volume of payments is less than the 

minimum required for tape submission, detailed check issue data must be provided on SF 1166 

OCR and SF 1167 OCR for automatic processing on optical scanning equipment. 

These schedules must be sent to one of the OCR-equipped financial centers. 

The magnetic tape for reporting salary payments to Treasury financial centers will include the 

following items on the same tape: 

◆ Net paychecks to home addresses, financial institutions, and designated agents. 

◆ Terminal leave settlement payments. 

◆ Employees’ savings allotments. 

◆ Payments to the Federal Reserve banks. 

◆ Charitable contributions. 

◆ Union dues and dues to associations of management officials and supervisors. 

◆ Other authorized deductions. 
 

 D-6 

2035.20—United States Savings Bonds 

Appendix No. 1 to I TFM 3-6000 prescribes the formats for SF 1166 OCR and SF 1166 EDP, 

which are used for U.S. Savings Bonds. 

SECTION 2040—SUPPLEMENTAL PAYMENTS

A supplemental payroll may be processed if an employee was not included on the regular payroll. Supplemental payrolls of 100 or more check items will be processed on magnetic tape in the 

same manner as the regular biweekly agency payroll. Only one supplemental check issue tape for 

each pay period will be submitted to the financial center. This may require accumulating 

items for consolidation into a supplemental tape, or merging several supplemental tapes at the 

agency prior to sending them to the financial center. 

If direct deposit payments must be made as a supplemental payroll, all such payments should be 

included in a single magnetic tape submission to the financial center each pay period. 

SECTION 2045—CLAIMS FOR DECEASED EMPLOYEES

The procedures and forms to be used to process claims for deceased employees are prescribed 

under Title 4 of the GAO Policy and Procedures Manual for Guidance of Federal Agencies (4 

GAO 23). 

CONTACTS 

Inquiries concerning this chapter should be directed to: 

Production Integrity Division 

Regional Operations 

Financial Management Service 

Department of the Treasury 

Liberty Center, Rm. 337 

Washington, DC 20227 

Telephone: 202-874-6820 
Rules and Regulations 

 D-7 

INDEX OF LAWS, REGULATIONS, AND OTHER 

REFERENCES RELATING TO LEAVE 

ADMINISTRATION 

This index highlights the laws, regulations, and other references relating to Federal leave programs and policies. The index is a valuable resource for researching major leave subject-matter 

areas. Please contact your agency personnel office, library, legal office, or information technology office to obtain copies of the documents cited (e.g., laws, regulations, Executive orders, 

opinions of the Comptroller General (Comp. Gen.)1

, etc.). Since each agency is responsible for 

Federal leave administration, it is imperative that you also consult your agency’s internal policies 

and collective bargaining agreements, as applicable. 

Subject 

Law 5 U.S.C. 

(unless otherwise 

indicated) 

Regulation/Other 

5 CFR 

(unless otherwise 

indicated) 

ABSENCE 

 bone marrow/organ donation 6327 

 funerals, law enforcement officers 6327 

 funerals, relatives in Armed Forces 6326 part 630, subpart H 

 funerals, veterans 6321 

 hostile actions abroad 6325 

 police and firemen, resulting from duty 6324 

ACCRUAL 

 annual leave 

 full-time 6303(a) 630.202 

 part-time 6302(c) 630.303 

sick leave 

 full-time 6307(a) 630.202 

 part-time 6302(c) 630.406, 630.202(b) 

 change in accrual rate 6303(c) 

ACCUMULATION 

 annual leave 6304(a) 630.304, 630.302 

 Overseas 6304(b) 630.302 

 Senior Executive Service (SES) 6304(f) 630.301 
 

 D-8 

Subject 

Law 5 U.S.C. 

(unless otherwise 

indicated) 

Regulation/Other 

5 CFR 

(unless otherwise 

indicated) 

 sick leave 6307(b) 

ADMINISTRATIVE LEAVE (SEE EXCUSED 

ABSENCE) 

 

ADOPTION (SICK LEAVE) 6307(c) 630.401(a)(6) 

ADVANCE LEAVE 

 annual leave 6302(d) 

 sick leave 6307(d) 630.209, 630.404 

 refund value of sick leave 630.208(d); 

Comp. Gen. opinion 

B-189531 (09/14/77) 

 not likely to return to duty 25 Comp. Gen. 874 

(1946) 

23 Comp. Gen. 837 

(1944) 

ALTERNATIVE WORK SCHEDULES (LEAVE 

ADMINISTRATION) 

6129 

ANNUAL LEAVE 

covered employees 

general provisions 

accrual 

maximum accumulation 

transfer between different leave systems 

6301 

6302 

6303 

6304 

6308 

part 630, subparts B 

and C; 

Title II-Leave, Civilian 

Personnel Law Manual, chapter 2-Annual 

Leave 

 reduction in force—use of annual leave to 

qualify for retirement/health benefits 

6302(g) 351.606(b), 351.608, 

630.212 

 agency discretion 39 Comp. Gen. 611 

(1960) 

16 Comp. Gen. 481 

(1936) 

ANNUITIES (COMPUTATION, USE OF SICK 

LEAVE) 

8339(m) 630.407, 831.302 

BACK PAY (RESTORED ANNUAL LEAVE) 5596(b)(1)(B) 550.805(g) 

BEREAVEMENT (SICK LEAVE) 6307(d) 630.401(a)(4) 

COURT LEAVE 

 jury duty 6322 Title II-Leave, Civilian 

Personnel Law Manual, chapter 5, part 

C-Court Leave 
Rules and Regulations 

 D-9 

Subject 

Law 5 U.S.C. 

(unless otherwise 

indicated) 

Regulation/Other 

5 CFR 

(unless otherwise 

indicated) 

 Witness 6322 Title II-Leave, Civilian 

Personnel Law Manual, chapter 5, part 

C-Court Leave 

 credit/retention of fees 5515, 5537 Title I-Compensation, 

Civilian Personnel 

Law Manual, chapter 

9-Service as Juror or 

Witness 

CREDITABLE SERVICE FOR LEAVE ACCRUAL 6303(a) Title II-Leave, Civilian 

Personnel Law Manual, chapter 2, part 

C-Creditable Services and part DNoncreditable Services 

 Agriculture Soil Conservation Service 

(ASCS) and Nonappropriated Fund (NAF) 

Employees 

6312 

 District of Columbia Police and Firemen’s 

Retirement System 

 Comp. Gen. opinion 

B-256756 (4/11/95) 

DEMONSTRATION PROJECTS (PROHIBITION OF 

LEAVE WAIVER) 4703(c)(1) 

DESERT SHIELD/DESERT STORM RESERVISTS 

LEAVE BANK 

Public Law 

102-25 (04/06/91) 

part 630, subpart K 

DISMISSAL, ADMINISTRATIVE (DAILY,

 HOURLY, 

PIECE- WORK) 

6104 part 610, subpart C 

DISMISSALS, ADMINISTRATIVE/EMERGENCY 301, 6104, 6302(a) part 610, subpart C 

 Leave Without Pay status 56 Comp. Gen. 393 

(1977) 

EMERGENCY LEAVE TRANSFER PROGRAM 6391 part 630, subpart K 

(proposed regulations at 

62 FR 59301, 

11/03/97) 

EMPLOYEES COVERED BY THE FEDERAL 

LEAVE SYSTEM 

6301(2) Title II-Leave, Civilian 

Personnel Law Manual, chapter I, part BEmployees Covered 

and part CEmployees Excluded

EXCLUSION OF PRESIDENTIAL APPOINTEES 6301(2)(xi) 630.211 
 

 D-10 

Subject 

Law 5 U.S.C. 

(unless otherwise 

indicated) 

Regulation/Other 

5 CFR 

(unless otherwise 

indicated) 

EXCUSED ABSENCE 301, 6104, 6302(a) Title II-Leave, Civilian 

Personnel Law Manual, chapter 5, part 

A-Administrative 

Leave 

EXPANDED FAMILY AND MEDICAL LEAVE 

POLICIES 

 Presidential 

Memorandum, April 

11, 1997 

OPM Memorandum 

to Heads of Executive Departments 

and Agencies, 

April 14, 1997 

Questions and Answers on the President’s Memo on 

Expanded Family 

and Medical Leave 

Polices, 

April 17, 1997 

FAMILY AND MEDICAL LEAVE ACT (FMLA) (TITLE 

I administered by the Department of Labor) 

29 U.S.C. 2601 et 

seq. 

29 CFR part 825 

FAMILY AND MEDICAL LEAVE ACT (FMLA) (TITLE 

II administered by the Office of Personnel Management) 

 6381-6387 part 630, subpart L 

FAMILY CARE (SICK LEAVE) 6307(d) 630.401(a)(3) 

FAMILY MEMBER 

 Definition 

 family and medical leave (spouse, son, 

daughter, and parent) 

6381 630.1202 

 leave transfer and leave bank programs 630.902 

 sick leave 6307(d) 630.201(b)(4) 

HOLIDAYS 6103, 6104 part 610, subpart B 

Title II-Leave, Civilian 

Personnel Law Manual, chapter 5, part 

B-Holidays 
Rules and Regulations 

 D-11 

Subject 

Law 5 U.S.C. 

(unless otherwise 

indicated) 

Regulation/Other 

5 CFR 

(unless otherwise 

indicated) 

 Leave Without Pay before and after Comp. Gen. opinion 

B-187520 (02/22/77) 

 Leave Without Pay before or after 56 Comp. Gen. 393 

(1977) 

HOME LEAVE 6305 part 630, subpart F; 

Title II-Leave, Civilian 

Personnel Law Manual, chapter 5, part 

E-Home Leave 

JURY DUTY (SEE COURT LEAVE) 6322 

LEAVE CEILING (ANNUAL LEAVE) 

 General 6304(a) and (b) 630.302 

 Senior Executive Service (SES) 6304(f) 630.301(a)-(c) 

 scheduling “use or lose” leave 630.308 

LEAVE BANK PROGRAM 6361-6373 part 630, subpart J 

LEAVE TRANSFER PROGRAM 6331-6340 part 630, subpart I 

 death of recipient—no retroactive substitution  630.907(e) 

70 Comp. Gen. 432 

(1991) 

68 Comp. Gen. 694 

(1989) 

 employee unable to return to work Comp. Gen. opinion 

B-271561.2 

(07/26/89) 

LEAVE OF ABSENCE (ALIENS) 6310 

LEAVE WITHOUT PAY 

 Administrative discretion Title II-Leave, Civilian 

Personnel Law Manual, chapter 5, part FLeave Without Pay 

 Disabled veterans Executive Order 

5396 

(July 17, 1960) 

 injury compensation 5 U.S.C. 

chapter 81 

 military training 38 U.S.C. 2024(d) 
 

 D-12 

Subject 

Law 5 U.S.C. 

(unless otherwise 

indicated) 

Regulation/Other 

5 CFR 

(unless otherwise 

indicated) 

 creditable service 8332(f) 

 during military service Comp. Gen. opinion 

B-215542 (08/01/85) 

 during period covered by service agreement Comp. Gen. opinion 

B-184948 (11/18/75) 

 Family and Medical Leave Act—Title II 6382(c) 630.1202, 

630.1205(a) 

 reduction in leave credits 630.208 

 Compensation for disability 8118(c) Comp. Gen. opinion 

B-164617 (04/13/72) 

 within-grade waiting periods 531.406 

LUMP-SUM PAYMENTS FOR ANNUAL LEAVE 5551-5553, 

6304(e) 

part 550, subpart L 

(proposed regulations at 

62 FR 40475, 

07/29/97) 

 DOD base closings 5551(c) 

 refund of lump-sum payment and recredit of annual leave 6306 part 550, subpart L 

(proposed regulations at 

62 FR 40475, 

07/29/97) 

MEDICAL CERTIFICATION 

 sick leave 630.403 

 Family and Medical Leave 6383 630.202; 630.1207 

 leave transfer and leave bank programs 6333(a), 6367(a) 630.904; 630.1006 

MILITARY LEAVE 6323 Title II-Leave, Civilian 

Personnel Law Manual, chapter 5, part 

D-Military Leave 

 offset of payments received 5519 

MINIMUM CHARGE OF LEAVE 630.206 

NONAPPROPRIATED FUND EMPLOYEES 

(LEAVE PORTABILITY) 

6308(b), 6312 

RECREDIT OF LEAVE 6306 part 630, subpart E 
Rules and Regulations 

 D-13 

Subject 

Law 5 U.S.C. 

(unless otherwise 

indicated) 

Regulation/Other 

5 CFR 

(unless otherwise 

indicated) 

REFUND FOR UNEARNED (ADVANCED) LEAVE 630.209(a) 

 waiver for medical disability 630.209(b) 

RESTORATION OF ANNUAL LEAVE 6304(d) and (e) 630.305-309; 

Title II-Leave, Civilian 

Personnel Law Manual, chapter 2, part 

G-Restoration of 

Leave 

 back pay 5596(b)(1)(B) 550.805(e)(2)(iv) 

 DOD base closings 6304(d)(3) 630.306(b) 

 leave forfeiture/scheduling requirement 630.306(a); 

56 Comp. Gen. 470 

(1977) 

SHORE LEAVE 6305 part 630, subpart G 

SICK LEAVE 

covered employees 

general provisions 

accrual and maximum accumulation 

transfer between different leave systems 

6301 

6302 

6307 

6308 

part 630, subparts B, 

D, 

and E; 

Title II-Leave, Civilian 

Personnel Law Manual, chapter 4-Sick 

Leave 

 Adoption 6307(c) 630.401(a)(6) 

 family care and bereavement 6307(d) 630.401 

 incapacity due to death of spouse Comp. Gen. opinion 

B-207444 (10/20/82) 

 agency discretion Comp. Gen. opinion 

B-170730 (08/16/71) 

SUBSTITUTION OF LEAVE 

 sick leave for annual leave 630.405; 

Title II-Leave, Civilian 

Personnel Law Manual, chapter 4, part 

D, 5(a)-Substitution 

of Sick Leave for Annual Leave 
 

 D-14 

Subject 

Law 5 U.S.C. 

(unless otherwise 

indicated) 

Regulation/Other 

5 CFR 

(unless otherwise 

indicated) 

 sick leave for leave without pay Title II-Leave, Civilian 

Personnel Law Manual, chapter 4, part 

D, 5(b)-Substitution 

of Sick Leave for 

Leave Without Pay 

 annual leave for sick leave Title II-Leave, Civilian 

Personnel Law Manual, chapter 2, part F, 

4(a)-Substitution of 

Annual Leave for 

Sick Leave 

 annual leave for leave without pay Title II-Leave, Civilian 

Personnel Law Manual, chapter 2, part F, 

4(b)-Substitution of 

Annual Leave for 

Leave Without Pay 

 substitution of leave without pay for annual leave Title II-Leave, Civilian 

Personnel Law Manual, chapter 5, part F, 

7(a)-Substitution of 

Leave Without Pay 

for Annual Leave 

 substitution of leave without pay for sick leave Title II-Leave, Civilian 

Personnel Law Manual, chapter 5, part F, 

7(a)-Substitution of 

Leave Without Pay 

for Sick Leave 

SUNDAY PREMIUM PAY 

prohibition on Sunday premium pay for periods of 

leave 

5546(a); 

Section 624 of 

Treasury and 

General Government Appropriations Act, 1999, as 

contained in section 101(h) of Public Law 105-277, 

Omnibus Consolidated and Emergency 

Supplemental Appropriations Act, 

1999 

TERMINAL LEAVE Comp. Gen. opinion 

B-223876 (06/12/87) 
Rules and Regulations 

 D-15 

Subject 

Law 5 U.S.C. 

(unless otherwise 

indicated) 

Regulation/Other 

5 CFR 

(unless otherwise 

indicated) 

TRANSFER OF LEAVE BETWEEN AGENCIES AND 

LEAVE SYSTEMS 

6308 630.501, 630.502 

Title II-Leave, Civilian 

Personnel Law Manual, chapter 2, part 

E-Transfers and Reemployment (Annual 

Leave) and chapter 

4, part C-Transfers 

and Reemployment 

(Sick Leave) 

TRAVEL TO/FROM POST OF DUTY 6303(d) 630.207 

UNCOMMON TOURS OF DUTY 6304, 

6307(d)(3)(B) 

630.201, 630.210 

VETERANS 

 use of leave for physical examination Executive Order 

5396 

(July 17, 1930) 

 travel expenses—VA physical exam Comp. Gen. opinion 

B-188012 (05/10/77 

VOLUNTEER ACTIVITIES 

participation of Federal employees in volunteer 

activities 

 Presidential Memorandum, April 22, 

1998 

OPM Memorandum 

to Heads of Executive Departments 

and Agencies, 

April 23, 1998 

Guidance on Scheduling Work and 

Granting Time Off to 

Permit Federal Employees to Participate 

in Volunteer Activities

April 1998 
 

 D-16 

Subject 

Law 5 U.S.C. 

(unless otherwise 

indicated) 

Regulation/Other 

5 CFR 

(unless otherwise 

indicated) 

WORKERS’ COMPENSATION 

 (Federal Employees Compensation Act) 

chapter 81 Title II-Leave, Civilian 

Personnel Law Manual, chapter 4, part 

E-Employee Receiving Workers’ Compensation; chapter 4, 

part H-Buy Back of 

Sick Leave; and 

chapter 2, part G, 

7(c)(4)-Buy Back of 

Annual Leave 

 buy-back of leave 20 CFR 10.202,310 

 no administrative leave for injury Comp. Gen. opinion 

B-192510 (04/06/79) 

 forfeiture of annual leave 62 Comp. Gen. 253 

(1983); 

Comp. Gen. opinion 

B-204524 (03/23/82) 

 accrual of leave while on leave without pay 630.204; 

29 Comp. Gen. 73 

(1949); 

Comp. Gen. opinion 

B-180010.12 

(03/08/79) 

NOTES: 

1. Opinions of the Comptroller General are included in the General Accounting Office’s Civilian Personnel Law Manual (CPLM), Title II (Leave), Fourth Edition, 1996. Title II of the 

CPLM is available at http//www.gao.gov/special.pubs/og96006.txt or may be ordered from 

the U.S. Government Printing Office at: 

Superintendent of Documents 

U.S. Government Printing Office 

941 North Capitol Street 

Washington, DC 20402 

email address: gpoaccess@gpo.gov 

Order Desk: (202) 512-1800 

2. Presidential memoranda and OPM guidance materials on expanded family and medical leave 

policies and participation of Federal employees in volunteer activities may be accessed on 

OPM’s website at http//www.opm.gov/oca. 
Rules and Regulations 

 D-17 

INDEX OF LAWS, REGULATIONS, AND OTHER 

REFERENCES RELATING TO PAY 

AND HOURS OF DUTY 

SUBJECT 

LAW 

5 U.S.C. 

(unless otherwise indicated) 

REGULATION/OTHER 

5 CFR 

(unless otherwise indicated) 

Administratively Uncontrollable Overtime 5545(c)(2) 550.151-154, 161-164 

Administrative Appeals Judges, Pay for + 5372b regulation pending; 

CPM 2001-4 (4-19-01) 

Administrative Law Judges, Pay for + 5372 930.210 

Advance Payments for New Appointees 5524a part 550, subpart B 

Aggregate Limitation on Pay 5307 part 530, subpart B 

Allotments 

 General 5525 part 550, subpart C 

 Pretax—FEHB Premium + 26 U.S.C. 125 550.311-313; part 892 

 Pretax -Transportation Fringe 

Benefit + 

7905(b); 

26 U.S.C. 132(f)(4) 

E.O. 13150; 

550.311(b); 550.313(a) 

Alternative Work Schedules (AWS) 6120-6133 part 610, subpart D 

 NAF Employees Section 1041 of Pub. L. 

104-106, Feb. 10, 1996 

 Premium Pay for Wage Employees under AWS  532.513 

Annual Pay Adjustment 5303 531.205 

Availability Pay (Criminal Investigators) 5545a; 5542(d) 550.181-550.187 

Awards* 4501-4513 part 451 

Back Pay 5596 part 550, subpart H 

Basic Pay (General Schedule) 5331-5338 part 531 

Blue Collar Employees, Pay for 5341-5349 part 532 

Claims, Settlement of (pay and leave)* 5584 part 178, subpart A 

Classification (General Schedule 

Grades)* 

5101-5115 part 511 
 

 D-18 

SUBJECT 

LAW 

5 U.S.C. 

(unless otherwise indicated) 

REGULATION/OTHER 

5 CFR 

(unless otherwise indicated) 

Compensatory Time Off 

 FLSA 5543; 6123(a)(1) 551.531 

 Prevailing Rate (Wage) Employees 5543(b) 532.504; 551.531(a) & 

(c) 

 Religious Observances 5550a part 550, subpart J 

 Title 5 5543; 6123(a)(1) 550.114 

Compressed Work Schedules 6120-6133 part 610, subpart D 

Consultant Pay 3109 part 304 

Continued Rate (Geographic Adjustments) FEPCA, sections 302 & 

404 

531.307; 

part 531, subpart G 

Contract Appeal Boards, Pay for Members* 5372a 

Cost of Living Allowances (Nonforeign 

Areas) 

5941 part 591, subpart B 

Credit Hours 6121(4), 6126 

Critical Positions, Pay for* 5377 OMB Bulletin 91-09 

(3/7/91) 

Debt Collection via Payment Offset + 5511-5514 

31 U.S.C. 3711-3716 

part 550, subpart K; 

31 CFR parts 900-904 

Demonstration Projects* 4701; 4703-4706 part 470 

Dual Pay and Dual Employment* 5531; 5533-5537 part 550, subparts E & F

Evacuation Payments 5522-5524 part 550, subpart D 

Executive Schedule, Pay Rates for + 5311-5318 

Expert Pay 3109 part 304 

Fair Labor Standards Act (FLSA) Overtime Pay 5542(c); 

29 U.S.C. 201 et seq 

part 551 

Federal Wage System (FWS) 5341-5349 part 532 

Firefighter Pay 5542, 5545b part 550, subpart M 

Fire Protection Activities, FLSA 29 U.S.C. 201 et seq 551.541 

Flexible Work Schedules 6120-6133 part 610, subpart D 
Rules and Regulations 

 D-19 

SUBJECT 

LAW 

5 U.S.C. 

(unless otherwise indicated) 

REGULATION/OTHER 

5 CFR 

(unless otherwise indicated) 

Foreign Area Allowances and Differentials* 5921-5928 Department of State 

Standardized Regulations 

(Government Civilians, 

Foreign Areas) 

Foreign Language Bonuses for Law 

Enforcement Officers* 

4521-4523 

Garnishment, Child Support/Alimony* 42 U.S.C. 659-662 part 581 

Garnishment, Commercial Debts* 5520a part 582 

General Schedule Basic Pay 5331-5338 part 531 

GM Employees, Pay Rules for Pub. L. 103-89, 

section 4 

531.202, 203(c)(2)&(g), 

531.204(d)-(f), 205(a)(2) 

Grade and Pay Retention 5361-5366 part 536 

Hazardous Duty Pay 5545(d) part 550, subpart I 

Health Care Positions (title 38 for GS 

Employees) + 

5371 

Highest Previous Rate 5334 531.202 & 531.203(c)-

(d) 

Holiday 

 Identification of Holidays 6103-6104; 

E.O. 11582 

610.201-202 

 “In lieu of” holiday under a compressed work schedule 5 U.S.C. 6103(d)(2) 610.202(c) 

 Premium Pay 5546(b) 550.131-132 

Hourly Rate (2087 divisor) 5504(b) 531.303 & 605 

Hours of Duty 6101-6133 part 610 

Hours Worked, FLSA 29 U.S.C. 201 et seq part 551, subpart D 

Law Enforcement Officers 

 Availability Pay 5545a 550.181-550.187 

 Definition 5541(3) 550.103 

 Foreign Language Bonus* 4521-4523 

 Geographic Adjustment FEPCA, section 404 part 531, subpart C 

 Overtime Rate Cap 5542(a)(4) 550.113(b) 
 

 D-20 

SUBJECT 

LAW 

5 U.S.C. 

(unless otherwise indicated) 

REGULATION/OTHER 

5 CFR 

(unless otherwise indicated) 

 Premium Pay Limitation 5547(c) 550.107 

 Special Salary Rates FEPCA, section 403 

Law Enforcement Activities, FLSA 29 U.S.C. 201 et seq 551.541 

Limitations on Pay 

 Administrative Action, Pay Set 

by + 

5373 

 Aggregate 5307 part 530, subpart B 

 General Schedule 5303(f) 

 Locality Adjusted 5304(g) 531.604 

 Premium Pay 5547 550.105-107 

Locality-Based Comparability Payments 5304-5304a part 531, subpart F 

Locality Pay, Extension to Non-GS Employees 5304(h) 531.604 

Lump-Sum Payments for Annual Leave 5551-5553; 6306 part 550, subpart L 

Minimum Wage Rates, FLSA 29 U.S.C. 201 et seq part 551, subpart C 

New Appointments, Pay Setting for + 5333 531.203(a)-(c) 

Night Pay (GS) 5545(a) and (b) 550.121-122 

Night Pay (FWS) 5343(f) 532.505 

Order of Precedence 

 For Deductions (when there is 

insufficient gross pay)+ 

 PQA 97-1 (8-19-97) 

 For Survivors (upon death of 

employee)* 

5581-5583 part 178, subpart B 

Overpayments 

 Collection/Disposition+ 5511-5514; 

31 U.S.C. 3711-3716 

part 550, subpart K; 

31 CFR parts 900-904 

 Waiver* 5584; 

sec. 101, Pub.L. 104-316 

OMB Determination Order of 12-17-96; 

65 FR 33737 (5-25-00) 

Overseas Allowances and Differentials* 5921-5928 Department of State 

Standardized Regulations 

(Government Civilians, 

Foreign Areas) 
Rules and Regulations 

 D-21 

SUBJECT 

LAW 

5 U.S.C. 

(unless otherwise indicated) 

REGULATION/OTHER 

5 CFR 

(unless otherwise indicated) 

Overtime 

 Administratively Uncontrollable 5545(c)(2) 550.151-154, 161-164 

 Call-Back 5542(b) 550.112(h), 551.401(e) 

 FLSA 5542(c); 

29 U.S.C. 201 et seq 

part 551, subpart E 

 Hourly Rate Cap (GS-10, step 1) 5542(a) 550.113(b) 

 Title 5 (GS) 5542 550.111-114 

 Title 5 (FWS) 5544 532.503 

Pay and Grade Retention 5361-5366 part 536 

Pay Caps (see “Limitations on Pay”) 

Pay Periods 5504-5505 

Pay Setting (General) 5334 part 531, subpart B 

Physicians Comparability Allowance 5948 part 595 

Post Differentials (Nonforeign Areas) 5941 part 591, subpart B 

Premium Conversion (FEHB)+ 550.311(a)(8), 

550.312(f), 

550.313(b) 

Premium Pay (Title 5) 5541-5550a part 550, subpart A 

 During Training + 4109(a)(1); 4102(b) 410.402 

 During Travel 5542(b)(2); 6101(b)(2) 550.112(g) 

 Limitations 5547 550.105-107 

Prevailing Rate Systems 5341-5349 part 532 

Promotions 5334(b) 531.202, 531.203(c), 

531.204(a)-(c) 

Quality Step Increases 5336 part 531, subpart E 

Recruitment Bonuses 5753 part 575, subpart A 

Reemployment of Retirees (see “Retiree 

Reemployment”) 

 

Religious Observances, Compensatory 

Time 

Off for 

5550a part 550, subpart J 

Relocation Bonuses 5753 part 575, subpart B 
 

 D-22 

SUBJECT 

LAW 

5 U.S.C. 

(unless otherwise indicated) 

REGULATION/OTHER 

5 CFR 

(unless otherwise indicated) 

Remote Worksite Allowances 5942 part 591, subpart C 

CG Decision B-188436 

Retention Allowances 5754 part 575, subpart C 

Retiree Reemployment 

 Civilian* 8344, 8468 part 553; Part 837 

 Military* 5532 repealed effective 

10/1/99 

OPM interim regulations, 

4/12/00 (65 FR 19643) 

Rounding Rules 5504(b) 531.303 & 605 

Salary Offset 5511-5514; 

31 U.S.C. 3711-3716 

part 550, subpart K; 

31 CFR parts 900-904 

Schedules, Alternative Work 6120-6133 part 610, subpart D 

Scientific and Professional Positions, Pay 

for + 

5376 part 534, subpart E 

Senior Executive Service 

 Aggregate Limitation 5383(b); 5307 part 530, subpart B; 

534.402 

 Credit Hours Prohibition 610.408 

 Pay + 5381-5385 part 534, subpart D 

 Retention of SES Pay During 

Presidential Appointment* 

3392(c) 317.801(b) 

 Saved Pay* 3594 part 359, subpart G 

Senior Level Positions, Pay for + 5376 part 534, subpart E 

Separate Maintenance Allowance (Johnston 

Island) 

5942a part 591, subpart D 

Settlement of Accounts* 5581-5583 part 178, subpart B 

Severance Pay 5595 part 550, subpart G 

Simultaneous Actions 5334 531.203(f) 

Special Salary Rates 

 General 5305 part 530, subpart C 

 Information Technology Employees  CPM 2000-13 (11-3-00),

CPM 2000-14 (11-3-00),

CPM 2001-3 (2-15-01) 
Rules and Regulations 

 D-23 

SUBJECT 

LAW 

5 U.S.C. 

(unless otherwise indicated) 

REGULATION/OTHER 

5 CFR 

(unless otherwise indicated) 

Standby Duty 

 Definition (Title 5) 550.112(k) 

 Definition (FLSA) 551.431(a) 

 Premium Pay 5545(c)(1) 550.141-144, 161-163 

Statute of Limitations 178.104 

 FLSA Claims (2 or 3-Year)* 29 U.S.C. 255a 550.804(e)(3), 551.702 

 Other Claims (6-Year)* 31 U.S.C. 3702(b); 

5596(b)(4); 7121(h) 

550.804(e)(1) & (2) 

 Waiver Requests* 5584(b)(5) 

Step Increases 5335-5336 part 531, subparts D 

and E 

Student Loan Repayments* 5379 part 537 

Student Trainees, Pay Entitlements for 213.3202(b)(14); 

PQA 2001-1 (2-6-01) 

Sunday Pay 5546; Section 624 of 

Treasury and General 

Gov’ Appropriations Act, 

1999 (Pub. L. 105-277, 

Oct. 21, 1998) 

550.171-172 

Superior Qualifications Appointments + 5333 531.203(b) 

Supervisory Differentials 5755 part 575, subpart D 

Temporary (Time-Limited) Promotion 3301-3302; 3361; 5334 part 335, subpart A; 

531.203(d)(2)(ii), 

531.204(c), 536.105(b); 

PQA 98-1 (7-23-98) 

Temporary Organizations, Pay for Employees of 3161 regulations pending 

Title 38 Delegation 5371 

Training 

 Overtime Pay (FLSA) 551.401(h); 551.422 

 Premium Pay During (Title 5) + 4109(a)(1); 4102(b) 410.402 

 Special Tours of Duty 6101(a)(4) 610.122 
 

 D-24 

SUBJECT 

LAW 

5 U.S.C. 

(unless otherwise indicated) 

REGULATION/OTHER 

5 CFR 

(unless otherwise indicated) 

Travel 

 Overtime Pay (FLSA) 551.401(f) & (g); 

551.423 

 Premium Pay During 5542(b)(2); 6101(b)(2) 550.112(g) 

Uniform Allowance 5901-5903 part 591, subpart A 

Voluntary Separation Incentive Pay 

 DOD* 5597 

 General—Waiver of Repayment* Pub. L. 103-226, 

section 3 

part 576, subpart A 

Wage Employees, Pay for 5341-5349 part 532 

Waiver of Overpayment Claims* 5584; 

sec. 101, Pub.L. 104-316 

OMB Determination Order of 12-17-96 

(GAO rules at 4 CFR 

parts 91-92 rescinded 5-

25-00) 

Within-Grade Increases 5335 part 531, subpart D 

Work Schedules 

 General 6101 part 610, subpart A 

 Alternative (Flexible or Compressed) 6120-6133 part 610, subpart D 

NOTES: 

1. FEPCA refers to the Federal Employees Pay Comparability Act of 1990 (Public Law 101-

509), as amended. (Some prints of title 5, United States Code, provide certain uncodified sections of FEPCA as notes. For example, notes regarding FEPCA sections 401-407 may be appended to 5 U.S.C. 5305.) FR refers to Federal Register. E.O. refers to Executive order. CG 

refers to GAO Comptroller General, who formerly issued decisions on pay matters. 

2. Definition of other acronyms: 

CPM Compensation Policy Memorandum, which is issued by OPM officials to 

agency human resources directors. (See 

www.opm.gov/oca/compmemo/index.htm.) 

PQA Pay Questions and Answers, which are posted by OPM on its website. (See 

www.opm.gov/oca/pay/index.htm.) 
Rules and Regulations 

 D-25 

3. An asterisk (*) indicates that the subject area is not within the purview of the Office of Compensation Administration. Questions in these areas should be directed to the responsible organization. A plus sign (+) indicates that the Office of Compensation Administration has 

only partial responsibility for the subject area. Certain questions in these areas may have to 

be directed to other offices or organizations. 

4. A separate index on leave subjects may be accessed on OPM’s Internet website at 

www.opm.gov/oca/leave/html/levindex.htm. 
 

 D-26 
Inventory of Agency Payroll Systems

Agency Processor Number 

served

Current technical 

environment

Payroll/time & 

attendance systems 

identified

date/software

Future plans

System

Legacy 

Age of Pay Plans Served

AID Cross-serviced 

by NFC

IBM MainframeapplicationHomegrown AETA - T&A None Planned

DOC Cross-serviced 

by NFC

IBM MainframeapplicationHomegrown OSPAY -T&A None Planned

DOD Provider 680,000 Homegrown 

IBM Mainframeapplication

DCPS - Civilian Payroll  ATAAPS GUI - T&A ATAAPS Mainframe - 

T&A

None Planned DCPS - 13 

GUI - 3 yrsATAAPS yrs M/F - 30 ATAAPS yrs 

Titles 3, 5, 10, 20, 32

DOE Self-provider 12,000 Homegrown 

IBM Mainframeapplication

ETA - T & APAYS - Payroll GSA

Possible Outsourcing with ETA - 6 

PAYSyears

 - 18 

years Title 5

DOI Provider 200,000 Homegrown 

IBM Mainframeapplication

SPersonnel Payroll DOI003 - Federal 

ystem

None Planned FY 99 All civilian pay plans

DOJ Cross-serviced 

by NFC

AdaBaseIBM Mainframe -- applicationHomegrown 

personnel supportFMIS - Payroll and Not developed

DOL Self-provider 15,000 Homegrown 

IBM Mainframeapplication

IPS - Integrated Payroll System 2002 -- PeopleSoft

Replacing with PP2K in Title 5

DOS Self-provider 23,000 AMS, Maxima, 

IBM MainframeGeneva, FSC Paris

CAPPS - Pays Peace FEP-TATELCorps

 - T&A by 

Telegram

systems by 2005Replacement for 3 of the 

E-3
Inventory of Agency Payroll Systems

Agency Processor Number 

served

Current technical 

environment

Payroll/time & 

attendance systems 

identified

Future plans

date/software

Age of 

Legacy 

System

Pay Plans Served

DOT Self-provider 

One bureau is Cross-serviced by EPA. Also provider for the National Transportation Safety Board (external to DOT).

65,000 Homegrown 

applicationIBM Mainframe

CUPS - Civilian Payroll 

SystemIPS - T&A EPAYS - EPA Personnel and Payroll legacy system for STB

Replacement or upgrade is expected, but plans are not developed

23 Title 5, 

Pay plans created as a result of DOT Authorization ACT of 1996 making FAA excepted service

ED Cross-serviced 

by DOI

Homegrown applicationIBM Mainframe

DOI003 - DOI Federal Personnel Payroll System

Upgrade Planned

EPA Provider - 

Surface Transportation Board

18,000 Application obtained 

by DOI and customized by CSC

EPAYS - EPA's Personnel and Payroll Legacy SystemTAPP - T&A

Replaced with PRS (integrated HR (implemented 7/10) & Payroll) in 2004 -- PeopleSoft

EPAYS -17TAPP - 16

General Salary (GS), Wage Grade (WG), Senior Executive Service Experts/Consultants (ED, EE, EF, and EG)

FEMA Cross-serviced 

by NFC

NFC - NFC Payroll System

None Planned

GSA Provider for 34 

agencies of Presidential Commissions, including:OPM

25,000 In House developed 

applicationOracle version 8.17 DB

FEDDESK - T&APAR - Payroll and awards processing 

PAR Upgrade 6 Title 5

HHS Self-provider 125,000 Homegrown 

applicationIBM Mainframe

PSC/Central - ERP HR and Payroll

Upgrade to EHRP in 2003; replacement planned with PeopleSoft

30 Titles: 5, 38, 42

E-4
Inventory of Agency Payroll Systems

Agency Processor Number 

served

Current technical 

environment

Payroll/time & 

attendance systems 

identified

date/software

Future plans

System

Legacy 

Age of Pay Plans Served

HUD Cross-serviced 

by NFC

IBM MainframeapplicationHomegrown PCTARE - T&A data that 

1)is transmitted to NFC (Z- 2001

Replaced with STARS in 

NASA Self-provider 7,500 Homegrown 

IBM Mainframeapplication

NPPS - Personnel and 

Payroll with COTS in 2006

Replacement planned 

NRC Self-provider 

HealthInstitutes of at the National with timeshare 

3,000 Customized version of 

MainframeSystem, IBM Payroll/Personnel FBI's 

PYP - Personnel and T&APayroll and electronic 

PeopleSoftNovember 2001 - Time and Labor modules, Resources, Payroll, and Replacement with Human 3 years Title 5

NSF Self-provider 1,250 Andrulis Corp

Client Server

IPAY - Payroll SystemITAS - Employee Timecard Reporting

None Planned 5 months Title 5

OPM Cross-serviced FBI's Pay/Pers 

IBM MainframeSystem

FMS - Personnel and Payroll starting October 2001

Cross-serviced by GSA 

SBA Cross-serviced 

by NFC

IBM MainframeapplicationHomegrown SES - Salaries and 

Expenditures 

commercial ASP-- Oracle hosted by a Travel) by 2003 for payroll HR, Procurement and encompassing Financials, with JAAMS (ERP Replacement planned 

SSA Cross-serviced 

by DOI

None Listed None Planned

E-5
Inventory of Agency Payroll Systems

Agency Processor Number 

served

Current technical 

environment

Payroll/time & 

attendance systems 

identified

Future plans

date/software

Age of 

Legacy 

System

Pay Plans Served

Treasury Cross-serviced 

by NFC

Homegrown applicationIBM Mainframe

NFC - NFC Payroll 

SystemCOSS - Overtime 

SchedulingOCTES - T&AOTPPS - Payroll

Replacement of OCTES with a COTS system is planned for 2002

USDA Provider to over 

100 Federal roganization, including:DOC, DOJ, FEMA, HUD, SBA, and Treasury

450,000 Homegrown 

applicationIBM Mainframe - IDMS

PPS - 13 applications for 

T&A, Pay history, pay processingAPS - Time and 

Attendance (T&A) for Forest Service firefighters PC-TARE - Remote entry T&ASTAR - System for T&A Reporting3 other homegrown T&A systems

Replacement planned by 2010 -- not identified

17 years; upgraded 8 years ago

Titles: 5, 6, & 7

VA Self-provider 220,000 Homegrown 

applicationIBM Mainframe

PAID - HR, Payroll and T&A - legacy systemOLDE - on-line data entry for T&AETA - T&A

Replacement planned with HRLINK$ (HR and Payroll System) for 2004 --

PeopleSoft

PAID -35OLDE - 12ETA - 12

Titles: 5 and 38

1,844,750 TOTAL Employees

E-6
F-1 12/

Appendix F 

Rules and Regulations 

Rules and regulations for payroll processing are governed by guidance from a 

number of agencies, in particular, the Department of the Treasury. The Treasury 

Financial Manual (TFM) Volume I, Part 3, Chapter 2000 is entitled, “Payroll 

Vouchers,” and is reproduced below in its entirety. The complete TFM is available on the Treasury Department’s web site www.treasury.gov, under Financial 

Management Service. 

The Office of Personnel Management (OPM) also provides certain guidance related to payroll. For example, OPM establishes regulations (5 C.F.R. 1-990) in 

regard to pay setting (530), pay administration and hours of duty (530, 550), and 

processing garnishment orders for child support or alimony (581). OPM manages 

regulations for leave administration (630). Indices of laws, regulations, and other 

references relating to pay and leave administration are provided below. Additional 

information can be found on OPM’s web site www.opm.gov. 

Payroll systems functional standards have been developed by OMB, OPM and 

other agencies and published as a JFMIP Federal Financial Management System 

Requirements document, “Human Resources and Payroll Systems Requirements, 

JFMIP SR-99-5.” 

Other agencies, like the Department of Labor, have rules here as well, as in the 

case of implementing the Fair Labor Standards Act. 
 

F-2

Vol 1Part 3Chapter 2000 (T/L 534 4-12-94)

PAYROLL VOUCHERS 

This chapter prescribes the procedures to be followed and the standard forms to 

be used in preparing payrolls for civilian employees of the executive agencies. 

SECTION 2010—AUTHORITY

The head of each executive agency is responsible for establishing and maintaining 

an adequate payroll system covering pay, leave, and allowances, as a part of the 

system of accounting and internal control required by the Accounting and Auditing Act of 1950 (31 U.S.C. 3513). The system must conform to the principles, 

standards, and related requirements prescribed by the Comptroller General. 

Regulations relating to the preparation of payroll vouchers are issued by the Office of Personnel Management (OPM), the Office of Management and Budget, the 

Department of Labor, and the Department of the Treasury (Treasury). Decisions 

of the Comptroller General, and the General Accounting Office (GAO) Policy and 

Procedures Manual for Guidance of Federal Agencies also govern payroll preparation. 

SECTION 2015—STANDARD FORMS

The following standard forms are prescribed: 

◆ SF 1166: Voucher and Schedule of Payments. 

◆ SF 1167: Voucher and Schedule of Payments—Continuation Sheet. 

Standard forms prescribed by this chapter are available at the Federal Supply Service, General Services Administration (GSA). Overprinting of the agency name, 

bureau, or other recurring information is permitted. Changes or modification of 

these forms by agencies will require prior concurrence by the Financial Management Service (I TFM 1-2000). 

Treasury, GAO, GSA, OPM, and the Department of State prescribe other forms 

used in payroll preparation. 

SECTION 2020—VOUCHER VERIFICATION AND CERTIFICATION

2020.10—Voucher Verification 

The SF 1166 OCR and SF 1167 OCR (for nontape payments), and the SF 1166 

OCR (or SF 1166 EDP) and the related magnetic tape (for tape submissions) prepared for the creation of checks or Electronic Funds Transfer (EFT) payments 

should be verified prior to certification. Verification must be performed to provide 
Rules and Regulations 

F-3

a cross-check for accuracy and to reduce the possibility of unauthorized, fraudulent, and other irregular acts. 

2020.20—Voucher Certification 

Payroll vouchers prepared as authority for recording and payment of the payroll 

will be signed before payment by an authorized certifying officer who does not 

compute the individual amounts payable, maintain the payroll records, or distribute the paychecks. The vouchers will show the net amount of payments to employees and the amounts withheld for each type of deduction. 

The certifying officer will make an examination of the facts underlying the 

vouchers as is necessary to assure the correctness and validity of the payments. 

SECTION 2025—METHOD OF PAYMENT

Agencies will make all payments by check or EFT. Agencies should encourage 

employees to have their net pay sent directly to accounts in a financial organization, as this method of payment is more advantageous to both the Government and 

the employee. 

When salary payments are delivered to the employees, at the worksite, each employee must be properly identified to the person who delivers the paychecks. 

Agencies will access the Government On-Line. 

Accounting Link System (GOALS) to obtain the inclusive check numbers assigned to the SF-1166 schedule. 

Agencies will use the inclusive check numbers to identify the checks, should it be 

necessary to process a nonreceipt claim (I TFM 4-7060). 

SECTION 2030—VOUCHER PREPARATION AND SCHEDULING

Agencies will use SF 1166 OCR, SF 1167 OCR, or when authorized, SF 1166 

EDP (I TFM 4-2000), for scheduling all regular biweekly payroll tape submissions. Every effort should be made to schedule all salary check payments on a 

single tape submission each pay period. Similarly, all EFT payments should be 

included on a single tape submission each pay period. 

The magnetic tape and the SF 1166 OCR, or SF 1166 EDP (original only) will be 

delivered to the financial center according to a prearranged schedule agreed to 

between the head of the agency and the Chief Disbursing Officer. 

All payment items to be made by check should be included on the same SF 1166 

OCR (or SF 1166 EDP). The “no-check” voucher deductions can be documented 

on SF 2812 (for OPM withholdings and contributions only), Optional Form 
 

F-4

1017G, or other agency-approved journal voucher form, and the payroll scheduled 

net. The SF 1166 OCR (or SF 1166 EDP) will be prepared as follows: 

◆ A single line entry will be recorded for each type of payment. 

◆ The “no check” deductions will be identified in the appropriate column. 

◆ Withheld Federal taxes will be recorded on the SF 1166 OCR (or SF 1166 

EDP). A Federal Tax Deposit (FTD) form will accompany an SF 1166 

OCR (or SF 1166 EDP) containing withheld Federal taxes. If the agency 

has no FTD forms on hand, or has FTD forms with incorrect data, the procedures prescribed in I TFM 3-4050.20 will be followed. 

◆ Individual payments of $10 million or more will be scheduled on a separate SF 1166 OCR. These payments cannot be included on tape and should 

not be reflected on the voucher-schedule covering payments submitted on 

tape. 

◆ SF 2812 “Report of Withholdings and Contributions for Health Benefits, 

Group Life 

Insurance, and Civil Service Retirement” will be sent directly to OPM at the same 

time as the payroll schedule is sent to the disbursing center (I TFM 3-3060). 

The SF 1167 OCR will be used when it is not possible to include all payroll items 

on one SF 1166 OCR. The SF 1166 OCR (or SF 1166 EDP) covering EFT payments will reflect only the net amount of the EFT payments. All authorized check 

enclosures will be sent to the financial center with the appropriate SF 1166 OCR. 

The enclosures will be aligned in the order in which they appear on the agency’s 

magnetic tape. 

2035.10—Magnetic Tape Submission 

Magnetic tape is the medium most commonly used for submission of payment 

issue data to the Treasury financial centers. EFT payments will be scheduled on 

magnetic tape. Check issue tapes should contain a minimum of 100 payment 

items. Tape submissions of fewer than 100 payments will require the approval of 

the director of the processing financial center. 

If an agency is unable to provide magnetic tape, or if the volume of payments is 

less than the minimum required for tape submission, detailed check issue data 

must be provided on SF 1166 OCR and SF 1167 OCR for automatic processing 

on optical scanning equipment. 

These schedules must be sent to one of the OCR-equipped financial centers. 

The magnetic tape for reporting salary payments to Treasury financial centers will 

include the following items on the same tape: 
Rules and Regulations 

F-5

◆ Net paychecks to home addresses, financial institutions, and designated 

agents. 

◆ Terminal leave settlement payments. 

◆ Employees’ savings allotments. 

◆ Payments to the Federal Reserve banks. 

◆ Charitable contributions. 

◆ Union dues and dues to associations of management officials and supervisors. 

◆ Other authorized deductions. 

2035.20—United States Savings Bonds 

Appendix No. 1 to I TFM 3-6000 prescribes the formats for SF 1166 OCR and SF 

1166 EDP, which are used for U.S. Savings Bonds. 

SECTION 2040—SUPPLEMENTAL PAYMENTS

A supplemental payroll may be processed if an employee was not included on the 

regular payroll. Supplemental payrolls of 100 or more check items will be processed on magnetic tape in the same manner as the regular biweekly agency payroll. Only one supplemental check issue tape for each pay period will be 

submitted to the financial center. This may require accumulating 

items for consolidation into a supplemental tape, or merging several supplemental 

tapes at the agency prior to sending them to the financial center. 

If direct deposit payments must be made as a supplemental payroll, all such payments should be 

included in a single magnetic tape submission to the financial center each pay period. 

SECTION 2045—CLAIMS FOR DECEASED EMPLOYEES

The procedures and forms to be used to process claims for deceased employees 

are prescribed under Title 4 of the GAO Policy and Procedures Manual for Guidance of Federal Agencies (4 GAO 23). 

CONTACTS 

Inquiries concerning this chapter should be directed to: 
 

F-6

Production Integrity Division 

Regional Operations 

Financial Management Service 

Department of the Treasury 

Liberty Center, Rm. 337 

Washington, DC 20227 

Telephone: 202-874-6820 
Rules and Regulations 

F-7

INDEX OF LAWS, REGULATIONS, AND OTHER 

REFERENCES RELATING TO LEAVE 

ADMINISTRATION 

This index highlights the laws, regulations, and other references relating to Federal leave programs and policies. The index is a valuable resource for researching 

major leave subject-matter areas. Please contact your agency personnel office, 

library, legal office, or information technology office to obtain copies of the 

documents cited (e.g., laws, regulations, Executive orders, opinions of the Comptroller General (Comp. Gen.)1

, etc.). Since each agency is responsible for Federal 

leave administration, it is imperative that you also consult your agency’s internal 

policies and collective bargaining agreements, as applicable. 

Subject 

Law 5 U.S.C. 

(unless otherwise 

indicated) 

Regulation/Other 

5 CFR 

(unless otherwise 

indicated) 

ABSENCE 

 bone marrow/organ donation 6327 

 funerals, law enforcement officers 6327 

 funerals, relatives in Armed Forces 6326 part 630, subpart H 

 funerals, veterans 6321 

 hostile actions abroad 6325 

 police and firemen, resulting from duty 6324 

ACCRUAL 

 annual leave 

 full-time 6303(a) 630.202 

 part-time 6302(c) 630.303 

sick leave 

 full-time 6307(a) 630.202 

 part-time 6302(c) 630.406, 630.202(b) 

 change in accrual rate 6303(c) 

ACCUMULATION 

 annual leave 6304(a) 630.304, 630.302 

 Overseas 6304(b) 630.302 
 

F-8

Subject 

Law 5 U.S.C. 

(unless otherwise 

indicated) 

Regulation/Other 

5 CFR 

(unless otherwise 

indicated) 

 Senior Executive Service (SES) 6304(f) 630.301 

 sick leave 6307(b) 

ADMINISTRATIVE LEAVE (SEE EXCUSED 

ABSENCE) 

 

ADOPTION (SICK LEAVE) 6307(c) 630.401(a)(6) 

ADVANCE LEAVE 

 annual leave 6302(d) 

 sick leave 6307(d) 630.209, 630.404 

 refund value of sick leave 630.208(d); 

Comp. Gen. opinion 

B-189531 (09/14/77) 

 not likely to return to duty 25 Comp. Gen. 874 

(1946) 

23 Comp. Gen. 837 

(1944) 

ALTERNATIVE WORK SCHEDULES (LEAVE 

ADMINISTRATION) 

6129 

ANNUAL LEAVE 

covered employees 

general provisions 

accrual 

maximum accumulation 

transfer between different leave systems 

6301 

6302 

6303 

6304 

6308 

part 630, subparts B 

and C; 

Title II-Leave, Civilian 

Personnel Law Manual, chapter 2-Annual 

Leave 

 reduction in force—use of annual leave to 

qualify for retirement/health benefits 

6302(g) 351.606(b), 351.608, 

630.212 

 agency discretion 39 Comp. Gen. 611 

(1960) 

16 Comp. Gen. 481 

(1936) 

ANNUITIES (COMPUTATION, USE OF SICK 

LEAVE) 

8339(m) 630.407, 831.302 

BACK PAY (RESTORED ANNUAL LEAVE) 5596(b)(1)(B) 550.805(g) 

BEREAVEMENT (SICK LEAVE) 6307(d) 630.401(a)(4) 

COURT LEAVE 
Rules and Regulations 

F-9

Subject 

Law 5 U.S.C. 

(unless otherwise 

indicated) 

Regulation/Other 

5 CFR 

(unless otherwise 

indicated) 

 jury duty 6322 Title II-Leave, Civilian 

Personnel Law Manual, chapter 5, part 

C-Court Leave 

 Witness 6322 Title II-Leave, Civilian 

Personnel Law Manual, chapter 5, part 

C-Court Leave 

 credit/retention of fees 5515, 5537 Title I-Compensation, 

Civilian Personnel 

Law Manual, chapter 

9-Service as Juror or 

Witness 

CREDITABLE SERVICE FOR LEAVE ACCRUAL 6303(a) Title II-Leave, Civilian 

Personnel Law Manual, chapter 2, part 

C-Creditable Services and part DNoncreditable Services 

 Agriculture Soil Conservation Service 

(ASCS) and Nonappropriated Fund (NAF) 

Employees 

6312 

 District of Columbia Police and Firemen’s 

Retirement System 

 Comp. Gen. opinion 

B-256756 (4/11/95) 

DEMONSTRATION PROJECTS (PROHIBITION OF 

LEAVE WAIVER) 4703(c)(1) 

DESERT SHIELD/DESERT STORM RESERVISTS 

LEAVE BANK 

Public Law 

102-25 (04/06/91) 

part 630, subpart K 

DISMISSAL, ADMINISTRATIVE (DAILY,

 HOURLY, 

PIECE- WORK) 

6104 part 610, subpart C 

DISMISSALS, ADMINISTRATIVE/EMERGENCY 301, 6104, 6302(a) part 610, subpart C 

 Leave Without Pay status 56 Comp. Gen. 393 

(1977) 

EMERGENCY LEAVE TRANSFER PROGRAM 6391 part 630, subpart K 

(proposed regulations at 

62 FR 59301, 

11/03/97) 
 

F-10

Subject 

Law 5 U.S.C. 

(unless otherwise 

indicated) 

Regulation/Other 

5 CFR 

(unless otherwise 

indicated) 

EMPLOYEES COVERED BY THE FEDERAL 

LEAVE SYSTEM 

6301(2) Title II-Leave, Civilian 

Personnel Law Manual, chapter I, part BEmployees Covered 

and part CEmployees Excluded 

EXCLUSION OF PRESIDENTIAL APPOINTEES 6301(2)(xi) 630.211 

EXCUSED ABSENCE 301, 6104, 6302(a) Title II-Leave, Civilian 

Personnel Law Manual, chapter 5, part 

A-Administrative 

Leave 

EXPANDED FAMILY AND MEDICAL LEAVE 

POLICIES 

 Presidential 

Memorandum, April 

11, 1997 

OPM Memorandum 

to Heads of Executive Departments 

and Agencies, 

April 14, 1997 

Questions and Answers on the President’s Memo on 

Expanded Family 

and Medical Leave 

Polices, 

April 17, 1997 

FAMILY AND MEDICAL LEAVE ACT (FMLA) (TITLE 

I administered by the Department of Labor) 

29 U.S.C. 2601 et 

seq. 

29 CFR part 825 

FAMILY AND MEDICAL LEAVE ACT (FMLA) (TITLE 

II administered by the Office of Personnel Management) 

 6381-6387 part 630, subpart L 

FAMILY CARE (SICK LEAVE) 6307(d) 630.401(a)(3) 

FAMILY MEMBER 

 Definition 

 family and medical leave (spouse, son, 

daughter, and parent) 

6381 630.1202 

 leave transfer and leave bank programs 630.902 

 sick leave 6307(d) 630.201(b)(4) 
Rules and Regulations 

F-11

Subject 

Law 5 U.S.C. 

(unless otherwise 

indicated) 

Regulation/Other 

5 CFR 

(unless otherwise 

indicated) 

HOLIDAYS 6103, 6104 part 610, subpart B 

Title II-Leave, Civilian 

Personnel Law Manual, chapter 5, part 

B-Holidays 

 Leave Without Pay before and after Comp. Gen. opinion 

B-187520 (02/22/77) 

 Leave Without Pay before or after 56 Comp. Gen. 393 

(1977) 

HOME LEAVE 6305 part 630, subpart F; 

Title II-Leave, Civilian 

Personnel Law Manual, chapter 5, part 

E-Home Leave 

JURY DUTY (SEE COURT LEAVE) 6322 

LEAVE CEILING (ANNUAL LEAVE) 

 General 6304(a) and (b) 630.302 

 Senior Executive Service (SES) 6304(f) 630.301(a)-(c) 

 scheduling “use or lose” leave 630.308 

LEAVE BANK PROGRAM 6361-6373 part 630, subpart J 

LEAVE TRANSFER PROGRAM 6331-6340 part 630, subpart I 

 death of recipient—no retroactive substitution  630.907(e) 

70 Comp. Gen. 432 

(1991) 

68 Comp. Gen. 694 

(1989) 

 employee unable to return to work Comp. Gen. opinion 

B-271561.2 

(07/26/89) 

LEAVE OF ABSENCE (ALIENS) 6310 

LEAVE WITHOUT PAY 

 Administrative discretion Title II-Leave, Civilian 

Personnel Law Manual, chapter 5, part FLeave Without Pay 
 

F-12

Subject 

Law 5 U.S.C. 

(unless otherwise 

indicated) 

Regulation/Other 

5 CFR 

(unless otherwise 

indicated) 

 Disabled veterans Executive Order 

5396 

(July 17, 1960) 

 injury compensation 5 U.S.C. 

chapter 81 

 military training 38 U.S.C. 2024(d) 

 creditable service 8332(f) 

 during military service Comp. Gen. opinion 

B-215542 (08/01/85) 

 during period covered by service agreement Comp. Gen. opinion 

B-184948 (11/18/75) 

 Family and Medical Leave Act—Title II 6382(c) 630.1202, 

630.1205(a) 

 reduction in leave credits 630.208 

 Compensation for disability 8118(c) Comp. Gen. opinion 

B-164617 (04/13/72) 

 within-grade waiting periods 531.406 

LUMP-SUM PAYMENTS FOR ANNUAL LEAVE 5551-5553, 

6304(e) 

part 550, subpart L 

(proposed regulations at 

62 FR 40475, 

07/29/97) 

 DOD base closings 5551(c) 

 refund of lump-sum payment and recredit of annual leave 6306 part 550, subpart L 

(proposed regulations at 

62 FR 40475, 

07/29/97) 

MEDICAL CERTIFICATION 

 sick leave 630.403 

 Family and Medical Leave 6383 630.202; 630.1207 

 leave transfer and leave bank programs 6333(a), 6367(a) 630.904; 630.1006 

MILITARY LEAVE 6323 Title II-Leave, Civilian 

Personnel Law Manual, chapter 5, part 

D-Military Leave 
Rules and Regulations 

F-13

Subject 

Law 5 U.S.C. 

(unless otherwise 

indicated) 

Regulation/Other 

5 CFR 

(unless otherwise 

indicated) 

 offset of payments received 5519 

MINIMUM CHARGE OF LEAVE 630.206 

NONAPPROPRIATED FUND EMPLOYEES 

(LEAVE PORTABILITY) 

6308(b), 6312 

RECREDIT OF LEAVE 6306 part 630, subpart E 

REFUND FOR UNEARNED (ADVANCED) LEAVE 630.209(a) 

 waiver for medical disability 630.209(b) 

RESTORATION OF ANNUAL LEAVE 6304(d) and (e) 630.305-309; 

Title II-Leave, Civilian 

Personnel Law Manual, chapter 2, part 

G-Restoration of 

Leave 

 back pay 5596(b)(1)(B) 550.805(e)(2)(iv) 

 DOD base closings 6304(d)(3) 630.306(b) 

 leave forfeiture/scheduling requirement 630.306(a); 

56 Comp. Gen. 470 

(1977) 

SHORE LEAVE 6305 part 630, subpart G 

SICK LEAVE 

covered employees 

general provisions 

accrual and maximum accumulation 

transfer between different leave systems 

6301 

6302 

6307 

6308 

part 630, subparts B, 

D, 

and E; 

Title II-Leave, Civilian 

Personnel Law Manual, chapter 4-Sick 

Leave 

 Adoption 6307(c) 630.401(a)(6) 

 family care and bereavement 6307(d) 630.401 

 incapacity due to death of spouse Comp. Gen. opinion 

B-207444 (10/20/82) 

 agency discretion Comp. Gen. opinion 

B-170730 (08/16/71) 

SUBSTITUTION OF LEAVE 
 

F-14

Subject 

Law 5 U.S.C. 

(unless otherwise 

indicated) 

Regulation/Other 

5 CFR 

(unless otherwise 

indicated) 

 sick leave for annual leave 630.405; 

Title II-Leave, Civilian 

Personnel Law Manual, chapter 4, part 

D, 5(a)-Substitution 

of Sick Leave for Annual Leave 

 sick leave for leave without pay Title II-Leave, Civilian 

Personnel Law Manual, chapter 4, part 

D, 5(b)-Substitution 

of Sick Leave for 

Leave Without Pay 

 annual leave for sick leave Title II-Leave, Civilian 

Personnel Law Manual, chapter 2, part F, 

4(a)-Substitution of 

Annual Leave for 

Sick Leave 

 annual leave for leave without pay Title II-Leave, Civilian 

Personnel Law Manual, chapter 2, part F, 

4(b)-Substitution of 

Annual Leave for 

Leave Without Pay 

 substitution of leave without pay for annual leave Title II-Leave, Civilian 

Personnel Law Manual, chapter 5, part F, 

7(a)-Substitution of 

Leave Without Pay 

for Annual Leave 

 substitution of leave without pay for sick leave Title II-Leave, Civilian 

Personnel Law Manual, chapter 5, part F, 

7(a)-Substitution of 

Leave Without Pay 

for Sick Leave 
Rules and Regulations 

F-15

Subject 

Law 5 U.S.C. 

(unless otherwise 

indicated) 

Regulation/Other 

5 CFR 

(unless otherwise 

indicated) 

SUNDAY PREMIUM PAY 

prohibition on Sunday premium pay for periods of 

leave 

5546(a); 

Section 624 of 

Treasury and 

General Government Appropriations Act, 1999, as 

contained in section 101(h) of Public Law 105-277, 

Omnibus Consolidated and Emergency 

Supplemental Appropriations Act, 

1999 

TERMINAL LEAVE Comp. Gen. opinion 

B-223876 (06/12/87) 

TRANSFER OF LEAVE BETWEEN AGENCIES AND 

LEAVE SYSTEMS 

6308 630.501, 630.502 

Title II-Leave, Civilian 

Personnel Law Manual, chapter 2, part 

E-Transfers and Reemployment (Annual 

Leave) and chapter 

4, part C-Transfers 

and Reemployment 

(Sick Leave) 

TRAVEL TO/FROM POST OF DUTY 6303(d) 630.207 

UNCOMMON TOURS OF DUTY 6304, 

6307(d)(3)(B) 

630.201, 630.210 

VETERANS 

 use of leave for physical examination Executive Order 

5396 

(July 17, 1930) 

 travel expenses—VA physical exam Comp. Gen. opinion 

B-188012 (05/10/77 
 

F-16

Subject 

Law 5 U.S.C. 

(unless otherwise 

indicated) 

Regulation/Other 

5 CFR 

(unless otherwise 

indicated) 

VOLUNTEER ACTIVITIES 

participation of Federal employees in volunteer 

activities 

 Presidential Memorandum, April 22, 

1998 

OPM Memorandum 

to Heads of Executive Departments 

and Agencies, 

April 23, 1998 

Guidance on Scheduling Work and 

Granting Time Off to 

Permit Federal Employees to Participate 

in Volunteer Activities 

April 1998 

WORKERS’ COMPENSATION 

 (Federal Employees Compensation Act) 

chapter 81 Title II-Leave, Civilian 

Personnel Law Manual, chapter 4, part 

E-Employee Receiving Workers’ Compensation; chapter 4, 

part H-Buy Back of 

Sick Leave; and 

chapter 2, part G, 

7(c)(4)-Buy Back of 

Annual Leave 

 buy-back of leave 20 CFR 10.202,310 

 no administrative leave for injury Comp. Gen. opinion 

B-192510 (04/06/79) 

 forfeiture of annual leave 62 Comp. Gen. 253 

(1983); 

Comp. Gen. opinion 

B-204524 (03/23/82) 

 accrual of leave while on leave without pay 630.204; 

29 Comp. Gen. 73 

(1949); 

Comp. Gen. opinion 

B-180010.12 

(03/08/79) 

NOTES: 
Rules and Regulations 

F-17

1. Opinions of the Comptroller General are included in the General Accounting 

Office’s Civilian Personnel Law Manual (CPLM), Title II (Leave), Fourth 

Edition, 1996. Title II of the CPLM is available at 

http//www.gao.gov/special.pubs/og96006.txt or may be ordered from the U.S. 

Government Printing Office at: 

Superintendent of Documents 

U.S. Government Printing Office 

941 North Capitol Street 

Washington, DC 20402 

email address: gpoaccess@gpo.gov 

Order Desk: (202) 512-1800 

2. Presidential memoranda and Office of Personnel Management (OPM) guidance materials on expanded family and medical leave policies and participation of Federal employees in volunteer activities may be accessed on OPM’s 

web site at http//www.opm.gov/oca. 
 

F-18

INDEX OF LAWS, REGULATIONS, AND OTHER 

REFERENCES RELATING TO PAY AND HOURS 

OF DUTY 

SUBJECT 

LAW 

5 U.S.C. 

(unless otherwise indicated) 

REGULATION/OTHER

5 CFR 

(unless otherwise indicated) 

Administratively Uncontrollable Overtime 5545(c)(2) 550.151-154, 161-164 

Administrative Appeals Judges, Pay for + 5372b regulation pending; 

CPM 2001-4 (4-19-01) 

Administrative Law Judges, Pay for + 5372 930.210 

Advance Payments for New Appointees 5524a part 550, subpart B 

Aggregate Limitation on Pay 5307 part 530, subpart B 

Allotments 

 General 5525 part 550, subpart C 

 Pretax—FEHB Premium + 26 U.S.C. 125 550.311-313; part 892 

 Pretax -Transportation Fringe 

Benefit + 

7905(b); 

26 U.S.C. 132(f)(4) 

E.O. 13150; 

550.311(b); 550.313(a) 

Alternative Work Schedules (AWS) 6120-6133 part 610, subpart D 

 NAF Employees Section 1041 of Pub. L. 

104-106, Feb. 10, 1996 

 Premium Pay for Wage Employees under AWS  532.513 

Annual Pay Adjustment 5303 531.205 

Availability Pay (Criminal Investigators) 5545a; 5542(d) 550.181-550.187 

Awards* 4501-4513 part 451 

Back Pay 5596 part 550, subpart H 

Basic Pay (General Schedule) 5331-5338 part 531 

Blue Collar Employees, Pay for 5341-5349 part 532 

Claims, Settlement of (pay and leave)* 5584 part 178, subpart A 

Classification (General Schedule 

Grades)* 

5101-5115 part 511 

Compensatory Time Off 

 FLSA 5543; 6123(a)(1) 551.531 
Rules and Regulations 

F-19

SUBJECT 

LAW 

5 U.S.C. 

(unless otherwise indicated) 

REGULATION/OTHER

5 CFR 

(unless otherwise indicated) 

 Prevailing Rate (Wage) Employees 5543(b) 532.504; 551.531(a) & 

(c) 

 Religious Observances 5550a part 550, subpart J 

 Title 5 5543; 6123(a)(1) 550.114 

Compressed Work Schedules 6120-6133 part 610, subpart D 

Consultant Pay 3109 part 304 

Continued Rate (Geographic Adjustments) FEPCA, sections 302 & 

404 

531.307; 

part 531, subpart G 

Contract Appeal Boards, Pay for Members* 5372a 

Cost of Living Allowances (Nonforeign 

Areas) 

5941 part 591, subpart B 

Credit Hours 6121(4), 6126 

Critical Positions, Pay for* 5377 OMB Bulletin 91-09 

(3/7/91) 

Debt Collection via Payment Offset + 5511-5514 

31 U.S.C. 3711-3716 

part 550, subpart K; 

31 CFR parts 900-904 

Demonstration Projects* 4701; 4703-4706 part 470 

Dual Pay and Dual Employment* 5531; 5533-5537 part 550, subparts E & F 

Evacuation Payments 5522-5524 part 550, subpart D 

Executive Schedule, Pay Rates for + 5311-5318 

Expert Pay 3109 part 304 

Fair Labor Standards Act (FLSA) Overtime Pay 5542(c); 

29 U.S.C. 201 et seq 

part 551 

Federal Wage System (FWS) 5341-5349 part 532 

Firefighter Pay 5542, 5545b part 550, subpart M 

Fire Protection Activities, FLSA 29 U.S.C. 201 et seq 551.541 

Flexible Work Schedules 6120-6133 part 610, subpart D 

Foreign Area Allowances and Differentials* 5921-5928 Department of State 

Standardized Regulations 

(Government Civilians, 

Foreign Areas) 
 

F-20

SUBJECT 

LAW 

5 U.S.C. 

(unless otherwise indicated) 

REGULATION/OTHER

5 CFR 

(unless otherwise indicated) 

Foreign Language Bonuses for Law 

Enforcement Officers* 

4521-4523 

Garnishment, Child Support/Alimony* 42 U.S.C. 659-662 part 581 

Garnishment, Commercial Debts* 5520a part 582 

General Schedule Basic Pay 5331-5338 part 531 

GM Employees, Pay Rules for Pub. L. 103-89, 

section 4 

531.202, 203(c)(2)&(g), 

531.204(d)-(f), 205(a)(2) 

Grade and Pay Retention 5361-5366 part 536 

Hazardous Duty Pay 5545(d) part 550, subpart I 

Health Care Positions (title 38 for GS 

Employees) + 

5371 

Highest Previous Rate 5334 531.202 & 531.203(c)-

(d) 

Holiday 

 Identification of Holidays 6103-6104; 

E.O. 11582 

610.201-202 

 “In lieu of” holiday under a compressed work schedule 5 U.S.C. 6103(d)(2) 610.202(c) 

 Premium Pay 5546(b) 550.131-132 

Hourly Rate (2087 divisor) 5504(b) 531.303 & 605 

Hours of Duty 6101-6133 part 610 

Hours Worked, FLSA 29 U.S.C. 201 et seq part 551, subpart D 

Law Enforcement Officers 

 Availability Pay 5545a 550.181-550.187 

 Definition 5541(3) 550.103 

 Foreign Language Bonus* 4521-4523 

 Geographic Adjustment FEPCA, section 404 part 531, subpart C 

 Overtime Rate Cap 5542(a)(4) 550.113(b) 

 Premium Pay Limitation 5547(c) 550.107 

 Special Salary Rates FEPCA, section 403 

Law Enforcement Activities, FLSA 29 U.S.C. 201 et seq 551.541 
Rules and Regulations 

F-21

SUBJECT 

LAW 

5 U.S.C. 

(unless otherwise indicated) 

REGULATION/OTHER

5 CFR 

(unless otherwise indicated) 

Limitations on Pay 

 Administrative Action, Pay Set 

by + 

5373 

 Aggregate 5307 part 530, subpart B 

 General Schedule 5303(f) 

 Locality Adjusted 5304(g) 531.604 

 Premium Pay 5547 550.105-107 

Locality-Based Comparability Payments 5304-5304a part 531, subpart F 

Locality Pay, Extension to Non-GS Employees 5304(h) 531.604 

Lump-Sum Payments for Annual Leave 5551-5553; 6306 part 550, subpart L 

Minimum Wage Rates, FLSA 29 U.S.C. 201 et seq part 551, subpart C 

New Appointments, Pay Setting for + 5333 531.203(a)-(c) 

Night Pay (GS) 5545(a) and (b) 550.121-122 

Night Pay (FWS) 5343(f) 532.505 

Order of Precedence 

 For Deductions (when there is 

insufficient gross pay)+ 

 PQA 97-1 (8-19-97) 

 For Survivors (upon death of 

employee)* 

5581-5583 part 178, subpart B 

Overpayments 

 Collection/Disposition+ 5511-5514; 

31 U.S.C. 3711-3716 

part 550, subpart K; 

31 CFR parts 900-904 

 Waiver* 5584; 

sec. 101, Pub.L. 104-316 

OMB Determination Order of 12-17-96; 

65 FR 33737 (5-25-00) 

Overseas Allowances and Differentials* 5921-5928 Department of State 

Standardized Regulations 

(Government Civilians, 

Foreign Areas) 

Overtime 

 Administratively Uncontrollable 5545(c)(2) 550.151-154, 161-164 

 Call-Back 5542(b) 550.112(h), 551.401(e) 
 

F-22

SUBJECT 

LAW 

5 U.S.C. 

(unless otherwise indicated) 

REGULATION/OTHER

5 CFR 

(unless otherwise indicated) 

 FLSA 5542(c); 

29 U.S.C. 201 et seq 

part 551, subpart E 

 Hourly Rate Cap (GS-10, step 1) 5542(a) 550.113(b) 

 Title 5 (GS) 5542 550.111-114 

 Title 5 (FWS) 5544 532.503 

Pay and Grade Retention 5361-5366 part 536 

Pay Caps (see “Limitations on Pay”) 

Pay Periods 5504-5505 

Pay Setting (General) 5334 part 531, subpart B 

Physicians Comparability Allowance 5948 part 595 

Post Differentials (Nonforeign Areas) 5941 part 591, subpart B 

Premium Conversion (FEHB)+ 550.311(a)(8), 

550.312(f), 

550.313(b) 

Premium Pay (Title 5) 5541-5550a part 550, subpart A 

 During Training + 4109(a)(1); 4102(b) 410.402 

 During Travel 5542(b)(2); 6101(b)(2) 550.112(g) 

 Limitations 5547 550.105-107 

Prevailing Rate Systems 5341-5349 part 532 

Promotions 5334(b) 531.202, 531.203(c), 

531.204(a)-(c) 

Quality Step Increases 5336 part 531, subpart E 

Recruitment Bonuses 5753 part 575, subpart A 

Reemployment of Retirees (see “Retiree 

Reemployment”) 

 

Religious Observances, Compensatory 

Time 

Off for 

5550a part 550, subpart J 

Relocation Bonuses 5753 part 575, subpart B 

Remote Worksite Allowances 5942 part 591, subpart C 

CG Decision B-188436 

Retention Allowances 5754 part 575, subpart C 
Rules and Regulations 

F-23

SUBJECT 

LAW 

5 U.S.C. 

(unless otherwise indicated) 

REGULATION/OTHER

5 CFR 

(unless otherwise indicated) 

Retiree Reemployment 

 Civilian* 8344, 8468 part 553; Part 837 

 Military* 5532 repealed effective 

10/1/99 

OPM interim regulations, 

4/12/00 (65 FR 19643) 

Rounding Rules 5504(b) 531.303 & 605 

Salary Offset 5511-5514; 

31 U.S.C. 3711-3716 

part 550, subpart K; 

31 CFR parts 900-904 

Schedules, Alternative Work 6120-6133 part 610, subpart D 

Scientific and Professional Positions, Pay 

for + 

5376 part 534, subpart E 

Senior Executive Service 

 Aggregate Limitation 5383(b); 5307 part 530, subpart B; 

534.402 

 Credit Hours Prohibition 610.408 

 Pay + 5381-5385 part 534, subpart D 

 Retention of SES Pay During 

Presidential Appointment* 

3392(c) 317.801(b) 

 Saved Pay* 3594 part 359, subpart G 

Senior Level Positions, Pay for + 5376 part 534, subpart E 

Separate Maintenance Allowance (Johnston 

Island) 

5942a part 591, subpart D 

Settlement of Accounts* 5581-5583 part 178, subpart B 

Severance Pay 5595 part 550, subpart G 

Simultaneous Actions 5334 531.203(f) 

Special Salary Rates 

 General 5305 part 530, subpart C 

 Information Technology Employees  CPM 2000-13 (11-3-00), 

CPM 2000-14 (11-3-00), 

CPM 2001-3 (2-15-01) 

Standby Duty 

 Definition (Title 5) 550.112(k) 

 Definition (FLSA) 551.431(a) 
 

F-24

SUBJECT 

LAW 

5 U.S.C. 

(unless otherwise indicated) 

REGULATION/OTHER

5 CFR 

(unless otherwise indicated) 

 Premium Pay 5545(c)(1) 550.141-144, 161-163 

Statute of Limitations 178.104 

 FLSA Claims (2 or 3-Year)* 29 U.S.C. 255a 550.804(e)(3), 551.702 

 Other Claims (6-Year)* 31 U.S.C. 3702(b); 

5596(b)(4); 7121(h) 

550.804(e)(1) & (2) 

 Waiver Requests* 5584(b)(5) 

Step Increases 5335-5336 part 531, subparts D 

and E 

Student Loan Repayments* 5379 part 537 

Student Trainees, Pay Entitlements for 213.3202(b)(14); 

PQA 2001-1 (2-6-01) 

Sunday Pay 5546; Section 624 of 

Treasury and General 

Gov’ Appropriations Act, 

1999 (Pub. L. 105-277, 

Oct. 21, 1998) 

550.171-172 

Superior Qualifications Appointments + 5333 531.203(b) 

Supervisory Differentials 5755 part 575, subpart D 

Temporary (Time-Limited) Promotion 3301-3302; 3361; 5334 part 335, subpart A; 

531.203(d)(2)(ii), 

531.204(c), 536.105(b); 

PQA 98-1 (7-23-98) 

Temporary Organizations, Pay for Employees of 3161 regulations pending 

Title 38 Delegation 5371 

Training 

 Overtime Pay (FLSA) 551.401(h); 551.422 

 Premium Pay During (Title 5) + 4109(a)(1); 4102(b) 410.402 

 Special Tours of Duty 6101(a)(4) 610.122 

Travel 

 Overtime Pay (FLSA) 551.401(f) & (g); 

551.423 

 Premium Pay During 5542(b)(2); 6101(b)(2) 550.112(g) 

Uniform Allowance 5901-5903 part 591, subpart A 
Rules and Regulations 

F-25

SUBJECT 

LAW 

5 U.S.C. 

(unless otherwise indicated) 

REGULATION/OTHER

5 CFR 

(unless otherwise indicated) 

Voluntary Separation Incentive Pay 

 DOD* 5597 

 General—Waiver of Repayment* Pub. L. 103-226, 

section 3 

part 576, subpart A 

Wage Employees, Pay for 5341-5349 part 532 

Waiver of Overpayment Claims* 5584; 

sec. 101, Pub.L. 104-316 

OMB Determination Order of 12-17-96 

(GAO rules at 4 CFR 

parts 91-92 rescinded 5-

25-00) 

Within-Grade Increases 5335 part 531, subpart D 

Work Schedules 

 General 6101 part 610, subpart A 

 Alternative (Flexible or Compressed) 6120-6133 part 610, subpart D 

NOTE 

1. FEPCA refers to the Federal Employees Pay Comparability Act of 1990 (Public Law 101-509), as amended. (Some prints of title 5, United States Code, 

provide certain uncodified sections of FEPCA as notes. For example, notes 

regarding FEPCA sections 401-407 may be appended to 5 U.S.C. 5305.) FR 

refers to Federal Register. E.O. refers to Executive order. CG refers to GAO 

Comptroller General, who formerly issued decisions on pay matters. 

2. Definition of other acronyms: 

CPM Compensation Policy Memorandum, which is issued by OPM 

officials to agency human resources directors. (See 

www.opm.gov/oca/compmemo/index.htm.) 

PQA Pay Questions and Answers, which are posted by OPM on its 

website. 

(See www.opm.gov/oca/pay/index.htm.) 

3. An asterisk (*) indicates that the subject area is not within the purview of the 

Office of Compensation Administration. Questions in these areas should be 

directed to the responsible organization. A plus sign (+) indicates that the Office of Compensation Administration has only partial responsibility for the 
 

F-26

subject area. Certain questions in these areas may have to be directed to other 

offices or organizations. 

4. A separate index on leave subjects may be accessed on OPM’s Internet web 

site at www.opm.gov/oca/leave/html/levindex.htm. 
 G-1 

Appendix G 

“Silly” Payroll Rules 

Staff members at stakeholder agencies identified the following payroll rules or 

procedures as particularly irrational, onerous, or duplicative. Their numbering 

does not indicate a ranking but is merely a convenience for discussion and tracking. The rules are as follows: 

1. Payout of Comp Time—ref CFR 550.114 

No standard procedure for payout of compensatory time in lieu of overtime. Heads of agencies 

◆ determine payout of comp time, 

◆ determine coverage for FLSA exempt employees, and 

◆ set time limits for expiration. 

2. FMLA and FFLP 

◆ Restrict hours chargeable to these programs 

◆ Require tracking of charged hours. 

3. Leave transfer program—ref CFR 630 subpart I 

◆ Cumbersome procedures for return of donated leave 

➤ Unused leave must be returned to donors. 

➤ Unused leave is prorated and distributed evenly to donors. 

➤ Number of hours from a single donor are restricted. 

➤ Use of donated leave must be tracked. 
 

 G-2 

4. Processing multiple garnishments—ref CFR 582.402 

◆ Maximum limitations for garnishments are capped at 25% of salary. 

◆ Rules require agency to determine how multiple garnishments will be 

handled. 

➤ First in first out. 

➤ Rotate payments. 

5. IRR reports for FERS and CSRS employees must be on different color 

card stock and with different color ink. 

6. Most Federal employees are paid on a biweekly pay cycle with the exception of the Secretary who is paid semimonthly. 

7. Federal Employee Health Benefit (FEHB) premiums can be taxable; make 

all FEHB deductions pre-tax. 

8. Escrow leave rules in the Leave Bank need to be simplified with regard to 

how leave is earned and how escrow rules are applied; consider removing 

escrow rules all together and allow employee to earn leave in standard 

leave categories (e.g., annual leave). 

9. Eliminate biweekly and annual pay cap limits. For example, a year-end 

bonus may need to be paid out in multiple payments over the current and 

next pay year to avoid exceeding annual pay cap. 

10. Do not apply compensatory time earned to biweekly pay cap limits. 

11. Credit limit hours are calculated based on the work schedule and tour of 

duty for part-time employees. Recommend limit for part-time employees 

be the same as the standard limit for full-time employees. 

12. FEFFLA program requires separate usage limits based on an employee’s 

sick leave balance (e.g., greater than 80 hours of sick leave FEFFLA limit 

is 104 hours; less than 80 hours balance the limit is 40 hours). 

13. Remove FEFFLA/FMLA reporting requirements since reports are not currently required on a regular basis. 

14. Donated leave must be returned to donors on a prorated basis. 

15. Have the FEGLI calculation for wage grade employees be based on their 

salary instead of the last hour worked * 2080. 

16. All emergency overtime for non-exempt employees should be paid at the 

overtime rate without being capped. 
“Silly” Payroll Rules 

 G-3 

17. Reduce/consolidate the number of employee paid time-off leave categories 

(sick leave, annual, credit time, compensatory time, time off award, organ 

donation, etc.). 

18. Monthly pay for secretaries of cabinet departments/military services. 

19. Collection of jury duty fees. 

20. Application of the Aggregate Limitation of Pay. 

21. Application of different rules for hazardous duty pay and environmental 

differential pay. 

22. Providing employees the opportunity to petition for a hearing as a due 

process requirement. 

23. Refund of the unexpired portion of lump-sum leave payments when employees return to federal service. 

24. Restoration of donated annual leave when a medical emergency terminates. 

25. Allowing overseas educators the option to receive their entire annual salary during the school year (9 months). 

26. Allowing DoD employees to repay their voluntary separation incentive 

pay in installments. 

27. Allowing employees to receive net salary payments by check, vice electronic funds transfer. 

28. Retroactive pay adjustment (1 year prior) for Department of Defense Education Activity (DoDEA) employees should be changed from retroactive 

to prospective. 

29. Repayment of voluntary separation incentives: Do not require repayment 

if the employee returns to Federal service. 

30. Voluntary separation incentive installment option: Do not allow installments. 

31. FERS employees sick leave: Allow FERS employees sick leave credit for 

retirement. 

32. TSP contribution percent: Allow employees to contribute any whole percentage and remove the incremental percentage increases. 
 

 G-4 

33. Law enforcement leave dual compensation: Do not require employees to 

pay back the difference in compensation amounts when law enforcement 

leave is used. 

34. Annual salary increase on lump sum leave: Employees separated prior to 

an annual salary increase should not receive additional lump sum payments resulting from it. 

35. Compensatory time payment: Pay unused compensatory time at the current rate of pay vice the rate in effect when it was earned. 

36. Restored leave termination date: Remove the usage termination date for 

restored leave accounts. 

37. Time-off awards: Remove the requirement of a maximum amount equal to 

one half of the biweekly scheduled hours. 

38. Time-off awards: Remove the requirement to forfeit after one year. 

39. Time-off awards: Do not allow usage before authorization. 

40. Religious compensatory time: Do not allow usage before it is earned. 

41. Biweekly salary limitation: Remove the GS15/10 biweekly salary limitation requirement. 

42. General Schedule overtime/compensatory time cap: Remove the time and 

one half of a GS10/01 limitation. 

43. Alternate work schedules: Remove the limitation that only certain types of 

alternate work schedules are allowed to accrue and use credit hours, compensatory time, etc. 

44. Because of the times, i.e., reservists given 22 days authorized absence to 

perform military duty for law enforcement purposes, agencies must offset 

the civilian pay by their military pay for duty under 5 USC 6323(b). 

45. Paying department heads on a monthly basis. 
 H-1 

Appendix H 

Low Cost, High Impact Recommendations 

This appendix contains a list of low cost, high impact recommendations applicable to payroll systems across agencies. The recommendations are characterized by 

their ease of implementation, broad impact, and quick benefit to the payroll community. Their numbering does not indicate a ranking but is merely a convenience 

for discussion and tracking. (OPM noted that many of the recommendations are 

“laws/rules/methods/practices” required and/or endorsed by the Administration, 

Congress, special interest groups, employee unions, professional organizations, or 

others and would require a substantial effort to change. Any change would be perceived as a “take-away.”) 

The recommendations are as follows: 

1. Consolidate all employees into one pay cycle (biweekly). 

The overwhelming majority of Federal employees are paid on a bi-weekly pay 

cycle, with the exception of the heads of departments, independent agencies, and 

members of boards and commissions. 

2. Consolidate/eliminate redundant reporting requirements and make them consistent across government (manpower reports, EEOC reports, 113A and 113G, 

etc.) Allow payroll offices to provide information in electronic format. 

The reports produced by payroll offices often contain the same information in 

slightly different formats. The requirements for these reports should be reviewed 

and options for providing electronic data in their stead should be mandated. 

3. Improve timeliness of wage employee wage area increases. 

A large percentage of these increases are implemented retroactively because distribution of the salary schedules to the payroll offices is delayed, causing the majority of Wage employees to receive late salary increases and retroactive 

adjustments. 

4. Establish consistencies in utilizing fractions of hours across Government for 

leave and pay. 

The different policies concerning the time increments (minutes, quarter hours, 

hours) used to determine leave usage and pay computations present complexities 

when multiple agencies are paid in a single payroll system. 
 

 H-2 

5. Establish consistency in pay rules: 

◆ LEO. Many agencies that employ law enforcement officers have varying 

benefits, allowances, and premium pay computations. 

◆ Rounding. Agency policies vary on the rounding of fractions of cents during pay and deduction calculations. Some round up, while others round 

down. 

◆ 2080/2087 hours. Some employees’ salaries are computed using 2080 

hours to determine the per hour amount, while the majority of employees’ 

salaries are computed using 2087. 

◆ Allowances (horse, porpoise observers, scuba diving, etc.). The number 

and type of allowances paid for special types of work cause payroll offices 

to develop unusually complex system routines and operational processes. 

◆ Locality pay. There are differences among agencies in the amount of 

locality pay employees receive within the same geographic area. 

◆ Premium pay. The number and types of agency-specific requirements for 

premium pay and special work schedules require complex system routines 

and operational processes. 

6. Establish a sole authority (OPM, GAO, etc.) to do the following: 

◆ Consult with Congress. This authority would advise Congress of the impact of pending payroll legislation on Federal payroll systems. 

◆ Interpret legislation. Once payroll legislation is enacted, this authority 

would interpret the law for all agencies to use in modifying their payroll 

systems. 

◆ Enforce compliance. This authority would force compliance with legislation or interpretation. 

7. Enact payroll legislation effective the beginning day of a biweekly pay period, 

not on the 1st of the month, and not retroactive. 

Since the vast majority of Federal employees are paid on a biweekly basis, enacting laws that become effective on other than the beginning date of a pay period 

results in complex system modifications to accommodate the legislation becoming effective during a payroll cycle. This is complicated even further when the 

legislation is enacted with a retroactive effective date. 

8. Establish one standard official payday each pay period for entire government. 

9. Establish mandatory EFT for all salary payments. 
Low Cost, High Impact Recommendations 

 H-3 

10. Eliminate the multiple pay plans currently existing and establish a universal 

pay plan. 

11. Consolidate overtime rules to eliminate the Title V/FLSA rules. 

12. Create competition among HBI carriers to select the top plans that provide 

the best coverage for Federal employees. 

13. Review and simplify time and attendance codes; make them universal through 

out government. 

14. Standardize the method for recording fractional time for leave taken. 

15. Establish one type of shared leave bank and eliminate accrued leave caps. 

16. Develop a standardized payroll system that interfaces with all of the systems 

(financial accounting, time and attendance, and personnel). 

It would be cost-effective to develop a system that has all of these components 

and could replace all of the existing systems at one time. However, reengineering 

the systems to interface with a new payroll system will not be simple. 

17. Automatically terminate the annuity amount when annuitants are reemployed. 

Currently when they hire annuitants, agencies have to reimburse OPM (via the 

RITS program) for the difference in the salary and the annuity amount, which requires making a lot of changes to the payroll system. If the annuity amount could 

be terminated automatically when annuitants are appointed, it would not be necessary to reimburse OPM. If the employee is appointed for more than a year, they 

become eligible for additional benefits. 

18. Simplify the Family Friendly/Medical Leave Act rules. 

A move to simplify system requirements and processing would be beneficial. 

Employees should be allowed to use as much of their sick leave for authorized 

family emergencies as they want without requiring any particular remaining balance of sick leave. 

19. Develop a Federal payroll website, with FAQs, and a good search engine for 

regulations and other pertinent information.
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 I-1 

Appendix I 

Abbreviations 

ASP application service provider 

CFO chief financial officer 

CIO chief information officer 

COTS commercial off-the-shelf 

DB database 

DFAS Defense Finance and Accounting Service 

DOI Department of the Interior 

EPA Environmental Protection Agency 

ERP enterprise resource planning 

ESOP Employee Stock Ownership Plan 

FEAF Federal Enterprise Architecture Framework 

FUN Federal Users Network 

GAO General Accounting Office 

GOTS government off-the-shelf 

HR human resources 

HRTC Human Resources Technology Council 

IRS Internal Revenue Service 

IT information technology 

JFMIP Joint Financial Management Improvement Program 

NFC National Finance Center (USDA) 

OMB Office of Management and Budget 

OPM Office of Personnel Management 

PUN Payroll Users Network 

USDA U.S. Department of Agriculture 

VA Department of Veterans Affairs 
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