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[108th Congress Public Law 411]
[From the U.S. Government Printing Office]

[DOCID: f:publ411.108]

[[Page 118 STAT. 2305]]

Public Law 108-411
108th Congress

                                 An Act

 
  To provide for reform relating to Federal employment, and for other 
             purposes. <<NOTE: Oct. 30, 2004 -  [S. 129]>> 

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress <<NOTE: Federal Workforce 
Flexibility Act of 2004.>> assembled,

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

    (a) Short Title.--This <<NOTE: 5 USC 101 note.>> Act may be cited as 
the ``Federal Workforce Flexibility Act of 2004''.

    (b) Table of Contents.--The table of contents of this Act is as 
follows:

Sec. 1. Short title; table of contents.

      TITLE I--REFORMS RELATING TO FEDERAL HUMAN CAPITAL MANAGEMENT

Sec. 101. Recruitment, relocation, and retention bonuses.
Sec. 102. Streamlined critical pay authority.

 TITLE II--REFORMS RELATING TO FEDERAL EMPLOYEE CAREER DEVELOPMENT AND 
                                BENEFITS

Sec. 201. Agency training.
Sec. 202. Annual leave enhancements.
Sec. 203. Compensatory time off for travel.

          TITLE III--PROVISIONS RELATING TO PAY ADMINISTRATION

Sec. 301. Corrections relating to pay administration.
Sec. 302. Technical corrections.

      TITLE I--REFORMS RELATING TO FEDERAL HUMAN CAPITAL MANAGEMENT

SEC. 101. RECRUITMENT, RELOCATION, AND RETENTION BONUSES.

    (a) Bonuses.--
            (1) In general.--Chapter 57 of title 5, United States Code, 
        is amended by striking sections 5753 and 5754 and inserting the 
        following:

``Sec. 5753. Recruitment and relocation bonuses

    ``(a)(1) This section may be applied to--
            ``(A) employees covered by the General Schedule pay system 
        established under subchapter III of chapter 53; and
            ``(B) employees in a category approved by the Office of 
        Personnel Management at the request of the head of an Executive 
        agency.

    ``(2) A bonus may not be paid under this section to an individual 
who is appointed to or who holds--

[[Page 118 STAT. 2306]]

            ``(A) a position to which an individual is appointed by the 
        President, by and with the advice and consent of the Senate;
            ``(B) a position in the Senior Executive Service as a 
        noncareer appointee (as such term is defined under section 
        3132(a)); or
            ``(C) a position which has been excepted from the 
        competitive service by reason of its confidential, policy-
        determining, policy-making, or policy-advocating character.

    ``(3) In this section, the term `employee' has the meaning given 
that term in section 2105, except that such term also includes an 
employee described in subsection (c) of that section.
    ``(b) The Office of Personnel Management may authorize the head of 
an agency to pay a bonus under this section to an individual only if--
            ``(1) the position to which such individual is appointed (as 
        described in paragraph (2)(A)) or to which such individual moves 
        or must relocate (as described in paragraph (2)(B)) is likely to 
        be difficult to fill in the absence of such a bonus; and
            ``(2) the individual--
                    ``(A) is newly appointed as an employee of the 
                Federal Government; or
                    ``(B)(i) is currently employed by the Federal 
                Government; and
                    ``(ii)(I) moves to a new position in the same 
                geographic area under circumstances described in 
                regulations of the Office; or
                    ``(II) must relocate to accept a position in a 
                different geographic area.

    ``(c)(1) <<NOTE: Contracts.>> Payment of a bonus under this section 
shall be contingent upon the employee entering into a written service 
agreement to complete a period of employment with the agency, not longer 
than 4 years. The Office may, by regulation, prescribe a minimum service 
period for purposes of this section.

    ``(2)(A) The agreement shall include--
            ``(i) the commencement and termination dates of the required 
        service period (or provisions for the determination thereof);
            ``(ii) the amount of the bonus;
            ``(iii) the method of payment; and
            ``(iv) other terms and conditions under which the bonus is 
        payable, subject to the requirements of this section and 
        regulations of the Office.

    ``(B) The terms and conditions for paying a bonus, as specified in 
the service agreement, shall include--
            ``(i) the conditions under which the agreement may be 
        terminated before the agreed-upon service period has been 
        completed; and
            ``(ii) the effect of the termination.

    ``(C) The required service period shall commence upon the 
commencement of service with the agency or movement to a new position or 
geographic area, as applicable, unless the service agreement provides 
for a later commencement date in circumstances and to the extent 
allowable under regulations of the Office, such as when there is an 
initial period of formal basic training.
    ``(d)(1) Except as provided in subsection (e), a bonus under this 
section shall not exceed 25 percent of the annual rate of

[[Page 118 STAT. 2307]]

basic pay of the employee at the beginning of the service period 
multiplied by the number of years (including a fractional part of a 
year, as determined under regulations of the Office) in the required 
service period of the employee involved.
    ``(2) A bonus under this section may be paid as an initial lump sum, 
in installments, as a final lump sum upon the completion of the full 
period of service required by the agreement, or in a combination of 
these forms of payment.
    ``(3) A bonus under this section is not part of the basic pay of an 
employee for any purpose.
    ``(4) Under regulations of the Office, a recruitment bonus under 
this section may be paid to an eligible individual before that 
individual enters on duty.
    ``(e) The Office may authorize the head of an agency to waive the 
limitation under subsection (d)(1) based on a critical agency need, 
subject to regulations prescribed by the Office. Under such a waiver, 
the maximum bonus allowable shall--
            ``(1) be equal to the maximum that would be determined if 
        subsection (d)(1) were applied by substituting `50' for `25'; 
        but
            ``(2) in no event exceed 100 percent of the annual rate of 
        basic pay of the employee at the beginning of the service 
        period.

Nothing in this subsection shall be considered to permit the waiver of 
any requirement under subsection (c).
    ``(f) The Office shall require that an agency establish a plan for 
the payment of recruitment bonuses before paying any such bonuses, and a 
plan for the payment of relocation bonuses before paying any such 
bonuses, subject to regulations prescribed by the Office.
    ``(g) The Office may prescribe regulations to carry out this 
section, including regulations relating to the repayment of a bonus 
under this section in appropriate circumstances when the agreed-upon 
service period has not been completed.

``Sec. 5754. Retention bonuses

    ``(a)(1) This section may be applied to--
            ``(A) employees covered by the General Schedule pay system 
        established under subchapter III of chapter 53; and
            ``(B) employees in a category approved by the Office of 
        Personnel Management at the request of the head of an Executive 
        agency.

    ``(2) A bonus may not be paid under this section to an individual 
who is appointed to or who holds--
            ``(A) a position to which an individual is appointed by the 
        President, by and with the advice and consent of the Senate;
            ``(B) a position in the Senior Executive Service as a 
        noncareer appointee (as such term is defined under section 
        3132(a)); or
            ``(C) a position which has been excepted from the 
        competitive service by reason of its confidential, policy-
        determining, policy-making, or policy-advocating character.

    ``(3) In this section, the term `employee' has the meaning given 
that term in section 2105, except that such term also includes an 
employee described in subsection (c) of that section.
    ``(b) The Office of Personnel Management may authorize the head of 
an agency to pay a retention bonus to an employee if--

[[Page 118 STAT. 2308]]

            ``(1) the unusually high or unique qualifications of the 
        employee or a special need of the agency for the employee's 
        services makes it essential to retain the employee; and
            ``(2) the agency determines that, in the absence of a 
        retention bonus, the employee would be likely to leave--
                    ``(A) the Federal service; or
                    ``(B) for a different position in the Federal 
                service under conditions described in regulations of the 
                Office.

    ``(c) The Office may authorize the head of an agency to pay 
retention bonuses to a group of employees in 1 or more categories of 
positions in 1 or more geographic areas, subject to the requirements of 
subsection (b)(1) and regulations prescribed by the Office, if there is 
a high risk that a significant portion of employees in the group would 
be likely to leave in the absence of retention bonuses.
    ``(d)(1) <<NOTE: Contracts.>> Payment of a retention bonus is 
contingent upon the employee entering into a written service agreement 
with the agency to complete a period of employment with the agency.

    ``(2)(A) The agreement shall include--
            ``(i) the length of the required service period;
            ``(ii) the amount of the bonus;
            ``(iii) the method of payment; and
            ``(iv) other terms and conditions under which the bonus is 
        payable, subject to the requirements of this section and 
        regulations of the Office.

    ``(B) The terms and conditions for paying a bonus, as specified in 
the service agreement, shall include--
            ``(i) the conditions under which the agreement may be 
        terminated before the agreed-upon service period has been 
        completed; and
            ``(ii) the effect of the termination.

    ``(3)(A) Notwithstanding paragraph (1), a written service agreement 
is not required if the agency pays a retention bonus in biweekly 
installments and sets the installment payment at the full bonus 
percentage rate established for the employee with no portion of the 
bonus deferred.
    ``(B) <<NOTE: Notices.>> If an agency pays a retention bonus in 
accordance with subparagraph (A) and makes a determination to terminate 
the payments, the agency shall provide written notice to the employee of 
that determination. Except as provided in regulations of the Office, the 
employee shall continue to be paid the retention bonus through the end 
of the pay period in which such written notice is provided.

    ``(4) A retention bonus for an employee may not be based on any 
period of such service which is the basis for a recruitment or 
relocation bonus under section 5753.
    ``(e)(1) Except as provided in subsection (f), a retention bonus, 
which shall be stated as a percentage of the employee's basic pay for 
the service period associated with the bonus, may not exceed--
            ``(A) 25 percent of the employee's basic pay if paid under 
        subsection (b); or
            ``(B) 10 percent of an employee's basic pay if paid under 
        subsection (c).

    ``(2)(A) A retention bonus may be paid to an employee in 
installments after completion of specified periods of service or in a 
single

[[Page 118 STAT. 2309]]

lump sum at the end of the full period of service required by the 
agreement.
    ``(B) An installment payment is derived by multiplying the amount of 
basic pay earned in the installment period by a percentage not to exceed 
the bonus percentage rate established for the employee.
    ``(C) If the installment payment percentage established for the 
employee is less than the bonus percentage rate established for the 
employee, the accrued but unpaid portion of the bonus is payable as part 
of the final installment payment to the employee after completion of the 
full service period under the terms of the service agreement.
    ``(D) For purposes of this paragraph, the bonus percentage rate 
established for an employee means the bonus percentage rate established 
for such employee in accordance with paragraph (1) or subsection (f), as 
the case may be.
    ``(3) A retention bonus is not part of the basic pay of an employee 
for any purpose.
    ``(f) Upon the request of the head of an agency, the Office may 
waive the limit established under subsection (e)(1) and permit the 
agency head to pay an otherwise eligible employee or category of 
employees retention bonuses of up to 50 percent of basic pay, based on a 
critical agency need.
    ``(g) The Office shall require that, before paying any bonuses under 
this section, an agency shall establish a plan for the payment of any 
such bonuses, subject to regulations prescribed by the Office.
    ``(h) The Office may prescribe regulations to carry out this 
section.''.
            (2) Clerical amendment.--The table of sections for chapter 
        57 of title 5, United States Code, is amended by striking the 
        item relating to section 5754 and inserting the following:

``5754. Retention bonuses.''.

            (3) Sense of congress.--It is the sense of the Congress that 
        the Director of the Office of Personnel Management--
                    (A) should, each time a bonus is paid under the 
                amendment made by paragraph (1) to recruit or relocate a 
                Federal employee from one Government agency to another 
                within the same geographic area or to retain a Federal 
                employee who might otherwise leave one Government agency 
                for another within the same geographic area, be notified 
                of that payment within 60 days after the date on which 
                such bonus is paid; and
                    (B) should monitor the payment of such bonuses (in 
                the circumstances described in subparagraph (A)) to 
                ensure that they are an effective use of the Federal 
                Government's funds and have not adversely affected the 
                ability of those Government agencies that lost employees 
                to other Government agencies (in such circumstances) to 
                carry out their mission.

    (b) Relocation Payments.--Section 407 of the Federal Employees Pay 
Comparability Act of 1990 (5 U.S.C. 5305 note; 104 Stat. 1467) is 
repealed.
    (c) Reports.--
            (1) Recruitment and relocation bonuses.--
                    (A) In general.--The Office of Personnel Management 
                shall submit to the Committee on Governmental Affairs of 
                the Senate and the Committee on Government Reform

[[Page 118 STAT. 2310]]

                of the House of Representatives annually, for each of 
                the first 5 years during which section 5753 of title 5, 
                United States Code (as amended by subsection (a)(1)) is 
                in effect, a report on the operation of such section.
                    (B) Contents.--Each report submitted under this 
                paragraph shall include, with respect to the period 
                covered by such report, a description of how the 
                authority to pay bonuses under the section of title 5, 
                United States Code, referred to in subparagraph (A) was 
                used by the respective agencies, including, with respect 
                to each such agency and each type of bonus under such 
                section--
                          (i) the number and dollar-amount of bonuses 
                      paid--
                                    (I) to individuals holding positions 
                                within each pay grade, pay level, or 
                                other pay classification; and
                                    (II) if applicable, to individuals 
                                who moved between positions that were in 
                                different agencies but the same 
                                geographic area (including the names of 
                                the agencies involved); and
                          (ii) a determination of the extent to which 
                      such bonuses furthered the purposes of such 
                      section.
            (2) Retention bonuses.--
                    (A) In general.--The Office of Personnel Management 
                shall submit to the Committee on Governmental Affairs of 
                the Senate and the Committee on Government Reform of the 
                House of Representatives annually, for each of the first 
                5 years during which section 5754 of title 5, United 
                States Code (as amended by subsection (a)(1)) is in 
                effect, a report on the operation of such section.
                    (B) Contents.--Each report submitted under this 
                paragraph shall include, with respect to the period 
                covered by such report, a description of how the 
                authority to pay bonuses under the section of title 5, 
                United States Code, referred to in subparagraph (A) was 
                used by the respective agencies, including, with respect 
                to each such agency--
                          (i) the number and dollar-amount of bonuses 
                      paid--
                                    (I) to individuals holding positions 
                                within each pay grade, pay level, or 
                                other pay classification; and
                                    (II) if applicable, to prevent 
                                individuals from moving between 
                                positions that were in different 
                                agencies but the same geographic area 
                                (including the names of the agencies 
                                involved); and
                          (ii) a determination of the extent to which 
                      such bonuses furthered the purposes of such 
                      section.

    (d) Effective Date and <<NOTE: 5 USC 5753 note.>> Application.--
            (1) Effective date.--Except as provided under paragraphs (2) 
        and (3), this section shall take effect on the first day of the 
        first applicable pay period beginning on or after the 180th day 
        after the date of the enactment of this Act.
            (2) Application to agreements.--A recruitment or relocation 
        bonus service agreement that was authorized under section 5753 
        of title 5, United States Code, before the effective date under 
        paragraph (1) shall continue, until its expiration, to

[[Page 118 STAT. 2311]]

        be subject to such section as in effect on the day before such 
        effective date.
            (3) Application to allowances.--Payment of a retention 
        allowance that was authorized under section 5754 of title 5, 
        United States Code, before the effective date under paragraph 
        (1) shall continue, subject to such section as in effect on the 
        day before such effective date, until the retention allowance is 
        reauthorized or terminated (but no longer than 1 year after such 
        effective date).
SEC. 102. STREAMLINED CRITICAL PAY AUTHORITY.

    Section 5377 of title 5, United States Code, is amended--
            (1) by striking ``Office of Personnel Management'' each 
        place it appears and inserting ``Office of Management and 
        Budget'';
            (2) by striking ``Office of Management and Budget'' each 
        place it appears and inserting ``Office of Personnel 
        Management'';
            (3) in subsection (g), by striking ``prescribing regulations 
        under this section or''; and
            (4) in subsection (h), by striking ``Committee on Post 
        Office and Civil Service'' and inserting ``Committee on 
        Government Reform''.

 TITLE II--REFORMS RELATING TO FEDERAL EMPLOYEE CAREER DEVELOPMENT AND 
                                BENEFITS

SEC. 201. AGENCY TRAINING.

    (a) Training To Accomplish Performance Plans and Strategic Goals.--
Section 4103 of title 5, United States Code, is amended by adding at the 
end the following:
    ``(c) The head of each agency shall, on a regular basis--
            ``(1) evaluate each program or plan established, operated, 
        or maintained under subsection (a) with respect to accomplishing 
        specific performance plans and strategic goals in performing the 
        agency mission; and
            ``(2) modify such program or plan as needed to accomplish 
        such plans and goals.''.

    (b) Specific Training Programs.--
            (1) In general.--Chapter 41 of title 5, United States Code, 
        is amended by adding after section 4120 the following:

``Sec. 4121. Specific training programs

    ``In consultation with the Office of Personnel Management, the head 
of each agency shall establish--
            ``(1) a comprehensive management succession program to 
        provide training to employees to develop managers for the 
        agency; and
            ``(2) a program to provide training to managers on actions, 
        options, and strategies a manager may use in--
                    ``(A) relating to employees with unacceptable 
                performance;
                    ``(B) mentoring employees and improving employee 
                performance and productivity; and
                    ``(C) conducting employee performance appraisals.''.

[[Page 118 STAT. 2312]]

            (2) Clerical amendment.--The table of sections for chapter 
        41 of title 5, United States Code, is amended by adding at the 
        end the following:

``4121. Specific training programs.''.

SEC. 202. ANNUAL LEAVE ENHANCEMENTS.

    (a) Creditability of Prior Nongovernmental Service for Purposes of 
Determining Rate of Leave Accrual.--
            (1) In general.--Section 6303 of title 5, United States 
        Code, is amended by adding at the end the following:

    ``(e)(1) <<NOTE: Deadline. Regulations.>> Not later than 180 days 
after the date of the enactment of this subsection, the Office of 
Personnel Management shall prescribe regulations under which, for 
purposes of determining years of service under subsection (a), credit 
shall, in the case of a newly appointed employee, be given for any prior 
service of such employee that would not otherwise be creditable for such 
purposes, if--
            ``(A) such service--
                          ``(i) was performed in a position the duties 
                      of which directly relate to the duties of the 
                      position to which such employee is so appointed; 
                      and
                          ``(ii) meets such other requirements as the 
                      Office may prescribe; and
            ``(B) in the judgment of the head of the appointing agency, 
        the application of this subsection is necessary in order to 
        achieve an important agency mission or performance goal.

    ``(2) Service described in paragraph (1)--
            ``(A) shall be creditable, for the purposes described in 
        paragraph (1), as of the effective date of the employee's 
        appointment; and
            ``(B) shall not thereafter cease to be so creditable, unless 
        the employee fails to complete a full year of continuous service 
        with the agency.

    ``(3) An employee shall not be eligible for the application of 
paragraph (1) on the basis of any appointment if, within 90 days before 
the effective date of such appointment, such employee has held any 
position in the civil service.''.
            (2) Conforming amendment.--The second sentence of section 
        6303(a) of title 5, United States Code, is amended by striking 
        the period and inserting ``, and for all service which is 
        creditable by virtue of subsection (e).''.

    (b) Other Annual Leave Enhancements.--Section 6303 of title 5, 
United States Code, is amended by adding after subsection (e) (as added 
by subsection (a)) the following:
    ``(f) Notwithstanding any other provision of this section, the rate 
of accrual of annual leave under subsection (a) shall be 1 day for each 
full biweekly pay period in the case of any employee who holds a 
position which is subject to--
            ``(1) section 5376 or 5383; or
            ``(2) a pay system equivalent to either of the foregoing, as 
        determined by the Office of Personnel Management.''.

    (c) Applicability.--None <<NOTE: 5 USC 6303 note.>> of the 
amendments made by subsection (a) shall apply in the case of any 
employee holding a position pursuant to an appointment made before the 
effective date of the regulations implementing such amendments.

[[Page 118 STAT. 2313]]

SEC. 203. COMPENSATORY TIME OFF FOR TRAVEL.

    (a) In General.--Subchapter V of chapter 55 of title 5, United 
States Code, is amended by adding at end the following:

``Sec. 5550b. Compensatory time off for travel

    ``(a) Notwithstanding section 5542(b)(2), each hour spent by an 
employee in travel status away from the official duty station of the 
employee, that is not otherwise compensable, shall be treated as an hour 
of work or employment for purposes of calculating compensatory time off.
    ``(b) An employee who has any hours treated as hours of work or 
employment for purposes of calculating compensatory time under 
subsection (a), shall not be entitled to payment for any such hours that 
are unused as compensatory time.''.
    (b) Clerical Amendment.--The table of sections for chapter 55 of 
title 5, United States Code, is amended by inserting after the item 
relating to section 5550a the following:

``5550b. Compensatory time off for travel.''.

    (c) Effective Date.--The <<NOTE: 5 USC 5550b note.>> amendments made 
by this section shall take effect on the earlier of--
            (1) the effective date of any regulations prescribed to 
        carry out such amendments; or
            (2) the 90th day after the date of the enactment of this 
        Act.

          TITLE III--PROVISIONS RELATING TO PAY ADMINISTRATION

SEC. 301. CORRECTIONS RELATING TO PAY ADMINISTRATION.

    (a) In General.--Chapter 53 of title 5, United States Code, is 
amended--
            (1) in section 5302, by striking paragraph (8) and inserting 
        the following:
            ``(8) the term `rates of pay under the General Schedule', 
        `rates of pay for the General Schedule', or `scheduled rates of 
        basic pay' means the rates of basic pay under the General 
        Schedule as established by section 5332, excluding pay under 
        section 5304 and any other additional pay of any kind; and'';
            (2) in section 5305--
                    (A) by striking subsection (a) and inserting the 
                following:

    ``(a)(1) Whenever the Office of Personnel Management finds that the 
Government's recruitment or retention efforts with respect to 1 or more 
occupations in 1 or more areas or locations are, or are likely to 
become, significantly handicapped due to any of the circumstances 
described in subsection (b), the Office may establish for the areas or 
locations involved, with respect to individuals in positions paid under 
any of the pay systems referred to in subsection (c), higher minimum 
rates of pay for 1 or more grades or levels, occupational groups, 
series, classes, or subdivisions thereof, and may make corresponding 
increases in all rates of the pay range for each such grade or level. 
However, a minimum rate so established may not exceed the maximum rate 
of basic pay (excluding any locality-based comparability payment under 
section 5304 or similar provision of law) for the grade or level by

[[Page 118 STAT. 2314]]

more than 30 percent, and no rate may be established under this section 
in excess of the rate of basic pay payable for level IV of the Executive 
Schedule. In the case of individuals not subject to the provisions of 
this title governing appointment in the competitive service, the 
President may designate another agency to authorize special rates under 
this section.
    ``(2) The head of an agency may determine that a category of 
employees of the agency will not be covered by a special rate 
authorization established under this 
section. <<NOTE: Notification.>> The head of an agency shall provide 
written notice to the Office of Personnel Management (or other agency 
designated by the President to authorize special rates under the last 
sentence of paragraph (1)) which identifies the specific category or 
categories of employees that will not be covered by special rates 
authorized under this section. <<NOTE: Effective date.>> If the head of 
an agency removes a category of employees from coverage under a special 
rate authorization after that authorization takes effect, the loss of 
coverage will take effect on the first day of the first pay period after 
the date of the notice.'';
                    (B) in subsection (b), by striking paragraph (4) and 
                inserting the following:
            ``(4) any other circumstances which the Office of Personnel 
        Management (or such other agency as the President may under the 
        last sentence of subsection (a)(1) designate) considers 
        appropriate.'';
                    (C) in subsection (d)--
                          (i) by striking ``President'' and inserting 
                      ``Office of Personnel Management''; and
                          (ii) by striking ``or by such agency as he may 
                      designate'' and inserting ``(or by such other 
                      agency as the President may designate under the 
                      last sentence of subsection (a)(1))'';
                    (D) in subsection (e), by striking ``basic pay'' and 
                inserting ``pay'';
                    (E) by striking subsection (f) and inserting the 
                following:

    ``(f) When a schedule of special rates established under this 
section is adjusted under subsection (d), a covered employee's special 
rate will be adjusted in accordance with conversion rules prescribed by 
the Office of Personnel Management (or by such other agency as the 
President may under the last sentence of subsection (a)(1) 
designate).'';
                    (F) in subsection (g)(1)--
                          (i) by striking ``basic pay'' and inserting 
                      ``pay''; and
                          (ii) by striking ``President (or his 
                      designated agency)'' and inserting ``Office of 
                      Personnel Management (or such other agency as the 
                      President may under the last sentence of 
                      subsection (a)(1) designate)'';
                    (G) by striking subsection (h) and inserting the 
                following:

    ``(h) An employee shall not for any purpose be considered to be 
entitled to a rate of pay established under this section with respect to 
any period for which such employee is entitled to a higher rate of basic 
pay under any other provision of law. For purposes of this subsection, 
the term `basic pay' includes any applicable locality-based 
comparability payment under section 5304 or similar provision of law.''; 
and

[[Page 118 STAT. 2315]]

                    (H) by adding at the end the following:

    ``(i) If an employee who is receiving a rate of pay under this 
section becomes subject, by virtue of moving to a new official duty 
station, to a different pay schedule, such employee's new rate of pay 
shall be initially established under conversion rules prescribed by the 
Office of Personnel Management (or such other agency as the President 
may under the last sentence of subsection (a)(1) designate) in 
conformance with the following:
            ``(1) First, determine the rate of pay to which such 
        employee would be entitled at the new official duty station 
        based on such employee's position, grade, and step (or relative 
        position in the rate range) before the move.
            ``(2) Then, if (in addition to the change in pay schedule) 
        the move also involves any personnel action or other change 
        requiring a rate adjustment under any other provision of law, 
        rule, or regulation, apply the applicable rate adjustment 
        provisions, treating the rate determined under paragraph (1) as 
        if it were the rate last received by the employee before the 
        rate adjustment.

    ``(j) A rate determined under a schedule of special rates 
established under this section shall be considered to be part of basic 
pay for purposes of subchapter III of chapter 83, chapter 84, chapter 
87, subchapter V of chapter 55, and section 5941, and for such other 
purposes as may be expressly provided for by law or as the Office of 
Personnel Management may by regulation prescribe.'';
            (3) in section 5334--
                    (A) in subsection (b), by adding at the end the 
                following:

``If an employee's rate after promotion or transfer is greater than the 
maximum rate of basic pay for the employee's grade, that rate shall be 
treated as a retained rate under <<NOTE: Regulations.>> section 5363. 
The Office of Personnel Management shall prescribe by regulation the 
circumstances under which and the extent to which special rates under 
section 5305 (or similar provision of law) or locality-adjusted rates 
under section 5304 (or similar provision of law) are considered to be 
basic pay in applying this subsection.''; and
                    (B) by adding at the end the following:

    ``(g) In the case of an employee who--
            ``(1) moves to a new official duty station, and
            ``(2) by virtue of such move, becomes subject to a different 
        pay schedule,

any rate adjustment under the preceding provisions of this section, with 
respect to such employee in connection with such move, shall be made--
            ``(A) first, by determining the rate of pay to which such 
        employee would be entitled at the new official duty station 
        based on such employee's position, grade, and step (or relative 
        position in the rate range) before the move, and
            ``(B) then, by applying the provisions of this section that 
        would otherwise apply (if any), treating the rate determined 
        under subparagraph (A) as if it were the rate last received by 
        the employee before the rate adjustment.'';
            (4) in section 5361--
                    (A) by amending paragraph (4) to read as follows:
            ``(4) `rate of basic pay' means--
                    ``(A) the rate of basic pay payable to an employee 
                under law or regulations before any deductions or 
                additions of any kind, but including--

[[Page 118 STAT. 2316]]

                          ``(i) any applicable locality-based 
                      comparability payment under section 5304 or 
                      similar provision of law;
                          ``(ii) any applicable special pay under 
                      section 5305 or similar provision of law; and
                          ``(iii) subject to such regulations as the 
                      Office of Personnel Management may prescribe, any 
                      applicable existing retained rate of pay 
                      established under section 5363 or similar 
                      provision of law; and
                    ``(B) in the case of a prevailing rate employee, the 
                scheduled rate of pay determined under section 5343;'';
                    (B) in paragraph (6), by striking ``and'' at the 
                end;
                    (C) in paragraph (7), by striking the period and 
                inserting ``; and''; and
                    (D) by adding at the end the following:
            ``(8) `retained rate' means the rate of basic pay to which 
        an employee is entitled under section 5363(b)(2).'';
            (5) in section 5363--
                    (A) in subsection (a), by striking the matter 
                following paragraph (4) and inserting the following:

``is entitled to a rate of basic pay in accordance with regulations 
prescribed by the Office of Personnel Management in conformity with the 
provisions of this section.''; and
                    (B) by striking subsections (b) and (c) and 
                inserting the following:

    ``(b)(1)(A) If, as a result of any event described in subsection 
(a), the employee's former rate of basic pay is less than or equal to 
the maximum rate of basic pay payable for the grade of the employee's 
position immediately after the occurrence of the event involved, the 
employee is entitled to basic pay at the lowest rate of basic pay 
payable for such grade that equals or exceeds such former rate of basic 
pay.
    ``(B) This section shall cease to apply to an employee to whom 
subparagraph (A) applies once the appropriate rate of basic pay has been 
determined for such employee under this paragraph.
    ``(2)(A) If, as a result of any event described in subsection (a), 
the employee's former rate of basic pay is greater than the maximum rate 
of basic pay payable for the grade of the employee's position 
immediately after the occurrence of the event involved, the employee is 
entitled to basic pay at a rate equal to the lesser of--
            ``(i) the employee's former rate of basic pay; or
            ``(ii) 150 percent of the maximum rate of basic pay payable 
        for the grade of the employee's position immediately after the 
        occurrence of the event involved,

as adjusted by subparagraph (B).
    ``(B) A rate to which an employee is entitled under this paragraph 
shall be increased at the time of any increase in the maximum rate of 
basic pay payable for the grade of the employee's position by 50 percent 
of the dollar amount of each such increase.
    ``(3) For purposes of this subsection, the term `former rate of 
basic pay', as used with respect to an employee in connection with an 
event described in subsection (a), means the rate of basic pay last 
received by such employee before the occurrence of such event.
    ``(c)(1) Notwithstanding any other provision of this section, in the 
case of an employee who--

[[Page 118 STAT. 2317]]

            ``(A) moves to a new official duty station, and
            ``(B) in conjunction with such move, becomes subject to both 
        a different pay schedule and (disregarding this subsection) the 
        preceding provisions of this section,

this section shall be applied--
            ``(i) first, by determining the rate of pay to which such 
        employee would be entitled at the new official duty station 
        based on such employee's position, grade, and step (or relative 
        position in the pay range) before the move, and
            ``(ii) then, by applying the provisions of this section that 
        would apply (if any), treating the rate determined under clause 
        (i) as if it were the rate last received by the employee before 
        the application of this section.

    ``(2) A reduction in an employee's rate of basic pay resulting from 
a determination under paragraph (1)(ii) is not a basis for an 
entitlement under this section.
    ``(3) The rate of basic pay for an employee who is receiving a 
retained rate at the time of moving to a new official duty station at 
which different pay schedules apply shall be subject to regulations 
prescribed by the Office of Personnel Management consistent with the 
purposes of this section.
    ``(d) A retained rate shall be considered part of basic pay for 
purposes of this subchapter and for purposes of subchapter III of 
chapter 83, chapters 84 and 87, subchapter V of chapter 55, section 
5941, and for such other purposes as may be expressly provided for by 
law or as the Office of Personnel Management may by regulation 
prescribe. <<NOTE: Regulations.>> The Office shall, for any purpose 
other than any of the purposes referred to in the preceding sentence, 
prescribe by regulation what constitutes basic pay for employees 
receiving a retained rate.

    ``(e) This section shall not apply, or shall cease to apply, to an 
employee who--
            ``(1) has a break in service of 1 workday or more;
            ``(2) is entitled, by operation of this subchapter, chapter 
        51 or 53, or any other provision of law, to a rate of basic pay 
        which is equal to or higher than, or declines a reasonable offer 
        of a position the rate of basic pay for which is equal to or 
        higher than, the retained rate to which the employee would 
        otherwise be entitled; or
            ``(3) is demoted for personal cause or at the employee's 
        request.''; and
            (6) in section 5365(b), by inserting after ``provisions of 
        this subchapter'' the following: ``(subject to any conditions or 
        limitations the Office may establish)''.

    (b) Special Rates for Law Enforcement Officers.--Section 403(c) of 
the Federal Employees Pay Comparability Act of 1990 (5 U.S.C. 5305 note) 
is amended by striking all after ``provision of law)'' and inserting 
``and shall be basic pay for all purposes. The rates shall be adjusted 
at the time of adjustments in the General Schedule to maintain the step 
linkage set forth in subsection (b)(2).''.
    (c) Repeal.--Section 4505a(a)(2) of title 5, United States Code, is 
amended--
            (1) by striking ``(2)(A)'' and inserting ``(2)''; and
            (2) by striking subparagraph (B).

    (d) Effective <<NOTE: 5 USC 5363 note.>> Date; Conversion Rules.--

[[Page 118 STAT. 2318]]

            (1) Effective date.--This section shall take effect on the 
        first day of the first applicable pay period beginning on or 
        after the 180th day after the date of the enactment of this Act.
            (2) Conversion rules.--
                    (A) Individuals receiving a retained rate or a rate 
                greater than the maximum rate for the grade.--Subject to 
                any regulations the Office of Personnel Management may 
                prescribe, an employee under a covered pay schedule who, 
                on the day before the effective date of this section, is 
                receiving a retained rate under section 5363 of title 5, 
                United States Code, or is receiving under similar 
                authority a rate of basic pay that is greater than the 
                maximum rate of basic pay payable for the grade of the 
                employee's position shall have that rate converted as of 
                the effective date of this section, and the employee 
                shall be considered to be receiving a retained rate 
                under section 5363 of such title (as amended by this 
                section). The newly applicable retained rate shall equal 
                the formerly applicable retained rate as adjusted to 
                include any applicable locality-based payment under 
                section 5304 of title 5, United States Code, or similar 
                provision of law.
                    (B) Definition.--For purposes of this paragraph, the 
                term ``covered pay schedule'' has the meaning given such 
                term by section 5361 of title 5, United States Code.

SEC. 302. TECHNICAL CORRECTIONS.

    (a)(1) Section 5304 of title 5, United States Code, as amended by 
section 1125 of the National Defense Authorization Act for Fiscal Year 
2004 (Public Law 108-136), is amended--
            (A) in subsection (g)(2)(A), by striking ``(A)-(D)'' and 
        inserting ``(A)-(C)''; and
            (B) in subsection (h)(2)(B)(i), by striking ``or (vii)'' and 
        inserting ``or (vi)''.

    (2) <<NOTE: Effective date. 5 USC 5304 note.>> The amendments made 
by this subsection shall take effect as if included in the enactment of 
the National Defense Authorization Act for Fiscal Year 2004 (Public Law 
108-136).

[[Page 118 STAT. 2319]]

    (b) Section 5314 of title 5, United States Code, is amended by 
adding at the end the following:
            ``Administrator of the Office of Electronic Government.''.

    Approved October 30, 2004.

LEGISLATIVE HISTORY--S. 129:
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HOUSE REPORTS: No. 108-733 (Comm. on Government Reform).
SENATE REPORTS: No. 108-223 (Comm. on Governmental Affairs).
CONGRESSIONAL RECORD, Vol. 150 (2004):
            Apr. 8, considered and passed Senate.
            Oct. 6, considered and passed House, amended.
            Oct. 11, Senate concurred in House amendment.

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