```

[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[S. 3492 Introduced in Senate (IS)]

109th CONGRESS
  2d Session
                                S. 3492

To strengthen performance management in the Federal Government, to make 
  the annual general pay increase for Federal employees contingent on 
                  performance, and for other purposes.

_______________________________________________________________________

                   IN THE SENATE OF THE UNITED STATES

                             June 13, 2006

 Mr. Voinovich introduced the following bill; which was read twice and 
referred to the Committee on Homeland Security and Governmental Affairs

_______________________________________________________________________

                                 A BILL

 
To strengthen performance management in the Federal Government, to make 
  the annual general pay increase for Federal employees contingent on 
                  performance, and for other purposes.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Federal Workforce Performance 
Appraisal and Management Improvement Act of 2006''.

SEC. 2. PERFORMANCE APPRAISAL SYSTEMS.

    Subchapter 1 of chapter 43 of title 5, United States Code, is 
amended--
            (1) by amending section 4302 to read as follows:
``Sec. 4302. Establishment of performance appraisal systems
    ``(a)(1) Subject to paragraphs (2) and (3), each agency shall 
establish 1 or more performance appraisal systems to promote high 
performance.
    ``(2) In designing and applying a performance appraisal system 
established under this subsection, each agency shall--
            ``(A) link the system with the strategic goals and annual 
        performance plan of the agency;
            ``(B) involve employees in the development of their 
        performance standards;
            ``(C) provide each employee with a written performance 
        appraisal annually;
            ``(D) make meaningful distinctions in performance; and
            ``(E) use the results of performance appraisals as a basis 
        for training, rewarding, compensating, reassigning, promoting, 
        reducing in grade, retaining, and removing employees.
    ``(3) Consistent with section 4304, each performance appraisal 
system established under this subsection shall be developed with 
appropriate technical assistance from the Office of Personnel 
Management and shall be reviewed before implementation and from time to 
time thereafter by the Director of the Office to determine whether the 
system meets the requirements of this subchapter. The agency shall 
promptly take any corrective action directed by the Director of the 
Office at any time under section 4304 (b)(3).
    ``(b) Under regulations which the Director of the Office of 
Personnel Management shall prescribe, each performance appraisal system 
shall provide for--
            ``(1) holding supervisors and managers accountable in their 
        performance appraisal for effectively managing the performance 
        of employees, which includes--
                    ``(A) assessing performance;
                    ``(B) providing ongoing feedback and preparing 
                written performance appraisals;
                    ``(C) addressing poor performance; and
                    ``(D) promoting and rewarding excellent 
                performance;
            ``(2) establishing performance standards related to 
        relevant assigned tasks for each employee or position under the 
        system which will permit--
                    ``(A) the accurate evaluation of performance on the 
                basis of objective criteria, to the maximum extent 
                feasible; and
                    ``(B) making meaningful distinctions in 
                performance;
            ``(3) communicating to each employee at the beginning of 
        each appraisal period the performance standards and the 
        critical elements of the employee's position;
            ``(4) evaluating each employee during the appraisal period 
        on such standards;
            ``(5) assisting employees in improving unacceptable 
        performance;
            ``(6) reassigning, reducing in grade, or removing employees 
        who continue to have unacceptable performance, but only after 
        an opportunity to demonstrate acceptable performance;
            ``(7) establishing multiple levels of summary performance 
        ratings which provide for making meaningful distinctions in 
        performance, including at least--
                    ``(A) a summary level of fully successful (or 
                equivalent);
                    ``(B) a summary level of unacceptable; and
                    ``(C) a summary level above fully successful; and
            ``(8) recognizing and rewarding employees whose performance 
        so warrants.''; and
            (2) by amending section 4304 to read as follows:
``Sec. 4304. Responsibilities of the Office of Personnel Management
    ``(a) The Office of Personnel Management shall make technical 
assistance available to agencies in the development of performance 
appraisal systems.
    ``(b)(1) The Director of the Office shall review each performance 
appraisal system developed by any agency under this subchapter prior to 
its implementation and determine whether the performance appraisal 
system as designed meets the requirements of this subchapter.
    ``(2) The Director of the Office shall--
            ``(A) review agency performance appraisal systems developed 
        under this subchapter from time to time after their 
        implementation to determine the extent to which the application 
        of any such system meets the requirements of this subchapter; 
        and
            ``(B) report to the President and Congress any finding that 
        an agency has failed to meet those requirements.
    ``(3) If the Director of the Office determines that a system does 
not meet the requirements of this subchapter (including regulations 
prescribed under section 4305), the Director of the Office shall direct 
the agency to implement an appropriate system or to correct operations 
under the system, and any such agency shall take any action so 
required.''.

SEC. 3. MANDATORY TRAINING PROGRAMS FOR SUPERVISORS.

    (a) In General.--Section 4121 of title 5, United States Code, is 
amended to read as follows:
``Sec. 4121. Specific training programs
    ``(a) In this section, the term `supervisor' means--
            ``(1) a supervisor as defined under section 7103(a)(10); 
        and
            ``(2) any other employee as the Director of the Office may 
        by regulation prescribe.
    ``(b) Under operating standards promulgated by, and in consultation 
with, the Director of 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 supervisors on 
        actions, options, and strategies a supervisor may use in--
                    ``(A) communicating performance expectations and 
                conducting employee performance appraisals;
                    ``(B) mentoring employees and improving employee 
                performance and productivity;
                    ``(C) dealing with employees whose performance is 
                unacceptable; and
                    ``(D) otherwise carrying out the duties and 
                responsibilities of a supervisor.
    ``(c)(1) Not later than 1 year after the date on which an 
individual is appointed to the position of supervisor, and every 5 
years thereafter, that individual shall be required to complete the 
program established under subsection (b)(2).
    ``(2) Each program established under subsection (b)(2) shall 
include provisions under which credit may be given for periods of 
similar training previously completed.
    ``(d) The Director of the Office of Personnel Management shall 
prescribe regulations to carry out this section.''.
    (b) Effective Date and Application.--
            (1) In general.--The amendments made by this section shall 
        take effect as provided under section 8 and apply to--
                    (A) each individual appointed to the position of a 
                supervisor, as defined under section 4121(a) of title 
                5, United States Code, (as added by subsection (a) of 
                this section) on or after that effective date; and
                    (B) each individual who is employed in the position 
                of a supervisor on that effective date as provided 
                under paragraph (2).
            (2) Supervisors on effective date.--Each individual who is 
        employed in the position of a supervisor on the effective date 
        of this section shall be required to--
                    (A) complete the program established under section 
                4121(b)(2) of title 5, United States Code (as added by 
                subsection (a) of this section), not later than 3 years 
                after the effective date of this section; and
                    (B) complete that program every 5 years thereafter 
                in accordance with section 4121(c) of such title.

SEC. 4. PAY RATES AND SYSTEMS.

    Chapter 53 of title 5, United States Code, is amended--
            (1) in section 5303, by adding at the end the following:
    ``(h)(1) An employee covered under subchapter III whose summary 
rating of performance for the most recently completed appraisal period 
is below the fully successful level, as defined by the Director of the 
Office of Personnel Management, may not receive an increase in the rate 
of basic pay of that employee as the result of an adjustment under this 
section. The Director shall prescribe such rules as may be necessary to 
administer this subsection, including rules regarding the treatment of 
an employee whose rate of basic pay falls below the minimum rate of the 
applicable grade (or between steps of a grade) and the treatment of an 
employee whose performance subsequently improves.
    ``(2) When a determination is made that an employee covered under 
subchapter III will not receive an increase in the rate of basic pay of 
that employee because the employee's summary rating of performance for 
the most recently completed appraisal period is below the fully 
successful level, the employee is entitled to prompt written notice of 
that determination and an opportunity for reconsideration of the 
determination within the agency, as specified in the procedures 
prescribed by the Director of the Office of Personnel Management under 
section 5335(c). If the determination is affirmed on reconsideration, 
the employee is entitled to appeal to the Merit Systems Protection 
Board under the same terms and conditions as specified in such 
section.'';
            (2) in section 5304, by amending subsection (i) to read as 
        follows:
    ``(i) The Director of the Office of Personnel Management shall 
prescribe regulations, consistent with this section, governing the 
payment of comparability payments to employees. The regulations shall 
provide that, at the time of an increase in a comparability payment, 
the rate of basic pay of an employee covered under subchapter III, or 
any other pay system designated by the Director, whose summary rating 
of performance for the most recently completed appraisal period is 
below the fully successful level, as defined by the Director, shall be 
reduced by an amount that results in retaining the employee's total 
rate of pay under this section and sections 5303 and 5304a, as in 
effect immediately before any increase under such sections. Such a 
reduction in an employee's rate of basic pay shall not be considered a 
reduction in pay for the purpose of applying the adverse action 
procedures under section 7512.'';
            (3) in section 5305, by amending subsection (f) to read as 
        follows:
    ``(f)(1) When a schedule of special rates established under this 
section is adjusted under subsection (d), the special rate of an 
employee shall be adjusted in accordance with conversion rules 
prescribed by the Director of the Office of Personnel Management (or by 
such other agency as the President may designate under the last 
sentence of subsection (a)(1)).
    ``(2) The conversion rules prescribed under paragraph (1), shall 
provide that a covered employee whose summary rating of performance for 
the most recently completed appraisal period is below the fully 
successful level, as defined by the Director of the Office of Personnel 
Management, may not receive an increase in the special rate of that 
employee as the result of an adjustment under subsection (d). The 
Director shall prescribe such rules as may be necessary to administer 
this paragraph, including rules regarding the treatment of an employee 
whose rate of basic pay falls below the minimum rate of the applicable 
grade (or between pay rates or steps of a grade) and the treatment of 
an employee whose performance subsequently improves. The rules may 
provide for reducing an employee's rate of basic pay to the extent 
necessary to prevent any increase in the employee's special rate. Such 
a reduction in an employee's rate of basic pay shall not be considered 
a reduction in pay for the purpose of applying the adverse action 
procedures in section 7512.
    ``(3) When a determination is made that a covered employee will not 
receive an increase in the special rate of that employee under this 
subsection because the employee's summary rating of performance for the 
most recently completed appraisal period is below the fully successful 
level, the employee is entitled to prompt written notice of that 
determination and an opportunity for reconsideration of the 
determination within the agency, as specified in the procedures 
prescribed by the Director under section 5335(c). If the determination 
is affirmed on reconsideration, the employee is entitled to appeal to 
the Merit Systems Protection Board under the same terms and conditions 
as specified in such section.'';
            (4) in section 5335--
                    (A) in subsection (a) by amending subparagraph (B) 
                to read as follows:
                    ``(B) the employee's summary rating of performance 
                for the most recently completed appraisal period is at 
                least at the fully successful level, as defined by the 
                Director of the Office of Personnel Management.''; and
                    (B) by amending subsection (c) to read as follows:
    ``(c)(1) When an employee's summary rating of performance for the 
most recently completed appraisal period is below the fully successful 
level, the pay of that employee may not be increased under this 
section. Such an employee is entitled to prompt written notice of the 
determination not to increase the pay of that employee and an 
opportunity for reconsideration of the determination within the agency 
under uniform procedures prescribed by the Director of the Office of 
Personnel Management. If the determination is affirmed on 
reconsideration, the employee is entitled to appeal to the Merit 
Systems Protection Board. If the reconsideration or appeal results in a 
reversal of the earlier determination, the new determination supersedes 
the earlier determination and is deemed to have been made as of the 
date of the earlier determination. The authority of the Director to 
prescribe procedures and the entitlement of the employee to appeal to 
the Board do not apply to a determination made by the Librarian of 
Congress.
    ``(2) Notwithstanding any other provision of law, an employee may 
grieve or appeal the first pay determination under this subsection or 
under section 5303(h), 5305(f), or 5363(b)(2(C) that is based on the 
employee's most recent summary rating of performance. An employee may 
not grieve or appeal any subsequent pay determination made that is 
based on the same summary rating of performance'';
            (5) by amending section 5338 to read as follows:
``Sec. 5338. Regulations
    ``The Director of the Office of Personnel Management may prescribe 
regulations necessary for the administration of this subchapter. Such 
regulations shall address how paysetting rules apply to an employee 
whose rate of basic pay is not equal to 1 of the scheduled step rates 
as a result of a determination not to increase the rate of basic pay of 
that employee under section 5303(h) or 5305(f) or to reduce the rate of 
basic pay of that employee under section 5304(i) or 5305(f).'';
            (6) in section 5343 (relating to prevailing rate wage 
        systems)--
                    (A) in subsection (e)--
                            (i) by amending paragraph (2) to read as 
                        follows:
    ``(2) A prevailing rate employee under a regular wage schedule 
whose summary rating of performance for the most recently completed 
appraisal period is at least at the fully successful level, as defined 
by the Director of the Office of Personnel Management, shall advance 
automatically to the next higher step within the grade at the beginning 
of the first applicable pay period following the completion by that 
employee of--
            ``(A) 26 calendar weeks of service in step 1;
            ``(B) 78 calendar weeks of service in step 2; and
            ``(C) 104 calendar weeks of service in each of steps 3 and 
        4.'';
                            (ii) by amending paragraph (4) to read as 
                        follows:
    ``(4) Supervisory wage schedules and special wage schedules 
authorized under subsection (c)(3) may have single or multiple rates or 
steps according to prevailing practices in the industry on which the 
schedule is based. A prevailing rate employee under a supervisory or 
special wage schedule with multiple rates or steps whose summary rating 
of performance for the most recently completed appraisal period is at 
least at the fully successful level, as defined by the Director of the 
Office of Personnel Management, shall advance automatically to the next 
higher step within the grade at the beginning of the first applicable 
pay period following the completion by that employee of any required 
waiting period.''; and
                            (iii) by adding at the end the following:
    ``(5)(A) When a summary rating of performance of an employee 
covered under this subchapter for the most recently completed appraisal 
period is below the fully successful level, as defined by the Director 
of the Office of Personnel Management, the employee may not be advanced 
to the next higher step within the grade under paragraph (2) or (4). 
Such an employee is entitled to prompt written notice of the 
determination not to increase the pay of that employee and an 
opportunity for reconsideration of the determination within the agency 
under uniform procedures prescribed by the Director of the Office of 
Personnel Management. If the determination is affirmed on 
reconsideration, the employee is entitled to appeal to the Merit 
Systems Protection Board. If the reconsideration or appeal results in a 
reversal of the earlier determination, the new determination supersedes 
the earlier determination and is deemed to have been made as of the 
date of the earlier determination.
    ``(B) Notwithstanding any other provision of law, an employee may 
grieve or appeal the first pay determination under this paragraph, 
subsection (g), or section 5363(b)(2)(C) when such determinations are 
made based on the same summary rating of performance. An employee may 
not grieve or appeal any subsequent pay determination made that is 
based on the same summary rating of performance.''; and
                    (B) by adding at the end the following:
    ``(g)(1) An employee covered under this subchapter whose summary 
rating of performance for the most recently completed appraisal period 
is below the fully successful level, as defined by the Director of the 
Office of Personnel Management, may not receive an increase in the rate 
of basic pay of that employee as the result of an adjustment in any 
wage schedule established under this subchapter. The Director may 
prescribe such rules as may be necessary to administer this subsection, 
including rules regarding the treatment of an employee whose rate of 
basic pay falls below the minimum rate of the applicable grade (or 
between steps of a grade) and the treatment of an employee whose 
performance subsequently improves.
    ``(2) When a determination is made that a covered employee will not 
receive an increase in the rate of basic pay of that employee at the 
time of an adjustment in a wage schedule because the employee's summary 
rating of performance for the most recently completed appraisal period 
is below the fully successful level, the employee is entitled to prompt 
written notice of that determination and an opportunity for 
reconsideration of the determination within the agency, as specified in 
the procedures prescribed by the Director of the Office of Personnel 
Management under subsection (e)(5). If the determination is affirmed on 
reconsideration, the employee is entitled to appeal to the Merit 
Systems Protection Board under the same terms and conditions as 
specified under subsection (e)(5).'';
            (7) in section 5363(b)(2) (relating to pay retention)--
                    (A) in subparagraph (B) by striking ``A rate'' and 
                inserting ``Except as provided in subparagraph (C), a 
                rate''; and
                    (B) by adding at the end the following:
    ``(C)(i) An employee's retained rate may not be increased under 
subparagraph (B) if the employee's summary rating of performance for 
the most recently completed appraisal period is below the fully 
successful level, as defined by the Director of the Office of Personnel 
Management. The Director shall prescribe such rules as may be necessary 
to administer this subparagraph, including rules regarding the 
treatment of an employee whose performance subsequently improves.
    ``(ii) When a determination is made that an employee will not 
receive an increase in the retained rate of that employee because the 
employee's summary rating of performance for the most recently 
completed appraisal period is below the fully successful level, the 
employee is entitled to prompt written notice of that determination and 
an opportunity for reconsideration of the determination within the 
agency, as specified in the procedures prescribed by the Director of 
the Office of Personnel Management under section 5335(c). If the 
determination is affirmed on reconsideration, the employee is entitled 
to appeal to the Merit Systems Protection Board under the same terms 
and conditions as specified under section 5335(c).'';
            (8) in section 5376(b) (relating to pay for certain senior-
        level positions)--
                    (A) in paragraph (2), by striking ``Subject to 
                paragraph (1)'' and inserting ``Subject to paragraphs 
                (1) and (3)''; and
                    (B) by adding at the end the following:
            ``(3) Notwithstanding any other provision of this section, 
        an employee covered under this section whose summary rating of 
        performance for the most recently completed appraisal period is 
        below the fully successful level, as defined by the Director of 
        the Office of Personnel Management, may not receive an increase 
        in the rate of basic pay of that employee. The Director shall 
        prescribe such rules as may be necessary to administer this 
        paragraph, including rules regarding the treatment of an 
        employee whose rate of basic pay falls below the otherwise 
        applicable minimum rate prescribed by paragraph (1)(A) and the 
        treatment of an employee whose performance subsequently 
        improves.'';
            (9) in section 5382(a), in the first sentence, by inserting 
        ``(except as provided by section 5383(a))'' after ``for the 
        Senior Executive Service, and''; and
            (10) in section 5383, by amending subsection (a) to read as 
        follows:
    ``(a) Each appointing authority shall determine, in accordance with 
criteria established by the Director of the Office of Personnel 
Management, which of the rates within a range established under section 
5382 shall be paid to each senior executive under such appointing 
authority. Such criteria shall provide that a member of the Senior 
Executive Service may not receive an increase in the rate of basic pay 
of that member if such member's summary rating of performance for the 
most recently completed appraisal period is below the fully successful 
level, as defined by the Director. The Director shall prescribe such 
rules as may be necessary to administer this subsection, including 
rules regarding the treatment of a member whose rate of basic pay falls 
below the otherwise applicable minimum rate prescribed by section 
5382(a) and the treatment of a member whose performance subsequently 
improves.''.

SEC. 5. SENIOR EXECUTIVE SERVICE PLACEMENT IN OTHER PERSONNEL SYSTEMS.

    Section 3594(c)(2) of title 5, United States Code, is amended to 
read as follows:
    ``(2)(A) Except as provided in subparagraph (B) of this paragraph, 
an employee who is receiving basic pay under paragraph (1)(B)(ii) or 
(iii) is entitled to have the rate of basic pay of the employee 
increased by 50 percent of the amount of each increase in the maximum 
rate of basic pay for the grade of the position in which the employee 
is placed under subsection (a) or (b) until the rate is equal to the 
rate in effect under paragraph (1)(B)(i) for the position in which the 
employee is placed.
    ``(B) A rate of basic pay established under paragraph (1)(B)(ii) or 
(iii) may not be increased under subparagraph (A) if the employee's 
summary rating of performance for the most recently completed appraisal 
period is below the fully successful level, as defined by the Director 
of the Office of Personnel Management. The Director shall prescribe 
such rules as may be necessary to administer this subparagraph, 
including rules regarding the treatment of an employee whose 
performance subsequently improves.''.

SEC. 6. CERTAIN SENIOR-LEVEL POSITIONS.

    (a) Locality Pay.--Section 5304 of title 5, United States Code, as 
amended by section 4 of this Act, is further amended--
            (1) in subsection (g), by amending paragraph (2) to read as 
        follows:
            ``(2) The applicable maximum under this subsection shall be 
        level III of the Executive Schedule for--
                    ``(A) positions under subparagraphs (A) and (B) of 
                subsection (h)(1); and
                    ``(B) any positions under subsection (h)(1)(C) as 
                the President may determine.''; and
            (2) in subsection (h)--
                    (A) in paragraph (1)--
                            (i) by striking subparagraph (A);
                            (ii) by redesignating subparagraphs (B), 
                        (C), and (D) as subparagraphs (A), (B), and 
                        (C), respectively;
                            (iii) in clause (v), by striking ``or'' at 
                        the end;
                            (iv) in clause (vi), by striking the period 
                        at the end and inserting ``; or''; and
                            (v) by adding at the end the following:
                            ``(vii) a position to which section 5376 
                        applies (relating to certain senior-level and 
                        scientific and professional positions).'';
                    (B) in paragraph (2)(B)--
                            (i) in clause (i)--
                                    (I) by striking ``subparagraphs (A) 
                                through (C)'' and inserting 
                                ``subparagraphs (A) and (B)''; and
                                    (II) by striking ``or (vi)'' and 
                                inserting ``(vi), or (vii)''; and
                            (ii) in clause (ii)--
                                    (I) by striking ``paragraph 
                                (1)(D)'' and inserting ``paragraph 
                                (1)(C)''; and
                                    (II) by striking ``or (vi)'' and 
                                inserting ``(vi), or (vii)''.
    (b) Access to Higher Maximum Rate of Basic Pay.--Section 5376(b) of 
title 5, United States Code, as amended by section 4 of this Act, is 
further amended--
            (1) in paragraph (1) by amending subparagraph (B) to read 
        as follows:
                    ``(B) subject to paragraph (4), not greater than 
                the rate of basic pay payable for level III of the 
                Executive Schedule.''; and
            (2) by adding at the end the following:
            ``(4) In the case of an agency which, under section 
        5307(d), has a performance appraisal system which, as designed 
        and applied, is certified as making meaningful distinctions 
        based on relative performance, paragraph (1)(B) shall apply as 
        if the reference to `level III' were a reference to `level II'.
            ``(5) No employee may suffer a reduction in pay by reason 
        of transfer from an agency with an applicable maximum rate of 
        pay prescribed under paragraph (4) to an agency with an 
        applicable maximum rate of pay prescribed under paragraph 
        (1)(B).''.
    (c) Authority for Employment; Appointments; Classification 
Standards.--Title 5, United States Code is amended--
            (1) in section 3104(a), in the second sentence, by striking 
        ``prescribes'' and inserting ``prescribes and publishes in such 
        form as the Office may determine'';
            (2) in section 3324(a) by striking ``the Office of 
        Personnel Management'' and inserting: ``the Director of the 
        Office of Personnel Management on the basis of qualification 
        standards developed by the agency involved in accordance with 
        criteria specified in regulations prescribed by the Director'';
            (3) in section 3325--
                    (A) in subsection (a), in the second sentence, by 
                striking ``or its designee for this purpose'' and 
                inserting the following: ``on the basis of standards 
                developed by the agency involved in accordance with 
                criteria specified in regulations prescribed by the 
                Director of the Office of Personnel Management''; and
                    (B) by adding at the end the following:
    ``(c) The Director of the Office of Personnel Management shall 
prescribe such regulations as may be necessary to carry out the purpose 
of this section.''; and
            (4) in section 5108(a)(2) by inserting ``published by the 
        Director of the Office of Personnel Management in such form as 
        the Office may determine'' after ``and procedures''.

SEC. 7. REGULATIONS.

    Not later than 1 year after the date of enactment of this Act, the 
Director of the Office of Personnel Management shall prescribe 
regulations to carry out this Act, including the amendments made by 
this Act.

SEC. 8. EFFECTIVE DATES AND IMPLEMENTATION.

    (a) Sections 2 and 3.--
            (1) Effective date.--The amendments made by sections 2 and 
        3 shall take effect on the earlier of--
                    (A) 180 days after the date of enactment of this 
                Act; or
                    (B) the effective date of implementing regulations 
                prescribed by the Director of the Office of Personnel 
                Management.
            (2) Submissions.--
                    (A) Performance appraisal systems.--Not later than 
                July 1, 2007, each agency covered by subchapter I of 
                chapter 43 of title 5, United States Code, shall submit 
                to the Director of the Office of Personnel Management 
                each performance appraisal system established under 
                that subchapter so that the Director may determine 
                whether the system meets the requirements of the 
                subchapter. Each submission under this paragraph shall 
                include all information the Director requires in order 
                to make the determination.
                    (B) Report to congress.--Not later than November 1, 
                2007, the Director of the Office of Personnel 
                Management shall submit a report regarding the 
                Director's review under section 4304(b)(1) of title 5, 
                United States Code, as amended by section 2 of this 
                Act, to the President and Congress.
    (b) Sections 4 and 5.--The amendments made by sections 4 and 5 
shall apply with respect to any employee beginning on the first day of 
the first pay period following the completion of 52 weeks after the 
date on which the first annual adjustments in rates of basic pay under 
section 5303 of title 5, United States Code, occur following the date 
of enactment of this Act.
    (c) Section 6.--
            (1) Effective date.--The amendments made by section 6 shall 
        take effect on the first day of the first pay period beginning 
        on or after the 180th day following the date of enactment of 
        this Act.
            (2) No reductions in rates of pay.--
                    (A) In general.--The amendments made by section 6 
                may not result, at the time such amendments take 
                effect, in a reduction in the rate of basic pay for an 
                individual holding a position to which section 5376 of 
                title 5, United States Code, applies.
                    (B) Determination of rate of pay.--For the purposes 
                of subparagraph (A), the rate of basic pay for an 
                individual described in that subparagraph shall be 
                deemed to be the rate of basic pay set for the 
                individual under such section 5376, plus applicable 
                locality pay paid to that individual, as of the 
                effective date under paragraph (1).
    (d) References to Maximum Rates.--Except as otherwise provided by 
law, any reference in a provision of law to the maximum rate under 
section 5376 of title 5, United States Code--
            (1) as provided before the effective date of the amendments 
        made by section 6, shall be considered a reference to the rate 
        of basic pay for level IV of the Executive Schedule; and
            (2) as provided on or after the effective date of the 
        amendments made by section 6, shall be considered a reference 
        to--
                    (A) the rate of basic pay for level III of the 
                Executive Schedule; or
                    (B) if the head of the agency responsible for 
                administering the applicable pay system certifies that 
                the employees are covered by a performance appraisal 
                system meeting requirements established by the Director 
                of the Office of Personnel Management, level II of the 
                Executive Schedule.
                                 <all>
```