This section of the FEDERAL REGISTER

contains notices to the public of the proposed

issuance of rules and regulations. The

purpose of these notices is to give interested

persons an opportunity to participate in the

rule making prior to the adoption of the final

rules.

Proposed Rules Federal Register

73239 

Vol. 79, No. 237 

Wednesday, December 10, 2014 

OFFICE OF PERSONNEL 

MANAGEMENT 

5 CFR Parts 430 and 534 

RIN 3206–AM48 

Managing Senior Executive 

Performance 

AGENCY: U.S. Office of Personnel 

Management. 

ACTION: Proposed rule with request for 

comments. 

SUMMARY: The Office of Personnel 

Management (OPM) proposes to amend 

subpart C of part 430 of title 5, Code of 

Federal Regulations, to help agencies 

design performance appraisal systems 

for senior executives that support a 

consistent approach for managing senior 

executive performance, incorporate 

OPM policies, and reorganize 

information for ease of reading. We are 

also amending part 534 to make 

technical corrections to the recently 

published final regulation on pay for 

senior level and scientific and 

professional positions. 

DATES: Comments must be received on 

or before February 9, 2015. 

ADDRESSES: You may submit comments, 

identified by ‘‘RIN 3206–AM48,’’ using 

any of the following methods: 

Federal eRulemaking Portal: http://

www.regulations.gov. Follow the 

instructions for submitting comments. 

All submissions received through the 

Portal must include the agency name 

and docket number or Regulation 

Identifier Number (RIN) for this 

rulemaking. 

Email: Send to sespolicy@opm.gov. 

Include ‘‘RIN 3206–AM48’’ in the 

subject line of the message. 

Fax: Send to (202) 606–4264. 

Mail, Hand Deliver/Courier 

comments: Address to Mr. Stephen T. 

Shih, Deputy Associate Director, Senior 

Executive Services and Performance 

Management, Suite 7412, 1900 E Street 

NW., Washington, DC 20415–9700. 

FOR FURTHER INFORMATION, CONTACT: 

Nikki Johnson by telephone at (202) 

606–8046, by FAX at (202) 606–4264, or 

by email at nikki.johnson@opm.gov. 

SUPPLEMENTARY INFORMATION: On 

January 4, 2012, OPM and the U.S. 

Office of Management and Budget 

(OMB) announced the design and 

issuance of a basic Senior Executive 

Service (SES) performance appraisal 

system. Drawing from leading practices 

in Federal agencies and the private 

sector, a working group of agency 

representatives—including SES 

members—provided input to OPM on 

the system development to meet the SES 

performance management needs of 

Executive Branch agencies and their 

SES members. The system was designed 

to improve Governmentwide 

performance management of the SES by 

providing a consistent and uniform 

framework for agencies to communicate 

expectations and evaluate the 

performance of SES members, 

particularly centering on the role and 

responsibility of SES members to 

achieve results through effective 

executive leadership. The system also 

provides the necessary flexibility and 

capability for appropriate customization 

to better meet the needs of agencies. In 

addition to promoting greater 

consistency, the system will promote 

greater clarity, transferability, and 

equity in the development of 

performance plans, the delivery of 

feedback, the derivation of ratings, and 

the link to compensation. The proposed 

regulations are primarily revised to 

include the requirements of the basic 

SES performance appraisal system. 

Approach 

The proposed regulations provide an 

updated framework and system 

standards for agencies to use in 

designing their SES performance 

management systems. Section 4312 of 

title 5, United States Code, provides 

authority for OPM to establish system 

standards. As proposed, these standards 

balance the need for a Governmentwide 

approach to SES performance 

management with agency flexibility. 

Agencies maintain the ability to tailor 

their SES performance management 

systems to meet their mission needs and 

organizational climates. 

The proposed regulations require 

critical elements in each executive’s 

performance plan to be based on the 

OPM-defined executive core 

qualifications (ECQs). ECQ-based 

critical elements provide a balanced 

emphasis on strategic leadership and 

results and enhance the consistency and 

equity of SES performance management 

systems within and across agencies. 

Furthermore, the proposed 

regulations define and identify the 

difference between performance 

standards and performance 

requirements. These terms are often 

misunderstood. A performance standard 

is a description of performance that 

must be met to be rated at a given level 

of performance. A performance 

requirement is a statement of 

performance expected for a critical 

element. These requirements should be 

measurable, understandable, verifiable, 

equitable, and achievable. Performance 

standards are associated with 

performance rating levels and 

performance requirements are 

associated with critical elements. When 

planning, monitoring, and appraising 

performance of SES members, 

supervisors must develop performance 

requirements using performance 

standards as a benchmark. 

• The following is an example of a 

performance standard describing 

performance at Level 5: This is a level 

of rare, high-quality performance. The 

employee’s mastery of technical skills 

and thorough understanding of the 

mission have been fundamental to the 

completion of program objectives. 

Preparing for the unexpected, the 

employee has planned and used 

alternate ways of reaching goals. The 

employee has produced an exceptional 

quantity of work, often ahead of 

established schedules. In writing and 

speaking, the employee presents 

complex ideas clearly in a wide range of 

difficult communications situations. 

• The following is an example of a 

performance requirement: 90% of costrecovery cases are addressed within 

statutory deadlines, including 

prudently-incurred expenses to 

safeguard and enhance the reliability, 

security and safety of the energy 

infrastructure. 

The proposed regulations also 

reinforce the importance of agency 

Performance Review Boards (PRB) by 

expanding their functions. Each PRB is 

required to consider agency 

performance during the review process 

and make recommendations on pay 

adjustments. 

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73240 Federal Register / Vol. 79, No. 237 / Wednesday, December 10, 2014 / Proposed Rules 

Structure 

The subpart is restructured to 

establish two new sections and to 

logically organize the material. ‘‘Details 

and job changes’’ currently addressed in 

‘‘Appraising Performance’’ are removed 

and established as a new section. 

‘‘Performance Management Systems’’ is 

also established as a new section to 

outline the system standards that must 

be incorporated into an agency’s SES 

performance management system. 

Key Changes 

A savings provision is added to 

authorize continued agency operation of 

appraisal systems approved prior to the 

issuance of the requirements of this new 

subpart. Within two years of the 

effective date of this subpart, agencies 

that have not implemented the basic 

SES appraisal system will be required to 

have designed, obtained OPM approval 

for, and implemented systems 

conforming to the requirements of this 

subpart. 

An oversight official is added to 

ensure each agency has designated an 

official to oversee the performance 

management system and issue 

performance appraisal guidelines. 

Performance appraisal guidelines are 

added to ensure the consideration of 

agency organizational performance 

assessments when appraising and rating 

executives. 

Evaluation of performance 

management systems is expanded to 

ensure agency evaluations address both 

effectiveness and compliance with 

relevant laws, regulations, and OPM 

policies. 

OPM review of agency systems is 

modified to clarify OPM will review 

agency systems for compliance with the 

requirements in the subpart, including 

those relating to system standards. 

Summary performance level 

requirements are modified to require the 

following five rating levels: 

Outstanding; exceeds fully successful; 

fully successful; minimally satisfactory; 

and unsatisfactory. The current 

requirement of a three-level minimum 

(i.e., one or more fully successful, 

minimally satisfactory, and 

unsatisfactory) is removed. 

Performance Review Board functions 

are expanded to ensure PRBs consider 

agency performance during the review 

process and make written 

recommendations on pay adjustments. 

Additionally, as required in 5 CFR 

534.405, recommendations on 

performance awards is now included as 

a PRB function. 

The requirements for ‘‘critical 

elements’’ are expanded so critical 

elements will be based on OPM’s ECQs 

and reflect individual and 

organizational performance applicable 

to each executive’s respective area of 

responsibility. 

A definition of ‘‘performance 

standard’’ is added as the description of 

performance that must be met to be 

rated at a given level of performance. 

The definition of ‘‘performance 

requirements’’ is expanded to clarify 

that performance requirements must be 

described at the fully successful level 

and may be described at other 

performance levels. 

A definition for ‘‘System standards’’ is 

added as the OPM-established 

requirements for performance 

management systems. The standards are 

identified in a new section of the 

proposed regulations. 

Table of Changes 

The following table lists all the 

proposed changes to the current 

regulations. The ‘‘current rule’’ column 

lists the regulations in the current 

subpart C. The ‘‘proposed rule’’ column 

indicates where matters addressed in 

the current regulation are addressed in 

the proposed regulation and where new 

material is being added. The third 

column explains each change. 

Current rule Proposed rule Explanation of change 

430.301(a) ..................... 430.301(a) ..................... Edits authority to streamline language. 

430.301(b) ..................... 430.301(b) ..................... Remains unchanged. 

430.301(b)(1) ................. 430.301(b)(1) ................. Edits section to better conform to 5-level rating system. 

430.301(b)(2) ................. 430.301(b)(2) ................. Edits section to update the items pertaining to alignment of executive performance plans. 

430.301(b)(3) ................. 430.301(b)(3) ................. Remains unchanged. 

430.301(b)(4) ................. 430.301(b)(5) ................. Moves and edits paragraph. 

430.301(b)(4) ................. Adds new paragraph addressing reporting on meeting organizational goals. 

430.301(b)(5) ................. 430.301(b)(6) ................. Moves and edits paragraph. 

430.301(c) ..................... Adds new paragraph addressing savings provision for system approvals. 

430.302 .......................... 430.302 ......................... Revises format of ‘‘Coverage’’ section. 

430.303 .......................... 430.303 ......................... Adds new definitions for Executive Core Qualifications, Oversight official, Performance 

standards, and System standards. Deletes the definition of Balanced measures and 

Other performance elements. Revises the definitions of Annual summary rating, Initial 

summary rating, Performance appraisal, Performance management system, Performance requirement, Senior executive performance plan, and Strategic planning initiatives. 

430.304(a) ..................... 430.304(a) ..................... Adds new requirement that agency performance management systems must be in accordance with the system standards. 

430.304(b)(1) ................. 430.305(a)(2) ................. Moves requirement for linkage to new section on ‘‘System standards for SES performance 

management systems’’ and edits the requirement. 

430.304(b)(2) ................. 430.306(b) ..................... Moves requirement for consultation to ‘‘Planning and communicating performance’’ and 

edits the requirement. 

430.304(b)(1) ................. Adds new requirement that agency performance management systems must identify the 

executives covered by the system. 

430.304(b)(3) ................. 430.304(b)(2) ................. Moves and edits the requirement for monitoring performance and broadens to include 

progress reviews. 

430.304(b)(4) ................. 430.305(a)(4) .................

430.308(c) .....................

Moves requirement to appraise annually to ‘‘System standards for SES performance management systems’’ and ‘‘Appraising performance’’ and edits the requirement. 

430.304(b)(5) ................. 430.305(a)(8) ................. Moves requirement for using performance results to ‘‘System standards for SES performance management systems’’ and edits the requirement. 

430.304(c)(1) ................. 430.304(b)(3) ................. Moves requirement to establish an official appraisal period. 

430.304(c)(1)(i) .............. 430.304(b)(4) ................. Moves requirement for a minimum appraisal period. 

430.304(c)(1)(ii) ............. 430.304(b)(5) ................. Moves requirement for ending the appraisal period and broadens the requirement to address effectiveness. 

430.304(b)(6) ................. Adds new requirement to address criteria and procedures for executives who are on detail, temporarily reassigned, or transferred. 

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Current rule Proposed rule Explanation of change 

430.304(c)(1)(iii) ............ 430.309(b) ..................... Moves restriction for appraising a career appointee within 120 days after the beginning of 

a new President’s term of office to ‘‘Rating performance.’’ 

430.304(c)(2) ................. 430.305(a)(6) ................. Moves requirement for summary levels to ‘‘System standards for SES performance management systems’’ and broadens it to increase the number of levels. 

430.305(a)(7) ................. Adds new requirement to include equivalency statements in system description. 

430.304(c)(3) ................. 430.305(a)(5) ................. Moves requirement for deriving annual summary ratings to ‘‘System standards for SES 

performance management systems’’ and edits the requirement. 

430.305 ......................... Adds new section on ‘‘System standards for SES performance management systems.’’ 

430.305(a)(1) ................. Adds new requirement that critical elements must be based on the executive core qualifications and includes quality of executive performance as basis for evaluation. 

430.305(a)(3) ................. Adds new requirement addressing performance standards. 

430.305(b) ..................... Adds new paragraph addressing development of agency performance management system. 

430.305(c) ..................... Adds new paragraph addressing establishment of a basic performance management system for agency use. 

430.305 .......................... 430.306 ......................... Moves ‘‘Planning and communicating performance’’ to another section. 

430.305(a) ..................... 430.306(a) .....................

430.306(b) 

Moves requirements for a performance plan, consultation, and communication of the plan. 

430.305(b)(1) ................. 430.306(c)(1) ................. Moves requirement for critical elements and broadens the requirement to include competencies and clarify the scope of organizational performance. 

430.305(b)(2) ................. 430.306(c)(2) .................

430.306(c)(3) 

Moves requirements for performance requirements and standards and broadens the requirement to address performance requirements for levels other than Fully Successful 

and performance standards for each level at which an executive may be appraised and 

includes requirement for general measures. 

430.305(b)(3) ................. 430.306(c)(3) ................. Moves requirement for linking to strategic planning initiatives and edits the requirement. 

430.306(d) ..................... Adds new paragraph addressing the option for agencies to require review of plans at the 

beginning of the appraisal period. 

430.306 .......................... 430.307 ......................... Moves ‘‘Monitoring performance’’ to another section. 

430.306(a) ..................... 430.307 ......................... Moves requirement to monitor performance and edits the requirement. 

430.306(b) ..................... 430.307 ......................... Moves requirement for progress reviews and broadens it to include discussion of available 

developmental opportunities. 

430.307 .......................... 430.308 ......................... Moves ‘‘Appraising performance’’ to another section. 

430.307(a) ..................... 430.308(a) ..................... Moves requirement for assigning an annual summary rating and broadens it to require assigning a summary rating at least annually. 

430.307(a)(1) ................. 430.308(b) ..................... Moves requirement for appraisal of critical elements and edits the requirement. 

430.307(a)(2) ................. 430.308(c) ..................... Moves requirement for basing appraisals on organizational performance and broadens it to 

include the scope of organizational performance. 

430.307(a)(2)(i) .............. 430.308(c)(1) ................. Moves taking results into account when appraising performance and edits it. 

430.308(c)(2)–(3) .......... Adds new paragraph addressing performance appraisal guidelines and quality of executive 

performance as factors that are taken into account when appraising performance. 

430.307(a)(2)(ii) ............. 430.308(c)(4) ................. Moves taking customer satisfaction into account when appraising performance and replaces customer satisfaction with customer perspectives. 

430.307(a)(2)(iii)–(iv) ..... 430.308(c)(5)–(6) .......... Moves taking remaining factors into account when appraising performance and updates 

language. 

430.307(a)(2)(v) ............. 430.308(c)(7)–(8) .......... Moves and updates language. 

430.307(b) ..................... 430.310 ......................... Moves ‘‘Details and job changes’’ to another section. 

430.307(b)(1) ................. 430.310(a) ..................... Moves requirement for appraising executives on a detail or temporarily reassigned and 

edits the requirement. 

430.307(b)(2) ................. 430.310(b) ..................... Moves requirement for appraising executives who are changing jobs or transferring and 

edits the requirement. 

430.307(b)(3) ................. 430.310(c) ..................... Moves requirement for providing appraisals and annual summary rating and clarifies the 

requirement. 

430.308 .......................... 430.309 ......................... Moves ‘‘Rating performance’’ to another section. 

430.308(a) ..................... 430.309(e)(1) ................. Moves requirement for initial summary rating. 

430.308(b) ..................... 430.309(e)(2) ................. Moves item pertaining to higher level review and expands the item.

430.308(c) ..................... 430.309(e)(3) ................. Moves requirement for PRB review and edits the requirement. 

430.308(d) ..................... 430.309(e)(4) ................. Moves requirement for annual summary rating and edits the requirement. 

430.308(e) ..................... 430.309(c) ..................... Moves requirement for extending the appraisal period. 

430.308(f) ...................... 430.309(d) ..................... Moves item pertaining to appeals. 

430.309(a)(1) and (a)(2) Adds new paragraphs addressing the criteria for rating performance. 

430.309 .......................... 430.312 ......................... Moves ‘‘Using performance results’’ to another section. 

430.309(a) ..................... 430.312(a) ..................... Moves requirement for using the results of performance appraisals and edits the requirement. 

430.309(b) ..................... 430.312(b) ..................... Moves and edits language to include pay. 

430.309(c) ..................... 430.312(c) ..................... Moves item pertaining to removal from the SES and edits the item.

430.310 .......................... 430.311 ......................... Moves ‘‘Performance Review Boards (PRBs)’’ to another section.

430.310(a)(1) ................. 430.311(a)(1) ................. Moves requirement for PRB membership and edits the requirement. 

430.310(a)(2) ................. 430.311(a)(2) ................. Moves requirement for PRB membership. 

430.310(a)(3) ................. 430.311(a)(3) ................. Moves and broadens the requirement to address membership when recommending performance-based pay adjustments for career appointees. 

430.310(a)(4) ................. 430.311(a)(4) ................. Moves requirement for publication of PRB appointments. 

430.310(b)(1) ................. 430.311(b)(1) ................. Moves and broadens the requirement to address agency performance and adds a condition for review of the initial summary rating. 

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73242 Federal Register / Vol. 79, No. 237 / Wednesday, December 10, 2014 / Proposed Rules 

Current rule Proposed rule Explanation of change 

430.310(b)(2) ................. 430.311(b)(2) ................. Moves and broadens the requirement for PRB recommendations to include pay adjustments and performance awards. 

430.310(b)(3) ................. 430.311(b)(3) ................. Moves and broadens requirement pertaining to PRB deliberations for PRB members to include pay adjustments and performance awards. 

430.311 .......................... 430.313 ......................... Moves ‘‘Training and evaluation’’ to another section. 

430.311(a) ..................... 430.313(a) ..................... Moves requirement for providing information and training and edits the requirement. 

430.311(b) ..................... 430.313(b) ..................... Moves requirement for evaluating performance management systems and expands item 

addressing evaluation. 

430.311(c) ..................... 430.313(c) ..................... Moves requirement for maintaining performance-related records and edits the requirement. 

430.312 .......................... 430.314 ......................... Moves OPM review of agency systems to another section. 

430.312(a) ..................... 430.314(a) ..................... Moves requirement for system approval and adds item addressing system standards and 

requirements. 

430.312(b) ..................... 430.314(b) ..................... Moves item on OPM review of agency systems and edits the item. 

430.312(c) ..................... 430.314(c) ..................... Moves requirement for corrective action and edits the requirement. 

Pay for Senior Level and Scientific and 

Professional Positions 

On March 5, 2014, OPM published 

final regulations (79 FR 12353) on pay 

for senior level and scientific and 

professional positions to implement 

Section 2 of the Senior Professional 

Performance Act of 2008 (Pub. L. 110– 

372, October 8, 2008). We find that 

paragraphs (c)(1)(ii) and (c)(1)(iii) of 5 

CFR 534.505 of these regulations 

contain erroneous cross-references that 

we are correcting. 

Regulatory Flexibility Act 

I certify that these regulations will not 

have a significant economic impact on 

a substantial number of small entities, 

because they will apply only to Federal 

agencies and employees. 

E.O. 12866, Regulatory Review 

This rule has been reviewed by the 

Office of Management and Budget in 

accordance with E.O. 12866. 

List of Subjects in 5 CFR Parts 430 and 

534 

Government employees. 

U.S. Office of Personnel Management 

Katherine Archuleta, 

Director. 

Accordingly, OPM is proposing to 

amend 5 CFR parts 430 and 534 as 

follows: 

PART 430—PERFORMANCE 

MANAGEMENT 

■ 1. The authority citation for part 430 

continues to read as follows: 

Authority: 5 U.S.C. chapter 43 and 5307(d). 

■ 2. Revise subpart C to read as follows: 

Subpart C—Managing Senior Executive 

Performance 

Sec. 

430.301 General. 

430.302 Coverage. 

430.303 Definitions. 

430.304 SES performance management 

systems. 

430.305 System standards for SES 

performance management systems. 

430.306 Planning and communicating 

performance. 

430.307 Monitoring performance. 

430.308 Appraising performance. 

430.309 Rating performance. 

430.310 Details and job changes. 

430.311 Performance Review Boards 

(PRBs). 

430.312 Using performance results. 

430.313 Training and evaluation. 

430.314 OPM review of agency systems. 

Subpart C — Managing Senior 

Executive Performance 

§ 430.301 General. 

(a) Statutory authority. Chapter 43 of 

title 5, United States Code, provides for 

the establishment of Senior Executive 

Service (SES) performance appraisal 

systems and appraisal of senior 

executive performance. This subpart 

prescribes regulations for managing SES 

performance to implement the statutory 

provisions at 5 U.S.C. 4311–4315. 

(b) Purpose. This subpart requires 

agencies to establish performance 

management systems that hold senior 

executives accountable for their 

individual and organizational 

performance in order to improve the 

overall performance of Government 

by— 

(1) Encouraging excellence in senior 

executive performance; 

(2) Aligning executive performance 

plans with the results-oriented goals 

required by the Government 

Performance and Results Act (GPRA) 

Modernization Act of 2010 or other 

strategic planning initiatives; 

(3) Setting and communicating 

individual and organizational goals and 

expectations; 

(4) Reporting on the success of 

meeting organizational goals; 

(5) Systematically appraising senior 

executive performance using measures 

that balance organizational results with 

customer and employee perspectives, 

and other perspectives as appropriate; 

and 

(6) Using performance appraisals as a 

basis for pay, awards, development, 

retention, removal, and other personnel 

decisions. 

(c) Savings provisions. Agencies 

without OPM approval to use the basic 

SES appraisal system issued by U.S. 

Office of Personel Management (OPM) 

and the Office of Management and 

Budget on January 4, 2012, must design, 

obtain OPM approval for, and 

implement systems conforming with the 

requirements of this subpart no later 

than one year after [INSERT EFFECTIVE 

DATE OF THE REGULATION]. No 

provision of this subpart will affect any 

administrative proceedings related to 

any action initiated under a provision of 

this chapter before [INSERT EFFECTIVE 

DATE OF THE REGULATION]. 

§ 430.302 Coverage. 

This subpart applies to— 

(a) All senior executives covered by 

subchapter II of chapter 31 of title 5, 

United States Code; and 

(b) Agencies identified in section 

3132(a)(l) of title 5, United States Code. 

§ 430.303 Definitions. 

In this subpart— 

Annual summary rating means the 

overall rating level that an appointing 

authority assigns at the end of the 

appraisal period after considering (1) 

the initial summary rating, (2) any input 

from the executive or a higher level 

review, and (3) the applicable 

Performance Review Board’s 

recommendations. This is the official 

rating for the appraisal period. 

Appointing authority means the 

department or agency head, or other 

official with authority to make 

appointments in the Senior Executive 

Service (SES). 

Appraisal period means the 

established period of time for which a 

senior executive’s performance will be 

appraised and rated. 

Critical element means a key 

component of an executive’s work that 

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contributes to organizational goals and 

results and is so important that 

unsatisfactory performance of the 

element would make the executive’s 

overall job performance unsatisfactory. 

Executive Core Qualifications (ECQs) 

means the overarching qualities, 

identified and validated by OPM, 

required of an individual to succeed in 

the SES. 

Initial summary rating means an 

overall rating level the supervisor 

derives, from appraising the senior 

executive’s performance during the 

appraisal period in relation to the 

critical elements and performance 

standards and requirements, and 

forwards to the Performance Review 

Board. 

Oversight official means the agency 

head or the individual specifically 

designated by the agency head who 

provides oversight of the performance 

management system and issues 

performance appraisal guidelines. 

Performance means the 

accomplishment of the work described 

in the senior executive’s performance 

plan. 

Performance appraisal means the 

review and evaluation of a senior 

executive’s performance against critical 

elements and performance standards 

and requirements. 

Performance management system 

means the framework of policies and 

practices that an agency establishes 

under subchapter II of chapter 43 of title 

5, United States Code, subpart A, and 

this subpart for planning, monitoring, 

developing, evaluating, and rewarding 

both individual and organizational 

performance and for using resulting 

performance information in making 

personnel decisions. 

Performance requirement means a 

description of what a senior executive 

must accomplish, or the competencies 

demonstrated, for a critical element. A 

performance requirement establishes the 

criteria to be met to be rated at a specific 

level of performance and generally 

includes quality, quantity, timeliness, 

cost savings, manner of performance, or 

other factors. 

Performance standard means a 

normative description of a single level 

of performance within five such 

described levels of performance ranging 

from unsatisfactory performance to 

outstanding performance. Performance 

standards provide the benchmarks for 

developing performance requirements 

against which actual performance will 

be assessed. 

Progress review means a review of the 

senior executive’s progress in meeting 

the performance requirements. A 

progress review is not a performance 

rating. 

Senior executive performance plan 

means the written critical elements and 

performance requirements against 

which performance will be evaluated 

during the appraisal period by applying 

the established performance standards. 

The plan includes all critical elements, 

performance standards, and 

performance requirements, including 

any specific goals, targets, or other 

measures established for the senior 

executive. 

Strategic planning initiatives means 

agency strategic plans as required by the 

GPRA Modernization Act of 2010, 

annual performance plans, 

organizational work plans, and other 

related initiatives. 

System standards means the OPMestablished requirements for 

performance management systems. 

§ 430.304 SES performance management 

systems. 

(a) To encourage excellence in senior 

executive performance, each agency 

must develop and administer one or 

more performance management systems 

for its senior executives in accordance 

with the system standards established in 

§ 430.305. 

(b) Performance management systems 

must provide for— 

(1) Identifying executives covered by 

the system; 

(2) Monitoring progress in 

accomplishing critical elements and 

performance requirements and 

conducting progress reviews at least 

once during the appraisal period, 

including informing executives on how 

well they are performing; 

(3) Establishing an official 

performance appraisal period for which 

an annual summary rating must be 

prepared; 

(4) Establishing a minimum appraisal 

period of at least 90 days; 

(5) Ending the appraisal period at any 

time after the minimum appraisal 

period is completed, but only if the 

agency determines there is an adequate 

basis on which to appraise and rate the 

senior executive’s performance and the 

shortened appraisal period promotes 

effectiveness; and 

(6) Establishing criteria and 

procedures to address performance of 

senior executives who are on detail, 

temporarily reassigned, or transferred as 

described at § 430.312(c)(1), and for 

other special circumstances established 

by the agency. 

§ 430.305 System standards for SES 

performance management systems. 

(a) Each agency performance 

management system must incorporate 

the following system standards: 

(1) Evaluation of executive leadership 

and results, including quality of 

performance, using critical elements 

based on the ECQs; 

(2) Performance requirements aligned 

with agency mission and strategic 

planning initiatives; 

(3) Performance standards for each of 

the summary rating performance levels, 

which also may be used for the 

individual elements or performance 

requirements being appraised; 

(4) Appraising each senior executive’s 

performance at least annually against 

performance requirements based on 

established performance standards and 

other measures; 

(5) Deriving an annual summary 

rating through a mathematical method 

that ensures executives’ performance 

aligns with level descriptors contained 

in performance standards that clearly 

differentiate levels above fully 

successful, while prohibiting a forced 

distribution of rating levels for senior 

executives; 

(6) Five summary performance levels 

as follows: 

(i) An outstanding level; 

(ii) An exceeds fully successful level; 

(iii) A fully successful level; 

(iv) A minimally satisfactory level; 

and 

(v) An unsatisfactory level; and 

(7) Agencies using agency-specific 

terms for the five summary performance 

levels must include equivalency 

statements in the system description 

aligning them with the five performance 

levels required in § 430.305(a)(6); and 

(8) Using performance appraisals as a 

basis to adjust pay, reward, retain, and 

develop senior executives or make other 

personnel decisions, including removals 

as specified in § 430.312. 

(b) An agency may develop its own 

performance management system for 

senior executives in accordance with 

the requirements of this section. 

(c) OPM may establish, and refine as 

needed, a basic performance 

management system incorporating all 

requirements of this section, which 

agencies may adopt, with limited 

adaptation for performance management 

of its senior executives. 

§ 430.306 Planning and communicating 

performance. 

(a) Each senior executive must have a 

performance plan that describes the 

individual and organizational 

expectations for the appraisal period 

that apply to the senior executive’s area 

of responsibility. 

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73244 Federal Register / Vol. 79, No. 237 / Wednesday, December 10, 2014 / Proposed Rules 

(b) Supervisors must develop 

performance plans in consultation with 

senior executives and communicate the 

plans to them on or before the beginning 

of the appraisal period. 

(c) A senior executive performance 

plan must include— 

(1) Critical elements. ECQ-based 

critical elements must reflect individual 

performance results or competencies as 

well as organizational performance 

priorities within each executive’s 

respective area of responsibility. 

(2) Performance standards. 

Performance plans must include the 

performance standards describing each 

level of performance at which a senior 

executive’s performance can be 

appraised. Performance standards 

describe the general expectations that 

must be met to be rated at each level of 

performance and provide the 

benchmarks for developing performance 

requirements. 

(3) Performance requirements. At a 

minimum, performance requirements 

must describe expected 

accomplishments or demonstrated 

competencies for fully successful 

performance by the executive. An 

agency may establish performance 

requirements associated with other 

levels of performance as well. These 

performance requirements must align 

with agency mission and strategic 

planning initiatives. Performance 

requirements must contain measures of 

the quality, quantity, timeliness, cost 

savings, or manner of performance, as 

appropriate, expected for the applicable 

level of performance. 

(d) Agencies may require a review of 

senior executive performance plans at 

the beginning of the appraisal period to 

ensure consistency of agency-specific 

performance requirements. Such 

reviews may be performed by the 

Performance Review Board (PRB) or 

another body of the agency’s choosing. 

§ 430.307 Monitoring performance. 

Supervisors must monitor each senior 

executive’s performance throughout the 

appraisal period and hold at least one 

progress review. At a minimum, 

supervisors must inform senior 

executives during the progress review 

about how well they are performing 

with regard to their performance plan. 

Supervisors must provide advice and 

assistance to senior executives on how 

to improve their performance. 

Supervisors and senior executives may 

also discuss available development 

opportunities for the senior executive. 

§ 430.308 Appraising performance. 

(a) At least annually, agencies must 

appraise each senior executive’s 

performance in writing and assign an 

annual summary rating at the end of the 

appraisal period. 

(b) Agencies must appraise a senior 

executive’s performance on the critical 

elements and performance requirements 

in the senior executive’s performance 

plan. 

(c) Agencies must base appraisals of 

senior executive performance on both 

individual and oranizational 

performance as it applies to the senior 

executive’s area of responsibility, taking 

into account factors such as— 

(1) Results achieved in accordance 

with agency mission and strategic 

planning initiatives; 

(2) Overall quality of performance 

rendered by the executive, 

(3) Performance appraisal guidelines 

that must be based upon assessments of 

the agency’s performance and are 

provided by the oversight official to 

senior executives, rating and reviewing 

officials, PRB members, and appointing 

authorities at the conclusion of the 

appraisial period; 

(4) Customer perspectives; 

(5) Employee perspectives; 

(6) The effectiveness, productivity, 

and performance results of the 

employees for whom the senior 

executive is responsible; 

(7) Leadership effectiveness in 

promoting diversity, inclusion and 

engagement as set forth, in part, under 

section 7201 of title 5, United States 

Code; and 

(8) Compliance with the merit system 

principles set forth under section 2301 

of title 5, United States Code. 

§ 430.309 Rating performance. 

(a) When rating senior executive 

performance, each agency must— 

(1) Comply with the requirements of 

this section, and 

(2) Establish a PRB as described at 

§ 430.311. 

(b) Each performance management 

system must provide that an appraisal 

and rating for a career appointee’s 

performance may not be made within 

120 days after the beginning of a new 

President’s term. 

(c) When an agency cannot prepare an 

annual summary rating at the end of the 

appraisal period because the senior 

executive has not completed the 

minimum appraisal period or for other 

reasons, the agency must extend the 

executive’s appraisal period. Once the 

appropriate conditions are met, the 

agency will then prepare the annual 

summary rating. 

(d) Senior executive performance 

appraisals and ratings are not 

appealable. 

(e) Procedures for rating senior 

executives must provide for the 

following: 

(1) Initial summary rating. The 

supervisor must develop an initial 

summary rating of the senior executive’s 

performance, in writing, and share that 

rating with the senior executive. The 

senior executive may respond in 

writing. 

(2) Higher-level review. The senior 

executive may ask for a higher-level 

official to review the initial summary 

rating before the rating is given to the 

PRB. 

(i) The senior executive is entitled to 

one higher-level review, unless the 

agency provides for more than one 

review level. The higher-level official 

cannot change the supervisor’s initial 

summary rating, but may recommend a 

different rating to the PRB. 

(ii) Copies of the reviewer’s findings 

and recommendations must be given to 

the senior executive, the supervisor, and 

the PRB. 

(iii) When an agency cannot provide 

a higher-level review for an executive 

who reports directly to the agency head, 

the agency may provide for an 

alternative review process of the 

executive’s initial summary rating. 

(3) PRB review. The PRB must receive 

and review the initial summary rating, 

the senior executive’s response to the 

initial rating if made, and the higherlevel official’s findings and 

recommendations if conducted, and 

make recommendations to the 

appointing authority, as provided in 

§ 430.311. 

(4) Annual summary rating. The 

appointing authority must assign the 

annual summary rating of the senior 

executive’s performance, in writing, 

after considering the applicable PRB’s 

recommendations. This rating is the 

official rating for the appraisal period. 

§ 430.310 Details and job changes. 

(a) When a senior executive is 

detailed or temporarily reassigned for 

120 days or longer, the gaining 

organization must set performance goals 

and requirements for the detail or 

temporary assignment. The gaining 

organization must appraise the senior 

executive’s performance in writing, and 

this appraisal must be considered when 

deriving the initial summary rating. 

(b) When a senior executive is 

reassigned or transferred to another 

agency after completing the minimum 

appraisal period, the supervisor must 

appraise the executive’s performance in 

writing before the executive leaves. 

(c) The most recent annual summary 

rating and any subsequent appraisals 

must be transferred to the gaining 

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Federal Register / Vol. 79, No. 237 / Wednesday, December 10, 2014 / Proposed Rules 73245 

agency or organization. The gaining 

supervisor must consider the rating and 

appraisals when deriving the initial 

summary rating at the end of the 

appraisal period. 

§ 430.311 Performance Review Boards 

(PRBs). 

Each agency must establish one or 

more PRBs to make recommendations to 

the appointing authority on the 

performance of its senior executives. 

(a) Membership. (1) Each PRB must 

have three or more members who are 

appointed by the agency head, or by 

another official or group acting on 

behalf of the agency head. Agency heads 

are encouraged to consider diversity and 

inclusion in establishing their PRBs. 

(2) PRB members must be appointed 

in a way that assures consistency, 

stability, and objectivity in SES 

performance appraisal. 

(3) When appraising a career 

appointee’s performance or 

recommending a career appointee for a 

performance-based pay adjustment or 

performance award, more than one-half 

of the PRB’s members must be SES 

career appointees. 

(4) The agency must publish notice of 

PRB appointments in the Federal 

Register before service begins. 

(b) Functions. (1) Each PRB must 

consider agency performance as 

communicated by the oversight official 

through the performance appraisal 

guidelines when reviewing and 

evaluating the initial summary rating, 

any senior executive’s response, and 

any higher-level official’s findings and 

recommendations on the initial 

summary rating. The PRB may conduct 

any further review needed to make its 

recommendations. The PRB may not 

review an initial summary rating to 

which the executive has not been given 

the opportunity to respond in writing. 

(2) The PRB must make a written 

recommendation to the appointing 

authority about each senior executive’s 

annual summary rating, performancebased pay adjustment, and performance 

award. 

(3) PRB members may not take part in 

any PRB deliberations involving their 

own appraisals, performance-based pay 

adjustments, and performance awards. 

§ 430.312 Using performance results. 

(a) Agencies must use performance 

appraisals as a basis for adjusting pay, 

granting awards, retaining senior 

executives, and making other personnel 

decisions. Performance appraisals also 

will be a factor in assessing a senior 

executive’s continuing development 

needs. 

(b) Agencies are required to provide 

appropriate incentives and recognition 

(including pay adjustments and 

performance awards under part 534, 

subpart D) for excellence in 

performance. 

(c) A career executive may be 

removed from the SES for performance 

reasons, subject to the provisions of part 

359, subpart E, as follows: 

(1) An executive who receives an 

unsatisfactory annual summary rating 

must be reassigned or transferred within 

the SES, or removed from the SES; 

(2) An executive who receives two 

unsatisfactory annual summary ratings 

in any 5-year period must be removed 

from the SES; and 

(3) An executive who receives less 

than a fully successful annual summary 

rating twice in any 3-year period must 

be removed from the SES. 

§ 430.313 Training and evaluation. 

(a) To assure effective implementation 

of agency performance management 

systems, agencies must provide 

appropriate information and training to 

agency leadership, supervisors, and 

senior executives on performance 

management, including planning and 

appraising performance. 

(b) Agencies must periodically 

evaluate the effectiveness of their 

performance management system(s) and 

implement improvements as needed. 

Evaluations must provide for both 

assessment of effectiveness and 

compliance with relevant laws, OPM 

regulations, and OPM performance 

management policy. 

(c) Agencies must maintain all 

performance-related records for no 

fewer than 5 years from the date the 

annual summary rating is issued, as 

required in 5 CFR 293.404(b)(1). 

§ 430.314 OPM review of agency systems. 

(a) Agencies must submit proposed 

SES performance management systems 

to OPM for approval. Agency systems 

must address the system standards and 

requirements specified in this subpart. 

(b) OPM will review agency systems 

for compliance with the requirements of 

law, OPM regulations, and OPM 

performance management policy, 

including the system standards 

specified at § 430.305. 

(c) If OPM finds that an agency system 

does not meet the requirements and 

intent of subchapter II of chapter 43 of 

title 5, United States Code, or of this 

subpart, OPM will identify the 

requirements that were not met and 

direct the agency to take corrective 

action, and the agency must comply. 

PART 534—PAY UNDER OTHER 

SYSTEMS 

■ 3. The authority citation for part 534 

continues to read as follows: 

Authority: 5 U.S.C. 1104, 3161(d), 5307, 

5351, 5352, 5353, 5376, 5382, 5383, 5384, 

5385, 5541, 5550a, sec. 1125 of the National 

Defense Authorization Act for FY 2004, Pub. 

L. 108–136, 117 Stat. 1638 (5 U.S.C. 5304, 

5382, 5383, 7302; 18 U.S.C. 207); and sec. 2 

of Pub. L. 110–372, 122 Stat. 4043 (5 U.S.C. 

5304, 5307, 5376). 

■ 4. In § 534.505, revise paragraphs 

(c)(1)(ii) and (c)(1)(iii) to read as follows: 

§ 534.505 Written Procedures. 

* * * * * 

(c) * * * 

(1) * * * 

(ii) Multiply the amount derived in 

paragraph (c)(1)(i) of this section by 0.10 

(in 2013, $60,146 × 0.10 = $6,015 if the 

applicable system is certified, or 

$45,746 × 0.10 = $4,575 if the applicable 

system is not certified or performance 

appraisal does not apply); and 

(iii) Subtract the amount derived in 

paragraph (c)(1)(ii) of this section from 

the maximum rate of basic pay 

applicable under § 534.504 (in 2013, 

$179,700¥$6,015 = $173,685 if the 

applicable system is certified, or 

$165,300¥$4,575 = $160,725 if the 

applicable system is not certified or 

performance appraisal does not apply); 

* * * * * 

[FR Doc. 2014–28887 Filed 12–9–14; 8:45 am] 

BILLING CODE 6325–39–P 

DEPARTMENT OF AGRICULTURE 

7 CFR Part 15c 

RIN 0503–AA57 

Nondiscrimination on the Basis of Age 

in Programs or Activities Receiving 

Federal Financial Assistance From the 

U.S. Department of Agriculture 

AGENCY: U.S. Department of Agriculture. 

ACTION: Proposed rule. 

SUMMARY: The U.S. Department of 

Agriculture (USDA) seeks to issue a 

Department-wide regulation to 

implement the Age Discrimination Act 

of 1975, as amended (‘‘Age Act’’), and 

the Government-wide age 

discrimination regulation promulgated 

by the U.S. Department of Health and 

Human Services (HHS). The Age Act 

and HHS regulations prohibit age 

discrimination in programs and 

activities receiving Federal financial 

assistance. The proposed rule intends to 

ensure compliance with the Age Act 

and HHS regulations and provide 

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