[Federal Register Volume 79, Number 237 (Wednesday, December 10, 2014)]
[Proposed Rules]
[Pages 73239-73245]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-28887]


========================================================================
Proposed Rules
                                                Federal Register
________________________________________________________________________

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.

========================================================================


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

[[Page 73239]]



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 <a href="/cdn-cgi/l/email-protection#40332533302f2c292339002f302d6e272f36"><span class="__cf_email__" data-cfemail="ccbfa9bfbca3a0a5afb58ca3bca1e2aba3ba">[email protected]</span></a>. 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 
<a href="/cdn-cgi/l/email-protection#d1bfb8babab8ffbbbeb9bfa2bebf91bea1bcffb6bea7"><span class="__cf_email__" data-cfemail="ec8285878785c2868384829f8382ac839c81c28b839a">[email protected]</span></a>.

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.
    <bullet> 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.
    <bullet> The following is an example of a performance requirement: 
90% of cost-recovery 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.

[[Page 73240]]

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).........  Moves requirement to appraise annually to ``System
                                     430.308(c)............   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.

[[Page 73241]]

 
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)............  Moves requirements for a performance plan,
                                     430.306(b)............   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).........  Moves requirements for performance requirements and
                                     430.306(c)(3).........   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       Adds new paragraphs addressing the criteria for
                                      (a)(2).                 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.

[[Page 73242]]

 
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

0
1. The authority citation for part 430 continues to read as follows:

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

0
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


Sec.  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].


Sec.  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.


Sec.  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

[[Page 73243]]

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 OPM-established requirements for 
performance management systems.


Sec.  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 Sec.  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 Sec.  430.312(c)(1), and for other special 
circumstances established by the agency.


Sec.  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 
Sec.  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 Sec.  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.


Sec.  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.

[[Page 73244]]

    (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.


Sec.  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.


Sec.  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.


Sec.  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 Sec.  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 higher-level official's findings and recommendations if 
conducted, and make recommendations to the appointing authority, as 
provided in Sec.  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.


Sec.  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

[[Page 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.


Sec.  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, 
performance-based 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.


Sec.  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.


Sec.  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).


Sec.  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 Sec.  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

0
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).

0
4. In Sec.  534.505, revise paragraphs (c)(1)(ii) and (c)(1)(iii) to 
read as follows:


Sec.  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 x 0.10 = $6,015 if the applicable 
system is certified, or $45,746 x 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 Sec.  
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


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