a location in the continental United States or in a non-
foreign area shall receive locality-based comparability pay-
ments under section 5304 of title 5, United States Code, 
that would be paid to such member if such member’s offi-
cial duty station would have been Washington, D.C. 
‘‘(b) TREATMENT AS BASIC PAY.—The locality-based 
comparability payment described in subsection (a) shall—
‘‘(1) be considered to be part of the basic pay 
of a member in accordance with section 5304 of title 
5, United States Code, for the same purposes for 
which comparability payments are considered to be 
part of basic pay under such section; and 
‘‘(2) be subject to any applicable pay limita-
tions. 
‘‘(c) PHASE-IN.—The comparability pay adjustment 
described under this section shall be paid to a member 
described in subsection (a) in three phases, as follows: 
‘‘(1) In fiscal year 2006, 33.33 percent of the 
amount of such adjustment to which such member 
is entitled. 
‘‘(2) In fiscal year 2007, 66.66 percent of the 
amount of such adjustment to which such member 
is entitled.
‘‘(3) In fiscal year 2008 and subsequent fiscal 
years, 100.00 percent of the amount of such adjust-
ment to which such member is entitled.’’. 
(b) CONFORMING AMENDMENTS RELATING TO THE 
RETIREMENT AND DISABILITY SYSTEM OF THE FOREIGN 
SERVICE.—
(1) CONTRIBUTIONS
TO
THE
FUND.—Section 
805(a) of the Foreign Service Act of 1980 (22 
U.S.C. 4045(a)) is amended—
(A) in paragraph (1)—
(i) in the first sentence, by striking 
‘‘7.25 percent’’ and inserting ‘‘7.00 per-
cent’’; and 
(ii) in the second sentence, by striking 
‘‘The contribution by the employing agen-
cy’’ through ‘‘and shall be made’’ and in-
serting ‘‘An equal amount shall be contrib-
uted by the employing agency’’; 
(B) in paragraph (2)—
(i) in subparagraph (A), by striking 
‘‘plus an amount equal to .25 percent of 
basic pay’’; and 
(ii) in subparagraph (B), in the first 
sentence, by striking ‘‘plus an amount 
equal to .25 percent of basic pay’’; and
(C) in paragraph (3), by striking ‘‘plus .25 
percent’’. 
(2) COMPUTATION
OF
ANNUITIES.—Section 
806(a)(9) of such Act (22 U.S.C. 4046(a)(9)) is 
amended—
(A) by striking ‘‘is outside’’ and inserting 
‘‘was outside’’; and 
(B) by inserting after ‘‘continental United 
States’’ the following: ‘‘for any period of time 
from December 29, 2002, to the first day of the 
first full pay period beginning after the date of 
applicability of the overseas comparability pay 
adjustment under section 415’’; 
(3) 
ENTITLEMENT
TO
ANNUITY.—Section 
855(a)(3) of such Act (22 U.S.C. 4071d(a)(3)) is 
amended—
(A) by striking ‘‘is outside’’ and inserting 
‘‘was outside’’; and 
(B) by inserting after ‘‘continental United 
States’’ the following: ‘‘for any period of time 
from December 29, 2002, to the first day of the 
first full pay period beginning after the date of 
applicability of the overseas comparability pay 
adjustment under section 415’’.
(4) DEDUCTIONS
AND
WITHHOLDINGS
FROM 
PAY.—Section 856(a)(2) of such Act (22 U.S.C. 
4071e(a)(2)) is amended to read as follows: 
‘‘(2) The applicable percentage under this sub-
section shall be as follows:
‘‘Percentage
Time Period 
7.5 ..................................................................................................
Before January 1, 1999. 
7.75 ................................................................................................
January 1, 1999, to Decem-
ber 31, 1999. 
7.9 ..................................................................................................
January 1, 2000, to Decem-
ber 31, 2000. 
7.55 ................................................................................................
January 11, 2003, to Sep-
tember 30, 2004.
7.5 ..................................................................................................
After September 30, 2004.’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall take effect on the date of the enactment 
of this Act and apply beginning on the first day of the 
first full pay period beginning after such date. 
SEC. 306. FELLOWSHIP OF HOPE PROGRAM. 
(a) FELLOWSHIP AUTHORIZED.—Chapter 5 of title 
I of the Foreign Service Act of 1980 (22 U.S.C. 3981 
et seq.) is amended by adding at the end the following 
new section: 
‘‘SEC. 506. FELLOWSHIP OF HOPE. 
‘‘(a) The Secretary is authorized to establish a pro-
gram to be known as the ‘Fellowship of Hope Program’. 
Under the Program, the Secretary may assign a member 
of the Service, for not more than one year, to a position 
with any designated country or designated entity that per-