Assignment of Benefits and Living Benefits
CRS Examines Awards Programs
Following are highlights of a recent Congressional Research Service study of federal employee award programs.
Federal law establishes many authorities governing employee awards and incentives. The authorities generally have been established by Congress to provide agencies with tools to help them manage their workforces and, thereby, to better accomplish agency missions and public policy goals that cut across agency boundaries. Some of these authorities are contained within Title 5 of the United States Code, and cover most agencies in the executive branch and some in the legislative branch. These authorities are the subject of this report. Other statutory authorities may be unique in their coverage to a single agency, occupation type, or workforce, and are located in agency-specific "carve outs" in Title 5 or in other titles.
The term award refers to an agency payment that is used to reward an individual employee or group of employees for quality of past performance. By contrast, the term incentive refers to a payment that is designed to provide a monetary inducement for an individual (or group) to accept a new position or to remain employed in a current position.
Title 5 award authorities differ in their coverage and requirements among three general types of employees: federal employees generally; career Senior Executive Service (SES) employees; and political appointees. In turn, Title 5 incentive authorities come in three types: recruitment, relocation, and retention (also known as the "three Rs" or "3Rs"). Each incentive authority has the same statutory eligibility requirements. Payment of awards and incentives may be subject to statutory limitations on aggregate compensation.
Potential issues for Congress related to employee awards and incentives include questions of how to provide agencies with effective human resources management tools in light of agency missions and resource levels; how agencies are using these and other authorities to recruit, motivate, reward, and retain high-performing workforces; how to structure oversight and regulation of agency practices within the executive branch; and how to exercise congressional oversight over a civil service system that is increasingly fragmented (i.e., decentralized in execution and customized to individual agencies and workforces).
Designing and Modifying Statutory Authorities
How should Congress provide agencies with effective human resources management tools in light of their missions and resource levels? Answers to this question will be numerous depending on specific agency missions, environments, and resource levels. Nonetheless, several overall themes may arise.
Some context may be helpful. The federal civil service increasingly has been customized to individual agencies and workforces (e.g., doctors, nurses, law enforcement officers). It also has been increasingly decentralized in execution. The civil service typically is described as divided into three separate services: the competitive service, the excepted service, and the SES. The competitive service has its statutory basis in the general personnel laws of Title 5, and specifically Title 5’s appointment provisions. The SES has its own customized appointment provisions in Title 5. Employees who are in the excepted service work in agencies or organizations that operate outside of Title 5’s appointment provisions. Different statutory provisions relating to hiring, pay, awards, and labor-management relations may apply to these workforces or portions of these workforces. At the same time, functions once performed by OPM or centralized offices have been delegated to agencies or contracted out. An implication of this customization and decentralization is that pay, award, and incentive authorities available to specific agencies and workforces may differ substantially across government.
Title 5 award and incentive authorities have wide coverage across agencies and workforces. Perhaps as a recognition of this diversity, Congress granted extensive flexibility and discretion to agencies under these Chapter 45 and Chapter 57 provisions to customize award and incentive practices to fit agency missions, environments, and resource levels. It may be fair to ask, however, for any given agency or workforce, whether these authorities—alone or in combination with agency- or workforce-specific "carve out" authorities—give agencies the capabilities they need in order to properly recruit, motivate, reward, and retain high-performing workforces. How would one make such an assessment? For example, how do these award and incentive authorities relate to an agency’s pay system(s) and alternative award and incentive authorities? To what extent does an agency offer intrinsic rewards and incentives (e.g., autonomy, professional development) in addition to extrinsic ones (e.g., involving monetary compensation)? What is the proper balance between intrinsic and extrinsic rewards in a specific agency or workforce situation? Such issues typically would require case-by-case analysis, in light of an agency’s or workforce’s circumstances and mission. Furthermore, related issues frequently arise in the context of such questions, including questions of how agencies actually are using their authorities, why they use them in these ways, and how best to balance agency flexibility with oversight and accountability.
Looking at Agency Practices for Clues
It may be difficult to address fundamental questions of how to design or modify award and incentive authorities without first looking at specific agency or workforce situations and, just as significant, the practice of how agencies have utilized existing authorities. Actual agency practice may offer significant clues about how an agency is working within its current statutory authorities, management capacities, resource level, and policy environment to recruit, motivate, appraise, reward, and retain its overall workforce and more specialized subset workforces. Agency behaviors may reveal that some statutory authorities, management capacities, or resource levels may need to be studied or changed to address emerging challenges inside an agency or outside the agency in its policy environment. Without study and investigation, however, it may be difficult to identify the true sources of problems.
For example, to what extent is a retention problem within part of an agency’s workforce a function of competition from nongovernmental employers? What is the basis for the attractiveness of alternative places of employment? Does the competition derive primarily from intrinsic factors, extrinsic factors, or both? If salary competition is a major source of competition, is an agency using awards or incentives to compensate for a perceived lack of competitiveness? Alternatively, are recruitment or retention problems more a symptom of outmoded management practices, program design, or organizational structures?
More broadly, are awards and incentives being used in ways that would be viewed as appropriate and legitimate by oversight institutions and stakeholders (e.g., OPM, Congress, and the public)? For example, are employees who receive retention incentives truly likely to leave federal service without the incentive payments? How are such determinations made? To what extent are awards and incentives being used to cope with increasing pay compression in civil service basic pay due to pay caps linked to the Executive Schedule? Or are they being used as salary enhancements for privileged segments of an agency’s workforce? In the case of awards, is the performance appraisal system that underlies an agency’s award decisions
* "valid" (the system measures aspects of performance under an employee’s control that reflect relevant job characteristics and are free from contaminating factors outside the employee’s control),
* "reliable" (e.g., different raters would agree on criteria and determinations), and
* "free from bias" (e.g., free from rating errors such as leniency, severity, central tendency, or "halo" effects)?
The way in which systems of oversight and regulation are structured within agencies and the executive branch may help provide answers to questions like the ones posed above.
Structuring Oversight and Regulatory Mechanisms in Agencies and the Executive Branch
Several approaches have been used by Congress to establish oversight and regulatory mechanisms within agencies and the executive branch. For example, Congress frequently has provided for institutional checks within agencies and the executive branch. As noted earlier, an institutional check refers to the situation when Congress delegates authority to an agency but also ensures that one or more additional agencies or entities can veto or block the delegate agency’s actions. Institutional checks were created with OPM’s roles in the implementation of Chapter 57 incentive authorities, for example (e.g., 5 C.F.R. § 575.112; § 575.212; and § 575.312). However, it is unclear whether OPM has ever revoked or suspended an agency’s authority to offer incentives.
When well designed, an institutional check may produce information that might galvanize action to address problems, without need for congressional intervention, and involve other parties in decision making when one party may not be fully relied upon to act in the public interest when acting alone or behind closed doors. Related issues for Congress may involve whether and how to create institutional checks within an agency, or within the executive branch, to ensure that laws are executed faithfully to congressional intent. On one hand, institutional checks may create additional bureaucratic hurdles that result in some inefficiency and frustration. On the other hand, institutional checks may not result in unnecessary red tape and may be judged necessary in order to avoid abuses and management dysfunctions and promote the accomplishment of agency missions and goals. Congress also has established oversight and regulatory capacity in agencies and the executive branch through the use of planning, transparency, and reporting requirements. Such requirements also may address issues of congressional oversight.
Exercising Congressional Oversight
It has become widely recognized that Congress does not have resources to pursue in-depth oversight and investigations into all areas of public policy and management that some observers might wish. With an increasingly customized and decentralized civil service "system," these issues may be especially relevant to HR authorities and practices, including those related to employee awards and incentives. How, then, might Congress exercise oversight over a civil service system that is increasingly fragmented? In making this assessment, Congress may decide that current statutes and practices provide for sufficient oversight. However, if Congress determines that additional avenues of transparency and oversight about employee awards and incentives should be explored (e.g., along with corresponding workforce authorities and practices), several options might be considered.
In general, Congress needs information about the conduct of federal agencies in order to fulfill its constitutional obligations. Two challenges appear to be the most significant, in this regard, for employee awards and incentives: (1) efficiently and accurately identifying the governing award and incentive authorities for specific agencies, workforces, and other groups of employees, including "carve out" provisions inside and outside of Title 5; and (2) getting timely and specific data on agency practices and utilization of these authorities. For example, the incidence of Chapter 45 awards appears to have received little attention in publicly available documents from OPM for several years. Data on awards to political appointees also appears to be sparse, at least publicly.
In response to challenges like these, one option might be to establish more formal reporting requirements for OPM and agencies (e.g., make permanent the reporting requirements for 3R incentives that were included in the Federal Workforce Flexibility Act of 2004). Another option might be to focus on long-term information technology solutions to matters of data availability and accuracy. Another might be to amend 5 U.S.C. § 1103(c), which requires OPM to "design a set of systems, including appropriate metrics, for assessing the management of human capital by Federal agencies," to require agencies and OPM to provide desired information in an accessible format to Congress and the public. OPM’s implementation of the statute from enactment of the provision through 2008 appeared to produce information primarily for the use of OPM and entities within the executive branch under the George W. Bush Administration’s President’s Management Agenda (PMA), with little public disclosure of OPM’s detailed evaluations of agency information. A third option might be to conduct oversight hearings to influence agency practices and prompt the release of information. A fourth option might be to more formally require agency and OPM reporting on subjects of congressional interest, perhaps including summary or detailed statistics or specific documents.