Fedweek

The Congressional Budget Office has projected that the Defense Department will offer 6,400 buyouts over a four-year period—out of a workforce of some 750,000—and of those, half would not accept unless the amount is restored to a temporary higher level that has now expired.

Buyouts, also called voluntary separation incentive payments, are designed to avoid the need for RIFs in downsizing and reorganizing situations, and require the recipient to agree not to work for the government for at least the next five years, among other restrictions. While the general maximum is $25,000 in recent years the maximum at DoD has been $40,000 (both pre-tax). However, that authority expired October 1.

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In a cost estimate of a provision in the pending Senate DoD authorization bill (S-2792) to restore the higher level for fiscal 2022-2025, the CBO projected the department would make 6,400 offers but CBO projected that only half of those employees would separate for $25,000 but the rest “would do so for the full $40,000.”

It added that based on information from DoD, 95 percent of employees offered buyouts would take them into retirement, retiring on average one to two years earlier than otherwise.

Buyouts commonly are paired with early retirement offers although there is no requirement that the two be offered together. The government does not report data on overall use of buyouts, but in fiscal 2020, early-outs accounted for fewer than 1,000 of the 57,000 retirements among the 2.1 million federal workers apart from the Postal Service.

The buyout increase at DoD was initiated late in the Obama administration on grounds that the $25,000 amount, in effect since buyouts were created in the early 1990s, is no longer a sufficient incentive, particularly for employees not eligible for retirement under even early retirement rules.

The increase was seen at the time as a potential precedent for raising the amount government-wide, and though the Trump administration several times recommended such an increase, Congress never approved it.

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