Proposed Changes to the Merit Pay System as Described in the Civil Service Amendments of 1984, H.R. 5066, and The Merit Pay Improvement Act, H.R. 5401

GAO discussed two bills that would revise the current merit pay system. Both bills would: (1) eliminate the merit pay pool concept; (2) require that merit pay employees receive uniform step increases for specific performance levels; (3) guarantee full annual salary increases to all employees rated at least fully successful; (4) require that agencies pay a performance award to all employees rated in the top performance category; (5) require the establishment of job-related performance standards which would permit accurate evaluation of job performance; and (6) require the Office of Personnel Management to submit an annual report to the President and Congress evaluating the effectiveness of the proposed merit pay system. GAO noted that the bills are experimental and that most of their provisions would terminate after about 5 years. GAO believes that this should allow enough time to determine the effectiveness of the proposed systems. GAO also noted that the two bills provide different formulas for the minimum funding level provided for performance awards. GAO concurs with the objectives of both bills and believes that either could improve the current system.