[Response to Request for Advance Decision Concerning Retroactive Quality Step Increase for IRS Employee]

The Internal Revenue Service (IRS) requested an advance decision as to whether it could grant an employee a quality step increase retroactive to the first pay period after the performance appraisal period. GAO noted that IRS did not recommend the employee for award until 6 months after the employee's evaluation and, because of administrative delay, IRS did not complete the necessary paperwork. GAO held that: (1) the employee had no vested right to a retroactive performance award since the agency had not exercised its discretion in granting an increase; (2) although the approving official concurred with the employee's rating and amount of award, there was no specific proposal to grant the employee an increase until 6 months after his evaluation; and (3) the agency retained its discretion to approve or deny an increase award until the appropriate official approved the award. Accordingly, the increase may not be retroactively effective.