Retention Allowances:

Usage and Compliance Vary Among Federal Agencies

GGD-96-32: Published: Dec 11, 1995. Publicly Released: Jan 3, 1996.

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Pursuant to a congressional request, GAO reviewed federal agencies' use of retention allowances as salary supplements to retain essential employees, focusing on: (1) the total and average value of the allowances from 1991 to 1994; (2) the extent to which Senior Executive Service employees received retention allowances; (3) whether there were any compliance issues involved in retention allowance awards; (4) the agencies' adherence to Office of Personnel Management (OPM) retention regulations; and (5) the extent to which OPM oversees the use of retention allowances.

GAO found that: (1) 354 civilian employees received retention allowances as of September 30, 1994; (2) although the Department of Health and Human Services did not report its allowance data, 20 of its employees received allowances during fiscal year (FY) 1994; (3) retention allowances totalled $2.8 million annually and averaged $7,789 annually per employee; (4) the Export-Import Bank (Eximbank) awarded allowances to 21.7 percent of its employees in FY 1994, while the other agencies awarded allowances to 0.3 percent or fewer of its employees; (5) Eximbank did not determine whether prospective recipients would have left their positions if they did not receive retention allowances; (6) the criteria the Department of Defense, Eximbank, and Securities and Exchange Commission (SEC) used to determine the amount of employee allowances could not be determined; (7) OPM regulations do not require agencies to review or recertify retention allowances affected by pay increases; and (8) OPM has developed regulations and conducted longitudinal studies of Federal Employees Pay Comparability Act (FEPCA) actions at selected agencies.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: The Chairman, Eximbank, the Secretary of Defense, and the Chairman, SEC, should include the required criteria for determining the value of retention allowances in their retention allowance plans.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: The Director of Personnel at the Securities and Exchange Commission provided GAO with an internal procedures document that highlights the GAO-recommended revision to its retention allowance plan and explains the criteria to be used in determining the amount of an allowance. The Director said that his agency is operating under the revised criteria and plans to make formal revisions to its Operations Manual reflecting the changes. On August 15, 1996, the Special Assistant to the Associate Executive Director of SEC said that it expects to incorporate the revisions in its Operations Manual within 1 month.

    Recommendation: The Chairman, Eximbank, the Secretary of Defense, and the Chairman, SEC, should include the required criteria for determining the value of retention allowances in their retention allowance plans.

    Agency Affected: Export-Import Bank of the United States

    Status: Closed - Implemented

    Comments: The Office of the Assistant Secretary of Defense on March 8, 1996, notified components that it had agreed that a planned revision of DOD regulations would indicate that appointing officials shall apply criteria for determining retention allowance amounts that are consistent with Office of Personnel Management criteria.

    Recommendation: The Chairman, Eximbank, the Secretary of Defense, and the Chairman, SEC, should include the required criteria for determining the value of retention allowances in their retention allowance plans.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: Eximbank's revised Retention Allowance Plan, dated September 19, 1996, provides criteria for establishing the value of a retention allowance.

    Recommendation: The Director, OPM, should take action to ensure that retention allowance regulations are revised to explicitly address whether, and if so when, an agency should review or recertify the amount of an allowance as a result of basic pay rate increases or other relevant changes in the conditions justifying the allowance.

    Agency Affected: Export-Import Bank of the United States

    Status: Closed - Implemented

    Comments: OPM issued an Interagency Advisory Group memorandum that explained GAO's concerns regarding the lack of specific guidance on whether and when an agency should review or recertify the amount of a retention allowance as a result of a basic pay rate increase or other relevant change in an employee's pay and requested agency comments. Agencies' comments expressed concerns that requiring additional formal reviews of retention allowances would be burdensome and demand valuable staff time to complete. OPM has decided that the existing regulations are adequate and preserve agency flexibility.

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