First Look at Senior Executive Service Performance Awards

FPCD-80-74: Published: Aug 15, 1980. Publicly Released: Aug 15, 1980.

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The Senior Executive Service (SES) went into effect on July 13, l979, with a system of performance awards intended to encourage excellence in performance and higher productivity among Federal executives. The first bonuses under this system were paid in May and April of l980 by the Small Business Administration (SBA), the National Aeronautics and Space Administration (NASA), and the Merit Systems Protection Board (MSPB). Concerned about the number and amounts paid by the first two agencies and about potential abuse of the system, Congress passed legislation to, through the appropriations process, limit payment of SES awards to no more than 25 percent of the number of SES positions in any agency. Awards made by the National Capital Planning Commission were withdrawn at the request of the Office of Personnel Management (0PM) in order to comply with this congressional action. Congress directed GAO, in cooperation with OPM, to study the SES award payments to identify potential abuses of the system.

The GAO study found that all four agencies conducted the processes and related awards within the parameters of the Reform Act and OPM guidance in effect when the awards were made. However, there were a few initial policies and procedures in each agency that need improvement. GAO believes that these matters are agency specific and that they should not be generalized or reflect negatively on the credibility of the system. The NASA performance award decisions lack the appearance of objectivity due to the composition of its Performance Review Board (PRB) and Senior Executive Committee. The SBA performance award policy is inconsistent with that of other agencies regarding its payment schedule. The MSPB establishment of performance criteria is questionable because it is scheduled near the end of the performance rating period. Several interrelated issues affecting the viability of the SES awards system are: (1) whether it will be more difficult to equitably administer SES awards with the existing pay compression; (2) whether restrictions on SES bonuses will diminish executive incentive; (3) whether bonuses should be paid to a small percentage or a large percentage of career SES members; and (4) whether additional criteria beyond the rating instrument should be used to determine which executives should receive the allowable bonuses. GAO feels that OPM will need to undertake a strong monitoring and compliance effort to insure the credibility of agency bonus programs.

Matter for Congressional Consideration

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Matter: Congress should allow the SES bonus and rank provisions to take effect with one exception. The one exception is that, for equity purposes among agencies, Congress should change the basis for the percent limit on number of bonuses paid from percent of positions to percent of eligible career executives.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Director, OPM, in order to add credibility and additional objectivity to bonus decisions, should: (1) direct Federal agencies to include lower level SES executives, as well as impartial outside members, to participate in PRB decisions and also include outside members as participants on special PRB's (such as the NASA Senior Executive Committee), and (2) work with SBA to determine an equitable plan for paying bonuses for the remaining fiscal year l980 performance. OPM should take a strong role in monitoring agency bonus programs and review agency bonus award plans and policies prior to awards for the first few years, or until such time OPM is assured that agencies are routinely following prudent procedures that are within the intent of the Reform Act. After it is assured that agencies are using prudent procedures, OPM should continue to monitor awards on a postaward basis through its data collection system and compliance visits to agencies. Further, the Director, with the help of agencies, should study the issues that may affect SES success, such as those identified in this report; evaluate the adequacy of SES bonus systems; and, as necessary, make recommendations for legislative change. These recommendations should include methods, amounts, and numbers of performance awards that will have the maximum effect in carrying out the intent of the Reform Act.

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