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 Awards made by the National Capital Planning Commission were withdrawn at the request of the Office of Personnel Management (0PM) in order to comply with this congressional action.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.

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