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GAO discussed the proposed Federal Pay Reform Act of 1990, focusing on the need to reform federal pay-setting principles and processes and restore competition with nonfederal salary rates. GAO found that: (1) noncompetitive salary rates are a major cause of federal recruitment and retention difficulties; (2) unlimited presidential prerogatives over salary schedule adjustments will not provide adequate assurance that federal salary rates will be set and kept at competitive levels; (3) imposing geographic differentials on federal professional and administrative salaries would cause inequities and difficulties for the two employee groups; (4) state and local government salary rates should be added to the surveys of prevailing nonfederal salaries; and (5) a form of performance-based pay adjustments deserves serious consideration. GAO believes that current pay disparties can no longer be tolerated, because they jeopardize the government's ability to compete for and hire quality employees needed to deliver federal services.

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