DHS's Max-HR Personnel System: Regulations on Classification, Pay, and Performance Management Compared With Current Law, and Implementation Plans

DHS’s Max-HR Personnel System: Regulations
on Classification, Pay, and Performance
Management Compared With Current Law, and
Implementation Plans
Updated May 4, 2007
Barbara L. Schwemle
Analyst in American National Government
Government and Finance Division

DHS’s Max-HR Personnel System: Regulations on
Classification, Pay, and Performance Management
Compared With Current Law, and Implementation Plans
Summary
The most recent legislative development on the implementation of a new
personnel system at the Department of Homeland Security (DHS) is that H.R. 1684,
DHS Authorization Act for FY2008, as ordered to be reported by the House
Committee on Homeland Security on March 28,2007, would repeal the authority for
that system. The bill is expected to be considered by the House in early May 2007.
The DHS Secretary and the Director of the Office of Personnel Management
were authorized to prescribe joint regulations for a new human resources
management system for DHS employees with the enactment of P.L. 107-296, the
Homeland Security Act of 2002. The final regulations for that system, called Max-
HR, were published in the Federal Register on February 1, 2005. This report
compares the final regulations with current law under Title 5 of the United States
Code and relevant regulations under Title 5 of the Code of Federal Regulations.
Specifically, Subparts A (General Provisions), B (Classification), C (Pay and Pay
Administration), and D (Performance Management) of the final regulations are
examined.
With regard to classification, pay, and performance management, the regulations
prescribe the following. The classification system will organize the department’s
jobs into clusters by major occupational groups. Within each occupational cluster,
open pay bands with no steps will be established. Each pay band typically will have
four levels — entry/developmental, full performance, senior expert, and supervisory.
Employees will progress through a pay band based on performance or enhanced skill
level. The pay system will provide an annual pay adjustment, supplemented by a
locality pay rate or a special pay rate in appropriate circumstances, to employees who
meet or exceed performance expectations. In addition, employees in a Full
Performance or higher pay band may receive a performance-based pay increase,
based primarily on accomplishing work assignments and achieving results.
Employees will not lose pay upon their transition to the pay system. The
performance management system ties employee performance appraisal to the DHS
mission and to specific performance standards based on job assignments. Quotas or
forced distributions will not be imposed on the performance ratings. A Homeland
Security Compensation Committee, chaired by the DHS Undersecretary for
Management, will provide options and/or recommendations to the Secretary on
various strategic compensation matters, including the annual adjustment of rate
ranges and locality and special pay rate supplements for the department’s employees.
The committee will have 14 members, four of whom will represent labor
organizations granted national consultation rights. The regulations provide broad
policy parameters. DHS will issue implementing directives to provide the details of
these policies. The directive on performance management was published on March

23, 2006. Directives on other aspects of the new system are in development. Max-

HR is expected to be implemented in phases beginning in early 2007, with the first
performance-based pay adjustments being granted in January 2008.

Contents
In troduction ......................................................1
Implementation ...............................................7
Funding .................................................9
FY2008 Budget and Personnel Issues.............................10
Legislation Pending in the 110^th Congress..........................13
Subpart A — General Provisions.....................................14
Subpart B — Classification.........................................22
General .....................................................22
Classification Structure........................................27
Classification Process.........................................29
Transitional Provisions........................................31
Subpart C — Pay and Pay Administration..............................32
General .....................................................32
Overview of Pay System.......................................39
Setting and Adjusting Rate Ranges...............................42
Locality and Special Rate Supplements............................45
Performance-Based Pay........................................51
Pay Administration...........................................56
Special Payments.............................................60
Transitional Provisions........................................62
Subpart D — Performance Management...............................64
List of Tables
Table 1. Views of DHS and OPM Representatives on Selected Policies
in the Final Regulations on Max-HR as Expressed at Senate
and House Subcommittee Hearings................................3
Table 2. Office of Human Capital (OHC) Appropriations, FY2005-FY2008..10
Table 3. Department of Homeland Security Human Resources
Management System: Final Regulations Compared With
Current Law/Selected Regulations................................14

DHS’s Max-HR Personnel System:
Regulations on Classification, Pay, and
Performance Management Compared With
Current Law, and Implementation Plans
Introduction
President George W. Bush signed the Homeland Security Act of 2002 on
November 25, 2002, and it became P.L. 107-296. Title VIII, Subtitle E, Section 841
of the law amends Title 5 United States Code by adding a new Chapter 97 —
Department of Homeland Security (DHS) to Part III, Subpart I. The new §9701(a)
provides that, notwithstanding any other provision of Part III, the Secretary of
Homeland Security may, in regulations prescribed jointly with the Director of the
Office of Personnel Management (OPM), establish, and from time to time adjust, a
human resources management (HRM) system for some or all of the organizational
units of the Department of Homeland Security. The law states specific requirements¹
for the HRM system.
On February 20, 2004, DHS and OPM jointly published a proposed rule to
implement a new HRM system for DHS in the Federal Register.² The final rule for
that system, called Max-HR, was published in the Federal Register on February 1,

2005.³ The design process that culminated in the proposed rule for the new system⁴

was discussed in the rule’s background section. Briefly, a design team, composed
of DHS program managers, union and employee representatives, DHS and OPM
human resource specialists, and private sector experts, conducted research and
meetings in the field to compile options for the new system. A senior review
committee, composed of DHS and OPM top management officials, major union
leaders, and several experts from academia, developed the options for consideration
by the DHS Secretary and the Director of OPM and their senior staff.

¹ See CRS Report RL31500, Homeland Security: Human Resources Management, by
Barbara L. Schwemle.
² U.S. Department of Homeland Security and U.S. Office of Personnel Management,
“Department of Homeland Security Human Resources Management System,” Federal
Register, vol. 69, no. 34, February 20, 2004, pp. 8029-8071.
³ U.S. Department of Homeland Security and U.S. Office of Personnel Management,
“Department of Homeland Security Human Resources Management System,” Federal
Register, vol. 70, no. 20, February 1, 2005, pp. 5271-5347.
⁴ “Designing Options for a New HR System,” in February 20, 2004, proposed rule, op. cit.,
pp. 8031-8035.

Broad policy parameters are provided in the final regulations. The details of
these policies will be included in implementing directives to be issued by DHS. On
March 23, 2006, the directive on performance management was published.
Directives on other aspects of the new system are in development. The final
regulations include the following information on classification, pay, and performance
management.
^!Classification. The department’s jobs will be organized into clusters
by major occupational groups. The current 15 grades and ten steps
of the General Schedule pay system will be abolished and replaced,
within each occupational cluster, by open pay bands without steps.
There typically will be four levels — entry/developmental, full
performance, senior expert, and supervisory — for each pay band.
Salaries within the pay bands will be set based on mission
requirements, labor market conditions, availability of funds, pay
adjustments received by other federal employees, and any other
relevant factors. Employees will progress through a pay band based
on performance or enhanced skill level.
^!Pay Adjustments. For each occupational cluster, there will be an
annual pay adjustment, and locality pay rate and special pay rate
supplements as appropriate, based on mission requirements, labor
market conditions, availability of funds, pay adjustments received by
other federal employees, and any other relevant factors. An
employee must meet or exceed performance expectations to receive
these pay adjustments. In addition, employees with a high level of
performance that supports the accomplishment of the department’s
mission may receive a performance-based pay increase; higher
increases would go to outstanding performers. The pay-outs for pay
adjustments and awards will depend on DHS’s funding. The
formula that will be used to determine the size of performance-based
pay adjustments has not yet been defined. Employees will not lose
pay as they transition to the new system. The DHS Undersecretary
for Management will chair a Homeland Security Compensation
Committee which will provide options and/or recommendations to
the Secretary on various strategic compensation matters, including
the annual adjustment of rate ranges and locality and special pay rate
supplements for the department’s employees. Of the committee’s 14
members, four will represent labor organizations granted national
consultation rights.
^!Performance Management. Appraisal of employee performance will
be tied to the DHS mission and to specific performance standards
based on job assignments. Generally, three or four rating levels will
be established. The system will not have quotas or forced
distributions of performance ratings. Managers and supervisors will
be trained to appraise employee performance. The directive on
performance management published on March 23, 2006, identifies
these core competencies: (1) achieving results, (2) technical
proficiency, (3) customer service (except for positions in the 1811

and 1896 series), (4) teamwork/cooperation, (5) communications,
and (6) representing the agency. Managers and supervisors have
additional core competencies on assigning, monitoring, and
evaluating work, and leadership. The directive provides for four
rating levels — “Achieved Excellence,” “Exceeded Expectations,”
“Achieved Expectations,” and “Unacceptable.”⁵
The Senate Subcommittee on Oversight of Government Management, the
Federal Workforce, and the District of Columbia of the Committee on Homeland
Security and Governmental Affairs, and the House Subcommittee on the Federal
Workforce and Agency Organization of the Committee on Government Reform
conducted hearings on the final regulations shortly after they were published. The
testimony of Ronald James, then-Chief Human Capital Officer at DHS, and Ronald
Sanders, then Associate Director for Strategic Human Resources Policy at OPM, and
their written responses to questions for the hearing record provide additional
information about the policies embodied in the final regulations. Table 1 below
presents the views of Mr. James and Mr. Sanders as stated for the February 10, 2005,
Senate subcommittee hearing and the March 2, 2005, House subcommittee hearing
on issues related to classification, pay, and performance management.
Table 1. Views of DHS and OPM Representatives on Selected
Policies in the Final Regulations on Max-HR as Expressed at
Senate and House Subcommittee Hearings
IssueViews
Senate Subcommittee on Oversight of Government Management, the Federal
Workforce, and the District of Columbia of the Committee on Homeland Security and
Governmental Affairs Hearing
job classification“DHS will establish definitions for a small number
of broad pay bands (typically 4-5), within
occupational clusters. Grading criteria will be
developed for these broad pay bands that will
specify the type and range of difficulty and
responsibility, qualifications, competencies, or
other characteristics of the work encompassed by
the band ... allow[ing] us to describe a range of
work ...” (James and Sanders, same written
response)
performance evaluations“OPM (or OPM and DHS) will treat performance
evaluations for DHS employees under 5 U.S.C.
chapter 97 as personnel actions for purposes of
enforcing the ban against prohibited personnel
practices under 5 U.S.C. §2302.” (Sanders, written
response)

⁵ U.S. Department of Homeland Security, Management Directives System, Performance
Management, MD Number 3181, March 23, 2006. Provided to CRS by electronic mail, by
Human Resources staff at DHS, March 27, 2006.

IssueViews
pass/fail system for rating“my personal professional judgment is ... that we do
performancenot want to use pass/fail anywhere beyond the entry
level, the training level, and the school level.”
(James, oral response)
annual pay adjustments“DHS will have the following type of annual pay
adjustment features: market-based pay which will
be based on a market survey approach; Locality
Rate Supplements which will be based on the cost
of labor at different localities or geographic areas;
and performance based pay increases which will be
based on individual performance. The DHS
compensation plan will also offer a special rate
supplement which will provide a higher pay level
for subcategories of employees within an
occupational cluster if warranted by current or
anticipated recruitment or retention needs.” (James,
written response)
locality pay“DHS will have greater flexibility in setting
[locality rate supplements] based on labor market
conditions and other factors .... DHS may provide
for different locality rate supplement percentages
for different occupational categories and different
band levels.” (James, written response)
Homeland Security“The HSCC will be an advisory body to the
Compensation CommitteeSecretary for making annual recommendations
(HSCC)regarding strategic pay decisions such as budget
allocation for market and locality adjustments and
aggregate review of performance ratings and
performance payouts. The HSCC will also
recommend process improvements or policy
changes to improve program effectiveness. The
Secretary or designee will make final decisions.
We appreciate the suggestion to publish internally
the overall results of performance management
decisions and will consider doing so ...” (James,
written response)

IssueViews
performance appraisal of“[E]ach manager’s goals will be based on his or her
managersmanager’s goals, thus creating a ‘line of sight’
cascade that starts with the Secretary and his direct
reports and is repeated through the chain, creating
subsets of goals that all point to the Department’s
mission objectives. With this cascade comes
responsibility and accountability for managers to
not only set appropriate goals, but to actually
nurture their employees to achieve success.
Because employees’ goals will be tied directly to
their manager’s goals, the manager’s success is tied
to how well employees perform. And finally,
managers will also be assessed on their
management skills ... including their ability to
justify and stand behind pay decisions. Employee
climate surveys and use of 360 degree performance
appraisal systems are being seriously considered ...
to ensure that employees have a voice in providing
feedback on how well their leaders are leading ...”
(James, written response)
House Subcommittee on the Federal Workforce and Agency Organization of the
Committee on Government Reform Hearing
communication of core“We are not considering amending the regulations
competenciesto provide that core competencies be communicated
in writing. During the meet-and-confer process, the
participating labor organizations agreed that
performance expectations (including core
competencies) need not be in writing ....
performance expectations, including those that may
affect an employee’s retention in the job, must be
communicated to the employee prior to holding the
employee accountable for them.” (James, written
response)
performance management“We will emphasize a greater role for Departmental
systemleaders in ensuring mission and individual goal
alignment and holding individual employees
accountable for results and ensuring that
compensation decisions are driven by performance
.... employees along with their supervisor will work
together to align their individual goals with the
larger goals of the Department. By setting specific
milestones and creating a direct line of sight
between individual jobs and mission-achievement
there will be a clear picture of what is expected
during the performance cycle.” (James, written
response)

IssueViews
mathematical formula for“There are four variables ... performance rating, pay
performance payoutspool and the dollars in the pay pool, and the ratings
distribution ... let us focus on those people who
‘meet expectations,’ ‘exceed expectations,’ and
who are ‘outstanding’ .... Each of those
[performance] ratings has a point value. That point
value is established at a higher headquarters
through oversight of the Compensation Committee.
The funding in that pay pool is also established at a
higher headquarters with oversight from the
Compensation Committee. You simply take the
rating, multiply it times the point value, and divide
the points into the dollars, and you get your share of
the pool.... The regulations absolutely positively bar
and prohibit forced distributions of ratings. You
can’t bust the budget because the pool is finite. You
simply divide the available dollars in the pool
amongst the employees based on their rating. And
the amount in the pool, the amount of the
Department’s payroll that will go to performance
pay is set by the Secretary on the advice and input
of the Compensation Committee, four members of
which are from the Department’s two major unions
... they will determine how much of the
Department’s annual appropriations increase in
payroll goes to performance, the national market
adjustments and local market adjustments.
Secretary reserves the right to make final
decisions.... They will decide how that is divided up
by location and occupation and how much goes into
the performance pay pool....” and later, “There is
enough in the performance pay pool to make sure
that fully successful employees get shares that are
worth something, those who exceed expectations
get shares that are worth more, and those that are
outstanding get even more.”
(Sanders, oral responses)
an employee who receives an“If the employee is at the minimum level of pay, he
“unacceptable” performanceor she is unacceptable and everybody else in the
ratingpay range goes up because they get across-the-
board increases, the regulations require
management to take action in 90 days .... Either the
employee’s performance improves and they move
back up into the range with everyone else, or the
Department either demotes or removes the
employee.” (Sanders, oral response)

IssueViews
employee understanding of the“will be measured through periodic employee
pay systemattitude surveys .... Fair administration and
meaningful performance adjustments will be
gauged both by these surveys and by periodic
quantitative analyses of pay adjustments data
(ratings given by managers and amounts of
increases throughout the department) ... as well as
review of payout information by the DHS
Compensation Committee.” (James, written
response)
prohibition on forced“DHS will conduct ongoing evaluations .... DHS
distributions or quotaswill deploy an automated performance management
system ... will include a reporting feature that will
provide the capability to produce standard reports
that will identify trends and detect patterns in
distribution that indicate forced distribution
curves.” (James, written response)
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^Federal^W^o^rk^f^o^{rce an}^{d A}^g^en^cy^Org^aⁿⁱ^zation^,^T^h^{e C}^ount^dow^{n t}^o^C^o^m^p^l^e^tⁱ^{on: Im}^pl^em^entⁱ^{ng t}^h^{e N}^e^w^th^st
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^(Was^hⁱⁿ^g^t^on^:^G^P^O^,^{2005), pp. 102, 108, 109,}^219,^{220, 224, 225, an}^{d 227. T}^h^{e v}ⁱ^ew^s^ex^pres^s^e^d
ⁱⁿ^th^{e table are th}^os^{e of}^R^oⁿ^a^{ld J}^a^m^e^s^,^th^en^-^C^hⁱ^ef^Hu^m^aⁿ^C^a^{pital Of}^fⁱ^{cer at DHS, an}^{d R}^oⁿ^a^ld
^San^d^ers^,^th^en^-^A^s^s^o^{ciate Director f}^o^{r Strateg}ⁱ^{c Hu}^m^aⁿ^R^e^s^o^u^r^ces^P^o^licy^{at OP}^M.
Implementation
According to a DHS and OPM Fact Sheet on the final regulations, the new
HRM system will cover about 110,000 of the department’s 180,000 employees.⁶
Transportation Security Administration (TSA) employees, Inspector General
employees, and employees appointed under the Robert T. Stafford Disaster Relief
and Emergency Assistance Act will not be covered by the system. The Secret
Service is excluded from the labor-management relations provisions and its
Uniformed Division employees are not covered by the classification and pay
provisions. Blue-collar employees under the wage grade system are excluded from
the classification and pay provisions during the initial implementation of the system.
Members of the Senior Executive Service (SES) are covered by the government-wide
pay-for-performance system.
At the time that the final regulations were published in February 2005, a phased
implementation of Max-HR according to the following timetable was envisioned:

⁶ U.S. Department of Homeland Security, DHS and OPM Final Human Resource
Regulations Fact Sheet, January 26, 2005. (Available on the Internet at
[http://www.dhs.gov], visited March 24, 2006.)

Time PeriodImplementation Steps
Early in 2005Communication outreach begins; Detailed design work,
including collaboration with employee representatives;
Meetings and focus groups held around the country.
Spring 2005Training of managers and supervisors begins; The labor
relations and adverse actions and appeals provisions
become effective.
Summer 2005Managers, supervisors, and employees receive performance
management training.
Fall 2005The performance management process begins.
Early 2006DHS Headquarters, Information Analysis and Infrastructure
Protection, Science and Technology, Emergency
Preparedness and Response, and Federal Law Enforcement
Training Center are converted to the new pay system. The
first rate range adjustment and performance pay-out is
scheduled for January 2007.
Early 2007U.S. Secret Service and U.S. Coast Guard (USCG) are
converted to the new pay system. The first rate range
adjustment and performance pay-out is scheduled for
January 2008. (The USCG performance pay-out is
scheduled for Summer 2008.)
Early 2008U.S. Customs and Border Protection, U.S. Immigration and
Customs Enforcement, and U.S. Citizenship and
Immigration Services are converted to the new pay system.
The first rate range adjustment and performance pay-out is
scheduled for January 2009.
This timetable has since been revised. In early September 2005, DHS
announced in the department’s newsletter that the employees who were initially
scheduled to move into Max-HR in early 2006 would instead do so in early 2007, at
the same time that the U.S. Secret Service and USCG employees are scheduled to
join the new system. The first rate range adjustment and performance pay-out for
these employees would be granted in January 2008. The remainder of the
implementation schedule was expected to remain the same. Commenting on the
revised schedule, Colleen M. Kelley, president of the National Treasury Employees
Union, stated that “leaving the rest of the calendar on the back end unchanged”
means that “DHS will be moving a larger number of employees into the pay system
at the same time, losing the advantages of a phased approach.” She called for “a delay⁷
of the entire rollout.” The DHS Secretary is required by P.L. 109-295 to report to

⁷ Louis C. LaBrecque, “DHS to Delay Implementation of MaxHR Pay System; Labor Battle
Continues,” Government Employee Relations Report, vol. 43, September 13, 2005.

the House and Senate Committees on Appropriations in January 2007 on an updated
plan for Max-HR (see the “Funding” section below.)
In his report to DHS employees on the agency’s results agenda, the Secretary of
Homeland Security, Michael Chertoff, stated that training and communications will
be ongoing as Max-HR becomes operational. During FY2006, among other
initiatives, the effectiveness of the department’s training was to be evaluated, gaps
in employee competencies were to be further defined and addressed, and
opportunities for employees to develop their leadership capabilities were to be
enhanced.⁸
On December 9, 2006, the Senate, by voice vote, confirmed Paul A. Schneider
to be the new Undersecretary for Management at DHS. (The previous
undersecretary, Janet Hale, who had been with DHS since its founding, left the
department in late May 2006.) During the Senate Committee on Homeland Security
and Governmental Affairs hearing on his confirmation, he reportedly assured Senator
Susan Collins that DHS officials would create “an effective method of evaluating
employees’ job performance and would work with unions on structuring the pay
aspects as well as grievance procedures” of Max-HR.⁹
Funding.¹⁰ The President’s FY2007 budget requested an appropriation of
$71.449 million to fund Max-HR, $41.749 million more than the amount provided
in FY2006. The full time equivalent (FTE) employees attached to the account were
27, an increase of 15 FTEs over FY2006. Almost 94% of the requested money was
for salaries and benefits ($3.153 million) and advisory and assistance services
($63.984 million). Accounting for the increased funding were (1) implementation
costs of the new pay system for employees who were originally scheduled to be
converted in FY2006 ($15 million), (2) implementation and operational costs for a
market- and performance-based compensation system in FY2007 ($22 million), and
(3) funding the Homeland Security Labor Relations Board (HSLRB) ($4.749¹¹
million). P.L. 109-295, the Department of Homeland Security Appropriations Act
for FY2007, provides funding of $25 million for Max-HR (some $46.449 million
below the President’s request).

⁸ U.S. Department of Homeland Security, Securing the Success of DHS Results, 2005, p. 14,
available at [http://www.dhs.gov], visited March 24, 2006.
⁹ Stephen Barr, “Personnel Policy Challenges Await the New DHS Management Chief,” The
Washington Post, December 14, 2006, p. D4.
¹⁰ For an analysis of the FY2007 appropriations for Max-HR, see the “Personnel Issues”
section of CRS Report RL33428, Homeland Security Department: FY 2007 Appropriations,
coordinated by Jennifer E. Lake and Blas Nunez-Neto. For the FY2006 appropriations, see
the “Personnel Issues” section of CRS Report RL32863, Homeland Security Department:
FY2006 Appropriations, coordinated by Jennifer E. Lake and Blas Nunez-Neto.
¹¹ U.S. Department of Homeland Security, FY2007 Congressional Justification,
Departmental Management and Operations, Under Secretary for Management, Office of
Human Capital and Office of Human Capital — MaxHR, pp. USM-43 - USM-50.

FY2008 Budget and Personnel Issues
The Office of Human Capital (OHC) at DHS reports to the Under Secretary for
Management, and its appropriation is included in that of the Under Secretary. The
OHC appropriation has two parts. The first part, formerly labeled “HR Operations”
and now labeled “OHC,” includes funding for the office which is responsible for the
overall management and administration of human capital in DHS. As such, the
office establishes policy and procedures and provides oversight, guidance, and
leadership for the department’s human resources functions. The second part, formerly
labeled “MaxHR” and now labeled “OHC — Operational Initiatives and HR
Management System,” includes funding for the OHC organization, which “is
responsible for creating, implementing, and operating DHS’ new human resources
system, ensuring that organizational goals and individual work performance are
linked, and that employees are compensated based on their contributions to agency
performance.” The OHC organization also “is responsible for ensuring that DHS
recruits, hires, trains, and retains the very best workforce, provides the highest quality
leadership development, and creates a performance culture in the workforce to ensure
DHS succeeds in its mission.”¹² Table 2 below shows the funding and staff for the
OHC from FY2005 through the budget request for FY2008.
Table 2. Office of Human Capital (OHC) Appropriations,
FY2005-FY2008
(in millions)
^FY²⁰⁰⁸
^Request
^Account^FY²⁰⁰⁵^Ena^c^t^e^d^FY²⁰⁰⁶^Ena^c^t^e^d^FY²⁰⁰⁷^Ena^c^t^e^d^FY²⁰⁰⁸^Request^Com^p^ared
^{to FY}²⁰⁰⁷
^Ena^c^t^e^d
^“^OHC^”^$7^$9^$9^$10^$1
^(f^orm^e^rl^y^“^H^R
^Operation^s^”)
^“^OHC^—^$36^$30^$25*^$15^-^$10
^Operation^a^l
^Iⁿ^itiativ^{es an}^d
^H^R^M^a^na^ge^m^e^nt
^Sy^stem^”
^(f^orm^e^rl^y
^“^M^ax^HR^”)
^T^o^t^a^l^$43^$39^$34^$25^-^$⁹
^St^a^ffi^{ng (}^f^ul^l⁴⁹⁶²⁵³⁶⁰⁷
^tⁱ^m^e^e^q^ui^va^l^e^nt^,^{(12 f}^o^r
^FT^{E, p}^o^s^itioⁿ^s⁾^“^M^ax^HR^”)
^No^te:^T^h^{is am}^o^uⁿ^t^d^o^e^{s n}^o^{t r}^e^f^l^{ect th}^{e tr}^an^sf^er^o^f^$⁵^m^illioⁿ^f^r^o^m^“^M^ax^{HR” to}^th^e^T^r^aⁿ^sp^o^r^tatioⁿ
^S^ecu^ri^t^y^A^d^mⁱⁿⁱ^s^t^ratⁱ^oⁿ^a^s^p^r^o^vⁱ^d^{ed by}^S^ectⁱ^oⁿ^{21101 of}^P.L^.^110-^{5, t}^h^{e R}^e^vⁱ^s^e^{d C}^oⁿ^tⁱⁿ^uⁱⁿ^g
^A^ppropri^a^tⁱ^oⁿ^s^R^e^s^o^l^u^tⁱ^oⁿ^f^o^r^F^Y^2007,^en^act^ed^on^F^e^b.^15,^{2007, (121 S}^t^at^{. 8). T}^h^{e n}^u^m^bersⁱⁿ^t^h^e
^{table are rou}ⁿ^d^ed.

¹² FY2008 DHS Justifications, Departmental Management and Operations, Undersecretary
for Management, p. USM-2.

^Sources^:^P.L^.^108-^334,^O^c^t^.^18,^2004,¹¹⁸^S^t^at^.^1298;^P.L^.^109-^{90, O}^c^t^.^{18, 2005, 119 S}^t^at^.
^2064;^P.L^.^109-^{295, O}^c^t^.^{4, 2006, 120 S}^t^at^{. 1355, at}^{1356, an}^d^F^Y^{2008 D}^H^S^J^u^stific^atⁱ^ons^,
^Depar^{tmental Management and Oper}^ations^{, Under}^s^ecr^etar^{y for}^{Management, Office of Human}
^C^{apital, and Office of}^{Human C}^{apital — Max-HR}^{, pp. U}^S^M-^{39 -}^U^S^M-^44.
As directed by the conference report¹³ accompanying P.L. 109-295, the
Department of Homeland Security Appropriations Act for FY2007, the Under
Secretary for Management submitted an expenditure plan for the DHS Human
Resources Management System (HRMS) (formerly “MaxHR”) for FY2007 to the
House and Senate Committees on Appropriations on February 1, 2007. The report’s
cover letter states that in FY2007 the HRMS “will be broadened ... to encompass
additional aspects of FY2007 Human Capital Operational Plan (HCOP), including
an increased focus on employee recruiting and advanced homeland security related
education.”¹⁴ Among other data, the report states that the contractor Northrop
Grumman Information Technology (NGIT) received a contract worth almost $3
million dollars to provide services through January 31, 2007, related to program
management; pay, performance, and classification; and training, communications,
and organizational change management at DHS. According to the report, NGIT is
being awarded another contract, worth more than $16 million, to provide services to
the department through September 30, 2007, in the same areas identified above and¹⁵
labor relations.
The transfer of the Office of Federal Law Enforcement Training Accreditation
(FLETA) from the Federal Law Enforcement Training Center to the OHC accounts
for the increase of $1 million and seven full-time equivalent employees over the
FY2007 appropriation for the “OHC” account. Almost 93% of the money requested
for FY2008 under this account is for salaries and benefits ($8 million) and advisory
and assistance services ($2 million) that includes services acquired by contract from¹⁶
non-federal sources. The appropriation will fund continued implementation of the
Human Capital Operational Plan for FY2007 to FY2009, development of an
employee talent bank for use throughout the department, creation of standards to
assess and evaluate learning and development programs, and participation of all new¹⁷
DHS employees in a department-wide orientation program. Some 76% of the
money requested for FY2008 under the “OHC — Operational Initiatives and HR
Management System” account is for advisory and assistance services ($11 million).

¹³ U.S. Congress, Conference Committees, 2006, Making Appropriations for the Department
of Homeland Security For the Fiscal Year Ending September 30, 2007, and For Other^th^nd
Purposes, conference report to accompany H.R. 5441, 109 Cong., 2 sess., H.Rept. 109-

699 (Washington, DC: GPO, 2006), p. 119.

¹⁴ Letter to Representative David E. Price, Chairman, House Subcommittee on Homeland
Security of the House Committee on Appropriations from Paul A. Schneider, Under
Secretary for Management, U.S. Department of Homeland Security, February 1, 2007.
¹⁵ Report to Congress, Spend Plan for MaxHR, Office of Human Capital, Department of
Homeland Security, January 4, 2007, p. 7. Accompanied the letter cited in footnote 5.
¹⁶ FY2008 DHS Justifications, Departmental Management and Operations, Undersecretary
for Management, Office of Human Capital, pp. USM-39 - USM-41.
¹⁷ FY2008 DHS Justifications, Under Secretary for Management, Strategic Context, p.
USM-3.

No funding is requested for salaries and benefits.¹⁸ The appropriation will fund
continued training of the DHS workforce in pay for performance and a new pay
system pilot project that will cover employees in the department who work in the
intelligence area. The pilot will be implemented jointly with the Director of National
Intelligence who is developing a pilot pay system for employees of the intelligence
agencies. It also will fund investment in recruitment and retention programs along
with learning and development initiatives to address gaps in skills and competencies,
and deployment of career paths and rotations to facilitate the mobility of DHS
employees through various leadership positions in the department.¹⁹
There are new incumbents for both the Under Secretary and Chief Human
Capital Officer positions at DHS. Paul Schneider assumed the former position on
February 1, 2007, and Marta Brito Perez the latter position on September 18, 2006.
During his confirmation hearing on December 6, 2006, Mr. Schneider told the
members of the Senate Committee on Homeland Security and Governmental Affairs
that he would make sure that DHS officials create an effective method of evaluating
employees’ job performance.
In January 2007, the Culture Task Force of the Homeland Security Advisory
Council issued a report to the DHS Secretary. Among its recommendations were that
DHS staff be referred to as “employees” or “members” of DHS and not as “human
capital,” and that “members of the headquarters” be required to visit and listen “to
employees and engage and support groups outside the headquarters” and respond
within 30 days on actions taken to address their concerns.²⁰ The task force believes
that “there can be no hierarchically imposed ‘single culture’ within the Department,”
but that “an overarching and blended culture can be developed that is based on
threads of common values, goals, and focus of mission among DHS headquarters and
its component organizations.” With regard to developing and sustaining such a
culture, the task force advised that “there are organizations in the Private Sector that
will deploy and embed within DHS qualified, objective, emotionally and
organizationally detached personnel to help develop the leadership’s vision and
strategic goals of creating a Homeland Security (rather than DHS) Mission Culture
and then monitor, objectively test, and support progress in achieving, continually
improving and sustaining an operationally focused, innovation and people rewarding

¹⁸ FY2008 DHS Justifications, Departmental Management and Operations, Undersecretary
for Management, Office of Human Capital — Max-HR, pp. USM-42 - USM-44.
¹⁹ FY2008 DHS Justifications, Under Secretary for Management, Strategic Context, p.
USM-4. On January 23, 2007, 27 employees in General Schedule grades 14 and 15 and
representing various components of DHS began a year-long fellowship program designed
to prepare them for future leadership positions in the department. The program is intended
to establish a common culture at DHS and encourage cooperation among the different
agencies that comprise the department.
²⁰ Homeland Security Advisory Council, Report of the Culture Task Force, January 2007,
pp. 2-3. Section 871 of P.L. 107-296 (116 Stat. 2243) authorized the council which provides
advice and recommendations to the DHS Secretary on homeland security matters. In June
2006, Secretary Chertoff directed the council to establish the task force “to provide
observations and recommendations for achieving and maintaining an empowering, energetic,
dedicated, mission-focused culture within the Department ... .”

culture.”²¹ The task force recommended that such contract employees work under
the direction of a senior (preferably career) DHS employee and with staff from the
department’s component agencies.
Legislation Pending in the 110^th Congress
Representative Bennie Thompson introduced H.R. 1684, the Department of
Homeland Security Authorization Act for FY2008, on March 26, 2007. It was
referred to the House Committee on Homeland Security where it was marked up and
ordered to be reported, on a 26-0 vote, on March 28, 2007. During the markup, an
amendment to repeal the authority for the new human resources management system
at DHS that was offered by Representative Sheila Jackson-Lee was agreed to on a 17-

13 vote. H.R. 1684 is expected to be considered by the House in early May 2007.

This report compares the final regulations for Subparts A (General Provisions),
B (Classification), C (Pay and Pay Administration), and D (Performance
Management) of the Department of Homeland Security’s HRM system with current
law under Title 5 United States Code and relevant regulations under Title 5 Code of
Federal Regulations. For an analysis of the regulations for Subpart E on Labor-
Management Relations and the court case which resulted from those rules, see CRS
Report RL32255, Homeland Security: Final Regulations for the Department of
Homeland Security Human Resources Management System (Subpart E) Compared
With Current Law, by Jon O. Shimabukuro; and CRS Report RL33052, Homeland
Security and Labor-Management Relations: NTEU v. Chertoff, by Thomas J. Nicola
and Jon O. Shimabukuro. P.L. 107-296, the Homeland Security Act of 2002,
amended Title 5 provisions that are applicable to most federal employees, and it is
these provisions (rather than those which have been provided in separate statutes to
employees at the Internal Revenue Service, Federal Aviation Administration,
Transportation Security Administration, Department of Defense, and the National
Aeronautics and Space Administration) that are compared with the proposed DHS
regulations.

²¹ Ibid., pp. 5-6.

CRS-14
Human Resources Management System: Final Regulations Compared
With Current Law/Selected Regulations
Current Law/Selected RegulationsFinal DHS Regulations
Title 5 United States Code and
Title 5 Code of Federal Regulations
Subpart A — General Provisions
.C. §9701. Establishment of human resources management§9701.101. Purpose. To establish a system that is mission-centered,
. (a) Notwithstanding any other provision of this part, theperformance-focused, flexible, contemporary, and excellent; that
ⁱ^{ki/CRS-RL32261}cretary of Homeland Security may, in regulations prescribed jointly Personnel Management, establish, andgenerates respect and trust through employee involvement; that is basedon the principles of merit and fairness embodied in the statutory merit
^g/w
^s^.or to time adjust, a human resources management system forsystem principles; and that complies with all other applicable laws.
^le^akanizational units of the Department of Homeland
ty.
^://wiki
^h^ttp derives from 5 U.S.C. §9701(a).§9701.102. Eligibility and coverage. All DHS civilian employees are
eligible for coverage under one or more subparts of 5 CFR Part 9701
except those covered by a provision of law outside the chapters of Title
5 United States Code identified in §9701.104 which can be waived. For
example Transportation Security Administration (TSA) employees,
employees appointed under the Robert T. Stafford Disaster Relief and
Emergency Assistance Act, Secret Service Uniformed Division
members, Coast Guard Academy faculty members, and Coast Guard
military members are not eligible for coverage under any classification
or pay system established under Subpart B or C. Each subpart provides
specific information regarding coverage.

CRS-15
Current Law/Selected RegulationsFinal DHS Regulations
Title 5 United States Code and
Title 5 Code of Federal Regulations
Subpart A becomes applicable to all eligible employees 30 days after
the date of publication in the Federal Register.
With respect to Subparts B, C, and D, the Secretary or designee may, at
his or her sole and exclusive discretion and after coordination with
OPM, apply one or more of these subparts to a specific category or
categories of eligible civilian employees at any time. With respect to
ⁱ^{ki/CRS-RL32261}any given category of civilian employees, the Secretary or designee may
^g/wapply some of these subparts, but not others, and such coverage
^s^.ordeterminations may be made effective on different dates (e.g., in order
^le^akto phase in coverage under a new classification, pay, and performance
management system).
^://wikiDHS will notify affected employees and labor organizations in advance
^h^ttpof the application of one or more subparts to them.
Until the Secretary or designee makes such a determination to apply the
provisions of one or more subparts to a particular category or categories
of eligible DHS employees, those employees will continue to be
covered by the applicable federal laws and regulations that would apply
to them in the absence of 5 CFR Part 9701. All personnel actions
affecting DHS employees must be based on the federal laws and
regulations applicable to them on the effective date of the action.
III — Pay for the Senior ExecutiveAny new DHS classification, pay, or performance management system
rvice.covering Senior Executive Service (SES) members must be consistent

CRS-16
Current Law/Selected RegulationsFinal DHS Regulations
Title 5 United States Code and
Title 5 Code of Federal Regulations
with the policies and procedures established by the government-wide
SES pay-for-performance system authorized by 5 U.S.C. Chapter 53,
Subchapter VIII, and applicable implementing regulations issued by
OPM. If the Secretary determines that SES members employed by
DHS should be covered by classification, pay, or performance
management provisions that differ substantially from the government-
ⁱ^{ki/CRS-RL32261}wide SES pay-for-performance system, the Secretary and the Director
^g/wmust issue joint regulations consistent with all of the requirements of 5
^s^.orU.S.C. §9701.
^le^akAt his or her sole and exclusive discretion, the Secretary or designee
may, after coordination with OPM, rescind the application of one or
^://wikimore subparts to a particular category of employees and prescribe
^h^ttpimplementing directives for converting that category of employees to
coverage under applicable Title 5 provisions. DHS will notify affected
employees and labor organizations in advance of such a decision.
The Secretary or other authorized DHS official may exercise an
independent legal authority to establish a parallel system that follows
some or all of the requirements in 5 CFR Part 9701 for a category of
employees who are not eligible for coverage under 5 U.S.C. §9701.
derives from 5 U.S.C. §9701(a).§9701.103. Definitions. Various terms are defined, including:
“Authorized agency official” means the Secretary or an official who is
authorized to act for the Secretary in the matter concerned.

CRS-17
Current Law/Selected RegulationsFinal DHS Regulations
Title 5 United States Code and
Title 5 Code of Federal Regulations
“Coordination” means the process by which DHS, after appropriate
staff-level consultation, officially provides OPM with notice of a
proposed action and intended effective date. If OPM concurs, or does
not respond to that notice within 30 calendar days, DHS may proceed
with the proposed action. However, if OPM indicates the matter has
government-wide implications or consequences, DHS will not proceed
ⁱ^{ki/CRS-RL32261}until the matter is resolved. The coordination process is intended to
^g/wgive due deference to the flexibilities afforded DHS by the Homeland
^s^.orSecurity Act and the regulations in 5 CFR Part 9701, without
^le^akcompromising OPM’s institutional responsibility to provide
government-wide oversight in HRM programs and practices.
^://wiki“Implementing directives” means directives issued at the departmental
^h^ttplevel by the Secretary or designee to carry out any policy or procedure
established in accordance with 5 CFR Part 9701. These directives may
apply department-wide or to any part of the department as determined
by the Secretary at his or her sole and exclusive discretion.
ployee.“Employee” means an employee within the meaning of that term in 5
ee” means an officer and an individual who is appointed inU.S.C. §2105. “Secretary” means the Secretary of Homeland Security
e civil service by one of the following acting in an official capacity — or, as authorized, the Deputy Secretary of Homeland Security.
e President; a Member or Members of Congress, or the Congress; a“Secretary or designee” means the Secretary or a DHS official
ember of a uniformed service; an individual who is an employeeauthorized to act for the Secretary in the matter concerned who serves as
overnment controlled corporation; orthe Undersecretary for Management or as DHS’ Chief Human Capital

CRS-18
Current Law/Selected RegulationsFinal DHS Regulations
Title 5 United States Code and
Title 5 Code of Federal Regulations
eneral designated by the Secretary concerned under 32Officer.
t also means an officer and an individual engaged in
tion under authority of law or an
ecutive act; and subject to the supervision of an individual named
aged in the performance of the duties of the position.
.C. §9701. Establishment of human resources management§9701.104. Scope of authority. Subject to the requirements and
ⁱ^{ki/CRS-RL32261}.limitations in 5 U.S.C. §9701, these Title 5 chapters and related
^g/wstem must be flexible and contemporary. It cannotregulations may be waived or modified: Chapter 43 (performance
^s^.or
^le^ak, or otherwise affect:appraisal systems); Chapter 51 (General Schedule (GS) job
classification); Chapter 53 (pay for GS employees, pay and job grading
^://wiki — the public employment principles of merit and fitness at 5for Federal Wage System employees, and pay for certain other
^h^ttpU.S.C. §2301, including the principles of hiring based on merit,employees); Chapter 71 (labor relations); Chapter 75 ( adverse actions
fair treatment without regard to political affiliation or other non-and certain other actions); and Chapter 77 (appeal of adverse actions
merit considerations, equal pay for equal work, and protection ofand certain other actions).

employees against reprisal for whistleblowing;
— any provision of 5 U.S.C. §2302 relating to prohibited
personnel practices;
— any provision of law referred to in 5 U.S.C. §2302(b)(1)(8)(9);
or any provision of law implementing any provision of law
referred to in 5 U.S.C. §2302(b)(1)(8)(9) by providing for equal

CRS-19
Current Law/Selected RegulationsFinal DHS Regulations
Title 5 United States Code and
Title 5 Code of Federal Regulations
employment opportunity through affirmative action; or providing
any right or remedy available to any employee or applicant for
employment in the civil service;
— Subparts A (General Provisions), B (Employment and
Retention), E (Attendance and Leave), G (Insurance and
ⁱ^{ki/CRS-RL32261}Annuities), and H (Access to Criminal History Record
^g/wInformation) of Part III of Title 5 United States Code; and Chapters
^s^.or41 (Training), 45 (Incentive Awards), 47 (Personnel Research
^le^akPrograms and Demonstration Projects), 55 (Pay Administration),
57 (Travel, Transportation, and Subsistence), 59 (Allowances), 72
^://wiki(Antidiscrimination, Right to Petition Congress), 73 (Suitability,
^h^ttpSecurity, and Conduct), and 79 (Services to Employees) of Title 5;
or
— any rule or regulation prescribed under any provision of law
referred to in any of the statements in bullets immediately above.
.C. §9701. Establishment of human resources management§9701.105. Continuing collaboration. Relates to the participation of
.employee representatives in developing implementing directives.

ive five years after the conclusion of the transition period
. 107-296, all authority to issue regulations
regulations which would modify,

CRS-20
Current Law/Selected RegulationsFinal DHS Regulations
Title 5 United States Code and
Title 5 Code of Federal Regulations
regulations previously issued under the
e. The transition period is the 12-
an on the act’s effective date. The act’s effective
s after the act’s enactment date of November 25, 2002.
derives from 5 U.S.C. §9701(a)-(c).§9701.106. Relationship to other provisions. Title 5, United States
Code, is waived or modified to the extent authorized by 5 U.S.C. §9701
ⁱ^{ki/CRS-RL32261}to conform to 5 CFR Part 9701. This part must be interpreted in a way
^g/wthat recognizes the critical mission of DHS. Each provision must be
^s^.or
^le^akconstrued to promote the swift, flexible, effective day-to-day
accomplishment of the mission, as defined by the DHS Secretary or
^://wikidesignee. The interpretation of the regulations by DHS and OPM must
^h^ttpbe accorded great deference.
.C. Chapter 43 (Performance Appraisal; Chapter 51For the purpose of applying other provisions of law or Government-
ssification); Chapter 53 (Pay Rates and Systems); Chapter 71wide regulations that reference provisions under 5 U.S.C. Chapters 43,
abor-Management Relations); Chapter 75 (Adverse Actions); and51, 53, 71, 75, and 77, the referenced provisions are not waived but are
modified consistent with the corresponding regulations in 5 CFR Part
9701, except as otherwise provided in this part or in DHS implementing
directives. Applications of this rule include, but are not limited to, the
following:
If another provision of law or Government-wide regulations requires
coverage under one of the chapters modified or waived under 5 CFR

CRS-21
Current Law/Selected RegulationsFinal DHS Regulations
Title 5 United States Code and
Title 5 Code of Federal Regulations
aw Enforcement Officers forPart 9701 (i.e., 5 U.S.C. Chapters 43, 51, 53, 71, 75, and 77), DHS
reign Language Capabilities; 5 U.S.C. §5545b (Pay for firefighters);employees are deemed to be covered by the applicable chapter
ard pay differentials); 5 U.S.C.notwithstanding coverage under a system established under this part.
tion bonuses and RetentionSelected examples of provisions that continue to apply to any DHS
sicians comparability allowances);employees (notwithstanding coverage under Subparts B through G)
. 101-509, Sec. 407, 5 U.S.C. §5305 note (Relocation payments forinclude, but are not limited to: foreign language awards for law
ⁱ^{ki/CRS-RL32261}w enforcement officers); enforcement officers; pay for firefighters; differentials for duty
^g/winvolving physical hardship or hazard; recruitment, relocation, and
^s^.orretention payments; physicians’ comparability allowances; and the
^le^akhigher cap on relocation bonuses for law enforcement officers.
Application of the back pay law with regard to attorney fees and labor
^://wikirelations will be consistent with §9701.706(h) and §9701.517,
^h^ttp respect i v el y.
R Part 300, Subpart F (Time-in-Grade Restrictions); 5 U.S.C.When a specified category of employees is covered by a classification
differentials); P.L. 101-509, Sec. 404 and 404, 5and pay system established under Subparts B and C, the following
Special pay adjustments for lawprovisions do not apply: time-in-grade restrictions that apply to
ent officers).competitive service GS positions; supervisory differentials; and law
enforcement officer special rates and geographic adjustments.
ment Opportunity); 29 U.S.C. §621Nothing in this part waives, modifies or otherwise affects the
e discrimination in employment); 29 U.S.C. §791 (Employment ofemployment discrimination laws that the Equal Employment
S.C. §206(d) (Prohibition of sexOpportunity Commission (EEOC) enforces under 42 U.S.C. §2000e et
CFR Part 1614 — Federal Sector Equalseq., 29 U.S.C. §621 et seq., 29 U.S.C. §791 et seq., and 29 U.S.C.

CRS-22
Current Law/Selected RegulationsFinal DHS Regulations
Title 5 United States Code and
Title 5 Code of Federal Regulations
ment Opportunity (Subparts A-F, including Agency Program to§206(d). Employees and applicants for employment in DHS will
ment Opportunity, Appeals and Civil Actions,continue to be covered by EEOC’s federal sector regulations found at
emedies and Enforcement).29 CFR Part 1614.
ⁱ^{ki/CRS-RL32261} derives from 5 U.S.C. §9701(a).§9701.107. Program evaluation. DHS will establish procedures for
^g/wevaluating the regulations and their implementation. Designated
^s^.or
^le^akemployee representatives will be provided with an opportunity to be
briefed and a specified timeframe to provide comments on the design
^://wikiand results of program evaluations. Employee representatives will be
^h^ttpinvolved with the identification of the scope, objectives, and
methodology to be used in program evaluation and review of draft
findings and recommendations. Involvement in the evaluation process
does not waive the rights of any party under applicable law or
regulations.
Subpart B — Classification
General
authority for Subpart B derives from 5 U.S.C. §9701(a)-(c).§9701.201. Purpose. Subpart B contains regulations establishing a

CRS-23
Current Law/Selected RegulationsFinal DHS Regulations
Title 5 United States Code and
Title 5 Code of Federal Regulations
classification structure and rules for covered DHS employees and
urpose. To provide a plan for classification ofpositions to replace the 5 U.S.C. Chapter 51 classification structure and
reby in determining the rate of basic pay which anrules and the 5 U.S.C. Chapter 53, Subchapter IV job grading system, in
ee will receive, the principle of equal pay for substantially equalaccordance with the merit principle of equal pay for work of equal
followed, and variations in rates of basic pay paid tovalue. Any classification system must be established in conjunction
ees will be in proportion to substantial differences inwith the pay system described in Subpart C.

ⁱ^{ki/CRS-RL32261}, responsibility, and qualification requirements of the work
^g/wof employees to efficiency and
^s^.or in the service. Individual positions will, in accordance with
^le^akqualification requirements, be so
ouped and identified by classes and grades, and the various classes
^://wiki published standards, that the resulting position-
^h^ttpstem can be used in all phases of personnel
ministration.
IV — Prevailing Rate Systems
olicy. It is the policy of Congress that rates of pay of
vailing rate employees be fixed and adjusted from time to time as
y as is consistent with the public interest in accordance with
vailing rates and be based on principles that there will be equal pay
ntially equal work for all prevailing rate employees who are
under similar conditions of employment in all agencies within
same local wage area; there will be relative differences in pay within

CRS-24
Current Law/Selected RegulationsFinal DHS Regulations
Title 5 United States Code and
Title 5 Code of Federal Regulations
ocal wage area when there are substantial or recognizable differences
qualification requirements among
level of rates of pay will be maintained in line with
vailing levels for comparable work within a local wage area; and the
vel of rates of pay will be maintained so as to attract and retain
lified prevailing rate employees.
ⁱ^{ki/CRS-RL32261} derives from 5 U.S.C. §9701(a).§9701.202. Coverage. Subpart B applies to eligible DHS employees
^g/wand positions listed below, subject to a determination by the Secretary
^s^.or
^le^akor designee under §9701.102(b).
^://wikiIII — General Schedule Pay RatesEligible for coverage are: employees and positions that would
^h^ttpIV — Prevailing Rate Systemsotherwise be covered by the GS classification system; employees and
for certain senior-level positionspositions that would otherwise be covered by a prevailing rate system;
III — Pay for the Senior Executiveemployees in senior-level (SL) and scientific or professional (ST)
rvicepositions who would otherwise be covered by 5 U.S.C. §5376; and SES
members who would otherwise be covered by 5 U.S.C. Chapter 53,
Subchapter VIII, subject to §9701.102(d).
tion (includes classification and§9701.203. Waivers. When a specified category of employees is
ading of positions)covered by a classification system established under Subpart B, 5
ob grading system U.S.C. Chapter 51 and 5 U.S.C. §5346, and related regulations, are
waived with respect to that category of employees, except as provided

CRS-25
Current Law/Selected RegulationsFinal DHS Regulations
Title 5 United States Code and
Title 5 Code of Federal Regulations
immediately below, in §9701.106, and §9701.222(d) (with respect to
OPM’s authority under 5 U.S.C. §§5112(b) and 5346(c) to act on
requests for review of classification decisions). 5 U.S.C. §5108 is not
waived.
initions; application (unless otherwise noted)§9701.204. Definitions.
itions which, although different with“Band” means a work level or pay range within an occupational cluster.
ⁱ^{ki/CRS-RL32261}work, are sufficiently equivalent as
^g/w and responsibility; and level of qualification
^s^.or
^le^aktheir inclusion within one range of
in the General Schedule.
^://wiki
^h^ttp” means the total amount of pay received during any one“Basic pay” means an employee’s rate of pay before any deductions and
lendar year at the rate fixed by law or administrative action for theexclusive of additional pay of any kind, except as expressly provided by
night and environmental differentials forlaw or regulation. It includes locality and special rate supplements for
vailing rate employees, but before any deductions and exclusive ofthe specific purposes prescribed in §§9701.332(c) and 9701.333.
of any other kind. [5 CFR §530.202]
lassification” means the analysis and identification of a position and“Classification” also referred to as job evaluation, means the process of
it in a class under the position-classification plan established byanalyzing and assigning a job or position to an occupational series,

5 CFR §511.101(c)]cluster, and band for pay and other related purposes.

CRS-26
Current Law/Selected RegulationsFinal DHS Regulations
Title 5 United States Code and
Title 5 Code of Federal Regulations
“Competencies’ means the measurable or observable knowledge, skills,
abilities, behaviors, and other characteristics required by a position.
includes all positions which are“Occupational cluster” means a grouping of one or more associated or
iently similar, as to kind or subject-matter of work; level ofrelated occupations or positions. An occupational cluster may include
and responsibility; and the qualification requirements of theone or more occupational series.
in personnel and pay administration.
ⁱ^{ki/CRS-RL32261}“Occupational series” means the number OPM or DHS assigns to a
^g/wgroup or family of similar positions for identification purposes.
^s^.or
^le^ak
^://wikig of the duties and responsibilities,“Position” or “Job” means the duties, responsibilities, and related
^h^ttpgned by competent authority for performance by an employee. [5competency requirements that are assigned to an employee whom the
R §511.101(e)]Secretary or designee approves for coverage under §9701.202(a).
subject to collective bargaining.§9701.205. Bar on collective bargaining. As provided in the
definition of “conditions of employment” in §9701.504, any
classification system established under Subpart B is not subject to
collective bargaining. This bar on collective bargaining applies to all
aspects of the classification system, including but not limited to
coverage determinations, the design of the classification structure, and
classification methods, criteria, and administrative procedures and
arrangem ent s .

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Classification Structure
or classifying positions§9701.211. Occupational clusters. For purposes of classifying
tion is placed in its appropriate class on the basis of the dutiespositions, DHS may, after coordination with OPM, establish
nd the qualifications required byoccupational clusters based on factors such as mission or function;
class is placed in its appropriatenature of work; qualifications or competencies; career or pay
ade on the basis of the level of difficulty, responsibility, andprogression patterns; relevant labor-market features; and other
ⁱ^{ki/CRS-RL32261} the work of the class.characteristics of those occupations or positions. DHS must document
^g/win implementing directives the criteria and rationale for grouping
^s^.or
^le^akoccupations or positions into occupational clusters.
^://wikior grading positions§9701.212. Bands. For purposes of identifying relative levels of work
^h^ttpovides for 15 General Schedule pay grades. The statute defines eachand corresponding pay ranges, DHS may, after coordination with OPM,
grades in terms of their difficulty and responsibility.establish one or more bands within each occupational cluster. Each
occupational cluster may include, but is not limited to, the following
bands: Entry/Developmental — work that involves gaining the
competencies needed to perform successfully in a Full Performance
band through appropriate formal training and/or on-the-job experience.
Full Performance — work that involves the successful completion of
any required entry-level training and/or developmental activities
necessary to independently perform the full range of non-supervisory
duties of a position in an occupational cluster.
Senior Expert — work that involves an extraordinary level of

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specialized knowledge or expertise upon which DHS relies for the
accomplishment of critical mission goals and objectives; reserved for a
limited number of non-supervisory employees.
Supervisory — work that may involve hiring or selecting employees,
assigning work, managing performance, recognizing and rewarding
employees, and other associated duties.
ⁱ^{ki/CRS-RL32261}or classifying positionsDHS must document in implementing directives the definitions for each
^g/wtion is placed in its appropriate class on the basis of the dutiesband which specify the type and range of difficulty and responsibility,
^s^.or
^le^aknd the qualifications required byqualifications, competencies, or other characteristics of the work
class is placed in its appropriateencompassed by the band.
^://wikiade on the basis of the level of difficulty, responsibility, and
^h^ttp te work of the class.
or classification of positionsDHS must, after coordination with OPM, establish qualification
fter consulting the agencies, prepares standards for placingstandards and requirements for each occupational cluster, occupational
and grades. OPM may make suchseries, and/or band. DHS may use the qualification standards
ations of the duties, responsibilities, andestablished by OPM or, after coordination with OPM, may establish
of positions as it considers necessary for thisdifferent qualification standards. Any DHS authority to establish
n the standards, OPM defines the various classes of positionsqualification standards or requirements under 5 U.S.C. Chapters 31 and
s, and qualification requirements;33 and OPM implementing regulations is not waived or modified.

tablishes the official class titles; and sets forth the grades in which the
OPM. OPM must revise, supplement, or

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isting standards, or prepare new standards so that positions
current published standards. The official class titles
et, and fiscal purposes.
ication of positions
cept as otherwise provided in Chapter 51, each agency places each
appropriate class and grade in
ⁱ^{ki/CRS-RL32261}When facts warrant, an agency may
^g/we a position from one class or grade to another.
^s^.or
^le^akClassification Process
^://wikior grading positions §9701.221. Classification requirements. DHS must develop a
^h^ttpovides for 15 General Schedule pay grades. The statute defines eachmethodology for describing and documenting the duties, qualifications,
grades in terms of their difficulty and responsibility.and other requirements of categories of jobs, and DHS must make such
ication of positions above GS-15descriptions and documentation available to affected employees.

s OPM to establish, and from time to time revise, the
imum number of positions classified at any one time above GS-15,
dures for classifying positions above
-15 for any executive agency.
.C. 5113. Classification records
M may prescribe the form in which each agency must record the
s of positions and the places where these
cords must be maintained; examine these or other pertinent records of
ency; and interview agency employees who have knowledge of
ons and information as to the
a position in a class or grade.

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or classifying positions An authorized agency official must assign occupational series to jobs
tion is placed in its appropriate class on the basis of the dutiesconsistent with definitions established by OPM or by DHS, after
nd the qualifications required bycoordination with OPM; and apply the criteria and definitions required
class is placed in its appropriateby §9701.211 and §9701.212 to assign jobs to an appropriate
ade on the basis of the level of difficulty, responsibility, andoccupational cluster and band.
the work of the class.
ⁱ^{ki/CRS-RL32261}or classification of positions DHS must establish procedures for classifying jobs and may make such
^g/wfter consulting the agencies, prepares standards for placinginquiries or investigations of the duties, responsibilities, and
^s^.or
^le^akand grades. OPM may make suchqualification requirements of jobs as it considers necessary for the
ations of the duties, responsibilities, andpurposes of this section.
^://wikiof positions as it considers necessary for thisClassification decisions become effective on the date designated by the
^h^ttpn the standards, OPM defines the various classes of positionsauthorized agency official who makes the decision.
s, and qualification requirements;
tablishes the official class titles; and sets forth the grades in which the
OPM. OPM must revise, supplement, or
isting standards, or prepare new standards so that positions
current published standards. The official class titles
et, and fiscal purposes.
authority to classifyDHS must establish a plan to periodically review the accuracy of
classification decisions.

hen OPM finds that an agency is not placing positions in classes and
ades in conformance with or consistently with published standards, it
revoke or suspend the authority granted to the agency under 5
OPM approval be secured before an
ion placing a position in a class and grade become effective. Agency
may be restored upon corrective action.

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of classification of positions§9701.222. Reconsideration of classification decisions. An
individual employee may request that DHS or OPM reconsider the pay
ency as will enable it to determine whether the agency is placingsystem, occupational cluster, occupational series, or band assigned to
rades in conformance with or consistently withhis or her current official position of record at any time.
ective action when it finds that aDHS will, after coordination with OPM, establish implementing
tion is not placed in its proper class and grade in conformance withdirectives for reviewing requests for reconsideration, including
ⁱ^{ki/CRS-RL32261}nonreviewable issues, rights of representation, and the effective date of
^g/weneral authority of OPMany corrective actions. OPM will, after consulting with DHS, establish
^s^.or place a position in the appropriate class and grade, determineseparate policies and procedures for reviewing reconsideration requests.
^le^akte class and grade, and change aAn employee may request that OPM review a DHS determination. If an
rade to another when the facts as to theemployee does not request an OPM reconsideration decision, DHS’s
^://wikiand qualification requirements of a positionclassification determination is final and not subject to further review or
^h^ttpee may request that OPM exercise its authority inappeal.
gard.OPM’s final determination on a request is not subject to further review
or appeal.
Transitional Provisions
derives from 5 U.S.C. §9701(a).§9701.231. Conversion of positions and employees to the DHS
classification system. Affected positions and employees may convert
from the GS system, a prevailing rate system, the SL/ST system, or the
SES system, as provided in §9701.202. The terms “convert,”
“converted,” “converting,” and “conversion” refer to positions and
employees that become covered by the classification system as a result
of a coverage determination made under §9701.102(b) and exclude
employees who are reassigned or transferred from a noncovered
position to a position already covered by the DHS system.
DHS will issue implementing directives prescribing policies and

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procedures for converting the GS or prevailing rate grade of a position
to a band and for converting SL/ST and SES positions to a band upon
initial implementation of the DHS classification system. Such
procedures must include provisions for converting an employee who is
retaining a grade under 5 U.S.C. Chapter 53, Subchapter VI,
immediately prior to conversion. As provided in §9701.373, DHS must
ⁱ^{ki/CRS-RL32261}convert employees without a reduction in their rate of pay (including
^g/wbasic pay and any applicable locality payment, special rate, or other
^s^.orsimilar supplemental pay).
^le^ak
derives from 5 U.S.C. §9701(a).§9701.232. Special transition rules for Federal Air Marshal
^://wiki. 107-71 (115 Stat. 597) established the Transportation SecurityService. Notwithstanding any other provision in Subpart B, if DHS
^h^ttption.transfers Federal Air Marshal Service (FAMS) positions from the TSA
to another organization within DHS, DHS may cover those positions
under a classification system that is parallel to the classification system
that was applicable to the FAMS within TSA. DHS may, after
coordination with OPM, modify that system. DHS will issue
implementing directives on converting FAMS employees to any new
classification system that may subsequently be established under
Subpart B, consistent with the conversion rules in §9701.231.
Subpart C — Pay and Pay Administration
General
Authority for Subpart C derives from 5 U.S.C. §9701(a)-(c).§9701.301. Purpose. Subpart C contains regulations establishing pay
Rates and Systemsstructures and pay administration rules for covered DHS employees to
olicyreplace the pay structures and pay administration rules established under
of Congress that federal pay fixing for employees under5 U.S.C. Chapter 53, as authorized by 5 U.S.C. §9701. These

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sed on the principles that there be equal payregulations are designed to provide DHS with the flexibility to allocate
antially equal work within each local pay area; within eachavailable funds strategically in support of DHS mission priorities and
al pay area, pay distinctions be maintained in keeping with work andobjectives. Various features that link pay to employees’ performance
y rates be comparable with non-ratings are designed to promote a high-performance culture within DHS.
deral pay rates for the same levels of work within the same local payAny pay system prescribed under Subpart C must be established in
existing pay disparities between federal and non-federalconjunction with the classification system described in Subpart B.
ⁱ^{ki/CRS-RL32261}ees should be completely eliminated.The pay system established under Subpart C, working in conjunction
^g/wwith the performance management system established under Subpart D,
^s^.oris designed to incorporate these features: adherence to merit principles
^le^akset forth in 5 U.S.C. §2301; a fair, credible, and transparent employee
performance appraisal system; a link between elements of the pay
^://wikisystem established in Subpart C, the employee performance appraisal
^h^ttpsystem, and the department’s strategic plan; employee involvement in
the design and implementation of the system (as specified in
§9701.105); adequate training and retraining for supervisors, managers,
and employees in the implementation and operation of the pay system;
periodic performance feedback and dialogue among supervisors,
managers, and employees throughout the appraisal period, and setting
timetables for review; effective safeguards so that the management of
the system is fair and equitable and based on employee performance;
and a means for ensuring that adequate resources are allocated for the
design, implementation, and administration of the performance
management system that supports the pay system.
derives from 5 U.S.C. §9701(a)-(c).§9701.302. Coverage. Subpart C applies to eligible DHS employees in
the categories listed below, subject to a determination by the Secretary
or designee under §9701.102(b).

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III — General Schedule Pay RatesEligible for coverage are: employees who would otherwise be covered
IV — Prevailing Rate Systemsby the GS pay system; employees who would otherwise be covered by a
for certain senior-level positionsprevailing rate system; employees in senior-level (SL) and scientific or
III — Pay for the Senior Executiveprofessional (ST) positions who would otherwise be covered by 5
rviceU.S.C. §5376; and SES members who would otherwise be covered by 5
U.S.C. Chapter 53, Subchapter VIII, subject to §9701.102(d).
ⁱ^{ki/CRS-RL32261} derives from 5 U.S.C. §9701 (a)-(c).§9701.303. Waivers. When a specified category of employees is
^g/wcovered by the pay system established under Subpart C, the provisions
^s^.or
^le^akof 5 U.S.C. Chapter 53, and related regulations, are waived with respect
to that category of employees, except as provided in §9701.106, and
^://wiki below.
^h^ttpProvisions of 5 U.S.C. Chapter 53 that are not waived are: Sections
imitation on certain payments5307; 5311 through 5318; and 5377.
ecutive Schedule Pay Rates
authority for critical positions
The following provisions of 5 U.S.C. Chapter 53 also are not waived:
Section 5371, insofar as it authorizes OPM to apply the provisions of 38
U.S.C. Chapter 74 to DHS employees in health care positions covered
by section 5371 in lieu of any DHS pay system established under
Subpart C or Title 5 Chapters 51, 53, and 61, and Subchapter V of
Chapter 55. The reference to “chapter 51” in section 5371 is deemed to
include a classification system established under Subpart B.
itation on pay fixed by administrative action Section 5373 is modified to raise the limit on rates of basic pay,
nerally, the limitation is Executive Schedule level IV.including any applicable locality payment or supplement, for DHS
employees who are not covered by Subpart C and whose pay is set by

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administrative action (e.g., Coast Guard Academy faculty) to the rate
for level III of the Executive Schedule.
mentsSection 5379 is modified to allow DHS, after coordination with OPM,
to establish and administer a student loan repayment program for DHS
employees, except that DHS may not make loan payments for any
noncareer appointees to the SES or for any employee occupying a
ⁱ^{ki/CRS-RL32261}position that is excepted from the competitive service because of its
^g/wconfidential, policy-determining, policy-making, or policy-advocating
^s^.or
^le^akcharacter. Notwithstanding §9701.302(a), any DHS employee
otherwise covered by section 5379 is eligible for coverage under the
^://wikiprovisions established under this paragraph, subject to a determination
^h^ttpby the Secretary or designee under §9701.102(b).
IV — Prevailing Rate SystemsIn approving the coverage of employees who would otherwise be
revailing rate determinations; wage schedules;covered by a prevailing rate system, DHS may limit the waiver so that
ght differentialsaffected employees remain entitled to environmental or other
rentials for blue-collar workersdifferentials established under 5 U.S.C. §5343(c)(4) and night shift
ht shift differentials for blue-collar workersdifferentials established under 5 U.S.C. §5343(f) if such employees are
grouped in separate occupational clusters (established under Subpart B)
that are limited to employees who would otherwise be covered by a
prevailing rate system.
for certain senior-level positionsEmployees in SL/ST positions and SES members who are covered by a
stment of rates of pay for thebasic pay system established under Subpart C are considered to be paid
ecutive Serviceunder 5 U.S.C. §§5376 and 5382, respectively, for the purpose of
.C. §5307. Limitation on certain paymentsapplying 5 U.S.C. §5307(d).

or an employee who is paid under 5 U.S.C. 5376 or 5383 (setting

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ecutive pay) or 28 U.S.C. 332(f) (judicial circuit
ecutives), 603 or 604 (Administrative Office of U.S. Courts) and who
ency which, for purposes of the
ear involved, has been certified as having a performance
stem which (as designed and applied) makes meaningful
tions based on relative performance, the limitation would be the
ⁱ^{ki/CRS-RL32261} .
^g/winitions; application (unless otherwise noted)§9701.304. Definitions. “48 contiguous States” means the States of
^s^.or
^le^akthe United States, excluding Alaska and Hawaii, but including the
District of Columbia.
^://wiki
^h^ttpitions which, although different with“Band” means a work level or pay range within an occupational cluster.
work, are sufficiently equivalent as“Band rate range” means the range of rates of basic pay (excluding any
and responsibility; and level of qualificationlocality or special rate supplements) applicable to employees in a
their inclusion within one range ofparticular band, as described in §9701.321. Each band rate range is
in the General Schedule.defined by a minimum and maximum rate.
” means the total amount of pay received during any one“Basic pay” means an employee’s rate of pay before any deductions and
lendar year at the rate fixed by law or administrative action for theexclusive of additional pay of any kind, except as expressly provided by
an employee, including night and environmentallaw or regulation. For the specific purposes prescribed in
rentials for prevailing rate employees, but before any deductions§§9701.332(c) and 9701.333, respectively, basic pay includes locality
clusive of additional pay of any other kind. [5 CFR §530.202]and special rate supplements.
“Competencies” means the measurable or observable knowledge, skills,
abilities, behaviors, and other characteristics required by a position.
e of an employee, while continuously“Demotion” means a reduction to a lower band within the same
ed, from one General Schedule (GS) grade to a lower GS grade,occupational cluster or a reduction to a lower band in a different

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; or a higher rate paid under authorityoccupational cluster under implementing directives issued by DHS
III, to a lower rate within apursuant to §9701.355.
rade. [5 CFR §531.202]
payment” means a payment payable under 5 U.S.C.“Locality rate supplement” means a geographic-based addition to basic
-based comparability payments).pay, as described in §9701.332.
ⁱ^{ki/CRS-RL32261}“Modal rating” means the rating of record that occurs most frequently in
^g/wa particular pay pool.
^s^.or
^le^ak“Occupational cluster” means a grouping of one or more associated or
^://wikirelated occupations or positions. An occupational cluster may includeone or more occupational series.
^h^ttp
e of an employee, while continuously“Promotion” means an increase to a higher band within the same
ed, from one General Schedule (GS) grade to a higher GS grade;occupational cluster or an increase to a higher band in a different
other than 5 U.S.C. Chapter 53,occupational cluster under implementing directives issued by DHS
bchapter III, to a higher rate within a GS grade. [5 CFR §531.202]pursuant to §9701.355.
ating of record” means the performance rating prepared at the end of“Rating of record” means a performance appraisal prepared at the end of
of agency-assigned duties over thean appraisal period covering an employee’ performance of assigned
nment of a summary level within a pattern. [5duties against performance expectations (as defined in §9701.404) over
R §430.203]the applicable period; or to support a pay determination, including one
granted in accordance with Subpart C, a within-grade increase granted
under 5 CFR §531.404, or a pay determination granted under other
applicable rules.
that are classified above GS-15“SL/ST” refers to an employee serving in a senior-level position paid
ientific or professional positionsunder 5 U.S.C. §5376. The term “SL” identifies a senior-level

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5 U.S.C. §5376]employee covered by 5 U.S.C. §§3324 and 5108. The term “ST”

identifies an employee who is appointed under the special authority in 5
U.S.C. §3325 to a scientific or professional position under 5 U.S.C.
§3104.
enior Executive Service position” means any position in an agency“SES” means the Senior Executive Service established under 5 U.S.C.
ant to 5 U.S.C. §5108 or in level IVChapter 31, Subchapter II.
ⁱ^{ki/CRS-RL32261}ecutive Schedule, or an equivalent position, that is not
^g/w an appointment by the President by and with the
^s^.or
^le^akte. Duties and responsibilities of
ees in such positions are listed. [5 U.S.C. §3132(a)(2)]
^://wiki
^h^ttp authority — higher minimum rates of basic pay for one or“Special rate supplement” means an addition to basic pay for a
rades or levels, occupational groups, series, classes, orparticular category of employees to address staffing problems, as
ocality-based comparability payments shall bedescribed in §9701.333. A special rate supplement is paid in place of
lable to employees receiving special rates to such extent as theany lesser locality rate supplement that would otherwise apply.
esident (or designated agency) considers appropriate subject to pay

5 U.S.C. §5305(a)(g)]

able performance” means performance of an employee that“Unacceptable performance” means the failure to meet one or more
ils to meet established performance standards in one or more criticalperformance expectations, as described in §9701.406.
ee’s position. [5 U.S.C. §4301(3)]
cannot be collectively bargained under Title 5§9701.305. Bar on collective bargaining. As provided in the
definition of “conditions of employment” in §9701.504, any pay
program established under authority of Subpart C is not subject to
collective bargaining. This bar on collective bargaining applies to all
aspects of the pay program, including but not limited to coverage
decisions, the design of pay structures, the setting and adjustment of pay

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levels, pay administration rules and policies, and administrative
procedures and arrangements.
Overview of Pay System
I — Pay Comparability System§9701.311. Major features. Through the issuance of implementing
stments to pay schedulesdirectives, DHS will establish a pay system that governs the setting and
ⁱ^{ki/CRS-RL32261}ocality-based comparability paymentsadjusting of covered employees’ rates of pay. The system will include a
^g/w authoritystructure of rate ranges linked to various bands for each occupational
^s^.orcluster, in alignment with the classification structure described in
^le^akII. Executive Schedule Pay RatesSubpart B; policies regarding the setting and adjusting of basic pay rate
^://wikiV. Prevailing Rate Systems (payranges based on mission requirements, labor market conditions, and
^h^ttptting for blue-collar workers)other factors, as described in §§9701.321 through 9701.322;
III. Pay for the Senior Executivepolicies regarding the setting and adjusting of supplements to basic pay
rvicebased on local labor market conditions and other factors, as described in
§§9701.331 through 9701.334; policies regarding employees’ eligibility
for pay increases based on adjustments in rate ranges and supplements,
as described in §§9701.323 through §9701.325 and 9701.335 through
§9701.337; policies regarding performance-based pay adjustments, as
described in §§9701.341 through 9701.346;
policies on basic pay administration, including movement between
occupational clusters, as described in §§9701.351 through 9701.356;
policies regarding special payments that are not basic pay, as described
in §§9701.361 through 9701.363; and linkages to employees’
performance ratings of records, as described in Subpart D.
.C. §5307. Limitation on certain payments§9701.312. Maximum rates. DHS may not pay any employee an
award, or other similar cash paymentannual rate of basic pay in excess of the rate for level III of the

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be paid to an employee in a calendar year if, or to the extent that,Executive Schedule, except that DHS may establish the maximum
paid or payable to such employeeannual rate of basic pay for members of the SES at the rate for level II
ceed the annual rate of basic pay forof the Executive Schedule if DHS obtains the certification specified in 5
ecutive Schedule level I.U.S.C. §5307(d).
r an employee who is paid under 5 U.S.C. 5376 or 5383 or 28 U.S.C.
executives), 603 or 604 (Administrative Offices
ⁱ^{ki/CRS-RL32261}ency which,
^g/wear involved, has been certified as having
^s^.orance appraisal system which (as designed and applied) makes
^le^akaningful distinctions based on relative performance, the limitation
ident’s annual salary.
^://wiki
^h^ttp derives from 5 U.S.C. §9701(a).§9701.313. Homeland Security Compensation Committee (HSCC).
DHS will establish a HSCC to provide options and/or recommendations
for consideration by the Secretary or designee on strategic
compensation matters such as departmental compensation policies and
principles, the annual allocation of funds between market and
performance pay adjustments, and the annual adjustment of rate ranges
and locality and special rate supplements. The committee will consider
factors such as turnover, recruitment, and local labor market conditions
in providing options and recommendations for consideration by the
Secretary. The Secretary’s or designee’s determination with regard to
these options and/or recommendations is final and not subject to further
review.
The DHS Undersecretary for Management will chair the committee.
The committee has 14 members, including 4 officials of labor
organizations granted national consultation rights (NCR). An OPM
official will serve as an ex officio member of the committee. DHS will

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provide technical staff to support the committee.
DHS will establish procedures governing the committee’s membership
and operation.
An individual will be selected by the Chair to facilitate committee
meetings. The facilitator will be selected from a list of nominees
developed jointly by representatives of the department and NCR labor
ⁱ^{ki/CRS-RL32261}organizations, the latter acting as a single party, according to procedures
^g/wand time limits established by implementing directives. Nominees must
^s^.orbe known for their integrity, impartiality, and expertise in facilitation
^le^akand compensation. If the department and the labor organizations are
unable to reach agreement on a joint list of nominees, they will enlist
^://wikithe assistance of the Federal Mediation and Conciliation Service
^h^ttp(FMCS). If the parties are still unable to reach agreement, each party
will prepare a list of up to three nominees and provide those separate
lists to FMCS who may add up to three additional nominees. From that
combined list of nominees, the department and the labor organizations,
the latter acting as a single party, will alternately strike names from the
list until five names remain, and those five nominees will be submitted
to the Chair for consideration. The Chair may request that the parties
develop an additional list of nominees. If the NCR labor organizations
representatives, acting as a single party, do not participate in developing
the list of nominees in accordance with this section, the Chair will select
the facilitator.
After considering the views of all committee members, the Chair
prepares and provides options and/or recommendations to the Secretary
or designee. Members may present their views on the final
recommendations in writing as part of the final recommendation
package. The Secretary or designee will make the final decision and

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notify the committee. This process is not subject to the requirements
established by §§9701.512, 9701.517(a)(5), 9701.518, or 9701.519.
The Secretary retains the right to make determinations regarding the
annual allocation of funds between market and performance pay
adjustments, the annual adjustment of rate ranges and locality and
special rate supplements, or any other matter recommended by the
ⁱ^{ki/CRS-RL32261}committee, and to make such determinations effective at any time.
^g/w derives from 5 U.S.C. §9701(a).§9701.314. DHS responsibilities. DHS responsibilities in
^s^.or
^le^akimplementing Subpart C include providing OPM with information
regarding the implementation of the program authorized under Subpart
^://wikiC at OPM’s request;
^h^ttpparticipating in any interagency pay coordination council or group
established by OPM to ensure that DHS pay policies and plans are
coordinated with other agencies; and fulfilling all other responsibilities
prescribed in Subpart C.
Setting and Adjusting Rate Ranges
or grading positions§9701.321. Structure of bands. After coordination with OPM, DHS
ovides for 15 General Schedule pay grades. The statute defines eachmay establish ranges of basic pay for bands, with minimum and
grades in terms of their difficulty and responsibility.maximum rates set and adjusted as provided in §9701.322. Rates must
be expressed as annual rates.
For each band within an occupational cluster, DHS will establish a
common rate range that applies in all locations.
or classifying positions§9701.322. Setting and adjusting rate ranges. Within its sole and
tion is placed in its appropriate class on the basis of the dutiesexclusive discretion, DHS may, after coordination with OPM, set and
nd the qualifications required byadjust the rate ranges established under §9701.321 on an annual basis.

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class is placed in its appropriateIn determining the rate ranges, DHS and OPM may consider mission
ade on the basis of the level of difficulty, responsibility, andrequirements, labor market conditions, availability of funds, pay
the work of the class.adjustments received by employees of other federal agencies, and any
other relevant factors.
or classification of positionsAfter coordination with OPM, DHS may determine the effective date of
ⁱ^{ki/CRS-RL32261}fter consulting the agencies, prepares standards for placingnewly set or adjusted band rate ranges. Unless DHS determines that a
^g/wand grades. OPM may make suchdifferent effective date is needed for operational reasons, these
^s^.orations of the duties, responsibilities, andadjustments will become effective on or about the date of the annual GS
^le^akof positions as it considers necessary for thispay adjustment.
n the standards, OPM defines the various classes of positionsDHS may establish different rate ranges and provide different rate range
^://wikis, and qualification requirements;adjustments for different bands.
^h^ttptablishes the official class titles; and sets forth the grades in which theDHS may adjust the minimum and maximum rates of a band by
OPM. OPM must revise, supplement, ordifferent percentages.
isting standards, or prepare new standards so that positions
current published standards. The official class titles
et, and fiscal purposes.
ication of positions
cept as otherwise provided in Chapter 51, each agency places each
appropriate class and grade in
When facts warrant, an agency may
e a position from one class or grade to another.
.C. §5335. Periodic step-increases§9701.323. Eligibility for pay increase associated with a rate range
.C. §5336. Additional step-increasesadjustment. When a band rate range is adjusted under §9701.322,
horizes within-grade pay adjustments for work at an acceptable levelemployees covered by that band are eligible for an individual pay
h quality performance above thatincrease. An employee who meets or exceeds performance expectations
found in the position (§5336).(i.e., has a rating of record above the unacceptable performance level for

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ents to pay schedulesthe most recently completed appraisal period) must receive an increase
es annual pay adjustments. Effective as of the first day of thein basic pay equal to the percentage value of any increase in the
applicable pay period beginning on or after January 1 of eachminimum rate of the employee’s band resulting from a rate range
endar year, the rates of basic pay for each statutory pay system areadjustment under §9701.322. The pay increase takes effect at the same
creased by the percentage equal to the Employment Cost Index fortime as the corresponding rate range adjustment, except as provided in
es and salaries, private industry workers, minus 0.5%, i.e., the§§9701.324 and 9701.325. For an employee receiving a retained rate,
ⁱ^{ki/CRS-RL32261} is used for the January 2005 pay adjustment.the amount of the increase is determined under §9701.356.
^g/wIf an employee does not have a rating of record for the most recently
^s^.orcompleted appraisal period, he or she must be treated in the same
^le^akmanner as an employee who meets or exceeds performance expectations
and is entitled to receive an increase based on the rate range adjustment.
^://wikiAn employee who has an unacceptable rating of record may not receive
^h^ttpa pay increase as a result of a rate range adjustment, except as provided
by §§9701.324 and 9701.325. Because the employee’s pay remains
unchanged, failure to receive a pay increase is not considered an adverse
action under Subpart F.
R §430.208 Rating performance. (i) A rating or record may be§9701.324. Treatment of employees whose rate of basic pay does
ed within 60 days of issuance based upon an informal request bynot fall below the minimum rate of their band. An employee who
e employee; as a result of a grievance, complaint, or other formaldoes not receive a pay increase under §9701.323 because of an
permitted by law or regulation that results in a finalunacceptable rating of record and whose rate of basic pay does not fall
appropriate authority that the rating of record must bebelow the minimum rate of his or her band as a result of that rating will
ed or as part of a bona fide settlement of a formal proceeding; orreceive such an increase if he or she demonstrates performance that
he agency determines that a rating of record was incorrectlymeets or exceeds performance expectations, as reflected by a new rating
culated.of record issued under §9701.409(b). Such an increase will be made
R §531.409 Acceptable level of competence determinations (theeffective on the first day of the first pay period beginning on or after the
ction generally and specifically:)date the new rating of record is issued.

) When the determination of an acceptable level of competence

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ayed for reasons including an employee’s unacceptable
ance, if, following the delay, the employee’s performance is
ermined to be at an acceptable level of competence, the within-grade
rease will be granted retroactively to the beginning of the pay period
completion of the applicable waiting period.
R §430.208 and 5 CFR §531.409 above.§9701.325. Treatment of employees whose rate of basic pay falls
ⁱ^{ki/CRS-RL32261}below the minimum rate of their band. For an employee who does
^g/wnot receive a pay increase under §9701.323 because of an unacceptable
^s^.or
^le^akrating of record and whose rate of basic pay falls below the minimum
rate of his or her band as a result of that rating, DHS must issue a new
^://wikirating of record under §9701.409(b) and adjust the employee’s pay
^h^ttpprospectively by making the increase effective on the first day of the
first pay period beginning on or after the date the new rating of record is
issued if the employee demonstrates performance that meets or exceeds
performance expectations within 90 days after the date of the rate range
adjustment; or
initiate action within 90 days after the date of the rate range adjustment
to demote or remove the employee in accordance with the adverse
actions procedures established in Subpart F.
If DHS fails to initiate a removal or demotion action within 90 days
after the date of the rate range adjustment, the employee becomes
entitled to the minimum rate of his or her band rate range on the first
day of the first pay period beginning on or after the 90^th day following
the date of the rate range adjustment.
Locality and Special Rate Supplements

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ocality-based comparability payments§9701.331. General. The basic pay ranges established under
authority§§9701.321 through 9701.323 may be supplemented in appropriate
circumstances by locality or special rate supplements, as described in
§§9701.332 through 9701.335. These supplements are expressed as a
percentage of basic pay and are set and adjusted as described in
§9701.334. As authorized by §9701.356, DHS implementing directives
ⁱ^{ki/CRS-RL32261}will determine the extent to which §§9701.331 through 9701.337 apply
^g/wto employees receiving a retained rate.
^s^.or
^le^akparability payments§9701.332. Locality rate supplements. For each band rate range,
payments are payable within each locality determined toDHS may, after coordination with OPM, establish locality rate
^://wiki disparity greater than 5%.supplements that apply in specified locality pay areas. Locality rate
^h^ttpsupplements apply to employees whose official duty station is located in
the given area. DHS may provide different locality rate supplements for
different occupational clusters or for different bands within the same
occupational cluster in the same locality pay area.
cality pay areas are listed at 5 CFR §531.603.For the purpose of establishing and modifying locality pay areas, 5
U.S.C. §5304 is not waived. A DHS decision to use the locality pay
area boundaries established under 5 U.S.C. §5304 does not require
separate DHS regulations. DHS may, after coordination with OPM and
in accordance with the public notice and comment provisions of 5
U.S.C. §553, publish departmental regulations in the Federal Register
that establish and adjust different locality pay areas within the 48
contiguous States or establish and adjust new locality pay areas outside
the 48 contiguous States. These regulations are subject to the
continuing collaboration process described in §9701.105. As provided
by 5 U.S.C. §5304(f)(2)(B), judicial review of any DHS regulation

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regarding the establishment or adjustment of locality pay areas is
limited to whether or not the regulation was promulgated in accordance
with 5 U.S.C. §553.
cality payments are part of basic pay for purposes of retirement, lifeLocality rate supplements are considered basic pay for retirement; life
, and for such other purposes as may beinsurance; premium pay; severance pay; application of the maximum
pressly provided for by law or as OPM regulations may prescribe.rate limitation set forth in §9701.312; determining the rate of basic pay
ⁱ^{ki/CRS-RL32261}upon conversion to the DHS pay system established under Subpart C,
^g/wconsistent with §9701.373(b); other payments and adjustments
^s^.or
^le^akauthorized under Subpart C as specified by DHS implementing
directives; other payments and adjustments under other statutory or
^://wikiregulatory authority that are basic pay for the purpose of locality-based
^h^ttpcomparability payments; and any provisions for which DHS locality
rate supplements must be treated as basic pay by law.
§9701.333. Special rate supplements. DHS will, after coordination
never the President finds that the government’s recruitment orwith OPM, establish special rate supplements that provide higher pay
or more occupations in one or morelevels for subcategories of employees within an occupational cluster if
ocations are, or are likely to become significantly handicappedDHS determines that such supplements are warranted by current or
o specific circumstances, he may establish for the areas or locationsanticipated recruitment and/or retention needs. DHS will issue
her minimum rates of basic pay for one or more grades ornecessary implementing directives. Any special rate supplement must
roups, series, classes, or subdivisions thereof, andbe treated as basic pay for the same purposes as locality rate
make corresponding increases in all step rates of the pay range forsupplements, as described in §9701.332(c), and for the purpose of
rade or level. Circumstances justifying special rates arecomputing cost-of-living allowances and post differentials in nonforeign
offered by non-federal employees being significantly higherareas under 5 U.S.C. §5941.

able by the government within the area, location,
roup, or classes of positions under the pay system
ea or location; the undesirability of

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conditions or the nature of the work involved (including
posure to toxic substances or other occupational hazards); or any
her circumstances which the President (or an agency) considers
parability payments§9701.334. Setting and adjusting locality and special rate
horizes the President to direct the Pay Agent to prepare a reportsupplements. Within its sole and exclusive discretion, DHS may, after
ⁱ^{ki/CRS-RL32261}mparing General Schedule pay rates with non-federal pay rates, ascoordination with OPM, set and adjust locality and special rate
^g/w surveys conducted by the Bureau of Labor Statistics. supplements. In determining the amounts of the supplements, DHS and
^s^.or
^le^akhe data from the surveys, the Pay Agent identifies eachOPM may consider mission requirements, labor market conditions,
ality in which a pay disparity exists, specifies the size of the payavailability of funds, pay adjustments received by employees of other
^://wiki, and makes recommendations to the President for appropriatefederal agencies, and any other relevant factors.
^h^ttpmparability payments. Comparability payments are paid in the sameDHS may, after coordination with OPM, determine the effective date of
nner and at the same time as basic pay is payable.newly set or adjusted locality and special rate supplements. Established
fix an alternative level ofsupplements will be reviewed for possible adjustment on an annual
mparability paymentsbasis in conjunction with rate range adjustments under §9701.322.

s the President to fix an alternative level of locality-based
payments if, because of national emergency or serious
the general welfare, he considers the
able to be inappropriate. At least one
fore those comparability payments would be payable he must
pare and transmit to Congress a report describing the alternative
ments he intends to provide, including the reasons why that
rnative level is necessary.
inimum rate may not exceed the maximum pay rate prescribed by
atute for the grade or level by more than 30% and no rate may be
cess of basic pay for Executive Schedule level V.

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nerally, Title 5 rewards high performing employees through awards.§9701.335. Eligibility for pay increase associated with a supplement
erformance-based cash awardsadjustment. When a locality or special rate supplement is adjusted
ployee whose most recent performance rating was fullyunder §9701.334, an employee to whom the supplement applies is
her may be paid a cash award equal to an amountentitled to the pay increase resulting from that adjustment if he or she
the agency head, but not more than 10% ofmeets or exceeds performance expectations (i.e., has a rating of record
ee’s annual pay rate (not more than 20% for exceptionalabove the unacceptable performance level for the most recently
ⁱ^{ki/CRS-RL32261}completed appraisal period). This includes an increase resulting from
^g/wardsthe initial establishment and setting of a special rate supplement. The
^s^.orhorizes an agency head to pay a cash award to an employee whopay increase takes effect at the same time as the applicable supplement
^le^ak, economy, or other improvement ofis set or adjusted, except as provided in §§9701.336 and 9701.337.
significant reduction in paperwork;If an employee does not have a rating of record for the most recently
^://wikis a special act or service in the public interest in connectioncompleted appraisal period, he or she must be treated in the same
^h^ttpment.manner as an employee who meets or exceeds performance expectations
residential awardsand is entitled to any pay increase associated with a supplement
horizes the President to pay a cash award to an employee whoadjustment.
, economy, or other improvement ofAn employee who has an unacceptable rating of record may not receive
significant reduction in paperwork;a pay increase as a result of an increase in an applicable locality or
ceptionally meritorious special act or service in thespecial rate supplement, except as provided by §§9701.336 and
interest in connection with or related to official employment.9701.337. Because the employee’s pay remains unchanged, failure to
receive a pay increase is not considered an adverse action under Subpart
F.
R §430.208 Rating performance. (i) A rating or record may be§9701.336. Treatment of employees whose pay does not fall below
ed within 60 days of issuance based upon an informal request bythe minimum adjusted rate of their band. An employee who does
e employee; as a result of a grievance, complaint, or other formalnot receive a pay increase under §9701.335 because of an unacceptable
permitted by law or regulation that results in a finalrating of record and whose rate of basic pay (including a locality or
appropriate authority that the rating of record must bespecial rate supplement) does not fall below the minimum adjusted rate
ed or as part of a bona fide settlement of a formal proceeding; orof his or her band as a result of that rating will receive such an increase

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he agency determines that a rating of record was incorrectlyif he or she demonstrates performance that meets or exceeds
culated.performance expectations, as reflected by a new rating of record issued
R §531.409 Acceptable level of competence determinations (theunder §9701.409(b). Such an increase will be made effective on the
ction generally and specifically:)first day of the first pay period beginning on or after the date the new
) When the determination of an acceptable level of competencerating of record is issued.
ayed for reasons including an employee’s unacceptable
ⁱ^{ki/CRS-RL32261}ance, if, following the delay, the employee’s performance is
^g/wermined to be at an acceptable level of competence, the within-grade
^s^.orrease will be granted retroactively to the beginning of the pay period
^le^ak completion of the applicable waiting period.
^://wikiR §430.208 and 5 CFR §531.409 (c) above.§9701.337. Treatment of employees whose rate of pay falls below
^h^ttpthe minimum adjusted rate of their band. For an employee who does
not receive a pay increase under §9701.335 because of an unacceptable
rating of record and whose rate of basic pay (including a locality or
special rate supplement) falls below the minimum adjusted rate of his or
her band as a result of that rating, DHS must issue a new rating of
record under §9701.409(b) and adjust the employee’s pay prospectively
by making the increase effective on the first day of the first pay period
beginning on or after the date the new rating of record is issued if the
employee demonstrates performance that meets or exceeds performance
expectations within 90 days after the date of the locality or special rate
supplement adjustment; or
initiate action within 90 days after the date of the locality or special rate
supplement adjustment to demote or remove the employee in
accordance with the adverse action procedures established in Subpart F.
If DHS fails to initiate a removal or demotion action within 90 days
after the date of a locality or special rate supplement adjustment, the

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employee becomes entitled to the minimum adjusted rate of his or her
band rate range on the first day of the first pay period beginning on or
after the 90^th day following the date of the locality or special rate
supplement adjustment.
Performance-Based Pay
ⁱ^{ki/CRS-RL32261}§9701.341. General. Sections 9701.342 through 9701.346 describe
^g/wvarious types of performance-based pay adjustments that are part of the
^s^.orpay system established under Subpart C. Generally, these within-band
^le^akpay increases are directly linked to an employee’s rating of record (as
^://wikiency awardsassigned under the performance management system described in
^h^ttpSubpart D). These provisions are designed to provide DHS with the
flexibility to allocate available funds based on performance as a means
of fostering a high-performance culture that supports mission
accomplishment. While performance measures primarily focus on an
employee’s contributions (as an individual or as part of a team) in
accomplishing work assignments and achieving mission results,
performance also may be reflected in the acquisition and demonstration
of required competencies.
erformance-based cash awards§9701.342. Performance pay increases. Overview. The DHS pay
ployee whose most recent performance rating was “fullysystem provides employees in a Full Performance or higher band with
her may be paid a cash award.increases in basic pay based on individual performance ratings of record
as assigned under a performance management system established under
.C. §5335. Periodic step-increasesSubpart D. The DHS pay system uses pay pool controls to allocate pay
.C. §5336. Additional step-increasesincreases based on performance points that are directly linked to the
horizes within-grade pay adjustments for work at an acceptable levelemployee’s rating of record, as described in this section. Performance

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h quality performance above thatpay increases are a function of the amount of money in the performance
found in the position (§5336).pay pool, the relative point value placed on ratings, and the distribution
of ratings within that performance pay pool.
The rating of record used as the basis for a performance pay increase is
the one assigned for the most recently completed appraisal period
(subject to the requirements of Subpart D), except that if the supervisor
ⁱ^{ki/CRS-RL32261}or other rating official determines that an employee’s current
^g/wperformance is inconsistent with that rating, the supervisor or other
^s^.orrating official may prepare a more current rating of record, consistent
^le^akwith §9701.409(b). If an employee does not have a rating of record,
DHS will use the modal rating received by other employees covered by
^://wikithe same pay pool during the most recent rating cycle to determine the
^h^ttpemployee’s performance pay increase.
Performance pay pools. DHS will establish pay pools for performance
pay increases. Each pay pool covers a defined group of DHS
employees, as determined by the agency. An authorized agency
official(s) may determine the distribution of funds among pay pools and
may adjust those amounts based on overall levels of organizational
performance or contribution to DHS’ mission. In allocating the monies
to be budgeted for performance pay increases, the Secretary or designee
must take into account the average value of within-grade and quality
step increases under the General Schedule, as well as amounts that
otherwise would have been spent on promotions among positions placed
in the same band.
Performance point values. DHS will establish point values that
correspond to the performance rating levels established under Subpart
D, so that a point value is attached to each rating level. For example, in
a four-level rating program, the point value pattern could be 4-2-1-0,

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where 4 points are assigned to the highest (outstanding) rating and 0
points to an unacceptable rating. Performance point values will
determine performance pay increases. DHS will establish a point value
pattern for each pay pool. Different pay pools may have different point
value patterns. DHS must assign zero performance points to an
unacceptable rating of record.
ⁱ^{ki/CRS-RL32261}Performance payout. DHS will determine the value of a performance
^g/wpoint, expressed as a percentage of an employee’s rate of basic pay
^s^.or(exclusive of locality or special rate supplements under §§9701.332 and
^le^ak9701.333) or as a fixed dollar amount. To determine an individual
employee’s performance payout, DHS will multiply the point value
^://wikidetermined above by the number of performance points assigned to the
^h^ttprating. To the extent that the adjustment does not cause the employee’s
rate of basic pay to exceed the maximum rate of the employee’s band
rate range, DHS will pay the performance payout as an adjustment in
the employee’s annual rate of basic pay. Any excess amount may be
granted as a lump-sum payment, which may not be considered basic pay
for any purpose. DHS may, after coordination with OPM, determine
the effective date of adjustments in basic pay.
For an employee receiving a retained rate under §9701.356, DHS will
issue implementing directives to provide for granting a lump-sum
performance payout that may not exceed the amount that may be
received by an employee in the same pay pool with the same rating of
record whose rate of pay is at the maximum rate of the same band.
Proration of performance payouts. DHS will issue implementing
directives regarding the proration of performance payouts for employees
who, during the period between performance pay adjustments, are hired
or promoted; in a leave-without-pay status; or in other circumstances

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where proration is considered appropriate.
Adjustments for employees returning after performing honorable
service in the uniformed services. DHS will issue implementing
directives regarding how it sets the rate of basic pay prospectively for an
employee who leaves a DHS position to perform service in the
uniformed services (as defined in 38 U.S.C. §4303 and 5 CFR
ⁱ^{ki/CRS-RL32261}§353.102) and returns through the exercise of a reemployment right
^g/wprovided by law, Executive order, or regulation under which accrual of
^s^.orservice for seniority-related benefits is protected (e.g., 38 U.S.C.
^le^ak§4316). DHS will credit the employee with intervening rate range
adjustments under §9701.323(a), as well as developmental pay
^://wikiadjustments under §9701.345 (determined by DHS in accordance with
^h^ttpits implementing directives), and performance pay adjustments based on
the employee’s last DHS rating of record. For employees who have no
such rating of record, DHS will use the modal rating received by other
employees covered by the same pay pool during the most recent rating
cycle. An employee returning from qualifying service in the uniformed
services will receive the full amount of the performance pay increase
associated with his or her rating of record.
Adjustments for employees returning to duty after being in workers’
compensation status. DHS will issue implementing directives regarding
how it sets the rate of basic pay prospectively for an employee who
returns to duty after a period of receiving injury compensation under 5
U.S.C. Chapter 81, Subchapter I (in a leave-without-pay status or as a
separated employee). DHS will credit the employee with intervening
rate range adjustments under §9701.323(a), as well as developmental
pay adjustments under §9701.345 (as determined by DHS in accordance
with its implementing directives), and performance pay adjustments

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based on the employee’s last DHS rating of record. For employees who
have no such rating of record, DHS will use the modal rating received
by other employees covered by the same pay pool during the most
recent rating cycle. An employee returning to duty after receiving
injury compensation will receive the full amount of the performance pay
increase associated with his or her rating of record.
ⁱ^{ki/CRS-RL32261}.C. §4303. Actions based on unacceptable performance§9701.343. Within-band reductions. Subject to the adverse action
^g/whorizes an agency to reduce in grade or remove an employee forprocedures set forth in Subpart F, DHS may reduce an employee’s rate
^s^.or
^le^akable performance.of basic pay within a band for unacceptable performance or conduct. A
reduction under this section may not be more than 10% or cause an
^://wikiemployee’s rate of basic pay to fall below the minimum rate of the
^h^ttpemployee’s band rate range. Such a reduction may be made effective at
any time.
ay authority for critical positions§9701.344. Special within-band increases. DHS may issue
es OMB, in consultation with OPM, to, upon the request of animplementing directives regarding special within-band basic pay
ency head, grant authority to fix the basic pay rate for one or moreincreases for employees within a Full Performance or higher band
ency in accordance with critical pay. OMB may notestablished under §9701.212 who possess exceptional skills in critical
horize the exercise of critical pay authority for more than 800areas or who make exceptional contributions to mission
t any time, of which not more than 30 may at any time beaccomplishment or in other circumstances determined by DHS.
paid on the Executive Schedule.Increases under this section are in addition to any performance pay
increases made under §9701.342 and may be made effective at any
time. Special within-band increases may not be based on length of
service.
.C. §5335. Periodic step-increases§9701.345. Developmental pay adjustments. DHS will issue
.C. §5336. Additional step-increasesimplementing directives regarding pay adjustments within the

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horizes within-grade pay adjustments for work at an acceptable levelEntry/Developmental band. These directives may require employees to
h quality performance above thatmeet certain standardized assessment or certification points as part of a
found in the position (§5336).formal training/developmental program. In administering
Entry/Developmental band pay progression plans, DHS may link pay
progression to the demonstration of required knowledge, skills, and
abilities (KSAs)/competencies. DHS may set standard timeframes for
ⁱ^{ki/CRS-RL32261}progression through an Entry/Developmental band while allowing an
^g/wemployee to progress at a slower or faster rate based on his or her
^s^.orperformance, demonstration of required competencies, and/or other
^le^ak fact ors.
^://wiki.C. §3393. Career appointments (SES)§9701.346. Pay progression for new supervisors. DHS will issue
^h^ttpdministers the Federal Candidate Development Program to trainimplementing directives requiring an employee newly appointed to or
ees for SES positions. Upon certification by aselected for a supervisory position to meet certain assessment or
ance review board that an employee has met the five executivecertification points as part of a formal training/developmental program.
or she may be selected for an SESIn administering performance pay increases for these employees under
hout the government.§9701.342, DHS may take into account the employee’s success in
completing a formal training/developmental program, as well as his or
her performance.
Pay Administration
um rate for new appointments§9701.351. Setting an employee’s starting pay. DHS will, after
e minimum rate of the appropriatecoordination with OPM, issue implementing directives regarding the
ade. Appointments at above the minimum rate may be made for suchstarting rate of pay for an employee, including an individual who is
isting pay or unusually high or uniquenewly appointed or reappointed to the federal service; an employee
date, or a special need of the government fortransferring to DHS from another Federal agency; and a DHS employee
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Subpart C.
R §531.203 General provisions. Discusses use of the highest§9701.352. Use of highest previous rate. DHS will issue
at (c)-(e). “Highest previous rate” means theimplementing directives regarding the discretionary use of an
ghest actual rate of basic pay previously received by an individualindividual’s highest previous rate of basic pay received as a federal
ed in a position in a branch of the federal governmentemployee or as an employee of a Coast Guard nonappropriated fund
ecutive, legislative, or judicial); a government corporation; theinstrumentality (NAFI) in setting pay upon reemployment, transfer,
ⁱ^{ki/CRS-RL32261}ted States Postal Service or the Postal Rate Commission; or thereassignment, promotion, demotion, placement in a different
^g/wmbia; without regard to whether theoccupational cluster, or change in type of appointment. For this
^s^.or
^le^akhedule (GS); or the actual rate ofpurpose, basic pay may include a locality-based payment or supplement
c pay for the highest grade and step previously held by an individualunder circumstances approved by DHS. If an employee in a Coast
^://wikied in a position subject to the GS. [5 CFR 531.202]Guard NAFI position is converted to an appropriated fund position
^h^ttpunder the pay system established under Subpart C, DHS must use the
existing NAFI rate to set pay upon conversion.
position or type of appointment;§9701.353. Setting pay upon promotion. Except as otherwise
gulationsprovided in this section, upon an employee’s promotion, DHS must
nerally, an employee who is promoted or transferred to a positionprovide an increase in the employee’s rate of basic pay equal to at least
higher grade is entitled to basic pay at the lowest rate of the higher8%. The rate of basic pay after promotion may not be less than the
ade which exceeds his existing rate of basic pay by not less than twominimum rate of the higher band.
ep-increases of the grade from which he is promoted or transferred. DHS will issue implementing directives providing for an increase other
ulations are at 5 CFR §531.203 and 5 CFR §531.204.than the amount specified above in the case of an employee promoted
from an Entry/Developmental band to a Full Performance band
(consistent with the pay progression plan established for the
Entry/Developmental band); an employee who was demoted and is then
repromoted back to the higher band; or employees in other
circumstances specified by DHS implementing directives.
An employee receiving a retained rate (i.e., a rate above the maximum

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of the band) before promotion is entitled to a rate of basic pay after
promotion that is at least 8% higher than the maximum rate of the
employee’s current band (except in circumstances specified by DHS
implementing directives). The rate of basic pay after promotion may
not be less than the minimum rate of the employee’s new band rate
range or the employee’s existing retained rate of basic pay. If the
ⁱ^{ki/CRS-RL32261}maximum rate of the employee’s new band rate range is less than the
^g/wemployee’s existing rate of basic pay, the employee will continue to be
^s^.orentitled to the existing rate as a retained rate.
^le^akDHS may determine the circumstances under which and the extent to
which any locality or special rate supplements are treated as basic pay in
^://wikiapplying the promotion increase rules in this section.
^h^ttp
position or type of appointment;§9701.354. Setting pay upon demotion. DHS will issue
gulationsimplementing directives regarding how to set an employee’s pay when
) The rate of basic pay to which an employee is entitled is governedhe or she is demoted. The directives must distinguish between
OPM regulations in conformity with Subchapter III of Chapter 53demotions under adverse action procedures (as defined in Subpart F)
rade .... and other demotions (e.g., due to expiration of a temporary promotion
ulations are at [5 CFR §531.203(c)(d)].or canceling of a promotion during a new supervisor’s probationary
period). A reduction in basic pay upon demotion under adverse action
procedures may not exceed 10% unless a larger reduction is needed to
place the employee at the maximum rate of the lower band.
§9701.355. Setting pay upon movement to a different occupational
cluster. DHS will issue implementing directives regarding how to set
an employee’s pay when he or she moves voluntarily or involuntarily to
a position in a different occupational cluster, including rules for
determining whether such a movement is to a higher or lower band for

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the purpose of setting pay upon promotion or demotion under
§§9701.353 and 9701.354, respectively.
VI — Grade and Pay Retention§9701.356. Pay retention. Subject to the requirements of this section,
rade retention following a change of positions orDHS will, after coordination with OPM, issue implementing directives
assificationregarding the application of pay retention. Pay retention prevents a
, an employee whose position changes to one in a lower gradereduction in basic pay that would otherwise occur by preserving the
ⁱ^{ki/CRS-RL32261}ntitled to retain the higher grade for two years. Certain requirementsformer rate of basic pay within the employee’s new band or by
^g/wted in the law must be met for grade retention to occur.establishing a retained rate that exceeds the maximum rate of the new
^s^.or
^le^akay retentionband.
nerally, entitles an employee to basic pay at a rate equal to thePay retention must be based on the employee’s rate of basic pay in
^://wikiee’s allowable former rate of basic pay, plus 50% of the amounteffect immediately before the action that would otherwise reduce the
^h^ttpncrease in the maximum rate of basic pay payable for the gradeemployee’s rate. A retained rate must be compared to the range of rates
employee’s position immediately after such reduction in pay ifof basic pay applicable to the employee’s position.
lowable former rate exceeds such maximum rate for the grade. In applying §9701.323 (regarding pay increases provided at the time of
ertain requirements for pay retention are stated in the law.a rate range adjustment under §9701.322), any increase in the rate of
basic pay for an employee receiving a retained rate is equal to one-half
of the percentage value of any increase in the minimum rate of the
employee’s band.
um rate for new appointments§9701.357. Miscellaneous. Except in the case of an employee who
e minimum rate of the appropriatedoes not receive a pay increase under §§9701.323 or 9701.335 because
ade. Appointments at above the minimum rate may be made for suchof an unacceptable rating of record, an employee’s rate of basic pay may
isting pay or unusually high or uniquenot be less than the minimum rate of the employee’s band (or the
date, or a special need of the government foradjusted minimum rate of that band).
Except as provided in §9701.356, an employee’s rate of basic pay may
not exceed the maximum rate of the employees’ band rate range.

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iweekly pay periods; computation of payDHS must follow the rules for establishing pay periods and computing
pay periods; computation of payrates of pay in 5 U.S.C. §§5504 and 5505, as applicable. For employees
covered by 5 U.S.C. §5504, annual rates of pay must be converted to
hourly rates of pay in computing payments received by covered
employees.
DHS will issue implementing directives regarding the movement of
ⁱ^{ki/CRS-RL32261}employees to or from a band with a rate range that is increased by a
^g/wspecial rate supplement.
^s^.or
^le^akR Part 351 — Reduction In ForceFor the purpose of applying the reduction-in-force provisions of 5 CFR
Part 351, DHS must establish representative rates for all band rate
^://wiki ranges.
^h^ttpIf a DHS employee moves from the pay system established under
Subpart C to a GS position within DHS having a higher level of duties
and responsibilities, DHS may issue implementing directives that
provide for a special increase prior to the employee’s movement in
recognition that the employee will not be eligible for a promotion
increase under the GS system.
Special Payments
III — Award to Law Enforcement§9701.361. Special skills payments. DHS will issue implementing
ers for Foreign Language Capabilitiesdirectives regarding additional payments for specializations for which
es cash awards of up to 5% of basic pay to eligible lawthe incumbent is trained and ready to perform at all times. DHS may
ent officers who possess and make substantial use of one ordetermine the amount of the payments and the conditions for eligibility,
n languages in the performance of official duties. An awardincluding any performance or service agreement requirements.
.Payments may be made at the same time as basic pay or in periodic
IX — Special Occupational Paylump-sum payments. Special skills payments are not basic pay for any

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stemspurpose and may be terminated or reduced at any time without
ent of special occupational pay systemstriggering pay retention or adverse action procedures.
s the President’s pay agent to establish one or more special
systems for any positions within occupations or
oups of occupations that the pay agent, determines for reasons of good
ed under 5 U.S.C. Chapter 51 or be
ⁱ^{ki/CRS-RL32261}III. Certain requirements for
^g/wablishing special occupational pay systems are stated in the law.
^s^.or
^le^ak§9701.362. Special assignment payments. DHS will issue
fferentialimplementing directives regarding additional payments for employees
^://wikies a differential for duty involving unusual physicalserving on special assignments in positions placing significantly greater
^h^ttpard.demands on the employee than other assignments within the employee’s
III — Overseas Differentials andband. DHS may determine the amount of the payments and the
V — Miscellaneous Allowancesconditions for eligibility, including any performance or service
es a danger pay allowance and an allowance based on duty atagreement requirements. Payments may be made at the same time as
mote worksites.basic pay or in periodic lump-sum payments. Special assignment
payments are not basic pay for any purpose and may be terminated or
reduced at any time without triggering pay retention provisions or
adverse action procedures.
.C. §5753. Recruitment and relocation bonuses§9701.363. Special staffing payments. DHS will issue implementing
directives regarding additional payments for employees serving in
and retention bonuses to eligiblepositions for which DHS is experiencing or anticipates significant
ployees in positions likely to be difficult to fill or likely that essentialrecruitment and/or retention problems. DHS may determine the amount
ees would leave in the absence of such bonuses. An employeeof the payments and the conditions for eligibility, including any
a bonus must enter into a service agreement with the agency. performance or service agreement requirements. Payments may be
enerally cannot exceed 25% of annual basic pay, but for amade at the same time as basic pay or in periodic lump-sum payments.

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ency need, may be up to 50% of annual basic pay. A bonusSpecial staffing payments are not basic pay for any purpose and may be
be paid as a lump sum and is not part of basic pay. Additionally,terminated or reduced at any time without triggering pay retention or
nnual basic pay may be paid to aadverse action procedures.
oup of employees if there is a high risk that a significant portion of
roup would likely leave in the absence of such bonuses. For a
ency need, such bonuses may be up to 50% of annual basic
ⁱ^{ki/CRS-RL32261}. [P.L. 108-411, Oct. 30, 2004, 118 Stat. 2305-2309]
^g/wTransitional Provisions
^s^.or
^le^ak derives from 5 U.S.C. §9701(a).§9701.371. General. An affected employee may convert from the GS
^://wikisystem, a prevailing rate system, the SL/ST system, or the SES system,
^h^ttpas provided in §9701.302. For the purpose of this section and
§§9701.372 through 9701.374, the terms “convert,”
“converted,”“converting,” and “conversion” refer to employees who
become covered by the pay system without a change in position (as a
result of a coverage determination made under §9701.102(b) and
exclude employees who are reassigned or transferred from a noncovered
position to a position already covered by the DHS system. DHS will
issue implementing directives prescribing the policies and procedures
necessary to implement these transitional provisions.
derives from 5 U.S.C. §9701(a).§9701.372. Creating initial pay ranges. DHS must, after coordination
with OPM, set the initial band rate ranges for the DHS pay system
established under Subpart C. The initial ranges will link to the ranges
that apply to converted employees in their previously applicable pay
system (taking into account any applicable special rates and locality
payments or supplements).

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forcement officer” (LEO) as anFor employees who are law enforcement officers as defined in 5 U.S.C.
ee who is an LEO within the meaning of 5 U.S.C. §§8331(20) or§5541(3) and who were covered by the GS system immediately before
poses of federal retirement. Theconversion, the initial ranges must provide rates of basic pay that equal
which meet the definition.or exceed the rates of basic pay these officers received under the GS
system (taking into account any applicable special rates and locality
payments or supplements).
ⁱ^{ki/CRS-RL32261} derives from 5 U.S.C. §9701(a).§9701.373. Conversion of employees to the DHS pay system. When
^g/wa pay system is established under Subpart C and applied to a category of
^s^.or
^le^akemployees, DHS must convert employees to the system without a
reduction in their rate of pay (including basic pay and any applicable
^://wikilocality payment, special rate, locality rate supplement under
^h^ttp§9701.332, or special rate supplement under §9701.333).
When an employee receiving a special rate under 5 U.S.C. §5305 before
conversion is converted to an equal rate of pay under the DHS pay
system that consists of a basic rate and a locality or special rate
supplement, the conversion will not be considered as resulting in a
reduction in basic pay for the purpose of an adverse action under
Subpart F.
If another personnel action (e.g., promotion, geographic movement)
takes effect on the same day as the effective date of an employee’s
conversion to the new pay system, DHS must process the other action
under the rules pertaining to the employee’s former system before
processing the conversion action.
An employee on a temporary promotion at the time of conversion must
be returned to his or her official position of record prior to processing
the conversion. If the employee is temporarily promoted immediately
after the conversion, pay must be set under the rules for promotion

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increases under the DHS system.
The Secretary has discretion to make one-time pay adjustments for GS
and prevailing rate employees when they are converted to the DHS pay
system. DHS will issue implementing directives governing any such
pay adjustment, including rules governing employee eligibility, pay
computations, and the timing of any such pay adjustment.
ⁱ^{ki/CRS-RL32261}The Secretary has discretion to convert entry/developmental employees
^g/win noncompetitive career ladder paths to the pay progression plan
^s^.orestablished for the Entry/Developmental band to which the employee is
^le^akassigned under the DHS pay system. DHS will issue implementing
directives governing any such conversion, including rules governing
^://wikiemployee eligibility, pay computations, and the timing of any such
^h^ttpconversion. DHS must convert employees without a reduction in their
rate of pay.
derives from 5 U.S.C. §9701(a).§9701.374. Special transition rules for Federal Air Marshal
. 107-71 (115 Stat. 597) established the Transportation SecurityService. Notwithstanding any other provision in Subpart C, if DHS
tion.transfers Federal Air Marshal Service (FAMS) positions from TSA to
another organization within DHS, DHS may cover those positions under
a pay system that is parallel to the pay system that was applicable to the
FAMS within TSA. DHS may, after coordination with OPM, modify
that system. DHS will issue implementing directives on converting
FAMS employees to any new pay system that may subsequently be
established under Subpart C, consistent with the conversion rules in
§9701.373.
Subpart D — Performance Management

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Authority for Subpart D derives from 5 U.S.C. §9701 (a)-(c).§9701.401. Purpose. Provides for the establishment in DHS of at least
ent of performance appraisal systemsone performance management system.
ency must develop one or more performance appraisal systemsThe performance management system(s), working in conjunction with
ls of job performance, encouragethe pay system established under Subpart C, is designed to promote and
ployee participation in establishing performance standards, and usesustain a high-performance culture by: adhering to merit principles;
e results of performance appraisals to train, reward, reassign, promote,having a fair, credible, and transparent employee performance appraisal
ⁱ^{ki/CRS-RL32261}rade, retain, and remove employees. Under OPMsystem; linking the pay and performance appraisal systems with the
^g/wulations, each system must establish performance standards whichDHS strategic plan; involving employees in the design and
^s^.orimum extent feasible, permit the accurate evaluation ofimplementation of the system; providing adequate training and
^le^akective criteria (which may includeretraining for supervisors, managers, and employees in implementing
demonstrated to the public) related to the job in question forand operating the system; providing for periodic performance feedback
^://wikiee or position; communicate those standards and criticaland dialogue among supervisors, managers, and employees throughout
^h^ttpements to employees at the beginning of each appraisal period;the appraisal period, with specific timetables for review; having
uate each employee during the appraisal period on the standards;effective safeguards so that the management of the system is fair and
nize and reward employees whose performance warrants such;equitable and based on employee performance; and providing a means
st employees in improving unacceptable performance; and reassign,for ensuring that adequate resources are allocated for the design,
rade, or remove employees who continue to haveimplementation, and administration of the system.
after an opportunity to demonstrate
able performance. The agency head may administer and maintain
ance appraisal system electronically.
I covers Performance Appraisal in the
ecutive Service
derives from 5 U.S.C. §9701(a).§9701.402. Coverage. Subpart D applies to eligible DHS employees
in the categories listed below, subject to a determination by the
Secretary or designee under §9701.102(b). Those eligible for coverage
include employees who would otherwise be covered by 5 U.S.C.
Chapter 43, and employees who were excluded from Chapter 43 by

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R §430.202 Coverage. (d) Agency requests for exclusions ofOPM under 5 CFR §430.202(d) prior to the date of coverage under
cepted service.Subpart D, as determined under §9701.102(b).
Employees who are not expected to be employed longer than a
minimum period (as defined in §9701.404) during a single 12-month
period are excluded from coverage under Subpart D.
ⁱ^{ki/CRS-RL32261} derives from 5 U.S.C. §9701(a)-(c).§9701.403. Waivers. When a specified category of employees is
^g/wcovered by the performance management system(s) established under
^s^.or
^le^akR Part 430 — Performance ManagementSubpart D, 5 U.S.C. Chapter 43 is waived with respect to that category
of employees.
^://wiki
^h^ttpR §430.203. Definitions. (unless otherwise noted)§9701.404. Definitions. “Appraisal” means the review and evaluation
r which performance is reviewedof an employee’s performance.
ppraisal period” means the established period of time for which“Appraisal period” means the period of time established under a
rformance will be reviewed and a rating of record will be prepared.performance management system for reviewing employee performance.
ritical element,” “Non-critical element,” and “Additional“Competencies” means the measurable or observable knowledge, skills,
ance element” express the objectives, goals, program plans,abilities, behaviors, and other characteristics required by a position.
ans, and the like that express performance expectations.
“Contribution” means a work product, service, output, or result
provided or produced by an employee that supports the departmental or
organizational mission, goals, or objectives.
ogram shall establish a minimum“Minimum period” means the period of time established by DHS during
completed before a performancewhich an employee must perform before receiving a rating of record.

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may be prepared. [5 CFR§430.207(a)]
erformance” means accomplishment of work assignments or“Performance” means accomplishment of work assignments or
responsibilities.
erformance standard” means the management-approved expression of“Performance expectations” means that which an employee is required
ment(s), or expectation(s) thatto do, as described in §9701.406, and may include observable or
ⁱ^{ki/CRS-RL32261}particular level of performance. Averifiable descriptions of quality, quantity, timeliness, and cost
^g/wrformance standard may include, but is not limited to, quality,effectiveness.
^s^.orntity, timeliness, and manner of performance.
^le^ak
^://wikir which performance is reviewed“Performance management” means applying the integrated processes ofsetting and communicating performance expectations, monitoring
^h^ttpperformance and providing feedback, developing performance and
addressing poor performance, and rating and rewarding performance in
support of the organization’s goals and objectives.
erformance appraisal system” means a framework of policies and“Performance management system” means the policies and
rameters established by an agency for the administration ofrequirements established under Subpart D, as supplemented by DHS
rams under 5 U.S.C. Chapter 43, Subchapterimplementing directives, for setting and communicating employee
R Part 430, Subpart B.performance expectations, monitoring performance and providing
feedback, developing performance and addressing poor performance,
and rating and rewarding performance.
ating of record” means the performance rating prepared at the end of“Rating of record” means a performance appraisal prepared at the end of
of agency-assigned duties over thean appraisal period covering an employee’s performance of assigned
tire period and the assignment of a summary level within a pattern.duties over the applicable period; or to support a pay determination,
including one granted in accordance with Subpart C of this part, a
within-grade increase granted under 5 CFR §531.404, or a pay

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determination granted under other applicable rules.
able performance” means performance by an employee which“Unacceptable performance” means the failure to meet one or more
ils to meet established performance standards in one or more criticalperformance expectations.
ee’s position. [5 U.S.C. §4301(3)]
ⁱ^{ki/CRS-RL32261}R Part 430 — Performance Management contains the regulations§9701.405. Performance management system requirements. DHS
^g/wment 5 U.S.C. Chapter 43 — Performance Appraisal, includingwill issue implementing directives that establish one or more
^s^.orulations on agency performance appraisal systems and programs, andperformance management systems for DHS employees, subject to the
^le^ak, monitoring, and rating performance.requirements set forth in Subpart D.
^://wikistem PrinciplesEach DHS performance management system must: specify the
^h^ttpstem principles and Prohibited personnel practices.employees covered; provide for the periodic appraisal of the
performance of each employee, generally once a year, based on
performance expectations; specify the minimum period during which an
employee must perform before receiving a rating of record; hold
supervisors and managers accountable for effectively managing
employee performance; include procedures for setting and
communicating performance expectations, monitoring performance and
providing feedback, and developing, rating, and rewarding performance;
and specify the criteria and procedures to address the performance of
employees who are detailed or transferred and for employees in other
special circumstances.
Supervisors and managers are responsible for: clearly communicating
performance expectations and holding employees responsible for
accomplishing them; making meaningful distinctions among employees
based on performance; fostering and rewarding excellent performance;

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and addressing poor performance.
ent of performance appraisal systems§9701.406. Setting and communicating performance expectations.
ency must develop one or more performance appraisalPerformance expectations must align with and support the DHS mission
stems which (a)(2) encourage employee participation in establishingand its strategic goals, organizational program and policy objectives,
annual performance plans, and other measures of performance. Such
ance appraisal system must provide for (1) establishingexpectations include those general performance expectations that apply
ⁱ^{ki/CRS-RL32261}rformance standards which will, to the maximum extent feasible,to all employees, such as standard operating procedures, handbooks, or
^g/w job performance on the basis ofother operating instructions and requirements associated with the
^s^.or
^le^akective criteria (which may include courtesy demonstrated to theemployee’s job, unit, or function.
on for each employee or position; (2)Supervisors and managers must communicate performance
^://wikimunicating the performance standards and the critical elements ofexpectations, including those that may affect an employee’s retention in
^h^ttpe employee’s position to the employee at the beginning of eachthe job. Performance expectations need not be in writing, but must be
communicated to the employee prior to holding the employee
R §430.102 Performance management.accountable for them. Employees are always accountable for
erformance management is the systematic process by which andemonstrating appropriate standards of conduct, behavior, and
ency involves its employees, as individuals and members of a group,professionalism, such as civility and respect for others.
improving organizational effectiveness in the accomplishment ofPerformance expectations may take the form of — goals or objectives
ency mission and goals.that set general or specific performance targets at the individual, team,
erformance management integrates the processes an agency uses toand/or organizational level; organizational, occupational, or other work
ommunicate and clarify organizational goals to employees; (2)requirements, such as standard operating procedures, operating
entify individual and, where applicable, team accountability forinstructions, administrative manuals, internal rules and directives,
plishing organizational goals.and/or other instructions that are generally applicable and available to
R §430.206 Planning Performance.the employee; a particular work assignment, including expectations
erformance plan. (1) Agencies shall encourage employeeregarding the quality, quantity, accuracy, timeliness, and/or other
rticipation in establishing performance plans. (2) Performance plansexpected characteristics of the completed assignment; competencies an
l be provided to employees at the beginning of each appraisal periodemployee is expected to demonstrate on the job, and/or the
within 30 days). (3) An appraisal program shall require thatcontributions an employee is expected to make; or any other means, as

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ee be covered by an appropriate written, or otherwiselong as it is reasonable to assume that the employee will understand the
ance plan based on work assignments andperformance that is expected.
ce plan shall include all elementsSupervisors must involve employees, insofar as practicable, in the
and assigning a summary level, including atdevelopment of their performance expectations. However, final
y non-critical element(s) .... (8)decisions regarding performance expectations are within the sole and
tablished as follows — For a criticalexclusive discretion of management.
ⁱ^{ki/CRS-RL32261}ement — At least two levels for appraisal shall be used with one level
^g/w “Fully Successful” or its equivalent and another level being
^s^.orable;” and a performance standard shall be established at the
^le^akly Successful” level and may be established at other levels. For
hed — At least two levels for
^://wikied, and a performance standard(s) shall be
^h^ttptablished at whatever level(s) is appropriate. Additional requirements
e listed in the regulations.
R §430.207 Monitoring Performance.§9701.407. Monitoring performance and providing feedback. In
) An appraisal program shall establish a minimum period ofapplying the requirements of the performance management system and
ance that must be completed before a performance rating mayits implementing directives and policies, supervisors must monitor the
performance of their employees and the organization; and provide
ram shall include methods for appraising eachtimely periodic feedback to employees on their actual performance with
g the appraisal period .... Ongoingrespect to their performance expectations, including one or more interim
ll include, but not be limited to, conducting one orperformance reviews during each appraisal period.

ore progress reviews during each appraisal period.
rams should provide assistance whenever
low “Fully Successful” or equivalent
ram shall provide for assisting employees in
unacceptable performance at any time during the appraisal

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od that performance is determined to be unacceptable in one or
ore critical elements; and taking action based on unacceptable
R §430.102 Performance management.§9701.408. Developing performance and addressing poor
erformance management integrates the process an agency uses toperformance. Subject to budgetary and other organizational
dentify and address developmental needs for individuals and whereconstraints, a supervisor must provide employees with the proper tools
ⁱ^{ki/CRS-RL32261}icable teams.and technology to do their job and develop employees to enhance their
^g/went of performance appraisal systemsability to perform.
^s^.or
^le^akance appraisal system must provide for (5) assistingDuring the appraisal period, if a supervisor determines that an
ployees in improving unacceptable performance; and (6) reassigning,employee’s performance is unacceptable, the supervisor must consider
^://wiki in grade, or removing employees who continue to havethe range of options available to address the performance deficiency,
^h^ttp after an opportunity to demonstratesuch as remedial training, an improvement period, a reassignment, an
able performance.oral warning, a letter of counseling, a written reprimand, and/or an
.C. §4303. Actions based on unacceptable performanceadverse action; and take appropriate action to address the deficiency,
horizes an agency to reduce in grade or remove an employee fortaking into account the circumstances, including the nature and gravity
able performance.of the unacceptable performance and its consequences.
As specified in Subpart G, employees may appeal adverse actions based
on unacceptable performance.
R §430.206 Planning Performance.§9701.409. Rating performance. Except as provided below, each
erformance plan. (8) Elements and standards shall be establishedDHS performance management system must establish a single summary
lows — For a critical element — At least two levels for appraisalrating level of unacceptable performance, a summary rating level of
level being “Fully Successful” or its equivalentfully successful performance (or equivalent), and at least one summary
her level being “Unacceptable;” and a performance standardrating level above fully successful performance. For employees in an
ll be established at the “Fully Successful” level and may beEntry/Developmental band, the DHS performance management
or non-critical elements, when established system(s) may establish two summary rating levels, i.e., an
l shall be used, and a performanceunacceptable rating level and a rating level of fully successful (or

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blished at whatever level(s) is appropriate.equivalent).
R §430.208. Rating performance.At his or her sole and exclusive discretion, the Secretary, or designee
end of the appraisal period, a written,may under extraordinary circumstances establish a performance
herwise recorded, rating of record shall be given to each employee.management system with two summary rating levels, i.e., an
evel 1 summary (“Unacceptable”) shall be assigned if andunacceptable level and a higher rating level, for employees not in an
if performance on one or more critical elements is appraised asEntry/Developmental band.
ⁱ^{ki/CRS-RL32261}able.”A supervisor or other rating official must prepare and issue a rating of
^g/w and assigning a summary level may notrecord after the completion of the appraisal period. An additional rating
^s^.orquire the use of particular summary levels (i.e., establish aof record may be issued to reflect a substantial change in the employee’s
^le^ak levels). However, methods used toperformance when appropriate. A rating of record will be used as a
employees or groups of employees such asbasis for determining an increase in basic pay under §9701.342; a
^://wiki, categorizing, and ranking employees or groups on the basislocality or special rate supplement increase under §9701.336; a
^h^ttp be used for purposes other than assigning aperformance pay increase determination under §9701.342(a); a within-
ry level including, but not limited to, award determinations andgrade increase determination under 5 CFR §531.404, prior to
conversion to the pay system established under Subpart C; a pay
ram may use one of eight patterns of summarydetermination under any other applicable pay rules; awards under any
ing levels. Level 1 is “Unacceptable,” Level 3 is “Fully Successful,”legal authority; including 5 U.S.C. Chapter 45, 5 CFR Part 451, and a
evel 5 is “Outstanding.” Additional requirements are listed in thedepartmental or organizational awards program; eligibility for
gulations.promotion; or such other action that DHS considers appropriate, as
ent of performance appraisal systemsspecified in the implementing directives.
ency must develop one or more performance appraisalA rating of record must assess an employee’s performance with respect
stems which (3) use the results of performance appraisals to ... rewardto his or her performance expectations and/or relative contributions and
ees.is considered final when issued to the employee with all appropriate
ance appraisal system must provide for (4) recognizingreviews and signatures.
employees whose performance warrants such.DHS may not impose a forced distribution or quota on any rating
ncentive Awardslevel(s).
erformance-based cash awardsA rating of record issued under Subpart D is an official rating of record
ployee whose most recent performance rating was “fullyfor the purpose of any provision of Title 5 CFR, for which an official

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her may be paid a cash award.rating of record is required.
DHS may not lower the rating of record of an employee on an approved
absence from work, including the absence of a disabled veteran to seek
medical treatment, as provided in Executive Order 5396.
A rating of record may be grieved by a non-bargaining unit employee
(or a bargaining unit employee when no negotiated procedure exists)
ⁱ^{ki/CRS-RL32261}through an administrative grievance procedure established by DHS. A
^g/wbargaining unit employee may grieve a rating of record through a
^s^.ornegotiated grievance procedure, as provided in Subpart E. An arbitrator
^le^akhearing a grievance is subject to the standards of review set forth in
§9701.521(g)(2). Except as otherwise provided by law, an arbitrator
^://wikimay not conduct an independent evaluation of the employee’s
^h^ttpperformance or otherwise substitute his or her judgment for that of the
supervisor.
A supervisor or other rating official may prepare an additional
performance appraisal for the purposes specified in the applicable
performance management system (e.g., transfers and details) at any time
after the completion of the minimum period. Such an appraisal is not a
rating of record.
DHS implementing directives will establish policies and procedures for
crediting performance in a reduction in force, including policies for
assigning additional retention credit based on performance. Such
policies must comply with 5 U.S.C. Chapter 35 and 5 CFR §351.504.

on Preference, Restoration, and
ment
R §351.504 Credit for performance.

CRS-74
Current Law/Selected RegulationsFinal DHS Regulations
Title 5 United States Code and
Title 5 Code of Federal Regulations
of the Office of Personnel§9701.410. DHS responsibilities. In carrying out its performance
entmanagement system(s), DHS must transfer ratings between subordinate
M must review each performance appraisal system developed by anyorganizations and to other federal departments or agencies; evaluate its
ency and determine whether the performance appraisal systems meetsperformance management system(s) for effectiveness and compliance
ter 43, Subchapter I. OPM maywith Subpart D, DHS implementing directives and policies, and the
rect that corrective action be taken if an agency performance systemprovisions of 5 U.S.C. Chapter 23 that set forth the merit system
ⁱ^{ki/CRS-RL32261}ments of Subchapter I.principles and prohibited personnel practices; provide OPM with a copy
^g/w Comptroller General from time to time must review on a selectedof the implementing directives, policies, and procedures that implement
^s^.orsis performance appraisal systems to determine the extent to whichSubpart D; and comply with 29 CFR §1614.102(a)(5), which requires
^le^ak such system meets the requirements of Subchapter I and mustagencies to review, evaluate, and control managerial and supervisory
report its findings to OPM and the Congress.performance to ensure enforcement of the policy of equal opportunity.
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U.S. Department of Homeland Security and U.S. Office of Personnel Management, “Department of Homeland Security Human Resources Management
,” Federal Register, vol. 70, no. 20, February 1, 2005, pp. 5271-5347.