Retention tension

The Bush administration has squashed a plan to let federal agencies use retention allowances to stop other agencies from hiring away their employees.

Under the plan, which the Office of Personnel Management proposed in the final days of the Clinton administration, federal managers would have been able to boost workers' salaries by up to 25 percent per year to keep employees from going to work for other agencies.

But the Bush administration decided this month to put off the proposal amid concerns that it would spark bidding wars among agencies for key employees. OPM had originally proposed the interagency retention allowances in the Jan. 19, 2001 Federal Register. The Office of Management and Budget received a final rule proposal from OPM on Feb. 15, 2002. OMB has 90 days to review such proposals. OPM withdrew the proposed regulations from consideration on May 9.

"The regulations are still under discussion within the administration," OPM spokesman Michael Orenstein said.

Since 1995, agencies have been able to offer retention allowances to employees who were planning to leave the federal government for any reason. But agencies haven't been allowed to offer the allowances if employees were planning to go to work for other agencies. OPM officials explained their historical opposition in their January 2001 proposal: "We did not authorize agencies to pay retention allowances to employees likely to leave for other federal employment because of concerns about potentially disruptive and costly bidding wars among federal agencies competing for employees with highly desired skills or competencies."

But after agency officials urged OPM to change the policy, OPM agreed to propose modifying the rule. "We recognize that agencies may experience significant staffing problems that hinder their ability to meet mission objectives when their employees leave for other federal jobs," OPM acknowledged in its proposal. "In some cases, the retention allowance authority may be the most effective way to resolve such problems. However, we must also continue to be cognizant of the potential costs of interagency competition."

In January 2001, OPM proposed to allow agencies to offer retention allowances to keep employees from bolting to other agencies in two limited situations. First, allowances could have been offered for up to a year when an agency critically needed an employee to stay to complete a project or help the agency through a crisis. Second, permanent allowances could have been offered if an employee was planning to go to work under a different federal pay system. For example, if an air traffic controller at the Defense Department who worked under the General Schedule pay system was offered a job at the Federal Aviation Administration, which has a special pay system, then the controller's manager would have been able to offer a permanent retention allowance.

Within the Bush administration, however, concerns about bidding wars apparently beat out arguments that agencies sometimes need to keep employees that are trying to go to work for other agencies. Agencies will still only be able to offer retention allowances when employees plan to leave the government entirely.

In the January 2001 proposal, OPM pointed out that agencies can use other means to hold on to employees, such as giving them alternative work schedules, providing training opportunities, helping pay for school or offering the chance to telecommute.

The death of the retention allowance proposal comes in the midst of an intense period of interagency competition for employees, most notably among law enforcement agencies. As the new Transportation Security Administration staffs up, officials with the Immigration and Naturalization Service, Bureau of Prisons and Federal Protective Service have all reported that employees are quitting at higher rates this year because of opportunities at the TSA.

Interagency competition has long been a fact of life for experienced federal wildland firefighters, who are sought by four Interior Department bureaus and the Forest Service. In addition, the Defense Department and the FAA compete for air traffic controllers, the Securities and Exchange Commission and other financial regulatory agencies compete for finance professionals and numerous agencies compete for experienced contracting officers, budget analysts and technology workers.

In the first quarter of fiscal 2002, agencies hired away about 3,000 employees from other agencies, according to OPM statistics. In fiscal 2001, about 13,000 employees transferred from one federal agency to another.