House passes pay-for-performance measure

When House lawmakers passed the fiscal 2004 Defense authorization bill late Thursday, they included a provision to create a $500 million fund managers can use to bump up the salaries of high-performing employees.

The Human Capital Performance Fund was part of the Bush administration's fiscal 2004 budget proposal, offered in conjunction with a plan to hold the annual across-the-board federal pay raise to 2 percent next year.

House Government Reform Chairman Tom Davis, R-Va., included the measure in "The Civil Service and National Security Personnel Improvement Act"(H.R.1836), which was approved by his committee on May 8. The House Armed Services Committee merged a portion of H.R. 1836, which gave Defense Department officials authority to craft a new civilian personnel system, into the authorization bill (H.R. 1588), but did not include the fund. On Wednesday, Davis succeeded in adding the language about the fund to the authorization bill as an amendment.

"This is a critical step that will enable agencies to reward their best employees and will instill a culture of achievement in the civil service system," said David Marin, a spokesman for Davis' committee. While the measure is included in a Defense-related bill, it applies to all federal agencies.

The Human Capital Performance Fund would be administered by the Office of Personnel Management and allow agencies to give performance-based raises in 2004. The raises would be permanent salary increases that would also increase employees' pensions and their agencies' Thrift Savings Plan contributions.

Agencies would be required to submit plans to OPM that include details about how the money would be used to improve agency results, as well as reward high performers. Administration officials say the fund will help with retention and recruitment efforts.

However, during a joint Senate and House hearing in April, key lawmakers voiced skepticism about whether performance management systems in agencies could accurately identify top performers. Several General Accounting Office studies have pointed out flaws in the federal performance appraisal system.

"Agencies should have to demonstrate that they have modern, effective, credible and validated performance management systems," Comptroller General David Walker told lawmakers.

On Friday, House Minority Whip Steny Hoyer, D-Md., voiced support for the measure, but called for higher across-the-board pay raises to close the gap between federal and private-sector pay.

"I view this fund as a supplement to providing pay parity, and not as a replacement," Hoyer said. "Our federal employees are hard-working, dedicated public servants, who deserve to be more fairly compensated for their efforts, their commitment and their service to our nation."