OPM authorizes retention bonuses for agencies facing restructuring

Federal agencies that are relocating or closing offices now have the authority to offer retention bonuses to employees likely to move to other federal jobs, according to a new rule issued by the Office of Personnel Management.

The rule, published on Nov. 16 in the Federal Register, offers additional flexibilities to agencies that must continue to perform mission-critical work at sites subject to closure and relocation.

"The need to retain employees when facilities are closing or relocating is especially acute," OPM noted. "Such employees may be more likely than others to seek other federal employment."

OPM released interim regulations in May 2005 to implement a provision of the 2004 Federal Workforce Flexibility Act. But they only allowed agencies to offer retention bonuses to highly skilled employees likely to leave for private sector jobs.

While the 2004 law provided the ability to offer incentives to employees who were offered positions elsewhere in the federal government, OPM said it would hold off implementing the provision, citing its potential for costly and counterproductive interagency competition.

In the final regulations, OPM noted concern that establishing broad retention flexibilities could result in "bidding wars" between agencies, adding that such flexibilities could have adverse effects on the overall operation of government. As a result, the new rule only allows agencies subject to closure or relocation to offer retention bonuses to employees who are likely to leave for other positions.

Since agency offices must continue to operate until they are shut down, "recruiting and training new employees to replace those who leave may not be a viable or cost-effective option," OPM said.

The incentives may prove to be particularly helpful at the Defense Department, where thousands of employees will be required to move to new locations as a result of changes authorized by Congress in 2005. The changes require Defense to close and realign more than 800 installations by Sept. 15, 2011.

OPM plans to monitor the effects of the flexibility on interagency competition and compensation costs on narrow closure and relocation situations to determine if the flexibility should be expanded.