Proposed Rule2026-03619
Performance Appraisal for General Schedule, Prevailing Rate, and Certain Other Employees
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
February 24, 2026
Issuing agencies
Personnel Management Office
Abstract
The Office of Personnel Management (OPM) is issuing a proposed rule to increase the efficiency of performance management for non- Senior Executive Service (SES) employees, including General Schedule (GS) and prevailing rate employees. The proposed rule amends the approved patterns of summary levels by removing a "Level 2"; requires agencies to undergo biennial appraisal system certifications with OPM; requires a supervisory critical element for all supervisors covered under this subpart; removes the prohibition of a forced, or standardized, distribution of performance-rating levels; removes the option to grieve a performance rating; and removes the mandatory review of level 1 ratings.
Full Text
<html>
<head>
<title>Federal Register, Volume 91 Issue 36 (Tuesday, February 24, 2026)</title>
</head>
<body><pre>
[Federal Register Volume 91, Number 36 (Tuesday, February 24, 2026)]
[Proposed Rules]
[Pages 8780-8791]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-03619]
-----------------------------------------------------------------------
OFFICE OF PERSONNEL MANAGEMENT
5 CFR Part 430
[Docket ID: OPM-2025-0273]
RIN 3206-AP06
Performance Appraisal for General Schedule, Prevailing Rate, and
Certain Other Employees
AGENCY: Office of Personnel Management.
ACTION: Notice of proposed rulemaking.
-----------------------------------------------------------------------
SUMMARY: The Office of Personnel Management (OPM) is issuing a proposed
rule to increase the efficiency of performance management for non-
Senior Executive Service (SES) employees, including General Schedule
(GS) and prevailing rate employees. The proposed rule amends the
approved patterns of summary levels by removing a ``Level 2''; requires
agencies to undergo biennial appraisal system certifications with OPM;
requires a supervisory critical element for all supervisors covered
under this subpart; removes the prohibition of a forced, or
standardized, distribution of performance-rating levels; removes the
option to grieve a performance rating; and removes the mandatory review
of level 1 ratings.
DATES: Comments must be received on or before March 26, 2026.
ADDRESSES: You may submit comments, identified by RIN number ``3206-
AP06,'' and title using the following method:
<bullet> Federal eRulemaking Portal: <a href="https://www.regulations.gov">https://www.regulations.gov</a>.
Follow the instructions for submitting comments.
The general policy for comments and other submissions from members
of the public is to make these submissions available for public viewing
at <a href="https://www.regulations.gov">https://www.regulations.gov</a> without change including any personal
identifiers or contact information.
As required by 5 U.S.C. 553(b)(4), a summary of this rule may be
found in the docket for this rulemaking at <a href="http://www.regulations.gov">www.regulations.gov</a>.
FOR FURTHER INFORMATION CONTACT: Noah Peters, Senior Advisor to the
Director, 202-606-8046 or by email at <a href="/cdn-cgi/l/email-protection#2774627457484b4e445e6748574a09404851"><span class="__cf_email__" data-cfemail="a1f2e4f2d1cecdc8c2d8e1ced1cc8fc6ced7">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION:
Background
Non-SES employees are often career civil servants who fulfill the
mission of their respective agencies through the performance of their
job duties. Often, they occupy positions that are white-collar,
recognized trades, crafts, or skilled manual labor occupations. The GS
system was established by the Classification Act of 1923 and then
further revised by the Classification Act of 1949. The prevailing rate
system was separately established in 1972 by the Prevailing Rate
Systems Act.
Congress passed the Civil Service Reform Act (CSRA) of 1978,
creating a merit-based system of hiring and performance appraisals for
Federal employees. Pursuant to the CSRA, OPM must prescribe regulations
that establish the framework for performance management.\1\
Specifically, OPM noted that it ``shall prescribe regulations to carry
out the purpose of the [CSRA], review agency performance appraisal
systems to determine'' compliance with ``the [CSRA], and direct
agencies to implement appropriate systems or correct operations[ ]
should OPM determine that the system does not meet the [CSRA's]
requirements.'' \2\ Further, OPM noted its ``intent to assist agencies
in developing systems that contribute to agency efficiency and
effectiveness, and to review operating appraisal systems in this light
because improvement in the quality of public service is the intention
of the [CSRA].'' \3\
---------------------------------------------------------------------------
\1\ 5 U.S.C. 4302.
\2\ 44 FR 45587, 45588 (Aug. 3, 1979).
\3\ Id. at 45589.
---------------------------------------------------------------------------
In 1983, OPM adopted a new performance management system.\4\ The
performance management system ``standardize[d] performance requirements
for within-grade increases, performance awards, quality step increases,
career ladder promotions, and merit pay.'' \5\ The system further
standardized the performance appraisal process ``by requiring five
summary rating levels'' that agencies must use when evaluating
employees.\6\ While OPM determined that five summary rating levels were
appropriate, it did not give much, if any, explanation to justify its
position.
---------------------------------------------------------------------------
\4\ 48 FR 49472, 49472 (Oct. 25, 1983).
\5\ Id.
\6\ Id.
---------------------------------------------------------------------------
When developing the non-SES performance appraisal regulations at
part 430, subpart B, in 1995, OPM adopted recommendations by the
National Performance Review for flexible, decentralized performance
management.\7\ OPM decentralized performance management and increased
agency flexibility in part through definitions. OPM defined an
``appraisal system'' as the agency's framework of policies and
parameters (i.e., guidelines, boundaries, limits) for the
[[Page 8781]]
administration of performance appraisal programs, and OPM defined
``appraisal program'' as the specific procedures and requirements
established under the policies and parameters of an agency appraisal
system. By creating these separate terms, OPM was able to limit its
approval role to just the content of an agency appraisal system, as
required by law, and leave agencies free to establish and adapt one or
more appraisal programs of specific procedures and requirements, which
OPM would not review. This move towards agency flexibility and
decentralization was a stark contrast to the highly detailed regulatory
requirements of the mid-1980s--a time when there was a strong policy
interest in achieving Governmentwide uniformity.
---------------------------------------------------------------------------
\7\ 60 FR 43936, 43936 (Aug. 23, 1995).
---------------------------------------------------------------------------
OPM also noted it previously proposed to remove the prohibition on
the ``use of forced distributions of summary levels for ratings of
record.'' \8\ However, OPM stated it was ``persuaded by the arguments
that criticized the use of forced distributions,'' summarily concluding
``that forced distributions were incompatible with effective
performance management.'' \9\ OPM also revised 5 CFR 430.208,
introducing ``a table of permissible patterns of summary levels.'' \10\
OPM noted that the regulations only require performance to ``be
appraisable at a minimum of two levels.'' \11\
---------------------------------------------------------------------------
\8\ Id. at 43941 (internal quotation marks omitted).
\9\ Id.
\10\ Id.
\11\ Id. at 43939.
---------------------------------------------------------------------------
Aside from a few minor changes in the late 1990s, the appraisal
regulations at part 430, subpart B, have remained in place and
unchanged, failing to keep pace with a growing and evolving Federal
workforce. Recognizing that reforms to Federal performance management
are long overdue, President Trump issued Presidential Memorandums and
Executive Orders that establish a high-performing Federal workplace
culture where excellent performance is celebrated and rewarded, and low
performance is swiftly addressed by appropriate actions.\12\
Accordingly, OPM issued a memorandum titled ``Performance Management
for Federal Employees.'' \13\ In that guidance, OPM noted that it is
``reforming employee performance management across the Federal
Government to ensure that it shall reward individual initiative,
skills, performance and hard work.'' \14\ OPM further stated that
``performance management across the Federal workforce has fallen
short,'' and ``has resulted in a lack of accountability and inflated
performance ratings.'' \15\
---------------------------------------------------------------------------
\12\ See, e.g., E.O. 14284, Strengthening Probationary Periods
in the Federal Service, 90 FR 17729 (April 24, 2025); E.O. 14171,
Restoring Accountability to Policy-Influencing Positions Within the
Federal Workforce, 90 FR 8625 (Jan. 20, 2025); President Donal J.
Trump, Memorandum for the Heads of Executive Departments and
Agencies, Restoring Accountability for Career Senior Executives
(Jan. 20, 2025); President Donald J. Trump, Memorandum for the Heads
of Executive Departments and Agencies, Return to In-Person Work
(Jan. 20, 2025).
\13\ OPM, Performance Management for Federal Employees (June 17,
2025), <a href="https://www.opm.gov/chcoc/latest-memos/performance-management-for-federal-employees.pdf">https://www.opm.gov/chcoc/latest-memos/performance-management-for-federal-employees.pdf</a>.
\14\ Id. (internal quotation marks omitted).
\15\ Id. at 2.
---------------------------------------------------------------------------
Accordingly, OPM concludes that regulatory change is needed. OPM
proposes to amend 5 CFR part 430, subpart B, by amending the approved
patterns of summary levels by removing any patterns utilizing a ``Level
2'' or that have ``Level 4'' as the highest rating level; requiring
agencies to undergo biennial certification with OPM of its appraisal
system(s); adding a new supervisory critical element; enhancing
accountability for poor performance by eliminating mandatory reviews of
``Level 1'' ratings while limiting the reasons why a rating of record
may be changed; and removing the prohibition of a forced, or
standardized, distribution of performance rating levels for non-SES
employees.
Non-SES Employee Performance Management
Currently, subpart B of 5 CFR part 430 provides the requirements
for managing the performance of non-SES Federal employees. 5 CFR part
430, subpart B also governs the performance appraisals of senior-level
(SL) and scientific or professional (ST) employees. OPM is in the
process of another rulemaking that will create a new subpart that
specifically applies to SL and ST employees. Therefore, if the other
rulemaking is adopted, then 5 CFR part 430, subpart B, and the changes
made in this rulemaking by extension, will not apply to SL and ST
employees. However, in the event the other rulemaking is not completed,
then this rulemaking will apply to SL and ST employees.
These regulations have not been updated since the mid-1990s and
were designed to meet the needs of a broad population of Federal
employees such as prevailing rate employees, seasonal employees, and
employees across all grades and steps of the GS. Over time, these
regulations have become increasingly incompatible with OPM's efforts to
develop a dedicated modern performance appraisal system. Some of the
current regulatory requirements present unnecessary administrative
burdens, while others present barriers to implementing needed
performance appraisal reform.
Historical Underperformance
Under 5 U.S.C. 4302(c), each agency's performance appraisal system
must include performance standards ``permit[ting] the accurate
evaluation of performance'' based on objective, job-related criteria.
However, the performance rating system for non-SES employees fails to
meet this statutory requirement because it fails to materially
differentiate between excellent, average, and poor performers. Data
concerning the performance appraisals of non-SES employees demonstrates
that many of these employees receive annual summary ratings at, or
above, the ``Fully Successful'' level. Specifically, in May 2016, the
Government Accountability Office (GAO) published a study on the
distribution of non-SES ratings, finding that ``[ninety nine-] percent
of permanent, non-SES employees received a rating at or above `fully
successful.' '' \16\ The report also concluded about sixty-one percent
of non-SES employees received an ``Outstanding'' or ``Exceeds Fully
Successful'' rating in the 2013 fiscal year.\17\ The 2016 GAO report
also showed that, among non-SES employees, only 0.1 percent were rated
at ``Unacceptable'' and 0.3 percent were rated at ``Minimally
Successful.'' \18\
---------------------------------------------------------------------------
\16\ GAO, Federal Workforce: Distribution of Performance Ratings
Across the Federal Government, 2013 (May 9, 2016), <a href="https://www.gao.gov/assets/680/677016.pdf">https://www.gao.gov/assets/680/677016.pdf</a>.
\17\ Id.
\18\ Id.
---------------------------------------------------------------------------
Historically, Federal agencies have confronted persistent
challenges in effectively and consistently managing employee
performance. For decades, oversight agencies have specifically
identified performance management as an area that requires improvement
and reform. GAO has noted ``the government needs to do a better job in
actively managing the workforce to better align employees' skills with
evolving mission needs,'' and that ``managing employee performance has
been a long-standing government-wide challenge and the subject of
numerous reforms since the beginning of the modern civil service.''
\19\ Even though there have been many initiatives to reform the
[[Page 8782]]
performance management of non-SES employees, agencies continue to
struggle with ensuring that an employee's performance is accurately
measured and aligns with the agency's mission.
---------------------------------------------------------------------------
\19\ GAO, Federal Workforce, Opportunities Exist for OPM to
Further Innovation in Performance Management (Nov. 2018), <a href="https://www.gao.gov/assets/700/695639.pdf">https://www.gao.gov/assets/700/695639.pdf</a>.
---------------------------------------------------------------------------
In 2019, OPM issued a memorandum to agencies on how to increase
rigor in performance management through well-developed performance
standards that make clear distinctions among what is required to
achieve performance at the various performance levels.\20\ However, the
2024 Federal Employee Viewpoint Survey (FEVS) results showed that only
47 percent of Federal employees agreed with the statement, ``In my work
unit, differences in performance are recognized in a meaningful way.''
\21\ This was the lowest positive response rate for any question and
has consistently been the lowest over the past three years.\22\
Similarly, only 45 percent of respondents agreed with the same
proposition in 2023.\23\ Further data has also yielded similar
responses. GAO reported that, from 2010 to 2017, approximately only
one-third of surveyed employees agreed or strongly agreed with the
statement that ``differences in performance are recognized in a
meaningful way.'' \24\
---------------------------------------------------------------------------
\20\ OPM, Applying Rigor in the Performance Management Process
and Leveraging Awards Programs for a High-Performing Workforce 1-2
(July 12, 2019), <a href="https://www.opm.gov/chcoc/transmittals/2019/applying-rigor-performance-management-process-and-leveraging-awards-programs-high-performing_508_0.pdf">https://www.opm.gov/chcoc/transmittals/2019/applying-rigor-performance-management-process-and-leveraging-awards-programs-high-performing_508_0.pdf</a>.
\21\ OPM, OPM FEVS Dashboard (last accessed Nov. 19, 2025),
<a href="https://www.opm.gov/fevs/reports/opm-fevs-dashboard/">https://www.opm.gov/fevs/reports/opm-fevs-dashboard/</a>.
\22\ Id.
\23\ Id.
\24\ GAO, Innovation in Performance Management, supra note 19.
---------------------------------------------------------------------------
Accurate performance management is critical to the success of any
Federal agency.\25\ The ability to measure and assess employee
performance enables agencies to reward excellence, address skill gaps,
and strengthen accountability. If a Federal agency is to fulfill its
mission, then it must have accurate performance measurement. Without
accurate performance measures, agencies risk not only misallocating
talent but also undermining the motivation of the broader Federal
workforce. As GAO further emphasized, ``without effective performance
management, agencies risk not only losing (or failing to utilize) the
skills of top talent, they also risk missing the opportunity to
effectively address increasingly complex and rapidly evolving
challenges.'' \26\
---------------------------------------------------------------------------
\25\ Merit Systems Protection Board, Building Blocks for
Effective Performance Management 1 (Oct. 2017), <a href="https://www.mspb.gov/studies/researchbriefs/Building_Blocks_for_Effective_Performance_Management_1453471.pdf">https://www.mspb.gov/studies/researchbriefs/Building_Blocks_for_Effective_Performance_Management_1453471.pdf</a>.
\26\ GAO, Innovation in Performance Management, supra note 19.
---------------------------------------------------------------------------
If relative performance is not accurately measured in an employee's
rating of record, then the entire performance management system across
the government is compromised. For example, Governmentwide regulations
require that programs for granting performance-based cash awards on the
basis of a rating of record must make meaningful distinctions based on
levels of performance (5 CFR 451.104(h)). However, the inflation of
employee performance ratings has made it difficult for agencies to
provide such meaningful monetary recognition in accordance with
regulation. OPM believes that the longstanding inflation of performance
ratings thus greatly frustrates efforts to recognize, motivate, and
reward high performance across the Federal workforce.
Through OPM oversight of agency non-SES/SP performance appraisal
systems, OPM calculated that, for the performance cycles of the fiscal
years (FY) 2022 to 2024, approximately 64.4 percent of non-SES/SP
employees on a five-level summary rating system (Pattern H) received an
``Outstanding'' or ``Exceeds Fully Successful'' rating and 0.5 percent
of non-SES/SP employees were rated below ``Fully Successful.'' \27\ In
FY 2024, 42.7 percent of non-SES/SP employees rated on a five-level
summary rating system (Pattern H) were rated ``Outstanding'' and 21.7
percent were rated ``Exceeds Fully Successful.'' That year 55.4 percent
of non-SES/SP employees rated on a four-level summary rating system
(Pattern E) received ``Outstanding'' ratings and 34.2 percent received
``Exceeds Fully Successful.'' Just 0.1 percent of employees on Pattern
E received the lowest rating in FY 2024. These results indicate that
non-SES/SP employee performance ratings may be inflated, and poor
performing employees are not being held accountable through a rigorous
appraisal process. A properly functioning rating system that makes
meaningful distinctions in performance would not give close to half of
all Federal employees the highest possible rating, while rating almost
no employees as underperforming.
---------------------------------------------------------------------------
\27\ Non-SES/SP ratings data submitted by individual agencies.
---------------------------------------------------------------------------
Given the preceding data, it is not surprising that Federal
employees also perceive their work unit to be performing exceptionally
well. For example, recent FEVS data demonstrates that 88 percent of
employees believe employees in their work unit ``always'' or ``most of
the time'' ``meet the needs of our customers.'' Ten percent believe
they do so ``sometimes,'' while only 2 percent believe they do so
``rarely'' or ``never.'' \28\ Meanwhile, public trust in government
hovers near all-time lows.\29\ Such incongruence between ratings,
perceived competence within work units, and sustained mistrust among
the American public suggests that the current performance system fails
to comply with the statutory mandate that all non-SES employee
performance systems meaningfully distinguish between excellent,
average, and poor performance and ``establish[ ] performance standards
which will, to the maximum extent feasible, permit the accurate
evaluation of job performance.'' \30\
---------------------------------------------------------------------------
\28\ OPM, Federal Employee Viewpoint Survey: 2024 Governmentwide
All Levels-All Index-All Items Reports, <a href="https://www.opm.gov/fevs/reports/governmentwide-reports/governmentwide-reports/governmentwide-all-levels-all-index-all-items-reports/2024/2024-governmentwide-all-levels-all-index-all-items-report.xlsx">https://www.opm.gov/fevs/reports/governmentwide-reports/governmentwide-reports/governmentwide-all-levels-all-index-all-items-reports/2024/2024-governmentwide-all-levels-all-index-all-items-report.xlsx</a>.
\29\ Pew Research Center, Public Trust in Government: 1958-2025
(December 4, 2025), <a href="https://www.pewresearch.org/topic/politics-policy/trust-in-government/">https://www.pewresearch.org/topic/politics-policy/trust-in-government/</a>.
\30\ 5 U.S.C. 4302(c)(1).
---------------------------------------------------------------------------
Given these historical and ongoing challenges, OPM has determined
that updates to the performance appraisal system for non-SES employees
are necessary. Such updates will strengthen the agencies' ability to
evaluate performance accurately and fairly, ensure that high
performance is recognized and rewarded, and align workforce management
with mission accomplishment. In doing so, OPM aims to promote a culture
of accountability and excellence across the Federal workforce--one that
reflects both the government's evolving operational demands and its
longstanding commitment to merit-based service.
Regulatory Changes
Currently, an agency may not require a particular distribution of
summary levels for any employee covered by 5 CFR part 430, subpart B,
meaning that each non-SES employee can potentially receive any rating
irrespective of how other employees perform within the agency. OPM
proposes to remove this categorical prohibition on forced, or
standardized, distribution for non-SES employees and provide that OPM
may establish and require a standardized distribution of some or all
non-SES
[[Page 8783]]
employee rating levels for agencies to apply.\31\
---------------------------------------------------------------------------
\31\ OPM uses the term ``standardized distribution''
interchangeably with the term ``forced distribution.'' OPM believes
the term ``standardized distribution'' better describes its intent
than ``forced distribution,'' which has appeared in other recent OPM
issuances. That is, OPM proposes to authorize consistent, normalized
standards for the distribution of some or all rating levels across
all non-senior executive employees. Among other things, OPM believes
that this will ensure that employees can be compared across
government, without regard to the particular practices of
performance ratings within specific agencies or the particular
practices of specific managers. It will also help agencies to better
identify, and reward, truly outstanding performers than under the
current system, under which 64.4% receive the highest two
performance ratings, and will also help agencies identify and
address poor performance, as very few employees receive the lowest
performance ratings.
---------------------------------------------------------------------------
Section 430.202(d) currently states that ``[h]eads of agencies or
their designees may request the Director of OPM to exclude positions in
the excepted service.'' On July 17, 2025, the President issued
Executive Order (E.O.) 14317, titled ``Creating Schedule G in the
Excepted Service.'' \32\ E.O. 14317 formally established Schedule G to
cover ``[p]ositions of a policy-making or policy-advocating character
normally subject to change as a result of a Presidential transition.''
\33\ The order also formally excepted individuals who were appointed
under Schedule G from the competitive service.\34\ In 5 CFR part 213,
subpart C, employees who were appointed under Schedule C are identified
as being a part of the excepted service. This rulemaking clarifies that
non-SES employees appointed under Schedules C or G, as members of the
excepted service, may be excluded from coverage under 5 CFR part 430,
subpart B, in accordance with 5 CFR 430.202.
---------------------------------------------------------------------------
\32\ 90 FR 34753 (July 17, 2025).
\33\ Id.
\34\ Id.
---------------------------------------------------------------------------
In another rulemaking, OPM removed the prohibition on a forced
(i.e., standardized) distribution for Senior Executive Service (SES)
employees.\35\ During that process, OPM received comments that were
concerned about whether noncareer SES employees might receive
preferential consideration for the limited number of high ratings
(i.e., Level 4 and 5) that would be available when there is a
standardized distribution.\36\ To alleviate these concerns, OPM
determined that it would exclude noncareer SES employees from
standardized distribution requirements.\37\ Likewise, we are
proactively taking a similar approach with respect to non-SES employees
appointed under Schedules C or G, as members of the excepted service,
may be excluded from any standardized distribution requirements, as
determined by OPM.
---------------------------------------------------------------------------
\35\ 90 FR 44291 (amending, inter alia, 5 CFR 430.305(d)).
\36\ Id. at 44292 (Sept. 15, 2025).
\37\ Id.
---------------------------------------------------------------------------
This new approach would apply to all non-SES employees covered
under a performance appraisal system subject to 5 CFR part 430, subpart
B, including GS and prevailing rate employees. Under a separate
rulemaking, OPM is proposing to create a new subpart in part 430 for
senior professionals (SP), who would no longer be covered under 5 CFR
part 430, subpart B, if made final. OPM's revised performance plan and
system incorporate various changes that seek to reinvigorate the
performance of non-SES employees, including the following: removing any
patterns of summary levels that utilize a ``Level 2''--often referred
to as ``Minimally Successful;'' eliminating required higher-level
review of a level 1 rating for an employee's performance appraisal; the
ability for OPM to implement a standardized distribution of performance
ratings and exclude employees appointed under Schedules C and G from
such requirements; and a requirement that all agencies participate in a
biennial appraisal system certification with OPM. These changes are
contingent upon this proposed rule being made final.
Approved Patterns of Summary Levels
OPM proposes to amend 5 CFR part 430, subpart B, by removing any
approved patterns of summary levels that include ``Level 2.''
Conceptually, a Level 2 summary rating is inconsistent with the logic
of an accurate, well-performing performance appraisal system that
comports with the statutory requirements of 5 U.S.C. 4302. While not
expressly defined, a Level 2 is a summary rating that is neither
``Fully Successful''--a ``Level 3'' rating--nor is it
``Unacceptable''--a ``Level 1'' rating.\38\ However, a plain reading of
the summary levels indicates that any summary rating that is not
``Fully Successful'' inherently signifies that an employee is not
meeting the performance criteria of their position. Any approved
patterns of summary levels that have two levels below a ``Fully
Successful'' create unnecessary complexity without meaningful
distinction. The Merit Systems Protection Board (MSPB) also noted the
failings of a ``Level 2'' rating, noting it ``is a difficult level of
performance to define'' because ``it makes possible a situation that
managers, employees, and members of the public may find intolerable: an
employee who is not performing the job satisfactorily, yet cannot be
removed for performance and who remains in the position at a full
salary.'' \39\
---------------------------------------------------------------------------
\38\ 5 CFR 430.208(d)(2).
\39\ MSPB, Determining an Acceptable Level of Competence for
Step Increases (Apr. 2021), <a href="https://www.mspb.gov/studies/researchbriefs/Determining_an_Acceptable_Level_of_Competence_for_Step_Increases_1823371.pdf">https://www.mspb.gov/studies/researchbriefs/Determining_an_Acceptable_Level_of_Competence_for_Step_Increases_1823371.pdf</a>.
---------------------------------------------------------------------------
This proposed amendment also aligns with OPM's statutory mandate to
improve the accuracy and consistency of its performance appraisal
systems. Given the above data evidencing inflated performance ratings
and the minimal differentiation between any summary rating that is not
``Fully Successful,'' the proposed change eliminates an ineffective and
logically redundant summary level rating. By simplifying the table of
approved patterns of summary levels, agencies will make clear and
accurate distinctions between performance that is ``Fully Successful''
and ``Unacceptable.'' In doing so, this rulemaking will increase the
accountability of the Federal service to the American public and
improve the integrity of Federal performance management.
Therefore, OPM seeks to simplify 5 CFR part 430, subpart B, by
ensuring that there is only one level--``Unacceptable''--that
represents when a non-SES employee's performance fails to meet the
fully successful standards. OPM's oversight of agency non-SES
performance appraisal systems also revealed that, for agencies using a
five-level summary rating system, only 0.3 percent of non-SES employees
were rated at a ``Level 2'' for the fiscal years 2022 to 2024.\40\ The
minimal use of a ``Level 2'' rating also suggests that agencies have
not found the availability of a ``Level 2'' to be useful.
---------------------------------------------------------------------------
\40\ Supra note 27.
---------------------------------------------------------------------------
Enhanced Accountability for Poor Performance
OPM proposes to add a new subsection 430.208(j) that prohibits
contesting performance ratings through union grievance arbitration.
Agency collective bargaining agreements generally permit bargaining
unit employees to grieve performance ratings and for their exclusive
representatives to advance the grievances to binding arbitration. This
requires agencies to defend performance ratings in an often lengthy
process that can involve considerable expense. Experience has shown
that arbitration of performance ratings creates duplicative processes,
delays the finality of ratings of record, and diverts supervisory and
agency
[[Page 8784]]
resources from mission-critical activities, thereby undermining
efficiency and timely accountability for performance outcomes. These
dynamics pressure supervisors to inflate performance ratings to avoid
litigation, undermining the integrity of the assessment.
Further, grievance arbitrators are in almost all cases private
citizens. They do not work in the Federal Government and have little
experience in agency operations. They are not well equipped to evaluate
the accuracy or appropriateness of specific performance ratings. They
are particularly ill-equipped to assess performance ratings assigned
under a standardized distribution, as they would only see the
individual before them and not the broader workforce they were
evaluated with.
Eliminating grievance-based avenues for revising ratings of record
will promote clearer roles and responsibilities in performance
management, reinforce supervisory authority, and enhance consistency
and integrity in appraisal systems. OPM also expects that requiring
agencies to assign performance ratings under a standardized
distribution would generally increase grievances over performance
ratings as fewer employees would receive the highest marks. This
proposed regulation would prevent such grievances from diverting agency
resources from mission accomplishment.\41\
---------------------------------------------------------------------------
\41\ OPM's proposed regulation, if finalized, would not abrogate
existing CBA articles. Performance rating grievances would be
prohibited when the terms of those CBAs expire and they are
renegotiated or roll over. See U.S. Department of Defense, Defense
Contract Audit Agency, Central Region and American Federation of
Government Employees, Local 3529, 37 FLRA 1218 (1990).
---------------------------------------------------------------------------
Importantly, the proposed revisions preserve appropriate due
process protections by continuing to allow changes to ratings of record
when a formal proceeding permitted by law or regulation results in a
final determination by an appropriate authority that the rating must be
changed, or when a change is effected as part of a bona fide settlement
of such a formal proceeding. They would also allow employees to request
informal reconsideration of their rating.
OPM also proposes to amend 5 CFR part 430, subpart B, by removing
the requirement of higher-level review for a Level 1 rating during an
employee's performance appraisal. Currently, 5 CFR 430.208(e) states
``[a] rating of record of ``Unacceptable'' (Level 1) shall be reviewed
and approved by a higher-level management official.'' However, OPM has
determined that requiring higher-level review for a Level 1 rating in
all cases adds unnecessary procedural complexity. For example, in cases
where the rating official is already a senior leader or where the
agency structure does not support additional layers of review,
mandating higher-level approval can be redundant.
OPM proposes to remove the requirement for higher-level approval
for a Level 1 rating because the standards for this rating are clearly
defined, Level 1 ratings are rarely used, and the performance
assessment will be subject to extensive oversight if the agency
subsequently takes a performance-based action. Mandating additional
review adds unnecessary complexity, delays corrective: action, and may
be redundant in streamlined agency structures. Agencies should retain
flexibility in determining when and how such reviews occur. OPM notes
that nothing in this regulation prohibits higher level review of
``Unacceptable'' ratings; the proposed regulation would simply
stipulate that such review is not required in all cases.
OPM also proposes adding limitations to the use of Summary Level
Pattern A, which is a 2-level system, commonly referred to as pass/
fail. Use of a pass/fail system directly works against the intention of
meaningful differentiation between summary ratings. While the pass/fail
system does not allow for deliberate distinctions of performance or
providing a basis for promoting/rewarding high performers, it is
reasonable for a limited number of populations in which comparing,
categorizing, and ranking of employees is impractical or impossible.
OPM seeks to limit the use of Summary Level Pattern A to only seasonal
employees, teachers, General Schedule grades 1-4, and Federal Wage
System (e.g., wage grade) employees (including equivalent grade levels
and types of positions in other personnel systems covered by this
subpart).
Standardized Distribution
Standardized distribution, also sometimes referred to as ``forced
distribution'' or ``stack ranking,'' can be executed by assigning
individual ranks to employees or by categorizing them into groups, such
as top performers, average performers, and low performers.
Performance appraisals in the Federal government date back to the
U.S. military's ``merit rating'' system, created during World War I to
identify poor performers for discharge or transfer. From the beginning
of performance appraisal systems, a recurring challenge has been to
ensure that supervisors use the system to distinguish good performers
from bad. When performance rating systems fail to meaningfully
distinguish different levels of performance, they lose much of their
utility. This is especially so because supervisors in the Federal
government, along with their employees, must spend a considerable
amount of time engaged in performance appraisals.
The practice of requiring a standardized distribution of
performance ratings dates back to just before World War II, when the
military used the practice to identify officer candidates. A study
conducted by Berger, Harbring, and Sliwka (2010) showed that
standardized distributions can counter leniency effects; \42\ i.e., the
common tendency of raters to be overly generous in their ratings.
Leniency bias can occur for a number of common reasons, including so
that supervisors can avoid having to deliver critical feedback to a
subordinate. However, excessive leniency bias undermines the integrity
of a performance rating system: undermining high performance (a
frequent occurrence in entities that do not differentiate performance
fairly); protecting poor performance (which inhibits poor performers
from being identified and receiving performance improvement
interventions); and distorting decisions as to whom to promote.
---------------------------------------------------------------------------
\42\ Berger, J., Harbring, C., & Sliwka, D., Performance
Appraisals and the Impact of Forced Distribution: An Experimental
Investigation, IZA Discussion Paper No. 5020 (2010).
---------------------------------------------------------------------------
The practice of forced ranking (that is, using a standardized
distribution of performance ratings) has a well-documented history of
private sector adoption over the last several decades. Wijayanti,
Sholihin, Nahartyo (2024) conducted a review of the forced distribution
literature.\43\ A total of 41 research articles published from 1960 to
2022 were included in their review. These studies highlight many
notable benefits of utilizing a forced, or standardized, distribution
as well as areas for caution. For example, several studies indicated
that standardized distributions can increase rating accuracy by
eliminating leniency bias, which is the tendency for raters to provide
lenient ratings to avoid conflicts that arise from granting unfavorable
ratings. Findings also show that a standardized distribution can
quickly enhance organizational performance
[[Page 8785]]
and promote the success of merit-based reward systems. Some studies
also found that a standardized distribution can have negative
consequences such as discrimination, perceptions of unfairness, and
reduced organizational citizenship behavior and knowledge sharing.
Nonetheless, the authors concluded that, when implemented carefully, a
standardized distribution has been shown to increase employee
satisfaction and reduce turnover.
---------------------------------------------------------------------------
\43\ Wijayanti, A., Sholihin, M., Nahartyo, E., & Supriyadi, S.,
What do we know about the forced distribution system: A systematic
literature review and opportunities for future research, Management
Quarterly Review (2024).
---------------------------------------------------------------------------
Indeed, while not the norm, a standardized distribution has been
used by many major private sector companies in executive performance
plans over the past few decades, including Oracle, Meta, Amazon,
Microsoft, Uber, and Google.\44\ The practice was famously championed
by the late General Electric executive Jack Welch, who was concerned
that supervisors failed to identify real differences in performance,
depriving employees of valuable feedback that is necessary to drive
improvement. In Welch's 2005 book, Winning,\45\ he advocates a ``20-70-
10'' performance differentiation framework coined the vitality curve,''
in which 20% are the organization's highest performers who should
receive the greatest rewards, opportunities, and leadership investment;
the middle 70% who meet expectations and for whom management should
emphasize coaching and development; and the bottom 10% who are the low
performers who still fail to meet expectations after clear feedback and
support. Welch consistently stressed that these numbers were
illustrative, and that the vitality curve works best when paired with
candor and frequent feedback, so employees always know where they stand
and are not surprised by outcomes. One recent source estimates that 30
percent of Fortune 500 companies use a standardized distribution of
some sort in their performance evaluations.\46\ There is even more
reason to implement a standardized distribution in the Federal
Government than in the private sector. Private sector companies
typically do not operate under a statutory mandate requiring that they
have performance appraisal systems that permit the accurate evaluation
of performance. But, under 5 U.S.C. 4302(c)(1), non-SES employees
operate under just such a statutory mandate. In addition, the Federal
Government is entrusted with many critical responsibilities from
veterans' health care to law enforcement to disaster relief to fighting
pandemics.\47\ When employees in the Federal Government fail to perform
at a high level, these crucial, life-or-death missions are compromised.
Further, unlike the private sector, the Federal Government lacks a
profit motive to ensure meaningful evaluations of its employees.
---------------------------------------------------------------------------
\44\ See, e.g., ``Should a company rate its staff? A former
Amazon exec says `stack ranking' is useful when done right,'' CNBC,
December 5, 2023, available at <a href="https://www.cnbc.com/2023/12/05/stack-ranking-ex-amazon-exec-explains-the-performance-review-system.html">https://www.cnbc.com/2023/12/05/stack-ranking-ex-amazon-exec-explains-the-performance-review-system.html</a>.
\45\ Jack Welch and Suzy Welch, Winning (Warner Books, 2005).
\46\ ``Stack Ranking--All You Need to Know,'' Medium (April 3,
2020) available at <a href="https://medium.com/@corvisio/stack-ranking-all-you-need-to-know-a5339c27ad83">https://medium.com/@corvisio/stack-ranking-all-you-need-to-know-a5339c27ad83</a>.
\47\ See, e.g., Titles 38, 34, and 42 of the United States Code.
---------------------------------------------------------------------------
By ensuring differentiation in performance ratings, a standardized
distribution also ensures that employees receive accurate feedback
regarding how the agency has evaluated their performance. The relevant
statutory authority, 5 U.S.C. 4302(c), states that a performance
appraisal system shall, among other things, allow the accurate
evaluation of job performance based on objective criteria; provide a
basis for recognizing and rewarding outstanding performance; and
assisting employees in improving unacceptable performance. A
performance appraisal can only do these things if it differentiates
relative levels of performance.
However, OPM believes that the current system does not optimally
satisfy the requirements of 5 U.S.C. 4302 due to widespread and
systemic inflation of employee performance ratings that has never been
curbed over many decades and many efforts. As discussed above, in FY
2024 close to half of all Federal employees received the highest
possible evaluation. Surveys consistently show that Federal employees
themselves believe the present performance appraisals system fails to
meaningfully differentiate relative performance. The 2024 Federal
Employee Viewpoint Survey (FEVS) results showed that only 47 percent of
Federal employees agreed with the statement, ``In my work unit,
differences in performance are recognized in a meaningful way.'' \48\
This was the lowest positive response rate for any question and has
consistently been the lowest over the past three years.\49\ Similarly,
only 45 percent of respondents agreed with the same proposition in
2023.\50\ Further data has also yielded similar responses. GAO reported
that, from 2010 to 2017, only one-third of surveyed employees agreed or
strongly agreed with the statement that ``differences in performance
are recognized in a meaningful way.'' \51\
---------------------------------------------------------------------------
\48\ OPM, OPM FEVS Dashboard (last accessed Nov. 19, 2025),
<a href="https://www.opm.gov/fevs/reports/opm-fevs-dashboard/">https://www.opm.gov/fevs/reports/opm-fevs-dashboard/</a>.
\49\ Id.
\50\ Id.
\51\ Id.
---------------------------------------------------------------------------
OPM views a system that incorporates a standardized distribution of
performance ratings as consistent with, and supportive of, the merit
system principles set forth in 5 U.S.C. 2301(b). By better
differentiating relative levels of performance, OPM believes that
(among other things) the performance appraisal system would better
ensure high standards of integrity, conduct, and concern for the public
interest, would better ensure efficient and effective use of the
Federal workforce (by better identifying, and therefore rewarding,
truly high performance), would more fulsomely ensure that employees are
retained based on adequacy of performance; would better identify low
performance (and thus better allow appropriate action to be taken
regarding low performance); and would better allow agencies to target
education and training resources to average or low performers. See 5
U.S.C. 2301(b). Supervisors who assign ratings based on personal
favoritism would continue to violate merit system principles regardless
of the rating structure, while a standardized distribution would
reinforce objective, performance-based differentiation.
Thus, OPM does not believe that a standardized rating system would
deny employees fair or equitable treatment, or subject them to
arbitrary action. Instead, it would ensure fair and equitable treatment
by ensuring that they receive transparent, accurate information about
their performance, ensure that performance ratings provide a true and
accurate basis for recognizing and rewarding outstanding performance,
and ensure that low performance is identified and addressed. See 5
U.S.C. 4302(c)(4). Employee performance ratings would still be based on
individual merit and individual performance--not on irrelevant factors
like race, political affiliation, or religion. Thus, distinguishing
employees based on relative performance does not conflict with the
principle of fair and equitable treatment without regard to prohibited
factors such as race, color, religion, sex, national origin, age, or
political affiliation (5 U.S.C. 2301(b)(2)); rather, it reflects fair
and equitable treatment by basing outcomes on job-related performance.
Similarly, the prohibition on arbitrary action, personal favoritism, or
coercion for partisan political purposes (5 U.S.C. 2301(b)(8)) is
directed at improper motives and
[[Page 8786]]
conduct, not at performance-based distinctions.
Indeed, a standardized distribution would ensure more accurate and
rigorous performance ratings by guarding against leniency bias--
ensuring that the performance appraisal system truly differentiates
outstanding performance, reflects individual merit, and promotes a
culture where outstanding performance is celebrated and rewarded and
where poor performance is identified and address.
OPM is aware of concerns that a standardized distribution of
ratings could impact teamwork among employees. However, OPM notes that,
in accordance with longstanding OPM and GAO guidance, individual
performance appraisals should align with achievement of organizational
and team goals.\52\ Further, OPM believes that any such concerns may be
addressed by making competencies like teamwork, problem-solving,
collaboration, and mentoring critical elements in individual
performance plans. These concerns may also be addressed by including
specific, measurable, achievable, and meaningful goals in individual
performance plans, and ensuring such goals align with broader
organizational and team objectives. In most cases, such meaningful
goals can only be achieved by effective collaboration with others in
the organization. Concerns over teamwork and collaboration may also be
addressed by giving performance-based awards to teams as well as
individuals. Ultimately, however, OPM believes that any potentially
negative effects on employee teamwork and collaboration are outweighed
by the increased accuracy and rigor that may be achieved by a
standardized distribution, especially in light of persistent leniency
bias and rating inflation that has occurred for many years across the
Federal government. In sum, it is particularly important that the
Executive Branch have the option to implement a standardized
distribution of at least some ratings given the systemic and pervasive
use of Level 4 and 5 ratings, and the disconnect between these ratings
and actual non-SES employee performance, as reflected in reports
throughout the past decade. Further, for the same reasons stated above,
OPM proposes to add language stating that non-SES employees appointed
under Schedules C or G, may be excluded from such standardized
distribution requirements, as determined by OPM.
---------------------------------------------------------------------------
\52\ GAO, Creating a Clear Linkage between Individual
Performance and Organizational Success, GAO-03-488 (March 2003)
(noting, as a key practice, ``[a]lign[ing] individual performance
expectations with organizational goals'').
---------------------------------------------------------------------------
Biennial Appraisal System Certifications
Pursuant to 5 U.S.C. 4302(c)(1), performance appraisal systems must
``establish[] performance standards which will, to the maximum extent
feasible, permit the accurate evaluation of job performance on the
basis of objective criteria.'' To meet this statutory requirement, OPM
proposes a new requirement for each Federal agency that uses a
performance management system covered by 5 CFR part 430, subpart B, to
undergo a biennial certification of its appraisal system with OPM.
While the current language in subpart B states that OPM ``may''
evaluate an agency's appraisal system, a biennial certification will
ensure that each agency's performance appraisal system continues to
meet statutory and regulatory requirements and OPM guidance.
This proposed amendment reflects OPM's conclusion that increased
oversight is necessary for OPM to meet its statutory obligations in 5
U.S.C. 4302(c). Increased oversight will hold Federal agencies--and its
employees--accountable to OPM's regulatory requirements. In doing so,
the biennial certification process would improve the overall rigor and
consistency of the performance management systems across the Federal
Government. As noted above, data suggests that fewer than 1 percent of
all non-SES employees are rated below ``Fully Successful,'' and there
are persistent surveys that show Federal employees are skeptical that
current performance management systems meaningfully differentiate
between different levels of performance.\53\ These trends demonstrate
the performance management systems covered by 5 CFR part 430, subpart
B, are not functioning as effective instruments for performance
differentiation, accountability, or workforce development.
---------------------------------------------------------------------------
\53\ Supra notes 24, 27.
---------------------------------------------------------------------------
Through the biennial certification process, OPM would be better
equipped to identify weaknesses in agency systems, promote best
practices, and provide targeted guidance to improve the quality of
performance evaluations. The certification process would also ensure
that appraisal systems align with evolving agency missions and
workforce needs. In short, biennial certification would help OPM to
carry out its statutory responsibility to ensure that agency
performance appraisal systems permit the accurate evaluation of job
performance, advance merit-based management, and strengthen public
trust in government accountability.
Supervisory Critical Element
OPM's regulations in 5 CFR 412.202 require the systematic
development of individuals in supervisory, managerial and executive
positions. Supervisors bear the responsibility to accurately assess
employees' performance. As such, supervisors must be held accountable
with respect to being appropriately trained on and executing exemplary
performance management. Agencies are also accountable for providing
comprehensive training and oversight of their performance management
programs. Too often, new supervisors receive inadequate training on
identifying and addressing poor performance. This lack of training
leads to erroneous assessment of employees' performance, often
resulting in inflated ratings for poor performers.
As a way to prevent this lack of training and oversight, OPM's
Performance Management for Federal Employees \54\ provided tools for
supervisors to identify and address poor performance. In addition to
those critical tools, OPM developed supervisory training that includes
drafting effective performance goals, elements and standards.
Completion of this new training is required by all individuals in
supervisory, managerial and executive positions.
---------------------------------------------------------------------------
\54\ Id.
---------------------------------------------------------------------------
In the same memorandum, OPM introduced a new mandatory critical
element to be included in the performance plans of all supervisory non-
SES/SP employees. Titled, ``Holding Employees Accountable,'' the
critical element ensures adequate and appropriate assessment of
supervisors with respect to the execution of their performance
management responsibilities, including supporting and rewarding
excellent work from employees supervised, as well as timely and
efficiently addressing poor and mediocre performance of the same
employees.
While the new critical element is required via OPM's authority
established in 5 U.S.C. 4302, OPM seeks to codify the supervisory
performance requirement in regulation. The proposed language to be
added to 5 CFR 430.206(b)(9) supports OPM's commitment to the oversight
of agency performance management systems and a high-performance, high-
accountability culture in the Federal workforce.
[[Page 8787]]
Proposed Changes in This Rulemaking
OPM has reviewed the performance management regulations governing
non-SES employees and is issuing this proposed rule in response to its
regulatory authority in 5 U.S.C. 4305. OPM proposes to amend 5 CFR
430.207. OPM proposes to remove paragraph (c) because it provides that
appraisal programs should provide assistance to employees whose
performance is below ``Fully Successful'' but above ``Unacceptable.''
However, because OPM has determined that it is appropriate to remove
any summary level pattern that utilizes a ``Level 2,'' the deletion of
paragraph (c) is also appropriate since it only refers to performance
that would be a ``Level 2'' rating. OPM would remove paragraph (c) and
redesignate paragraph (d) as (c).
OPM also proposes to amend 5 CFR 430.208 by adding a new paragraph
(c) and redesignate the current paragraph (c) as paragraph (d). The new
paragraph Sec. 430.208(c) would state that agencies must use a
standardized distribution of ratings, as established by OPM. Removing
the categorical prohibition would allow OPM to require and enforce a
pre-established agency-wide and government-wide distribution of
performance ratings among all non-SES employees, for covered agencies
and personnel. OPM anticipates implementing a standardized distribution
limiting the highest rating levels (i.e., levels 4 and 5) only and
would not impose any requirements with respect to the number of
employees rated at levels 1 and 3. The proposed amendment also provides
for the exclusion of non-SES employees appointed under Schedules C or G
from any standardized distribution requirements, as determined by OPM.
In addition, OPM is proposing to expressly allow comparing,
categorizing, and ranking employees on the basis of their performance,
a change that would allow for a standardized distribution of
performance ratings. Thus, in Sec. 430.208(a)(1), the rating of record
must be determined using the method established under Sec. 430.208(b)
and (d). In addition, OPM believes that expressly allowing agencies to
compare relative employee performance--and removing the previous
prohibition on this practice--will ensure that employee performance
ratings better account for, and differentiate between, relative
employee performance, ensuring that ratings of record provide an
accurate guide to rewarding high performance and identifying and
addressing low performance, in alignment with congressional intent. See
5 U.S.C. 4302(c). Any human judgment is by nature comparative.\55\
Thus, the quality of an evaluation is improved by ensuring that it is
comparative in nature (that is, involving relative judgments of a
target in comparison to other individuals and groups), instead of
absolute (that is, involving judgments on scales that do not reference
others).\56\ One study, for example, concluded that ``[t]he relatively
few studies that have investigated the validity of comparative
performance appraisal methods have tended to support their validity.''
\57\ It found significant evidence from ``at least three important and
quite different domains that comparative evaluative judgments of the
self or others may be more advantageous than absolute evaluative
judgments.'' \58\ OPM thus believes that a performance appraisal
framework that permits comparative judgments among employees, by
utilizing a standardized distribution of ratings, will more accurately
and objectively measure individual performance than one that prohibits
any comparative judgments between employees and requires that any
measurement of employee performance be framed in absolute terms, in
addition to correcting for leniency bias (a widespread and well-
documented problem in Federal employee performance ratings).
---------------------------------------------------------------------------
\55\ Kedia G, Mussweiler T, Linden DE. Brain mechanisms of
social comparison and their influence on the reward system.
Neuroreport. 2014 Nov 12;25.
\56\ Goffin RD, Olson JM. Is It All Relative? Comparative
Judgments and the Possible Improvement of Self-Ratings and Ratings
of Others. Perspect. Psychol. Sci. 2011 Jan; 6(1):48-60.
\57\ Id. at p. 50.
\58\ Id. at 53.
---------------------------------------------------------------------------
In accordance with the above section titled ``Approved Patterns of
Summary Levels,'' OPM proposes to amend 5 CFR 430.208(d)(1) to remove
any patterns of summary levels using a ``Level 2'' or that have ``Level
4'' as the highest summary level. Accordingly, this rulemaking would do
the following: removes Patterns C, D, F, G, H; retains Patterns A and
B; and redesignates Pattern E as C. Additionally, OPM proposes to amend
Sec. 430.208(d)(1) by limiting the use of Pattern A (Pass/Fail) only
for: seasonal employees, teachers, General Schedule grades 1-4, and
Federal Wage System (e.g., wage grade) employees (including equivalent
grade levels and types of positions in other personnel systems covered
by this subpart). OPM also proposes to amend Sec. 430.210(b) by adding
language that states OPM must conduct a biennial review and
certification of an agency's performance appraisal system that is
covered by 5 CFR part 430, subpart B. The revised language relatedly
states that OPM must issue annual evaluation criteria and policy, and
that OPM may recommend that the Office of Management and Budget limit
an agency's aggregate awards spending based on an unfavorable
evaluation. By making these conforming changes, OPM guarantees that
agencies will have an incentive to comply with the requirements of 5
CFR part 430, subpart B.
OPM also proposes to amend 5 CFR 430.206(b) by adding a new
subparagraph (9). The new paragraph Sec. 430.206(b)(9) would require a
supervisory critical element to be included in the performance plan of
all supervisory non-SES/SP employees. The language of the supervisory
critical element and its corresponding performance standards would be
established by OPM.
Conforming Amendments
In an unrelated rulemaking, OPM has proposed revisions to the
reduction in force regulations found in 5 CFR part 351. 90 FR xxxxx
(MM, DD, YYYY). In this rule OPM proposes to make appropriate
conforming changes to part 351 following the finalization of that rule.
Based on the current language, OPM would make conforming changes to
proposed 5 CFR 351.503 to adjust the calculations for an employee's
performance credit by removing Level 2 from the list of summary levels
and removing references to summary level patterns that would be
eliminated under this rulemaking.
Expected Impact of This Rulemaking
A. Statement of Need
OPM is issuing this proposed rule pursuant to its authority to
issue regulations governing performance appraisals for non-SES
employees in subchapter I of chapter 43 of title 5, United States Code.
The purpose of this rulemaking is to modernize and strengthen the
performance management framework for non-SES employees under 5 CFR part
430, subpart B. The current regulatory structure has remained largely
unchanged for decades. Therefore, it no longer reflects the operational
realities or accountability standards necessary for today's Federal
workforce. As stated in more detail above, persistent issues--including
inflated performance ratings, limited differentiation between
successful and unsuccessful performance, and uneven agency compliance
with statutory performance
[[Page 8788]]
appraisal requirements--demonstrate the need for comprehensive reform.
OPM proposes to eliminate all summary level patterns that use a
``Level 2'' rating. We also propose to eliminate any pattern in which
``Level 4'' represents the highest rating level. This will preserve
``Level 5'' as the highest rating level except in limited cases where a
pass/fail (i.e., Levels 1 and 3) pattern is used. As noted above, data
shows that only approximately 0.3 percent of employees are rated at
``Level 2,'' \59\ demonstrating that the rating level is rarely used
and does not meaningfully distinguish performance. Further, any rating
below ``Fully Successful'' already indicates that an employee is not
meeting job expectations. A ``Level 2'' rating is illogical because
``it makes possible a situation that managers, employees, and members
of the public may find intolerable: an employee who is not performing
the job satisfactorily, yet cannot be removed for performance and who
remains in the position at a full salary.'' \60\ Accordingly, the
``Level 2'' rating adds unnecessary complexity, is not consistent with
an accurate performance management system, and should be eliminated.
---------------------------------------------------------------------------
\59\ Supra note 27.
\60\ MSPB, Determining an Acceptable Level of Competence for
Step Increases, supra note 39.
---------------------------------------------------------------------------
As mentioned in the Background, the performance rating data for
non-SES employees for fiscal years 2022 to 2024 show approximately 64.4
percent of non-SES employees received an ``Outstanding'' or ``Exceeds
Fully Successful'' rating and 0.5 percent of non-SES employees were
rated below ``Fully Successful.'' \61\ The distribution of these
ratings suggests there is inflation of non-SES employee ratings and
poor performing employees are likely not being identified or held
accountable through a rigorous appraisal process. Similarly, where
there is a proliferation of ratings inflation, rating-based awards are
also likely to be paid to undeserving employees. As such, action must
be taken to re-set and infuse rigor into the non-SES performance
appraisal process, including the permitted use of standardized
distributions.
---------------------------------------------------------------------------
\61\ Supra note 27.
---------------------------------------------------------------------------
This proposed rulemaking also aligns OPM's regulations with 5
U.S.C. 4302(c) by establishing a biennial certification requirement for
performance management systems covered by 5 CFR part 430, subpart B.
The biennial certification requirement with OPM ensures that each
agency complies with OPM's regulations and, therefore, accurately
evaluates the job performance of non-SES employees based on objective
criteria. Given the evidence of inflated ratings and minimal
performance differentiation across the Federal workforce,\62\ this
biennial certification requirement would increase OPM's ability to
provide effective oversight and compel accuracy within agency
performance appraisal systems.
---------------------------------------------------------------------------
\62\ OPM, Performance Management for Federal Employees, supra
note 13.
---------------------------------------------------------------------------
B. Impact
The proposed amendments to 5 CFR part 430, subpart B, will cause
both the President and the American public to more confidently rely on
employees that make up the biggest percentage of all Federal employees:
non-SES employees. The above changes to 5 CFR part 430, subpart B,
would enable agencies and non-SES employees to be held to a higher
standard of accountability and ensure only the truly deserving
performers are rewarded for their performance. Over time, these
improvements are expected to result in higher-performing organizations,
more responsive public service, and renewed public trust in the
integrity and effectiveness of the Federal workforce.
By authorizing OPM to establish and maintain a standardized
distribution of some or all rating levels, this proposed rulemaking
would require agencies to refocus efforts on ensuring that there are
meaningful distinctions in non-SES performance ratings. Establishing
limits on non-SES employee ratings would result in a more normalized
distribution of performance ratings. OPM expects that a standardized
distribution of some or all rating levels would incentivize improved
performance of non-SES employees as they no longer would expect to
receive the highest ratings without demonstrating superior performance
relative to the other non-SES employees in their agency. This would
ultimately improve the performance of the Government in providing
services to the American public.
The proposed amendments will have a significant impact on the
operation of an agency's performance management systems. The removal of
any patterns that include a ``Level 2'' rating will simplify the
appraisal system by removing a level that states an employee's job
performance is not ``Unacceptable'' when it fails to be ``Fully
Successful.'' Further, because a very small percentage of employees are
rated at ``Level 2,'' the removal of that rating should cause minimal
operational disruption but provide significant benefits.
The proposed biennial appraisal system certification requirement
will strengthen non-SES employee consistency and oversight under 5
U.S.C. 4302(c). This new process will not impose significant additional
administrative burden, as most agencies already maintain and
periodically review their performance appraisal systems. Instead,
certification will serve as a structured mechanism for agencies to
demonstrate compliance, identify deficiencies, and receive OPM feedback
on improving system quality. Over time, the requirement will enhance
interagency comparability, promote best practices, and ensure that
agency systems continue to meet statutory standards for objectivity and
accuracy.
C. Costs
This proposed rule would affect most Federal agencies--ranging from
cabinet-level departments to small independent agencies--that have
employees covered under 5 CFR part 430, subpart B. We estimate that
this rulemaking will require individuals employed by these agencies to
spend time updating their performance appraisal system(s), program(s),
policies, and plans during fiscal year 2026 to prepare for
implementation in fiscal year 2027. Typically, an agency's human
resources staff are responsible for these tasks. Therefore, for this
cost analysis, the assumed average salary rate of Federal employees
performing this work will be the rate in 2026 for GS-14, step 5, in the
Washington, DC, locality pay table ($163,104 annual locality rate and
$78.15 hourly locality rate). We assume the total dollar value of
labor, which includes wages, benefits, and overhead, is equal to 200
percent of the wage rate, resulting in an assumed labor cost of $156.30
per hour. We estimate that, in the first year following publication of
a final rule, this would require an average of 22,500 hours of work
governmentwide, resulting in estimated costs of about $23,445 per
agency and about $3,516,750 governmentwide. Additionally,
USAPerformance, which is an IT tool used by many agencies to service
their performance management systems, would need to be updated to
reflect the removal of the Level 2 rating. This would require an
estimated 400 hours of work at the rate of $390 per hour, resulting in
an estimated cost of $156,000. There are also approximately 48 other
agency-specific IT systems used for performance management that would
need the same update. OPM estimates the cost to each agency would be
similar to that of USAPerformance,
[[Page 8789]]
resulting in an estimated $7,488,000 in total costs to update these
other systems.
The regulatory changes in the proposed rule would also require OPM
to evaluate the operation and application of agency performance
appraisal system(s) and program(s) on a biennial basis. We estimate
that, in the first year following publication of the final rule, doing
so will require 150 hours of work by OPM employees with an average
hourly cost of $156.30. This work would result in estimated costs in
that first year of implementation of about $23,445.
We do not believe this rulemaking will substantially increase the
ongoing administrative costs to agencies (including any administrative
costs associated with OPM's annual review of agency appraisal system(s)
and program(s)) because the rulemaking provides cost-saving provisions.
It also eliminates mandatory review of Level 1 ``Unacceptable'' ratings
of record, thereby eliminating those associated labor costs.
D. Benefits
Since 5 CFR part 430, subpart B, covers positions that include GS
and prevailing rate employees, its impact is governmentwide. Non-SES
employees are the backbone of the Federal Government and are,
therefore, critical to the operation of an effective and efficient
government. The application of a standardized distribution within the
non-SES employee performance appraisal system would reinforce the
understanding that success as a Federal employee is aligned to the
appropriate rating at the fully successful level. By establishing a
limit on the number of non-SES employees who can receive a rating above
the fully successful level, there would be a clear distinction of the
highest performers across an agency and the Federal Government.
Agencies would no longer be able to rate a high number of its non-SES
employees at the highest performance ratings, thus encouraging
employees to strive for increased levels of performance and ultimately
provide better results for the Government and the American public.
The removal of summary level patterns that include a ``Level 2''
also simplifies and increases the rating accuracy of non-SES employees.
A ``Level 2'' rating is rarely used and is confusing because it creates
a performance rating that guarantees an employee stays in their
position when their performance was not ``Fully Successful.'' Its
removal eliminates redundancy, simplifies rating scales, and allows
agencies to more clearly distinguish between satisfactory and
unsatisfactory performance. This simplification will also help
supervisors communicate expectations more clearly and apply performance
standards more consistently across the workforce.
The new biennial certification requirement will also strengthen
OPM's oversight of non-SES employees and aid in continuous improvement.
The establishment of a biennial oversight mechanism will ensure that
OPM and all impacted Federal agencies are complying with the
congressional requirements of 5 U.S.C. 4302. Recurring certification
will aid OPM in identifying inconsistencies or deficiencies in agency
appraisal systems, promote best practices across the Government, and
enable OPM to provide targeted technical assistance where needed. This
ongoing review process will foster greater accountability,
transparency, and uniformity in the administration of performance
appraisal systems, thereby improving public confidence in Federal
workforce management.
E. Regulatory Alternatives
An alternative to this rulemaking is to not permit standardized
distributions and instead issue further guidance encouraging agencies
to be increasingly rigorous in their management of non-SES performance
to promote meaningful distinctions in non-SES performance. However,
previous attempts to achieve this result through guidance have not been
successful in curbing inflated non-SES employee ratings. Without the
ability to place limits on the ratings of non-SES employees, there will
almost certainly continue to be a pervasive inflation of ratings and a
lack of accountability and meaningful distinction in performance
ratings.
Another alternative to this rulemaking is to keep all patterns of
summary levels that include a ``Level 2.'' Instead, OPM could issue
further guidance on the appropriate use of any ratings below a ``Level
3,'' and instruct agencies to hold employees in this rating level more
accountable. However, the use of a summary level pattern that includes
a ``Level 2'' has not aided agencies in meaningfully distinguishing
between performers at different rating levels. Rather, a ``Level 2''
rating is rarely used due to its inherent contradictions. Another
alternative to this rulemaking is to not create a biennial
certification requirement. Instead, OPM could issue further guidance
encouraging agencies to be increasingly rigorous in managing the
performance of their non-SES employees. OPM could exercise its
authority and include a more rigorous review of agency performance
management results in its human capital oversight, conducted by OPM's
Merit Systems Accountability and Compliance team. Oversight agencies
have noted for decades that there are issues with the performance
management of Federal employees and guidance has proven to be
ineffective at materially improving an agency's performance management
system. Rather, a biennial certification requirement will guarantee a
regular, recurring review of each agency's performance management
system and require its compliance with 5 CFR part 430, subpart B.
Therefore, the biennial certification requirement will better aid OPM
and the Federal Government as a whole in meeting the statutory
requirements for performance management systems.
Request for Comments
OPM requests comments on the implementation and potential impacts
of this proposed rule. Such information will be useful for better
understanding the effect of this amendment on non-SES employee
performance management by Federal agencies. The type of information in
which OPM is interested includes, but is not limited to, the following:
<bullet> How will a standardized distribution of some or all
performance ratings drive merit, competence, and excellence across the
Federal Government?
<bullet> Is there any research OPM should consider regarding what
impact a standardized distribution may have on non-SES employee
performance and organizational performance?
<bullet> Does the current non-SES employee performance management
system accurately distinguish excellent from average from poor
performance? If so, how?
<bullet> Would a standardized distribution help drive a high-
performance culture across the Federal Government? Why?
<bullet> Would a standardized distribution motivate non-SES
employees to work harder and produce better results for the American
people? Why?
<bullet> Would a standardized distribution empower agency
leadership to hold non-SES employees accountable for poor performance?
Why?
<bullet> What effect, if any, would a standardized distribution
have on the Government's ability to hire and retain non-SES employees?
<bullet> How has standardized distribution of employee performance
rankings worked in the private sector? Has it positively or negatively
impacted corporate performance?
[[Page 8790]]
<bullet> What effect would a standardized distribution of
performance ratings have on teamwork and collaboration among Federal
employees? How could any such concerns be addressed?
What measures could Federal agencies take to ensure that
standardized distribution is implemented in such as a way as to promote
a culture that values individual performance, teamwork, collaboration,
and high performance?
Severability
OPM proposes that, if any of the provisions of this proposed rule
as finalized is held to be invalid or unenforceable by its terms, or as
applied to any person or circumstance, it shall be severable from its
respective section(s) and shall not affect the remainder thereof or the
application of the provision to other persons not similarly situated or
to other dissimilar circumstances. For example, if it is determined
that OPM may not establish and refine a standardized distribution of
summary levels, the proposed provision eliminating summary level
patterns utilizing Level 2 summary levels would remain in effect. OPM
welcomes public comment on the independent operation of various
provisions in this proposal.
Regulatory Compliance
A. Regulatory Flexibility Act
The Director of OPM certifies that this rulemaking will not have a
significant economic impact on a substantial number of small entities
because it will apply only to Federal agencies and employees.
B. Regulatory Review
OPM has examined the impact of this rule as required by E.O.s 12866
and 13563, which direct agencies to assess all costs and benefits of
available regulatory alternatives and, if regulation is necessary, to
select regulatory approaches that maximize net benefits (including
potential economic, environmental, public, health, and safety effects,
distributive impacts, and equity). A regulatory impact analysis must be
prepared for economically significant rules as defined by section
3(f)(1) of E.O. 12866. This rulemaking does not reach that threshold
but has otherwise been designated a ``significant regulatory action''
under section 3(f) of E.O. 12866. This rule is not expected to be a
regulatory action under E.O. 14192 because it imposes no more than de
minimis costs.
C. Federalism
This rulemaking will not have substantial direct effects on the
States, on the relationship between the National Government and the
States, or on distribution of power and responsibilities among the
various levels of government. Therefore, in accordance with E.O. 13132,
it is determined that this proposed rule does not have sufficient
federalism implications to warrant preparation of a Federalism
Assessment.
D. Civil Justice Reform
This rulemaking meets the applicable standards set forth in section
3(a) and (b)(2) of E.O. 12988.
E. Unfunded Mandates Reform Act of 1995
Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA)
requires that agencies assess anticipated costs and benefits before
issuing any rule that would impose spending costs on State, local, or
tribal governments in the aggregate, or on the private sector, in any 1
year of $100 million in 1995 dollars, updated annually for inflation.
That threshold is currently approximately $206 million. This rulemaking
will not result in the expenditure by State, local, or tribal
governments, in the aggregate, or by the private sector, in excess of
the threshold. Thus, no written assessment of unfunded mandates is
required.
F. Paperwork Reduction Act
This regulatory action will not impose any reporting or
recordkeeping requirements under the Paperwork Reduction Act.
List of Subjects in 5 CFR Part 430
Decorations, Government employees.
Signing Statement
The Director of OPM, Scott Kupor, reviewed and approved this
document and has authorized the undersigned to electronically sign and
submit this document to the Office of the Federal Register for
publication.
Office of Personnel Management.
Jerson Matias,
Federal Register Liaison.
For the reasons stated in the preamble, OPM is proposing to amend 5
CFR part 430 as follows:
PART 430--PERFORMANCE MANAGEMENT
0
1. The authority citation for part 430 continues to read as follows:
Authority: 5 U.S.C. chapter 43 and 5307(d).
Subpart B-Performance Appraisal for General Schedule, Prevailing
Rate, and Certain Other Employees
Sec. 430.206 Planning performance.
0
2. Amend Sec. 430.206 by adding paragraph (b)(9) to read as follows:
* * * * *
(b) * * *
(9) The performance plan of any supervisor covered under this
subpart must include a supervisory critical element comprised of
supervisory requirements established by OPM and agency-established
criteria for protecting whistleblowers, as required by 5 U.S.C.
4302(b).
Sec. 430.207 [AMENDED].
0
3. Amend Sec. 430.207 by:
0
a. Removing paragraph (c); and
0
b. Redesignating paragraph (d) as (c).
0
4. Revise and republish Sec. 430.208 to read as follows:
Sec. 430.208 Rating performance.
(a) As soon as practicable after the end of the appraisal period, a
written, or otherwise recorded, rating of record must be given to each
employee.
(1) A rating of record must be based only on the evaluation of
actual job performance for the designated appraisal period.
(2) An agency must not issue a rating of record that assumes a
level of performance by an employee without an actual evaluation of
that employee's performance.
(3) Except as provided in Sec. 430.208(i), a rating of record is
final when it is issued to an employee with all appropriate reviews and
signatures.
(b) Rating of record procedures for each appraisal program must
include a method for deriving and assigning a summary level as
specified in paragraph (d) of this section based on appraisal of
performance on critical elements and, as applicable, non-critical
elements.
(1) A Level 1 summary (``Unacceptable'') must be assigned if and
only if performance on one or more critical elements is appraised as
``Unacceptable.''
(2) Consideration of non-critical elements must not result in
assigning a Level 1 summary (``Unacceptable'').
(c) OPM may establish, and refine as needed, a standardized
distribution of some or all rating levels which agencies must apply
when rating employees, except that employees appointed under Schedules
C or G in the excepted service may be excluded from such standardized
distribution requirements, as determined by OPM.
(d) The method for deriving and assigning a summary level, as may
be
[[Page 8791]]
established by OPM as described in paragraph (c) of this section, may
involve comparing, categorizing, and ranking employees or groups on the
basis of their performance. Such procedures may also be used to make
award determinations and promotion decisions.
(e) Summary levels.
(1) An appraisal program must use one of the following patterns of
summary levels, but Pattern A may only be used for seasonal employees,
teachers, General Schedules grades 1-4, and Federal Wage System
employees:
------------------------------------------------------------------------
Summary level
Pattern ---------------------------------------
1 2 3 4 5
------------------------------------------------------------------------
A............................... X ...... X ...... ......
B............................... X ...... X ...... X
C............................... X ...... X X X
------------------------------------------------------------------------
(2) Within any of the patterns shown in paragraph (e)(1) of this
section, summary levels must comply with the following requirements:
(i) Level 1 through Level 5 are ordered categories, with Level 1 as
the lowest and Level 5 as the highest;
(ii) Level 1 is ``Unacceptable'';
(iii) Level 3 is ``Fully Successful'' or equivalent; and
(iv) Level 5 is ``Outstanding'' or equivalent.
(3) The term ``Outstanding'' may be used only to describe the
summary level ``Level 5.''
(4) The designation of a summary level and its pattern shall be
used to provide consistency in describing ratings of record and as a
reference point for applying other related regulations, including, but
not limited to, assigning additional retention service credit under
Sec. 351.504 of this chapter.
(5) Under the provisions of Sec. 351.504(e) of this chapter, the
number of years of additional retention service credit established for
a summary level of a rating of record shall be applied in a uniform and
consistent manner within a competitive area in any given reduction in
force, but the number of years may vary:
(i) In different reductions in force;
(ii) In different competitive areas; and
(iii) In different summary level patterns within the same
competitive area.
(e) The rating of record or performance rating for a disabled
veteran must not be lowered because the veteran has been absent from
work to seek medical treatment as provided in Executive Order 5396.
(f) When a rating of record cannot be prepared at the time
specified, the appraisal period must be extended. Once the conditions
necessary to complete a rating of record have been met, a rating of
record must be prepared as soon as practicable.
(g) Each rating of record must cover a specified appraisal period.
Agencies must not carry over a rating of record prepared for a previous
appraisal period as the rating of record for a subsequent appraisal
period(s) without an actual evaluation of the employee's performance
during the subsequent appraisal period.
(h) When either a regular appraisal period or an extended appraisal
period ends and any agency-established deadline for providing ratings
of record passes or a subsequent rating of record is issued, an agency
must not produce or change retroactively a rating of record that covers
that earlier appraisal period except that a rating of record may be
changed--
(1) Within 60 days of issuance based upon an informal request by
the employee;
(2) As a result of a formal proceeding permitted by law or
regulation that results in a final determination by appropriate
authority that the rating of record must be changed or as part of a
bona fide settlement of a formal proceeding; or
(3) Where the agency determines that a rating of record was
incorrectly recorded or calculated.
(i) A performance rating may be prepared at such other times as an
appraisal program may specify for special circumstances including, but
not limited to, transfers and performance on details.
(j) A rating of record may not be challenged through the grievance
provisions of 5 U.S.C. 7121.
0
5. Amend Sec. 430.210 by revising paragraph (b) to read as follows:
Sec. 430.210 OPM responsibilities.
* * * * *
(b) OPM must evaluate and certify the operation and application of
an agency's performance appraisal system(s) and program(s) on a
biennial basis. OPM may recommend that the Office of Management and
Budget limit an agency's aggregate awards spending based on an
unfavorable evaluation. OPM must issue biennial certification criteria
and policy.
* * * * *
[FR Doc. 2026-03619 Filed 2-23-26; 8:45 am]
BILLING CODE 6325-38-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on February 24, 2026.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.