Organization of the Government for Personnel Management, Overseas Employment, Temporary and Term Employment, Recruitment and Selection for Temporary and Term Appointments Outside the Register, Examining System, and Training

AGENCY:

Office of Personnel Management.

ACTION:

Final rule.

SUMMARY:

The Office of Personnel Management (OPM) is revising its regulations to implement certain Governmentwide human resources flexibilities contained in the Chief Human Capital Officers Act of 2002 (Title XIII of the Homeland Security Act). These regulations provide agencies with: The ability to appoint qualified candidates for positions in the competitive service using direct-hire procedures; increased flexibility in assessing applicants using alternative (category-based) rating and selection procedures; the authority to pay or reimburse the costs of academic degree training from appropriated or other available funds under specified conditions; and increased flexibility to use academic degree training to address agency-specific human capital requirements and objectives. This final regulation also removes Recruitment and Selection for Temporary and Term Appointments Outside the Register, and all related references including temporary appointments pending establishment of a register (TAPER) authority.

EFFECTIVE DATES:

July 15, 2004.

FOR FURTHER INFORMATION CONTACT:

On alternative rating and selection procedures, Ms. Linda Watson by telephone at (202) 606-0830, fax at (202) 606-2329 or by e-mail at lmwatson@opm.gov. On direct-hire authority, emergency indefinite appointments, overseas employment, TAPER, and outside the register appointments, Mr. Larry Lorenz by telephone at (202) 606-0830, fax at (202) 606-2329 or by e-mail at dmtyrrel@opm.gov. On academic degree training, Ms. LaVeen M. Ponds by telephone at (202) 606-1394, fax at (202) 606-2329 or by e-mail at lmponds@opm.gov. Ms. Watson, Ms. Tyrrell and Ms. Ponds may also be contacted by TTY at (202) 418-3134.

SUPPLEMENTARY INFORMATION:

On June 13, 2003, OPM published interim regulations at Federal Register 68 FR 35265, to implement provisions of the Chief Human Capital Officers Act of 2002 (Title XIII of the Homeland Security Act). The Chief Human Capital Officers Act of 2002 (Act) provides Federal agencies with a number of human resources (HR) flexibilities. These flexibilities include direct-hire authority and alternative (that is, category) rating and selection procedures, which will aid in recruitment and hiring. The Act also provides Federal agencies with the authority to pay or reimburse employees for the costs of academic degree training. For additional background information on these flexibilities, please refer to the interim regulations.

During the comment period, OPM hosted four briefings to introduce the new flexibilities. We received written and oral comments from six Federal agencies, one employee union, a Federal program director, one private sector company, and numerous Federal employees and human resources professionals. Based on these comments, we have made several changes in the final regulations to adopt suggestions or to clarify intent. We have addressed these comments as they apply within each flexibility.

Additional information on direct-hire and category rating and selection procedures has been added to OPM's Delegated Examining Operations Handbook. Information on approved Governmentwide direct-hire authorities can be obtained by visiting OPM's Web site at http://www.opm.gov and accessing the document entitled “Primary Appointing Authorities for Career and Career Conditional Employees” from the Web site index. We have also posted fact sheets on our Web site that address many of the questions received on these new flexibilities. To access these fact sheets, refer to the individual flexibility in the Web site index.

Direct-Hire Authority

Section 3304(c) of title 5, United States Code, provides agencies with the authority to appoint candidates directly to jobs for which OPM determines that there is a severe shortage of candidates or a critical hiring need.

We asked agencies to comment on whether OPM should combine the requirements and justification for direct-hire authorities in a single section of the regulations, or whether we should continue to publish them in separate sections. Three of the four agencies responding to our request recommended we retain this information in separate sections. Therefore, this information will remain in separate sections in the final regulation.

The final regulation provides that OPM may independently decide that a severe shortage of candidates or a critical hiring need exists, either Governmentwide or in specified agencies, for one or more specific occupational series, grades (or equivalent), or geographic locations. Alternatively, an agency may, in a written request to OPM, identify the position(s) for which it believes a severe shortage or a critical hiring need exists. The agency must support its request with relevant evidence, as described below. Agencies that use this direct-hire authority must adhere to public notice requirements, as set forth in 5 U.S.C. 3327 and 3330, and 5 CFR part 330, subpart G.

Discussion of Comments

Two agencies suggested that the authority to approve the use of direct-hire authority be delegated to agencies, and if not delegated, that the regulation require requests be submitted from the agency headquarters level. Based on our experience to date, there are widely varying interpretations of the appropriate use of direct-hire authority. OPM will, therefore, retain approval authority. However, for consistent application within individual agencies, requests for direct-hire authority should be submitted by the agency headquarters level. We have added this requirement to the regulation.

One agency suggested we include, in the definition portion of the regulation, the same language explaining when a “critical need” exists that was published in the interim regulation supplementary information. In addition, it was suggested that we substitute “difficult to identify” for “unable to identify” in the definition of “severe shortage of candidates” to more realistically describe a severe shortage situation. We have added these language changes in the regulation for clarity.

We received several agency comments and questions about the ability to use a direct-hire authority if a delegated examining unit (DEU) is not present. Although an agency using direct-hire authority must have a delegated examining authority, the agency is not required to have a DEU in place. We have clarified this in the regulation.

One agency commented that the required justification for a direct-hire authority based on a critical hiring need is excessive and burdensome. The agency recommended the regulation provide for agencies to use direct-hire based on a critical hiring need to prevent a staffing crisis rather than to address an existing one. This comment is outside the scope of the provisions of the Act and the regulation. The legislative language provides for direct-hire authority, outside the merit system, when a critical hiring need exists. We want to emphasize, however, that the regulation provides a number of criteria that can be used to evidence a critical hiring need, as they apply to a specific situation. These criteria, not necessarily all-inclusive, present examples of the type of information that will support reasonable evidence that the agency is experiencing a critical situation.

A union objected to the use of direct-hire authority for a severe shortage of candidates unless a special salary rate had been established for the position. Special salary rates are one of the many flexibilities agencies have to address their recruitment difficulties. Establishing a special salary rate is not a prerequisite for obtaining approval for a direct-hire authority. Special salary rates were included in the regulation as an example of a flexibility an agency may use to support its justification for a severe shortage of candidates. We have added language to clarify our intention.

The same union also noted that the regulation requires agencies to submit supporting evidence when requesting direct-hire authority based on a severe shortage of candidates or a critical hiring need, but does not require the same evidence from OPM when deciding on its own that a need exists. In addition, the union commented that similar evidence from OPM to support the need for an extension of existing direct-hire authority should be required. We agree that these additions should be included in the regulation and have added clarifying language.

The union also commented that the “periodic” review of existing direct-hire authorities should adhere to a specific schedule and that the content of reviews and the requirement for publication should be identified. We have determined it to be impractical to regulate a schedule for reviewing direct-hire authorities. However, we will ensure that these reviews will take place often and will focus on continued adherence to regulatory intent. We have not adopted this suggestion.

Elimination of Outside-the-Register Procedures

OPM has eliminated 5 CFR part 333, Recruitment and Selection for Temporary and Term Appointments Outside the Register, based on its conclusion that this hiring authority is now obsolete.

One Federal agency submitted comments opposing the elimination of the outside-the-register procedures. The comments did not adequately explain why using other merit-based hiring authorities does not enable the agency to meet its hiring needs. Nor did the agency provide any compelling independent reason for retaining outside-the-register procedures. The comments have not been adopted and the outside-the-register procedures are eliminated.

Elimination of the TAPER Regulation

Based on the elimination of the outside-the-register procedure, OPM has also eliminated the Temporary Appointments Pending the Establishment of a Register (TAPER) regulation.

One Federal agency submitted comments opposing the elimination of the TAPER regulation. The comments did not adequately explain why the agency cannot use other merit-based hiring authorities to meet its hiring needs. Nor did the agency provide any compelling independent reason for retaining the ability to make TAPER appointments. As described in the interim regulation's supplemental information, this regulation has been shown to have outlived its usefulness, and other appropriate appointing authorities are available for use in its place. The comments have not been adopted and the TAPER regulation is eliminated.

Eliminating the TAPER regulation will not adversely affect employees currently serving under TAPER appointments. These individuals will continue under these appointments until they have completed the 3 years of service that entitles them, under 5 U.S.C. 3304a, to be converted to career appointments.

Category Rating and Selection Procedures

Background

Agencies have authority under 5 U.S.C. 3319 to develop a category-based rating method as an alternative way of assessing job applicants for positions filled through the competitive examining process. Traditionally, applicants for Federal jobs are assigned numerical scores, including veterans' preference points, if appropriate, and are considered for selection based on the “rule of three” (5 U.S.C. 3318(a)). The category rating method prescribed by the Act does not add veterans' preference points or apply the “rule of three” but protects the rights of veterans by placing them ahead of non-preference eligibles within each category. Preference eligibles who meet minimum qualification requirements and who have a compensable service-connected disability of at least 10 percent must be listed in the highest quality category, except when the position being filled is scientific or professional at the GS-9 grade level or higher. When using category rating, agencies must follow veterans' preference procedures as specified in 5 U.S.C. 3319(b) and (c)(2). Consistent with this requirement and with 5 U.S.C. 2302(e)(1)(G), OPM intends to promulgate a regulation in the near future designating section 3319(b) and (c)(2) as a “veterans' preference requirement” for purposes of the prohibited personnel practice described in 5 U.S.C. 2302(b)(11). Please refer to the interim regulations' supplementary information in Federal Register dated June 13, 2003, 68 FR 35265 for a full discussion of the category rating method.

Discussion of Comments

Based on the complexity of the comments on category rating, we have organized them into topic areas for clarity and for ease of reference.

General

One agency requested that the regulations specify that category rating may be used for term and temporary appointments. Category rating is a method for evaluating applicants under a competitive examining system. It is not a separate appointing authority. Category rating may be used to fill any competitive service position, including a position filled through a term or temporary appointment. This is reflected in sections 316.302 and 316.402 of the regulation.

One agency requested clarification on the proper placement of the word “competencies” in relation to the words “knowledge, skills, or abilities” cited in § 337.302(b). We have modified that section to clarify our meaning. This agency also suggested we change the wording in § 337.303(b) to read “based on job analysis” instead of “through job analysis.” We did not adopt this suggestion because the chosen phrase is consistent with the language in other guides issued by OPM.

Vacancy Announcement

Three agencies and several Federal employees suggested clarification of what is required in the vacancy announcement when using category rating.

The current vacancy announcement requirements of 5 CFR part 330 and Executive Order 13078, requiring the agency to state how applicants will be rated, have not changed. However, agencies have a choice in their basis of rating. Agencies must decide on rating and selection procedures in advance of posting a vacancy announcement. Once a procedure is chosen, it must be described in the vacancy announcement.

Traditionally, agencies described rating procedures in general terms under the “Basis of Rating” heading in the vacancy announcement. Under category rating procedures, agencies will continue to use the “Basis of Rating” as a means of communicating rating procedures to applicants. Agencies can simply state whether the rating is based on numerical rating procedures or category rating procedures and how veterans' preference will be applied.

Also, agencies were concerned that the statement “Describe each quality category in the job announcement * * *” is ambiguous and could be read as tantamount to a requirement to publish the crediting plan and benchmarks in the vacancy announcement. No such requirement applies.

When describing each quality category, agencies may continue to use the “Qualification Requirement” heading to describe each quality category. This description could vary from naming the quality categories to describing the competencies or the knowledge, skills, and abilities required for each quality category. OPM does not expect agencies to disclose crediting plans and/or rating schedules with scoring keys to the general public because doing so would jeopardize the integrity and validity of the assessment. These issues are addressed in OPM's Delegated Examining Operations Handbook (DEOH). No changes in the regulation are necessary to respond to this comment.

Veterans' Preference

Two agencies requested that OPM clarify how to use category rating procedures to rank preference eligibles with a service-connected disability of 10 percent or more.

Under the traditional numerical rating and ranking procedures, 5 U.S.C. 3313 instructs agencies to place preference eligibles, who meet the minimum qualification requirements, at the top of the list of eligibles, regardless of their numerical scores, for all positions except scientific and professional positions at the GS-09 (and equivalent) grade level or higher. When filling scientific and professional positions at the GS-09 (and equivalent) grade level or higher, these preference eligibles are ranked according to their numerical scores, including points added under 5 U.S.C. 3309.

Under category rating, the same concept applies. The Act instructs agencies to place preference eligibles, who meet the minimum qualification requirements, in the highest quality category when filling all positions except scientific and professional positions at the GS-09 (and equivalent) grade level or higher. These preference eligibles are placed above the non-preference eligibles. When filling scientific and professional positions at the GS-09 (and equivalent) grade level or higher, these preference eligibles are placed above the non-preference eligibles within the quality category in which they were assessed.

Within a quality category, agencies may list preference eligibles above non-preference eligibles in any order (such as type of preference, alphabetical order, Social Security number, etc.). An example of how to rank preference eligibles with a service-connected disability of 10 percent or more is in Chapter 6 of the DEOH.

Several agencies and Federal employees suggested that OPM explain how to remove preference eligibles from the list after three considerations under category rating.

Currently, 5 U.S.C. 3317(b) allows an appointing official to remove a preference eligible from further consideration after considering and passing over the preference eligible three times. This same rule applies under category rating. A preference eligible within a quality category must receive three bona fide considerations before he or she may be eliminated from further consideration. We intend to address the possibility of adding information about how this rule applies to preference eligibles and whether it applies to non-preference eligibles in an upcoming amendment to this regulation, which will be published with a request for comments.

Reporting Requirements

One agency suggested that OPM include the category rating reporting requirements in the regulation. For convenience and clarity, we added the reporting requirements in § 337.306 of the final regulation. These reporting requirements are also located in Chapter 5 of the DEOH. One agency noticed that the reporting requirements did not include all minority groups in the annual report to Congress. The Act requires that agencies submit information on the impact category rating has on hiring veterans and particular minorities. Because the Act does not include all minority groups in the list of minorities, we may not require agencies to add to the specific groups included in the Act. An agency may do so on its own.

Several Federal employees asked for specific information on where agencies should send their annual reports on category rating. We have added this information at § 337.305 of the final regulation and to the DEOH.

One agency suggested, for reporting consistency, that OPM develop a standard reporting form for use by all agencies. We do not plan to develop a reporting form at this time. Each agency is responsible for developing its own reporting format.

One agency suggested that OPM develop a training module on category rating for its managers. We did not adopt this suggestion because it is outside the scope of the regulation.

Merging Quality Categories

Four agencies and several Federal employees suggested that OPM explain the merging of quality categories. The Act allows agencies to merge the highest quality category with the next lower quality category, if the highest quality category has fewer than three candidates. Merging quality categories is optional. When merging quality categories, preference eligibles from the next lower quality category are placed above the non-preference eligibles in the newly merged quality category.

Additional information on merging quality categories is described in the DEOH.

Use of Numerical Scores

Three agencies requested clarification on using examinations that produce numerical scores (e.g., Luevano Consent Decree examination or rating schedule) with category rating. We did not include this information in the final regulation, but will publish guidance on this issue that will be posted on OPM's Web site at http://www.opm.gov.

Accountability

One professional organization commented that in order to promote accountability, an agency that decides to use category rating should first be required to publicize the data upon which it relied in reaching its decision.

Agencies with delegated examining authority are required to establish an accountability system in compliance with all examining laws and regulations, including category rating. Additionally, OPM has oversight responsibility to ensure that each agency complies with competitive examining laws and regulations. OPM plans to add the alternative ranking and selection procedures to its evaluation agenda to ensure that agencies are complying with the category rating regulations. Because periodic oversight is a sufficient mechanism for accountability, we chose not to adopt the recommendations that agencies should be required to publish their data.

Wage Grade Positions

An agency asked whether category rating may be used for rating and ranking candidates for wage grade positions. Neither the Act nor these regulations bar the use of category rating for wage grade positions.

Excepted Service Positions

A Federal employee suggested that agencies should be able to use category rating to fill excepted service positions. We have not adopted this suggestion. The Act authorizes agencies with delegated examining authority under 5 U.S.C. 1104(a)(2) to develop a category rating system for jobs filled through competitive examining. This authority cannot be extended to the excepted service. However, 5 CFR part 302 gives agencies the flexibility to develop procedures similar to category rating to fill excepted service positions.

Expanded Academic Degree Training Authority

Section 1331(a) of the Act amended the provisions of 5 U.S.C. 4107 by expanding the agency's authority to pay or reimburse employees for the cost of academic degree training when such training contributes significantly to meeting an identified agency training need, resolving an identified agency staffing problem, or accomplishing goals in the agency's human capital management strategic plan.

Discussion of Comments

One agency suggested the reference to 5 CFR 335.103(c)(1)(iii), which requires competition for certain training opportunities that lead to promotion, be added to the requirement for selecting employees for academic degree programs. We agree and have added the reference 5 CFR 335.103(c)(1)(iii) to § 410.308(c). The same agency questioned whether Career Transition Assistance Plan (CTAP) requirements should be followed concerning details for training assignments that may become permanent. The scenario presented by the agency concerning CTAP and detail assignments is outside the scope of the regulation.

A union suggested that OPM redraft the regulation to reincorporate constraints on the use of academic degrees as previously written in 5 CFR 410.308 to guard against the abusive spending of funds for closely related purposes. The wording in the interim regulation does not remove protection against abusive use of funds. Agencies continue to be required to establish written training policies and procedures to support and document the use of this expanded authority in accordance with the criteria in law. Agencies are also required to maintain records on the use and efficacy of their academic degree training programs. However, we have rephrased § 410.308(c) to address specific criteria concerning the use of this authority.

Two agencies commented that sections 410.309 and 410.310 need clarification in light of the expanded authority to pay for academic degrees. They indicated that if the authority is to be a useful tool for retention, it should not require an agency paying for a four-year degree to commit the beneficiary to a 12-year service obligation. Although these sections do not specifically address the expanded academic degree authority, they are integral to the implementation of this authority. Therefore, we have considered the comments and concur that sections 410.309 and 410.310 should be clarified to explain agencies' flexibilities when using this academic degree training authority. We have added a definition to § 410.101 and a new paragraph (d) to § 410.310 to provide an additional method to compute time in training. These changes allow agencies more flexibility in establishing effective continued service requirements following training. Additional information and an example on how to apply section 410.310(d) can be found on the OPM Web site at http://www.opm.gov/hrd/lead/pubs/handbook/opmintro.asp.

Other Comments, Including Those on Overseas Employment

One agency and one union commented on the need for clarification of overseas limited appointing authority. We have revised § 301.201 to clarify its meaning.

Two Federal agencies commented that restating referenced sections of title 5, U.S.C., instead of referencing them, would make the regulations clearer and easier to apply. We have adopted this suggestion throughout the regulation.

Executive Order 12866, Regulatory Review

This final rule has been reviewed by the Office of Management and Budget in accordance with Executive Order 12866.

Regulatory Flexibility Act

I certify that these regulations will not have a significant economic impact on a substantial number of small entities (including small businesses, small organizational units, and small governmental jurisdictions) because they only apply to Federal agencies and employees.

List of Subjects in 5 CFR Parts 230, 301, 316, 337, and 410

Accordingly, under the authority of 5 U.S.C. 3304, 3319, and 4107, the interim rule (68 FR 35265) amending 5 CFR parts 230, 301, 316, 337, and 410 is adopted as final with the following changes:

PART 230—ORGANIZATION OF THE GOVERNMENT FOR PERSONNEL MANAGEMENT

1. The authority for part 230 continues to read as follows:

Authority: 5 U.S.C. 1302, 3301, 3302; E.O. 10577; 3 CFR 1954-1958 Comp., p. 218; § 230.401 also issued under 5 U.S.C. 1104.

Subpart D—Agency Authority To Take Personnel Actions in a National Emergency

2. Revise § 230.402(c), (h)(1), and (h)(2) to read as follows:

PART 301—OVERSEAS EMPLOYMENT

3. The authority citation for part 301 continues to read as follows:

Authority: 5 U.S.C. 3301, 3302; E.O. 10577, 3 CFR 1954-1958 Comp., p. 218, as amended by E.O. 10641, 3 CFR 1954-1958 Comp., p. 274, unless otherwise noted.

Subpart B—Overseas Limited Appointment

4. Revise § 301.201 to read as follows:

5. Revise § 301.205 to read as follows:

PART 316—TEMPORARY AND TERM EMPLOYMENT

6. The authority citation for part 316 continues to read as follows:

Authority: 5 U.S.C. 3301, 3302; E.O. 10577, 3 CFR, 1954-1958 Comp., p. 218.

Subpart C—Term Employment

7-8. Revise paragraph (a) of § 316.302 to read as follows:

Subpart D—Temporary Limited Employment

9. Revise paragraph (a) of § 316.402 to read as follows:

PART 337—EXAMINING SYSTEM

10-11. Revise the authority citation for part 337 to read as follows:

Authority: 5 U.S.C. 1104(a)(2), 1302, 3301, 3302, 3304, 3319, 5364; E.O. 10577, 3 CFR 1954-1958 Comp., p. 218; 33 FR 12423, Sept. 4, 1968; and 45 FR 18365, Mar. 21, 1980.

12. Revise subpart B to read as follows:

Subpart B—Direct-Hire Authority

13. Revise Subpart C to read as follows:

Subpart C—Alternative Rating and Selection Procedures

PART 410—TRAINING

14. Revise the authority citation in part 410 to read as follows:

Authority: 5 U.S.C. 4101, et seq.; E.O. 11348, 3 CFR, 1967 Comp., p. 275.

Subpart C—Establishing and Implementing Training Programs

15. Amend § 410.101 to add paragraph (i) to read as follows:

16. Revise § 410.308 to read as follows:

17. Add paragraph (b)(3) to § 410.309 to read as follows:

18. Amend § 410.310 to add paragraph (d) to read as follows: