Retention Incentives, 64523-64528 [E7-22490]

Agencies

• Office of Personnel Management
• Personnel Management Office

[Federal Register Volume 72, Number 221 (Friday, November 16, 2007)]
[Rules and Regulations]
[Pages 64523-64528]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-22490]



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Rules and Regulations
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Federal Register / Vol. 72, No. 221 / Friday, November 16, 2007 / 
Rules and Regulations

[[Page 64523]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Part 575

RIN 3206-AL41


Retention Incentives

AGENCY: U.S. Office of Personnel Management.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The U.S. Office of Personnel Management (OPM) is issuing final 
regulations to implement a provision of the Federal Workforce 
Flexibility Act of 2004 granting agencies additional flexibility to pay 
retention incentives. The final regulations permit an agency to pay a 
retention incentive to an employee who would be likely to leave for a 
different position in the Federal service before the closure or 
relocation of the employee's office, facility, activity, or 
organization. The final regulations provide agencies with additional 
flexibility to help retain employees critical to important agency 
missions and better meet strategic human capital needs.

DATES: Effective Date: The final regulations will become effective on 
December 17, 2007.
    Applicability Date: The final regulations apply to retention 
incentives authorized under 5 U.S.C. 5754 and 5 CFR 575.315 on the 
first day of the first pay period beginning on or after December 17, 
2007.

FOR FURTHER INFORMATION CONTACT: Jeanne Jacobson by telephone at (202) 
606-2858; by fax at (202) 606-0824; or by e-mail at pay-performance-
policy@opm.gov.

SUPPLEMENTARY INFORMATION: On May 13, 2005, the U.S. Office of 
Personnel Management (OPM) published interim regulations (70 FR 25732) 
to implement section 101 of the Federal Workforce Flexibility Act of 
2004 (Pub. L. 108-411, October 30, 2004). Section 101 amended 5 U.S.C. 
5753 and 5754 by providing a new authority to make recruitment, 
relocation, and retention payments. The amended law replaced the former 
recruitment and relocation bonus and retention allowance authority 
provided by 5 U.S.C. 5753 and 5754. The 60-day comment period for the 
interim regulations ended on July 12, 2005.
    The Supplementary Information for the interim regulations posed a 
number of questions about whether the final regulations should provide 
agencies with the authority to pay recruitment incentives to help 
recruit current employees (as authorized by 5 U.S.C. 5753(b) under 
conditions that would be described in OPM regulations) and to pay 
retention incentives to help retain employees likely to leave for a 
different position in the Federal service (as authorized by 5 U.S.C. 
5754(b) under conditions that would be described in OPM regulations) 
and, if so, under what circumstances. This Federal Register notice 
addresses the comments we received in response to the questions 
regarding retention incentives. The comments we received in response to 
the questions regarding recruitment incentives are not addressed in 
these final regulations, but will be addressed in a future Federal 
Register notice.
    These final regulations provide agencies with the discretionary 
authority to pay a retention incentive to an employee who, in the 
absence of such an incentive, would be likely to leave for a different 
position in the Federal service before the closure or relocation of the 
employee's office, facility, activity, or organization. The comments on 
the situations proposed in the interim regulations and the changes made 
in these final regulations relating to the use of retention incentives 
are discussed further in the following sections of this Supplementary 
Information.

Comments on Retention Incentives for Employees Likely to Leave for a 
Different Position in the Federal Service

    Section 5754(b) of title 5, United States Code, allows OPM to 
authorize the head of an agency to pay retention incentives to 
employees who, in the absence of an incentive, would be likely to leave 
their positions for a different position in the Federal service under 
the conditions described in OPM's regulations. In recognition that 
costly and inefficient interagency competition could occur if agencies 
are permitted to pay retention incentives in this manner, in the May 
13, 2005, interim regulations, we asked for comments on the following 
circumstances in which agencies could grant a retention incentive to 
encourage employees to stay in their current position and not move to 
another Federal agency:
     Would it be desirable to allow an agency to offer a 
retention incentive to a current employee when the head of that agency 
determines that the loss of the employee's unique competencies (i.e., 
knowledge, skills, abilities, behaviors, and other characteristics) 
required for the position would adversely affect the successful 
accomplishment of an important agency mission or the completion of a 
critical project?
     Would it be desirable to allow an agency to offer a 
retention incentive to a current employee when the offered position is 
under a pay system that differs from the pay system of the employee's 
position before the move and the head of that agency determines that 
the loss of the employee in the current position would adversely affect 
the successful accomplishment of an important agency mission or the 
completion of a critical project?
     Would it be desirable to allow an agency to offer a 
retention incentive when the employee's position requires him or her to 
work under unusually severe or arduous working conditions (e.g., an 
extreme climate; unreliable essential services, such as basic utility 
or telecommunication services; or other harsh conditions) that the 
agency cannot control and the head of that agency has determined that 
these conditions have a significant negative effect on the agency's 
ability to retain that employee at the worksite?
     Would it be desirable to allow an agency to offer a 
retention incentive to a current employee in order to retain an 
employee who is likely to leave his or her position for another Federal 
position before the closure or relocation of the employee's office or 
facility and the head of that agency has determined that the employee's 
services are critical to the successful closure or relocation?
    OPM also invited comments on whether the regulations should limit 
the payment of a retention incentive in any

[[Page 64524]]

of the circumstances listed above to only those employees whose rating 
of record is at the highest level under the applicable performance 
appraisal or evaluation system.
    We received mixed reactions to the situations proposed in the 
previous bullets for paying a retention incentive to an employee who 
would be likely to leave for a different position in the Federal 
service in the absence of such an incentive. Some commenters expressed 
concerns about possible bidding wars and increased costs to the 
Government of the proposed retention incentive flexibility; controlling 
the use of the flexibility; and the need for adequate funding and 
specific payment criteria, accountability measures, and a trial period 
to prevent abuse. Finally, several agencies noted authorities already 
exist to compensate for working under difficult conditions, such as 
post differentials, hazardous duty pay, and environmental differential 
pay, and the proposed retention incentive authority is not needed for 
these purposes.
    However, some commenters also stated the flexibility to pay 
retention incentives to employees who would be likely to leave for a 
different position in the Federal service would help agencies retain 
knowledgeable, skilled, and experienced employees to finish work on 
critical projects and train replacement employees. One agency stated 
the use of this flexibility would help avoid (1) the cost of recruiting 
for unique skill sets, (2) the inability to get the job done after the 
employee leaves and prior to a replacement coming on board, and (3) the 
risk of not being able to fill the position at all. Another agency 
noted, while there are concerns about bidding wars, it is a fact that 
agencies are in competition with one another as well as private sector 
employers for the most talented employees, and additional pay 
flexibility is desirable to meet these needs.
    Commenters provided a number of suggestions for additional criteria 
to use when authorizing a retention incentive for an employee who would 
be likely to leave for a different position in the Federal service. 
Some stated any payment criteria should focus on the employee's unique 
competencies, and the type of pay system and working conditions should 
not be a deciding factor in determining whether to offer a retention 
incentive. One agency felt the payment criteria should be written 
broadly to cover any of the proposed situations, but acknowledged the 
nature of the relevant pay systems may be an issue for consideration in 
authorizing a retention incentive. Another stated payment of a 
retention incentive should be based on staffing needs related to a 
``critical agency mission,'' rather than just an ``important agency 
mission,'' and an agency should determine the critical agency mission 
or project would likely fail without the employee's services. Other 
suggestions for the regulations included requiring an employee to have 
an offer of other employment in hand before a retention incentive is 
paid, limiting the length of service agreements, ensuring service 
agreements make clear the retention incentive will be terminated when 
the critical project or program is complete, limiting the payment of a 
retention incentive to a lump-sum payment at the end of the service 
period (rather than biweekly or other installment payments), and 
establishing additional retention incentive flexibility for a trial 
period during which compliance with the regulations would be closely 
monitored.
    Regarding the question as to whether the regulations should limit 
the payment of a retention incentive to only those employees whose 
rating of record is at the highest level under the applicable 
performance appraisal or evaluation system, commenters overwhelmingly 
objected to this proposed requirement. Commenters felt the needs of 
agencies and the employee's capabilities should be the determining 
factors in deciding whether to pay an incentive and that including such 
a limit in the regulations would be a disservice to the office 
attempting to meet a critical mission need or project. They pointed out 
that an employee with a ``Fully Successful'' rating might have the 
competencies or experience that are essential for the agency to attract 
or retain. Another commenter agreed an employee's performance level 
must be a factor when determining whether an incentive should be paid 
to an employee and suggested the performance level be limited to at 
least ``Fully Successful'' (or equivalent) consistent with other 
recruitment, relocation, and retention incentive provisions.

Response to Comments

    Ensuring agencies have an effective civilian workforce to achieve 
their goals is one of the primary objectives of strategic human capital 
management in the Government. To meet this objective, agencies must 
have the necessary human resources tools to retain essential employees 
to perform mission-critical work. The retention incentive authority is 
one of several tools providing agencies substantial flexibility to pay 
additional compensation to help retain key employees.
    We carefully considered the comments received on the circumstances 
proposed in the interim regulations under which agencies would be 
allowed to pay a retention incentive to an employee who would be likely 
to leave for a different position in the Federal service in the absence 
of an incentive. In determining whether to provide additional retention 
incentive flexibility, we must balance the workforce needs of a single 
agency with the workforce needs of other agencies. An employee 
providing valuable services to one agency also may possess the 
competencies that are valuable to another agency.
    We also need to be cautious when establishing new flexibilities 
that have the potential to result in costly and inefficient interagency 
competition. We agree with several of the commenters who expressed 
concerns about controlling any increased retention incentive 
flexibility and possible bidding wars between agencies. The regulations 
must include the appropriate approval criteria, controls, and 
monitoring and reporting requirements to help ensure agencies continue 
to use the retention incentive authority judiciously and responsibly.
    In light of these concerns and the issues identified by commenters, 
we have not amended the regulations to establish a broad authority to 
pay a retention incentive to an employee who would be likely to leave 
for a different position in the Federal service in the absence of the 
incentive. We understand interagency compensation already exists and 
some agencies are disadvantaged because other agencies have the 
flexibility to pay higher salaries. However, we must balance single 
agency needs against the Governmentwide interest of avoiding costly and 
inefficient interagency competition.
    In this regard, these final regulations provide agencies with the 
authority to pay a retention incentive to an employee who would be 
likely to leave for a different position in the Federal service before 
the closure or relocation of the employee's office, facility, activity, 
or organization. The need to retain employees when facilities are 
closing or relocating is especially acute. Such employees may be more 
likely than others to seek other Federal employment, especially if they 
will otherwise be separated from Federal service when their office or 
facility closes or if they cannot relocate with their office or 
facility. At the same time, agencies typically must continue to perform 
mission-critical work at sites subject to closure and relocation.

[[Page 64525]]

Recruiting and training employees to replace those who leave may not be 
a viable or cost-effective option. While this final regulation does not 
provide agencies the flexibility to pay retention incentives in all the 
circumstances proposed in the interim regulations, it will provide OPM 
an opportunity to monitor the effects of such pay flexibility on 
interagency competition and compensation costs in narrow closure and 
relocation situations to determine if the flexibility should be 
expanded.
    In addition, no commenters objected to providing the authority to 
pay retention incentives to employees who would be likely to leave for 
a different position in the Federal service before the closure or 
relocation of the employee's office or facility. Of those who commented 
on this specific proposal, all agreed such flexibility should be 
provided. Some commenters noted the importance of retaining employees 
with critical skills before a closure or relocation. One agency 
stressed the importance of maintaining operations and retaining needed 
expertise in such situations. Another recognized retention incentives 
alone may not be adequate to retain the services of employees facing 
eventual separation, but they might be of benefit in certain 
circumstances.
    One agency stated the use of retention incentives for employees who 
would be likely to leave for a different position in the Federal 
service before the closure or relocation of the employee's office or 
facility would require coordination between the losing and gaining 
agencies to ensure the employee is not harmed. We do not agree that 
coordination between the gaining and losing agency is necessary. The 
service agreement signed by the employee will define the terms and 
conditions of the employee's retention incentive.
    The same agency noted in closure and relocation situations, 
reduction in force procedures may be an issue and would have to be 
considered and followed. We agree. Allowing agencies to pay retention 
incentives to employees who would be likely to leave for a different 
position in the Federal service before the closure or relocation of the 
employee's office or facility does not affect any requirement for 
agencies to follow reduction in force procedures in appropriate 
circumstances.

Changes to the Regulations

    This notice amends the retention incentive regulations at 5 CFR 
part 575, subpart C, by establishing a new Sec.  575.315 to provide 
agencies with the authority to pay a retention incentive to an employee 
who would be likely to leave for a different position in the Federal 
service before the closure or relocation of the employee's office, 
facility, activity, or organization. The regulations regarding this new 
flexibility are contained only in this section. However, Sec.  575.315 
includes numerous cross-references to provisions that must be followed 
in other sections of 5 CFR part 575, subpart C. While many of the 
provisions in Sec.  575.315 are the same as the requirements for a 
retention incentive authorized for an employee likely to leave the 
Federal service, Sec.  575.315 contains additional parameters. Under 
this final regulation, agencies will continue to have the authority to 
pay a retention incentive to an employee in a closure or relocation 
situation who would be likely to leave the Federal service in the 
absence of an incentive.
    Under Sec.  575.315(a)(1), an agency may approve a retention 
incentive for an individual employee when the agency determines--
     Given the agency's mission requirements and the employee's 
competencies, the agency has a special need for the employee's services 
that makes it essential to retain the employee in his or her current 
position during a period of time before the closure or relocation of 
the employee's office, facility, activity, or organization; and
     In the absence of a retention incentive, the employee 
would be likely to leave for a different position in the Federal 
service.
    Section 575.315(a)(2) also provides an agency with the authority to 
approve a retention incentive for a group or category of employees if 
(1) the agency has a special need for the employees' services that 
makes it essential to retain the employees in their current positions 
during a period of time before a closure or relocation and (2) there is 
a high risk that a significant number of the employees in the group 
would be likely to leave for different positions in the Federal service 
in the absence of a retention incentive. An agency may not include an 
employee in a senior-level or scientific or professional, Senior 
Executive Service, or Executive Schedule position, or in certain other 
senior positions, in a group retention incentive authorization. (See 
Sec. Sec.  575.315(a)(2) and 575.305(c).)
    Agencies may use this new retention incentive flexibility for an 
employee in a position listed in Sec.  575.303 (e.g., General Schedule 
or prevailing rate position) who is not excluded by Sec.  575.304 
(e.g., Presidential appointees). The employee must have a rating of 
record (or an official performance appraisal or evaluation under a 
system not covered by 5 U.S.C. chapter 43 or 5 CFR part 430) of at 
least ``Fully Successful'' or equivalent. In addition, the employee 
must have received a general or specific written notice from the agency 
that his or her position may or would be affected by the closure or 
relocation of the employee's office, facility, activity, or 
organization (e.g., the employee's position may or would move to a new 
geographic location or the employee's position may or would be 
eliminated). (See Sec.  575.315(b).)
    Under Sec.  575.315(c), an agency must include in its retention 
incentive plan established under Sec.  575.307(a) the conditions and 
requirements governing the use of retention incentives for employees 
who would be likely to leave for a different position in the Federal 
service before the closure or relocation of the employee's office, 
facility, activity, or organization. The plan also must designate the 
authorized agency officials who may approve such retention incentives, 
consistent with the approval requirements in Sec.  575.307(b).
    For each determination to pay a retention incentive under new Sec.  
575.315, an agency must document in writing the basis for authorizing 
the incentive and for the amount and timing of approved incentive 
payments. (See Sec.  575.315(d).) When documenting the determination to 
pay a retention incentive for an individual employee who would be 
likely to leave for a different Federal position, agencies must 
consider the factors in Sec.  575.306(b), as applicable, and--
     The extent to which the employee's departure for a 
different position in the Federal service would affect the agency's 
ability to carry out an activity, perform a function, or complete a 
project the agency deems essential to its mission before and during the 
closure or relocation period (e.g., the agency's need (1) to retain the 
employee to ensure minimal disruption in the performance of mission-
critical functions, continuity of key operations, or minimal disruption 
of service to the public before and during the closure or relocation; 
(2) to train new employees who will move with the organization to the 
new geographic location; (3) to assist with the actual closure or 
relocation of the office, facility, activity, or organization; or (4) 
to perform similar mission-essential functions before or during the 
closure or relocation);
     The competencies possessed by the employee that are 
essential to retain; and
     The agency (which may be in the executive, judicial, or 
legislative branch) for which the employee would be likely

[[Page 64526]]

to leave in the absence of the retention incentive (as required by the 
reporting requirements in section 101(c)(2) of Pub. L. 108-411).
    Agencies must address similar factors in documenting each 
determination to pay a retention incentive to a group or category of 
employees. (See Sec.  575.315(d)(3).) In addition, the agency must 
narrowly define a targeted category of employees. The factors that may 
be appropriate are described in Sec.  575.306(c)(2), except that each 
group retention incentive authorized under new Sec.  575.315 may cover 
no more than one occupational series.
    Under Sec.  575.315(e), the payment options, calculations, and 
limitations in Sec.  575.309 apply to the payment of retention 
incentives to employees who would be likely to leave for a different 
position in the Federal service before the closure or relocation of the 
employees' office, facility, activity, or organization, except an 
agency may not pay retention incentives in biweekly installments at the 
full retention incentive percentage rate established for the employee 
under Sec.  575.309(a). Agencies will need to consider options to pay 
all or a significant portion of the retention incentive at the end of 
the full period of service required by the service agreement to 
maximize the effectiveness of the retention incentive. For example, an 
agency could pay the retention incentive in a single lump-sum payment 
at the end of the full period of service required by the service 
agreement. An agency also could pay the retention incentive in 
installment payments that are less than the full percentage retention 
incentive rate authorized. The agency could defer payment of a portion 
of the full payment (e.g., 50 percent or more) until the end of the 
full period of service required by the service agreement. Guidance on 
such strategic payment options is provided at https://www.opm.gov/oca/
pay/HTML/retpaycalc.asp.
    The service agreement provisions in Sec. Sec.  575.310(b) through 
575.310(e) apply to retention incentive service agreements for 
employees who would be likely to leave for a different position in the 
Federal service under this final regulation, subject to the additional 
requirements in Sec.  575.315(f). The period of employment under such a 
service agreement may be of any length, not to exceed the date on which 
the employee's position is actually affected by the closure or 
relocation. The service agreement must include the conditions under 
which the agency must terminate the service agreement in Sec.  
575.310(d) and (e) and Sec.  575.315(g), including the conditions under 
which the agency will pay an additional retention incentive payment for 
partially completed service. The service agreement also must notify 
employees that the agency will review the retention incentive at least 
annually to determine if payment is still warranted.
    Under Sec.  575.315(f), the service agreement termination 
provisions in Sec.  575.311 apply to retention incentive service 
agreements for employees who would be likely to leave for a different 
position in the Federal service in the absence of such an incentive. 
Section 575.315(f) also requires agencies to review each determination 
to pay a retention incentive under new Sec.  575.315 at least annually 
to determine if payment is still warranted. In addition, Sec.  
575.315(g)(2) requires an agency to terminate a retention incentive 
service agreement when--
     The closure or relocation is cancelled and no longer 
affects the employee's position;
     The employee moves to another position not affected by the 
closure or relocation (including another position within the same 
agency);
     For relocation situations, the employee accepts the 
agency's offer to relocate with his or her the office, facility, 
activity, or organization and, thus, the employee is no longer likely 
to leave for a different position in the Federal service; or
     The employee moves to a different position in the same 
office, facility, activity, or organization subject to closure or 
relocation not covered by the employee's service agreement. (The agency 
may authorize a new retention incentive under Sec.  575.315 for the 
employee, as appropriate.).
    If an authorized agency official terminates a service agreement 
under the conditions specified above, the employee is entitled to keep 
any retention incentive installment payments already received. Under 
certain conditions, the employee also may receive a portion or all of 
any amount attributable to completed service, similar to the provisions 
under Sec.  575.311.

Monitoring and Reporting Requirements

    The Federal Workforce Flexibility Act of 2004 provided additional 
monitoring and reporting requirements for retention incentives 
authorized for employees who would be likely to leave for a different 
position in the Federal service in the absence of an incentive. Section 
101(a)(3) provides a sense of Congress statement that OPM should be 
notified within 60 days after the date on which a retention incentive 
is paid to retain an employee who might otherwise leave one Government 
agency for another within the same geographic area. This section also 
states OPM should monitor the payment of such retention incentives to 
ensure they are an effective use of the Federal Government's funds and 
have not adversely affected Government agencies' ability to carry out 
their mission. In addition, section 101(c)(2) requires OPM to include 
in its report to Congress on recruitment, relocation, and retention 
incentives information and data on the use of retention incentives to 
prevent individuals from moving between positions in different agencies 
but the same geographic area (including the names of the agencies 
involved).
    The frequent notification provisions in section 101(a)(3) of the 
Federal Workforce Flexibility Act of 2004 for the new retention 
incentive flexibility would be administratively difficult for agencies 
to implement and follow. Retention incentive monitoring and 
recordkeeping requirements in Sec.  575.312 and 575.313(a) are already 
in place, and OPM and agencies will apply them to retention incentives 
authorized under new Sec.  575.315 for employees who would be likely to 
leave for a different position in the Federal service in the absence of 
an incentive.
    In addition, consistent with the reporting requirements in section 
101(c)(2) the Federal Workforce Flexibility Act of 2004, Sec.  
575.315(i) specifies an additional annual reporting requirement for 
such retention incentives. This annual report will allow OPM to monitor 
and evaluate the use of the new retention incentive flexibility. 
Section 575.315(i) requires each agency to submit a written report to 
OPM by March 31 of each year on the use of retention incentives under 
Sec.  575.315. In each of the years 2008 through 2010, the written 
report may be included in the agency's written report for OPM's report 
to Congress under Sec.  575.313(b). Each report must include--
     A description of how the authority to pay retention 
incentives under Sec.  575.315 was used in the agency during the 
previous calendar year;
     The number and dollar amount of retention incentives paid 
during the previous calendar year to individuals under Sec.  575.315 by 
occupational series and grade, pay level, or other pay classification;
     The agency (which may be in the executive, judicial, 
legislative branch) to which each individual employee would be likely 
to leave in the absence of a retention incentive;

[[Page 64527]]

     Each individual employee's official worksite and the 
geographic location of the agency (which may be in the executive, 
judicial, or legislative branch) to which each individual employee 
would be likely to leave in the absence of a retention incentive; and
     Other information, records, reports, and data as OPM may 
require.

E.O. 12866, Regulatory Review

    This rule has been reviewed by the Office of Management and Budget 
in accordance with E.O. 12866.

Regulatory Flexibility Act

    I certify that these regulations will not have a significant 
economic impact on a substantial number of small entities because they 
will apply only to Federal agencies and employees.

List of Subjects in 5 CFR Part 575

    Government employees, Reporting and recordkeeping requirements, 
Wages.

Office of Personnel Management.
Linda M. Springer,
Director.

0
Accordingly, OPM amends 5 CFR part 575 as follows:

PART 575--RECRUITMENT, RELOCATION, AND RETENTION INCENTIVES; 
SUPERVISORY DIFFERENTIALS; AND EXTENDED ASSIGNMENT INCENTIVES

0
1. The authority citation for part 575 is revised to read as follows:

    Authority: 5 U.S.C. 1104(a)(2) and 5307; subparts A and B also 
issued under 5 U.S.C. 5753 and sec. 101, Public Law 108-411, 118 
Stat. 2305; subpart C also issued under 5 U.S.C. 5754 and sec. 101, 
Public Law 108-411, 118 Stat. 2305; subpart D also issued under 5 
U.S.C. 5755; subpart E also issued under 5 U.S.C. 5757 and sec. 207 
of Public Law 107-273, 116 Stat. 1780.

Subpart C--Retention Incentives


Sec.  575.301  [Amended]

0
2. In Sec.  575.301, remove ``the Federal service'' from the second 
sentence.

0
3. Add a new Sec.  575.315 to subpart C to read as follows:


Sec.  575.315  Retention incentives for employees likely to leave for a 
different position in the Federal service.

    (a) Authority. (1) An agency in its sole and exclusive discretion, 
subject only to OPM review and oversight, may approve a retention 
incentive for an individual employee under the conditions prescribed in 
this section when the agency determines that--
    (i) Given the agency's mission requirements and employee's 
competencies, the agency has a special need for the employee's services 
that makes it essential to retain the employee in his or her current 
position during a period of time before the closure or relocation of 
the employee's office, facility, activity, or organization; and
    (ii) The employee would be likely to leave for a different position 
in the Federal service in the absence of a retention incentive.
    (2) An agency in its sole and exclusive discretion, subject only to 
OPM review and oversight, may approve a retention incentive for a group 
or category of employees (subject to the exclusions in Sec.  
575.305(c)) under the conditions prescribed in this section when the 
agency determines that--
    (i) Given the agency's mission requirements and employees' 
competencies, the agency has a special need for the employees' services 
that makes it essential to retain the employees in their current 
positions during a period of time before the closure or relocation of 
the employees' office, facility, activity, or organization; and
    (ii) There is a high risk that a significant number of the 
employees in the group would be likely to leave for different positions 
in the Federal service in the absence of a retention incentive.
    (b) Employee eligibility. An agency may pay a retention incentive 
to an employee under this section when--
    (1) The employee holds a position listed in Sec.  575.303, and is 
not excluded by Sec.  575.304;
    (2) The employee's rating of record (or an official performance 
appraisal or evaluation under a system not covered by 5 U.S.C. chapter 
43 or 5 CFR part 430) is at least ``Fully Successful'' or equivalent; 
and
    (3) The agency has provided a general or specific written notice to 
the employee that his or her position may or would be affected by the 
closure or relocation of the employee's office, facility, activity, or 
organization (e.g., the employee's position may or would move to a new 
geographic location or the employee's position may or would be 
eliminated).
    (c) Retention incentive plan and approval levels. Before 
authorizing a retention incentive under this section, an agency must 
include in its retention incentive plan established under Sec.  
575.307(a) the conditions and requirements governing the use of 
retention incentives under this section for employees who would be 
likely to leave for a different position in the Federal service before 
the closure or relocation of the employees' office, facility, activity, 
or organization, including a designation of the authorized agency 
officials who may approve retention incentives under this section, 
consistent with the approval requirements in Sec.  575.307(b).
    (d) Approval criteria and written determination. (1) For each 
determination to pay a retention incentive under this section, an 
agency must document in writing--
    (i) The basis for determining the agency has a special need for the 
employee's (or group of employees') services that makes it essential to 
retain the employee(s), based on the agency's mission needs and the 
employee's (or group of employees') competencies, during a period of 
time before the closure or relocation of the employee's (or group of 
employees') office, facility, activity, or organization;
    (ii) The basis for determining, in the absence of a retention 
incentive, the employee (or a significant number of employees in a 
group) would be likely to leave for a different position in the Federal 
service; and
    (iii) The basis for establishing the amount and timing of the 
approved retention incentive payment and the length of the required 
service period.
    (2) An agency must address the following factors when documenting 
the determination required by paragraph (a) of this section for an 
individual employee:
    (i) The factors for authorizing a retention incentive for an 
individual employee described in Sec.  575.306(b) as they relate to a 
determination made under paragraph (a)(1) of this section;
    (ii) The extent to which the employee's departure for a different 
position in the Federal service would affect the agency's ability to 
carry out an activity, perform a function, or complete a project the 
agency deems essential to its mission before and during the closure or 
relocation period (e.g., the agency's need to retain the employee to 
ensure minimal disruption in the performance of mission-critical 
functions, continuity of key operations, or minimal disruption of 
service to the public before and during the closure or relocation; to 
train new employees who will move with the organization to the new 
geographic location; to assist with the actual closure or relocation of 
the office, facility, activity, or organization; or to perform similar 
mission-essential functions before or during the closure or 
relocation);
    (iii) The competencies possessed by the employee that are essential 
to retain; and
    (iv) The agency (which may be in the executive, judicial, or 
legislative branch) for which the employee would be likely

[[Page 64528]]

to leave in the absence of the retention incentive.
    (3) An agency must address the following factors when documenting 
the determination required by paragraph (a) of this section for a group 
or category of employees:
    (i) The factors for authorizing a retention incentive for a group 
or category of employees described in Sec.  575.306(c) as they relate 
to the determination made under paragraph (a)(2) of this section; and
    (ii) The factors in paragraphs (d)(2)(ii) through (d)(2)(iv) of 
this section as they relate to the determination made under paragraph 
(a)(2) of this section for the group or category of employees.
    (4) An agency must narrowly define a targeted category of employees 
using factors that relate to the conditions described in paragraph 
(a)(2) of this section. The factors that may be appropriate are 
described in Sec.  575.306(c)(2), except that each group retention 
incentive authorized under this section may cover no more than one 
occupational series.
    (e) Payment of retention incentives. (1) Except as provided in 
paragraph (e)(2) of this section, the provisions regarding computing 
and paying retention incentives under Sec.  575.309 apply to computing 
and paying retention incentives under this section for employees who 
would be likely to leave for a different position in the Federal 
service before the closure or relocation of the their office, facility, 
activity, or organization.
    (2) An agency may not pay retention incentives under this section 
in biweekly installments at the full retention incentive percentage 
rate established for the employee under Sec.  575.309(a).
    (f) Service agreement requirements. (1) The service agreement 
provisions in Sec. Sec.  575.310(b) through 575.310(e) apply to 
retention incentive service agreements under this section, subject to 
the additional requirements in paragraphs (f)(2) through (f)(5) of this 
section.
    (2) Before paying a retention incentive under this section, an 
agency must require an employee, including each employee covered by a 
group retention incentive authorization, to sign a written service 
agreement to complete a specified period of employment with the agency.
    (3) In no event, may the service period under a service agreement 
established under this paragraph extend past the date on which the 
employee's position is actually affected by the relocation or closure 
of the employee's office, facility, activity, or organization (e.g., 
the date the employee's position moves to a new geographic location or 
the date the employee's position is eliminated).
    (4) In addition to the terminating conditions in Sec.  575.310(d) 
and (e), the service agreement must include the conditions under which 
the agency must terminate the service agreement under paragraph (g) of 
this section, including the conditions under which the agency will pay 
an additional retention incentive payment for partially completed 
service under Sec.  575.311.
    (5) The service agreement must include a notification to the 
employee that the agency will review the determination to pay the 
retention incentive at least annually to determine whether payment is 
still warranted, as required by paragraph (g) of this section.
    (g) Termination of retention incentives. (1) The provisions in 
Sec.  575.311 regarding termination of retention incentive service 
agreements and paragraphs (g)(2) through (g)(4) of this section apply 
to the termination of retention incentives authorized under this 
section. Each determination to pay a retention incentive under this 
section must be reviewed at least annually to determine if payment is 
still warranted. An authorized agency official must certify this 
determination in writing.
    (2) In addition to the terminating conditions in Sec.  575.311(a) 
and (b), an authorized agency official must terminate a retention 
incentive service agreement under this section if--
    (i) The closure or relocation is cancelled or no longer affects the 
employee's position;
    (ii) The employee moves to another position not affected by the 
closure or relocation (including another position within the same 
agency);
    (iii) For relocation situations, the employee accepts the agency's 
offer to relocate with his or her the office, facility, activity, or 
organization and, thus, the employee is no longer likely to leave for a 
different position in the Federal service; or
    (iv) The employee moves to a different position in the same office, 
facility, activity, or organization subject to closure or relocation 
that is not covered by the employee's service agreement. In this 
situation, the agency may authorize a new retention incentive for the 
employee under this section, as appropriate.
    (3) If an authorized agency official terminates a service agreement 
under paragraph (g)(2)(ii) or (iv) of this section in cases in which 
the employee's movement to another position is by management action and 
not at the employee's request or under paragraph (g)(2)(i) of this 
section, the employee is entitled to retain any retention incentive 
payments that are attributable to completed service and to receive any 
portion of a retention incentive payment owed by the agency for 
completed service.
    (4) If an authorized agency official terminates a service agreement 
in termination actions under paragraph (g)(2) of this section that are 
not covered by paragraph (g)(3) of this section, the employee is 
entitled to retain retention incentive payments previously paid by the 
agency that are attributable to the completed portion of the service 
period. If the employee received retention incentive payments that are 
less than the amount that would be attributable to the completed 
portion of the service period, the agency is not obligated to pay the 
employee the amount attributable to completed service, unless the 
agency agreed to such payment under the terms of the retention 
incentive service agreement.
    (h) Monitoring requirements. The monitoring requirements in Sec.  
575.312 apply to retention incentives authorized under this section.
    (i) Records and reports. (1) In addition to the recordkeeping 
requirements in Sec.  575.313(a), each agency must submit a written 
report to OPM by March 31 of each year on the use of retention 
incentives under this section. Each report must include--
    (i) A description of how the authority to pay retention incentives 
under this section was used in the agency during the previous calendar 
year;
    (ii) The number and dollar amount of retention incentives paid 
during the previous calendar year to individuals under this section by 
occupational series and grade, pay level, or other pay classification;
    (iii) The agency (which may be in the executive, judicial, 
legislative branch) to which each employee would be likely to leave in 
the absence of a retention incentive;
    (iv) Each employee's official worksite and the geographic location 
of the agency (which may be in the executive, judicial, or legislative 
branch) for which each employee would be likely to leave in the absence 
of a retention incentive; and
    (v) Other information, records, reports, and data as OPM may 
require.
    (2) In each of the years 2008 through 2010, the written report 
required by paragraph (i)(1) of this section may be included in the 
agency's written report to OPM for OPM's report to Congress under Sec.  
575.313(b).

[FR Doc. E7-22490 Filed 11-15-07; 8:45 am]
BILLING CODE 6325-39-P