Recruitment and Selection Through Competitive Examination, and Employment in the Excepted Service (Rule of Many), 47059-47068 [2023-15374]

Download as PDF 47059 Proposed Rules Federal Register Vol. 88, No. 139 Friday, July 21, 2023 This section of the FEDERAL REGISTER contains notices to the public of the proposed issuance of rules and regulations. The purpose of these notices is to give interested persons an opportunity to participate in the rule making prior to the adoption of the final rules. OFFICE OF PERSONNEL MANAGEMENT 5 CFR Parts 302, 332, and 337 [Docket ID: OPM–2023–0015] RIN 3206–AN80 Recruitment and Selection Through Competitive Examination, and Employment in the Excepted Service (Rule of Many) Office of Personnel Management. ACTION: Proposed rule; request for comments. AGENCY: The Office of Personnel Management (OPM) is proposing regulations to implement changes authorized by the National Defense Authorization Act (NDAA) for Fiscal Year 2019 governing the selection of candidates from competitive lists of those who are eligible. These changes will provide expanded flexibility to agencies in the selection of candidates under delegated examining procedures. These changes also affect how agencies select candidates for excepted service appointments. SUMMARY: Comments must be received on or before September 19, 2023. ADDRESSES: You may submit comments, identified by Regulation Identification Number (RIN) ‘‘3206–AN80’’ using any of the following methods: Federal eRulemaking Portal: https:// www.regulations.gov. Follow the instructions for submitting comments. All submissions received through the Portal must include the agency name and docket number or Regulation Identification Number (RIN) for this rulemaking. Email: employ@opm.gov. Include ‘‘RIN 3206–AN80, Recruitment and Selection’’ in the subject line of the message. Fax: (202) 606–4430. Mail: Kimberly A. Holden, Deputy Associate Director for Talent Acquisition, Classification, and ddrumheller on DSK120RN23PROD with PROPOSALS1 DATES: VerDate Sep<11>2014 18:29 Jul 20, 2023 Jkt 259001 Veterans Programs, U.S. Office of Personnel Management, Room 6551, 1900 E Street NW, Washington, DC 20415–9700. FOR FURTHER INFORMATION CONTACT: Roseanna Ciarlante by telephone at (202) 936–3282 or Katika Floyd by telephone at (202) 606–0960; by email at employ@opm.gov; by fax at (202) 606– 4430; or by TTY at (202) 418–3134. SUPPLEMENTARY INFORMATION: Background The proposed rule is written for the immediate audience of Federal agency human resources practitioners and Federal agency hiring officials, who will implement the rules. For reference, many of the terms and concepts used and referenced below are defined in OPM’s Delegated Examining Operations Handbook (DEOH), and its appendices, available at https://www.opm.gov/ policy-data-oversight/hiringinformation/competitive-hiring/deo_ handbook.pdf. The DEOH handbook also provides additional context. The Federal civilian workforce consists of three categories of service: the competitive service, the excepted service, and the Senior Executive Service. The main differences between the three classes of service are: the manner in which candidates apply and are selected for jobs, the qualifications of the position being filled, the opportunity for appointees to move within or between the three classes of Federal service, and the rights governing appeal and redress options for incumbents of these positions. Each class of service (and its particular employment system(s)) is governed by different laws and regulations. The competitive service consists of all civil service positions in the executive branch of the Federal Government with some exceptions, which are defined in section 2102 of title 5, United States Code (U.S.C.). Four categories of appointments comprise the competitive service: those subject to delegated examining procedures; those filled through promotion and internal placement (i.e., merit promotion) procedures in accordance with 5 Code of Federal Regulations (CFR) part 335; those filled on a non-competitive basis in accordance with 5 CFR part 315 subparts F and G; and those filled under direct hire authority in accordance with 5 CFR part 337 subpart B. These PO 00000 Frm 00001 Fmt 4702 Sfmt 4702 proposed regulations impact positions filled in the competitive service using delegated examining procedures. The Director of OPM has delegated to agency heads the authority delegated to the Director by the President to conduct competitive examinations for positions in the competitive service. [5 U.S.C. 1104]. Each agency with this delegated authority is required to enter into a written agreement with OPM. Agencies with delegated examining authority may fill competitive civil service jobs with applicants from outside the Federal workforce; Federal employees who do not have competitive service status (i.e., temporary or term employees, and individuals who hold or held an excepted service position which did not provide for conversion to the competitive service); or Federal employees with competitive service status (i.e., career or career-conditional employees). Agencies use delegated examining (also called ‘‘competitive examining’’) procedures to fill positions in the competitive service for which any U.S. citizen may apply. Competitive examining supports Federal merit system principles by promoting recruitment from all segments of society, fair and open competition among job-seekers, and selection based on an applicant’s competencies or knowledge, skills, and abilities. OPM maintains oversight of its delegated examining authority to ensure agencies apply their delegated authority in accordance with the merit system principles in 5 U.S.C. 2301. There are three stages to the competitive service Federal hiring process: the assessment process (i.e., the rating and ranking of applicants and application of veterans’ preference); the certification process (i.e., the process through which applicants are listed on a certificate of eligible candidates (‘‘certificate of eligibles’’) in order of their assessed scores, adjusted for veterans’ preference); and the selection process (i.e., the process for choosing among applicants based on their numerical rankings in accordance with veterans’ preference requirements). Filling Jobs in the Competitive Service Rule of Three For readers not familiar with delegated examining, traditionally, applicants for Federal jobs in the E:\FR\FM\21JYP1.SGM 21JYP1 47060 Federal Register / Vol. 88, No. 139 / Friday, July 21, 2023 / Proposed Rules ddrumheller on DSK120RN23PROD with PROPOSALS1 competitive service are assigned numerical scores (including veterans’ preference points, if applicable, for preference eligible veterans), listed in rank-order, and considered for selection based on the ‘‘rule of three.’’ The rule of three requires that each selection must be made from among the highest three candidates on the certificate with the condition that a hiring official cannot select a non-preference eligible candidate over a preference eligible veteran (i.e., an individual who served in the U.S. Armed Forces, or a relative of the individual, and meets certain statutory criteria, making the individual eligible for an advantage in Federal hiring over those who did not serve or do not meet the statutory criteria) with an equal or higher ranking, unless the agency follows the procedures for formally passing over or objecting to the preference eligible veteran. Under the rule of three, preference eligible candidates (or ‘‘eligibles’’) are given 0, 5, or 10 points, which are added to their passing score on an assessment. Individuals with 0 points added still have an advantage over non-preference eligible candidates with an equal or lower score. [5 U.S.C. 3318(a); 5 CFR part 332]. Numerical ranking is appropriate when a hiring agency needs to make granular distinctions between applicants; i.e., an individual with a score of 97 (out of a 100 possible points) is deemed more qualified than an applicant with a score of 96 or lower. Category Rating On June 15, 2004, OPM issued final regulations which provided agencies with increased flexibility in assessing applicants using alternative (categorybased) rating and selection procedures rather than individual numerical ratings. This flexibility is known as ‘‘category rating’’ (see 5 CFR part 337, subpart C). Under category rating procedures, in lieu of numerical ranking, applicants are assessed and placed into two or more pre-defined quality categories, with preference eligible veterans listed above nonpreference eligible veterans in each category to which the applicants are assessed. Veterans 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. Hiring officials may select from applicants in the highest quality category provided that any preference eligible veteran must be considered before a non-preference eligible applicant. A hiring official cannot select a non-preference eligible VerDate Sep<11>2014 18:29 Jul 20, 2023 Jkt 259001 veteran over a preference eligible veteran without going through the formal procedures for passing over or objecting to the preference eligible veteran. [5 U.S.C. 3319; 5 CFR part 337, subpart C.] Category rating is appropriate when the hiring agency does not need to make such fine distinctions among applicants as is made using numerical ranking procedures (i.e., all applicants placed in a particular category are deemed equally qualified). Category rating gives selecting officials potentially more applicants to choose from because all applicants in a given category are equally qualified: hiring officials are not limited to selecting from only the three highest rated applicants. Filling Jobs in the Excepted Service By definition, the excepted service consists of those civil service positions which have been excepted from certain requirements of the competitive service or the Senior Executive Service. [5 U.S.C. 2103]. Positions may be excepted from title 5 U.S.C. entirely, or from limited portions of title 5 U.S.C., e.g., excepted from public notice or selection requirements, or from classification and pay otherwise required in accordance with 5 U.S.C. chapter 51. The reasons for and scope of the exceptions vary, depending on the circumstances surrounding the exception and the authority for the exception. When filling a position in the excepted service, the hiring agency must follow the procedures in 5 CFR parts 213 and 302. Under these provisions, agencies have more flexibility when assessing, rating and ranking, and selecting eligible applicants than they do under competitive examining. Agencies can: • Use a numerical ranking procedure similar to the rule of three, • Place eligible applicants into preference categories based on their veterans’ preference status (i.e., in descending order from 30 percent or more disabled veterans (CPS); disabled veterans with at least a 10 percent but less than 30 percent disability (CP); less than 10 percent disabled veterans (XP); eligible parents and widows and widowers of a disabled veteran or a veteran killed on active duty (XPderived); veterans who served during certain periods specified in statute or by the President or who received an armed forces expeditionary medal (TP); and sole survivor veterans pursuant to the Hubbard Act (SSP); 1 or 1 Veterans’ preference codes, e.g., ‘‘TP,’’ are a shorthand reference used in competitive examinations. Veteran’s preference is recognized by PO 00000 Frm 00002 Fmt 4702 Sfmt 4702 • Use an agency-developed method that provides preference-eligible veterans with at least as much preference as they would receive under the other two methods. Agencies oftentimes use their competitive service category rating process in conjunction with this last option. Introduction The NDAA for Fiscal Year 2019 (or ‘‘the Act’’) authorizes changes governing the selection of candidates from competitive lists of those who are eligible. Such lists are also known as delegated examining certificates. The Act eliminates the ‘‘rule of three’’ in numerical rating and ranking, which required that, for each selection, consideration was limited to the top three candidates on the certificate. Instead, the Act authorizes agencies to certify a ‘‘sufficient number’’ of names, not less than three, from the top of the appropriate register or list of eligible candidates, to be considered for selection, using a cut-off score 2 or other mechanism established by OPM (described below), known as the ‘‘rule of many.’’ The Act also affects how agencies may make selections under 5 CFR part 302, Employment in the Excepted Service. The proposed rule, called the ‘‘rule of many,’’ encompasses the advantages of both ‘‘rule of three’’ and category rating procedures, allowing the hiring agency to make finer distinctions among applicants based on their relative qualifications for the position being filled, while at the same time expanding the range of candidates from which a hiring manager may make a selection. Under the rule of many. a hiring manager is not limited to choosing from among only the three highest applicants to fill each vacancy. The Act does not change other requirements of delegated examining including public notice and the application of veterans’ preference in competitive examining—veterans are still granted preference points under ‘‘rule of many’’ numerical rating procedures and continue to be entitled to selection preference over nonadding points to the veteran’s numerical score. CPS–10 point 30 percent or more disabled veteran; CP–10 point at least 10 percent disabled, but less than 30 percent, disabled veteran; XP–10 point other disabled veteran and those with derived preference; TP–5 point preference; SSP–0-point sole survivorship preference; and NV-non-veteran/nonpreference. 2 A cut-off score is an established score used to filter out unqualified candidates on any particular test or assessment. For purposes of this proposed rule, a cut-off score is used to reflect a sub-group of qualified applicants who demonstrated, through the assessment, they are highly qualified and can be successful in the position. E:\FR\FM\21JYP1.SGM 21JYP1 Federal Register / Vol. 88, No. 139 / Friday, July 21, 2023 / Proposed Rules ddrumheller on DSK120RN23PROD with PROPOSALS1 preference eligible candidates with the same or a lower numerical score unless the requirements for passing over a preference eligible are satisfied. Certification Procedures Using Numerical Rating The Act requires OPM to prescribe regulations for the administration of the ‘‘rule of many’’ numerical rating procedure, which may include cut-off scores. In considering the types of mechanisms that may be appropriate for this use, OPM reviewed candidate assessment and referral procedures when using rank-ordered selection 3 under competitive examining. OPM identified four approaches that can be reasonably and practically incorporated into existing processes. OPM proposes that agencies use one of the following ways for determining the number of applicants referred for selection: 1. A cut-off score based on the assessment(s) 4 used, supported by job analysis data. This referral mechanism involves establishing a cut-off, or minimum, score using test measurement experts knowledgeable about the assessment(s) used. This score should reflect a sub-group of qualified applicants who demonstrated, through the assessment, that they are highly qualified and can be successful in the position. 2. A cut-off score based on business necessity; for example, to keep the number of applicants manageable for costly or labor-intensive assessments such as structured interviews. This way of referring applicants involves establishing a cut-off, or minimum, score that results in identifying an appropriate number of applicants to move forward in the hiring process based on the business needs of the agency, taking into consideration the resources available. This mechanism is also useful when test measurement expertise is not available. 3. A set number of the highest ranked eligible applicants, for example, the top 10 names. This referral mechanism involves establishing a number of applicants to refer from the top of the ranked list of applicants. 4. A percentage of the highest ranked eligible applicants; for example, the top 10 percent will be referred for selection. This referral mechanism involves establishing a percentage of applicants 3 Rank-order selection ranks applicants from highest score to lowest score based on their assessment results including veterans’ preference points, and selections occur on a top-down basis. 4 A sample of the most common assessment tools used in the Federal Government may be found in chapter 2 of the Delegated Examining Operations Handbook. VerDate Sep<11>2014 18:29 Jul 20, 2023 Jkt 259001 to refer from the top of the ranked list of applicants. When using a set number of applicants or top percentage of eligible applicants, all applicants with the same score as the last applicant in the cut will also be referred. For example, if using the top 10 eligible applicants and the 10th applicant has a score of 96.0, then all applicants scoring 96.0 will be referred. In selecting an appropriate mechanism, agencies should consider the number of positions to be filled, the assessment(s) used, historical applicant data, current labor market conditions, and other factors appropriate for the hiring action. Agencies should document their decision-making in the case files sufficient to allow for reconstruction or third-party review of the decision. This should include the data and factors used in making the decision. Each agency may choose which methodology it will use to certify a sufficient number of candidates to allow them to consider at least three candidates for each vacancy. The hiring agency must decide the approach, or mechanism, it will use before announcing the vacancy and must identify the methodology in the job opportunity announcement. Additionally, the approach used must be clearly documented in the examining case file and available for reconstruction or third-party review. OPM is proposing to amend 5 CFR 332.402 to include these requirements. Under this proposal, eligible applicants are ranked in score order, including veterans’ preference points, with veterans’ preference breaking ties in scores, and then the previouslychosen mechanism is applied to create the certificate of eligibles. For example, a preference eligible with a rating of 98XP (10-point veteran) 5 is listed ahead of a preference eligible with 98TP (5point veteran). Similarly, a preference eligible with a rating of 98TP is listed ahead of a non-preference eligible with a score of 98NV (non-veteran/nonpreference veteran). Compensably disabled preference eligibles (CPS and CP veterans) 6 go to the top of the certificate of eligibles, regardless of numerical rating and ahead of all other eligibles, except when certifying for scientific and professional positions 7 at note 1, above, for an explanation of veterans preference codes. 6 See note 1, above, for an explanation of veterans preference codes. 7 Professional and scientific positions are identified in the OPM publication Handbook of Occupational Groups and Families. For a list of professional and scientific positions, see Appendix PO 00000 5 See Frm 00003 Fmt 4702 Sfmt 4702 47061 the GS–9 grade level and above in accordance with 5 U.S.C. 3313. Using the rule of many procedures will occur as the final step before certification. Applicants will have already applied, been reviewed and assessed for qualifications, assessed for rating and ranking purposes and have a final rating. If a pass/fail assessment(s) is used, any applicant who fails to meet the passing grade of an assessment is no longer eligible, including those with priority or preference, and, therefore, will not be certified or referred for selection consideration. It should be noted that delegated examining certificates issued under rule of many procedures may be shared with other agencies consistent with the Competitive Service Act requirements. See 83 FR 5335. Selection Procedures Using Numerical Rating As provided in 5 U.S.C. 3318(a), OPM is proposing to revise 5 CFR 332.404 to change selection procedures from requiring that each selection must be made from the top three candidates (the ‘‘rule of three’’) to state that a selecting official may select any eligible candidate on the certificate of eligibles. However, under delegated examining rules, a selecting official may not pass over a preference eligible veteran to select a lower ranked non-preference eligible on the certificate unless there are reasons for passing over the preference eligible and the agency has complied with the pass-over procedures at 5 U.S.C. 3318(c). OPM notes that the ‘‘three consideration rule’’ at 5 CFR 332.405 may be used to remove an eligible candidate (to include preference eligibles) from the certificate who has received three bona fide considerations, as described in the next section. The following is an example of a certificate of eligibles ranked by numerical ratings and veterans’ preference under the proposed rule of many. In this example, the agency established a cut-off score of 95.0 based on the assessment used for the position. Candidates with the same score are ranked in veterans’ preference order.8 K of the Delegated Examining Operations Handbook. 8 CPS–10 point 30 percent or more disabled veteran and CP–10 point at least 10 percent disabled, but less than 30 percent, disabled veteran; XP–10 point other disabled veteran and those with derived preference; TP–5 point preference; SSP–0point sole survivorship preference; and NV-nonveteran/non-preference. E:\FR\FM\21JYP1.SGM 21JYP1 47062 Federal Register / Vol. 88, No. 139 / Friday, July 21, 2023 / Proposed Rules CERTIFICATE OF ELIGIBLES Candidate 1 2 3 4 5 6 ............. ............. ............. ............. ............. ............. Candidate Score/ veterans’ preference (VP) 98.0 96.0 96.0 95.0 95.0 95.0 CERTIFICATE OF ELIGIBLES Action 1 2 3 4 5 6 TP. XP. NV. TP. TP. NV. CERTIFICATE OF ELIGIBLES ddrumheller on DSK120RN23PROD with PROPOSALS1 1 2 3 4 5 6 ............. ............. ............. ............. ............. ............. Score/VP 98.0 96.0 96.0 95.0 95.0 95.0 TP ...... XP ...... NV. TP. TP. NV. Action Declined. Selected. For the next vacancy, using the example above, the agency may select candidate 3, 4, or 5. The first nonpreference candidate, number 3, may be selected now that there are no available veterans’ preference candidates ranked above them on the list. Candidate 6 may not be selected because there are available veterans’ preference candidates ranked above candidate 6. It should be noted that a certificate does not have to be worked from the top down. In this example, any of the preference eligible candidates may be selected. The fifth candidate, a 5-point preference eligible, may have been selected first. In another example, below, based on the ranked certificate, an agency may select from among any of the top 5 candidates. The top three nonpreference eligibles are within reach, or legally eligible, for selection because there are no higher ranked veterans’ preference candidates. VerDate Sep<11>2014 Score/VP 98.0 96.0 96.0 95.0 95.0 95.0 Action NV. NV. NV. TP. TP. NV. Three Bona Fide Considerations In this example, 6 candidates are eligible for consideration on the certificate of eligibles. Any of the 4 preference eligible candidates (candidates 1, 2, 4, or 5) may be selected. Under the rule of many procedures, the agency is not limited to considering the top three candidates, nor does the agency have to consider candidates in groups of three. The two non-preference eligibles may not be selected without satisfying pass-over requirements while there are higher ranked veterans’ preference candidates available on the certificate. If the agency is filling multiple positions, a possible scenario may look like the below certificate where the first preference eligible declined and the second was selected: Candidate ............. ............. ............. ............. ............. ............. 18:29 Jul 20, 2023 Jkt 259001 The Act codifies at 5 U.S.C. 3318(e) the long-standing practice under 5 CFR 332.405 of applying the ‘‘three consideration rule’’ under numerical rating and ranking selection procedures, whereby, if an appointing officer considers a candidate three times for three separate appointments from the same or different certificates for the same position 9 and makes a valid (legal) selection of another candidate each time, the appointing officer may remove that candidate from further consideration. As stated above, the Act also retains the pass-over rule, which imposes certain requirements when an appointing authority proposes to pass over a preference eligible in favor of a lower ranked non-preference eligible. A pass-over must be based on proper and adequate reasons. The Delegated Examining Operations Handbook provides information on proper and adequate reasons. When substantiated by documentation supporting the conclusion that one of the adequate and proper reasons has been demonstrated, the eligible is either not qualified or not suitable for the job and may be removed from consideration. Agencies with delegated examining authority have the authority to make a determination on most types of pass-overs. However, it should be noted that OPM retains exclusive authority to: • Make medical determinations pertaining to preference eligibles (5 CFR part 339); • Grant or deny an agency’s pass-over request of a preference eligible with a compensable service connected disability of 30 percent or more (5 U.S.C. 3318); and • Make suitability determinations involving material, intentional false statement or deception or fraud in examination or appointment, or refusal to furnish testimony as required by 5 CFR 731.103(a). This proposed rule is not intended to affect an agency’s obligation under 5 U.S.C. 3317 to notify a preference eligible of the eligible’s removal from a standing register based on being 9 In this context, the same position means the same title, series, and grade level or equivalent. PO 00000 Frm 00004 Fmt 4702 Sfmt 4702 considered and passed over for appointment three times. Additionally, OPM proposes that the three consideration rule does not always apply in cases of filling positions restricted to preference eligibles. Such positions include guards, elevator operators, messengers, and custodians (including housekeeping aides). [5 U.S.C. 3310]. The statute requires that in examining for such positions, ‘‘competition is restricted to preference eligibles as long as preference eligibles are available.’’ [5 U.S.C. 3310.] If applications from both preference and non-preference eligibles are accepted, OPM proposes that agencies cannot eliminate preference eligibles from further consideration once they have been certified and received three bona fide considerations if doing so would result in the selection of a nonpreference eligible. In such a case, an approved pass-over would be needed to remove the preference eligible from consideration prior to selecting a nonpreference eligible candidate. OPM is proposing the following process to reconcile the use of the three consideration rule in § 3318(e) and the pass-over rule in § 3318(c) to preserve veterans’ preference. OPM cautions agencies to take a judicious approach when using the three consideration rule. An agency may not use the three consideration rule to remove large numbers of applicants in lieu of formal pass-over procedures. Agencies should continue to pursue pass-over procedures when warranted and consider using the three consideration provisions when pass-over procedures are not justified. An agency should limit use of the three consideration rule to situations in which an agency has made an individualized determination that a specific applicant does not possess the specific skills or attributes needed for the position being filled. Therefore, in order to remove a candidate from consideration, one or more hiring managers must have made three valid selections and given bona fide consideration to the candidate during this process. OPM has determined that a bona fide consideration under the three consideration rule requires, at a minimum, that the hiring manager(s) has considered the candidate’s application material and interviewed the candidate for the position. OPM proposes the requirement of an interview to ensure that a candidate is treated as fairly and equitably as other candidates being considered. The interview must have been of the same rigor and thoroughness as that provided to other candidates. Such consideration may have been given by one or more E:\FR\FM\21JYP1.SGM 21JYP1 47063 Federal Register / Vol. 88, No. 139 / Friday, July 21, 2023 / Proposed Rules hiring managers from the same or different certificates under the same appointing officer. When more than one hiring manager is involved, each hiring manager must have interviewed the candidate. To use the three consideration provision, an agency must document in the case file the bona fide consideration a candidate received (including a copy of the interview and the interviewer’s notes and rating) and its reason(s) for removing the candidate from consideration, including a description of why the applicant is not receiving additional consideration, such as the applicant’s lack of a specific skill(s) or attribute(s). When making multiple selections from a certificate, starting with the fourth selection, one individual may be removed per selection using the three consideration rule. OPM is proposing to amend 5 CFR 332.405 to include the requirements for this provision. Example of Using the Three Consideration Rule The following example goes through the steps an agency may take when making multiple selections under the proposed rule of many. In this example, the agency issued the following certificate of eligibles based on a cutscore of 95. The agency expects to make 9 selections from this certificate and conducts interviews with all 18 candidates. CERTIFICATE OF ELIGIBLES Candidate ddrumheller on DSK120RN23PROD with PROPOSALS1 1 ............. 2 ............. 3 ............. 4 ............. 5 ............. 6 ............. 7 ............. 8 ............. 9 ............. 10 ........... 11 ........... 12 ........... 13 ........... 14 ........... 15 ........... 16 ........... 17 ........... 18 ........... Score/VP 98.0 98.0 98.0 98.0 98.0 96.0 96.0 96.0 95.0 95.0 95.0 95.0 95.0 95.0 95.0 95.0 95.0 95.0 Action CP. CPS. TP. TP. TP. TP. NV. NV. TP. TP. TP. TP. TP. NV. NV. NV. NV. NV. Any of the veterans’ preference candidates referred on the certificate may be selected. In this example, candidates 2 and 6 decline the position. For the first three selections, the agency selects candidates 1, 4, and 5. (For purposes of this illustration, the agency is selecting from the top of the certificate. However, the agency could have selected any preference eligible on the certificate including those further VerDate Sep<11>2014 18:29 Jul 20, 2023 Jkt 259001 down on the list, such as candidates 12 or 13.) CERTIFICATE OF ELIGIBLES Candidate 1 ............. 2 ............. 3 ............. 4 ............. 5 ............. 6 ............. 7 ............. 8 ............. 9 ............. 10 ........... 11 ........... 12 ........... 13 ........... 14 ........... 15 ........... 16 ........... 17 ........... 18 ........... Score/VP 98.0 98.0 98.0 98.0 98.0 96.0 96.0 96.0 95.0 95.0 95.0 95.0 95.0 95.0 95.0 95.0 95.0 95.0 CP ...... CPS .... TP. TP ...... TP ...... TP ...... NV. NV. TP. TP. TP. TP. TP. NV. NV. NV. NV. NV. Action Selected. Declined. Selected. Selected. Declined. The agency has now considered candidate 3 in each of its earlier selection decisions, that is, three times. The agency documents the interview and the hiring manager’s reason(s) to remove the candidate. Candidate 3 is removed from consideration. At this point, the agency may consider candidates 7, 8, or any of the veterans’ preference candidates. The agency selects candidate 8 for the fourth selection. CERTIFICATE OF ELIGIBLES Candidate Score/VP 1 ............. 2 ............. 3 ............. 98.0 CP ...... 98.0 CPS .... 98.0 TP ...... 4 ............. 5 ............. 6 ............. 7 ............. 8 ............. 9 ............. 10 ........... 11 ........... 12 ........... 13 ........... 14 ........... 15 ........... 16 ........... 17 ........... 18 ........... 98.0 98.0 96.0 96.0 96.0 95.0 95.0 95.0 95.0 95.0 95.0 95.0 95.0 95.0 95.0 TP ...... TP ...... TP ...... NV. NV ...... TP. TP. TP. TP. TP. NV. NV. NV. NV. NV. Action Selected. Declined. Removed—3 considerations. Selected. Selected. Declined. Selected. For the fifth selection, the agency may select candidate 7 or any of the veterans’ preference candidates. The agency selects candidate 12. The agency has also determined to eliminate candidate 10 on the basis of the three consideration rule because three selections have been made and candidate 10 was not chosen. The agency documents the interview and the hiring manager’s reason(s) to remove the candidate. Candidate 10 is removed from consideration. PO 00000 Frm 00005 Fmt 4702 Sfmt 4702 CERTIFICATE OF ELIGIBLES Candidate Score/VP 1 ............. 2 ............. 3 ............. 98.0 CP ...... 98.0 CPS .... 98.0 TP ...... 4 ............. 5 ............. 6 ............. 7 ............. 8 ............. 9 ............. 10 ........... 98.0 98.0 96.0 96.0 96.0 95.0 95.0 TP ...... TP ...... TP ...... NV. NV ...... TP. TP ...... 11 12 13 14 15 16 17 18 95.0 95.0 95.0 95.0 95.0 95.0 95.0 95.0 TP. TP ...... TP. NV. NV. NV. NV. NV. ........... ........... ........... ........... ........... ........... ........... ........... Action Selected. Declined. Removed—3 considerations. Selected. Selected. Declined. Selected. Removed—3 considerations. Selected. For the sixth selection, the agency may select candidate 7 or any of the veterans’ preference candidates. The agency selects candidate 13. The agency has determined that candidate 11 has been considered 3 times and documents the interview and the hiring manager’s reason(s) to remove the candidate. Candidate 11 is removed from consideration. CERTIFICATE OF ELIGIBLES Candidate Score/VP 1 ............. 2 ............. 3 ............. 98.0 CP ...... 98.0 CPS .... 98.0 TP ...... 4 ............. 5 ............. 6 ............. 7 ............. 8 ............. 9 ............. 10 ........... 98.0 98.0 96.0 96.0 96.0 95.0 95.0 11 ........... 95.0 TP ...... 12 13 14 15 16 17 18 95.0 95.0 95.0 95.0 95.0 95.0 95.0 ........... ........... ........... ........... ........... ........... ........... TP ...... TP ...... TP ...... NV. NV ...... TP. TP ...... TP ...... TP ...... NV. NV. NV. NV. NV. Action Selected. Declined. Removed—3 considerations. Selected. Selected. Declined. Selected. Removed—3 considerations. Removed—3 considerations. Selected. Selected. For the seventh selection, the agency may select candidate 7 or 9. Candidates 14 to 18 are still not within reach as there is a higher ranked veterans’ preference candidate available. The agency selects candidate 9. The agency has determined that candidate 7 has been considered 3 times and documents the interview and the hiring manager’s reason(s) to remove the candidate. Candidate 7 is removed from consideration. (It should be noted that non-preference candidates may be nonselected at any time.) E:\FR\FM\21JYP1.SGM 21JYP1 47064 Federal Register / Vol. 88, No. 139 / Friday, July 21, 2023 / Proposed Rules CERTIFICATE OF ELIGIBLES Candidate Score/VP 1 ............. 2 ............. 3 ............. 98.0 CP ...... 98.0 CPS .... 98.0 TP ...... 4 5 6 7 98.0 98.0 96.0 96.0 ............. ............. ............. ............. TP TP TP NV ...... ...... ...... ...... 8 ............. 9 ............. 10 ........... 96.0 NV ...... 95.0 TP ...... 95.0 TP ...... 11 ........... 95.0 TP ...... 12 ........... 13 ........... 14 ........... 15 ........... 16 ........... 17 ........... 18. 95.0 95.0 95.0 95.0 95.0 95.0 TP ...... TP ...... NV. NV. NV. NV. Action Selected. Declined. Removed—3 ations. Selected. Selected. Declined. Removed—3 ations. Selected. Selected. Removed—3 ations. Removed—3 ations. Selected. Selected. consider- consider- considerconsider- For selections eight and nine, the agency may select any of the remaining candidates and selects candidate 15 and 17. Below is the complete certificate of eligibles. CERTIFICATE OF ELIGIBLES Candidate Score/VP 1 ............. 2 ............. 3 ............. 98.0 CP ...... 98.0 CPS .... 98.0 TP ...... 4 5 6 7 98.0 98.0 96.0 96.0 ............. ............. ............. ............. TP TP TP NV ...... ...... ...... ...... 8 ............. 9 ............. 10 ........... 96.0 NV ...... 95.0 TP ...... 95.0 TP ...... 11 ........... 95.0 TP ...... 12 13 14 15 16 17 18 95.0 95.0 95.0 95.0 95.0 95.0 95.0 ........... ........... ........... ........... ........... ........... ........... TP TP NV NV NV NV NV ...... ...... ...... ...... ...... ...... ...... Action Selected. Declined. Removed—3 considerations. Selected. Selected. Declined. Removed—3 considerations. Selected. Selected. Removed—3 considerations. Removed—3 considerations. Selected. Selected. Non-selected. Selected. Non-selected. Selected. Non-selected. OPM welcomes the public’s views on the impact this application of the three consideration rule would have on agency hiring outcomes. ddrumheller on DSK120RN23PROD with PROPOSALS1 Supplemental Certification Under competitive examining procedures, a supplemental certificate may be issued when the original certificate results in fewer than three eligible and available candidates per vacancy. Reasons why supplemental certificates are needed often include: (1) the declination and failure to respond rates are higher than anticipated; (2) additional vacancies materialize in the office where the original certificate was sent; or (3) a supervisor in another office VerDate Sep<11>2014 18:29 Jul 20, 2023 Jkt 259001 (but still under the same appointing officer) has an identical vacancy. OPM proposes that, to allow for instances when a certificate of eligibles issued under rule of many procedures results in fewer than three eligible and available candidates per vacancy and the agency needs to issue a supplemental certification, the agency must have already decided how to expand the group of candidates for whichever of the referral mechanisms used. This decision must be made before announcing the vacancy and must be clearly documented in the examining case file and available for reconstruction or third-party review. In making this decision an agency may, for example, establish a standard policy that the cut-off score used to establish the original certificate of eligibles may be augmented by dropping down 10 points, for example, from 95 to 85 points, as determined on a case-by-case basis based on business necessity. Following are illustrations of how this process might work. 1. A cut-off score based on the assessment(s) used, supported by job analysis data. A supplemental cut-off score may be established for instances when the original certificate is exhausted. For example, the original cut-off score may be set at 95 and, if additional applicants are needed after exhausting the certificate of eligibles, a cut-off score of 90 will be used. 2. A cut-off score based on business necessity. A supplemental cut-off score may be established for instances when the original certificate is exhausted. For example, the original cut-off score may be set at 98 and, if additional applicants are needed after exhausting the certificate of eligibles, a cut-off score of 94 will be used. 3. A set number of the highest ranked eligible applicants. For example, if the top 10 applicants are referred and then exhausted, the next ranked 10 applicants may be referred. 4. A percentage of the highest ranked eligible applicants. For example, if the top 10 percent are referred and then exhausted, then the next 5 percent of top applicants may be referred. The eligible candidates remaining on the original certificate retain their higher order of placement on the expanded certificate and candidates on the supplemental certificate are ranked below them. In working the expanded certificate, i.e., the original and supplemental certificates together, any preference eligible may be selected. A non-preference eligibles may be selected only if there is no preference eligible above them on the list. That is, a hiring manager may not select a non- PO 00000 Frm 00006 Fmt 4702 Sfmt 4702 preference eligible when there is an equal or higher-ranked preference eligible veteran(s) unless there are reasons for passing over the preference eligible and the agency has complied with the pass-over procedures at 5 U.S.C. 3318(c). Alternatively, as previously described, the three consideration rule may be used to remove an eligible candidate (to include preference eligibles) from the certificate who has received three bona fide considerations. OPM is proposing to amend 5 CFR 332.402 to include the provision for issuing supplemental certification. Additionally, OPM will provide these and other examples in the guidance it issues when this proposed rule is implemented. Category Rating OPM notes that the NDAA added a provision at 5 U.S.C. 3319(c)(6) (renumbered from (c)(7) and amended by the Act) to allow an agency to use category rating procedures when issuing certificates from a standing register. When an appointing officer has three times considered and removed a preference eligible certified from a standing register through pass-over procedures, certification of the preference eligible may be discontinued. OPM will include this change in its category rating guidance in the Delegated Examining Operations Handbook (DEOH); however, no modifications to the regulations are needed as § 337.304 already directs that veterans’ preference be applied as prescribed in 5 U.S.C. 3319, which incorporates the recent amendment. OPM is proposing to amend 5 CFR 337.304 to reflect the new numbering of 5 U.S.C. 3319(c)(6). Additionally, OPM is proposing to retitle part 337, subpart C—Category Rating to conform to the statute. Excepted Service Selections Appointments in the excepted service are made in the same manner and under the same conditions required for the competitive service, as required by 5 U.S.C. 3320. With the proposed elimination of the rule of three, OPM is proposing to revise the procedures in 5 CFR part 302 to remove the requirement to make selection from among the highest three names available when using numerical scores and to add that agencies may apply the methods identified by OPM for identifying the number of applicants referred for selection. These methods (which are the same as described above for filling positions in the competitive service) are: E:\FR\FM\21JYP1.SGM 21JYP1 ddrumheller on DSK120RN23PROD with PROPOSALS1 Federal Register / Vol. 88, No. 139 / Friday, July 21, 2023 / Proposed Rules 1. The use of a cut-off score based on the assessment(s) used, supported by job analysis data. 2. The use of a cut-off score based on business necessity; for example, to keep the number of applicants manageable for costly or labor-intensive assessments such as structured interviews. 3. A set number of candidates, for example, the top 10 applicants. 4. A percentage of the highest rated applicants; for example, the top 10 percent will be referred for selection. In selecting an appropriate mechanism, agencies should consider the assessment(s) used, historical applicant data, current labor market conditions, and other factors appropriate for the hiring action. The NDAA also amended 5 U.S.C. 3320 to allow agencies to apply the provisions of 5 U.S.C. 3319, category rating, when making excepted service appointments in the same or similar manner as in the competitive service. OPM is proposing to revise the procedures for accepting, rating, and arranging applications in 5 CFR part 302 to include the option of using the category rating procedures as outlined in 5 U.S.C. 3319. Agencies are reminded that instructions for creating quality categories and procedures for certification and selection under category rating are provided in the DEOH available at www.opm.gov/deu. Proposed § 302.201(c) provides information on granting veterans’ preference when quality categories are used. When an agency chooses to use quality categories, it must list qualified preference eligibles ahead of nonpreference eligibles within the same quality category. OPM is proposing to modify § 302.302(a) to allow the use of either numerical rating or category rating when evaluating candidates. OPM is proposing to modify § 302.302(b) to include procedures for using category rating. For the convenience of the reader, the existing process for numerical rating is listed as § 302.302(b)(1) and the procedures for using category rating are added as § 302.302(b)(2). An agency will be required to predefine at least two quality categories when using category rating. OPM is proposing to modify the procedures for the maintenance of employment lists in § 302.303(d) by adding a new subparagraph § 302.303(d)(3) to explain the order used to list preference eligibles within each quality category. Within each quality category, preference eligibles must be listed ahead of non-preference eligibles VerDate Sep<11>2014 18:29 Jul 20, 2023 Jkt 259001 and may be listed in preference or alphabetical order. Proposed § 302.304(b) includes procedures on the order of consideration when quality categories are used. These procedures are added as § 302.304(b)(6). The procedures require an agency to first consider candidates on the reemployment list, followed by candidates in the highest quality category, with preference eligibles listed ahead of non-preference eligibles, and then candidates in the next lower quality category, with preference eligibles listed ahead of non-preference eligibles. Proposed § 302.401 modifies the current provisions to include procedures for the use of quality categories when making selections. For the convenience of the reader, the procedures for making selections from unranked lists are listed in § 302.401(a)(1) and have been revised to match processes used in the competitive service when unranked lists are used. The procedures for using numerical lists are in § 302.401(a)(2) and OPM is proposing to modify them to allow the agency to use an objective mechanism to define a sufficient number of candidates to refer for selection. The procedures for making selections using category rating are in § 302.401(a)(3) and allow an agency to select a candidate from the highest quality category as long as a non-preference eligible is not selected ahead of a preference eligible (an agency can select any preference eligible veteran in the highest quality category). Expected Impact of This Proposed Rule OPM is proposing regulations to implement changes authorized by the NDAA governing the selection of candidates from competitive lists of eligibles. The NDAA eliminated the ‘‘rule of three’’ in numerical rating and ranking, which required that, for each selection, consideration was limited to the top three candidates on the ranked certificate of eligibles. The NDAA, instead, authorizes agencies to certify a ‘‘sufficient number’’ of names, not less than three, from the top of the appropriate register, or list of eligibles, to be considered for selection, using a cut-off score or other mechanism established by OPM. The NDAA also affects how agencies make selections under 5 CFR part 302 procedures for excepted service appointments. This proposal is part of a larger OPM effort to improve the hiring process by helping agencies make meaningful distinctions among applicants in terms of their relative qualifications for the position being filled, while at the same time expanding the range of candidates PO 00000 Frm 00007 Fmt 4702 Sfmt 4702 47065 from which a hiring manager may make a selection as compared to the more restrictive rule of three (i.e., a hiring manager is not limited to choosing from among only the three highest applicants). OPM is proposing four mechanisms for agencies to use to determine a ‘‘sufficient number’’ of names to certify for consideration, and the proposal includes provisions for using the three consideration rule in numerical rating and ranking. The proposed rule does not change the application of veteran’s preference in competitive examining— veterans are still granted preference points under numerical rating procedures and continue to be entitled to selection preference over nonpreference eligibles with the same or lower numerical score unless the requirements for passing over a preference eligible are satisfied. The proposed rule also replaces ‘‘rule of three’’ procedures in excepted service hiring and allows agencies instead to use one of the same mechanisms described under competitive examining procedures to determine a ‘‘sufficient number’’ of names to certify for consideration. The NDAA also amended 5 U.S.C. 3320 to allow agencies to apply 5 U.S.C. 3319, category rating, when making excepted service appointments in the same or similar manner as in the competitive service. OPM’s proposal revises the procedures for accepting, rating, and arranging applications in 5 CFR part 302 to include the option of using the category rating procedures as outlined in 5 U.S.C. 3319. Costs This proposed rule, once finalized and in effect, will affect the operations of over 80 Federal agencies—ranging from cabinet-level departments to small independent agencies. OPM will provide guidance on implementing this rulemaking in the form of frequently asked questions and updates to the Delegated Examining Operations Handbook and Delegated Examining Training. OPM estimates that this rulemaking will require individuals employed by these agencies to modify policies and procedures to implement the rulemaking and train human resources (HR) practitioners and hiring managers on its use. For the purpose of this cost analysis, the assumed average salary rate of Federal employees performing this work will be the rate in 2023 for GS–14, step 5, from the Washington, DC, locality pay table ($150,016 annual locality rate and $71.88 hourly locality rate). We assume that the total dollar value of labor, which includes wages, benefits, and E:\FR\FM\21JYP1.SGM 21JYP1 ddrumheller on DSK120RN23PROD with PROPOSALS1 47066 Federal Register / Vol. 88, No. 139 / Friday, July 21, 2023 / Proposed Rules overhead, is equal to 200 percent of the wage rate, resulting in an assumed labor cost of $143.76 per hour. In order to comply with the regulatory changes in this Notice of Proposed Rulemaking, affected agencies will need to review the rule and update their policies and procedures. We estimate that, in the first year following publication of the final rule, doing so will require an average of 300 hours of work by employees with an average hourly cost of $143.76. This work would result in estimated costs in that first year of implementation of about $43,128 per agency, and about $3,450,240 in total Governmentwide. Some agencies may incur additional costs to ensure they have staff with the necessary assessment measurement expertise to use these proposed procedures. Numerical ranking is appropriate when a hiring agency needs to make finer, more granular distinctions between applicants, i.e., an individual with a score of 97 (out of a 100 possible points) is deemed more qualified than an applicant with a score of 96 or lower. Therefore, using these procedures will require assessment tools that make those meaningful distinctions and measurement experts to understand their use to establish appropriate cut-off scores. For the purpose of this cost estimate, the assumed average salary rate of Federal employees performing this work will be the rate in 2023 for GS–14, step 5, from the Washington, DC, locality pay table ($150,016 annual locality rate). We assume that 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 $300,032 annually for those agencies in this situation. We do not believe this rulemaking will substantially increase the ongoing administrative costs to agencies (including the administrative costs of using these new procedures and training new staff) because the rulemaking is replacing existing procedures and processes. OPM notes that agencies may incur higher costs to develop or purchase more rigorous assessments to use in determining cut-off scores under rule of many procedures. Alternatively, agencies may experience cost savings by identifying and selecting highlyqualified candidates more quickly through expanded choices and may recognize cost savings by eliminating the need to re-advertise and re-work hiring actions when selections were not made. Finally, we intend and expect that the provisions of this proposed rule will operate independently and be treated as VerDate Sep<11>2014 18:29 Jul 20, 2023 Jkt 259001 severable. If any part or section of this proposed rule as finalized were invalidated by a reviewing court, the remaining provisions of the rule will continue to concern and effectuate the purpose of the rule, which is to implement changes in the various procedures for selecting candidates under delegated examining authorized by the NDAA for FY 2019. Executive Order 12866 Executive Order 12866 directs 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). In accordance with the provisions of Executive Order 12866, this rulemaking was reviewed by the Office of Management and Budget as a significant rule. Regulatory Flexibility Act Federalism Accordingly, the Office of Personnel Management proposes to amend title 5, Code of Federal Regulations, as follows: PART 302—EMPLOYMENT IN THE EXCEPTED SERVICE 1. The authority citation for part 302 continues to read as follows: ■ Authority: 5 U.S.C. 1302, 3301, 3302, 8151, E.O. 10577 (3 CFR 1954–1958 Comp., p. 218); § 302.105 also issued under 5 U.S.C. 1104, Pub. L. 95–454, sec. 3(5); § 302.501 also issued under 5 U.S.C. 7701 et seq. 2. In § 302.201, add paragraph (c) to read as follows: ■ § 302.201 Persons entitled to veteran preference. * * * * (c) When quality categories are used in the evaluation and referral, the agency shall list preference eligibles under section 2108(3) of title 5, United States Code, ahead of non-preference eligibles in accord with § 302.304(b)(6). ■ 3. In § 302.302, revise paragraphs (a) and (b) to read as follows: § 302.302 We have examined this rulemaking in accordance with Executive Order 13132, Federalism, and have determined that this rulemaking will not have any negative impact on the rights, roles and responsibilities of State, local, or tribal governments. Civil Justice Reform This regulation meets the applicable standard set forth in Executive Order 12988. Unfunded Mandates Reform Act of 1995 This rulemaking will not result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of more than $100 million or more in any year, and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995. Paperwork Reduction Act of 1995 (44 U.S.C. 3501–3521) This regulatory action will not impose any additional reporting or recordkeeping requirements under the Paperwork Reduction Act. Frm 00008 U.S. Office of Personnel Management. Kayyonne Marston, Federal Register Liaison. * The Director of the Office of Personnel Management certifies that this regulation will not have a significant impact on a substantial number of small entities because it applies only to Federal agencies and employees. PO 00000 List of Subjects in 5 CFR Parts 302, 332, and 337 Government employees. Fmt 4702 Sfmt 4702 Examination of applicants. (a) Eligibility. An evaluation of the qualifications of applicants for positions covered by this part may be conducted at any time before an appointment is made. The evaluation may involve only determination of eligibility or ineligibility or may include qualitative rating of candidates. If the evaluation involves only basic eligibility, candidates will not receive numerical scores or be placed in quality categories and will be referred in accordance with the procedures described in § 302.304(b)(5). If qualitative ranking is desired, numerical scores or placement in quality categories may be assigned in accordance with paragraph (b) of this section. Each agency shall make a part of the records the reasons for its decision to use ranked or unranked referral and, for ranked actions, the rating factors used. This information shall be made available to an applicant on his/her request. (b) Rating—(1) Numerical rating. Numerical scores will be assigned on a scale of 100. Each applicant who meets the qualification requirements for the position established under § 302.202 will be assigned a rating of 70 or more and will be eligible for appointment. Candidates scoring 70 or more will E:\FR\FM\21JYP1.SGM 21JYP1 Federal Register / Vol. 88, No. 139 / Friday, July 21, 2023 / Proposed Rules receive additional points for veteran preference as provided in § 302.201. Numerical ratings are not required when all qualified applicants will be offered immediate appointment. When there are an excessive number of applicants, numerical ratings are required only for a sufficient number of the highest qualified applicants to meet the anticipated needs of the agency within a reasonable period of time. The agency must, however, adopt procedures to ensure the consideration of preference eligibles in the order in which they would have been considered if all applicants had been assigned numerical ratings. An agency shall furnish a notice of the rating assigned to an applicant on his/her request. (2) Category rating. In accordance with 5 CFR part 337, subpart C, an agency must predefine at least two quality categories that reflect the requirements to perform the job successfully and to distinguish differences in the quality of candidates’ job-related competencies/knowledge, skills and abilities. An agency may not establish a ‘‘not qualified’’ category. Only those found qualified will be placed in a category. Quality categories must be established and defined by the employing agency prior to accepting applications. Quality categories are not required when all qualified applicants will be offered immediate appointment. * * * * * ■ 4. In § 302.303, add paragraph (d)(3) to read as follows: § 302.303 lists. Maintenance of employment ddrumheller on DSK120RN23PROD with PROPOSALS1 * * * * * (d) * * * (3) When candidates have been placed in quality categories under § 302.302(b). Within each quality category, preference eligibles must be listed ahead of non-preference eligibles and may be listed in preference or alphabetical order. Preference eligibles having a compensable, serviceconnected disability of 10 percent or more (designated as CPS or CP) are placed in the highest quality category unless the list will be used to fill scientific or professional positions at the GS–9 level or above, or equivalent. ■ 5. In § 302.304, revise paragraph (b) introductory text and add paragraph (b)(6) as follows: § 302.304 Order of consideration. * * * * * (b) Consideration of other candidates. Except as provided in paragraphs (b)(4), (b)(5) and (b)(6) of this section, an agency shall consider applicants on the reemployment and regular employment VerDate Sep<11>2014 18:29 Jul 20, 2023 Jkt 259001 list who have been assigned eligible ratings for a given position in Order A, Order B, or Order C, as described in paragraphs (b)(1) through (b)(3) of this section. Order A must be used when the agency has not established a reemployment list. * * * * * (6) Category rating. In accordance with 5 CFR part 337, subpart C, qualified preference eligibles will be listed ahead of non-preference eligibles within the same quality category in which they were assigned. Qualified preference eligibles with a compensable service-connected disability of 30percent or more (CPS) and those with a compensable service-connected disability of at least 10-percent but less than 30-percent (CP) move from the category in which they would otherwise be placed to the highest quality category (except for scientific or professional positions at the GS–9 level or higher). Eligible candidates are considered in the following order: (i) Candidates on the reemployment list; (ii) Candidates in the highest quality category with preference eligibles listed ahead of non-preference eligibles; and (iii) Candidates in each subsequent lower quality category with preference eligibles listed ahead of non-preference eligibles. ■ 6. In § 302.401, revise paragraph (a) to read as follows: § 302.401 Selection and appointment. (a) Selection—(1) Unranked lists. When making an appointment from a priority reemployment, reemployment, or regular list on which candidates have not received numerical scores, an agency must make its selection from among the qualified preference eligibles, as long as at least three candidates remain in that group. When fewer than three preference eligibles remain, consideration may be expanded to include the non-preference eligibles in accordance with paragraph (b) of this section, passing over a preference applicant. (2) Numerical lists. When making an appointment from a list on which candidates have received numerical scores, an agency must use one of the methodologies identified below to determine the number of applicants referred for selection. A selecting official may select any eligible candidate referred for selection. However, a selecting official may not pass over a preference eligible to select a lower standing non-preference eligible unless the agency has complied with the pass-over procedures in paragraph (b) of this section. The mechanism, or PO 00000 Frm 00009 Fmt 4702 Sfmt 4702 47067 approach, used must be determined before soliciting for applications and be made available to applicants upon their request. The approach used must be clearly documented in the recruitment file and available for reconstruction or third-party review. The agency may determine, based on the position to be filled, which of the following mechanisms will best meet the hiring needs of the agency and result in at least three names for consideration for appointment in the order provided in § 302.304. (i) The agency may establish a cut-off score based on the assessment(s) used, supported by job analysis data; (ii) The agency may use of a cut-off score based on business necessity; (iii) The agency may use a set number of the highest ranked eligible applicants; or (iv) The agency may use a set percentage of the highest ranked eligible applicants. In selecting an appropriate mechanism, agencies should consider the assessment(s) used, historical applicant data, current labor market conditions, and other factors appropriate for the hiring action. (3) Category rating. When making appointments from a list on which candidates have been placed in quality categories, in accordance with 5 CFR part 337, subpart C, an agency may select any eligible candidate(s) in the highest quality category; except the selecting official may not select a nonpreference eligible over a preference eligible unless the agency has complied with the pass-over procedures in paragraph (b) of this section. If there are fewer than three candidates in the highest quality category, the agency may combine (merge) the top two quality categories and make selections from the newly merged category. The newly merged category is the new highest quality category. Preference eligibles must be listed ahead of non-preference eligibles in the newly merged category. (4) Conditions. Under any of the above selection methods, an agency is not required to— (i) Accord an applicant on its priority reemployment or reemployment list the preference consideration required by § 302.304 if the list on which the applicant’s name appears does not contain the names of at least three preference eligibles; or (ii) Consider an applicant who has previously been considered three times or a preference eligible if consideration of his/her name has been discontinued for the position as provided in paragraph (b) of this section. E:\FR\FM\21JYP1.SGM 21JYP1 47068 Federal Register / Vol. 88, No. 139 / Friday, July 21, 2023 / Proposed Rules PART 332—RECRUITMENT AND SELECTION THROUGH COMPETITIVE EXAMINATION 7. The authority citation for part 332 continues to read as follows: ■ Authority: 5 U.S.C. 1103, 1104, 1302, 2108, 3301, 3302, 3304, 3312, 3317, 3318, 3319; sec. 2(d), Pub. L. 114–137, 130 Stat. 310; E.O. 10577, 19 FR 7521, 3 CFR, 1954–1958 Comp., p. 218. ■ 8. Revise § 332.402 to read as follows: ddrumheller on DSK120RN23PROD with PROPOSALS1 § 332.402 Referring candidates for appointment. OPM or a delegated examining unit (DEU) will use one of the mechanisms identified below to refer a sufficient number of candidates for consideration, in accordance with this section and the agency’s delegated examining policies. (a) Agencies must establish a policy on the use of these procedures. (b) OPM or a DEU may determine, based on the position to be filled, which of the following mechanisms will best meet the hiring needs of the agency and result in at least three names for consideration. (1) OPM or a DEU may establish a cutoff score based on the assessment(s) used, supported by job analysis data; (2) OPM or a DEU may establish a cutoff score based on business necessity; (3) OPM or a DEU may use a set number of the highest ranked eligible applicants to certify; or (4) OPM or a DEU may use a set percentage of the highest ranked eligible applicants to certify. (5) When using a set number of candidates or top percentage of eligible applicants, all applicants with the same score and veterans’ preference category as the last candidate in the cut, will also be referred. (6) In selecting an appropriate mechanism, agencies should consider the number of positions to be filled, the assessment(s) used, historical applicant data, current labor market conditions, and other factors appropriate for the hiring action. (c) The mechanism, or approach, used must be determined before announcing the vacancy and must be stated in the job opportunity announcement. (d) The approach used must be clearly documented in the examining case file and available for reconstruction or third-party review. (e) Hiring managers will receive sufficient names, when available, to allow them to consider at least three candidates for each vacancy. (f) In instances when a certificate of eligibles results in fewer than three eligible and available candidates per vacancy and an agency needs to issue a VerDate Sep<11>2014 18:29 Jul 20, 2023 Jkt 259001 supplemental certification, OPM or a DEU must have decided, before announcing the vacancy, how to expand the group of candidates for whichever of the referral mechanisms used in accordance with the guidance in the Delegated Examining Operations Handbook. (g) OPM or a DEU will refer candidates for consideration by simultaneously listing a candidate on all certificates for which the candidate is interested, eligible, and within reach, except that, when it is deemed in the interest of good administration and candidates have been so notified, OPM or a DEU may choose to refer candidates for only one vacancy at a time. ■ 9. Revise § 332.404 to read as follows: § 332.404 Order of selection from certificates. A hiring manager, with sole regard to merit and fitness, shall select any eligible candidate certified for appointment on a certificate of eligibles, except the hiring manager may not pass over a preference eligible to select a lower standing non-preference eligible on the certificate unless the agency complies with pass over procedures in accordance with § 332.406. ■ 10. Revise § 332.405 to read as follows: § 332.405 Three considerations for appointment. An appointing officer is not required to consider an eligible who has been considered by one or more hiring managers for three separate appointments from the same or different certificates for the same position (i.e., the same title, series, and grade). In order to remove a candidate from consideration, one or more hiring managers must have made three valid selections and given bona fide consideration to the candidate during this process. (a) Bona fide consideration. To use this provision, a hiring manager must consider the candidate’s application material and interview the candidate for the position. The interview must have been of the same rigor and thoroughness as those conducted with other candidates interviewed for the position. (b) Documentation. The agency must document in the case file the bona fide consideration a candidate received and its reason(s) for removing the candidate from consideration, including a description of why the candidate is not receiving additional consideration, such as the candidate’s lack of a specific skill(s) or attribute(s). (c) Selection consideration. An agency may use the three consideration PO 00000 Frm 00010 Fmt 4702 Sfmt 4702 provision to remove one candidate from further consideration starting with the fourth selection, i.e., after three valid selections have been made, and may remove one candidate for each subsequent selection made from a certificate of eligibles as long as bona fide consideration has been given and documented as required by this section. PART 337—EXAMINING SYSTEM 11. The authority citation for part 337 continues to read as follows: ■ Authority: 5 U.S.C. 1104(a), 1302, 2302, 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; 116 Stat. 2135, 2290; 117 Stat. 1392, 1665; and E.O. 13833. 12. Revise the heading to subpart C to read as follows: ■ Subpart C—Category Rating 13. Revise § 337.304 to read as follows: ■ § 337.304 Veterans’ preference. In this subpart: (a) Veterans’ preference must be applied as prescribed in 5 U.S.C. 3319(b) and (c)(6); (b) Veterans’ preference points as prescribed in § 337.101 are not applied in category rating; and (c) Sections 3319(b) and 3319(c)(6) of title 5 U.S.C. constitute veterans’ preference requirements for purposes of 5 U.S.C. 2302(b)(11)(A) and (B). [FR Doc. 2023–15374 Filed 7–20–23; 8:45 am] BILLING CODE 6325–39–P DEPARTMENT OF AGRICULTURE Animal and Plant Health Inspection Service 9 CFR Part 11 [Docket No. APHIS–2011–0009] RIN 0579–AE76 Horse Protection; Licensing of Designated Qualified Persons and Other Amendments Animal and Plant Health Inspection Service, USDA. ACTION: Notice of proposed rulemaking and request for comments. AGENCY: The Animal and Plant Health Inspection Service (APHIS) of the United States Department of Agriculture is proposing to withdraw a final rule that was filed for public inspection by the Office of the Federal Register on January 19, 2017, in advance of SUMMARY: E:\FR\FM\21JYP1.SGM 21JYP1

Agencies

[Federal Register Volume 88, Number 139 (Friday, July 21, 2023)]
[Proposed Rules]
[Pages 47059-47068]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-15374]


========================================================================
Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

========================================================================


Federal Register / Vol. 88 , No. 139 / Friday, July 21, 2023 / 
Proposed Rules

[[Page 47059]]



OFFICE OF PERSONNEL MANAGEMENT

5 CFR Parts 302, 332, and 337

[Docket ID: OPM-2023-0015]
RIN 3206-AN80


Recruitment and Selection Through Competitive Examination, and 
Employment in the Excepted Service (Rule of Many)

AGENCY: Office of Personnel Management.

ACTION: Proposed rule; request for comments.

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

SUMMARY: The Office of Personnel Management (OPM) is proposing 
regulations to implement changes authorized by the National Defense 
Authorization Act (NDAA) for Fiscal Year 2019 governing the selection 
of candidates from competitive lists of those who are eligible. These 
changes will provide expanded flexibility to agencies in the selection 
of candidates under delegated examining procedures. These changes also 
affect how agencies select candidates for excepted service 
appointments.

DATES: Comments must be received on or before September 19, 2023.

ADDRESSES: You may submit comments, identified by Regulation 
Identification Number (RIN) ``3206-AN80'' using any of the following 
methods:
    Federal eRulemaking Portal: https://www.regulations.gov. Follow the 
instructions for submitting comments. All submissions received through 
the Portal must include the agency name and docket number or Regulation 
Identification Number (RIN) for this rulemaking.
    Email: [email protected]. Include ``RIN 3206-AN80, Recruitment and 
Selection'' in the subject line of the message.
    Fax: (202) 606-4430.
    Mail: Kimberly A. Holden, Deputy Associate Director for Talent 
Acquisition, Classification, and Veterans Programs, U.S. Office of 
Personnel Management, Room 6551, 1900 E Street NW, Washington, DC 
20415-9700.

FOR FURTHER INFORMATION CONTACT: Roseanna Ciarlante by telephone at 
(202) 936-3282 or Katika Floyd by telephone at (202) 606-0960; by email 
at [email protected]; by fax at (202) 606-4430; or by TTY at (202) 418-
3134.

SUPPLEMENTARY INFORMATION: 

Background

    The proposed rule is written for the immediate audience of Federal 
agency human resources practitioners and Federal agency hiring 
officials, who will implement the rules. For reference, many of the 
terms and concepts used and referenced below are defined in OPM's 
Delegated Examining Operations Handbook (DEOH), and its appendices, 
available at https://www.opm.gov/policy-data-oversight/hiring-information/competitive-hiring/deo_handbook.pdf. The DEOH handbook also 
provides additional context.
    The Federal civilian workforce consists of three categories of 
service: the competitive service, the excepted service, and the Senior 
Executive Service. The main differences between the three classes of 
service are: the manner in which candidates apply and are selected for 
jobs, the qualifications of the position being filled, the opportunity 
for appointees to move within or between the three classes of Federal 
service, and the rights governing appeal and redress options for 
incumbents of these positions. Each class of service (and its 
particular employment system(s)) is governed by different laws and 
regulations.
    The competitive service consists of all civil service positions in 
the executive branch of the Federal Government with some exceptions, 
which are defined in section 2102 of title 5, United States Code 
(U.S.C.). Four categories of appointments comprise the competitive 
service: those subject to delegated examining procedures; those filled 
through promotion and internal placement (i.e., merit promotion) 
procedures in accordance with 5 Code of Federal Regulations (CFR) part 
335; those filled on a non-competitive basis in accordance with 5 CFR 
part 315 subparts F and G; and those filled under direct hire authority 
in accordance with 5 CFR part 337 subpart B. These proposed regulations 
impact positions filled in the competitive service using delegated 
examining procedures.
    The Director of OPM has delegated to agency heads the authority 
delegated to the Director by the President to conduct competitive 
examinations for positions in the competitive service. [5 U.S.C. 1104]. 
Each agency with this delegated authority is required to enter into a 
written agreement with OPM. Agencies with delegated examining authority 
may fill competitive civil service jobs with applicants from outside 
the Federal workforce; Federal employees who do not have competitive 
service status (i.e., temporary or term employees, and individuals who 
hold or held an excepted service position which did not provide for 
conversion to the competitive service); or Federal employees with 
competitive service status (i.e., career or career-conditional 
employees).
    Agencies use delegated examining (also called ``competitive 
examining'') procedures to fill positions in the competitive service 
for which any U.S. citizen may apply. Competitive examining supports 
Federal merit system principles by promoting recruitment from all 
segments of society, fair and open competition among job-seekers, and 
selection based on an applicant's competencies or knowledge, skills, 
and abilities. OPM maintains oversight of its delegated examining 
authority to ensure agencies apply their delegated authority in 
accordance with the merit system principles in 5 U.S.C. 2301.
    There are three stages to the competitive service Federal hiring 
process: the assessment process (i.e., the rating and ranking of 
applicants and application of veterans' preference); the certification 
process (i.e., the process through which applicants are listed on a 
certificate of eligible candidates (``certificate of eligibles'') in 
order of their assessed scores, adjusted for veterans' preference); and 
the selection process (i.e., the process for choosing among applicants 
based on their numerical rankings in accordance with veterans' 
preference requirements).

Filling Jobs in the Competitive Service

Rule of Three

    For readers not familiar with delegated examining, traditionally, 
applicants for Federal jobs in the

[[Page 47060]]

competitive service are assigned numerical scores (including veterans' 
preference points, if applicable, for preference eligible veterans), 
listed in rank-order, and considered for selection based on the ``rule 
of three.'' The rule of three requires that each selection must be made 
from among the highest three candidates on the certificate with the 
condition that a hiring official cannot select a non-preference 
eligible candidate over a preference eligible veteran (i.e., an 
individual who served in the U.S. Armed Forces, or a relative of the 
individual, and meets certain statutory criteria, making the individual 
eligible for an advantage in Federal hiring over those who did not 
serve or do not meet the statutory criteria) with an equal or higher 
ranking, unless the agency follows the procedures for formally passing 
over or objecting to the preference eligible veteran. Under the rule of 
three, preference eligible candidates (or ``eligibles'') are given 0, 
5, or 10 points, which are added to their passing score on an 
assessment. Individuals with 0 points added still have an advantage 
over non-preference eligible candidates with an equal or lower score. 
[5 U.S.C. 3318(a); 5 CFR part 332]. Numerical ranking is appropriate 
when a hiring agency needs to make granular distinctions between 
applicants; i.e., an individual with a score of 97 (out of a 100 
possible points) is deemed more qualified than an applicant with a 
score of 96 or lower.

Category Rating

    On June 15, 2004, OPM issued final regulations which provided 
agencies with increased flexibility in assessing applicants using 
alternative (category-based) rating and selection procedures rather 
than individual numerical ratings. This flexibility is known as 
``category rating'' (see 5 CFR part 337, subpart C). Under category 
rating procedures, in lieu of numerical ranking, applicants are 
assessed and placed into two or more pre-defined quality categories, 
with preference eligible veterans listed above non-preference eligible 
veterans in each category to which the applicants are assessed. 
Veterans 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. Hiring officials may select from applicants in 
the highest quality category provided that any preference eligible 
veteran must be considered before a non-preference eligible applicant. 
A hiring official cannot select a non-preference eligible veteran over 
a preference eligible veteran without going through the formal 
procedures for passing over or objecting to the preference eligible 
veteran. [5 U.S.C. 3319; 5 CFR part 337, subpart C.] Category rating is 
appropriate when the hiring agency does not need to make such fine 
distinctions among applicants as is made using numerical ranking 
procedures (i.e., all applicants placed in a particular category are 
deemed equally qualified). Category rating gives selecting officials 
potentially more applicants to choose from because all applicants in a 
given category are equally qualified: hiring officials are not limited 
to selecting from only the three highest rated applicants.

Filling Jobs in the Excepted Service

    By definition, the excepted service consists of those civil service 
positions which have been excepted from certain requirements of the 
competitive service or the Senior Executive Service. [5 U.S.C. 2103]. 
Positions may be excepted from title 5 U.S.C. entirely, or from limited 
portions of title 5 U.S.C., e.g., excepted from public notice or 
selection requirements, or from classification and pay otherwise 
required in accordance with 5 U.S.C. chapter 51. The reasons for and 
scope of the exceptions vary, depending on the circumstances 
surrounding the exception and the authority for the exception.
    When filling a position in the excepted service, the hiring agency 
must follow the procedures in 5 CFR parts 213 and 302. Under these 
provisions, agencies have more flexibility when assessing, rating and 
ranking, and selecting eligible applicants than they do under 
competitive examining. Agencies can:
     Use a numerical ranking procedure similar to the rule of 
three,
     Place eligible applicants into preference categories based 
on their veterans' preference status (i.e., in descending order from 30 
percent or more disabled veterans (CPS); disabled veterans with at 
least a 10 percent but less than 30 percent disability (CP); less than 
10 percent disabled veterans (XP); eligible parents and widows and 
widowers of a disabled veteran or a veteran killed on active duty (XP-
derived); veterans who served during certain periods specified in 
statute or by the President or who received an armed forces 
expeditionary medal (TP); and sole survivor veterans pursuant to the 
Hubbard Act (SSP); \1\ or
---------------------------------------------------------------------------

    \1\ Veterans' preference codes, e.g., ``TP,'' are a shorthand 
reference used in competitive examinations. Veteran's preference is 
recognized by adding points to the veteran's numerical score. CPS-10 
point 30 percent or more disabled veteran; CP-10 point at least 10 
percent disabled, but less than 30 percent, disabled veteran; XP-10 
point other disabled veteran and those with derived preference; TP-5 
point preference; SSP-0-point sole survivorship preference; and NV-
non-veteran/non-preference.
---------------------------------------------------------------------------

     Use an agency-developed method that provides preference-
eligible veterans with at least as much preference as they would 
receive under the other two methods. Agencies oftentimes use their 
competitive service category rating process in conjunction with this 
last option.

Introduction

    The NDAA for Fiscal Year 2019 (or ``the Act'') authorizes changes 
governing the selection of candidates from competitive lists of those 
who are eligible. Such lists are also known as delegated examining 
certificates. The Act eliminates the ``rule of three'' in numerical 
rating and ranking, which required that, for each selection, 
consideration was limited to the top three candidates on the 
certificate. Instead, the Act authorizes agencies to certify a 
``sufficient number'' of names, not less than three, from the top of 
the appropriate register or list of eligible candidates, to be 
considered for selection, using a cut-off score \2\ or other mechanism 
established by OPM (described below), known as the ``rule of many.'' 
The Act also affects how agencies may make selections under 5 CFR part 
302, Employment in the Excepted Service.
---------------------------------------------------------------------------

    \2\ A cut-off score is an established score used to filter out 
unqualified candidates on any particular test or assessment. For 
purposes of this proposed rule, a cut-off score is used to reflect a 
sub-group of qualified applicants who demonstrated, through the 
assessment, they are highly qualified and can be successful in the 
position.
---------------------------------------------------------------------------

    The proposed rule, called the ``rule of many,'' encompasses the 
advantages of both ``rule of three'' and category rating procedures, 
allowing the hiring agency to make finer distinctions among applicants 
based on their relative qualifications for the position being filled, 
while at the same time expanding the range of candidates from which a 
hiring manager may make a selection. Under the rule of many. a hiring 
manager is not limited to choosing from among only the three highest 
applicants to fill each vacancy.
    The Act does not change other requirements of delegated examining 
including public notice and the application of veterans' preference in 
competitive examining--veterans are still granted preference points 
under ``rule of many'' numerical rating procedures and continue to be 
entitled to selection preference over non-

[[Page 47061]]

preference eligible candidates with the same or a lower numerical score 
unless the requirements for passing over a preference eligible are 
satisfied.

Certification Procedures Using Numerical Rating

    The Act requires OPM to prescribe regulations for the 
administration of the ``rule of many'' numerical rating procedure, 
which may include cut-off scores. In considering the types of 
mechanisms that may be appropriate for this use, OPM reviewed candidate 
assessment and referral procedures when using rank-ordered selection 
\3\ under competitive examining. OPM identified four approaches that 
can be reasonably and practically incorporated into existing processes. 
OPM proposes that agencies use one of the following ways for 
determining the number of applicants referred for selection:
---------------------------------------------------------------------------

    \3\ Rank-order selection ranks applicants from highest score to 
lowest score based on their assessment results including veterans' 
preference points, and selections occur on a top-down basis.
---------------------------------------------------------------------------

    1. A cut-off score based on the assessment(s) \4\ used, supported 
by job analysis data. This referral mechanism involves establishing a 
cut-off, or minimum, score using test measurement experts knowledgeable 
about the assessment(s) used. This score should reflect a sub-group of 
qualified applicants who demonstrated, through the assessment, that 
they are highly qualified and can be successful in the position.
---------------------------------------------------------------------------

    \4\ A sample of the most common assessment tools used in the 
Federal Government may be found in chapter 2 of the Delegated 
Examining Operations Handbook.
---------------------------------------------------------------------------

    2. A cut-off score based on business necessity; for example, to 
keep the number of applicants manageable for costly or labor-intensive 
assessments such as structured interviews. This way of referring 
applicants involves establishing a cut-off, or minimum, score that 
results in identifying an appropriate number of applicants to move 
forward in the hiring process based on the business needs of the 
agency, taking into consideration the resources available. This 
mechanism is also useful when test measurement expertise is not 
available.
    3. A set number of the highest ranked eligible applicants, for 
example, the top 10 names. This referral mechanism involves 
establishing a number of applicants to refer from the top of the ranked 
list of applicants.
    4. A percentage of the highest ranked eligible applicants; for 
example, the top 10 percent will be referred for selection. This 
referral mechanism involves establishing a percentage of applicants to 
refer from the top of the ranked list of applicants.
    When using a set number of applicants or top percentage of eligible 
applicants, all applicants with the same score as the last applicant in 
the cut will also be referred. For example, if using the top 10 
eligible applicants and the 10th applicant has a score of 96.0, then 
all applicants scoring 96.0 will be referred.
    In selecting an appropriate mechanism, agencies should consider the 
number of positions to be filled, the assessment(s) used, historical 
applicant data, current labor market conditions, and other factors 
appropriate for the hiring action. Agencies should document their 
decision-making in the case files sufficient to allow for 
reconstruction or third-party review of the decision. This should 
include the data and factors used in making the decision.
    Each agency may choose which methodology it will use to certify a 
sufficient number of candidates to allow them to consider at least 
three candidates for each vacancy. The hiring agency must decide the 
approach, or mechanism, it will use before announcing the vacancy and 
must identify the methodology in the job opportunity announcement. 
Additionally, the approach used must be clearly documented in the 
examining case file and available for reconstruction or third-party 
review. OPM is proposing to amend 5 CFR 332.402 to include these 
requirements.
    Under this proposal, eligible applicants are ranked in score order, 
including veterans' preference points, with veterans' preference 
breaking ties in scores, and then the previously-chosen mechanism is 
applied to create the certificate of eligibles. For example, a 
preference eligible with a rating of 98XP (10-point veteran) \5\ is 
listed ahead of a preference eligible with 98TP (5-point veteran). 
Similarly, a preference eligible with a rating of 98TP is listed ahead 
of a non-preference eligible with a score of 98NV (non-veteran/non-
preference veteran). Compensably disabled preference eligibles (CPS and 
CP veterans) \6\ go to the top of the certificate of eligibles, 
regardless of numerical rating and ahead of all other eligibles, except 
when certifying for scientific and professional positions \7\ at the 
GS-9 grade level and above in accordance with 5 U.S.C. 3313.
---------------------------------------------------------------------------

    \5\ See note 1, above, for an explanation of veterans preference 
codes.
    \6\ See note 1, above, for an explanation of veterans preference 
codes.
    \7\ Professional and scientific positions are identified in the 
OPM publication Handbook of Occupational Groups and Families. For a 
list of professional and scientific positions, see Appendix K of the 
Delegated Examining Operations Handbook.
---------------------------------------------------------------------------

    Using the rule of many procedures will occur as the final step 
before certification. Applicants will have already applied, been 
reviewed and assessed for qualifications, assessed for rating and 
ranking purposes and have a final rating. If a pass/fail assessment(s) 
is used, any applicant who fails to meet the passing grade of an 
assessment is no longer eligible, including those with priority or 
preference, and, therefore, will not be certified or referred for 
selection consideration.
    It should be noted that delegated examining certificates issued 
under rule of many procedures may be shared with other agencies 
consistent with the Competitive Service Act requirements. See 83 FR 
5335.

Selection Procedures Using Numerical Rating

    As provided in 5 U.S.C. 3318(a), OPM is proposing to revise 5 CFR 
332.404 to change selection procedures from requiring that each 
selection must be made from the top three candidates (the ``rule of 
three'') to state that a selecting official may select any eligible 
candidate on the certificate of eligibles. However, under delegated 
examining rules, a selecting official may not pass over a preference 
eligible veteran to select a lower ranked non-preference eligible on 
the certificate unless there are reasons for passing over the 
preference eligible and the agency has complied with the pass-over 
procedures at 5 U.S.C. 3318(c). OPM notes that the ``three 
consideration rule'' at 5 CFR 332.405 may be used to remove an eligible 
candidate (to include preference eligibles) from the certificate who 
has received three bona fide considerations, as described in the next 
section.
    The following is an example of a certificate of eligibles ranked by 
numerical ratings and veterans' preference under the proposed rule of 
many. In this example, the agency established a cut-off score of 95.0 
based on the assessment used for the position. Candidates with the same 
score are ranked in veterans' preference order.\8\
---------------------------------------------------------------------------

    \8\ CPS-10 point 30 percent or more disabled veteran and CP-10 
point at least 10 percent disabled, but less than 30 percent, 
disabled veteran; XP-10 point other disabled veteran and those with 
derived preference; TP-5 point preference; SSP-0-point sole 
survivorship preference; and NV-non-veteran/non-preference.

[[Page 47062]]



                        Certificate of Eligibles
------------------------------------------------------------------------
                          Score/ veterans'
      Candidate           preference (VP)                Action
------------------------------------------------------------------------
1...................  98.0 TP................
2...................  96.0 XP................
3...................  96.0 NV................
4...................  95.0 TP................
5...................  95.0 TP................
6...................  95.0 NV................
------------------------------------------------------------------------

    In this example, 6 candidates are eligible for consideration on the 
certificate of eligibles. Any of the 4 preference eligible candidates 
(candidates 1, 2, 4, or 5) may be selected. Under the rule of many 
procedures, the agency is not limited to considering the top three 
candidates, nor does the agency have to consider candidates in groups 
of three. The two non-preference eligibles may not be selected without 
satisfying pass-over requirements while there are higher ranked 
veterans' preference candidates available on the certificate. If the 
agency is filling multiple positions, a possible scenario may look like 
the below certificate where the first preference eligible declined and 
the second was selected:

                        Certificate of Eligibles
------------------------------------------------------------------------
      Candidate               Score/VP                   Action
------------------------------------------------------------------------
1...................  98.0 TP................  Declined.
2...................  96.0 XP................  Selected.
3...................  96.0 NV................
4...................  95.0 TP................
5...................  95.0 TP................
6...................  95.0 NV................
------------------------------------------------------------------------

    For the next vacancy, using the example above, the agency may 
select candidate 3, 4, or 5. The first non-preference candidate, number 
3, may be selected now that there are no available veterans' preference 
candidates ranked above them on the list. Candidate 6 may not be 
selected because there are available veterans' preference candidates 
ranked above candidate 6.
    It should be noted that a certificate does not have to be worked 
from the top down. In this example, any of the preference eligible 
candidates may be selected. The fifth candidate, a 5-point preference 
eligible, may have been selected first.
    In another example, below, based on the ranked certificate, an 
agency may select from among any of the top 5 candidates. The top three 
non-preference eligibles are within reach, or legally eligible, for 
selection because there are no higher ranked veterans' preference 
candidates.

                        Certificate of Eligibles
------------------------------------------------------------------------
      Candidate               Score/VP                   Action
------------------------------------------------------------------------
1...................  98.0 NV................
2...................  96.0 NV................
3...................  96.0 NV................
4...................  95.0 TP................
5...................  95.0 TP................
6...................  95.0 NV................
------------------------------------------------------------------------

Three Bona Fide Considerations

    The Act codifies at 5 U.S.C. 3318(e) the long-standing practice 
under 5 CFR 332.405 of applying the ``three consideration rule'' under 
numerical rating and ranking selection procedures, whereby, if an 
appointing officer considers a candidate three times for three separate 
appointments from the same or different certificates for the same 
position \9\ and makes a valid (legal) selection of another candidate 
each time, the appointing officer may remove that candidate from 
further consideration. As stated above, the Act also retains the pass-
over rule, which imposes certain requirements when an appointing 
authority proposes to pass over a preference eligible in favor of a 
lower ranked non-preference eligible.
---------------------------------------------------------------------------

    \9\ In this context, the same position means the same title, 
series, and grade level or equivalent.
---------------------------------------------------------------------------

    A pass-over must be based on proper and adequate reasons. The 
Delegated Examining Operations Handbook provides information on proper 
and adequate reasons. When substantiated by documentation supporting 
the conclusion that one of the adequate and proper reasons has been 
demonstrated, the eligible is either not qualified or not suitable for 
the job and may be removed from consideration. Agencies with delegated 
examining authority have the authority to make a determination on most 
types of pass-overs. However, it should be noted that OPM retains 
exclusive authority to:
     Make medical determinations pertaining to preference 
eligibles (5 CFR part 339);
     Grant or deny an agency's pass-over request of a 
preference eligible with a compensable service connected disability of 
30 percent or more (5 U.S.C. 3318); and
     Make suitability determinations involving material, 
intentional false statement or deception or fraud in examination or 
appointment, or refusal to furnish testimony as required by 5 CFR 
731.103(a).
    This proposed rule is not intended to affect an agency's obligation 
under 5 U.S.C. 3317 to notify a preference eligible of the eligible's 
removal from a standing register based on being considered and passed 
over for appointment three times.
    Additionally, OPM proposes that the three consideration rule does 
not always apply in cases of filling positions restricted to preference 
eligibles. Such positions include guards, elevator operators, 
messengers, and custodians (including housekeeping aides). [5 U.S.C. 
3310]. The statute requires that in examining for such positions, 
``competition is restricted to preference eligibles as long as 
preference eligibles are available.'' [5 U.S.C. 3310.] If applications 
from both preference and non-preference eligibles are accepted, OPM 
proposes that agencies cannot eliminate preference eligibles from 
further consideration once they have been certified and received three 
bona fide considerations if doing so would result in the selection of a 
non-preference eligible. In such a case, an approved pass-over would be 
needed to remove the preference eligible from consideration prior to 
selecting a non-preference eligible candidate.
    OPM is proposing the following process to reconcile the use of the 
three consideration rule in Sec.  3318(e) and the pass-over rule in 
Sec.  3318(c) to preserve veterans' preference. OPM cautions agencies 
to take a judicious approach when using the three consideration rule. 
An agency may not use the three consideration rule to remove large 
numbers of applicants in lieu of formal pass-over procedures. Agencies 
should continue to pursue pass-over procedures when warranted and 
consider using the three consideration provisions when pass-over 
procedures are not justified. An agency should limit use of the three 
consideration rule to situations in which an agency has made an 
individualized determination that a specific applicant does not possess 
the specific skills or attributes needed for the position being filled. 
Therefore, in order to remove a candidate from consideration, one or 
more hiring managers must have made three valid selections and given 
bona fide consideration to the candidate during this process. OPM has 
determined that a bona fide consideration under the three consideration 
rule requires, at a minimum, that the hiring manager(s) has considered 
the candidate's application material and interviewed the candidate for 
the position. OPM proposes the requirement of an interview to ensure 
that a candidate is treated as fairly and equitably as other candidates 
being considered. The interview must have been of the same rigor and 
thoroughness as that provided to other candidates. Such consideration 
may have been given by one or more

[[Page 47063]]

hiring managers from the same or different certificates under the same 
appointing officer. When more than one hiring manager is involved, each 
hiring manager must have interviewed the candidate.
    To use the three consideration provision, an agency must document 
in the case file the bona fide consideration a candidate received 
(including a copy of the interview and the interviewer's notes and 
rating) and its reason(s) for removing the candidate from 
consideration, including a description of why the applicant is not 
receiving additional consideration, such as the applicant's lack of a 
specific skill(s) or attribute(s).
    When making multiple selections from a certificate, starting with 
the fourth selection, one individual may be removed per selection using 
the three consideration rule. OPM is proposing to amend 5 CFR 332.405 
to include the requirements for this provision.

Example of Using the Three Consideration Rule

    The following example goes through the steps an agency may take 
when making multiple selections under the proposed rule of many. In 
this example, the agency issued the following certificate of eligibles 
based on a cut-score of 95. The agency expects to make 9 selections 
from this certificate and conducts interviews with all 18 candidates.

                        Certificate of Eligibles
------------------------------------------------------------------------
      Candidate               Score/VP                   Action
------------------------------------------------------------------------
1...................  98.0 CP................
2...................  98.0 CPS...............
3...................  98.0 TP................
4...................  98.0 TP................
5...................  98.0 TP................
6...................  96.0 TP................
7...................  96.0 NV................
8...................  96.0 NV................
9...................  95.0 TP................
10..................  95.0 TP................
11..................  95.0 TP................
12..................  95.0 TP................
13..................  95.0 TP................
14..................  95.0 NV................
15..................  95.0 NV................
16..................  95.0 NV................
17..................  95.0 NV................
18..................  95.0 NV................
------------------------------------------------------------------------

    Any of the veterans' preference candidates referred on the 
certificate may be selected. In this example, candidates 2 and 6 
decline the position. For the first three selections, the agency 
selects candidates 1, 4, and 5. (For purposes of this illustration, the 
agency is selecting from the top of the certificate. However, the 
agency could have selected any preference eligible on the certificate 
including those further down on the list, such as candidates 12 or 13.)

                        Certificate of Eligibles
------------------------------------------------------------------------
      Candidate               Score/VP                   Action
------------------------------------------------------------------------
1...................  98.0 CP................  Selected.
2...................  98.0 CPS...............  Declined.
3...................  98.0 TP................
4...................  98.0 TP................  Selected.
5...................  98.0 TP................  Selected.
6...................  96.0 TP................  Declined.
7...................  96.0 NV................
8...................  96.0 NV................
9...................  95.0 TP................
10..................  95.0 TP................
11..................  95.0 TP................
12..................  95.0 TP................
13..................  95.0 TP................
14..................  95.0 NV................
15..................  95.0 NV................
16..................  95.0 NV................
17..................  95.0 NV................
18..................  95.0 NV................
------------------------------------------------------------------------

    The agency has now considered candidate 3 in each of its earlier 
selection decisions, that is, three times. The agency documents the 
interview and the hiring manager's reason(s) to remove the candidate. 
Candidate 3 is removed from consideration. At this point, the agency 
may consider candidates 7, 8, or any of the veterans' preference 
candidates. The agency selects candidate 8 for the fourth selection.

                        Certificate of Eligibles
------------------------------------------------------------------------
      Candidate               Score/VP                   Action
------------------------------------------------------------------------
1...................  98.0 CP................  Selected.
2...................  98.0 CPS...............  Declined.
3...................  98.0 TP................  Removed--3
                                                considerations.
4...................  98.0 TP................  Selected.
5...................  98.0 TP................  Selected.
6...................  96.0 TP................  Declined.
7...................  96.0 NV................
8...................  96.0 NV................  Selected.
9...................  95.0 TP................
10..................  95.0 TP................
11..................  95.0 TP................
12..................  95.0 TP................
13..................  95.0 TP................
14..................  95.0 NV................
15..................  95.0 NV................
16..................  95.0 NV................
17..................  95.0 NV................
18..................  95.0 NV................
------------------------------------------------------------------------

    For the fifth selection, the agency may select candidate 7 or any 
of the veterans' preference candidates. The agency selects candidate 
12. The agency has also determined to eliminate candidate 10 on the 
basis of the three consideration rule because three selections have 
been made and candidate 10 was not chosen. The agency documents the 
interview and the hiring manager's reason(s) to remove the candidate. 
Candidate 10 is removed from consideration.

                        Certificate of Eligibles
------------------------------------------------------------------------
      Candidate               Score/VP                   Action
------------------------------------------------------------------------
1...................  98.0 CP................  Selected.
2...................  98.0 CPS...............  Declined.
3...................  98.0 TP................  Removed--3
                                                considerations.
4...................  98.0 TP................  Selected.
5...................  98.0 TP................  Selected.
6...................  96.0 TP................  Declined.
7...................  96.0 NV................
8...................  96.0 NV................  Selected.
9...................  95.0 TP................
10..................  95.0 TP................  Removed--3
                                                considerations.
11..................  95.0 TP................
12..................  95.0 TP................  Selected.
13..................  95.0 TP................
14..................  95.0 NV................
15..................  95.0 NV................
16..................  95.0 NV................
17..................  95.0 NV................
18..................  95.0 NV................
------------------------------------------------------------------------

    For the sixth selection, the agency may select candidate 7 or any 
of the veterans' preference candidates. The agency selects candidate 
13. The agency has determined that candidate 11 has been considered 3 
times and documents the interview and the hiring manager's reason(s) to 
remove the candidate. Candidate 11 is removed from consideration.

                        Certificate of Eligibles
------------------------------------------------------------------------
      Candidate               Score/VP                   Action
------------------------------------------------------------------------
1...................  98.0 CP................  Selected.
2...................  98.0 CPS...............  Declined.
3...................  98.0 TP................  Removed--3
                                                considerations.
4...................  98.0 TP................  Selected.
5...................  98.0 TP................  Selected.
6...................  96.0 TP................  Declined.
7...................  96.0 NV................
8...................  96.0 NV................  Selected.
9...................  95.0 TP................
10..................  95.0 TP................  Removed--3
                                                considerations.
11..................  95.0 TP................  Removed--3
                                                considerations.
12..................  95.0 TP................  Selected.
13..................  95.0 TP................  Selected.
14..................  95.0 NV................
15..................  95.0 NV................
16..................  95.0 NV................
17..................  95.0 NV................
18..................  95.0 NV................
------------------------------------------------------------------------

    For the seventh selection, the agency may select candidate 7 or 9. 
Candidates 14 to 18 are still not within reach as there is a higher 
ranked veterans' preference candidate available. The agency selects 
candidate 9. The agency has determined that candidate 7 has been 
considered 3 times and documents the interview and the hiring manager's 
reason(s) to remove the candidate. Candidate 7 is removed from 
consideration. (It should be noted that non-preference candidates may 
be non-selected at any time.)

[[Page 47064]]



                        Certificate of Eligibles
------------------------------------------------------------------------
      Candidate               Score/VP                   Action
------------------------------------------------------------------------
1...................  98.0 CP................  Selected.
2...................  98.0 CPS...............  Declined.
3...................  98.0 TP................  Removed--3
                                                considerations.
4...................  98.0 TP................  Selected.
5...................  98.0 TP................  Selected.
6...................  96.0 TP................  Declined.
7...................  96.0 NV................  Removed--3
                                                considerations.
8...................  96.0 NV................  Selected.
9...................  95.0 TP................  Selected.
10..................  95.0 TP................  Removed--3
                                                considerations.
11..................  95.0 TP................  Removed--3
                                                considerations.
12..................  95.0 TP................  Selected.
13..................  95.0 TP................  Selected.
14..................  95.0 NV................
15..................  95.0 NV................
16..................  95.0 NV................
17..................  95.0 NV................
18..................
------------------------------------------------------------------------

    For selections eight and nine, the agency may select any of the 
remaining candidates and selects candidate 15 and 17. Below is the 
complete certificate of eligibles.

                        Certificate of Eligibles
------------------------------------------------------------------------
      Candidate               Score/VP                   Action
------------------------------------------------------------------------
1...................  98.0 CP................  Selected.
2...................  98.0 CPS...............  Declined.
3...................  98.0 TP................  Removed--3
                                                considerations.
4...................  98.0 TP................  Selected.
5...................  98.0 TP................  Selected.
6...................  96.0 TP................  Declined.
7...................  96.0 NV................  Removed--3
                                                considerations.
8...................  96.0 NV................  Selected.
9...................  95.0 TP................  Selected.
10..................  95.0 TP................  Removed--3
                                                considerations.
11..................  95.0 TP................  Removed--3
                                                considerations.
12..................  95.0 TP................  Selected.
13..................  95.0 TP................  Selected.
14..................  95.0 NV................  Non-selected.
15..................  95.0 NV................  Selected.
16..................  95.0 NV................  Non-selected.
17..................  95.0 NV................  Selected.
18..................  95.0 NV................  Non-selected.
------------------------------------------------------------------------

    OPM welcomes the public's views on the impact this application of 
the three consideration rule would have on agency hiring outcomes.

Supplemental Certification

    Under competitive examining procedures, a supplemental certificate 
may be issued when the original certificate results in fewer than three 
eligible and available candidates per vacancy. Reasons why supplemental 
certificates are needed often include: (1) the declination and failure 
to respond rates are higher than anticipated; (2) additional vacancies 
materialize in the office where the original certificate was sent; or 
(3) a supervisor in another office (but still under the same appointing 
officer) has an identical vacancy.
    OPM proposes that, to allow for instances when a certificate of 
eligibles issued under rule of many procedures results in fewer than 
three eligible and available candidates per vacancy and the agency 
needs to issue a supplemental certification, the agency must have 
already decided how to expand the group of candidates for whichever of 
the referral mechanisms used. This decision must be made before 
announcing the vacancy and must be clearly documented in the examining 
case file and available for reconstruction or third-party review. In 
making this decision an agency may, for example, establish a standard 
policy that the cut-off score used to establish the original 
certificate of eligibles may be augmented by dropping down 10 points, 
for example, from 95 to 85 points, as determined on a case-by-case 
basis based on business necessity. Following are illustrations of how 
this process might work.
    1. A cut-off score based on the assessment(s) used, supported by 
job analysis data. A supplemental cut-off score may be established for 
instances when the original certificate is exhausted. For example, the 
original cut-off score may be set at 95 and, if additional applicants 
are needed after exhausting the certificate of eligibles, a cut-off 
score of 90 will be used.
    2. A cut-off score based on business necessity. A supplemental cut-
off score may be established for instances when the original 
certificate is exhausted. For example, the original cut-off score may 
be set at 98 and, if additional applicants are needed after exhausting 
the certificate of eligibles, a cut-off score of 94 will be used.
    3. A set number of the highest ranked eligible applicants. For 
example, if the top 10 applicants are referred and then exhausted, the 
next ranked 10 applicants may be referred.
    4. A percentage of the highest ranked eligible applicants. For 
example, if the top 10 percent are referred and then exhausted, then 
the next 5 percent of top applicants may be referred.
    The eligible candidates remaining on the original certificate 
retain their higher order of placement on the expanded certificate and 
candidates on the supplemental certificate are ranked below them. In 
working the expanded certificate, i.e., the original and supplemental 
certificates together, any preference eligible may be selected. A non-
preference eligibles may be selected only if there is no preference 
eligible above them on the list. That is, a hiring manager may not 
select a non-preference eligible when there is an equal or higher-
ranked preference eligible veteran(s) unless there are reasons for 
passing over the preference eligible and the agency has complied with 
the pass-over procedures at 5 U.S.C. 3318(c). Alternatively, as 
previously described, the three consideration rule may be used to 
remove an eligible candidate (to include preference eligibles) from the 
certificate who has received three bona fide considerations.
    OPM is proposing to amend 5 CFR 332.402 to include the provision 
for issuing supplemental certification. Additionally, OPM will provide 
these and other examples in the guidance it issues when this proposed 
rule is implemented.

Category Rating

    OPM notes that the NDAA added a provision at 5 U.S.C. 3319(c)(6) 
(renumbered from (c)(7) and amended by the Act) to allow an agency to 
use category rating procedures when issuing certificates from a 
standing register. When an appointing officer has three times 
considered and removed a preference eligible certified from a standing 
register through pass-over procedures, certification of the preference 
eligible may be discontinued. OPM will include this change in its 
category rating guidance in the Delegated Examining Operations Handbook 
(DEOH); however, no modifications to the regulations are needed as 
Sec.  337.304 already directs that veterans' preference be applied as 
prescribed in 5 U.S.C. 3319, which incorporates the recent amendment. 
OPM is proposing to amend 5 CFR 337.304 to reflect the new numbering of 
5 U.S.C. 3319(c)(6). Additionally, OPM is proposing to retitle part 
337, subpart C--Category Rating to conform to the statute.

Excepted Service Selections

    Appointments in the excepted service are made in the same manner 
and under the same conditions required for the competitive service, as 
required by 5 U.S.C. 3320. With the proposed elimination of the rule of 
three, OPM is proposing to revise the procedures in 5 CFR part 302 to 
remove the requirement to make selection from among the highest three 
names available when using numerical scores and to add that agencies 
may apply the methods identified by OPM for identifying the number of 
applicants referred for selection. These methods (which are the same as 
described above for filling positions in the competitive service) are:

[[Page 47065]]

    1. The use of a cut-off score based on the assessment(s) used, 
supported by job analysis data.
    2. The use of a cut-off score based on business necessity; for 
example, to keep the number of applicants manageable for costly or 
labor-intensive assessments such as structured interviews.
    3. A set number of candidates, for example, the top 10 applicants.
    4. A percentage of the highest rated applicants; for example, the 
top 10 percent will be referred for selection.
    In selecting an appropriate mechanism, agencies should consider the 
assessment(s) used, historical applicant data, current labor market 
conditions, and other factors appropriate for the hiring action.
    The NDAA also amended 5 U.S.C. 3320 to allow agencies to apply the 
provisions of 5 U.S.C. 3319, category rating, when making excepted 
service appointments in the same or similar manner as in the 
competitive service. OPM is proposing to revise the procedures for 
accepting, rating, and arranging applications in 5 CFR part 302 to 
include the option of using the category rating procedures as outlined 
in 5 U.S.C. 3319. Agencies are reminded that instructions for creating 
quality categories and procedures for certification and selection under 
category rating are provided in the DEOH available at www.opm.gov/deu.
    Proposed Sec.  302.201(c) provides information on granting 
veterans' preference when quality categories are used. When an agency 
chooses to use quality categories, it must list qualified preference 
eligibles ahead of non-preference eligibles within the same quality 
category.
    OPM is proposing to modify Sec.  302.302(a) to allow the use of 
either numerical rating or category rating when evaluating candidates.
    OPM is proposing to modify Sec.  302.302(b) to include procedures 
for using category rating. For the convenience of the reader, the 
existing process for numerical rating is listed as Sec.  302.302(b)(1) 
and the procedures for using category rating are added as Sec.  
302.302(b)(2). An agency will be required to predefine at least two 
quality categories when using category rating.
    OPM is proposing to modify the procedures for the maintenance of 
employment lists in Sec.  302.303(d) by adding a new subparagraph Sec.  
302.303(d)(3) to explain the order used to list preference eligibles 
within each quality category. Within each quality category, preference 
eligibles must be listed ahead of non-preference eligibles and may be 
listed in preference or alphabetical order.
    Proposed Sec.  302.304(b) includes procedures on the order of 
consideration when quality categories are used. These procedures are 
added as Sec.  302.304(b)(6). The procedures require an agency to first 
consider candidates on the reemployment list, followed by candidates in 
the highest quality category, with preference eligibles listed ahead of 
non-preference eligibles, and then candidates in the next lower quality 
category, with preference eligibles listed ahead of non-preference 
eligibles.
    Proposed Sec.  302.401 modifies the current provisions to include 
procedures for the use of quality categories when making selections. 
For the convenience of the reader, the procedures for making selections 
from unranked lists are listed in Sec.  302.401(a)(1) and have been 
revised to match processes used in the competitive service when 
unranked lists are used. The procedures for using numerical lists are 
in Sec.  302.401(a)(2) and OPM is proposing to modify them to allow the 
agency to use an objective mechanism to define a sufficient number of 
candidates to refer for selection. The procedures for making selections 
using category rating are in Sec.  302.401(a)(3) and allow an agency to 
select a candidate from the highest quality category as long as a non-
preference eligible is not selected ahead of a preference eligible (an 
agency can select any preference eligible veteran in the highest 
quality category).

Expected Impact of This Proposed Rule

    OPM is proposing regulations to implement changes authorized by the 
NDAA governing the selection of candidates from competitive lists of 
eligibles. The NDAA eliminated the ``rule of three'' in numerical 
rating and ranking, which required that, for each selection, 
consideration was limited to the top three candidates on the ranked 
certificate of eligibles. The NDAA, instead, authorizes agencies to 
certify a ``sufficient number'' of names, not less than three, from the 
top of the appropriate register, or list of eligibles, to be considered 
for selection, using a cut-off score or other mechanism established by 
OPM. The NDAA also affects how agencies make selections under 5 CFR 
part 302 procedures for excepted service appointments.
    This proposal is part of a larger OPM effort to improve the hiring 
process by helping agencies make meaningful distinctions among 
applicants in terms of their relative qualifications for the position 
being filled, while at the same time expanding the range of candidates 
from which a hiring manager may make a selection as compared to the 
more restrictive rule of three (i.e., a hiring manager is not limited 
to choosing from among only the three highest applicants).
    OPM is proposing four mechanisms for agencies to use to determine a 
``sufficient number'' of names to certify for consideration, and the 
proposal includes provisions for using the three consideration rule in 
numerical rating and ranking. The proposed rule does not change the 
application of veteran's preference in competitive examining--veterans 
are still granted preference points under numerical rating procedures 
and continue to be entitled to selection preference over non-preference 
eligibles with the same or lower numerical score unless the 
requirements for passing over a preference eligible are satisfied.
    The proposed rule also replaces ``rule of three'' procedures in 
excepted service hiring and allows agencies instead to use one of the 
same mechanisms described under competitive examining procedures to 
determine a ``sufficient number'' of names to certify for 
consideration. The NDAA also amended 5 U.S.C. 3320 to allow agencies to 
apply 5 U.S.C. 3319, category rating, when making excepted service 
appointments in the same or similar manner as in the competitive 
service. OPM's proposal revises the procedures for accepting, rating, 
and arranging applications in 5 CFR part 302 to include the option of 
using the category rating procedures as outlined in 5 U.S.C. 3319.

Costs

    This proposed rule, once finalized and in effect, will affect the 
operations of over 80 Federal agencies--ranging from cabinet-level 
departments to small independent agencies. OPM will provide guidance on 
implementing this rulemaking in the form of frequently asked questions 
and updates to the Delegated Examining Operations Handbook and 
Delegated Examining Training. OPM estimates that this rulemaking will 
require individuals employed by these agencies to modify policies and 
procedures to implement the rulemaking and train human resources (HR) 
practitioners and hiring managers on its use. For the purpose of this 
cost analysis, the assumed average salary rate of Federal employees 
performing this work will be the rate in 2023 for GS-14, step 5, from 
the Washington, DC, locality pay table ($150,016 annual locality rate 
and $71.88 hourly locality rate). We assume that the total dollar value 
of labor, which includes wages, benefits, and

[[Page 47066]]

overhead, is equal to 200 percent of the wage rate, resulting in an 
assumed labor cost of $143.76 per hour.
    In order to comply with the regulatory changes in this Notice of 
Proposed Rulemaking, affected agencies will need to review the rule and 
update their policies and procedures. We estimate that, in the first 
year following publication of the final rule, doing so will require an 
average of 300 hours of work by employees with an average hourly cost 
of $143.76. This work would result in estimated costs in that first 
year of implementation of about $43,128 per agency, and about 
$3,450,240 in total Governmentwide. Some agencies may incur additional 
costs to ensure they have staff with the necessary assessment 
measurement expertise to use these proposed procedures. Numerical 
ranking is appropriate when a hiring agency needs to make finer, more 
granular distinctions between applicants, i.e., an individual with a 
score of 97 (out of a 100 possible points) is deemed more qualified 
than an applicant with a score of 96 or lower. Therefore, using these 
procedures will require assessment tools that make those meaningful 
distinctions and measurement experts to understand their use to 
establish appropriate cut-off scores. For the purpose of this cost 
estimate, the assumed average salary rate of Federal employees 
performing this work will be the rate in 2023 for GS-14, step 5, from 
the Washington, DC, locality pay table ($150,016 annual locality rate). 
We assume that 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 $300,032 annually for those 
agencies in this situation.
    We do not believe this rulemaking will substantially increase the 
ongoing administrative costs to agencies (including the administrative 
costs of using these new procedures and training new staff) because the 
rulemaking is replacing existing procedures and processes. OPM notes 
that agencies may incur higher costs to develop or purchase more 
rigorous assessments to use in determining cut-off scores under rule of 
many procedures. Alternatively, agencies may experience cost savings by 
identifying and selecting highly-qualified candidates more quickly 
through expanded choices and may recognize cost savings by eliminating 
the need to re-advertise and re-work hiring actions when selections 
were not made.
    Finally, we intend and expect that the provisions of this proposed 
rule will operate independently and be treated as severable. If any 
part or section of this proposed rule as finalized were invalidated by 
a reviewing court, the remaining provisions of the rule will continue 
to concern and effectuate the purpose of the rule, which is to 
implement changes in the various procedures for selecting candidates 
under delegated examining authorized by the NDAA for FY 2019.

Executive Order 12866

    Executive Order 12866 directs 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). In accordance with the 
provisions of Executive Order 12866, this rulemaking was reviewed by 
the Office of Management and Budget as a significant rule.

Regulatory Flexibility Act

    The Director of the Office of Personnel Management certifies that 
this regulation will not have a significant impact on a substantial 
number of small entities because it applies only to Federal agencies 
and employees.

Federalism

    We have examined this rulemaking in accordance with Executive Order 
13132, Federalism, and have determined that this rulemaking will not 
have any negative impact on the rights, roles and responsibilities of 
State, local, or tribal governments.

Civil Justice Reform

    This regulation meets the applicable standard set forth in 
Executive Order 12988.

Unfunded Mandates Reform Act of 1995

    This rulemaking will not result in the expenditure by State, local, 
or tribal governments, in the aggregate, or by the private sector, of 
more than $100 million or more in any year, and it will not 
significantly or uniquely affect small governments. Therefore, no 
actions were deemed necessary under the provisions of the Unfunded 
Mandates Reform Act of 1995.

Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521)

    This regulatory action will not impose any additional reporting or 
recordkeeping requirements under the Paperwork Reduction Act.

List of Subjects in 5 CFR Parts 302, 332, and 337

    Government employees.

U.S. Office of Personnel Management.
Kayyonne Marston,
Federal Register Liaison.

    Accordingly, the Office of Personnel Management proposes to amend 
title 5, Code of Federal Regulations, as follows:

PART 302--EMPLOYMENT IN THE EXCEPTED SERVICE

0
1. The authority citation for part 302 continues to read as follows:

    Authority: 5 U.S.C. 1302, 3301, 3302, 8151, E.O. 10577 (3 CFR 
1954-1958 Comp., p. 218); Sec.  302.105 also issued under 5 U.S.C. 
1104, Pub. L. 95-454, sec. 3(5); Sec.  302.501 also issued under 5 
U.S.C. 7701 et seq.

0
2. In Sec.  302.201, add paragraph (c) to read as follows:


Sec.  302.201  Persons entitled to veteran preference.

* * * * *
    (c) When quality categories are used in the evaluation and 
referral, the agency shall list preference eligibles under section 
2108(3) of title 5, United States Code, ahead of non-preference 
eligibles in accord with Sec.  302.304(b)(6).
0
3. In Sec.  302.302, revise paragraphs (a) and (b) to read as follows:


Sec.  302.302  Examination of applicants.

    (a) Eligibility. An evaluation of the qualifications of applicants 
for positions covered by this part may be conducted at any time before 
an appointment is made. The evaluation may involve only determination 
of eligibility or ineligibility or may include qualitative rating of 
candidates. If the evaluation involves only basic eligibility, 
candidates will not receive numerical scores or be placed in quality 
categories and will be referred in accordance with the procedures 
described in Sec.  302.304(b)(5). If qualitative ranking is desired, 
numerical scores or placement in quality categories may be assigned in 
accordance with paragraph (b) of this section. Each agency shall make a 
part of the records the reasons for its decision to use ranked or 
unranked referral and, for ranked actions, the rating factors used. 
This information shall be made available to an applicant on his/her 
request.
    (b) Rating--(1) Numerical rating. Numerical scores will be assigned 
on a scale of 100. Each applicant who meets the qualification 
requirements for the position established under Sec.  302.202 will be 
assigned a rating of 70 or more and will be eligible for appointment. 
Candidates scoring 70 or more will

[[Page 47067]]

receive additional points for veteran preference as provided in Sec.  
302.201. Numerical ratings are not required when all qualified 
applicants will be offered immediate appointment. When there are an 
excessive number of applicants, numerical ratings are required only for 
a sufficient number of the highest qualified applicants to meet the 
anticipated needs of the agency within a reasonable period of time. The 
agency must, however, adopt procedures to ensure the consideration of 
preference eligibles in the order in which they would have been 
considered if all applicants had been assigned numerical ratings. An 
agency shall furnish a notice of the rating assigned to an applicant on 
his/her request.
    (2) Category rating. In accordance with 5 CFR part 337, subpart C, 
an agency must predefine at least two quality categories that reflect 
the requirements to perform the job successfully and to distinguish 
differences in the quality of candidates' job-related competencies/
knowledge, skills and abilities. An agency may not establish a ``not 
qualified'' category. Only those found qualified will be placed in a 
category. Quality categories must be established and defined by the 
employing agency prior to accepting applications. Quality categories 
are not required when all qualified applicants will be offered 
immediate appointment.
* * * * *
0
4. In Sec.  302.303, add paragraph (d)(3) to read as follows:


Sec.  302.303  Maintenance of employment lists.

* * * * *
    (d) * * *
    (3) When candidates have been placed in quality categories under 
Sec.  302.302(b). Within each quality category, preference eligibles 
must be listed ahead of non-preference eligibles and may be listed in 
preference or alphabetical order. Preference eligibles having a 
compensable, service-connected disability of 10 percent or more 
(designated as CPS or CP) are placed in the highest quality category 
unless the list will be used to fill scientific or professional 
positions at the GS-9 level or above, or equivalent.
0
5. In Sec.  302.304, revise paragraph (b) introductory text and add 
paragraph (b)(6) as follows:


Sec.  302.304  Order of consideration.

* * * * *
    (b) Consideration of other candidates. Except as provided in 
paragraphs (b)(4), (b)(5) and (b)(6) of this section, an agency shall 
consider applicants on the reemployment and regular employment list who 
have been assigned eligible ratings for a given position in Order A, 
Order B, or Order C, as described in paragraphs (b)(1) through (b)(3) 
of this section. Order A must be used when the agency has not 
established a reemployment list.
* * * * *
    (6) Category rating. In accordance with 5 CFR part 337, subpart C, 
qualified preference eligibles will be listed ahead of non-preference 
eligibles within the same quality category in which they were assigned. 
Qualified preference eligibles with a compensable service-connected 
disability of 30-percent or more (CPS) and those with a compensable 
service-connected disability of at least 10-percent but less than 30-
percent (CP) move from the category in which they would otherwise be 
placed to the highest quality category (except for scientific or 
professional positions at the GS-9 level or higher). Eligible 
candidates are considered in the following order:
    (i) Candidates on the reemployment list;
    (ii) Candidates in the highest quality category with preference 
eligibles listed ahead of non-preference eligibles; and
    (iii) Candidates in each subsequent lower quality category with 
preference eligibles listed ahead of non-preference eligibles.
0
6. In Sec.  302.401, revise paragraph (a) to read as follows:


Sec.  302.401  Selection and appointment.

    (a) Selection--(1) Unranked lists. When making an appointment from 
a priority reemployment, reemployment, or regular list on which 
candidates have not received numerical scores, an agency must make its 
selection from among the qualified preference eligibles, as long as at 
least three candidates remain in that group. When fewer than three 
preference eligibles remain, consideration may be expanded to include 
the non-preference eligibles in accordance with paragraph (b) of this 
section, passing over a preference applicant.
    (2) Numerical lists. When making an appointment from a list on 
which candidates have received numerical scores, an agency must use one 
of the methodologies identified below to determine the number of 
applicants referred for selection. A selecting official may select any 
eligible candidate referred for selection. However, a selecting 
official may not pass over a preference eligible to select a lower 
standing non-preference eligible unless the agency has complied with 
the pass-over procedures in paragraph (b) of this section. The 
mechanism, or approach, used must be determined before soliciting for 
applications and be made available to applicants upon their request. 
The approach used must be clearly documented in the recruitment file 
and available for reconstruction or third-party review. The agency may 
determine, based on the position to be filled, which of the following 
mechanisms will best meet the hiring needs of the agency and result in 
at least three names for consideration for appointment in the order 
provided in Sec.  302.304.
    (i) The agency may establish a cut-off score based on the 
assessment(s) used, supported by job analysis data;
    (ii) The agency may use of a cut-off score based on business 
necessity;
    (iii) The agency may use a set number of the highest ranked 
eligible applicants; or
    (iv) The agency may use a set percentage of the highest ranked 
eligible applicants.
    In selecting an appropriate mechanism, agencies should consider the 
assessment(s) used, historical applicant data, current labor market 
conditions, and other factors appropriate for the hiring action.
    (3) Category rating. When making appointments from a list on which 
candidates have been placed in quality categories, in accordance with 5 
CFR part 337, subpart C, an agency may select any eligible candidate(s) 
in the highest quality category; except the selecting official may not 
select a non-preference eligible over a preference eligible unless the 
agency has complied with the pass-over procedures in paragraph (b) of 
this section. If there are fewer than three candidates in the highest 
quality category, the agency may combine (merge) the top two quality 
categories and make selections from the newly merged category. The 
newly merged category is the new highest quality category. Preference 
eligibles must be listed ahead of non-preference eligibles in the newly 
merged category.
    (4) Conditions. Under any of the above selection methods, an agency 
is not required to--
    (i) Accord an applicant on its priority reemployment or 
reemployment list the preference consideration required by Sec.  
302.304 if the list on which the applicant's name appears does not 
contain the names of at least three preference eligibles; or
    (ii) Consider an applicant who has previously been considered three 
times or a preference eligible if consideration of his/her name has 
been discontinued for the position as provided in paragraph (b) of this 
section.

[[Page 47068]]

PART 332--RECRUITMENT AND SELECTION THROUGH COMPETITIVE EXAMINATION

0
7. The authority citation for part 332 continues to read as follows:

    Authority: 5 U.S.C. 1103, 1104, 1302, 2108, 3301, 3302, 3304, 
3312, 3317, 3318, 3319; sec. 2(d), Pub. L. 114-137, 130 Stat. 310; 
E.O. 10577, 19 FR 7521, 3 CFR, 1954-1958 Comp., p. 218.

0
8. Revise Sec.  332.402 to read as follows:


Sec.  332.402  Referring candidates for appointment.

    OPM or a delegated examining unit (DEU) will use one of the 
mechanisms identified below to refer a sufficient number of candidates 
for consideration, in accordance with this section and the agency's 
delegated examining policies.
    (a) Agencies must establish a policy on the use of these 
procedures.
    (b) OPM or a DEU may determine, based on the position to be filled, 
which of the following mechanisms will best meet the hiring needs of 
the agency and result in at least three names for consideration.
    (1) OPM or a DEU may establish a cut-off score based on the 
assessment(s) used, supported by job analysis data;
    (2) OPM or a DEU may establish a cut-off score based on business 
necessity;
    (3) OPM or a DEU may use a set number of the highest ranked 
eligible applicants to certify; or
    (4) OPM or a DEU may use a set percentage of the highest ranked 
eligible applicants to certify.
    (5) When using a set number of candidates or top percentage of 
eligible applicants, all applicants with the same score and veterans' 
preference category as the last candidate in the cut, will also be 
referred.
    (6) In selecting an appropriate mechanism, agencies should consider 
the number of positions to be filled, the assessment(s) used, 
historical applicant data, current labor market conditions, and other 
factors appropriate for the hiring action.
    (c) The mechanism, or approach, used must be determined before 
announcing the vacancy and must be stated in the job opportunity 
announcement.
    (d) The approach used must be clearly documented in the examining 
case file and available for reconstruction or third-party review.
    (e) Hiring managers will receive sufficient names, when available, 
to allow them to consider at least three candidates for each vacancy.
    (f) In instances when a certificate of eligibles results in fewer 
than three eligible and available candidates per vacancy and an agency 
needs to issue a supplemental certification, OPM or a DEU must have 
decided, before announcing the vacancy, how to expand the group of 
candidates for whichever of the referral mechanisms used in accordance 
with the guidance in the Delegated Examining Operations Handbook.
    (g) OPM or a DEU will refer candidates for consideration by 
simultaneously listing a candidate on all certificates for which the 
candidate is interested, eligible, and within reach, except that, when 
it is deemed in the interest of good administration and candidates have 
been so notified, OPM or a DEU may choose to refer candidates for only 
one vacancy at a time.
0
9. Revise Sec.  332.404 to read as follows:


 Sec.  332.404  Order of selection from certificates.

    A hiring manager, with sole regard to merit and fitness, shall 
select any eligible candidate certified for appointment on a 
certificate of eligibles, except the hiring manager may not pass over a 
preference eligible to select a lower standing non-preference eligible 
on the certificate unless the agency complies with pass over procedures 
in accordance with Sec.  332.406.
0
10. Revise Sec.  332.405 to read as follows:


 Sec.  332.405  Three considerations for appointment.

    An appointing officer is not required to consider an eligible who 
has been considered by one or more hiring managers for three separate 
appointments from the same or different certificates for the same 
position (i.e., the same title, series, and grade). In order to remove 
a candidate from consideration, one or more hiring managers must have 
made three valid selections and given bona fide consideration to the 
candidate during this process.
    (a) Bona fide consideration. To use this provision, a hiring 
manager must consider the candidate's application material and 
interview the candidate for the position. The interview must have been 
of the same rigor and thoroughness as those conducted with other 
candidates interviewed for the position.
    (b) Documentation. The agency must document in the case file the 
bona fide consideration a candidate received and its reason(s) for 
removing the candidate from consideration, including a description of 
why the candidate is not receiving additional consideration, such as 
the candidate's lack of a specific skill(s) or attribute(s).
    (c) Selection consideration. An agency may use the three 
consideration provision to remove one candidate from further 
consideration starting with the fourth selection, i.e., after three 
valid selections have been made, and may remove one candidate for each 
subsequent selection made from a certificate of eligibles as long as 
bona fide consideration has been given and documented as required by 
this section.

PART 337--EXAMINING SYSTEM

0
11. The authority citation for part 337 continues to read as follows:

    Authority: 5 U.S.C. 1104(a), 1302, 2302, 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; 116 Stat. 2135, 2290; 117 
Stat. 1392, 1665; and E.O. 13833.

0
12. Revise the heading to subpart C to read as follows:

Subpart C--Category Rating

0
13. Revise Sec.  337.304 to read as follows:


Sec.  337.304  Veterans' preference.

    In this subpart:
    (a) Veterans' preference must be applied as prescribed in 5 U.S.C. 
3319(b) and (c)(6);
    (b) Veterans' preference points as prescribed in Sec.  337.101 are 
not applied in category rating; and
    (c) Sections 3319(b) and 3319(c)(6) of title 5 U.S.C. constitute 
veterans' preference requirements for purposes of 5 U.S.C. 
2302(b)(11)(A) and (B).

[FR Doc. 2023-15374 Filed 7-20-23; 8:45 am]
BILLING CODE 6325-39-P
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