Department of Veterans Affairs Memorandum

Date DEC 4 2015

From. Chief of Staff

subj. Discretionary Monetary Awards Guidance for Fiscal Year 2016 (VAJQ #7657785)

ro: Under Secretaries, Assistant Secretaries and Other Key Officials

1. This memorandum provides Department-wide guidance on the issuance of monetary awards to Department of Veterans Affairs (VA) employees during FY 2016.

2. On November 17, 2015, the Office of Personnel Management (OPM) issued an electronic message to Chief Human Capital Officers and Deputies on FY 2016 Awards Guidance. This guidance continues into FY 2016 the Government-wide budget spending caps on award spending originally imposed on November 1, 2013, when the Office of Management and Budget (OMB) and OPM jointly issued Memorandum M-14­02 titled, "Guidance on Awards for Fiscal Year 2014." The FY 2016 exceptions to the original limitations on awards are incorporated into the attached budget tables.

3. The attachments provided by OPM include: a chart summarizing the award spending limits; the award limitations for individual superior performance awards; and, individual special contribution awards for non-Senior Executive Service/Senior Level/Scientific and Professional employees.

4. In accordance with OPM guidance, the following restrictions apply in FY 2016:

a. Total spending for the combination of: (1) individual superior performance awards for non-Senior Executive Service/Senior Level/Scientific and Professional employees; and, (2) individual special contribution awards for all employees cannot exceed 0.96 percent of the aggregate salaries of all on-board VA employees as of September 30, 2015.

b. Other awards, such as group awards (suggestion, invention, referral awards, recruitment, relocation, retention incentives, and quality step increases) are not included as part of the 0. 96 percent cap, but they may not exceed FY 2010 levels. Additional award types are included in the attached chart. Please contact your servicing Human Resources (HR) office for specific guidance if you do not see an award that you would like to issue.

c. Time-off awards are not subject to any limit, but do have an indirect cost to VA. These awards should be provided to staff in a prioritized, judicious manner.

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Subject: Discretionary Monetary Awards Guidance for Fiscal Year 2016 (VAIQ #7657785)

5. Each Administration and Staff Office is responsible for adhering to these award budget limitations. Awards intended to be paid with 2016 funds, should be processed prior to September 20, 2016. For additional information, please contact the fiscal officer at your facility.

6. VA Handbook 5013, Part I, Paragraph 8, requires performance appraisal ratings and superior performance awards to be coded by HR offices into the PAID/HRSmart system as soon as possible, but no later than 90 calendar days after the end of the rating cycle. HR offices should continue to code and process awards as expeditiously as possible after they are received for processing.

7. For additional information about the types of awards and employee eligibility, please contact Ms. Judy Welch, Office of Human Resources Management, at (202) 461-7815. For information on the calculation of the award limitations, please contact Mr. Brian Funaki, Office of Management, at (202) 461-6672, or Mr. Bill Walsh, Office of Mana ement, at (202) 61-6601.

Attachments

Superior Performance Awards (non-SES) and

Individual Special Contribution Awards (non-SES/SUST)

Budget Limitations for Awards Approved or Processed in FY 2016

Organization

Acquisition, Logistics & Construction

Board of Veterans Appeals

Congressional and Legislative Affairs

Human Resources & Administration

Information and Technology

National Cemetery Administration

Office of General Counsel

Office of Management

Office of the Secretary

OEDCA

Policy and Planning

Public and Intergovernmental Affairs

Security and Preparedness

OSDBU

Veterans Benefits Administration

Veterans Health Administration

Grand Total

Cost Centers 6XXX (excl OSDBU)

& 1102

1105

25XX

14XX-16XX

19XX

5XXX

12XX

18XX 11XX (excl 1102,

1105, 1110)

1110

13XX

17XX

29XX

6290 & 6291

3XXX

7XXX-8XXX

FY 2016 Awards

Limitation (0.96%) 11

$ 1,298,501

$ 622,333

$ 40,270

$ 702,185

$ 6,591,776

$ 993,411

$ 690,966

$ 607,747

$ 69,321

$ 25,073

$ 126,205

$ 77,284

$ 154,248

$ 42,647

$ 13,721,008

$ 215,656, 116

$ 241,419,089

11 The FY 2016 llmltatlon Is based on 0.96% of each organization's aggregate FY 2015 salaries.

OPM AWARD LIMITATIONS QUICK REFERENCE

AWARD TYPE

Superior performance awards, including exemplary job performance and exemplary job achievement for non·

SES/SUST employees

AND

Individual special contribution awards for all employees

OPM LIMITATIONS• Fiscal Year (FY) 2015

0.96% of the aggregate salaries of all employees effective September 30, 2014

Other awards, including group cash awards, individual and group suggestion and invention awards, cost saving

referrals of job candidates, productivity sharing or gainsharing awards, and organizational awards

Amount spent in FY 201 O

Quality Step Increases, Special Advancements for Achievement, Special Advancements for

Performance Amount spent in FY 2010

Recruitment, relocation and retention incentives Amount spent in FY 2010

Time-off awards Time-off awards are not subject to any limit, but do have an indirect cost to VA, so they should be provided to the

staff in a prioritized, judicious manner.

*There is no limit to the amount of a single award (other than as prescribed by VA Handbook 5017) or the number of awards that an individual may receive but the total amount of award spending for each administration/department cannot exceed the levels prescribed by OPM.

Awards Guidance on Spending Limitations

The Office of Personnel Management (OPM) and the Office of Management and Budget (OMB) are issuing this awards guidance that applies to awards paid during the Fiscal Year (FY) (e.g., FY IS is October 1, 2014, through September 30, 2015) and shall continue to remain in effect until further notice. This guidance is applicable to all departments end agencies (referred to collectively as agencies).

Budgetary Limitations for Individual Monetary Awards

These budgetary limits apply to agency spending for individual monetary awards only, which include rating-based perfonnance awards and individual contribution (e.g., special act) awards.

Agencies must limit total awards spending on the following categories ofawards:

• Agencies may spend no more than 4.8 percent of the aggregate salaries of their career executives at the end ofthe previous fiscal year on individual perfonnance awards for career members ofthe Senior Executive Service (SES).

• Agencies may spend no more than 4.8 percent of the aggregate salaries• of their senior­level and scientific and professional employees (SL/ST) at the end of the previous fiscal year on individual performance awards for SL/ST employees.

• Agencies may spend no more than 0.96 percent of the aggregate salaries" ofall employees at the end of the previous fiscal year on the combination of (I) individual performance awards for non-SES/SL/ST employees, and (2) individual contribution awards (e.g., special act awards) for all employees (i.e., SES/SL/ST and non-SES/SL/ST).

OPM and OMB will continue to monitor awards data that agencies provide to OPM under the agencies' regular reporting procedures for compliance with these limitations.

In addition, if overall Governmentwide discretionary funding levels are reduced below the discretionary spending caps set fonh in the Budget Control Act (the BCA) of201 I (Public Law 112-25), each agency shall funher reduce awards spending pools for SES and non-SES by an amount proportional to the Govemmentwide reduction made from the original BCA discretionary spending cap, as detennined and communicated by OMB.

•These budgetary limitations do not apply to political appointees. Therefore, the salaries ofpolitical appointees are not included when calculating the awards funding. The President's August 3, 20 l 0, memorandum freezing discretionary awards, bonuses, and similar payments for political appointees continues in effect until funhcr notice. Agencies should continue to apply this freeze in accordance with OPM's guidance at http;l/www.chcoc.govffransmittals!TransminalDetajls.aspx?JransmjttaliD~J060.

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Other Covered Awards

Consistent with previous awards guidance, the limitations on the following remain unchanged:

• Other awards and incentives, such as group awa-rds, referral bonuses, or suggestion/invention awards, are frozen at FY 2010 spending levels. Travel savings and foreign language awards are not frozen.

• Time.off awards are not direct monetary expenditures and are not included in the 0.96 percent limit; however, agencies should continue to use time-off awards judiciously as they do represent a cost to the agency.

• Recruitment, relocation, and retention incentives are not awards and are not covered by the budgetary limits; however, agencies should ensure that spending on these incentives in the aggregate during the calendar year does not exceed calendar year 20 I 0 levels.

• Quality step increases for General Schedule employees is another category of rating­based payment that does not constitute an award. These payments are not covered by the 0.96 percent budgetary limit; however, agencies may not exceed their FY 20 I 0 spending levels on quality step increases granted during the fiscal year.

These budgetary limits apply to all Executive branch agencies for all members ofthe SES as well as non-SES civilian employees, including SUST, General Schedule, wage grade and others, except political appointees covered by the freeze on discretionary spending. Agencies retain the flexibility, however, to apply these budgetary limits on awards programs to all employees, regardless ofapplicable pay authority, to accommodate current budget constraints, provided they meet all legal requirements and agency contractual obligations.

In applying these budget limitations, agencies should discuss their agency award programs in agency labor-management forums and should honor all collective bargaining obligations and existing agreements prior to implementation.

Additional Information

Agency Chief Human Capital Officers and/or Human Resources Directors should contact Stephen T. Shih, Deputy Associate Director for Senior Executive Services and Performance Management, in OPM's Employee Services, at (202) 606-8046 or perfonnance­management@opm.gov if they have any questions regarding this guidance. Employees should contact their agency human resources offices for assistance.

Agencies that did not spend anything in 20 I 0 on the types of awards/payments limited to 20IO spending should contact their Resources Management Officer at OMB to establish appropriate baseline spending amounts.

U.S. Office of u.s. Office of PersonnelManagetnent Management & Budgel

M-14-02 November 1, 2013

MEMORANDUM FOR HEADS OF EXECUTIVE DEPARTMENTS AND AGENCIES

FROM: SYLVIAM.BURWEUL}if~DIRECTOR, OFFICE di/MANAGEMENT AND BUDGET

ELAINE KAPLAN ~ Ky(__ ACTING DIRECTOR, OFFICE OF PERSONNEL MANAGEMENT

SUBJECT: Guidance on Awards for Fiscal Year 2014

In keeping with the need to manage budget resources carefully, the Office ofPersonnel Management (OPM) and the Office ofManagement and Budget (OMB) are issuing this memorandum to establish budgetary limits on awards paid during Fiscal Year (FY) 2014. This memorandum provides guidance applicable to all departments and agencies (referred to collectively as agencies) and supersedes the guidance provided to agencies on discretionary monetary awards that was included in OMB Memoranda on sequester implementation, M-13-05 (February 2013) and M-13-11{April2013).

In exercising their discretion in this area, agencies should discuss their agency award programs in agency labor-management forums and should honor all collective bargaining obligations and agreements prior to implementation.

Budgetary Lim~tations for Awards Granted during FY 2014

Given the current fiscal environment and the budget constraints agencies will operate under in FY 2014, it is critical that agencies' use ofperformance awards be managed in a manner that is cost-effective and leads to increased employee performance and organizational results.

Consistent with the June 2011 guidance that placed aggregate spending caps on agency award spending for FYs 2011 and 2012, agencies must limit total spending on individual performance awards for career members ofthe Senior Executive Service (SES)1 and senior~level and

1 OPM's position, with which OMB and the Department ofJustice concur, is that SES performance awards are statutorily required because the statute providing for such awards specifies that "To encourage excellence in performance by career appointees, such awards shall be paid ...." 5 U.S.C. 5384. Agencies may, however, take budgetary considerations into account when deciding on the number and amount ofawards to be provided, as long as regulatory and statutory requirements are met. Among those requirements is that the amount ofany performance award that an agency ultimately decides to provide under section 5384 may not be less than five percent ofthe employee's rate ofbasic pay.

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scientific and professional (SUST) employees to no more than five percent oftheir respective aggregate salaries. Agencies must also limit award spending to no more than one percent oftotal aggregate salaries for non-SES/SUST performance awards plus individual contribution awards (e.g., special act, or spot) for all employees. In addition, agencies may not exceed FY 2012 . spending levels on either category ofawards. These award spending targets apply for awards paid during FY 2014. OPM and OMB will monitor awards data that agencies provide to OPM under the agencies' regular reporting procedures.

In addition, ifoverall Governmentwide discretionary funding levels are reduced below·the discretionary spending caps set forth in the Budget Control Act (the BCA) of2011 (Public Law 112-25), each agency shall further reduce awards spending pools for SES and non-SES by an amount proportional to the Governmentwide reduction made from the original BCA discretionary spending cap, as determined by OMB.

As final FY 2014 appropriations are not known nt this time, agencies should not spend at a rate that would preclude them from meeting these overall award spending targets by the end of the fiscal year. Agencies are encouraged to be prudent in their awards spending.

These budgetary limitations do not apply to political appointees. The President's August 3, 2010 memorandum freezing discretionary awards, bonuses, and similar payments for political appointees continues in effect until further notice. Agencies should continue to apply this freeze in accordance with OPM's guidance at htt;p://www.chcoc.gov!fransmittals/f ransmittalDetails.aspx7f ransmittalID=3060.

Covered Awards and Agencies

The budgetary limits specified in this memorandum apply to spending for individual monetary awards only, which include rating-based performance awards and individual special act awards. Other awards and incentives, such as group awards, referral bonuses, or suggestion/invention awards, are frozen at FY 2010 spending levels, except travel savings and foreign language awards. Time-off awards are not direct monetary expenditures and are not included in the one percent limit; however, agencies should continue to use time-off awards judiciously as they do represent a cost to the agency. Agencies are encouraged to leverage existing award programs to reward employees who identify improvements that result in documented, validated cost savings and productiVity improvements. An emphasis on awards ofthis nature is particularly important in light ofthe fiscal challenges the Federal Government is currently experiencing.

Recruitment, relocation, and retention incentives are not awards and are not covered by the budgetary limits. However, agencies should ensure that spending on these incentives in calendar year 2014 does not exceed calendar year 2010 levels. The quality step increase for General Schedule employees is another category ofrating-based payment that does not constitute an award under this guidance. These payments are not covered by the one percent budgetary limit; however, agencies may not exceed their FY 2010 spending levels on quality step increases granted during FY 2014. Agencies should be cautious in awarding these payments until final funding levels for FY 2014 are determined.

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The budgetary limits specified in this memorandum apply to all Executive branch agencies for all members ofthe SES as well as non-SES civilian employees, including SUST, wage grade and others. Agencies retain the flexibility, however, to apply these budgetary limits to awards programs for their employees to accommodate current budget constraints, provided that those flexibilities meet all legal requirements and agency contractual obligations.

Effective Date

The budgetary limits specified in this memorandum take effect for awards with effective dates during FY 2014. These awards limits and this policy shall remain in effect until further notice.

Additional Information

Agency Chief Human Capital Officers and/or Human Resources Directors should contact Stephen T. Shih, Deputy Associate Director for Senior Executive Services and Performance Management, in OPM's Employee Services, at (202) 606-8046 or performance­management@opm.gov, ifthey have any questions regarding this policy. Employees should contact their agency human resources offices for assistance.

cc: Chief Human Capital Officers Human Resources Directors