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Attachment 1

2006 ANNUAL REVIEW INSTRUCTIONS

1. General

The Office of Personnel Management (OPM) is conducting the 2006 review of special rates authorized by 5 U.S.C. 5305 and 5 CFR part 530, subpart C. OPM authorizes special rates for specific occupations, grades, and locations to alleviate existing or likely recruitment or retention problems. The special rate schedules applicable to your agency are listed in the index in Attachment 2. Please note that the six schedules for information technology (IT) employees, tables 999A-999F, are listed in the third row of the index and are applicable to all agencies employing General Schedule (GS) employees even though they are not shown in the individual agency listings.

2. Deadline

Agencies must submit all annual review materials to OPM by October 13, 2006, unless an extension is approved by OPM. Please send your materials to the Pay and Leave Administration Group by fax at (202) 606-0824 or mail to the following address:

Office of Personnel Management
Division for Strategic Human Resources Policy
Center for Pay and Performance Policy
Attn: Special Rates Annual Review Team
1900 E Street, NW., Room 7H31
Washington, DC 20415-8200

3. Agency Reviews

In conducting the annual review of special rates, OPM relies on the reviews conducted by agencies employing special rate employees. In conducting their reviews, agencies must consider the circumstances and factors consistent with OPM's regulations at 5 CFR 530.304 and 530.306.

4. Adjustments Equal to the GS Adjustment

Agencies do not need to submit any documentation to request adjustments in special rate schedules equal to the GS percentage adjustment in January 2007. As permitted by the new regulations in 5 CFR 530.307, special rate schedules will automatically be adjusted in January 2007 by the GS percentage adjustment without any agency action, unless OPM specifically approves an alternative adjustment. This means that fixed-dollar special rate supplements will be adjusted by approximately the same percentage as the GS adjustment, while fixed-percentage supplements will remain at the same percentage amount.

5. Adjustments Greater Than or Less Than the GS Adjustment

Agencies requesting special rate adjustments that are greater than the January 2007 GS annual pay adjustment must submit additional data in accordance with OPM regulations and the instructions on OPM Form 1397. Staffing data should cover the period from May 29, 2005, through May 27, 2006, if possible. (A copy of OPM Form 1397 is available at http://www.opm.gov/oca/compmemo/2000/ssrpage.asp.)

Agencies requesting special rate adjustments that are less than the January 2007 GS annual pay adjustment must submit a written justification and any applicable supporting data in accordance with OPM regulations and the instructions on OPM Form 1397. Such a request may be appropriate if you have determined that special rates are no longer necessary to prevent a serious staffing problem and you wish to phase out special rates by freezing or reducing the special rate supplement. (See also "Requests for Reduction or Termination of Special Rate Schedules.")

6. Requests for Reduction or Termination of Special Rate Schedules

Agencies may request to reduce or terminate special rate schedules or grades of a schedule as part of the annual review process. These types of requests trigger the pay retention provisions of 5 U.S.C. 5363 for eligible employees. Therefore, OPM advises agencies to consider phasing out special rates that are no longer necessary by freezing or reducing special rate supplements without reducing the corresponding special rate. (A special rate supplement may be reduced without triggering pay retention as along as the employee's underlying base rate is increased simultaneously by a sufficient amount to prevent the employee's special rate from being reduced. In other words, if the increase in the underlying base rate exceeds the reduction in the special rate supplement, the employee will still have a net increase in his or her special rate.)

Termination of a special rate schedule may be appropriate if there are no longer any employees covered by that schedule. In this case, the affected agency or agencies should provide OPM Form 1397 indicating the termination of the schedule and that there are no covered employees.

Any agency contemplating a request for reduction or termination of a special rate schedule with covered employees should contact OPM's Pay and Leave Administration Group by telephone at (202) 606-2858 or by email at pay-performance-policy@opm.gov for additional information and instructions.

7. Certification

The head of each agency must document and certify his or her recommendation for any special rate adjustment not equal to the January 2007 GS annual pay adjustment or to terminate a special rate schedule and submit such certification to OPM on OPM Form 1397. A headquarters official designated to act on behalf of the head of the agency or department may sign the certification.

If there are substantial differences among agency recommendations for a particular special rate schedule, OPM will designate a lead agency (usually the agency with the largest number of covered employees). OPM generally will be the lead agency for worldwide/nationwide schedules. The lead agency will be responsible for obtaining a consensus from the major agencies involved and submitting a final recommendation for that schedule. We expect each agency covered by a schedule to cooperate with the designated lead agency in attempting to reach a consensus.

8. New Requests Not Part of the Annual Review

Agencies should indicate how requests to establish a new special rate schedule submitted between now and December 31, 2006, relate to the anticipated January 2007 GS adjustment.

9. Effective Date

Adjustments in special rate schedules resulting from this year's annual review will take effect on the same date as the general GS adjustment-i.e., the first day of the first applicable pay period beginning on or after January 1, 2007. If there is no general GS adjustment in 2007, the amount of the special rate adjustment will be zero, unless an adjustment greater than the GS adjustment is requested and approved. Any such adjustment will take effect on the first day of the first applicable pay period beginning on or after January 1, 2007. However, OPM may authorize new schedules and changes in existing special rate schedules at any time during the year if all the required criteria for establishing or adjusting special rates are met.

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