The Federal Employee Performance and Accountability Act of 2025 authorizes a five‑year pilot, run by the Office of Management and Budget (OMB), to test a performance‑based pay structure for a limited group of federal employees. The pilot aims to test whether linking compensation and non‑monetary benefits to measurable annual performance improves productivity, accountability, and employee satisfaction in public service.
The bill requires participating agencies to set objective, role‑specific performance metrics, provide training and feedback, and report quantitative and qualitative outcomes to OMB. The pilot is self‑funded from existing agency resources and concludes with assessments from OMB and the Comptroller General for Congress to review.
At a Glance
What It Does
The bill creates a five‑year, OMB‑administered pilot that applies a tiered pay adjustment system to a limited share of eligible federal employees based on annual evaluations and agency‑specific metrics. Participating agencies must provide training, implement standardized evaluations, and submit annual productivity and qualitative reports to OMB.
Who It Affects
The pilot targets eligible employees at mid‑to‑senior professional grades and the agencies that employ them — specifically HR, supervisors, finance officers, and OMB/GAO staff who will design, audit, and assess the experiment. Agency heads decide which employees participate within a 1–10% participation band and may opt out for security or safety reasons with written justification to OMB.
Why It Matters
If the pilot shows measurable gains, it could reshape parts of federal pay administration by demonstrating a model that trades uniform Title 5 step/award mechanisms for performance‑tiered adjustments and targeted non‑monetary incentives. Conversely, weak design or implementation risks unfair pay outcomes, morale problems, and legal or labor‑relations challenges.
More articles like this one.
A weekly email with all the latest developments on this topic.
What This Bill Actually Does
The bill tasks the Director of OMB with standing up a five‑year pilot that launches 180 days after enactment. OMB sets the broad framework, while agency heads nominate a bounded share of eligible employees to participate.
Agencies must translate the framework into annual, role‑specific performance metrics—productivity, quality, and timeliness are the enumerated categories—and administer an OMB‑standardized evaluation system with periodic reviews.
Participating employees receive an introductory training course and quarterly feedback. The pay mechanics are operationalized through a three‑tier classification each year: employees who significantly exceed metrics qualify for the top tier, those who meet metrics comprise the middle, and those who fail to meet metrics fall into the bottom tier.
Agencies can award discretionary bonuses and non‑monetary benefits to higher tiers, and must provide training and development to lower‑tier employees.The statute limits how participation interacts with existing pay law: employees in the pilot are ineligible for routine Title 5 pay adjustments, step increases, and certain awards for service performed while in the Program. OMB receives annual agency productivity reports and issues recommendations; OMB also prepares annual assessments for Congress.
One year after the pilot ends, OMB and the Comptroller General jointly report to Congress on productivity, budget impacts, and engagement to inform any future policy decisions.
The Five Things You Need to Know
Eligible population is limited to Executive Branch employees at GS‑11 through GS‑15 and senior‑level positions above GS‑15 with clearly measurable duties.
Each participating agency must enroll at least 1% but no more than 10% of its eligible employees; agency heads may opt out entirely for national security or public safety reasons with written justification to OMB.
Pay adjustments operate on three tiers: up to +10% for employees who significantly exceed metrics, no increase for those who meet metrics, and an automatic −10% pay reduction for employees who fail to meet metrics, coupled with required training.
Participating employees are ineligible, while in the Program, for statutory Title 5 pay adjustments, step increases, and specified bonuses or awards tied to traditional pay systems.
No new appropriations are authorized; OMB, GAO, and agencies must use existing funds to implement, monitor, and evaluate the pilot, and must submit annual reports plus a final GAO/OMB review.
Section-by-Section Breakdown
Every bill we cover gets an analysis of its key sections.
Short title
Names the statute the ‘‘Federal Employee Performance and Accountability Act of 2025.’
Definitions and eligible roles
Defines key terms used throughout the Act, including ‘‘Director’’ (OMB), ‘‘eligible employee’’ (GS‑11 through GS‑15 and senior‑level positions), ‘‘performance metrics’’ (productivity, quality, timeliness), and other terms used to delimit scope. These definitions limit the pilot to mid‑to‑senior professional work with measurable outputs and set the policy frame for later provisions.
Pilot scope, timing, and participation rules
Directs OMB to run the five‑year pilot beginning 180 days after enactment and requires each Executive agency to enroll between 1% and 10% of its eligible employees. Agency heads retain a narrow opt‑out for national security or public safety reasons but must provide written justification to OMB — a transparency hook that also centralizes oversight of participation decisions.
Performance measurement and evaluation system
Requires agencies to adopt annual, job‑specific performance metrics and to use a standardized, objective evaluation system established by OMB. Agencies must provide an introductory training class and quarterly feedback to participants, embedding a continuous‑improvement loop intended to reduce implementation drift and support employees who must meet new targets.
Tiered pay, bonuses, non‑monetary benefits, and Title 5 interactions
Specifies the annual compensation mechanics: a tier 1 (exceeds expectations) increase of up to 10%, tier 2 (meets expectations) no base pay change, and tier 3 (below expectations) a mandatory 10% reduction coupled with remedial training. Agency heads may grant discretionary bonuses and non‑monetary perks. Crucially, the provision displaces certain Title 5 pay authorities for service performed while an employee is in the pilot — a structural departure from standard federal pay adjustments.
Reporting, OMB assessment, and final GAO review
Mandates annual agency reports to OMB on quantitative and qualitative outcomes and requires OMB to assess the pilot each year and send reports to Congress. After the pilot ends, OMB and the Comptroller General must jointly assess overall impact and submit a final report. Those reporting requirements create a paper trail for legislative or administrative follow‑up and allow for independent audit and evaluation.
Funding constraints
States that no additional appropriations are authorized and requires OMB, GAO, and agencies to implement the pilot using existing funds. This imposes an implicit budgetary cap that may limit scale, staffing, or analytical resources for the experiment.
This bill is one of many.
Codify tracks hundreds of bills on Government across all five countries.
Explore Government in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- High‑performing eligible employees — those who ‘‘significantly exceed’’ metrics can receive up to a 10% pay increase and discretionary bonuses or perks, giving them faster, performance‑linked rewards than standard Title 5 paths.
- Agency leaders and program managers — gain a tool to align compensation with measurable outcomes and to incentivize productivity in targeted mission areas where outputs are clear and quantifiable.
- OMB and GAO analysts and evaluators — receive new data and a centralized mandate to design, monitor, and assess a testbed for modernized pay practices, raising their influence over future federal HR policy.
- Taxpayers and service recipients (potential) — if agencies deliver verifiable efficiency gains and quality improvements, the pilot could translate into lower costs per unit of service or faster service delivery in the tested pockets.
Who Bears the Cost
- Participating employees who miss metrics — the statute requires an automatic 10% pay cut for tier 3 outcomes, which is an immediate financial penalty and potential career setback.
- Agency HR, finance, and supervisory staff — must design selection criteria, implement OMB’s standardized evaluation system, track metrics, deliver training, and manage appeals or disputes with no additional appropriations.
- Unions and collective bargaining relationships — the pilot sidesteps some traditional Title 5 compensation mechanisms and may create conflicts or grievances where negotiated procedures or protections exist.
- Agencies’ program budgets — bonuses, training, and administrative costs must be absorbed from existing funds, potentially diverting resources from operations or constraining the scale and rigor of evaluation activities.
Key Issues
The Core Tension
The central tension is between accountability through targeted, performance‑linked pay and the civil service commitment to uniform, rules‑based compensation: stronger monetary incentives can improve productivity where outputs are clear, but they risk inequitable outcomes, weakened procedural protections, and perverse incentives when measurement is imperfect — a trade‑off the pilot aims to test but cannot fully resolve in isolation.
The bill creates a classic measurement dilemma: productivity, quality, and timeliness are sensible anchors, but roles vary and not all important public service outcomes are easily quantified. Agencies must design metrics that resist gaming, avoid tunnel‑vision incentives (for example, prioritizing throughput over accuracy), and remain legally defensible against claims of arbitrariness.
The statute mitigates some risk by requiring OMB‑standardized evaluations and training, but it leaves considerable discretion to agency heads on selection, bonus awards, and non‑monetary benefits — a decentralization that will produce uneven implementation across agencies.
The pay mechanics have distributional and labor‑relations consequences. Excluding pilot service from Title 5 adjustments and awarding automatic cuts for poor performance creates sharp incentives but may run into statutory or negotiated protections and could damage morale.
The funding clause — no new appropriations — forces agencies to reallocate resources to run and measure the pilot, which may limit analytical rigor or the availability of meaningful bonuses and supports. Finally, the pilot’s small scale (max 10% per agency) and short horizon could produce noisy results that are hard to generalize; policymakers deciding whether to scale must confront implementation fidelity, sample size, and selection biases.
Try it yourself.
Ask a question in plain English, or pick a topic below. Results in seconds.