The bill would establish a five-year pilot program to test a performance-based pay structure for eligible federal employees, focusing on those at GS-11 through GS-15 levels and certain senior-level positions where performance can be clearly measured. It defines performance metrics and requires a standardized evaluation system plus accompanying training.
Participation is capped: each Executive agency must ensure that between 1% and 10% of its eligible workforce participates, with an opt-out option for national security or public safety reasons, provided the agency submits a written justification to the Director. The bill also creates a tiered pay framework with bonuses and non-monetary benefits for Tier 1 and imposes restrictions on other Title 5 pay adjustments during the program.
It requires annual reporting and oversight, and explicitly states that no new funds are appropriated; existing agency resources must be used.
At a Glance
What It Does
During 180 days after enactment, the Director launches a five-year pilot that pays participating employees based on annual performance metrics. The program uses a three-tier pay structure (Tier 1: +15%, Tier 2: no change, Tier 3: -15% with training) and allows bonuses and non-monetary benefits for Tier 1.
Who It Affects
Participating Executive agencies and eligible employees (GS-11–GS-15 and certain senior-level roles), along with agency HR offices responsible for implementing metrics and evaluations; federal service customers may see changes in service delivery.
Why It Matters
It tests whether performance-based pay can raise productivity and accountability within a constrained federal budget while maintaining service quality and fairness, with formal oversight and data collection to inform future policy.
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What This Bill Actually Does
The bill designs a structured, time-limited experiment to reward or sanction employee performance through pay adjustments. It creates a defined pool of eligible employees (GS-11 to GS-15 and certain senior-level roles) and requires agencies to set annual performance metrics tailored to core functions.
An evaluation system and training requirements are established so employees know what counts and how they will be assessed.
Participation is restricted by agency: each Executive agency must have between 1% and 10% of eligible staff participate, and agencies can opt out for security or public safety reasons, but must justify the decision in writing to the Director. The pay structure is tiered: Tier 1 receives a 15% pay increase for exceeding metrics, Tier 2 receives no pay change for meeting metrics, and Tier 3 faces a 15% pay reduction plus opportunities for development.
Tier 1 employees may receive bonuses and non-monetary benefits, such as flexible scheduling or tech upgrades. The program explicitly prevents participating staff from receiving other Title 5 pay adjustments or bonuses during the pilot.
Governance and oversight are central: agencies must report annually on productivity, cost savings, and employee satisfaction, and the Director, along with the Office of Management and Budget, will assess outcomes and adjust as needed. After five years, the Comptroller General and the Director will conduct a final review and deliver findings to Congress.
Funding is limited to existing appropriations; no new funds are authorized for the program.
The Five Things You Need to Know
The pilot runs for five years, beginning 180 days after enactment, to test performance-based pay for participating federal employees.
Eligible employees include GS-11 to GS-15 staff and certain senior-level roles with clearly measurable performance criteria.
Pay adjustments follow a three-tier system: Tier 1 +15% for exceeds, Tier 2 no change for meets, Tier 3 -15% plus training for below expectations.
Agencies must establish annual performance metrics, implement a standardized evaluation system, and offer training and feedback sessions; Tier 1 may receive bonuses and non-monetary benefits.
No new funds are authorized; existing agency resources fund the pilot, with annual reporting to the Director and a final evaluation by GAO and the Director after termination.
Section-by-Section Breakdown
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Short Title
This section designates the bill as the Federal Employee Performance and Accountability Act of 2025, establishing the intent and scope for the pilot program.
Definitions
Key terms are defined, including Director (OMB Director), Eligible Employee (GS-11–GS-15 and certain senior-level roles with measurable criteria), Executive Agency, Participating Agency, Participating Employee, and Performance Metrics (productivity, quality, timeliness) that are tailored to each agency.
Pilot Program Eligibility and Scope
The Director must implement a five-year pilot beginning 180 days after enactment to test a performance-based pay structure. Each agency must ensure 1–10% of eligible staff participate, with an opt-out option for national security or public safety reasons backed by written justification to the Director.
Performance Measurement and Accountability
Participating agencies must set annual metrics tied to core functions and public service delivery and implement a standardized evaluation system with periodic reviews. Agencies must provide training and quarterly feedback to participating employees to support performance improvement.
Incentive Pay Structure and Non-Monetary Benefits
The pilot uses a tiered pay system: Tier 1 receives a 15% pay increase for exceeding metrics; Tier 2 receives no pay change for meeting metrics; Tier 3 faces a 15% pay reduction plus required training for not meeting metrics. Bonuses and non-monetary benefits may be offered to Tier 1 employees, and participating staff are not eligible for other Title 5 pay adjustments during the program.
Reporting and Accountability
Participating agencies must submit annual productivity reports to the Director, including cost savings, efficiency gains, and qualitative outcomes. The Director and OMB will review reports and may recommend adjustments; a final evaluation by the Comptroller General and the Director occurs after program termination.
Funding
No new funds are authorized. Existing agency funds, plus the Office of Management and Budget and GAO resources, shall cover the program’s activities.
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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
- Participating employees who exceed metrics (Tier 1) receive higher pay and potential bonuses/benefits, aligning rewards with performance.
- Agency HR and program offices responsible for implementing measurement systems gain experience and authority in performance management.
- Agency program managers and leadership benefit from clearer performance data and accountability frameworks.
- Public service users may experience faster, more reliable service outcomes due to productivity gains.
- OMB and Congress receive structured annual productivity data to inform oversight and policy decisions.
Who Bears the Cost
- Participating employees who underperform (Tier 3) face a pay reduction and must engage in development opportunities.
- Participating agencies bear the cost of establishing metrics, evaluation systems, training, data collection, and increased administrative oversight within existing budgets.
- There is potential opportunity cost for agencies reallocating resources to measurement and reporting rather than program delivery.
Key Issues
The Core Tension
The central trade-off is whether to pursue meaningful productivity gains through pay-for-performance in a diverse federal workforce within strict budget constraints, while maintaining fairness, preventing gaming, and ensuring consistent implementation across agencies.
The bill relies on measurable, objective metrics to drive performance across diverse federal roles, which raises concerns about cross-agency comparability and potential gaming of metrics. The opt-out provision for national security or public safety creates carve-outs that could lead to uneven participation and fairness questions.
The no-new-funds constraint may strain agency capacity to implement training and evaluation infrastructure, possibly diluting the pilot’s impact. Additionally, reducing pay (Tier 3) or excluding staff from pay adjustments during the program could affect morale, retention, and recruitment in affected groups.
Finally, the success of the pilot hinges on the quality and comparability of metrics, data integrity, and the willingness of agencies to invest in sustained, rigorous evaluation.
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