Obama weighs cap on federal employee bonuses

Federal employees who were concerned about President Barack Obama’s decision last November to freeze their pay for the next two years might have something new to worry about.

According to an undated draft memo obtained by the Washington Post, senior Obama administration officials are directing agency leaders to cap bonuses for Senior Executive Service employees at 5 percent of aggregate salary and non-SES employees at 1 percent.

John Berry, director of the Office of Personnel Management, and Jeffrey Zients, chief performance officer and deputy director for management at the Office of Management and Budget, wrote the memo on restricting individual performance awards in 2011 and 2012, citing the need to “manage budget resources carefully.”

The memo states that when Obama made the decision to freeze employee pay, he asked OPM and OMB to evaluate the cost and effectiveness of the government’s system for performance awards and incentives. The review identified a number of “concerning trends,” including employees viewing awards as entitlements, Berry and Zients wrote.

The revelation troubles federal employee groups, according to a report by Charles Clark in Government Executive.

William Bransford, general counsel of the Senior Executives Association, said in that article, "our concern is that it not last more than two years." Also in the GovExec article, John Gage, president of the American Federation of Government Employees, said "The whole deficit reduction thing is like lemmings over the cliff, and I think cutting working people's pay, even if it's SES, is wrong."

The draft memo, which the Post published May 17, also appears to override the policy Berry outlined in a Dec. 30, 2010, memo. In that memo, Berry said the president’s two-year pay freeze would not extend to “performance awards and bonuses; recruitment, relocation, and retention incentives; and premium payments such as overtime pay.”

OMB has so far declined to comment on the leaked memo. But as a number of legislative proposals targeting the size and pay of the federal workforce await congressional action, could the proposed cap on bonuses further damage feds' morale?

What are your thoughts on capping employee bonuses? Do you think the federal government’s performance award system is fair? Why or why not?