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5 U.S.C. § 5406 — Agency plan
Federal law — U.S. Code and appendices · legal_authorities
**(a)** To be eligible for consideration by the Office for an allocation under this section, an agency shall—
(1) develop a plan that incorporates the following elements:
(A) adherence to merit principles set forth in section 2301;
(B) a fair, credible, and transparent employee performance appraisal system;
(C) a link between the pay-for-performance system, the employee performance appraisal system, and the agency’s strategic plan;
(D) a means for ensuring employee involvement in the design and implementation of the system;
(E) adequate training and retraining for supervisors, managers, and employees in the implementation and operation of the pay-for-performance system;
(F) a process for ensuring ongoing performance feedback and dialogue between supervisors, managers, and employees throughout the appraisal period, and setting timetables for review;
(G) effective safeguards to ensure that the management of the system is fair and equitable and based on employee performance; and
(H) a means for ensuring that adequate agency resources are allocated for the design, implementation, and administration of the pay-for-performance system;
(2) upon approval, receive an allocation of funding from the Office;
(3) make payments to individual employees in accordance with the agency’s approved plan; and
(4) provide such information to the Office regarding payments made and use of funds received under this section as the Office may specify.
**(b)** The Office, in consultation with the Chief Human Capital Officers Council, shall review and approve an agency’s plan before the agency is eligible to receive an allocation of funding from the Office.
**(c)** The Chief Human Capital Officers Council shall include in its annual report to Congress under section 1303
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Source file: Laws/federal/codes/united-states-code/title-5/section-5406-agency-plan--be43c672c6.md
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Source location: Title 5, Chapter 54, § 5406; chapter-054-human-capital-performance-fund.md
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**(a)** To be eligible for consideration by the Office for an allocation under this section, an agency shall—
(1) develop a plan that incorporates the following elements:
(A) adherence to merit principles set forth in section 2301;
(B) a fair, credible, and transparent employee performance appraisal system;
(C) a link between the pay-for-performance system, the employee performance appraisal system, and the agency’s strategic plan;
(D) a means for ensuring employee involvement in the design and implementation of the system;
(E) adequate training and retraining for supervisors, managers, and employees in the implementation and operation of the pay-for-performance system;
(F) a process for ensuring ongoing performance feedback and dialogue between supervisors, managers, and employees throughout the appraisal period, and setting timetables for review;
(G) effective safeguards to ensure that the management of the system is fair and equitable and based on employee performance; and
(H) a means for ensuring that adequate agency resources are allocated for the design, implementation, and administration of the pay-for-performance system;
(2) upon approval, receive an allocation of funding from the Office;
(3) make payments to individual employees in accordance with the agency’s approved plan; and
(4) provide such information to the Office regarding payments made and use of funds received under this section as the Office may specify.
**(b)** The Office, in consultation with the Chief Human Capital Officers Council, shall review and approve an agency’s plan before the agency is eligible to receive an allocation of funding from the Office.
**(c)** The Chief Human Capital Officers Council shall include in its annual report to Congress under section 1303(d) of the Homeland Security Act of 2002 an evaluation of the formulation and implementation of agency performance management systems.
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Federal law — U.S. Code and appendices · legal_authorities
The head of each agency referred to under paragraphs (1) and (2) of [section 901(b) of title 31](https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title31-section901/b&num=0&edition=prelim) shall appoint or designate a Chief Human Capital Officer, who shall—
(1) advise and assist the head of the agency and other agency officials in carrying out the agency’s responsibilities for selecting, developing, training, and managing a high-quality, productive workforce in accordance with merit system principles;
(2) implement the rules and regulations of the President and the Office of Personnel Management and the laws governing the civil service within the agency; and
(3) carry out such functions as the primary duty of the Chief Human Capital Officer.
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Federal law — U.S. Code and appendices · legal_authorities
Page 633
TITLE 5—GOVERNMENT ORGANIZATION AND EMPLOYEES
§ 5406
formance pay, as defined by regulation, may not
exceed the rate of basic pay for Executive Level
IV in any year.
(3) Any human capital performance payment
provided to an employee from the Fund is in ad-
dition to any annual pay adjustment (under sec-
tion 5303 or any similar provision of law) and
any locality-based comparability payment that
may apply.
(c) No monies from the Human Capital Per-
formance Fund may be used to pay for a new po-
sition, for other performance-related payments,
or for recruitment or retention incentives paid
under sections 5753 and 5754.
(d)(1) An agency may finance initial human
capital performance payments using monies
from the Human Capital Performance Fund, as
available.
(2) In subsequent years, continuation of pre-
viously awarded human capital performance
payments shall be financed from other agency
funds available for salaries and expenses.
(Added Pub. L. 108–136, div. A, title XI, § 1129(a),
Nov. 24, 2003, 117 Stat. 1643.)
Editorial Notes
REFERENCES IN TEXT
Executive Level IV, referred to in subsec. (b)(2), is set
out in section 5315 of this title.
PRIOR PROVISIONS
A prior section 5404, added Pub. L. 95–454, title V,
§ 501, Oct. 13, 1978, 92 Stat. 1183; amended Pub. L. 98–615,
title II, § 201(a), Nov. 8, 1984, 98 Stat. 3210; Pub. L.
101–103, § 3(a), Sept. 30, 1989, 103 Stat. 670, related to
merit increases, prior to repeal by Pub. L. 103–89,
§ 3(a)(1), (c), Sept. 30, 1993, 107 Stat. 981, 983, eff. Nov. 1,
1993.
§ 5405. Regulations
The Office shall issue such regulations as it
determines to be necessary for the administra-
tion of this chapter, including the administra-
tion of the Fund. The Office’s regulations shall
include criteria governing
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