December 17, 2003
The President's Pay Agent
Washington, D.C. 20415-1000
MEMORANDUM FOR HEADS OF EXECUTIVE DEPARTMENTS AND AGENCIES
SUBJECT: Extension of Locality Payments to Non-General Schedule Employees
The President's Pay Agent has decided to extend the 2004 locality-based comparability payments to certain categories of non-General
Schedule employees. Except for the categories of employees listed below, the locality-based comparability payments are extended to the
same Governmentwide and single-agency categories that were authorized to receive the 2003 locality payments. As required by law, the 2003
locality payments will remain in effect through the last day of the last pay period commencing during calendar year 2003.
Section 1125 of the "National Defense Authorization Act for Fiscal Year 2004" (Public Law 108-136, November 24, 2003) (the "Act"),
establishes a new pay-for-performance system for the Senior Executive Service (SES). The newly revised 5 U.S.C. 5382 replaces the current
six-level SES pay system with a single open-range pay system, with only the minimum and maximum rates of pay set by law. The new SES
rate range becomes effective on the first day of the first pay period beginning on or after January 1, 2004 (January 11, 2004, for most
employees).
(See CPM 2003-19 for information on the new SES pay system.)
Additional amendments made by the Act affect the extension of locality-based comparability payments to certain categories of positions,
as follows:
The newly amended 5 U.S.C. 5304(h)(1)(D)(v) prohibits extending locality-based comparability payments to (1) SES positions under
5 U.S.C. 3132 and (2) Federal Bureau of Investigation (FBI) and Drug Enforcement Administration (DEA) SES positions under 5 U.S.C. 3151.
As a result, beginning on the first day of the first applicable pay period beginning on or after January 1, 2004, members of the SES and
FBI/DEA SES may not receive any locality-based comparability payments under 5 U.S.C. 5304.
The newly amended 5 U.S.C. 5304(h)(1)(D) prohibits the extension of locality pay to any position that has a rate of basic pay
higher than the rate for level IV of the Executive Schedule. As a result of the amendments made by the Act to 5 U.S.C. 5382, the maximum
rate of basic pay for members of the Senior Foreign Service (SFS) will increase to a rate above level IV beginning on the first day of
the first applicable pay period beginning on or after January 1, 2004. Therefore, SFS members may no longer receive an extension of locality-based
comparability payments under 5 U.S.C. 5304.
It is imperative that agencies notify the Office of Personnel Management (OPM) immediately if the maximum rate of basic pay (excluding
any locality payments) for any single-agency category of positions to which the President's Pay Agent extended locality pay in 2003 (Attachment 2)
will exceed the rate for level IV of the Executive Schedule in January 2004 as a result of the amendments made by the Act in 5 U.S.C. 5382.
Such categories of employees may no longer receive locality-based comparability payments under the authority of 5 U.S.C. 5304.
The newly amended 5 U.S.C. 5304(h)(1)(D)(vi) prohibits the extension of locality-based comparability payments to a position in a
system that is equivalent to positions in the SES system under 5 U.S.C. 3132, as determined by the President's Pay Agent.
It is imperative that agencies notify OPM immediately if they have any positions to which the President's Pay Agent extended
locality payments in 2003 (Attachment 2) that are equivalent to SES positions under 5 U.S.C. 3132. We advise agencies to use the definition
of "Senior Executive Service position" in 5 U.S.C. 3132(a)(2) to identify such positions. The President's Pay Agent will make the final decision
on whether identified categories of positions will be eligible for locality payments in 2004.
Locality payments will be extended to the Governmentwide categories in Attachment 1 with no further action required by any agency.
Under 5 U.S.C. 5304(h)(2)(A), locality payments may be extended to single-agency categories of employees only at the request of
the head of an Executive agency. Therefore, locality payments will be extended to the single-agency categories in Attachment 2 without
any further action required by any agency unless (1) the head of an Executive agency requests that an extension not be re-approved or
(2) the President's Pay Agent determines that the category is no longer eligible because of the amendments made by the Act.
Please contact Brenda Roberts in OPM's Strategic Human Resources Policy Division, at (202) 606-2858 or by email to pay-performance-policy@opm.gov,
by December 29, 2003, if you believe a single-agency category of positions is no longer eligible for a locality pay extension or if you do
not want locality payments extended in 2004 to a single-agency employee category in your agency for which such payments were previously authorized
by the Pay Agent. Please note that a policy decision not to extend locality payments in 2004 to a category of employees means that those employees
would no longer be entitled to any locality payment. All employees in a given locality pay area who receive locality payments in 2004 must receive
the same percentage as received by GS employees in that area.
New requests for extending locality-based comparability payments to single-agency categories of non-GS employees should be submitted by the
agency head or his or her designee to the following address by December 29, 2003, to ensure that the extension takes effect beginning on
the first day of the first applicable pay period beginning on or after January 1, 2004:
The Honorable Kay Coles James
Director
Office of Personnel Management
1900 E Street NW.
Washington, DC 20415-1000
In your request, please include the following information:
(1) The legal authority under which the employees are paid.
(2) The types of employees to be paid.
(3) The number of employees to be covered by the extension.
New requests for extending locality-based comparability payments to single-agency categories should be directed to the OPM Human Capital
Officer for your agency. Employees should contact their agency human resources offices to obtain information on locality pay entitlements.
For the President's Pay Agent:
Kay Coles James, Director
Office of Personnel Management
Attachments
cc: Chief Human Capital Officers
Human Resources Directors
