Defense and Homeland Security Execs Light on Pay Scale

By Stephen Barr
Wednesday, July 19, 2006

Pay for federal executives at two key departments -- Defense and Homeland Security -- lagged most other agencies in fiscal 2005, a recently released report shows.

While average basic pay for members of the Senior Executive Service was $147,751 at Defense and $149,667 at Homeland Security, across government, SES members received an average of $151,266, according to the report.

At some agencies, SES members made even higher salaries. For example, average executive pay was $157,060 at the Agriculture Department; $156,863 at the Small Business Administration; and $153,339 at the Labor Department.

Members of the Senior Executive Service typically manage the day-to-day operations of the government or serve as some of its leading scientific and technical experts.

The differences in SES pay reflect the Bush administration's effort to create a pay-for-performance system. Agencies that win certification for establishing such performance-based systems can pay their executives higher salaries.

The Pentagon has trailed other agencies in winning certification, one of the reasons it paid lower salaries to its executives in 2005. It has been cleared by the Office of Personnel Management to offer performance-based pay starting this year.

Under new pay rules approved by Congress, federal executives can be paid up to $165,200 in base pay and no more than $212,100, the vice president's salary, as a combination of pay and bonuses. The new rules do not guarantee an annual raise to executives and they no longer receive a locality adjustment given to other federal employees.

The OPM released the 2005 salary data on federal executives in a brief report to agency heads. In a memo, OPM Director Linda M. Springer said, "The data indicate that federal agencies are taking seriously the requirement to develop rigorous appraisal systems and to make meaningful distinctions in performance ratings and pay."

The report also shows that bonuses to executives have not increased significantly, from an average of $12,444 in 2002 to $13,814 in 2005. But two-thirds of career senior executives received bonuses in 2005, compared with about half in 2002.

The data suggest that some agencies may be turning to bonuses as a way to reward executives or to offset their loss of locality pay adjustments.

For example, the Defense Department was below average in salary, by about $3,500, but about $970 above the average in bonuses. The SBA, on the other hand, provided one of the highest salaries but fell about $4,000 below the average bonus size.

Most agencies ensured that the majority of their executives received a bonus, the data show. The Veterans Affairs Department, for example, paid an average of $16,713 in bonuses to 75.4 percent of its executives; Agriculture paid $15,945 to 83.7 percent of its executives; Defense paid $14,788 to 85.3 percent of its executives; and Homeland Security paid $14,935, on average, to 49.4 percent of its executives.

Carol A. Bonosaro , president of the Senior Executives Association, cautioned against drawing too many conclusions from the OPM report, noting that averages often do not provide insight into agency practices.

The OPM counted 6,834 career and political appointees in the Senior Executive Service in 2005. Of the 6,410 who received job ratings, 5,906 were career federal executives. One of the largest concentrations of executives is at the Defense Department, with about 1,300.

Under the new pay system, agencies have adopted four-level and five-level rating systems to score executives' job performance. Government-wide, from 2004 to 2005, executives ranked at the highest level dropped 16 percent, according to the OPM.

"It really is unfortunate that they define progress as a decrease in those rated at the highest level," Bonosaro said.

An OPM official said the new system better rewards "exceptional members" of the Senior Executive Service. "The decline in ratings reflects an improved reporting system, not decreased performance," said Nancy H. Kichak , an OPM associate director.

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