The Bush administration's proposal to overhaul federal pay rules would move the government closer to private-sector models by allowing annual raises to vary according to occupation and market demand and by linking raises to job performance.

The administration announced its proposed pay overhaul in news briefings Monday and yesterday and in closed-door meetings with federal unions and in Congress.

The legislative proposal comes as the departments of Defense and Homeland Security prepare to launch performance-based pay systems and leave the decades-old General Schedule.

The administration's government-wide proposal applies to more than 1 million employees: those covered by the General Schedule (mostly white-collar), those covered by the Federal Wage System (mostly blue-collar) and those who have been designated as "senior level" or "scientific and professional."

Under current practice, the president recommends a pay raise in his annual budget request, and Congress usually makes the final decision. In recent years, Congress has decided to give roughly equal pay increases to the civil service and the military -- a policy known as "pay parity." The raise goes to white-collar and blue-collar employees, regardless of grade or occupation, with a small portion that varies based on geographic area.

The White House and Congress would continue to set an average raise, but the amount passed on to individual employees could vary more than in the past. Raises would be influenced by how much is paid for similar work outside the government and how employees scored on performance ratings.

The administration offered an illustration involving four people making the same salary, working in different occupations and in different locations and performing at different levels. All were being paid $70,000.

The employee with the highest performance rating, "outstanding," received a $2,100 performance increase; a national market adjustment of $770, based on occupation and salary scale; and a local market adjustment of $1,400, based on occupation, salary scale and location. The total pay increase came to $4,270 -- a 6.1 percent raise.

An employee who was rated as "exceeds expectations" received a smaller performance increase, $1,400. The employee also received $1,470 in a national market adjustment and $350 in a local market adjustment. The total increase amounted to $3,220, a 4.6 percent raise.

The third employee was rated "fully successful" and received a $700 performance increase. When national and local market adjustments were added, the employee ended up with a $3,080 increase, for an overall 4.4 percent raise.

The last employee was deemed "less than fully successful" and, as a result, received no performance raise and was ineligible for the market adjustments. His salary stayed the same.

In this scenario, each performance rating level is worth $700. Whether that amount would serve to further motivate employees probably cannot be answered.

But Clay Johnson III, who is leading the administration's pay initiative as deputy director for management at the Office of Management and Budget, said yesterday that linking pay raises to job ratings should drive federal managers to pay more attention to their employees and the quality of their work.

"This requires managers to be managers," Johnson told reporters.

He said the administration has no timetable for the proposed bill, which is drawing opposition from federal unions, but hopes to win passage before this session of Congress ends in January 2007.

Pay Raise Moving in Senate

A Senate Appropriations subcommittee yesterday proposed providing federal employees with a 3.1 percent pay raise in 2006. The House approved a 3.1 percent raise last month, up from the 2.3 percent recommended by the White House.

Congress appears on track to provide the civil service with a raise comparable to the military raise. Sen. Barbara A. Mikulski (D-Md.), a member of the Appropriations Committee, noted that civilians and the military often work side by side and said that "they all earn and deserve" the same pay adjustment.

E-mail: barrs@washpost.com