The Obama administration has placed a cap on the money available for federal employee awards.

In a memorandum issued Friday, Office of Personnel Management Director John Berry and Jeffrey Zients, the administration’s chief performance officer and deputy director of the Office of Management and Budget, told agency heads that awards for employees at the senior executive level must not exceed 5 percent of an agency’s aggregate senior level salaries. Awards for all other workers, including those in General Schedule positions, must be no more than 1 percent of an agency’s aggregate salary for those positions. By law, senior level awards must be between 5 and 20 percent.

This memo closely follows a draft document the Federal Diary reported on last month. Friday’s memo says “the current fiscal environment, and the budget constraints” require awards to be carefully considered.

The memo indicates the dissatisfaction administration officials have with the current awards process: “In many cases, awards are broadly and inconsistently allocated, and some Federal employees have come to expect awards as part of their compensation. At the same time, recent survey results show that a large number of both agency managers and employees do not perceive the current employee performance management/award systems to be fair or accurately reflect differences in performance levels.”

The restrictions placed on awards apply to the overall amount an agency may spend and not the amount of awards to individuals. In many cases, for those not in senior-level positions, bonuses and awards already total less than 1 percent, so it is not clear what budgetary impact, if any, this policy will have.

This memo, however, along with one issued June 8 about within-grade pay increases does allow the administration to respond to Republican criticism about loopholes in the federal pay freeze implemented in January. The June 8 memo from Berry reminded agency heads that within-grade pay raises, also called step increases, must only be granted for an “acceptable level of competence,” which is defined as a performance rating of “fully successful.”

“The payment of within-grade increases should never be viewed as automatic or routine,” the June 8 memo said.

Awards to employees and step increases have been cited by Republicans who said the pay freeze did not go far enough. During a hearing on federal pay in March, Rep. Rep. Darrell Issa, chairman of the Committee on Oversight and Government Reform, said “The truth is, there will be pay increases throughout this [freeze] process.”

At the time, Berry responded by pointing out that awards amount to less than 2 percent of payroll and that even with awards and step increases, the freeze will save $28 billion over five years.