In another sign of how the federal government’s tight budget situation is affecting its employees, the Obama administration is considering plans to limit funding available for bonuses given for outstanding work.

A recently distributed draft document from the Office of Personnel Management and the Office of Management and Budget tells the heads of Executive Branch agencies to review a “guidance memorandum” that provides specific limits on aggregate awards for Senior Executive Service and non-SES personnel.

“For awards granted based on performance cycles ending in 2011 and 2012, agencies must reduce total spending on individual performance awards for members of the Senior Executive Service (SES) to no more than five percent of aggregate salaries,” the memo says. “Agencies must also reduce award spending for non-SES employees to no more than one percent of their aggregate salaries during calendar year 2012, with significant progress toward that level in 2011.”

Agency heads were instructed to provide any comments on the draft by May 3.

The memo from OPM Director John Berry and Jeffery Zients, OMB’s deputy director for management and the government’s chief performance officer, indicates the administration’s dissatisfaction with the current awards program.

“In many cases, awards are broadly and inconsistently allocated and some Federal employees have come to expect awards as entitlements,” Berry and Zients wrote.

“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. For example, the latest Federal Employee Viewpoint Survey showed that only 36 percent of employees believe that differences in performance are recognized and only 43 percent believe that awards reflect how well employees perform their jobs.”

The policy outlined in the memo would not limit the number of individuals who could receive awards, nor the amount of any single bonus. “However, one way to reach these budgetary targets… is addressing the amounts granted for specific awards,” the memo says.

Some agencies could have a conflict between the award limits outlined in the memo and award amounts negotiated with labor unions. The memo reminds agency heads “to honor all collective bargaining obligations and discuss agency award programs in agency labor-management forums.”

The policy would not directly affect time-off awards, but Berry and Zients advised agencies “to refrain from significantly increasing time off awards in light of the restrictions on cash awards.”

A spokeswoman for OMB said “We do not comment on policies that are under review and deliberation and not yet final.”