Federal employees didn’t like it when their pay was frozen for two years in January, but they were relieved that the freeze did not hit the bonuses the government hands out for exceptional work.

If you just heard a clunk, it’s the sound of the other shoe dropping.

As we blogged Friday, the Obama administration is considering plans to limit funding for performance awards. A recently distributed draft document from the Office of Personnel Management and the Office of Management and Budget 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 to heads of executive branch agencies 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.”

Federal workers may not be happy about this proposed policy, but for some it won’t make much of a difference. Their agencies weren’t providing much more award money than the draft guidance outlines anyway. Those agencies providing less than the guidance suggest would have to stay at their current levels.

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.”

Colleen M. Kelley, president of the National Treasury Employees Union, said her organization “is very concerned about this proposal, which undercuts precisely the performance management principle that everyone seems to agree on — namely, that exceptional performance should be recognized and rewarded.”

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.

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

Awards can provide a nice chunk of change for workers whose base salaries are stuck in time. Nearly 80 percent of career Senior Executive Service members received awards in fiscal year 2009, and they averaged about $14,800. Currently, awards to SES members range from 5 percent to 20 percent of an individual’s salary, with an agency allowed to spend no more than 10 percent of the prior year’s payroll on awards.

William L. Bransford, general counsel of the Senior Executive Association, said limiting the awards could discourage high-level General Schedule employees from seeking SES positions because, in some cases, they may already make as much or more than the executives.

“You’re going to need some recruiting tools,” Bransford said.

In the 2006 fiscal year, 1.3 million awards were given out across all levels, according to OPM data. The average award was $969, which in aggregate amounted to just a smidgen more than 1 percent of total salaries.

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.”

In some cases, the collective bargaining agreements set awards at levels greater than the 1 percent for non-SES employees proposed in the draft guidance. For example, NTEU contracts call for Bureau of Public Debt awards to be 2.5 percent of aggregate salaries; Internal Revenue Service awards are pegged at 1.75 percent. The draft policy would not change things at Customs and Border Protection and the Department of Health and Human Services, where the negotiated award levels are 1 percent.

“We expect these contract provisions to be honored,” Kelley said.

Guilty plea in HUD case

Reginald B. Hayes, the former director of employee and career development at the Department of Housing and Urban Development, faces up to a year in prison after pleading guilty last week to a misdemeanor conflict of interest offense.

Hayes, 61, of Dumfries, “admitted that he received money from a company that obtained contracts from HUD in return for his assistance — sometimes in his official capacity at HUD — in obtaining those contracts,” according to a news release from the office of Ronald C. Machen Jr., U.S. attorney for the District.

William J. Thorpe, a former physical security specialist at the Department of Homeland Security, also pleaded guilty to misdemeanor conflict of interest last week. The 39-year-old Fredericksburg, Va., resident could get up to a year in prison when he is sentenced in September.

Thorpe used sensitive information he obtained as a DHS employee to help a private company, Total Security Products Corporation, submit the lowest bid for a DHS contract, prosecutors said. The bid was just $1.21 lower than the agency’s target price of $98,129.13.

When the scam was discovered, the second-lowest bidder was awarded the contract.

Staff writer Eric Yoder contributed to this column.