The White House on Thursday ordered limits on the payment of monetary awards and incentives to federal workers, while cautioning agencies about shifting money among accounts to soften the impact of sequestration.


An Office of Management and Budget memo to agencies follows one issued just before sequestration hit a month ago that told them to apply “increased scrutiny” to hiring new personnel and making investments in training, conferences and travel, among other steps. That memo said “discretionary monetary awards” should not be issued while sequestration is in place, unless issuance of such awards is legally required.

The new memo states that such awards “include annual performance awards, group awards, and special act cash awards, which comprise a sizeable majority of awards and incentives provided by the Federal Government to employees. Until further notice, agencies should not issue such monetary awards from sequestered accounts unless agency counsel determines the awards are legally required. Legal requirements include compliance with provisions in collective bargaining agreements governing awards.”

It adds that certain other types of incentives are not considered discretionary monetary awards, including performance based pay step increases; travel incentives recognizing employee savings on official travel; foreign language awards for mission-critical language needs; recruitment, retention, and relocation incentives; student loan repayments; and time-off awards.

“While these items are permitted, in light of current budgetary constraints, they should be used only on a highly limited basis and in circumstances where they are necessary and critical to maintaining the agency’s mission,” the memo says.

It also reminds agencies that under prior policy, spending on performance-based step increases and on recruitment, retention and relocation incentives should not exceed 2010 levels. Also under earlier policy, various types of awards and bonuses may not be paid to political appointees.

A budget plan passed by the House late in March meanwhile seeks repeal of the student loan repayment program.

The OMB memo adds that despite sequestration’s across the board nature, “some agencies may have a limited ability to realign funds to protect mission priorities” and says they “should continue to examine whether the use of these authorities would allow the agency to minimize the negative impact of sequestration on core mission priorities.”

Some agencies also have reserve funds or carryover balances that they might tap, it notes.

However, it says that agencies must bear in mind their long-terms needs, including maintaining their facilities and making information technology and other investments to support their operations. Agencies also should protect “program integrity and fraud mitigation activities,” it says.