Federal agencies have been directed to limit spending on individual performance awards paid to federal employees in FY2014, according to guidance issued by the Office of Management and Budget (OMB) and the Office of Personnel Management (OPM),

Spending on awards for members of the Senior Executive Service (SES) and senior-level and scientific and professional (SL/ST) employees is capped at five percent of total aggregate salaries for each group. Total spending on performance awards to non-SES/SL/St employees will be limited to one percent of their total aggregate salaries, plus individual contribution awards.

The memo also states that spending levels for either category of awards cannot be higher than that paid in FY2012. This is consistent with that issued for FY2011 and FY2012.  Last year, when sequestration was triggered, agencies were directed to cancel almost all bonuses.

The guidance applies to individual money awards only, including rate-based performance awards and individual special act awards. Other awards, such as group awards, referral bonuses, and suggestion awards, are frozen at the FY2010 spending levels.

Although time-off awards are not subject to the one percent limit, the memo urges agencies to use these awards “judiciously.” In addition, the limit does not cover Quality Step Increases for General Schedule employees, recruitment, relocation, and retention incentives, but the memo directs agencies to ensure that they do not exceed the FY2010 spending levels for these awards.

If sequestration continues in FY2014, agency awards spending pools will be reduced by an amount proportional to the total government-wide sequestration cut, according to the guidance.

Awards and bonuses for political employees are not covered by this guidance, but remain frozen under a presidential memo issued in August, 2010.