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Office of the Director
United States
Office of Personnel Management
Washington, DC 20415-1000


Linda M. Springer

2005 Annual Review of Special Rates
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This memorandum announces the 2005 annual review of special rates authorized under 5 U.S.C. 5305 and 5 CFR part 530, subpart C. The Office of Personnel Management (OPM) authorizes special rates for specific occupations, grades, and locations to alleviate existing or likely significant recruitment or retention problems. Under 5 CFR 530.307(a), OPM may, at any time, conduct general or targeted reviews of established special rates to determine whether they should be increased, decreased, or discontinued based on staffing considerations. In addition, an authorized agency official may request OPM conduct a review of one or more special rate schedules. As part of OPM's 2005 annual review, we invite you to request a strategic review of specific special rate schedules covering your employees.

OPM Review and Adjustment of Special Rates

On May 31, 2005, OPM issued interim regulations implementing section 301 of the Federal Workforce Flexibility Act of 2004 (Public Law 108-411, October 30, 2004), which amends provisions in 5 U.S.C. chapter 53 relating to the administration of special rates, locality rates, and retained rates. (See Under ยง 530.304(c), a special rate is computed by adding a special rate supplement (i.e., a fixed dollar amount or fixed percentage amount) to an employee's underlying base rate (i.e., a General Schedule (GS) rate or law enforcement officer (LEO) special base rate).

At the time of a GS annual pay adjustment, special rate employees will receive the same adjustment in their underlying GS rate (or LEO special base rate) as other GS employees. However, OPM must make a separate determination as to whether to adjust (increase or decrease) or discontinue a special rate supplement, taking into account the circumstances and factors that led to establishing the special rate schedule. Based on the adjustment of a special rate supplement, the corresponding special rate (i.e., underlying base rate plus supplement) may be increased, reduced, or discontinued.

This year, we are using an exception-based approach for the annual review, which is permitted under the new special rate law and regulations. Under this approach, agencies do not need to submit a certification form for each special rate schedule. Instead, agencies must submit information to OPM only if they are requesting a special rate adjustment greater than or less than the January 2006 GS annual pay adjustment under 5 U.S.C. 5303 or similar provision of law. OPM will review such agency submissions and make determinations regarding the appropriate adjustment in the affected special rate schedules. All other special rate schedules will be adjusted by the same percentage as the January 2006 GS pay adjustment.

Attachment 1 provides detailed instructions for requesting an adjustment in a special rate supplement that is greater than or less than the January 2006 GS annual pay adjustment and other information about the new exception-based approach. Attachment 2 provides an index of the current special rate schedules by agency. Agencies must submit requests to OPM to adjust (increase or decrease) or discontinue a special rate supplement by October 15, 2005 .

Terminated Special Rates

Under 5 U.S.C. 5305(h) and 5 CFR 530.303(d), an employee's entitlement to a special rate is eliminated if the employee is entitled to a higher rate of basic pay, such as a locality rate under 5 U.S.C. 5304. As a result of the January 2006 pay adjustment, some special rate schedules may be terminated because higher locality rates apply at all steps of each covered grade or certain grades, or steps of a special rate schedule may be discontinued because higher locality rates apply. The termination of special rates will not result in a loss in pay for any covered employees, since all affected employees will receive the higher locality rate to which they are otherwise entitled. OPM will notify agencies of any terminated special rates when we announce the results of the 2005 annual review of special rates.

Discontinued or Decreased Special Rates

When a special rate applicable to a position is discontinued or decreased by OPM, and the employee holding the position is placed in a non-special rate position or a lower-paid special rate position, the employee is entitled to pay retention under 5 CFR 536.301(a)(8). Agencies must follow the rules in 5 CFR 536.304 to determine the employee's pay retention entitlement. (See also the Grade and Pay Retention Examples at

IT Special Rates

During the 2004 annual review of special rates, the Chief Human Capital Officers (CHCO) Council requested OPM review information technology (IT) special rates in light of the changes in the IT labor market over the last couple of years. OPM convened a working group of agency human resources (HR) and IT officials, analyzed available market recruiting/retention data, and held discussions with the CHCO Council, the Chief Information Officers (CIO) Council, and others in the Federal HR and IT communities regarding pay adjustments for IT employees. We are continuing our review and have been collecting more detailed information from agencies on the recruitment, retention, and pay of IT employees. We will share the results of our review with the CHCO Council later this year and consult with the CHCO Council and the CIO Council before making any determinations with respect to IT special rates and adjustments for CY 2006.

In January 2006, we will amend IT special rate tables 999A-999F to delete the former GS-334 Computer Specialist series designation. The IT special rate schedules will continue to cover the GS-854 Computer Engineer, GS-1550 Computer Scientist, and GS-2210 Information Technology Management occupational series. The job family position classification standard for administrative work in the Information Technology Group, GS- 2200, issued in May 2001, canceled the GS-334 Computer Specialist series. By January 2006, agencies should have completed their reclassification actions and classified affected IT positions in the appropriate series. E mployees whose positions continue to be classified under the former GS-334 computer specialist series designation in January 2006 will not lose pay, but will be entitled to pay retention under 5 CFR 536.301(a)(8), except for those employees who may not receive a retained rate under 5 CFR 536.102(b), (c), or (e).

We ask agency headquarters to bring any problems encountered in implementing the annual review process to our attention as they arise. You may contact the Pay and Leave Administration Group by telephone at (202) 606-2858, by fax at (202) 606-0824, or by email at

cc: Human Resources Directors

Attachment 1
Attachment 2 Our Mission is to Recruit, Retain and Honor a World-Class Workforce to Serve the American People.
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