---
kind: "section"
citation: "5 U.S.C. § 5406"
title: "5"
title_heading: "Government Organization and Employees"
number: "5406"
heading: "Agency plan"
release: "119-102"
url: "https://uscodex.org/usc/5/5406"
units:
  - "Part III — Employees"
  - "Subpart D — Pay and Allowances"
  - "Chapter 54 — Human Capital Performance Fund"
---

# §5406. Agency plan

- (a) To be eligible for consideration by the [Office](/usc/5/5402.md?p=3) for an allocation under this section, an [agency](/usc/5/5402.md?p=1) shall—
  - (1) develop a plan that incorporates the following elements:
    - (A) adherence to merit principles set forth in [section 2301](/usc/5/2301.md);
    - (B) a fair, credible, and transparent [employee](/usc/5/5402.md?p=2) performance appraisal system;
    - (C) a link between the pay-for-performance system, the [employee](/usc/5/5402.md?p=2) performance appraisal system, and the [agency](/usc/5/5402.md?p=1)’s strategic plan;
    - (D) a means for ensuring [employee](/usc/5/5402.md?p=2) involvement in the design and implementation of the system;
    - (E) adequate training and retraining for supervisors, managers, and [employees](/usc/5/5402.md?p=2) in the implementation and operation of the pay-for-performance system;
    - (F) a process for ensuring ongoing performance feedback and dialogue between supervisors, managers, and [employees](/usc/5/5402.md?p=2) throughout the appraisal period, and setting timetables for review;
    - (G) effective safeguards to ensure that the management of the system is fair and equitable and based on [employee](/usc/5/5402.md?p=2) performance; and
    - (H) a means for ensuring that adequate [agency](/usc/5/5402.md?p=1) resources are allocated for the design, implementation, and administration of the pay-for-performance system;
  - (2) upon approval, receive an allocation of funding from the [Office](/usc/5/5402.md?p=3);
  - (3) make payments to individual [employees](/usc/5/5402.md?p=2) in accordance with the [agency](/usc/5/5402.md?p=1)’s approved plan; and
  - (4) provide such information to the [Office](/usc/5/5402.md?p=3) regarding payments made and use of funds received under this section as the [Office](/usc/5/5402.md?p=3) may specify.
- (b) The [Office](/usc/5/5402.md?p=3), in consultation with the Chief Human Capital Officers [Council](/usc/5/8471.md?p=2), shall review and approve an [agency](/usc/5/5402.md?p=1)’s plan before the [agency](/usc/5/5402.md?p=1) is eligible to receive an allocation of funding from the [Office](/usc/5/5402.md?p=3).
- (c) The Chief Human Capital Officers [Council](/usc/5/8471.md?p=2) shall include in its annual report to Congress under section 1303(d) of the Homeland Security Act of 2002 an evaluation of the formulation and implementation of [agency](/usc/5/5402.md?p=1) performance management systems.

## Source credit

(Added Pub. L. 108–136, div. A, title XI, § 1129(a), Nov. 24, 2003, 117 Stat. 1644.)

## Notes

### Editorial Notes

### References in Text

Section 1303(d) of the Homeland Security Act of 2002, referred to in subsec. (c), is section 1303(d) of Pub. L. 107–296, which is set out as a note under section 1401 of this title.

### Prior Provisions

A prior section 5406, added Pub. L. 98–615, title II, § 201(a), Nov. 8, 1984, 98 Stat. 3211; amended Pub. L. 101–103, § 4, Sept. 30, 1989, 103 Stat. 671; Pub. L. 102–22, § 2(b), Mar. 28, 1991, 105 Stat. 71, related to performance awards, prior to repeal by Pub. L. 103–89, § 3(a)(1), (c), Sept. 30, 1993, 107 Stat. 981, 983, eff. Nov. 1, 1993.