Yellow Jacket InitiativeBy E. Lawrence Anderson, Yellow Jacket Initiative
On Monday, September 21, the Office of Personnel Management told agencies how many of their employees may receive the two highest performance ratings for fiscal year 2026. The answer is no more than 40 percent of each covered group. OPM says this is the first time distribution caps will apply to the career General Schedule workforce. For FY 2025, OPM had only recommended a 30 percent limit for career senior executives and senior professionals; the memo says that recommendation "was not a mandate."
What the memo directs. Ratings at Level 4 and Level 5 combined may not exceed 40 percent of each covered population: career Senior Executive Service members, career senior professionals, and career and career-conditional GS employees. OPM cites its appraisal rules at 5 CFR 430.208(c) and 430.305(d). The count is based on employees whose appraisal period ends September 30, 2026, and agencies must round down. There is no cap on any other rating level.
Who is left out.
- Offices of Inspector General, Wage Grade employees, noncareer SES, and limited-term or emergency SES.
- Schedule C and Schedule G appointees.
- Small groups: five or fewer career SES or senior professionals, or ten or fewer GS employees, for that group only.
- Ratings raised to Level 4 or 5 through a proceeding permitted by law or regulation.
- Bargaining-unit employees whose contract prohibits standardized distribution, until that contract's term ends.
The memo says it is to be implemented "consistent with applicable collective bargaining obligations and subject to the availability of appropriations."
Money follows the ratings. OPM says at least 60 percent of each agency's SES, senior-professional and GS bonus pools "should be set aside" for Level 4 and Level 5 performers. Its GS ranges: a minimum of 7 percent of basic pay at Level 5, a minimum of 4 percent at Level 4, and a maximum of 3 percent at Level 3. Agencies may give a Fully Successful employee no award at all. Agencies "must ensure" that anyone rated below Fully Successful receives a performance improvement plan and is not eligible for a performance-based award.
A separate pool for Schedule Policy/Career. Agencies with Schedule Policy/Career employees must set aside a separate bonus pool for them. That requirement comes from Executive Order 14410 (June 3, 2026), not from the memo. OPM recommends adding "at least an additional 0.5 percentage point" to those employees' awards, for example from 7 percent to 7.5 percent.
Waivers and deadlines. An agency may ask to raise its cap by up to 10 points, and never above 50 percent. To qualify it must show that it exceeded its FY 2026 targets on a majority of the performance indicators in its published plans, and that it has a documented calibration process. Requests are due Friday, October 30, 2026. The memo says: "Extensions will not be granted." OPM will notify agencies of its decision by Friday, November 20. Agency closeout reports are also due October 30.
The strongest case for the memo. OPM's July 7 appraisal rule cites a 2016 GAO report that found 99 percent of permanent non-SES employees rated at or above Fully Successful. The memo argues that inflated ratings "carry no meaningful signal" and spread awards thin. It calls 40 percent "a ceiling, not a target," and says it set the figure above the FY 2025 recommendation so that the first GS cap would be "achievable." These are OPM's claims.
Where it fits. OPM's July 7 rule (91 FR 41521) gave OPM authority to set a standardized distribution of ratings that agencies must apply. This memo is the first number set under it. On October 19, OPM's rule ending the 52-week time-in-grade wait (91 FR 65887) called the two rules "complementary rather than in tension," and said that "nothing in this rule makes a rating of record either necessary or sufficient for promotion" (our note).
Update as of October 23. The memo's footnote 3 says that if OPM's proposed senior-professional appraisal rule is finalized, "that rule would apply." OPM and OMB published that rule as final on October 19 (91 FR 65904), effective November 18, 2026 (The Rating Curve Moves Up a Grade). How it interacts with the FY 2026 cap for senior professionals is not stated in either document.
What is not established. How agencies actually rate for FY 2026 will not be known until they report to OPM in calendar 2027. The memo is dated September 21; it is new to this series, not new news, and press coverage was not checked. We have not read OPM's two July 24, 2026 guidance documents on calibration and collective bargaining, which the memo cites.
Source: OPM, Memorandum, "FY 2026 Standardized Distribution of Rating Levels and FY 2026 Performance Awards Guidance for Federal Employees" (Sept. 21, 2026), Scott Kupor, Director: opm.gov. First read October 20 and re-read October 23, 2026. Also cited: 91 FR 41521 (July 7, 2026), 91 FR 65887 and 91 FR 65904 (Oct. 19, 2026).
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