---
kind: "section"
citation: "5 U.S.C. § 5406"
title: "5"
title_heading: "Government Organization and Employees"
number: "5406"
heading: "Agency plan"
release: "119-102"
date: "2026-07-12"
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](/usc/5/4701.md?p=a-3) for consideration by the [Office](/usc/5/5402.md?p=3) for an allocation under this section, an [agency](/usc/5/3132.md?p=a-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/5/4701.md?p=a-2) performance appraisal [system](/usc/5/8401.md?p=29);
    - (C) a link between the [pay](/usc/5/7511.md?p=a-4)-for-performance [system](/usc/5/8401.md?p=29), the [employee](/usc/5/4701.md?p=a-2) performance appraisal [system](/usc/5/8401.md?p=29), and the [agency](/usc/5/3132.md?p=a-1)’s strategic plan;
    - (D) a means for ensuring [employee](/usc/5/4701.md?p=a-2) involvement in the design and implementation of the [system](/usc/5/8401.md?p=29);
    - (E) adequate [training](/usc/5/4101.md?p=4) and retraining for [supervisors](/usc/5/7103.md?p=a-10), managers, and [employees](/usc/5/4701.md?p=a-2) in the implementation and operation of the [pay](/usc/5/7511.md?p=a-4)-for-performance [system](/usc/5/8401.md?p=29);
    - (F) a process for ensuring ongoing performance feedback and dialogue between [supervisors](/usc/5/7103.md?p=a-10), managers, and [employees](/usc/5/4701.md?p=a-2) throughout the appraisal period, and setting timetables for review;
    - (G) effective safeguards to ensure that the management of the [system](/usc/5/8401.md?p=29) is fair and equitable and based on [employee](/usc/5/4701.md?p=a-2) performance; and
    - (H) a means for ensuring that adequate [agency](/usc/5/3132.md?p=a-1) resources are allocated for the design, implementation, and [administration](/usc/5/9801.md?p=1) of the [pay](/usc/5/7511.md?p=a-4)-for-performance [system](/usc/5/8401.md?p=29);
  - (2) upon approval, receive an allocation of funding from the [Office](/usc/5/5402.md?p=3);
  - (3) make payments to individual [employees](/usc/5/4701.md?p=a-2) in accordance with the [agency](/usc/5/3132.md?p=a-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](/usc/5/8401.md?p=6) 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, shall review and approve an [agency](/usc/5/3132.md?p=a-1)’s plan before the [agency](/usc/5/3132.md?p=a-1) is [eligible](/usc/5/4701.md?p=a-3) to receive an allocation of funding from the [Office](/usc/5/5402.md?p=3).
- (c) The Chief Human Capital Officers Council 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/5/3132.md?p=a-1) performance management [systems](/usc/5/8401.md?p=29).

## 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.