Friday, July 21, 2023: How Hiring Works
The Federal civilian workforce consists of three categories of service:
- the Competitive Service,
- the Excepted Service, and
- the Senior Executive Service.
Different laws and regulations govern each class of service (and its particular employment system(s)).
The Competitive Service consists of all civil service positions in the Executive Branch of the federal Government with some exceptions. Four categories of appointments comprise the Competitive Service:
- those subject to delegated examining procedures (meaning that, the agency may decide how to hire its employees, whether by test, interview, demonstration of performance, or all of the above);
- those filled through promotion and internal placement (i.e., merit promotion) procedures;
- those filled on a non-competitive basis; and
- those filled under direct hire authority.
The proposed regulations OPM published on Friday impact positions filled in the Competitive Service using “delegated examining procedures” (i.e., the first category). These proposed changes would also affect how agencies select candidates for “Excepted Service” appointments (i.e., political appointees, et al).
The Director of OPM has delegated to agency heads the authority the President had originally delegated to the OPM Director to conduct competitive examinations for positions in the Competitive Service. Agencies with such “delegated examining authority” may fill competitive civil service jobs with:
- applicants from outside the federal workforce;
- federal employees who do not have competitive service status (i.e., temporary or limited term employees, and individuals who hold or held an excepted service position which did not provide for conversion to the competitive service); or
- federal employees with competitive service status ( i.e., career or career-conditional employees).
Agencies use “delegated examining” (also called “competitive examining”) procedures to fill positions in the competitive service for which any U.S. citizen may apply. “Competitive examining” supports federal merit system principles by promoting recruitment from all segments of society, fair and open competition among job-seekers, and selection based on an applicant’s competencies or knowledge, skills, and abilities, OPM explained in the preamble to the Proposed Rule. OPM maintains oversight of its delegated examining authority to ensure agencies apply their delegated authority in accordance with the merit system principles set out in 5 U.S.C. §2301.
There are three stages to the competitive service federal hiring process:
- the assessment process ( i.e., the rating and ranking of applicants and application of veterans’ preference);
- the certification process ( i.e., the process through which applicants are listed on a certificate of eligible candidates (“Certificate of Eligibles”) in the order of their assessed scores, adjusted for veterans’ preference); and
- the selection process ( i.e., the process for choosing among applicants based on their numerical rankings in accordance with veterans’ preference requirements).
The “Rule of Three” (requiring the hiring from among the best-qualified candidates)
Traditionally, when a federal agency hires for a position in the “Competitive Service,” the agency applies during its final selection process what is known as the “Rule of Three.” Under this “rule,” applicants for federal jobs in the Competitive Service are assigned numerical scores (including veterans’ preference points, if applicable, for preference-eligible veterans), listed in rank order, and then considered for selection.
The Rule of Three requires that each selection must be made from among the highest three candidates on the Certificate of Eligibles with the condition that a hiring official cannot select a non-preference eligible candidate over a preference-eligible veteran ( i.e., an individual who served in the U.S. Armed Forces, or a relative of the individual, and meets certain statutory criteria, making the individual eligible for an advantage in federal hiring over those who did not serve or do not meet the statutory criteria with an equal or higher-ranking candidate. Alternatively, the agency may pass over or object to the preference-eligible veteran if the agency follows certain formal procedures).
Under the Rule of Three, preference-eligible candidates (or “eligibles”) are given 0, 5, or 10 points, which the agency then adds to their passing score on an assessment. Individuals with 0 points added still have an advantage over non-preference eligible candidates with an equal or lower score. (See 5 U.S.C. § 3318(a); 5 CFR § 332). Numerical ranking is appropriate when a hiring agency needs to make granular distinctions between applicants; i.e., an individual with a score of 97 (out of 100 possible points) is deemed more qualified than an applicant with a score of 96 or lower.
As federal jobs increased in complexity, the “Rule of Three” process eventually lost favor, with hiring managers frequently passing on all three candidates in favor of a new hiring solicitation. Some hiring managers criticized the Rule saying that limiting the number to three sometimes excluded candidates who would be the best “fit” for the job even though they had not made the cutoff into the final three candidates based on points.
Category Rating (the precursor to the new Proposed Rule)
During the George W. Bush Administration, OPM provided a new option in 2004, known as “Category Rating.” That process called for the federal agencies to place groups of qualified applicants into two or more pre-defined “quality categories.” The agency would also list preference-eligible veterans above non-preference-eligible veterans in each assessed category. The federal government deemed Category Rating appropriate when the hiring agency did not need to make such fine distinctions among applicants as agencies made when using numerical ranking procedures. This option increased the hiring manager’s “flexibility” to assess applicants by allowing federal hiring managers to choose from a broader array of candidates. However, it made it harder to compare applicants rated within the same category.
In May 2010, then-President Barack Obama issued a Memorandum making Category Rating the default federal civilian employee hiring system.
Proposed New System Would Eliminate “Rule of Three” in Favor of “Rule of Many”
The 2019 NDAA (at Title XI, Section 1107; codified at 5 U.S.C. §§ 3317-3319) eliminated the Rule of Three and asked OPM to devise a method to retain its numerical scoring system while allowing hiring managers to select from a list of more than three candidates. OPM’s Proposed Rule published on Friday would implement a new system designed to combine the granularity of the Rule of Three with the expanded talent pool of Category Ranking.
The Proposed Rule, to be called the “Rule of Many,” is a numerical rating procedure that encompasses the advantages of both Rule of Three and Category Rating procedures, allowing the hiring agency to make finer distinctions among applicants based on their relative qualifications for the position being filled, while at the same time expanding the range of candidates from which a hiring manager may make a selection, according to OPM. Under the Rule of Many, a hiring manager is not limited to choosing from among only the three highest applicants to fill each vacancy.
The 2019 NDAA did not change other requirements of delegated examining including public notice and the application of veterans’ preference in competitive examining. Veterans are still granted preference points under the Rule of Many numerical rating procedures and continue to be entitled to selection preference over non-preference eligible candidates with the same or a lower numerical score unless the requirements for passing over a preference eligible are satisfied.
How Does the Rule of Three Differ from the Rule of Many?
The Rule of Many differs from the Rule of Three in that, at the outset of the hiring process, a federal agency must choose from between four methods to determine the final list of qualified candidates (i.e., the Certificate of Eligibles). Agencies may:
- set a minimum cut-off score based on the assessment(s) used, supported by job analysis data. This referral mechanism involves establishing a cut-off, or minimum, score using test measurement experts knowledgeable about the assessment(s) used;
- elect to set a cut-off score “based on business necessity,” in which agencies apply the minimum score earlier in the hiring process and that agencies can use to determine which candidates advance to the interview stage of the hiring process. This method could be a means “to keep the number of applicants manageable for costly or labor-intensive assessments such as structured interviews,” OPM stated. This way of referring applicants involves establishing a cut-off, or minimum, score that results in identifying an appropriate number of applicants to move forward in the hiring process based on the business needs of the agency, taking into consideration the resources available. This mechanism is also useful when test measurement expertise is not available, OPM pointed out;
- use a set number of the highest-ranked eligible applicants, for example, the top 10 names. This referral mechanism involves establishing a number of applicants to refer from the top of the ranked list of applicants; or
- use a percentage of the highest-ranked eligible applicants; for example, referring the top 10 percent for selection. This referral mechanism involves establishing a percentage of applicants to refer from the top of the ranked list of applicants.
When using a set number of applicants or top percentage of eligible applicants, all applicants with the same score as the last applicant in the cut will also be referred, OPM explained. For example, if using the top 10 eligible applicants and the 10th applicant has a score of 96.0, then all applicants scoring 96.0 will be referred.
Each agency may choose which of the four methodologies it will use to certify a sufficient number of candidates to allow them to consider at least three candidates for each vacancy. In selecting which of the four mechanisms is appropriate, agencies should consider the number of positions to be filled, the assessment(s) used, historical applicant data, current labor market conditions, and other factors appropriate for the hiring action. The hiring agency must also decide the methodology it will use before announcing the vacancy and must identify that methodology in the job opportunity announcement. Additionally, each agency must clearly document the approach it will use to examine case files and later make its decision-making process available to third-party review and susceptible to reconstruction.
How Will Selection Procedures Using Numerical Rating Work?
As provided in 5 U.S.C. §3318(a), OPM is proposing to revise its regulations at 5 CFR §332.404 to change selection procedures from requiring that each selection must be made from the top three candidates (i.e., the Rule of Three) to state that a selecting official may select any eligible candidate on the Certificate of Eligibles. Examples of a Certificate of Eligibles ranked by numerical ratings and veterans’ preference under the Proposed Rule of Many are available in the preamble of the proposal here.
Excepted Service Appointments
Appointments in the excepted service are made in the same manner and under the same conditions required for the competitive service. In addition to applying the Rule of Many to the excepted service, OPM is proposing to revise the procedures for accepting, rating, and arranging applications in 5 CFR § 302 to include the option of using the Category Rating procedures as outlined in 5 U.S.C. §3319.