This report provides an update on issues affecting federal managers. As always, I encourage you to visit www.fedmanagers.org on a regular basis for more information on these and other matters.

Also, be sure to look for the monthly FMA Grassroots Update where we offer links to action letters and FMA-PAC matters we do not address in the Washington Report. The grassroots newsletter is sent exclusively to non-governmental email addresses to avoid any Hatch Act violations. If you are not receiving it, contact the national office to provide your non-governmental email address.

Please feel free to provide feedback any time by emailing Greg Stanford at gstanford@fedmanagers.org, or by calling the National Office at (703) 683-8700. Thank you for your membership in FMA. It’s an honor to represent your interests before Congress and the administration.

On August 26, 2026, President Donald Trump formalized an alternative compensation plan calling for a pay freeze for most civilian federal employees for 2027. The alternative compensation plan also prevents locality pay increases for feds in the upcoming year. Federal employees received a 1 percent raise in 2026.

FMA National President Linda Lentjes expressed disappointment in the decision, noting the raise federal law enforcement and the uniformed military are slated to receive.

"To be clear, we fully support the raise for the military and the 3.8 percent raise for federal law enforcement, but strongly argue federal employees deserve parity," Lentjes said. "Federal managers swear the same oath to the Constitution and dutifully spend every day maintaining and operating the military enterprise that protects our national security, processing tax returns and Social Security payments, caring for our veterans, protecting our environment and food supply, and countless other services on behalf of all Americans. They deserve to be recognized and compensated fairly."

In September, FMA National President Linda Lentjes sent two letters -- to Department of the Navy Acting Secretary Hung Cao and Secretary of War Pete Hegseth -- expressing our ongoing concerns with salary inversion at the Department of the Navy and potentially elsewhere across the Department of Defense. Lentjes collaborated with FMA members at the four public shipyards and other naval installations on this effort.

This problem is significant, worsening, and increasingly affecting the Navy’s ability to retain and support its management workforce. In recent years, Federal Wage System (FWS) and Wage Grade (WG) employees have received major boosts in pay. We recognize that these increases are an important and well-deserved gain for FWS employees, and we support their receiving fair compensation for their work.

On September 30 the Office of Personnel Management (OPM) announced the 2027 Federal Employees Health Benefits (FEHB) Program rates. The open season for health benefits, dental and vision insurance, and flexible spending accounts will be November 9 through December 14, 2026.

The average enrollee share increase for 2027 will be 10.9 percent. This is a 1.4 percent decrease from last year’s increase in the enrollee share (12.3 percent in 2026). The overall average FEHB premium increase will be 9.3 percent. The new health premiums go into effect in January 2027.

President Donald Trump signed a continuing resolution (CR) into law on September 2, a measure that will fund the federal government at Fiscal Year 2026 levels through December 11. The House of Representatives approved the bill the day before by a vote of 370-48 and the Senate passed it by a vote of 90-6 prior to its August recess. The passage and signing of the CR averted a government shutdown at least through November’s midterm elections and into mid-December. Fiscal Year 2027 began on October 1.

None of the twelve traditional full-year appropriations bills have been signed into law. This stopgap ensures federal agencies and departments will remain funded and gives lawmakers running for the 120^th Congress an opportunity to stay in their states and districts to campaign.

Among the unfinished business Congress needs to address is completion of the Fiscal Year 2027 National Defense Authorization Act (NDAA). While the House passed its version in July by a vote of 216-212, the Senate must pass its version before the two bills can then be reconciled.

“Our national security depends on a ready, capable, and well-equipped fighting force backed by a robust and innovative defense industrial base. The FY27 NDAA delivers that,” House Armed Services Committee Chairman Mike Rogers (R-AL) said in a statement. "Peace Through Strength begins long before the battlefield – it is forged in America’s factories, depots, and shipyards. After years of underinvestment, the FY27 NDAA revitalizes America’s defense industrial base and gives our military the capacity to deter our adversaries and carry out President Trump’s Peace Through Strength Agenda."

The Office of Personnel Management (OPM) is directing federal agencies to manage all hiring actions within 80 calendar days. Its guidance outlined in a September 30 memorandum pairs that target with requirements for leadership oversight and regular reporting.

The 80-day figure comes from Executive Order 14170, "Reforming the Federal Hiring Process and Restoring Merit to Government Service," which President Donald Trump signed on his first day in office. The order led to the Merit Hiring Plan, which directs agencies to hire federal employees in under 80 days. According to OPM data, the governmentwide average time-to-hire in fiscal year 2024 was 101 days. Hiring reform, including reducing time-to-hire, and an emphasis on skills-based hiring is part of FMA’s policy agenda for 2026 and we broadly support the effort.

On September 21, 2026, the Office of Personnel Management (OPM) issued guidance setting a 40 percent cap on Level 4 and Level 5 ratings across General Schedule (GS) employees, and career Senior Executive Service (SES) members for fiscal year 2026. OPM described 2026 as the first year distribution caps will apply to career GS employees, and said it was setting an initial cap meant to be achievable and consistent.

“Effective performance management requires that ratings reflect genuine, differentiated individual contributions rather than inflated assessments or organizational inertia,” wrote OPM Director Scott Kupor in the memo. “Inflated ratings carry no meaningful signal about who is performing at an exceptional level, deprive agencies of the information needed to direct the largest rewards to the employees who have earned them, and dilute awards across the workforce at the expense of top performers. Distribution caps are intended to address these concerns by establishing a governmentwide ceiling on the share of employees who may receive the highest rating levels. This approach promotes more consistent and credible ratings across agencies, while requiring agencies to make more meaningful distinctions among the levels rather than defaulting to ratings that avoid difficult assessments. As the pool of Level 4 and Level 5 recipients is appropriately sized, the award amounts available to those top performers will increase substantially and, consequently, incentivize higher levels of performance from the workforce.”