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A MESSAGE FROM THE DIRECTOR OF THE OFFICE OF PERSONNEL MANAGEMENT

I am pleased to present the Office of Personnel Management’s (OPM’s) report on the cost to the Government of administering the Federal Wage System (FWS). This report was prepared in response to House Report 107-152, which accompanied H.R. 2590 (enacted as Public Law 107-67, November 12, 2001). In that report, the House Committee on Appropriations directed OPM to report on the cost of administering the FWS, including the cost of data collection, the cost of analyzing FWS data and its transformation into FWS paylines and wage schedules, and the cost of operating the Federal Prevailing Rate Advisory Committee (FPRAC).

Our report estimates the total cost of administering the FWS to be about $5.8 million in

FY 2001. Of this total, the Department of Defense spent about $5.4 million to collect FWS wage data and establish wage schedules for appropriated fund employees. OPM spent about $120,000 on FPRAC and about $275,000 on salaries and other costs associated with administering the FWS. We believe the FWS works well and is responsibly managed and that FWS wage surveys are conducted in a cost-effective manner.

The President has called for a Government that is citizen-centered, results-oriented, and market-based. The FWS meets those goals. Private sector participants in local FWS wage surveys contribute to setting blue-collar Federal pay rates at responsible levels. Blue-collar Federal employees participate at every level of the FWS pay determination process. The end result of the FWS pay determination process is a set of wage schedules that are based on local labor market rates and are responsive to changing market conditions. I am convinced that the FWS successfully accomplishes the purposes for which it was established.

The members of FPRAC have reviewed and contributed to this report. I look forward to continue receiving knowledgeable advice from FPRAC and other stakeholders about administering the FWS.

I want to thank the dedicated staff of OPM’s Workforce Compensation and Performance Service for their hard work in drafting this report. The report can be found on the OPM Web site at www.opm.gov/oca/wage.

Kay Coles James

Director

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