What’s the difference between an outstanding federal executive and a pretty good one? Not much, according to the government’s pay-for-performance compensation system for Senior Executive Service members.

That’s more true now than in years past because of grade inflation, budget constraints and new White House guidance, according to a new Government Accountability Office report.

GAO compared SES members’ performance awards against their evaluation ratings in the 24 largest agencies. It found nearly all SES members rated better than average, a statistic improbability anywhere but Lake Wobegone of A Prairie Home Companion fame. About 85 percent of SES members scored either a 5, the highest rating, or a 4, the second highest, for fiscal 2010-2013.

Supervisors feel pressure to rate executives highly because the ratings become criteria for myriad compensation decisions, GAO said.

But budget constraints and recent guidance from the Office of Management and Budget has kept the total amount of performance awards down and erased distinctions among SES. Executives with ratings of 5 earned $4,991 more than those with ratings of 4 in fiscal 2010. By 2013, the difference had shrunk to just $2,604. Between those in the middle of the pack, the difference is even smaller. Executives with ratings of 4 took home $690 more than those with ratings of 3.

As the difference lessens, the perception that awards are not directly linked to performance grows, GAO noted. Yet an executive at rating level 5 is much more likely to receive a performance award than one rated at 4 or below.

After looking closely at five large agencies, GAO concluded that four of them made little correlation between performance rating and award amount. The departments of Justice, Health and Human Services, Treasury and Defense awarded overlapping amounts to executives rated 5 and 4. Only the Energy Department did not.

This is not a new problem. GAO drew similar conclusions in a 2008 report.

Auditors suggest that the Office of Personnel Management’s certification process for agency systems is too lenient.

“While OPM has certified that the select department’s appraisal systems make meaningful distinctions based on relative performance, actual awards at some departments do not seem to support that meaningful distinctions are being made,” the report says.

In 2012, OPM launched a standard appraisal system to foster uniformity and consistency across the 90 percent of agencies that choose to use it. But based on its findings, GAO concluded that “the link between performance ratings and awards is not being consistently applied.”

OPM plans to hold a cross-agency working group on the SES certification process later this year. GAO urged OPM Director Katherine Archuleta to consider revising its guidelines for rating categories. OPM could also post online and report to Congress the justifications agencies give for rating executives highly.

In a response, OPM Associate Director of Employee Services Mark Reinhold says the agency “does not support” the recommendations, but may discuss them with the working group.

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