On July 31, the Office of Personnel Management (OPM) finalized four rules that expand agencies’ ability to conduct Reductions in Force (RIFs), while also transferring authority over RIF-related employee appeals from the Merit Systems Protection Board (MSPB) to OPM itself. The rules were published in the Federal Register on Monday, August 3, and are set to take effect 30 days after publication.
Taken together, the changes give agencies broader, faster-moving authority to restructure their workforces, a shift with direct implications for federal grantees who rely on federal staff to approve, oversee and support grant awards.
Key Changes
The most consequential of the four rules overhauls the RIF process itself. Historically, federal regulations directed agencies to weigh employee tenure and length of service ahead of performance ratings when building RIF retention registers. Under the new rule, performance becomes the primary factor, followed by veterans’ preference, with tenure and seniority serving only as “tiebreakers.”
The rule also does away with the traditional “bump and retreat” process, the longstanding practice that used to allow employees facing layoffs displace less senior staff in other jobs across the agency or reclaim a position they had previously held. Instead, the new rule adopts a much more narrow set of reassignment rights. Now, an employee can only claim another position if it falls within the same tenure group (broadly the same category of appointment such as permanent versus temporary), and is currently held by someone with lower retention standing. Together, these changes shrink the pool of alternative positions an employee can turn to when their job is eliminated, giving agencies considerably more latitude to target specific positions and employees during a RIF.
The remaining three rules narrow the ability of affected employees to contest these decisions. Currently, employees appealing adverse actions connected to a RIF, a suitability determination, or an action taken during their probationary period file that appeal with MSPB. The MSPB is an independent, quasi-judicial agency where cases are heard by an administrative judge, subject to review by MSPB’s three-member board, with a further right of appeal to the U.S. Court of Appeals for the Federal Circuit. Under the finalized rules, RIF and probationary appeals move to OPM’s Office of Merit System Accountability and Compliance, suitability appeals move to a separate OPM office, and final review rests with the OPM Director. Employees will no longer have the option to appeal a final decision in federal court.
Relevance to RDOs and Federal Grantees
Although the RIF rules don’t directly impact NADO member organizations, the rules do raise a concerning question around federal agency capacity. Regional Development Organizations (RDOs) depend on stable, experienced staff at agencies to process awards, interpret program requirements, and provide technical assistance on federal grants. This new framework will increase the likelihood of abrupt staffing changes at federal agencies, with fewer procedural guardrails to slow or reverse decisions once made. That can translate into longer award processing times, turnover among the program officers members work with directly, and a loss of institutional knowledge on regional projects already underway.
Looking Ahead
NADO will continue to monitor implementation of these rules, including forthcoming OPM and agency-level guidance, as they take effect in early September. Particular attention will be paid to how the broadened RIF authority affects staffing at EDA and other federal partner agencies, and NADO will share additional analysis and member guidance as it becomes available.