The Office of Personnel Management (OPM) has moved to overhaul how federal employee performance is evaluated, and agencies have been told the changes apply to the Fiscal Year 2026 appraisal cycle that closes at the end of this month. The result is a compressed timeline in which agencies are being asked to implement significant changes to long-standing rating practices for a cycle that was already well underway.

On July 7, 2026, OPM published a final rule covering non-Senior Executive Service (SES) employees, including General Schedule (GS), prevailing rate, senior-level, and scientific or professional employees. The rule followed a proposed version OPM issued in February 2026 and finalized in August.

It builds on earlier 2025 guidance from the Trump administration directing agencies to limit top performance ratings and move more quickly on poor-performer discipline.

According to OPM, the rule makes several substantive changes to non-SES performance management:

• Ends the ban on forced (standardized) distributions. Agencies may now set target ranges for how many employees can receive the top rating levels, reversing a long-standing prohibition on forced distribution of ratings.
• Eliminates certain summary rating patterns, including the removal of a mid-level "Level 2" rating from agency rating patterns.
• Eliminates mandatory higher-level review of "Unacceptable" (Level 1) ratings before they become final.
• Requires a supervisory critical element for all covered supervisors, tying supervisors' own ratings to their performance managing employees.
• Requires OPM to conduct biennial certification of agency appraisal systems.

OPM has stated the changes are intended to reduce ratings inflation and more accurately measure employee performance. The agency reports that, from FY 2022 to FY 2024, almost two-thirds of non-SES employees received a four or five rating. Only 0.6 percent of employees received a rating below a three during that timeframe. A 2016 Government Accountability Office report from 2016 found 99 percent of employees received at least a three (fully successful) rating.

FMA submitted comments to the proposed rule change, writing, “Improving accountability, reinforcing a culture of high performance, and ensuring meaningful differentiation in evaluations are important and worthwhile goals FMA supports. A well-designed performance management system can help recognize excellence, address underperformance, and better align individual contributions with agency missions. However, any approach that relies on fixed or forced distributions of ratings risks introducing unnecessary rigidity into what should be a thoughtful and evidence-based process. Requiring managers to fit employees into predetermined categories, regardless of actual performance levels, can undermine the credibility of evaluations and reduce trust in the system.”

Click here to read FMA’s full comments.

While the compliance deadline for the new rating-pattern requirements (including elimination of Level 2 and the supervisory critical element) is January 1, 2027, OPM has told agencies — and confirmed to FedWeek — that elements of the forced-distribution approach apply to both the FY 2026 and FY 2027 appraisal cycles. This means agencies are being directed to apply aspects of the new standardized rating framework to the FY 2026 cycle that closes in September 2026, even though the cycle began under the prior rules.

According to OPM's guidance to agencies, agencies must establish a calibration program for the FY 2026 performance appraisal closeout no later than September 20, 2026 (the end of the FY 2026 appraisal cycle). Further, agencies must design their new GS performance management systems and have them approved by OPM before October 1, 2026, in preparation for FY 2027 implementation.

OPM has said it will issue separate, forthcoming guidance specifically addressing close-out of the FY 2026 cycle.