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.”

The cap on 4’s and 5’s follows a broader rewrite of federal performance management. OPM's final rule removes "level 2" from the five-level rating scale, ends employees' ability to contest ratings through grievance and arbitration, and requires OPM to review agencies' rating systems every other year. It also lifts the longstanding prohibition on forced distribution of ratings. Under the rule, the caps apply only to the top two levels, and no limits are placed on lower-level ratings.

OPM Director Kupor pointed to a policy already in effect for senior executives that limits the top two levels to 30 percent, and said similar guidelines would be proposed for the rest of the workforce. OPM's September guidance says agencies have made progress in normalizing ratings for both executive populations, with a notable drop in the share receiving the two highest ratings. It describes 40 percent as a starting point, and says OPM will monitor fiscal 2026 results to inform future cap levels.

As we have noted during the rulemaking process, OPM argues that ratings have become inflated and no longer distinguish levels of performance. It has cited data showing that 43 percent of employees below the senior level were rated a 5 in 2024. The rule also cites a 2016 Government Accountability Office finding that 99 percent of permanent, non-SES employees were rated Fully Successful or above, along with survey data showing only 42 to 51 percent of employees believe their supervisors meaningfully distinguish performance. OPM has said supervisors often inflate ratings to avoid confrontation or because of weak management support.

The agency has also paired the cap with changes to rewards. On the same day it announced the cap, OPM said agency heads may now award bonuses between $10,000 and $25,000 without OPM approval. Kupor wrote that a system making meaningful distinctions in performance must also deliver meaningful rewards.