OPM has set a cap of 40 percent for the top two ratings levels combined in performance evaluations for the large majority of employees under the GS system effective with the rating cycle ending September 30.

A memo assigns a number to the limit on Level 5 and Level 4 ratings under the recently finalized rules implementing a forced—what OPM calls “standardized”—ratings pattern in response to what the administration has criticized as too many employees being rated as “outstanding” and “exceeds fully successful.”

Says the memo, “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.”

Following finalization of the rules, the OPM said that forced distributions would apply in the fiscal 2026 ratings cycle, although it still did not announce what that number would be. It was widely expected that the number would mirror a figure OPM recommended for fiscal 2025 for SES and senior professional employees of 30 percent in the top two levels combined.

The memo says that agencies “responded with meaningful action. FY 2025 performance data shows that agencies made substantial progress in normalizing ratings across both populations, with a notable reduction in the share of employees” rated at the top two levels—although not specifying how those figures came out.

Raising that to 40 percent and setting the new GS cap at 40 percent reflects that “the demonstrated commitment by agencies during FY 2025 to reduce rating inflation warrants recognizing that a meaningful share of employees genuinely earns top ratings when assessments are conducted with rigor. Second, FY 2026 marks the first time distribution caps will apply to the career GS population, and OPM is setting an initial cap that is achievable and consistent across all three populations as agencies build experience implementing this requirement,” the memo says.

It adds, however, that the 40 percent figure “is a ceiling, not a target. Agencies are expected to continue calibrating ratings based on genuine performance differentiation, and OPM will monitor FY 2026 results to inform future cap levels and performance appraisal system certifications.”

However, even at a higher than expected figure, the cap will mean agencies will have to reduce the ratings of many employees that their supervisors assign to them. OPM has said that in 2024, nearly 43 percent of employees below senior levels on a five-level system received a Level 5 rating another nearly 22 percent were rated as Level 4. Under four-level systems, it was 55 and 34 percent.

Making assigned ratings comply with the cap will involve “calibration” panels of representatives from the performance management officer and executives, senior managers, HR and other senior officials from multiple agency units. Under the regulations, they are to focus on what did the employee accomplish; what effect did those accomplishments have; how challenging was the work; was performance sustained; and how did the employee contribute to mission success.

The cap will not apply to: Agencies with five or fewer employees in the agency’s career SES or SP population, or with 10 or fewer GS employees; Offices of Inspector General; Wage Grade employees; Noncareer SES; Limited Term/Emergency SES; Schedule C and G appointees; Individuals whose ratings are modified upward to Level 4 or Level 5 as a result of a proceeding permitted by law or regulation.

The memo reiterates previous statements that there is to be no specific pattern on ratings below Level 4.

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