Labor & Employment Law Daily Wrap Up, AGENCY NEWS—OMB issues guidance on agency RIF and reorganization plans, (Feb 27, 2025)

By WK Editorial Staff

The plan is in two phases; the second phase, the memo instructs, “should be planned for implementation by September 30, 2025.”

On February 11, 2025, in President Trump’s Executive Order “Implementing the President’s ‘Department of Government Efficiency’ Workforce Optimization Initiative,” Trump required agency heads to undertake preparations for “large-scale reductions in force” and develop reorganization plans by March 13, 2025. Yesterday, OPM and OMB issued guidance on those plans in a memo sent to all department and agency heads.

According to the memo, ARRPs (Agency Reform and Restructuring Plans) supposedly will improve service for the American public; increase productivity; cut down on purportedly unnecessary full-time equivalent (FTE) positions; shrink the real property footprint; and reduce the overall budget. Agencies are expected to eliminate non-mandated functions while still delivering required services efficiently. They have been instructed to merge duplicative areas and management layers; trim down non-critical components and positions; use technology to automate routine tasks; close or consolidate regional offices for “efficient” service delivery; cut back on outside consultants and contractors; and coordinate office closures or relocations with return-to-office actions to avoid extra relocation costs. Agencies must ensure their actions comply with statutory authority and work with their Department of Government Efficiency (DOGE) team leads. They should pinpoint competitive areas, especially those not deemed essential during funding lapses, using the 2019 Agency Contingency Plans as a guide.

Available “tools.” Agencies, the memo instructs, are expected to use every tool at their disposal to meet the President’s directive for a more “effective and efficient” government. These tools include adhering to the hiring freeze from the January 20, 2025, Presidential Memorandum, or, with approval, hiring no more than one employee for every four who leave; setting up processes to ensure agency leadership reviews and approves all job offers and candidates; cutting non-mandated functions through reductions in force (RIFs); removing underperforming or misbehaving employees and continuing to assess probationary employees; reducing headcount through attrition and letting temporary positions expire; separating reemployed annuitants in areas likely to face RIFs; and renegotiating collective bargaining agreements that hinder government efficiency and accountability. ARRPs should also list areas for large-scale RIFs, the memo instructs, as well as effective dates, expected conclusion dates, the number of FTEs reduced, and impacts like canceled contracts and leases.

Agencies were also advised to consider regulatory and policy changes, including those requiring notice-and-comment rulemaking, to reduce or eliminate subcomponents and expedite ARRPs.

Phase 1. Agencies are expected to submit their Phase 1 ARRPs by March 13, 2025, focusing on initial cuts and reductions. Each plan is expected to identify subcomponents or offices providing direct services to citizens, aiming to improve services while cutting costs, with implementation certified as beneficial by OMB and OPM; statutes establishing the agency or its subcomponents, ensuring no over-expansive interpretation of requirements; non-mandated functions and employees not essential during funding lapses, based on 2019 contingency plans; potential eliminations or consolidations of subcomponents, and any expansions needed for the President’s priorities; tools for achieving efficiencies, including hiring freezes, attrition, and RIFs, with details on FTE reductions and cost impacts; essential positions excluded from large-scale RIFs; plans for congressional engagement on restructuring efforts; and timetables and plans for implementing each part of the Phase 1 ARRP.

Phase 2. Agencies are expected to submit Phase 2 ARRPs by April 14, 2025, outlining a vision for operations to be implemented by September 30, 2025. These plans should include a future-state organizational chart; confirmation of reviewed personnel data; plans to group employees by duties and align real estate with federal office hubs; proposed relocations to cheaper areas; competitive areas for further RIFs; details on all reductions related to RIFs; plans for absorbing functions, including FTEs, funding, and space; processes for leadership oversight of job offers; data-driven hiring plans, adhering to a 1:4 hiring ratio until the freeze is lifted; plans to renegotiate collective bargaining agreements that hinder efficiency; explanations of how ARRPs will improve services and advance policy priorities; criteria for efficient use of personnel and funds; certifications that ARRPs will positively impact service delivery, with written explanations; justifications for any programs not impacted by ARRPs; plans for cost reductions through technology improvements; regulatory and policy changes to expedite ARRPs; and timetables and monitoring plans for implementation. Agencies must also send monthly progress reports.

Exclusions. The memo also specifies certain exclusions, stating that it does not apply to positions related to law enforcement, border security, national security, immigration enforcement, or public safety; military and federal uniformed personnel, including the U.S. Coast Guard and other commissioned corps; presidential appointees, non-career Senior Executive Service positions, and certain other non-career employees; the Executive Office of the President; and the U.S. Postal Service.

Additionally, it notes, agencies providing direct services to citizens (Social Security, Medicare, etc.) must get certification from OMB and OPM before implementing ARRPs to ensure a positive impact on service delivery.

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