The pay increase was part of a $388 billion omnibus spending package that was approved by the House and then the Senate later in the evening. The administration has warned that the pay increase may lead to severe agency belt-tightening and a reduction in the workforce.
The approval means that, for the first time in three years, the federal government's 1.8 million civilian employees will begin receiving higher pay in January. In the past two years, Congress's failure to complete spending bills until the new year left federal workers waiting for weeks to get the increase.
In February, Bush proposed a 1.5 percent average raise for civilian workers and a 3.5 percent increase for members of the armed forces. White House officials said the plan would allow all employees to keep up with inflation while rewarding the military during a time of war.
Lawmakers of both parties instead deferred to a two decade-old tradition of "pay parity" and granted civilian workers a raise equivalent to that awarded to the military. Supporters argued that many civilian workers, including employees of the CIA, the FBI and the Department of Homeland Security, play vital roles in national security.
"This pay adjustment rewards them for their commitment and dedication to serving our country and protecting our citizens, " House Minority Whip Steny H. Hoyer (D-Md.) said in a statement. Hoyer and Virginia Reps. Frank R. Wolf (R), Thomas M. Davis III (R) and James P. Moran Jr. (D) were the main House backers.
The White House said the 3.5 percent raise exceeds inflation and would add $2.2 billion in spending for the fiscal year that began Oct. 1. In a letter to Congress last week, Joshua B. Bolten, director of the White House's Office of Management and Budget, warned that the increase "would be very difficult for agencies to absorb . . . and will likely require reductions-in-force or shifts of resources away from critical programmatic priorities."
Federal employee union leaders applauded the increase. "We're very pleased at the bipartisan support that has been there for the pay raise all year," said Colleen M. Kelley, president of the National Treasury Employees Union.
John Gage, president of the American Federation of Government Employees, praised Congress "for reaffirming its commitment to . . . federal employees and, in particular, for DOD, DHS and blue-collar civilian workers."
In other developments, lawmakers dropped language forcing the OMB to abandon revised rules designed to speed up the competitions run by agencies to determine whether private contractors can do federal work more cheaply than civil servants. The provision, sponsored by Rep. Chris Van Hollen (D-Md.) and Sen. Barbara A. Mikulski (D-Md.), had earlier won approval in the House and in a Senate committee.
Also dropped was language that would have guaranteed federal employees in every agency the right to reorganize their work units as "most efficient organizations" -- with fewer workers, for example, or better technology -- when they go up against contractors in competitions involving 10 or more jobs.
The measure would have required contractors to show savings of at least 10 percent or $10 million to win a competition . Such restrictions still apply to the Defense Department, but the White House had threatened to veto any effort to expand them government-wide.
"The Bush administration through its actions is once again showing its disrespect for the people who deliver valuable public services every day," Van Hollen said.
In a statement, Mikulski said: "I will keep fighting to fix the competition process that is shamefully slanted in favor of private contractors."