The Bush administration announced plans Sunday to revamp the way federal workers are rewarded, asking for $500 million in raises for fiscal 2004 that will be awarded based on performance rather than years of service.

Federal worker unions, however, said they would rather have raises across the board. They charged that the president's new plan is meant to cover the fact that the most federal workers will get smaller raises than their private-sector counterparts or members of the military.

"There's no reason to believe the $500 million is going to be distributed based on anything but cronyism and politics," said Jacqueline Simon of the American Federation of Government Employees.

"Rank-and-file employees won't see any of this money," she predicted. "This is going to go to high-paid elites and political appointees."

But government officials heralded the plan as an important innovation.

"Most Americans recognize the pay system of the federal government is broken," said Kay Coles James, director of the Office of Personnel Management.

"Currently, our system rewards longevity not performance," she said. "This will increase the pay of people who work hard."

Under the new plan, federal agencies will request raise money and will have to justify how the money could improve their departments. The Office of Personnel Management will allot the money based on the agencies' shares of the overall federal payroll.

The new system of giving raises would help recruit and retain federal employees and will spur current employees to work better, said Mark Everson, deputy director of the Office of Management and Budget.

Union leaders say the real issue isn't performance-based raises, but higher raises in general.

The government, in most past years, has given equal raises to both military and civilian workers. But for fiscal 2004, Bush suggested a 4.1 percent raise across the board for the military and a 2 percent raise for civilian government employees.

But focusing on the size of raises "misses the point," said Amy Call, a spokeswoman for the Office of Management and Budget.

"This is not about base pay raises. This is about paying federal employees for good performances," Call said.

Unions also complained that the 2 percent raise does nothing to close the salary gap between government workers and workers in the private sector.

"$500 million sounds like a lot of money to me and you," said Colleen Kelley, president of the National Treasury Employees Union. "But I don't know if it does anything in the larger scheme of things."