The federal government faces a human capital crisis over the next several years due to driving environmental forces, which include the reduction in the replacement labor force cohorts and the image problem of public service. One of the great challenges facing the federal service is the need to address the negative perceptions of the quality of work life experienced in the federal service, especially for younger employees. Consequently, governmental organizations must cope with increasing aging of their labor forces and elevated retirement levels exacerbating succession planning and knowledge transfer practices. This paper examines the current environment of the federal system and explores how it must adapt to postmodern influences that are embraced by Millennial and Generation X employees. While today’s federal system is rigid in many of its key leadership, performance management, and support service delivery systems, the postmodern workforce thrives on flexibility, involvement, and excitement. This paper further examines what leadership concepts and competencies can assist in the positive transformation of the federal government.