27:0440(61)NG - AFGE Local 3477 and Commodity Futures Trading Commission -- 1987 FLRAdec NG



[ v27 p440 ]
27:0440(61)NG
The decision of the Authority follows:


 27 FLRA No. 61
 
 AMERICAN FEDERATION OF GOVERNMENT 
 EMPLOYEES, AFL-CIO, LOCAL 3477
 Union
 
 and
 
 COMMODITY FUTURES TRADING 
 COMMISSION
 Agency
 
                                            Case No. 0-NG-681
                                             (21 FLRA No. 18)
 
                       DECISION AND ORDER ON REMAND
 
                         I.  Statement of the Case
 
    This case is before the Authority pursuant to a remand at our request
 from the United States of Court of Appeals for the District of Columbia
 Circuit.  The question involved is whether the following proposal,
 seeking to establish a range of percentages of salary to be used in
 determining cash awards for outstanding and superior performance, is
 rendered nonnegotiable by section 7106(a)(1) of the Federal Service
 Labor-Management Relations Statute (the Statute) and other applicable
 laws:
 
                              Proposal 1 /1/
 
          Percentage of award based on the employee's salary shall range
       as follows:
 
          Annual Performance Rating and Range
 
          Outstanding 10% to 15%
 
          Superior 5% to 10%
 
                              II.  Background
 
    In a previous decision in this case, American Federation of
 Government Employees, AFL-CIO, Local 3477 and Commodity Futures Trading
 Commission, 21 FLRA No. 18 (1986), the Authority held that Proposal 1
 was nonnegotiable because it was to the same effect as Proposal 5 held
 to be nonnegotiable in National Treasury Employees Union and Internal
 Revenue Service, 14 FLRA 463 (1984).  The Union appealed the Authority's
 decision on Proposal 1 in Commodity Futures Trading Commission, to the
 U.S. Court of Appeals for the D.C. Circuit.
 
    An appeal of the Authority's decision in Internal Revenue Service was
 pending in the D.C. Circuit when the Authority issued Commodity Futures
 Trading Commission.  In its decision on the appeal of Internal Revenue
 Service, the D.C. Circuit rejected the Authority's reasoning in that
 case that management's right to assign work to employees encompassed the
 authority to reward superior performance of work assigned.
 Consequently, the court vacated the Authority's decision and remanded
 the case for consideration of arguments not previously addressed by the
 Authority.  National Treasury Employees Union v. FLRA, 793 F.2d 371
 (D.C. Cir. 1986).
 
    Because the decision that Proposal 1 was nonnegotiable in Commodity
 Futures Trading Commission was based on the Internal Revenue Service
 decision, the Authority sought and was granted a remand of Commodity
 Futures Trading Commission.
 
    A.  Positions of the Parties /2/
 
    The Agency contends that the proposal is nonnegotiable because it
 conflicts with management's right to determine its budget under section
 7106(a)(1) of the Statute.  The Agency also argues that the proposal is
 inconsistent with 5 U.S.C. Sections 4502 and 4503 because, in its view,
 those sections establish that the head of each agency determines the
 amount of each incentive award, and negotiation of the award amounts
 would be contrary to those statutory requirements.
 
    The Union contends that the proposal is not inconsistent with
 management's right to determine its budget.  The Union also contends
 that the proposal is not inconsistent with 5 U.S.C. Sections 4502 and
 4503.
 
    B.  Analysis and Conclusion
 
    1.  Whether the Proposal Violates Management's Rights under Section
 7106(a)(2)(A) and (B) to Direct Employees and to Assign Work
 
    The Authority's original finding that Proposal 1 in this case was
 nonnegotiable was based on the conclusion that it had "the same effect"
 as Proposal 5 in Internal Revenue Service.  The proposal in that case
 was described as "a proposal that would establish the rate of a monetary
 incentive for performance(.)" In Internal Revenue Service, the Authority
 had concluded that because the right to assign work to employees
 included the right to reward superior performance, Proposal 5 interfered
 with management's rights under section 7106(a)(2)(A) and (B) to direct
 employees and to assign work.  In rejecting the Authority's reasoning
 that Proposal 5 interfered with management's rights to direct employees
 and to assign work the D.C. Circuit stated that "the level of incentive
 pay awarded for the performance of agency work, even work that has been
 'assigned' or 'directed', does not come within the nonbargainable
 management rights to assign work and direct employees." National
 Treasury Employees Union v. FLRA, 793 F.2d at 375.
 
    In our Decision and Order on Remand in Internal Revenue Service, 27
 FLRA No. 25 (1987) we adopted the court's holding that determining the
 level of incentive pay to be awarded for performance of assigned work
 was not an exercise of the rights to direct employees and to assign work
 under section 7106(a)(2)(A) and (B) of the Statute.  Thus, we find that
 Proposal 1 in this case which also seeks to determine the level of
 incentive pay for above-normal performance of assigned work does not
 violate management's rights to direct employees and to assign work.
 
    2.  Whether Proposal 1 is Inconsistent with 5 U.S.C. Sections 4502
 and 4503
 
    In the previous decision in Commodity Futures Trading Commission, the
 Authority determined with respect to Proposals 2 and 3 in that case that
 the cited sections of law specifically provided an agency with
 discretion to decide the conditions under which it would award incentive
 money to employees and the discretion as to the amount which could be
 paid.  Based on that reasoning the Authority concluded that Proposal 1
 also was not inconsistent with 5 U.S.C. Sections 4502 and 4503.  We
 reached the same conclusion in our decision on remand in Internal
 Revenue Service.  For the reasons more fully expressed with respect to
 Proposals 2 and 3 in the previous decision in Commodity Futures Trading
 Commission, as well as in the decision on remand in Internal Revenue
 Service, we find that Proposal 1 is not inconsistent with 5 U.S.C.
 Sections 4502 and 4503.
 
    3.  Whether Proposal 1 Interferes with Management's Right to
 Determine its Budget under Section 7106(a)(1) of the Statute
 
    In our decision on remand in Internal Revenue Service we held that
 Proposal 5 in that case, which sought to establish the rate of incentive
 pay, did not interfere with management's right to determine its budget.
 We found that such a proposal does not prescribe a particular program or
 operation or an amount of funds to be included in an agency's budget.
 
    Further, in our decision on remand in Internal Revenue Service, we
 found that the agency had not demonstrated that implementation of the
 proposal would result in a significant and unavoidable increase in costs
 which would not be offset by compensating benefits.  In this connection,
 we noted that, as the proposal linked the amount of incentive money to
 be awarded to increases in an employee's productivity, the proposal
 directly benefited the agency's objective of greater efficiency in
 Government.
 
    Proposal 1 in this case also links the amount of incentive money to
 be awarded to an increase in an employee's productivity.  Further, the
 Agency in this case also failed to demonstrate that Proposal 1 either
 prescribes a particular program or operation or an amount of funds to be
 included in the Agency's budget or results in a significant and
 unavoidable increase in costs which is not offset by compensating
 benefits.  Thus, based on the cases and reasons more fully stated in our
 decision on remand in Internal Revenue Service, we find Proposal 1 in
 this case does not interfere with management's right under section
 7106(a)(1) of the Statute to determine its budget.
 
                                III.  Order
 
    The Agency must upon request, or as otherwise agreed to by the
 parties, bargain concerning Proposal 1.  /3/
 
    Issued, Washington, D.C., June 16, 1987.
                                       /s/ Jerry L. Calhoun, Chairman
                                       /s/ Henry B. Frazier III, Member