30:1206(134)AR - DODDS, Pacific Region and Overseas Education Association, Pacific Region -- 1988 FLRAdec AR



[ v30 p1206 ]
30:1206(134)AR
The decision of the Authority follows:


30 FLRA NO. 134
 30 FLRA 1206

   29 JAN 1988


DEPARTMENT OF DEFENSE
DEPENDENTS SCHOOLS, PACIFIC REGION

                   Agency

         and

OVERSEAS EDUCATION ASSOCIATION
PACIFIC REGION

                   Union

Case Nos. O-AR-1343
          O-AR-1445

DECISION

I. Statement of the Case

     This matter is before the Authority on exceptions to awards
of Arbitrator R. Charles Bocken. The Arbitrator, in Case No.
O-AR-1343, concluded that the grievants, Mary Owen and Lora Dory,
were entitled to receive living quarters allowances (LQAs) and
foreign post differentials (FPDs) as a result of being
transferred from teaching posts in Germany, where they were
"local hires," to teaching posts in Okinawa and Korea. 1 The
Arbitrator also concluded that grievant Owen was entitled to a
renewal transportation agreement and determined the entitlement
of witnesses to reimbursement of transportation expenses. The
Arbitrator ordered, among other things, that the Agency pay each
grievant an LQA and an FPD retroactive to the date of transfer.


     The Arbitrator retained jurisdiction for the limited purpose
of considering an application for attorney fees. The attorneys
who represented the grievants and the Union filed a request for
fees. The Arbitrator granted the request in Case No. O-AR-1445.

     Exceptions were filed by the Agency under section 7122(a) of
the Federal Service Labor - Management Relations Statute (the
Statute) and part 2425 of the Authority's Rules and Regulations
to the Arbitrator's award on the merits of the grievances in Case
No. O-AR-1343 and to his award of attorney fees in Case No.
O-AR-1445. We have consolidated these cases for decision.

     For the reasons discussed below, we conclude that the Agency
has failed to establish that the award of LQAs and FPDs to the
grievants is contrary to law and Government-wide regulation.
Accordingly, we deny the Agency's exceptions. We also conclude
that the Agency has failed to establish that the award of
attorney fees is deficient. However, the award must be modified
to conform to the appropriate method of computing fees for the
Union's attorney.

II. Case No. O-AR-1343

A. Background

     This case arose as a result of the Agency's denial of LQAs
and a FPDs to two overseas teachers. Both teachers were initially
hired by the Department of Defense Dependents Schools (DODDS) in
Germany as local hires. They were subsequently transferred to
other overseas areas under the provisions of Article 48, section
3c, the Inter - Regional Transfer Program, of the parties'
collective bargaining agreement.

     Grievant Owen was hired in 1968. In 1982, she applied for
and received a transfer to Okinawa as a permanent change of
station. Upon arrival in Okinawa, she was informed by the
civilian personnel office that she was not entitled to receive an
LQA or an FPD. Grievant Dory was hired in 1974. In 1985, she
applied for and received a transfer to Korea as a permanent
change of station. Upon arrival in Korea she received an LQA and
an FPD. Subsequently, she was informed by the civilian personnel
office that she was not entitled to these allowances and that the
amounts already paid would be recouped. A grievance was filed
protesting DODDS' actions with respect to the LQAs and FPDs. The
grievance was submitted to arbitration. 

     The Union argued at arbitration that the practice of DODDS
had been to grant LQAs to local hires who transferred to other
duty stations. The Union also argued that in negotiating their
collective bargaining agreement, the parties intended to provide
local hires who applied for and received a transfer with the same
benefits as a CONUS hire, specifically, the LQA and FPD, provided
that the local hires had served 3 continuous years after
receiving an "excepted appointment without condition.

     The Agency argued at arbitration that any previous grant of
an LQA or an FPD to a transferred employee was erroneous and not
precedential. The Agency asserted that the parties' agreement
merely provides that a local hire may apply for a transfer and
does not refer to a transferred employee's entitlement to an LQA.
The Agency also argued that the Department of State Standardized
Regulations (DSSRs), as implemented by Department of Defense
(DOD) regulations, apply to the local hire transfer program and
clearly provide that an LQA is to be provided only in certain
circumstances. The Agency asserted that in this case LQAs were
not authorized because the transfers were not
"management-generated actions" as required by those regulations.
The Agency also argued that a clear reading" of the parties'
agreement did not support the Union's position.

B. Arbitrator's Award

     The Arbitrator noted that section 031.12c of the DSSRs
provides that an LQA may be granted to a local hire who was not
initially granted such an allowance if "as a condition of
employment by a government agency, the employee was required by
that agency to move to another area, in cases specifically,
authorized by the head of the agency." Award at 7. He further
noted that DOD regulations implementing the DSSRs provide, at DOD
Directive 1400.25M:

     Section 031.12C, DSSR, will be applied when an employee is
relocated to another area by a management-generated action. It
also will be applied when management must request that an
employee not now eligible for LQA relocate to another area. A
management request that an employee relocate is considered a
management-generated action.

     Award at 7. 

     The Arbitrator determined that the transfer of a local hire
employee under the negotiated Inter - Regional Transfer Program
was a management-generated action to fill an Agency need in
another overseas area. He concluded that since the grievants were
relocated by management-generated actions, they were entitled to
LQAs under section 031.12c of the DSSRs.

     In reaching his conclusion that the grievants were entitled
to LQAs and FPDs, the Arbitrator made a number of findings. Award
at 9-12. He found that the purpose of the negotiated transfer
program was to encourage employees to move to hardship areas and
that local hires were eligible to apply for transfer under the
program after completion of 3 continuous years of service. He
found that the grievants met the service time requirement,
applied for, and were selected for transfer to fill a management
need. The Arbitrator further found that the grievants believed
that they would receive LQAs upon being transferred. They
accepted the reassignment offer on that basis. Additionally, the
Arbitrator found that the grievants were subject to termination
if they declined a transfer after accepting management's offer.

     The Arbitrator also determined that the Agency's
implementation of the DSSRs and DOD Directive 1400.25M was
inconsistent and unclear because at least two local hires had
been granted LQAs when they were transferred under the negotiated
program. He also noted that a Personnel Guide for managers issued
by the Agency, which the Agency argued was not a regulation and
was contrary to its policy, provided for the payment of LQAs to
teachers who voluntarily participated in and were selected for
transfer under the negotiated program when the transfer is made
for the benefit of the Government. Moreover, the Arbitrator found
that the bargaining history of the parties' agreement indicated
that the Inter - Regional Transfer Program was negotiated to
permit a local hire to receive the same benefits as a CONUS hire
upon transfer to another area, provided the employee had served 3
continuous years after appointment.

     The Arbitrator therefore sustained the grievance as it
related to LQAs and the FPDs. The Arbitrator ordered the Agency
to pay grievants Owen and Dory LQAs and FPDs retroactive to the
effective dates of their transfer. He directed that any prior LQA
payments made to grievant Dory were to be credited to the Agency.
He also ordered the Agency to correct grievant Owen's
transportation agreement to reflect her actual place of residence
and to provide her with a renewal travel agreement. The
Arbitrator further ruled on the entitlement of witnesses
in the proceeding to reimbursement for transportation expenses.

B. Agency Exceptions

     The Agency contends that the portion of the Arbitrator's
award ordering it to grant the grievants LQAs and FPDs is
contrary to Government-wide regulation and law.

     1. The Agency's allegation that the award is contrary to
Government-wide regulation

     The Agency first contends that the award is contrary to the
DSSRs. In support of this contention, the Agency argues that the
DSSRs allow local hires to receive LQAs only if they are required
to move to another area. The Agency asserts that the grievants
were not required to move, but, rather, were voluntarily
transferred. The Agency argues that the negotiated transfer
program in the parties' agreement is voluntary and, therefore, an
employee transferred under that program is not "required" to
relocate. The Agency further asserts that the Arbitrator's
interpretation of the parties' agreement is not supported by the
language of the agreement. The Agency also disputes the
Arbitrator's finding that the grievants were subject to
termination if they refused to transfer, arguing that the
grievants had 48 hours to decline a transfer offer.

     2. The Agency's allegation that the award is contrary to
law

     In support of its contention that the award is contrary to
law, the Agency argues that the Arbitrator erred in concluding
that filling the vacancies by transfer constituted a
management-generated action. The Agency relies on an unpublished
decision of the Comptroller General, Comp. Gen. No. B-194024
(Oct. 5, 1979) (unpublished). The Agency asserts that in that
case the Comptroller General sustained the determination by the
agency head that a local hire who applied for and received a
transfer to another location was not entitled to an LQA and that
the situation did not constitute a management-generated action.
The Agency asserts that the Arbitrator should have found that the
transfers in this case were not management-generated actions.

     The Agency also argues that the Arbitrator erred in adopting
the Union's position regarding the bargaining history of the
negotiated transfer program. Specifically, the Agency argues that
the Arbitrator erred in adopting  the Union's position
that the parties agreed that if a local hire served 3 continuous
years after appointment, the employee would be eligible to apply
for a transfer and to receive the same benefits as a CONUS hire.
The Agency asserts that this interpretation is contrary to law
and that the Union could not gain through negotiations that which
is contrary to law. The Agency relies on a decision of the U.s.
Claims Court, Acker v. United States, 6 Cl. Ct. 503 (1984) (Acker
II). The Agency maintains that the court affirmed its decision in
an earlier Acker case, Acker v. United States, 620 F.2d 802 (Ct.
Cl. 1980) (Acker I). The Agency asserts that in Acker I, the
court determined that nonprobationary local hires were not
entitled to an LQA based on longevity. Therefore, the Agency
asserts that the Arbitrator's interpretation of Article 48,
section 3c of the parties' agreement as allowing a local hire who
served 3 continuous years after appointment to apply for a
transfer and receive the same benefits as a CONUS hire is
contrary to law.

     C. Analysis and Conclusions

     We find that the Agency has not established that the
Arbitrator's award is deficient.

     1. The award is not contrary to Government-wide regulation

     As to its first contention, the Agency has not
sub-stantiated its assertion that the award is contrary to the
DSSRs. As noted, section 031.12c of the DSSRs provides that an
LQA may be granted if an employee is required as a condition of
employment to move to another area. The essence of the Agency's
contention is that the grievants were voluntarily transferred and
not required to relocate. Whether the Arbitrator's award is
contrary to regulation, therefore, depends on the validity of the
Arbitrator's determination that the grievants were required to
relocate.

     As indicated above, the Arbitrator expressly concluded,
based on the evidence and testimony presented and the parties'
agreement, that the grievants were required to relocate as a
condition of employment. In defining the term "required," the
Arbitrator noted the provision in DOD's implementing regulations,
DOD Directive 1400.25M, that payment of an LQA under the DSSRs is
authorized when an employee is relocated to another area by a
management-generated action. 

     The Arbitrator determined that the selection of an employee
under the Inter - Regional Transfer Program in the parties'
agreement is a management-generated action which is taken to fill
an Agency need in another overseas area. Thus, the Arbitrator
determined, based on his interpretation of the parties'
agreement, that the grievants were transferred from Germany as a
result of a management-generated action to fill Agency needs in
Okinawa and Korea.

     Moreover, in finding that the grievants were required to
relocate, the Arbitrator credited the grievants' testimony that
they were led to believe that they would receive LQAs and FPDs
upon transfer under the program. The grievants also testified
that they would not have accepted the transfer offer had they
known that they would not be eligible for the allowances. Thus,
while the Agency correctly argues that under the negotiated
program the grievants had 48 hours in which to reject a transfer
offer, the grievants had no reason to decline the offers because
they believed that they would receive the allowances until long
after the 48-hour period had expired.

     The Arbitrator also found, as a fact in the case, that under
Agency policy the grievants were subject to dismissal if they
declined the transfer after they had accepted the offer. The
Union established that included in the evidence introduced at the
hearing was a statement the Agency required transfer applicants
to sign, which provided:

     If I an offered a transfer to an area of my choice.... I
will accept unless an emergency should arise. I also understand
that if I accept an offer to transfer and later decline for
reasons that are determined as unacceptable to the U.S.
(G)overnment, I may be separated.

     Opposition at 6.

     The grievants did not learn that they would not receive LQAs
and FPDs until after they had been transferred. It is clear that,
as the Arbitrator found, they would have been subject to
dismissal if they refused the transfer at that point.

     Furthermore, as the Arbitrator found, the Agency had paid
LQAs to other local hires transferred under the negotiated
program and the Agency's own Personnel Guide for its managers
clearly indicated that such payments were appropriate where, as
here, the transfers were for the benefit of Government. Thus, the
Arbitrator's findings of fact indicate that local hires
transferred under the negotiated program were paid LQAs pursuant
to the DSSRs notwithstanding the voluntary nature of a teacher's
application for transfer under the program.

     In view of the Arbitrator's determination, based on his
interpretation of the parties' agreement and findings of fact,
that the grievants were required to relocate as the result of a
management-generated action, we conclude, contrary to the
Agency's contention, that his award of LQAs to the grievants is
consistent with section 031.12c of the DSSRs. The Agency's
contention constitutes nothing more than an attempt to relitigate
the merits of the dispute before the Authority and disagreement
with the Arbitrator's findings of fact, reasoning and conclusions
and interpretation and application of the parties' agreement. It
is well established under Authority precedent that such
disagreement provides no basis for finding an award deficient
under the Statute. See, for example, 351st Combat Support Group,
Whiteman Air Force Base and Local 2361, American Federation of
Government Employees, 30  FLRA  No. 68 (1987); Overseas Education
Association and Department of Defense Dependents Schools,
Mediterranean Region, 16 FLRA  276, 277-78 (1984); Department of
Defense Dependents Schools and Overseas Education Association, 13
FLRA  475, 476-77 (1983). See also United States Paperworkers
International Union v. Misco, Inc., 56 U.S.L.W. 4011, 4014 (U.S.
Dec. 1, 1987) (in which the Supreme Court reinforced national
arbitration policy that it is the arbitrator's view of the facts
and the meaning of a contract that the parties have agreed to
accept and a court may not reject the arbitrator's findings of
fact or interpretation of the contract simply because it
disagrees).

     2. The award is not contrary to law

     We likewise find that the Agency has failed to establish
that the Arbitrator's award is contrary to law. In support of
this contention, the Agency reiterates the argument that the
transfer of the grievants was not a management-generated action.
However, as we found with regard to its DSSR argument above, the
Agency fails to substantiate this claim. The Agency does not cite
any express provision of law to support its argument. Moreover,
the decisions relied on by the Agency do not demonstrate that the
Arbitrator's award in this case is contrary to any law.

     The Agency's reliance on the Comptroller General's 1979
unpublished decision is misplaced. In that case, the Comptroller
General sustained the determinations of  Headquarters,
U.S. Air Force and the Office of the Assistant Secretary of
Defense for Manpower and Reserve Affairs (OASD) that the employee
was not entitled to an LQA. The Air Force and OASD determined
that the employee was not entitled to an LQA because the
circumstances of his transfer from Berlin to the Netherlands did
not constitute a "management-generated action," as they defined
that term. The Air Force had defined management-generated action
as including a reassignment due to abolishment of an employee's
position; a transfer of function where the employee works; or a
management-requested reassignment. Since the employee's transfer
did not fall into any of those categories, the Air Force denied
his LQA claim. OASD defined the term as an action taken at the
request of or at the direction of management, and affirmed the
denial of the LQA. The Comptroller General concluded that since
the Air Force and OASD had determined that the employee's
transfer was not a management-generated action, there was no
basis on which to hold that he was entitled to an LQA.

     In this case, there was a basis on which to hold that the
grievants were entitled to LQAs under the DSSRs. Unlike the
situation in the case before the Comptroller General, the dispute
before the Arbitrator was not confined to a question of the
propriety of the Agency's determinations under its regulations.
The dispute also involved a question of the rights of the
grievants under the Inter - Regional Transfer Program of the
parties' collective bargaining agreement. The Arbitrator resolved
the dispute by determining that the transfers of the grievants
under the negotiated transfer program were management-generated
actions, thereby establishing the basis for the grievants'
entitlement to LQAs under the DSSRs.

     The Agency's reliance on the decisions in Acker I and Acker
II also is misplaced. In the Acker decisions, the court
determined that local hire employees were not entitled to LQAs
based on longevity. In this case, the Arbitrator did not award
the grievants LQAs based on longevity. Rather, he determined that
they were entitled to LQAs under the parties' negotiated transfer
program. The length of service of the grievants was pertinent
only to establish their eligibility to apply for a transfer under
the negotiated program.

     As to the award of an LQA to grievant Dory, we note that the
Claims Court has held that in the absence of a showing of error
on the part of the authorized agency official who properly
determined the eligibility of an overseas teacher's entitlement
to an LQA, the subsequent revocation of that allowance was not
justified. Bentley v.  United States, 3 Cl. Ct. 403
(1983). See also Overseas Education Association and Department of
Defense Departments Schools, 29 FLRA  240, 242-44 (1987).

     We conclude that the Agency has failed to establish that the
Arbitrator's award is contrary to law. The Agency's arguments in
support of this second contention constitute nothing more than
disagreement with the Arbitrator's findings of fact, reasoning
and conclusions and interpretation and application of the
parties' agreement. As stated above, such disagreement provides
no basis for finding an award deficient under the Statute.

     We further conclude that since the Agency has not
established that the Arbitrator's award in Case No. O-AR-1343 is
deficient, the Agency's exceptions must be denied.

III. Case No. O-AR-1445

A. Arbitrator's Award

     In his award of attorney fees, the Arbitrator found, citing
International Brotherhood of Electrical Workers and United States
Army Support Command, Hawaii, 14 FLRA  680 (1984), that he was
permitted to consider the issue of attorney fees simultaneously
with a review of the decision on the merits. Award at 3-4. The
Arbitrator found that the requirements of the Back Pay Act, 5
U.S.C. SS 5596, had been met because the grievants were subjected
to an unjustified or unwarranted personnel action, the wrongful
denial of LQAs and FPDs, which resulted in their loss of pay or
allowances. Award at 5. He then addressed the requirements of 5
U.S.C. 7701(g)(1). He found that: (1) the grievants were the
prevailing parties; (2) the attorney fees had been incurred by
the grievants; and (3) attorney fees were warranted in the
interest of justice.

     With regard to the actual amount of reasonable fees to be
awarded, the Arbitrator found that the number of hours claimed by
the grievants' attorneys was reasonable. 2 

B. Agency Exception

     The Agency contends that the Arbitrator's award of attorney
fees is contrary to law. The Agency argues that the Arbitrator is
precluded from deciding the issue of attorney fees until the
Authority resolves its exceptions to the underlying award on the
merits making it final and binding. The Agency asserts that
unless and until its exceptions to the underlying award are
denied by the Authority, there is no final decision on which to
base the required findings of whether there was an unwarranted or
unjustified personnel action and whether the grievants were the
prevailing parties.

C. Analysis and Conclusion

     We find that the Agency has failed to establish that the
award is deficient. However, we find that the award must be
modified to provide that the Union, as the employer of Attorney
Hurst, is to be reimbursed only for its actual costs in
accordance with the applicable cost-plus formula.

     There is nothing in Authority precedent or applicable law
which requires an arbitrator to refrain from granting a request
for attorney fees until the Authority resolves any exceptions
which may have been filed to the underlying award, if the award
of fees otherwise meets the requirements of 5 U.S.C. 5596 and 5
U.S.C. 7701(g)(1). See Army Support Command, Hawaii, 14 FLRA  680
(the Authority resolved excep-tions to an award of attorney fees
rendered simultaneously with a decision on the merits of the
dispute).

     The Authority summarized the applicable legal requirements
for an award of attorney fees in Naval Air Development Center,
Department of the Navy and American Federation of Government
Employees, Local 1928, AFL - CIO, 21 FLRA  131 (1986). In order
for attorney fees to be awarded: (1) the fees must be in
conjunction with an award of backpay to correct an unjustified or
unwarranted personnel action; (2) the award must be reasonable
and related to the personnel action; and (3) the award must be in
accordance with the standards established under 5 U.S.C.
7701(g).

     Section 7701(g)(1), which applies to all cases other than
discrimination, requires that the fees must be reasonable and
must have been incurred by the employee; that the employee must
be the prevailing party in the proceeding; and that payment of
the fees by the agency involved must be warranted in the interest
of justice. Finally, there must be a "fully articulated, reasoned
decision" setting forth the  specific findings
supporting the determination on each pertinent statutory
requirement, including the basis upon which the reasonableness of
the amount was determined when fees are awarded.

     In this case, it is clear that the Arbitrator properly
established that the attorneys representing the grievants were
entitled to an award of attorney fees. The award of fees is in
conjunction with an award of retroactive LQAs and FPDs to the
grievants to correct the Agency's unwarranted denial. There is no
dispute that the fees were incurred on behalf of the employees.
The grievants were the prevailing parties in the proceeding
before the Arbitrator. The Arbitrator expressly found, based upon
consideration of the facts and circumstances involved, that
attorney fees were warranted in the interest of justice. Award at
6. We therefore conclude that the Arbitrator's determination that
the attorneys representing the grievants are entitled to attorney
fees is fully consistent with applicable legal requirements and
that the Agency's exception does not provide a basis for finding
the award deficient.

     We turn now to the question of the reasonableness of the
amount of the fees awarded.

     In determining what constitutes reasonable attorney fees,
the Authority has determined that if the award of fees is to an
attorney in private practice, the appropriate acceptable method
is the "lodestar" method, where the attorney's customary hourly
billing rate is multiplied by the number of hours reasonably
devoted to the case with appropriate adjustments for any special
factors. 21 FLRA  at 139. However, when the attorney is an
employee of a union, fees are computed based on the actual costs
rather than on the prevailing market rate for the legal services
rendered. 21 FLRA  at 140.

     In this case, the grievants were represented by two
attorneys, Mr. Hirn, who is an attorney in private practice, and
Ms. Hurst, who is an attorney employed by the Union. The
Arbitrator awarded fees to both attorneys based on the "lodestar"
method. The Arbitrator's award to Mr. Hirn is proper. However, to
the extent that he awarded attorney fees to Ms. Hurst on other
than a cost-plus basis, the award is deficient and must be
modified. See Internal Revenue Service, Baltimore District Office
and National Treasury Employee Union and NTEU Chapter 62, 21 FLRA
918, 924-926 (1986). 

     With regard to the computation of fees to be paid when the
attorney is an employee of a union, there are three elements to
be considered: (1) the compensation paid to the attorney-employee
for the time expended on THE case; (2) out-of-pocket expenses
related to the case; and (3) the overhead costs. An overhead
allowance of 100 percent normally may be included as an element
of actual costs unless that amount is either "substantially
excessive or insufficient." 21 FLRA  925.

IV. Decision

     The Agency's exceptions in Case Nos. O-AR-1343 and O-AR-1445
are denied. However, the Arbitrator's award of attorney fees in
Case No. O-AR-1445 is modified to direct the Agency to reimburse
the Union, as the employer of Attorney Hurst, for its actual
costs in accordance with the applicable cost-plus formula. The
Union may submit a claim for reimbursement to the Agency based on
the applicable formula. If the parties are unable to agree on the
amount of reimbursement to be paid, they may resubmit the matter
to the Arbitrator for resolution.

Issued, Washington, D.C., January, 29, 1988.

Jerry L. Calhoun,        Chairman

Jean Mckee,                Member


FOOTNOTES

     Footnote 1 A "local hire" is a United States citizen who is
residing in a foreign area at the time of recruitment. "Local
hires" do not receive the same benefits as individuals recruited
in the Continental United States (CONUS) for foreign posts.
"CONUS hires" receive certain benefits, for example, LQA, FPD,
and transportation agreements to encourage them to leave the
United States for a foreign post or assignment.

     Footnote 2 The Arbitrator found that certain discrepancies
existed in the time records submitted in the initial fee request.