30:1219(135)NG - NTEU Chapter 245 and Commerce, Patent and Trademark Office -- 1988 FLRAdec NG



[ v30 p1219 ]
30:1219(135)NG
The decision of the Authority follows:


30 FLRA NO. 135
 30 FLRA 1219

 29 JAN 1988

NATIONAL TREASURY EMPLOYEES
UNION, CHAPTER 245

                    Union

       and

DEPARTMENT OF COMMERCE,
PATENT AND TRADEMARK OFFICE

                     Agency

Case No. O-NG-1374

DECISION AND ORDER ON NEGOTIABILITY ISSUES

     I. Statement of the Case

     This case is before the Authority because of a negotiability
appeal filed under section 7105(a)(2)(E) of the Federal Service
Labor - Management Relations Statute (the Statute). It concerns
the negotiability of three proposals submitted by the Union in
response to the Agency's notification that it intended to
implement an Agency regulation entitled "Department of Commerce
Bulletin 451-1" (PB451-1) concerning performance awards.

     For the reasons which follow, we find that Proposal 1, which
concerns cash awards for performance, is negotiable. We dismiss
the Union's petition for review as it relates to Proposal 2
concerning quality salary increases, because the proposal
conflicts with a Government-wide regulation. We find that
Proposal 3 is not properly before us. Therefore, we dismiss the
Union's petition for review as to Proposal 3 without prejudice to
its right to file a negotiability appeal if the conditions
governing review of negotiability issues are met and if the Union
chooses to file such an appeal.

     II. Proposal 1

     I. SUSTAINED SUPERIOR PERFORMANCE AWARDS

     A. The award ranges for full time employees for a full
performance appraisal cycle are as follows: outstanding, 10% (of
] salary); commendable, 6% (of salary); and fully
successful, 3% (of salary).

     C. Employees promoted within the last six months will
receive a special achievement award roughly proportional to the
performance award they would have received.

     A. Positions of the Parties

     The Agency contends that Proposal 1 violates the following
Government-wide regulations: (1) 5 C.F.R. 531.606(b), which
states that performance awards shall not be mandatory; (2)
Federal Personnel Manual (FPM) 451, Subchapter 4-2a(8), which
states that "there should be no automatic awards based solely on
performance appraisals"; and (3) 5 C.F.R. 430.503(c), which
requires review and approval of each award determination by an
Agency official. It claims further that the proposal violates
management's right to determine its budget under section
7106(a)(1) of the Statute. The Agency claims that Proposal 1,
section IC is not negotiable for the following additional
reasons: (1) the Agency has made no change which gives rise to a
duty to bargain over special achievement awards; and (2) section
IC violates a Government-wide regulation, 5 C.F.R. 451.104(j),
which provides that, "Superior accomplishment awards shall not be
mandatory."

     The Union contends that the Government-wide regulations
cited by the Agency are not applicable because: (1) 5 C.F.R.
531.606(b) has been superseded by 5 C.F.R. 430.501, Subpart E
which does not continue the proscription of mandatory performance
awards; and (2) FPM chapter 451, subchapter 4-2a(8) does not
concern "performance" awards but relates to other "incentive"
awards--suggestions, inventions, special acts or services. The
Union asserts that the performance awards in issue are governed
by 5 C.F.R. 430.502, which states that the granting of
performance awards must be "based on the employee's rating of
record." The Union further asserts that the applicable Agency
regulation involved, Personnel Bulletin 451-1, permits "the use
of a performance appraisal as the sole written justification for
the performance award." Union Response at 3. The Union also
contends that the proposal does not violate the requirement in 5
C.F.R. 430.503(c) for the review of performance award
determinations by management officials since nothing in section
IA prohibits review under the procedure established in
the Agency's regulation, which includes a review of the
employee's performance by the employee's supervisor and an
incentive awards program officer to ensure compliance with award
criteria. Finally, the Union contends that the Agency has not
submitted any evidence to support its assertion that the proposal
will increase the Agency's operating costs and claims that any
increase in costs nevertheless would be offset by the savings
generated by a comparable increase in performance and
efficiency.

     B. Analysis and Conclusions

     This proposal establishes mandatory performance awards of
various percentages of salary. An award is triggered under the
proposal if an employee receives a fully successful, a
commendable, or an outstanding performance rating. We find, as
explained below, that the Agency has not supported its claim that
the proposal is nonnegotiable.

     1. Whether The Proposal Is Barred From Negotiations by 5
C.F.R. 531.606, Subpart F, Entitled "Performance Awards"

     5 C.F.R. 531.606, Subpart F provided that performance awards
shall not be mandatory. It has been superseded, however, by 5
C.F.R. 430.501, Subpart E, entitled "Performance Awards." The
change itself and the reasons for it are described at 51 Fed.
Reg. 8409, 8417-18 and 8421 (1986). The regulation now in effect
does not proscribe mandatory performance awards based on an
employee's performance rating. Rather, it states at section
430.503(b) that:

     An award under this subpart shall be based on the employee's
rating of record for the current appraisal period for which
performance awards are being paid.

     We find no basis on which to construe the wording of the
current regulation as prohibiting an agency from basing a
performance, award, as is here proposed by the Union, solely on
an employee's rating. Therefore, we reject the Agency's claim
that 5 C.F.R. 531.606 bars the negotiation of this proposal.

     2. Whether the Proposal Is Barred From Negotiations By FPM
451, Subchapter 4-2

     The Agency claims that since FPM 451, Subchapter 4-2a(8)
states that "(b)ecause other factors affect award 
decisions, there should be no automatic awards based solely on
performance appraisals," negotiations on Proposal 1 are barred.
We reject this argument.

     The provision of the FPM relied on is not mandatory.
Introduction to FPM chapter 451 expressly characterizes the
chapter as follows: "Italicized material quotes law or regulation
which requires compliance by agencies. Non-italicized material is
guidance., The quoted provision on which the Agency relies is not
italicized and therefore constitutes only guidance. FPM chapter
451 further expressly provides in subchapter 1-3 that: "The
regulation on incentive awards is Part 451 of the Code of Federal
Regulations. This chapter (451 of the Federal Personnel Manual),
is guidance." We, therefore, conclude that the provision relied
on by the Agency is guidance and not a Government-wide regulation
which could bar negotiations.

     3. Whether The Proposal Is Barred From Negotiations

     By 5 C.F.R. 430.503(c)

     We find, contrary to the Agency's claim, that Proposal 1
does not conflict with section 430.503(c), which requires that
agency procedures for making performance award determinations
"must include a requirement for review and approval of each
determination by an official of the agency.' The Union states,
consistent with the plain wording of its proposal, that Proposal
1 does not prohibit management from reviewing an award. The Union
asserts as an example that the proposal does not conflict with
the review procedure set forth in the Agency's regulation, which
includes "review of the employee's performance by the supervisor
and a review by the appropriate incentive awards program officer
to assure conformity with regard to the award criteria." Union
Response at 4. Therefore, we reject the agency's argument that
the proposal is barred from negotiations by 5 C.F.R. 430.503(c)
because it would not permit management review and approval.

     4. Whether the Proposal Interferes With Management's Right
to Determine Its Budget Under Section 7106(a)(1) of the Statute

     In American Federation of Government Employees, AFL - CIO
and Air Force Logistics Command, Wright - Patterson Air Force
Base, Ohio, 2 FLRA  604 (1980), enforced as to other matters sub
nom. Department of Defense v. FLRA,  659 F.2d 1140 (D.C. Cir.
1981), cert. denied sub nom., AFGE v. FLRA,  455 U.S. 945 (1982),
the Authority stated that it would find a proposal inconsistent
with an agency's right to determine its budget if (1)
the proposal prescribed a particular program or an amount of
funds to be included in the agency's budget or,(2) the agency
made a substantial demonstration that the proposal would result
in costs which would not be offset by compensating benefits. The
Agency has not demonstrated that implementation of the Union's
proposal would directly interfere with management's right to
determine its budget under this test.

     There is no showing that Proposal 1 prescribes a particular
program or operation, or an amount of funds to be included in the
Agency's budget. The Agency has not demonstrated that
implementation of Proposal 1 would result in a significant and
unavoidable increase in costs which would not be offset by
compensating benefits. Although the Agency maintains that the
proposal would, "create a particular entitlement program
affecting so many employees as to require a significant amount of
funds to be included in the budget," the Agency concedes that it
has not "costed out" the proposal. Agency Statement of Position
at 6.

     Further, management has the right to establish the
performance standards that an employee must meet in order to
achieve a particular performance rating which, under the
proposal, would result in an automatic award. Therefore,
management retains control over the fundamental, underlying
criteria which affect employee performance ratings and,
derivatively, awards under this proposal. Consequently, we cannot
find that negotiation of the proposal would result in an
unavoidable increase in costs. See National Treasury Employees
Union and Internal Revenue Service, 27 FLRA  132, 138-40 (1987).
Therefore, the proposal does not violate the Agency's right to
determine its budget.

     5. Whether Section IC Of The Proposal Is Barred From
Negotiations By 5 C.F.R. 451.104(j)

     In promulgating changes to its regulations in 1986, the
Office of Personnel Management (OPM) noted that the changes were
designed to "facilitate a clear distinction between performance
awards and superior accomplishment awards (cash awards) covered
under Part 451, Subpart A." 51 Fed. Reg. 8409 (1986). 5 C.F.R.
451.104(j), relied on by the Agency, is contained in Part 451,
Subpart A and provides that, "Superior accomplishment awards
shall not be mandatory." Since it is clear and undisputed that
section IC of the proposal is not concerned with a superior
accomplishment award, 5 C.F.R. 451 is inapplicable.

     Therefore, we reject the Agency's argument that section
451.104(j) bars negotiation of this proposal.

     6. Whether Section IC of the Proposal is Barred from
Negotiations Because the Agency Has Not Made a Regulatory Change
Which Gave Rise to a Duty to Bargain

     Where the conditions for review of negotiability issues have
been met, that is, where the parties are in dispute as to whether
a proposal is inconsistent with law, rule or regulation, a union
is entitled to a decision by the Authority as to whether a
proposal is negotiable under the Statute. This conclusion is not
altered by the existence of additional issues in the case, for
example, an alleged conflict between a proposal and a controlling
agreement. See American Federation of Government Employees, Local
2736 v. FLRA,  715 F.2d 627, 631 (D.C Cir. 1983). Accordingly,
the Agency's allegations that a threshold duty to bargain
question exists does not preclude us from determining the
negotiability of this proposal which is otherwise properly before
us. The Agency also contends that section IC of the proposal
contravenes law and Government-wide regulations. Issues regarding
the duty to bargain in the specific circumstances of this case
should be resolved in other appropriate proceedings such as the
parties' negotiated grievance procedure or the unfair labor
practice procedures under the Statute. See American Federation of
Government Employees, AFL - CIO, Local 2736 and Department of the
Air Force, Headquarters 379th Combat Support Group (SAC)
Wurtsmith Air Force Base, Michigan, 14 FLRA  302, 306 n.6
(1984).

     7. Summary

     As discussed above, the Agency has not supported its claims
that Proposal 1 violates Government-wide regulations promulgated
by OPM or the Agency's right to determine its budget.
Accordingly, we find that the proposal is within the duty to
bargain.

     III. Proposal 2

     II. QUALITY STEP INCREASES

     A. Criteria. To qualify, an employee must:

     1. Have a current outstanding summary rating of Outstanding;


     2. Have occupied the same grade and type of position for at
least the last six consecutive months of the appraisal cycle and
be expected to continue at this high level of performance in the
same position for at least 60 days after the effective date of
the increase;

     3. Not have been on detail to another position during any
part of the recognition period ("detail to another position" is
when an employee is getting higher pay or a position outside the
PTO);

     4. Not have received a QSI within the preceding 52 calendar
weeks; and

     5. Not be in the top step of his or her pay range.

     C. If the employee satisfies the criteria outlined in A. the
employee will be entitled to receive the QSI; however, the
employee will have the option of electing between the QSI and the
applicable cash award (SSP). This election need not be made by
the employee until the amount of the cash award has been
determined.

     A. Positions of the Parties

     The Agency contends that Proposal 2 is nonnegotiable for all
of the reasons it claimed in connection with Proposal 1.
Additionally, it argues that Proposal 2 violates 5 C.F.R.
531.504, which provides that a quality step increase (QSI) "shall
not be required but may be granted only to an employee who
receives a rating of record at level 5 (Outstanding)." Agency
Statement of Position at 8.

     The Union contends that Proposal 2 does not violate the
Statute or any Government-wide regulations.

     B. Analysis and Conclusions

     We reject here the Agency's arguments raised in connection
with Proposal 1 for the reasons previously stated. We
find, however, that Proposal 2 is outside the duty to bargain
because it conflicts with 5 C.F.R. 531.504, a Government-wide
regulation within the meaning of section 7117(a)(1) of the
Statute because it is mandatory and generally applicable to
Federal employees throughout the Government. Proposal 2 mandates
that "if the employee satisfies the criteria outlined in A, the
employee will be entitled to receive the QSI." Section 531.504,
in contrast, provides that: "A quality step increase shall not be
required but may be granted only to an employee who receives (an
outstanding rating)." The Union states that this proposal "do(es)
not require a QSI. Only employees who meet the established
criteria are entitled to a QSI." Union Response at 9.

     The plain wording of this proposal and the Union's stated
intent are that an employee who meets the established criteria
must be granted a QSI by the Agency. The wording of the
regulation is equally plain: it permits the Agency to grant a QSI
to an employee who meets established criteria but it prohibits
the Agency from establishing a requirement that a QSI will be
granted, even to an employee who meets established criteria.
Consequently, we find that this proposal is inconsistent with 5
C.F.R. 531.504 and, therefore, is outside the duty to bargain.

     IV. Proposal 3

     III. TRANSITION

     A. This award system will continue in effect unless one of
the following occurs:

     (1) a new performance award bulletin is issued by the Office
and impact and implementation bargaining has been completed; or

     (2) the FLRA  decision on the negotiability of awards in 14
FLRA  77 is finally overruled or clarified in such a manner that
the negotiability of awards is not reasonably at issue.

     However, this award system will remain effective for FY 1987
even if one of the above events occurs during FY 1987.
If event (2) occurs, the union has the option to submit proposals
on the subject of awards to the office. Upon receipt of such
proposals, the office will have 2 weeks to submit
counterproposals and begin negotiations.

     The parties recognize that standard legal interpretation of
the effect of a reversal or clarification of a lower tribunal's
decision is applicable.

     A. Positions of the Parties

     The Agency contends that this proposal is nonnegotiable
because: (1) the parties' collective bargaining agreement covers
the matters involved in the proposal; and (2) the Agency has no
obligation to reopen this part of the parties' agreement. The
Union generally disagrees with the Agency's contentions and
contends that the agency cites no law, regulation or
administrative ruling in support of its position.

     B. Analysis and Conclusions

     As to Proposal 3, the Agency contends only that the subject
matter is covered by the parties' Agreement and that the Agency
has no obligation to reopen this part of the agreement. The
Agency does not argue that this proposal is inconsistent with
law, rule, or regulation.

     Under section 2424.1 of our Regulations, we will consider a
petition for review of a negotiability issue only where the
parties are in dispute as to whether a proposal is inconsistent
with law, rule or regulation. American Federation of Government
Employees, Local 12, AFL - CIO and Department of Labor, 26 FLRA 
768 (1987). There are no issues before us as to whether Proposal
3 is inconsistent with law, rule or regulation. In these
circumstances, the conditions governing review of negotiability
issues have not been met. Moreover, other issues concerning the
proposal about which the parties are in dispute--whether the
subject matter of the proposal is covered by the parties'
agreement or whether management has an obligation to
reopen--should be resolved in other appropriate proceedings, such
as the parties'negotiated grievance procedure or the unfair labor
practice procedures under section 7118 of the Statute.

     Therefore, we will dismiss the Union's petition for review
as to this proposal, without prejudice to the Union's right to
file a negotiability appeal if the conditions governing review of
negotiability issues are met and if the Union chooses to file
such an appeal.

     V. Order

     The Agency must upon request, or as otherwise agreed to by
the parties, negotiate over Proposal 1. 1 The petition for review
is dismissed as to Proposal 2. The petition for review as to
Proposal 3 is dismissed without prejudice to the Union's right to
file a negotiability appeal if the conditions governing review of