38:0456(46)NG - - NAGE Local R1-144, Federal Union of Scientists and Engineers and Navy, Naval Underwater Systems Command, Newport, RI - - 1990 FLRAdec NG - - v38 p456
[ v38 p456 ]
38:0456(46)NG
The decision of the Authority follows:
38 FLRA No. 46
FEDERAL LABOR RELATIONS AUTHORITY
WASHINGTON, D.C.
NATIONAL ASSOCIATION OF GOVERNMENT EMPLOYEES
LOCAL R1-144
FEDERAL UNION OF SCIENTISTS AND ENGINEERS
(Union)
and
U.S. DEPARTMENT OF THE NAVY
NAVAL UNDERWATER SYSTEMS CENTER
NEWPORT, RHODE ISLAND
(Agency)
0-NG-1650
DECISION AND ORDER ON NEGOTIABILITY ISSUES
November 28, 1990
Before Chairman McKee and Members Talkin and Armendariz.
I. Statement of the Case
This case is before the Authority on a negotiability appeal filed under section 7105(a)(2)(E) of the Federal Service Labor-Management Relations Statute (the Statute). It concerns 13 proposals regarding the Agency's Performance Appraisal Review System.(1)
For the reasons that follow we find: Proposal 2, which addresses the treatment of "close-out ratings" in deriving annual ratings, is limited to bargaining unit employees, and neither directly interferes with management's rights to direct employees and assign work nor is inconsistent with Government-wide regulations. We find that it is negotiable.
The disputed portion of Proposal 3, which requires that performance standards be fair and equitable, is nonnegotiable because it directly interferes with management's rights to direct employees and assign work.
Sentence one of Proposal 4, which requires that certain information be included in performance plans, neither directly interferes with management's rights to direct employees and assign work nor is inconsistent with a Government-wide regulation and is negotiable. Sentence two directly interferes with management's rights to direct employees and assign work because it would allow employees to negotiate over the content of performance standards and is nonnegotiable. Sentence three, which would preclude management from holding employees responsible for matters beyond their control, also directly interferes with management's rights to direct employees and assign work and is nonnegotiable.
Proposal 5, which addresses the number of rating levels and the criteria for performance evaluation, directly interferes with management's rights to direct employees and assign work and is nonnegotiable.
Proposal 6, which addresses remedial actions to be afforded employees whose performance is less than "Fully Successful," directly interferes with management's right to assign work and is nonnegotiable.
Sentences two and three of Proposal 7, which prescribe a budgetary allocation for awards, directly interfere with management's right to determine the budget of the Agency and are nonnegotiable. Sentence five of Proposal 7, which assigns responsibilities relating to awards to the Personnel Department, directly interferes with management's right to assign work and is nonnegotiable.
Proposal 8, which assigns responsibilities relating to awards to specified officials, directly interferes with management's right to assign work and is nonnegotiable.
Proposal 9, which would require, in certain circumstances, that a Quality Step Increase be awarded, is inconsistent with a Government-wide regulation and is nonnegotiable.
Sentences one and three of Proposal 10, which relate to dividing funds for awards into pools, do not directly interfere with management's right to determine the budget of the Agency and are negotiable. Sentence two of Proposal 10, which relates to the amount of funds to be budgeted for awards, directly interferes with management's right to determine the budget of the Agency and is nonnegotiable.
Proposals 11 and 12, which address the types and amounts of awards that may be given for a particular performance rating, are negotiable. The proposals concern conditions of employment within the meaning of section 7103(a)(14); do not directly interfere with management's rights to determine the budget of the Agency, direct employees and assign work; and are consistent with Government-wide regulations.
Proposal 13, which would require reassignment of certain employees whose performance had been identified as "Unacceptable," is nonnegotiable because it directly interferes with management's right to assign employees.
Sentence four of Proposal 14, which would require counseling and closer supervision for employees whose performance is less than "Fully Successful," has not been shown to directly interfere with management's right to assign work and is negotiable. Sentence five of Proposal 14, which would require training for employees whose performance is less than "Fully Successful," excessively interferes with management's right to assign work and is nonnegotiable.
II. Proposal 2
Item 5(e).(2) Close-out ratings [sic] means a written "summary rating" as defined below and in 5 CFR [§] 430.203, conducted when an employee or supervisor leaves a position after the employee has been under established performance standards for 90 days. All critical elements above Fully Satisfactory (FS) at a close-out rating will serve as rating of record for that element at end of year. Close-out ratings for continuing critical elements are interim appraisals and do not serve as the annual rating of record.
A. Positions of the Parties
The Agency argues that Proposal 2 is nonnegotiable because it interferes with management's rights under section 7106(a) to direct employees and assign work by prescribing the criteria upon which employees will be rated. More specifically, the Agency contends that the proposal would interfere with its "managerial discretion" to determine the weight to be given critical elements in an employee's annual performance appraisal and would cause an upward skewing of ratings by preventing equal treatment of lower and higher ratings. Agency statement of position at 2-3. Additionally, the Agency argues that, by requiring that the "close-out" ratings be more than simply considered in deriving a final rating, this proposal is inconsistent with 5 C.F.R. §§ 430.205(a) and 430.206(f), Government-wide regulations. The Agency further argues that the proposal is outside the duty to bargain because it, "in part, addresses performance appraisals for supervisors[.]" Agency statement of position at 5.
The Union describes the proposal as seeking to allow employees to have the benefit of "work well done" when an employee or supervisor changes position and a critical element does not continue in the employee's new position or under the new supervisor. Union reply brief, Proposal 2. (3) The Union denies that this proposal either interferes with management's rights or is inconsistent with Government-wide regulations. The Union denies that the proposal is intended to apply to the performance appraisals of supervisors. Id.
B. Analysis and Conclusions
1. Management's Rights To Direct Employees and Assign Work
The Authority has held that, in the context of performance appraisal systems, management's rights to direct employees and assign work are exercised through supervising and determining the quantity, quality, and timeliness of employees' work products and establishing employees' work priorities. For example, Patent Office Professional Association and Patent and Trademark Office, Department of Commerce, 25 FLRA 384, 385 (1987) (POPA), aff'd mem. sub nom. Patent Office Professional Association v. FLRA, No. 87-1135 (D.C. Cir. Mar. 30, 1988) (per curiam); National Treasury Employees Union and Department of the Treasury, Bureau of the Public Debt, 3 FLRA 769 (1980) (Public Debt) aff'd sub nom. National Treasury Employees Union v. FLRA, 691 F.2d 553 (D.C. Cir. 1982). Consequently, the Authority has held that the rights to direct employees and assign work encompass the authority to identify critical elements and to establish performance standards. For example, American Federation of Government Employees, Local 3172 an U.S. Department of Health and Human Services, Social Security Administration, Vallejo District Office, 35 FLRA 1276 (1990) (SSA, Vallejo); POPA; and Public Debt.
Proposals governing only the application of performance standards and critical elements generally do not conflict with management's rights to direct employees and assign work. For example, SSA, Vallejo, 35 FLRA at 1281. However, the rights to direct employees and assign work do include the right to determine the aspects of employees' work to be evaluated for the purpose of preparing employee performance appraisals. For example, American Federation of Government Employees, Local 32, AFL-CIO and Office of Personnel Management, 28 FLRA 714, 717 (1987). The Authority has held that a proposal that would prevent management from enforcing its established performance standards effectively alters the contents of the standards and, consequently, conflicts with the rights to direct employees and to assign work. National Treasury Employees Union and Department of Health and Human Services, Office of Hearings and Appeals, 34 FLRA 1022, 1024-27 (1990). Moreover, the right to evaluate employee performance extends to the determination of the rating to be given an employee. American Federation of Government Employees, AFL-CIO, Local 1760 and Department of Health and Human Services, Social Security Administration, 28 FLRA 160, 169 (1987). The Authority has also held that a contract provision that deprives a performance appraisal reviewing official of the discretion to change appraisals interferes with management's right to assign work by preventing the reviewing official from carrying out duties inherent in the work of appraisal review.(4) American Federation of Government Employees, Local 1509, Sioux Falls, South Dakota Veterans Hospital and U.S. Veterans Administration Hospital, Sioux Falls, South Dakota, 23 FLRA 17 (1986).
As written and explained by the Union, Proposal 2 requires that where an employee or his/her supervisor changes positions, the employee will be provided a "close-out rating." Under the proposal, any ratings above the fully successful level that are received on a critical element as a "close-out rating" would serve as the rating of record for purposes of the annual performance appraisal when that particular critical element does not continue in the employee's new position or under the new supervisor.
Nothing in the proposal or the Union's statement of intent specifies what weight must be accorded the "close-out ratings" in a noncontinuing critical element for purposes of determining an employee's annual performance appraisal. Therefore, we reject the Agency's claim to that effect. Additionally, although it is clear from the Union's reply brief that it does not intend the proposal to require that a "close-out rating" of "fully successful" or below become the rating of record for purposes of an employee's annual appraisal, the proposal itself is silent concerning what treatment is to be accorded to the lower ratings. We do not read the proposal as preventing the Agency from according the same treatment to lower "close-out ratings" as the proposal requires be accorded to higher "close-out ratings." Thus, the Agency's contention that the proposal would cause an upward skewing of ratings is unfounded.
Based on the record, we find that Proposal 2 would not directly interfere with the Agency's exercise of its rights to determine the content of critical elements and performance standards, to evaluate employee performance, or to determine the rating to be given an employee. See National Treasury Employees Union and U.S. Department of Commerce, Patent and Trademark Office, 36 FLRA 606 (1990) (proposal that determines the aspects of an employee's job that will constitute work units for counting purposes in agency's performance standards constitutes a procedure negotiable under section 7106(b)(2) and does not directly interfere with management's rights to direct employees and assign work). Additionally, the Agency does not assert and there is no basis for concluding that the proposal would interfere with the performance of duties by appraisal review officials. We reject the Agency's contention that Proposal 2 directly interferes with its rights to direct employees and assign work.
2. Government-wide Regulations
The Authority has construed the term "Government-wide regulation" to include regulations and official declarations of policy that apply to the Federal civilian work force as a whole and are binding on the Federal agencies and officials to which they apply. National Treasury Employees Union, Chapter 6 and Internal Revenue Service, New Orleans District, 3 FLRA 747 (1980) (IRS, New Orleans District). The Authority has emphasized that a requirement that a regulation apply, literally, to all Federal civilian employees in order to constitute a Government-wide regulation under section 7117 would render that provision virtually meaningless, as few, if any, regulations affect every civilian employee of the Federal Government. The Authority has found from the legislative history of the Statute that Congress understood "Government-wide regulation" to constitute a significant limitation on the scope of bargaining and intended the term to include more than the inconsequential number of regulations that might fall within a literal definition. Thus, the Authority has concluded that a regulation is a Government-wide regulation under section 7117 if it is generally applicable throughout the Federal sector. See, for example, Overseas Education Association, Inc. and Department of Defense, Office of Dependents Schools, 22 FLRA 351, 354 (1986), aff'd sub nom. Overseas Education Association, Inc. v. FLRA, 827 F.2d 814 (D.C. Cir. 1987).
Under 5 U.S.C. § 4302, executive agencies, with minor exceptions, are required to establish performance appraisal systems covering employees. The Office of Personnel Management (OPM) is authorized to prescribe regulations governing the establishment and operations of those systems. For example, 5 U.S.C. § 4302(b). Pursuant to that authority, OPM has issued regulations that include those provisions codified at 5 C.F.R. Part 430. See 5 C.F.R. § 430.101 (1990). By its terms, 5 C.F.R. Part 430, Subpart B, applies to Federal general schedule and prevailing rate employees, with minor exceptions,(5) and is binding on the heads of agencies.(6) Based on its nature and scope, we conclude that 5 C.F.R. Part 430, subpart B, which includes sections 430.205(a) and 430.206(f), is a Government-wide regulation within the meaning of section 7117(a) of the Statute.
Having determined that, we now address the question of whether Proposal 2 conflicts with 5 C.F.R. §§ 430.205(a) and 430.206(f). 5 C.F.R. § 430.205(a) provides:
Systems shall provide for preparing a summary rating when an employee changes positions during the appraisal period, if the employee has served for the minimum appraisal period in the position from which he/she has changed; agency Performance Management Plans must describe how these ratings and any other ratings given throughout the appraisal period will be taken into consideration in deriving the next rating of record.
5 C.F.R. § 430.206(f) provides:
(f) Transfer of rating. If an employee moves to a new agency or new organization in the employing agency at any time during the appraisal period, the current performance ratings of record must be transferred . . . . A summary rating must be prepared as required by § 430.205(a) of this subpart, which must be taken into consideration by the gaining agency when deriving the next rating of record.
The Agency asserts that, because the proposal mandates that a "close-out rating" for a noncontinuing critical element become the rating of record for that element, the rating "will not simply be considered in deriving a final rating" as it contends is required by the above-quoted regulatory provisions. Agency statement of position at 4.
In our view, the requirement that a "close-out rating" on a noncontinuing critical element be treated as a rating of record for purposes of "the next rating of record" is not inconsistent with a requirement that the "close-out rating" must be "taken into consideration" in deriving "the next rating of record." Under the regulatory provisions, the determination of how ratings that are based on performance during a portion of the appraisal period are to be "taken into consideration" is left to the agency's discretion. Matters that are within the discretion of an agency and are not otherwise inconsistent with law or applicable rule or regulation are negotiable. For example, National Federation of Federal Employees and U.S. Department of Agriculture, Forest Service, 35 FLRA 1008, 1014 (1990), petition for review filed sub nom. U.S. Department of Agriculture, Forest Service v. FLRA, No. 90-1333 (D.C. Cir. Jul. 5, 1990); National Treasury Employees Union and Department of the Treasury, U.S. Customs Service, 21 FLRA 6 (1986) (Customs Service), aff'd sub nom. Department of the Treasury, U.S. Customs Service v. FLRA, 836 F.2d 1381 (D.C. Cir. 1988); IRS, New Orleans District, 3 FLRA at 759-60. Of course, where the discretion committed to the agency is unfettered, that discretion is not subject to negotiation. Illinois National Guard v. FLRA, 854 F.2d 1396 (D.C. Cir. 1988) (agency could not be required to bargain over matter that was the subject of unfettered discretion vested in agency head by law). Here, the Agency cites nothing to support a conclusion, and it is not otherwise apparent to us, that the determination of how ratings based on a portion of the appraisal period will be taken into consideration is a matter of unfettered discretion.
Based on the foregoing, we reject the Agency's contention that Proposal 2 is inconsistent with a Government-wide regulation.
3. Applicability of the Proposal to Supervisors
The Union states that Proposal 2 is not intended to apply to the performance appraisals given to supervisors. This statement is not inconsistent with the wording of the proposal. Therefore, we conclude that the proposal would only apply to performance appraisals given to bargaining unit employees and reject the Agency's claim that the proposal would apply to performance appraisals provided to supervisors.
4. Conclusion
Based on the foregoing, we conclude that Proposal 2 is negotiable.
III. Proposal 3
Item 7a(1). Individual employee performance plans shall be in writing. Performance elements and standards will be prepared based on the requirements of the employee's position. Generic elements and standards may be used. Performance element standards [sic] shall be fair and equitable. Changes in performance elements during an appraisal period must be consistent with employee's position description. (Disputed portion underlined).
A. Positions of the Parties
The Agency asserts that the disputed portion of Proposal 3 is nonnegotiable because it interferes with management's rights to direct employees and assign work by substantively restricting the Agency's authority to establish performance standards. The Union contends that this proposal does not substantively affect management's rights, but, rather, establishes a "general, non-quantitative requirement allowing management's setting of standards" to be evaluated. Union reply brief, Proposal 3.
B. Analysis and Conclusions
As discussed in conjunction with Proposal 2, management's rights to direct employees and assign work encompass the authority to identify critical elements and to establish performance standards. The Authority has long distinguished between those proposals that determine the content of performance standards and proposals that are limited to the application of performance standards. Proposals in the former group are generally held to interfere with the rights to direct employees and assign work. For example, American Federation of Government Employees, AFL-CIO, Department of Education Council of AFGE Locals and Department of Education, 34 FLRA 1114 (1990) (Proposal 1) (Department of Education). Proposals in the latter group are generally held to be negotiable. For example, SSA, Vallejo, 35 FLRA at 1281.
In Department of Education, 34 FLRA at 1117-18, the Authority found that a proposal requiring that a performance appraisal system be fair and equitable was nonnegotiable because the proposal's requirements were not restricted to the application of the performance appraisal system but, rather, applied to the content of the system. Among the previous decisions on which the Authority relied in finding the proposal nonnegotiable was a decision of the U.S. Court of Appeals for the Eighth Circuit that stated in relevant part:
To allow the Union to negotiate over the meaning of such a broad and subjective term as "fair," for example, would effectively open the door to bargaining over any aspect of performance standards. Contradicting their expressed wish to affect only the application of performance standards, the Union is attempting to gain a foothold in territory that is management's exclusively, i.e., fashioning the content of performance standards.
American Federation of Government Employees, Local 3748 v. FLRA, 797 F.2d 612, 618 (8th Cir. 1986).
As the Authority noted in Department of Education, a proposal requiring only that performance standards be established in accordance with applicable law, for example, 5 U.S.C. § 4302(b), is negotiable. Proposal 3 is similar to Proposal 1 in Department of Education, however, in that it does not merely require the Agency to establish critical elements and performance standards in accordance with law. Rather, Proposal 3 requires that they be "fair and equitable," which are substantially different requirements than those imposed by 5 U.S.C. § 4302(b)(l).(7) As we stated in Department of Education, although the concepts of fairness and equity in performance elements and standards are ideals to which agencies and unions no doubt aspire, proposals that impose them as contractual criteria to govern the content of the elements and standards directly interfere with management's rights to direct employees and assign work. 34 FLRA at 1118.
Based on the foregoing, we find that the disputed portion of Proposal 3 is outside the duty to bargain because it directly interferes with management's rights to direct employees and assign work.
IV. Proposal 4
Item 7(a)(2). Accomplishment of organization objective will be included in performance plan by incorporating goals, program plans or other measures of program results. The performance plan will include the supervisor['s] and employee's conditions and assumptions required to meet the performance plans standards. No employee shall be held responsible for the work performed by other employees, supervisors, managers, contracts etc. for [sic] which they have no control over. If an employee requests his supervisor's performance plan or organizational objective, they shall be provided. (Disputed portion underlined.)
A. Positions of the Parties
The Agency asserts that the disputed portions of this proposal interfere with management's rights to direct employees and assign work by requiring that certain information be included in the performance plan and by insulating employees from accountability for work "which they have no control over." Additionally, the Agency asserts that the first sentence is inconsistent with 5 C.F.R. § 430.204(d)(2), a Government-wide regulation. In support of this latter contention, the Agency asserts that the regulation provides only that accomplishment of organizational goals "should, when appropriate" be included in performance plans while the proposal would mandate inclusion whether or not such was appropriate. Agency statement of position at 9.
The Union states that it is attempting to protect employees from "management's mistakes" and have employees informed about "what management is requiring." Union reply brief, Proposal 4.
B. Analysis and Conclusions
1. Sentence One
The Union describes the intent of the proposal as being to provide employees with "a wider understanding of the why and wherefore of their individual elements," and adopts the Agency's characterization of sentence one as relating to "information." Union reply brief, Proposal 4. Based on the record in this case, particularly the proposal itself and the Union's statement of intent, we interpret the first sentence as prescribing that the specified matters be included in performance plans for informational purposes only. The proposed first sentence would only require the Agency to set forth information concerning the context in which performance standards and critical elements apply. It does not establish criteria that would govern the content of those standards and elements: that is, the level of job performance expected of employees with regard to selected duties and responsibilities of their jobs for purposes of appraising their performance. In our view, a proposal that only requires that information be included in performance plans and does not specify criteria that would govern the content of performance standards and critical elements does not interfere with the Agency's right to determine such content.
The wording of the first sentence reflects the provisions of 5 C.F.R. § 430.204(d)(2), which states:
(2) Accomplishment of organizational objectives should, when appropriate, be included in performance plans by incorporating objectives, goals, program plans, work plans, or by other similar means that account for program results.
In our view, this regulatory provision is ambiguous and can be read as either encouraging the inclusion of the specified matters in performance plans for purely informational purposes or intending that the content of performance standards and elements should reflect "organizational objectives." For that matter, it may encompass both interpretations. Under the latter interpretation, the regulatory provision would effectively specify criteria governing the content of performance standards and critical elements; under the former interpretation, the provision does not specify criteria governing content. There is nothing in the regulation that compels adoption of the latter interpretation to the exclusion of the former interpretation. Based on the Union's statement of intent, we conclude that the proposal requires only that information concerning the specified matters be incorporated in the performance plans and not that the content of the performance standards and elements reflect "organizational objectives."
The Authority has previously held that proposals that merely require an agency to provide information concerning conditions of employment do not directly interfere with management's rights but are negotiable procedures. See, for example, Fort Bragg Association of Educators, NEA and Department of the Army, Fort Bragg Schools, 30 FLRA 508, 535-36 (1987) (Fort Bragg), rev'd as to other matters sub nom. Fort Bragg Association of Educators, NEA v. FLRA, 870 F.2d 698 (D.C. Cir. 1989). For the foregoing reasons, we conclude that the first sentence of Proposal 4 does not directly interfere with management's rights to direct employees and assign work.
We also reject the Agency's claim that the first sentence is inconsistent with 5 C.F.R. § 430.204(d)(2). Proposal 4 would require that information related to the accomplishment of organizational objectives be included in performance plans, according to the Union, for the purpose of providing employees with a better understanding of the reasons for the requirements being placed on them by the performance plan. In our view, the determination of when it is appropriate to include the matters specified in 5 C.F.R. § 430.204(d)(2) in performance plans is left to the Agency's discretion under the regulation. As discussed above in conjunction with Proposal 2, matters that are within the discretion of an agency and are not otherwise inconsistent with law or applicable rule or regulation are negotiable. Here, the Agency makes no showing, and it is not otherwise apparent to us, that the discretion that it possesses under 5 C.F.R. § 430.204(d)(2) is unfettered and cannot be exercised through negotiations. Consequently, we do not find that sentence one is inconsistent with 5 C.F.R. § 430.204(d)(2).
2. Sentence Two
The Union does not explain what is intended by sentence two. As written, the proposal requires that performance plans include "the supervisor['s] and employee[']s conditions and assumptions required to meet the performance plan standards." We interpret the second sentence as requiring that the supervisor and employee mutually agree on the "conditions and assumptions required to meet the performance plan standards" to be included in the employee's performance plan.(8) By subjecting the determination of what is required to meet performance standards to mutual agreement, the sentence effectively permits employees to negotiate over the content of the performance standards. As discussed in conjunction with Proposal 2, management's rights to direct employees and assign work encompass the authority to establish performance standards. For example, SSA, Vallejo, POPA, and Public Debt. Proposals that have the effect of allowing employees to negotiate over the establishment and content of performance standards directly interfere with those rights. For example, National Federation of Federal Employees, Local 1623 and South Carolina National Guard, Columbia, South Carolina, 28 FLRA 633, 636-38 (1987), aff'd as to other matters sub nom. National Federation of Federal Employees, Local 1623 v. FLRA, 852 F.2d 1349 (D.C. Cir. 1988).
Because the second sentence would effectively allow employees to negotiate over the content of performance standards, it directly interferes with management's rights to direct employees and assign work. If the sentence was revised to require that employees be provided with information as to what management expected of them in order to meet performance plan requirements, the sentence would likely be negotiable. See, for example, Fort Bragg, 30 FLRA at 535-36 (proposals that merely require an agency to notify employees of matters concerning their conditions of employment are negotiable procedures); see also U.S. Department of Health and Human Services, Social Security Administration, Chicago, Illinois and American Federation of Government Employees, Local 1346, 35 FLRA 1180, 1185-86 (1990) (under 5 U.S.C. § 4302(b)(2) an agency must apprise employees of the requirements against which they are to be measured for purposes of performance appraisal).
3. Sentence Three
Sentence three is to the same effect as Provision 1 in National Treasury Employees Union, Chapter 237 and U.S. Department of Agriculture, Food and Nutrition Service, Midwest Region, 32 FLRA 62 (1988) (Food and Nutrition Service). That provision precluded management from establishing performance standards that held employees responsible when levels of performance were affected by matters beyond the employee's control. In Food and Nutrition Service, the Authority distinguished between proposals that require management merely to consider matters outside the control of the employee in applying performance standards and those that require that employees be absolved of accountability and responsibility for their work performance in situations where that performance has been affected by matters outside the employee's control. Proposals in the former category concern the application of performance standards, do not directly interfere with management's rights, and are generally negotiable. See, for example, National Federation of Federal Employees, Local 2096 and U.S. Department of the Navy, Naval Facilities Engineering Command, Western Division, 36 FLRA 834, 845-46 (1990) (NAFEC, Western Division). Proposals in the latter category directly interfere with management's rights to determine the content of performance standards and elements and to evaluate employees against them and, consequently, directly interfere with management's rights to direct employees and assign work. See Food and Nutrition Service, 32 FLRA at 63-65. Because sentence three is not limited to identifying circumstances that management should merely consider when evaluating employees, but would prevent management from holding employees accountable for their work performance in the identified circumstances, it directly interferes with management's rights to direct employees and assign work.(9) Compare NAFEC, Western Division, 36 FLRA 834 (1990) (Provision 2, which required management to adjust its performance expectations in light of certain factors beyond the control of employees, directly interfered with management's rights to direct employees and assign work) with SSA, Vallejo, 35 FLRA at 1280-83 (proposal that was limited to identifying certain circumstances that management should consider when evaluating employee performance did not interfere with management's rights).
4. Conclusions
Based on the foregoing reasons, we find that sentence one does not directly interfere with management's rights to direct employees and assign work and is not inconsistent with 5 C.F.R. § 430.204(d)(2). Thus, we conclude that sentence one is negotiable. Sentences two and three directly interfere with management's rights to direct employees and assign work and the Union has not asserted that they are negotiable as appropriate arrangements under section 7106(b)(3) of the Statute. Therefore, we conclude that those two sentences are nonnegotiable.
V. Proposal 5
Item 7c4(b). Definitions of the five summary rating levels are provided below. Definitions are used to convert element ratings to a final summary rating.
| RATING | DEFINITIONS |
| Outstanding (O) (level 5) | Rated "Above Fully Successful" on all critical elements. |
| Exceeds Fully Successful (level 4) | Rated above fully successful on fifty percent or more of critical elements. |
| Fully Successful (level 3) | Rated at least fully successful on all critical elements. |
| Minimally Successful (level 2) | Rated "Below Fully Successful" on one or more critical element[s] but did not fall below the Minimally Successful Standard on any element. |
| Unacceptable (level 1) | Failed to meet the "Minimally Successful" standard on one or more critical elements. |
A. Positions of the Parties
The Agency argues that Proposal 5 interferes with management's rights to direct employees and assign work by establishing the number of rating levels and the quality of performance required at each level. The Union states that this proposal, in large measure, mirrors an Agency proposal.(10)
B. Analysis and Conclusions
It is well-established that proposals that establish the number of rating levels and criteria for performance evaluations are outside the duty to bargain because they directly interfere with management's rights to direct employees and assign work. For example, Service and Hospital Employees International Union, Local 150 and Veterans Administration Medical Center, Milwaukee, Wisconsin, 35 FLRA 521, 531-33 (1990) (VAMC, Milwaukee); American Federation of State, County and Municipal Employees, AFL-CIO, Council 26 and U.S. Department of Justice, 13 FLRA 578 (1984) (Department of Justice).
As the Authority noted in Department of Justice, an essential aspect of management's assignment of work and the supervision and guidance of employees in the performance of their work is the establishment of job requirements for various levels of performance so as to elicit the quality and amount of work from employees necessary to effectively and efficiently fulfill the agency's mission and functions. Consequently, a proposal that would establish the particular levels of performance in individual job elements required to achieve a particular summary rating for overall performance directly interferes with management's rights to direct employees and assign work. Department of Justice, 13 FLRA at 580. Additionally, the determination of the number of performance levels directly affects the degree of precision with which management can establish and communicate job requirements and the range of judgments that management can make regarding performance. In short, the number of such levels is integrally related to the effectiveness of an agency's using performance standards to accomplish the work of the agency in a manner consistent with the exigencies of effective government. Id. at 580-81.
Even if Proposal 5 largely mirrors an Agency proposal or established practice, such fact does not render negotiable a proposal that is nonnegotiable under section 7106(a). See, for example, Fraternal Order of Police, Lodge 1F (R.I.) Federal and Veterans Administration, Veterans Administration Medical Center, Providence, Rhode Island, 32 FLRA 944, 947 (1988) (VAMC, Providence) (proposals that are nonnegotiable under section 7106(a) do not become negotiable based on management actions).
We conclude that Proposal 5 directly interferes with management's rights under section 7106(a) to direct employees and assign work. Therefore, as the Union has not asserted that it is an appropriate arrangement under section 7106(b)(3) of the Statute, it is nonnegotiable.
VI. Proposal 6
Item 7(c)14. "Employees who receive a rating of record below the Fully Successful level must receive sufficient assistance in the form of formal training, on-the-job training, counseling, and close supervision and other appropriate measures to enable them to perform at the Fully Successful level."
A. Positions of the Parties
The Agency contends that Proposal 6 interferes with management's right to assign work because it would require the assignment of formal training. The Agency also argues that because this proposal would require unlimited remedial assistance and therefore prevent management from taking certain disciplinary actions, it interferes with management's rights to assign, reduce in grade and remove employees.
The Union asserts that Proposal 6 reflects a requirement set forth in the Code of Federal Regulations that requires that assistance be provided employees whose performance falls below the Fully Successful level. The Union states that, although the proposal states that the assistance must be sufficient to enable the employee to perform at an acceptable level, a third party may determine whether sufficient assistance was given.
B. Analysis and Conclusions
The OPM regulations governing agency performance appraisal systems provide at 5 C.F.R. § 430.204(i):
(i) Each appraisal system shall provide for assisting employees in improving performance rated at a level below the "Fully Successful" level. Such assistance may include but is not limited to formal training, on-the-job training, counseling, and closer supervision.
As we found in conjunction with Proposal 2, 5 C.F.R. Part 430, Subpart B, which includes § 430.204(i), is a Government-wide regulation. A proposal that paraphrases a Government-wide regulation is within the duty to bargain unless the proposal directly interferes with management's rights or is inconsistent with applicable regulations. National Treasury Employees Union, Chapter 213 and 228 and United States Department of Energy, Washington, D.C., 32 FLRA 578, 583-84 (1988). However, where incorporation of the terms of a Government-wide regulation directly into the contract would have the effect of imposing an independent, contractual requirement on an agency's discretion to exercise its management rights, a proposal doing so directly interferes with those rights. For example, National Treasury Employees Union and Department of the Treasury, Financial Management Service, 29 FLRA 422, 426-27 (1987). Therefore, the question presented is whether Proposal 6, by its terms, directly interferes with any of the management rights set forth in section 7106.
In contrast to 5 C.F.R. § 430.204(i), which requires that agency appraisal systems provide for assistance, which may include training, to employees whose performance is below the Fully Successful level, the proposal requires that formal and on-the-job training be provided if necessary to enable employees to perform at the Fully Successful level. The Authority has consistently held that proposals requiring an Agency to provide job-related training during duty hours are outside the duty to bargain because the assignment of that type of training constitutes an assignment of work. For example, American Federation of Government Employees, AFL-CIO, Local 1625 and Department of the Navy, Naval Air Station, Oceana, Virginia, 30 FLRA 1105, 1111-13 (1988) (NAS, Oceana). By requiring the Agency to provide training that would include job-related training during duty hours when necessary to enable an employee to bring their performance up to the Fully Successful level, Proposal 6 interferes with the Agency's discretion to determine whether such training will be assigned to employees. Consequently, this proposal directly interferes with management's right to assign work and, as the Union has not asserted that it constitutes an appropriate arrangement under section 7106(b)(3) of the Statute, it is nonnegotiable.
In view of this conclusion, it is unnecessary to address the Agency's contention that Proposal 6 interferes with management's right to assign, reduce in grade, and remove employees.
VII. Proposals 7 and 10
[Proposal 7]
Item 9b(1). Proper and equitable performance ratings and resulting payments and awards will be granted to covered employees. If management decides to give awards within any given grouping, then the budget allocations in that grouping will be 1.5% of base aggregate payroll. Responsibility for ensuring that the 1.5% limit is not exceeded and the 1.5% is set aside in a fund to be distributed as awards to employees is delegated to the Activity Head Designees. Because the appraisal cycle ends on 31 July, and award payments must be made no later than 31 October, they may be made from the budgets of either or both fiscal years spanning the periods. The Personnel Department will support the Activity Head Designee[s] in their responsibilities in this matter. (Underlined portions disputed.)
[Proposal 10]
Item 9(e)(4)(d). The money in each Activity Head Designee[']s fund shall be split into two pools[,] one for GS-12 and below and another for GS-13 and above. The funds in each pool shall be obtained from % of payroll for the respective grouping. Awards for GS-12 and below shall be only from their pool and likewise for GS-13 and above.
A. Positions of the Parties
The Agency contends that both proposals are nonnegotiable because they interfere with management's right to determine the budget of the Agency by dictating the allocation of Agency funds for awards and because of their significant cost implications. In this latter regard, the Agency argues that the degree of benefit to employees is disproportionate to the cost to the Agency. As to Proposal 7, the Agency makes the following additional contentions. The Agency asserts that because Proposal 7 concerns performance awards, which the Agency asserts is a "pay issue," the proposal does not concern a condition of employment within the meaning of section 7103(a)(14) of the Statute. To support this contention, the Agency argues that Congress did not intend that section 7103(a)(14) would encompass pay and money-related fringe benefits. The Agency contends that the third and fifth sentences of Proposal 7 interfere with management's right to assign work because they specify duties that are to be performed by "Activity Head Designees" and the Personnel Department. Finally, the Agency asserts that Proposal 7 is inconsistent with Government-wide regulations; specifically, 5 C.F.R. §§ 430.203, 430.204, 430.206, 430.503(c)(1), 430.503(f), and 430.506(a).
The Union states that Proposal 7 does not require that any awards be given but is only concerned with ensuring that funds are set aside for awards. According to the Union, once the decision is made to give awards within a particular "Activity Head Designee's grouping," Proposal 7 would require that "l.5% of employee salaries in that grouping be put aside for awards." Petition at 4; Union reply brief, Proposal 7. The Union asserts that Proposal 7, in large measure, reflects an Agency "proposal" and that the impact on individual Activity Head budgets would not be that great. The Union contends that Proposal 10 does not interfere with the Agency's right to determine its budget.
B. Analysis and Conclusions
1. Management's Right To Determine Its Budget
A. The 1.5 Percent Funding Requirement
The Authority first articulated the analytical structure that it would use to make determinations on whether proposals directly interfered with management's right to determine an agency's budget in American Federation of Government Employees, AFL-CIO and Air Force Logistics Command, Wright-Patterson Air Force Base, Ohio, 2 FLRA 604, 607-08 (1980) (Wright-Patterson), aff'd as to other matters sub nom. Department of Defense v. FLRA, 659 F.2d 1140 (D.C. Cir. 1981), cert. denied, 455 U.S. 945 (1982).
In that decision the Authority stated:
[T]he agency's authority to determine its budget extends to the determination of the programs and operations which will be included in the estimate of proposed expenditures and the determination of the amounts required to fund them. Under the Statute, therefore, an agency cannot be required to negotiate those particular budgetary determinations. That is, a union proposal attempting to prescribe the particular programs or operations the agency would include in its budget or to prescribe programs or operations the agency would include in its budget or to prescribe the amount to be allocated in the budget for them would infringe upon the agency's right to determine its budget under section 7106(a)(1) of the Statute.
Moreover, where a proposal which does not by its terms prescribe the particular programs or amounts to be included in an agency's budget, nevertheless is alleged to violate the agency's right to determine its budget because of increased cost, consideration must be given to all the factors involved. That is, rather than basing a determination as to the negotiability of the proposal on increased cost alone, that one factor must be weighed against such factors as the potential for improved employee performance, increased productivity, reduced turnover, fewer grievances, and the like. Only where an agency makes a substantial demonstration that an increase in costs is significant and unavoidable and is not offset by compensating benefits can an otherwise negotiable proposal be found to violate the agency's right to determine its budget under section 7106(a) of the Statute. [Footnotes omitted.]
The effect of Wright-Patterson was the establishment of a two-part test for determining whether proposals directly interfere with management's right to determine the agency's budget.
Under the first part of the test, a proposal that prescribes the particular programs or operations an agency will include in its budget or prescribes the amount to be allocated in the budget for them is found to violate the agency's right to determine its budget. The first part of the budget test is narrow. It makes nonnegotiable only those proposals addressed to the budget per se, not those that would result in expenditures by an agency and, consequently, have an impact on the budget process. See, for example, Fort Stewart Schools v. FLRA, 110 S. Ct. 2043, 2052-53 (1990) (Marshall, J., concurring) (Fort Stewart); see also Tidewater Virginia Federal Employees Metal Trades Council and U.S. Department of the Navy, Norfolk Naval Shipyard, Portsmouth, Virginia, 37 FLRA No. 79, slip op. at 10-11 (1990) (Norfolk Naval Shipyard). Proposals that simply have cost ramifications cannot be said to inject a union directly into the budget formulation process that is protected from bargaining under the first part of the budget test.
Under the second part of the test, a proposal that does not, by its terms, prescribe the particular programs or amounts to be included in the agency's budget but would result in an increase in costs that is significant and unavoidable and not offset by compensating benefits is found to violate the right to determine budget.(11) Wright-Patterson, 2 FLRA at 608.
The Union describes the proposals' funding requirement as becoming operative only if the Agency decides to give awards within an "Activity Head Designee's grouping." The implication of this statement is that, under the proposals, the Agency retains an option that would allow it to avoid the funding requirements imposed by the proposals. We find that interpreting the proposals as effectively leaving the Agency free to decide simply not to give awards is inconsistent with the first sentence of Proposal 7, which states that "[p]roper and equitable performance ratings and resulting payments and awards will be granted to covered employees." We read that sentence as contemplating that some awards will be given and as contradicting the Union's claim that under the proposal the Agency is free to refrain from giving any awards and, thereby, avoid the funding requirements of the proposals. See SSA, Vallejo, 35 FLRA at 1289 (union's position rejected where the wording of the proposal contradicts the union's claim concerning the objective of the proposal).
Even assuming that the proposals would legitimately leave the Agency with a means of avoiding the requirement that 1.5 percent of base aggregate payroll be allocated in budgets for "Activity Head Designee groupings,"12/ the question of whether the funding requirement violates the Agency's right to determine its budget would still exist. As noted above, under the first part of the budget test a proposal that prescribes the amount to be allocated in an agency's budget for a particular program or operation violates management's right to determine its budget. Insofar as Proposals 7 and 10 prescribe that, in circumstances where awards are given within a particular "Activity Head Designee's grouping," 1.5 percent of base aggregate payroll be allocated in the budget for that grouping, they prescribe an amount to be allocated in the Agency's budget for a particular program or operation. Accordingly, we find that the second and third sentences of Proposal 7 and the second sentence of Proposal 10, all of which integrally relate to the 1.5 percent funding requirement, directly interfere with the Agency's right to determine its budget.
Because we have found that these portions of the proposals are nonnegotiable based on the first part of the budget test, it is unnecessary to address the Agency's argument with respect to the second part of the budget test.
B. The "Pool" Requirement
The first and third sentences of Proposal 10 are limited to requiring that money budgeted for performance awards be divided into two pools within "each Activity Head Designee's fund," one for employees GS-12 and below and the other for employees GS-13 and above. As written, these two sentences can stand independently of the 1.5 percent funding requirement and we address them separately from sentence two of Proposal 10, which is integrally related to that funding requirement.
These two sentences, standing by themselves, prescribe neither a particular program or operation nor an amount of funds to be included in the Agency's budget. In fact, under these two sentences the Agency retains the right to determine the amount of money to be applied to each pool. There is no showing, and it is not otherwise apparent to us, that these two sentences would result in any increase in costs. Consequently, these two sentences do not meet either part of the Authority's test for establishing that a proposal directly interferes with an agency's right to determine its budget. See American Federation of Government Employees, Local 3836 and Federal Emergency Management Agency, Washington, D.C., 31 FLRA 921, 931 (1988).
In fact, these two sentences simply establish a disbursement procedure to apply after the Agency has determined its budget. That is, once the Agency has determined how much money will be budgeted for performance awards, these two sentences would operate to designate what are, in effect, separate accounts for the purpose of administering the expenditure of those funds. Even assuming that the establishment of such accounts is part of the "budget" process, the two sentences merely outline a procedure for the Agency to follow in implementing its decision concerning the amount of funds budgeted for performance awards. The proposal does not directly interfere with the Agency's right to determine the programs and amounts to be included in its budget. Thus, assuming for the sake of argument that the two sentences relate to management's right to determine the budget of the Agency, the two sentences constitute procedures that management officials of the agency will observe in exercising that right and would be negotiable under section 7106(b)(2) of the Statute. See National Federation of Federal Employees, Local 1256 and Department of the Air Force, K.I. Sawyer Air Force Base, Michigan, 31 FLRA 1203, 1205-06 (1988) (K.I. Sawyer AFB) (proposal concerned with the pool of employees who would be considered for Quality Step Increases was "wholly procedural in nature").
2. Pay and Money-Related Fringe Benefits
At the outset, we reject the Agency's claim that performance awards are a "pay issue." An agency's authority under 5 U.S.C. §§ 4502-03 to grant awards encompasses performance awards. See 5 C.F.R. § 430.501(a); 51 Fed. Reg. 8396, 8407. In National Treasury Employees Union and Internal Revenue Service, 27 FLRA 132, 135-38 (1987) (Internal Revenue Service), the Authority concluded that incentive awards payable to employees under 5 U.S.C. §§ 4502 and 4503 do not constitute wages or salaries and are distinguishable from those "money-related fringe benefits" referred to in the legislative history of the Statute in the context of discussions of the scope of bargaining under the Statute and on which the Agency in this case relies. In concluding that incentive awards were not wages or salaries, the Authority relied on the fact that incentive awards are not encompassed under Chapter 53 of title 5, U.S. Code, which governs pay rates and systems generally, and that OPM did not view incentive awards to be properly considered pay within the meaning of that Chapter. The Authority concluded that incentive awards differed from the kinds of "money-related fringe benefits" referred to in the legislative history (retirement, life and health insurance, etc.) in that those matters, unlike incentive awards, are all statutory entitlements of Federal employees.
Additionally, we reject the Agency's argument that pay and fringe benefits, per se, do not concern "conditions of employment" within the meaning of section 7103(a)(14) of the Statute. Under the Statute, parties are obligated to bargain over proposals concerning conditions of employment, provided that the proposals do not violate law, Government-wide regulation, or an agency regulation for which there is a compelling need. Conditions of employment are defined as personnel policies, practices, and matters whether established by rule, regulation, or otherwise, affecting working conditions. 5 U.S.C. § 7103(a)(14). Matters that are specifically provided for by Federal statute are excluded from the definition of conditions of employment. 5 U.S.C. § 7103(a)(14)(C).
The Authority has applied this basic analytical framework to negotiability questions that are presented to it, including those that concern pay and fringe benefits. For example, American Federation of Government Employees, AFL-CIO, Local 1897 and Department of the Air Force, Eglin Air Force Base, Florida, 24 FLRA 377 (1986) (Chairman Calhoun dissenting) (Eglin). Recently, the Supreme Court upheld the Authority's conclusion that proposals concerning pay and fringe benefits concern "conditions of employment" in circumstances where pay and fringe benefits are not specifically provided for by statute. Fort Stewart. In Fort Stewart, the Court held that the Authority's conclusion that a proposal concerning pay related to "conditions of employment" within the meaning of the Statute was a permissible construction of the Statute. The Court rejected contentions that (1) the term "conditions of employment," which is contained in the Statute, does not encompass pay and (2) statements in the legislative history of the Statute, on which the Agency in this case relies, warrant a conclusion that pay and fringe benefit proposals are not "conditions of employment" under the Statute. Thus, under Fort Stewart and Eglin, matters concerning pay and fringe benefits that are not specifically provided for by statute, but are left to the discretion of the agency, are conditions of employment within the meaning of section 7103(a)(14) of the Statute.
3. Management's Right To Assign Work
The Agency asserts that sentences three and five of Proposal 7 interfere with management's right to assign work by specifically defining duties to be performed by Agency officials. Because we have found that sentence three directly interferes with management's right to determine the budget of the agency and is nonnegotiable for that reason, it is not necessary