38:1589(127)NG - - IFPTE Local No. 1 and Navy, Norfolk Naval Shipyard - - 1991 FLRAdec NG - - v38 p1589



[ v38 p1589 ]
38:1589(127)NG
The decision of the Authority follows:


38 FLRA No. 127

FEDERAL LABOR RELATIONS AUTHORITY

WASHINGTON, D.C.

INTERNATIONAL FEDERATION OF PROFESSIONAL AND

TECHNICAL ENGINEERS, LOCAL NO. 1

(Union)

and

U.S. DEPARTMENT OF THE NAVY

NORFOLK NAVAL SHIPYARD

(Agency)

0-NG-1715

DECISION AND ORDER ON NEGOTIABILITY ISSUES

January 18, 1991

Before Chairman McKee and Members Talkin and Armendariz.

I. Statement of the Case

This case is before the Authority on a negotiability appeal filed by the Union under section 7105(a)(2)(E) of the Federal Service Labor-Management Relations Statute (the Statute). The appeal concerns the negotiability of three proposals resulting from changes in the Agency's performance appraisal program. The Union did not file a response to the Agency's statement of position.

Proposal 1 establishes the maximum performance awards pool funding level for each activity and for the bargaining unit. We find that the proposal is nonnegotiable because it directly interferes with the Agency's right to determine its budget under section 7106(a)(1) of the Statute.

Proposal 2 requires the Agency to pay an employee the dollar value of shares earned in the performance awards pool in accordance with the employee's performance rating. We find that the proposal is nonnegotiable under section 7117(a)(1) of the Statute because it is inconsistent with a Government-wide regulation.

Proposal 3 requires the Agency to include a place on the Agency's performance appraisal form for an endorsement by the Activity head designee. We find that the proposal is a negotiable procedure under section 7106(b)(2) of the Statute.

II. Proposal 1

Paragraph 8a(7)(c) Funding Levels Activities will establish 1.5 percent of aggregate base salaries of covered employees as the maximum funding level for [the] performance awards pool. The aggregate base salary will be calculated based on the number of filled or vacant unit positions as of the last day of the appraisal cycle. (QSIs are not charged to the 1.5 percent limit.) The funding levels for this unit shall not be less than the maximum in the activity.

A. Positions of the Parties

1. Agency

The Agency contends that Proposal 1 is inconsistent with section 7103(a)(14) of the Statute because wages and fringe benefits are not conditions of employment. The Agency argues that: (1) section 7117 of the Statute is applicable only to "conditions of employment" within the meaning of section 7103(a)(14); and (2) the legislative history of the Statute and recent court decisions indicate that "Congress did not intend for collective bargaining to encompass pay and money-related fringe benefits." Statement of Position at 1. The Agency cites the courts' decisions in Department of the Navy, Military Sealift Command v. FLRA, 836 F.2d 1409 (3d Cir. 1988); and Department of the Treasury, Bureau of Engraving and Printing v. FLRA, 838 F.2d 1341, 1343 (D.C. Cir. 1988).

The Agency states that it is "aware that in recent decisions concerning incentive pay and performance recognition, the Authority has taken the position that . . . such matters are negotiable[.]" Statement of Position at 6. The Agency asserts, however, that, although the payment of incentive awards is not basic pay within the meaning of section 4503 of the Statute, the payment of incentive awards "is nevertheless pay by any common understanding of the term." Id. The Agency requests that the Authority, consistent with the dissent in American Federation of Government Employees, AFL-CIO, Local 1897 and Department of the Air Force, Eglin Air Force Base, Florida, 24 FLRA 377, 390 (1986) (Chairman Calhoun dissenting), find Proposal 1 to be nonnegotiable because it does not concern conditions of employment under section 7103(a)(14). Statement of Position at 6-7.

The Agency also contends that Proposal 1, by requiring that a fixed percentage of employees' base aggregate salaries be used for the payment of performance awards, interferes with management's right to determine its budget under section 7106(a)(1) of the Statute. The Agency relies on 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, Army Exchange Service v. FLRA, 659 F.2d 1140 (D.C. Cir. 1981), cert. denied, 455 U.S. 945 (1982). The Agency states that the proposal "would specifically require the allocation of 1.5% of base aggregate payroll for awards and . . . require that the level of funding in one part of the organization must not be less than that elsewhere in the organization." Statement of Position at 8.

Moreover, the Agency asserts that Proposal 1 specifies a particular budget amount even though the amount "is stated in percentage terms rather than in absolute dollar terms[.]" Id. According to the Agency, therefore, the proposal would "force the [A]gency to establish its funding priorities in a specific manner" despite Congressional intent that "agencies should be free to set funding priorities without the mandatory involvement of unions." Id.

The Agency disagrees with the Union's argument that, because Proposal 1 only establishes the method of funds distribution and does not dictate a specific dollar amount for performance awards, the proposal does not interfere with management's right to determine its budget. The Agency argues that Proposal 1 precludes the exercise of management's right to determine its budget because the proposal would establish: (1) a particular program (that is, a performance awards program); and (2) an awards pool ceiling at 1.5 percent of employees' aggregate base salaries. Id. at 9. In addition, the Agency asserts that Proposal 1 would prevent it "from rewarding employee performance more generously if it saw fit to do so." Id. The Agency relies on the courts' decisions in Nuclear Regulatory Commission v. FLRA, 859 F.2d 302 (4th Cir.) (en banc), reversed, 879 F.2d 1225 (4th Cir. 1989) (en banc); and Department of the Air Force, Langley Air Force Base v. FLRA, 878 F.2d 1430 (4th Cir. 1989) (unpublished opinion) to support its position.

2. Union

The Union contends that the proposal does not interfere with management's right to determine its budget because the proposal does not require the Agency to budget a specific amount of money for performance awards. The Union states that it has the right to "negotiate distribution of funds once the budget has been established." Petition for Review at 2. The Union argues that the proposal merely requires that funds for the purpose of providing performance awards to employees must be equitably distributed. Id. The Union points out that the 1.5 percent funding level maximum established in the proposal was taken directly from an Agency counter-proposal made during negotiations between the parties. Id.

The Union also contends that the proposal does not conflict with section 7103(a)(14) of the Statute because performance awards are "legally and traditionally" distinct from wages and fringe benefits. Id. at 3. According to the Union, "the only thing that awards have in common with wages and fringe benefits is that each can be given a monetary value." Id. The Union also argues that the funds for performance awards are within the Agency's discretion. Id.

Finally, the Union contends that the proposal is similar to proposals found to be negotiable in several decisions, including the Authority's decision in National Association of Government Employees, Locals R4-26 and R4-106 and Department of the Air Force, Langley Air Force Base, Virginia, 32 FLRA 607 (1988) (Langley Air Force Base).

B. Analysis and Conclusions

We conclude that Proposal 1 directly interferes with the Agency's right to determine its budget under section 7106(a)(1) of the Statute and, therefore, that it is nonnegotiable.

Proposal 1 would require activities to establish a performance awards pool. The maximum funding level of the "pool" so established would be calculated based on: (1) 1.5 percent of the aggregate base salaries of covered unit employees; and (2) the number of filled or vacant positions on the last day of the performance appraisal cycle. Therefore, the effect of Proposal 1 would be to limit the maximum performance awards funding level for activities to an amount not more than 1.5 percent of the aggregate base salaries of covered employees.

1. Proposal 1 Concerns a Condition of Employment

In National Treasury Employees Union and Internal Revenue Service, 27 FLRA 132, 136-37 (1987) (Internal Revenue Service), the Authority concluded that a proposal relating to incentive awards concerned a condition of employment. Noting that money paid to employees pursuant to 5 U.S.C. § 4503 is not properly considered pay within the meaning of 5 U.S.C. § 5301 et seq., the Authority rejected the agency's argument that matters concerning incentive awards are matters concerning employees' pay. Because incentive awards are not matters concerning pay, we reject the Agency's argument in this case that Proposal 1 concerns a "pay and money-related fringe benefit" matter.

Proposal 1 in this case concerns matters pertaining to incentive awards in each activity. We find, therefore, consistent with Internal Revenue Service, that Proposal 1 concerns a condition of employment within the meaning of section 7103(a)(14) of the Statute. See also National Association of Government Employees, Local R1-144, Federal Union of Scientists and Engineers and U.S. Department of the Navy, Naval Underwater Systems Center, 38 FLRA No. 46, slip op. at 25, 26 (1990) (Naval Underwater Systems Center). We note that, in any event, matters pertaining to employees' pay are matters related to employees' conditions of employment. See Fort Stewart Schools v. FLRA, 110 S. Ct. 2043 (1990) (Fort Stewart).

2. Proposal 1 Is Inconsistent With Management's Right to Determine Its Budget

In Wright-Patterson, the Authority established two separate tests for determining whether a proposal conflicts with an agency's right to determine its budget. The Authority held that, in order to establish that a union proposal directly interferes with management's right to determine its budget, an agency must either demonstrate that the proposal: (1) prescribes the particular programs to be included in the budget or the amount to be allocated in the budget for those programs; or (2) entails an increase in costs that is significant and unavoidable and is not offset by compensating benefits. See Fort Stewart, 110 S. Ct. at 2049.

The first budget test in Wright-Patterson makes nonnegotiable only those proposals that are addressed to the budget per se. A proposal will be found to violate an agency's right to determine its budget under the first test if the proposal prescribes the particular programs or operations an agency will include in its budget or prescribes the amount to be allocated in the budget for those programs or operations. Under the second test, a proposal will be found to violate an agency's right to determine its budget if the proposal does not, by its terms, prescribe the particular programs or amounts to be included in an agency's budget but, nevertheless, would result in an increase in costs that is significant and unavoidable and not offset by compensating benefits.(1) Wright-Patterson, 2 FLRA at 608.

As noted earlier, the Union argues that the proposal does not directly interfere with management's right to determine its budget because the proposal: (1) becomes operative only after the Agency has established its budget; and (2) does not require the Agency to budget a specific amount of money for performance awards. We disagree. In Naval Underwater Systems Center, slip op. at 24, the Authority, applying the first budget test established in Wright-Patterson, determined that a proposal requiring a budgetary allocation of 1.5 percent of base aggregate payroll for performance awards was inconsistent with the agency's right to determine its budget under section 7106(a)(1). The Authority found that the proposal prescribed a particular amount to be set aside for the purpose of granting performance awards to employees and required that a budget allocation be made in that amount. The Authority also determined, however, that the proposal's requirement of a performance award pool did not violate the Agency's right to determine its budget.

Proposals requiring a "budget allocation" of a specific amount to fund performance awards, even if expressed solely in percentage terms, directly interfere with management's right to determine its budget under section 7106(a)(1) of the Statute. See Naval Underwater Systems Center, slip op. at 24. Proposal 1 in this case establishes a maximum funding level of 1.5 percent of employees' aggregate base salaries for each activity. We find that Proposal 1 establishes a specific budgetary restriction on the funding levels for performance awards and that that limitation directly affects the amount of money the Agency may include in its budget for that purpose. The effect of Proposal 1 would be to establish a maximum limit, 1.5 percent of aggregate employees' salaries, on the amount of money that could be included in the budget of an activity for performance awards. The funding level set by the proposal, therefore, prescribes a "ceiling," which the Agency is prevented from exceeding, on the amount of money the Agency may have available in its budget for performance awards.

Because Proposal 1 establishes a specific budgetary limit on the funding levels for performance awards in the Agency's budget, we find that Proposal 1 is nonnegotiable because it directly interferes with the Agency's right to determine its budget under section 7106(a)(1) of the Statute.

We also conclude that because Proposal 1 prescribes the maximum amount that may be included in the budget to fund performance awards for unit employees, Proposal 1 is distinguishable from the proposal found negotiable in American Federation of Government Employees, Local 3836 and Federal Emergency Management Agency, Washington, D.C., 31 FLRA 921, 931 (1988) (Federal Emergency Management Agency). The proposal in Federal Emergency Management Agency preserved the agency's discretion to determine the amount of money to be budgeted for performance awards. Proposal 1 in this case, however, by prescribing the maximum funding level for unit employee performance awards, establishes a specific limit on the amount of money to be budgeted for that purpose. Consequently, the proposal directly interferes with management's right to determine its budget under section 7106(a)(1).

In our opinion, this result is consistent with the first prong of the budget test set forth in Wright-Patterson. Although the first prong is stated in terms of an "amount" or a "program" to be included in an agency's budget, the first prong is designed to bar from negotiation those proposals that determine directly what the agency's budget will be. The second prong of the test concerns proposals that establish a condition of employment that would impose a cost on the agency, but do not determine how that cost will be funded in the agency's budget.

Proposal 1 does not prescribe a specific amount or a specific program to be included in the Agency's budget. However, because Proposal 1 pertains to what the budget itself can include, the proposal is appropriately analyzed under the first prong of the budget test. By imposing a ceiling on what the Agency's budget can contain in the way of funds for incentive awards, Proposal 1 goes directly to the budget per se. Under the first prong of the budget test, therefore, because Proposal 1 imposes an upper limit on what the Agency's budget itself may contain as a funding level for incentive awards, the proposal directly interferes with management's right to determine its budget. See Department of Defense, Army-Air Force Exchange Service v. FLRA, 659 F.2d 1140, 1152 (D.C. Cir. 1981), cert. denied sub nom., AFGE v. FLRA, 455 U.S. 945 (1982) (the court noted that proposals, although cast in procedural language, may nonetheless "impinge on substantive management decisions by specifying the criteria pursuant to which decisions must be made").

Moreover, in view of Fort Stewart, to the extent that the court's decision in Langley Air Force Base pertains to management's right to determine its budget, we will not follow that decision. Accord Norfolk Naval Shipyard; and U.S. Department of the Treasury, Internal Revenue Service, Brookhaven Service Center and National Treasury Employees Union, Chapter 99, 37 FLRA 1176, 1184 (1990).

Accordingly, noting that the Union does not contend that the proposal constitutes an appropriate arrangement under section 7106(b)(3) of the Statute, we find that the proposal is nonnegotiable because it directly interferes with the Agency's right to determine its budget under section 7106(a)(1) of the Statute.

III. Proposal 2

Paragraph 8a(7)(d). Payments of Awards. The amount of the award pool will be dependent on available EOB funds and on Managing Payroll Authority. It is the employer's intent that the award pool be no less than 0.7% and no more than 1.5% of the aggregate salaries of PARS positions as defined above. In any given year, if the pool size is less than that amount, or less than the amount of the previous year, the parties shall meet to discuss the reasons for the reduction. The dollar value of a share will be calculated by determining the total number of shares awarded, and dividing that into the dollar amount of the award pool. Each eligible employee will be awarded a number of shares based upon their performance rating and the degree of their contribution to the achievement of shipyard mission, goals and objectives. The number of shares will be distributed as follows:

Pay-out Conversion Table

   Within-grade  Quality Step  Performance Award
Ratings   Increase  Increase (QSI) (PA) Shares  
       
 0  FULL  ELIGIBLE*  2 **
 EFS  FULL  NO  1.5
 FS  FULL  NO  1
 M  ZERO  NO  ZERO
 U  ZERO  NO ZERO

*The payment of QSIs is optional.

**Additional awards of more than 20 percent of salary may be given for unusually outstanding performance. The command headquarters must approve them. Additionally, in accordance with reference (d), the command headquarters must approve awards with dollar amounts exceeding $5,000. These awards are not charged to the pool.

A. Positions of the Parties

1. Agency

For the reasons set forth in its Statement of Position as to Proposal 1, the Agency contends that Proposal 2 is inconsistent with section 7103(a)(14) of the Statute because wages and fringe benefits are not conditions of employment. The Agency asserts that the proposal "seeks to impose specific levels of payment when performance awards are granted." Statement of Position at 12.

The Agency also contends, for the reasons set out in connection with Proposal 1, that Proposal 2 violates management's right to determine its budget under section 7106(a)(1) of the Statute. The Agency states that even though proposal 2 does not require it "to expend a specific dollar amount for [performance] awards[,]" the proposal does "require the [A]gency to set aside and pay to employees a particular percentage of employee salaries for awards." Id. (emphasis in original).

The Agency argues that the proposal is inconsistent with 5 C.F.R. §§ 430.503(a) and (c). The Agency states that 5 C.F.R. § 430.503(a), reasonably interpreted, indicates that "an employee's performance must at least be above average in order to warrant monetary recognition." Id. The Agency argues that Proposal 2, however, "would provide entitlement to a cash award to every employee who received a rating above Marginal." Id. (emphasis in original). The Agency argues that, under Proposal 2, 89 percent of its employees would receive "monetary recognition." Id. at 13.

The Agency asserts that 5 C.F.R. § 430.503(c) requires that recommended performance awards must be reviewed by officials higher than the official making the performance award. The Agency acknowledges that Proposal 2 would not preclude the review of performance awards and that the amount of an award would vary with the size of the awards pool. However, the Agency asserts that "receipt of an award by an employee with a rating of Fully Successful or higher would be predetermined." Id. at 14.

Finally, the Agency argues that the Authority should follow the decision of the Fourth Circuit in Department of the Air Force, Langley Air Force Base v. FLRA, 878 F.2d 1430 (4th Cir. 1989) (unpublished opinion).

2. Union

The Union contends that Proposal 2 does not directly interfere with management's right to determine its budget under section 7106(a)(1) of the Statute because the budget factors that determine the dollar amount of the performance awards pool are totally within the Agency's discretion. The Union asserts that the proposal only requires: (1) a fair and equitable distribution of funds budgeted for performance awards; and (2) discussion between the parties concerning reductions in the amount of funds budgeted for performance awards. Petition for Review at 2. The Union states that, although the proposal "offers a specific share system rather than an unspecified percentage, it in no way tells the [A]gency how much to budget for the awards pool." Id.

The Union also contends that Proposal 2 is not contrary to 5 U.S.C. § 7103(a)(14). The Union argues that the proposal does not concern wages and fringe benefits because: (1) performance awards are legally distinct; and (2) the funds for performance awards are within the Agency's discretion and, consequently, are not established by law in the same manner as wages and fringe benefits.

The Union relies on Authority precedent, including the Authority's decision in Langley Air Force Base, to support its position.

B. Analysis and Conclusions

We conclude that Proposal 2 is inconsistent with 5 C.F.R. § 430.503(c), a Government-wide regulation, and, therefore, that it is nonnegotiable.

Proposal 2 establishes the method that the Agency will use in the payment of performance awards to employees. The proposal: (1) requires that the funds available for performance awards will not be less than 0.7 percent, nor more than 1.5 percent, of employees' aggregate salaries; (2) provides that the parties will meet to discuss the reasons for decreases in the availability of funds in the awards pool if the amount available is below 0.7 percent of aggregate employee salaries or the amount available in the previous year; (3) establishes the formula for the calculation of the dollar value for a "share" of the awards pool; and (4) provides that employees will be awarded shares in the pool based on their performance ratings. The effect of the proposal would be to require the Agency to pay employees the dollar value of performance award shares based on their performance ratings in accordance with the payment schedule set forth in the proposal.

1. Proposal 2 Concerns a Condition of Employment

For the reasons set forth above with respect to Proposal 1, we find that Proposal 2, requiring employees to be paid incentive awards in accordance with the proposed schedule, concerns a condition of employment within the meaning of section 7103(a)(14) of the Statute. See also Norfolk Naval Shipyard, 37 FLRA No. 79, slip op. at 13 (1990) (proposal establishing ranges of performance awards payable to employees concerns a condition of employment).

2. Proposal 2 Is Inconsistent With A Government-wide Regulation

5 C.F.R. § 430.503(c)(1) provides as follows:

Agency procedures for making performance awards determinations must include a requirement for review and approval of each determination by an official of the agency who is at a higher level than the official who made the initial decision, unless there is no official at a higher level in the agency, and also by the official(s) with responsibility for managing the performance awards budget within the agency.

This regulation requires that "each" determination that an employee will receive a performance award must be reviewed and approved: (1) by an agency official at a higher level than the recommending official; and (2) by the official(s) with responsibility for managing the performance awards budget.

In Norfolk Naval Shipyard, 37 FLRA No. 79, slip op. at 13 (1990), the Authority held that a proposal requiring the agency to pay performance awards to employees who received a particular performance rating was inconsistent with 5 C.F.R. § 430.503(c)(1), a Government-wide regulation within the meaning of section 7117(a)(1) of the Statute. In reaching that conclusion, the Authority stated:

In our view, the expressed authority to review and approve inherently encompasses the authority to review and disapprove. That is, we are unable to conclude that the review and approval process mandated by the regulation would be satisfied if, after reviewing awards determinations, the budget official were required to approve the awards.

By requiring the Agency to pay performance awards to employees in accordance with the proposed schedule, Proposal 2 prevents the Agency from reviewing performance awards to employees in a manner which would satisfy the requirements of 5 C.F.R § 430.503(c). That is, the proposal requires the approval of performance awards and, thus, conflicts with the requirement of the regulation that management officials be able to disapprove performance awards. Accordingly, consistent with the decision in Norfolk Naval Shipyard, we find that Proposal 2 is inconsistent with 5 C.F.R. § 430.503(c)(1), a Government-wide regulation. Consequently, we conclude that Proposal 2 is nonnegotiable under section 7117(a)(1) of the Statute.

We find that Proposal 2 is distinguishable from Proposals 11 and 12 in Naval Underwater Systems Center, slip op. at 36-37. Proposals 11 and 12 specify the type of award that may be given for a particular performance rating and establish a payment range based on a percentage of salary in order to determine the amount of performance awards. Proposals 11 and 12 do not require that performance awards must be granted. Proposal 2 in this case, however, requires that performance awards must be paid to employees in accordance with the schedule established in the proposal.

Because we have determined that Proposal 2 is inconsistent with a Government-wide regulation, it is unnecessary to address the Agency's remaining arguments concerning the negotiability of this proposal.

IV. Proposal 3

The sample form is accepted with the following changes:

. . . . . . .

4. Add a place for the activity head designee endorsement on page 1.

A. Positions of the Parties

1. Agency

The Agency contends that Proposal 3 interferes with management's right to assign work under section 7106(a)(2)(B) of the Statute because it requires a management official to "sign the first page of each employee's performance appraisal form." Statement of Position at 16. Relying on Authority precedent, the Agency argues that a requirement that an Activity head must sign performance awards in accordance with a local instruction, Agency instruction, or Government-wide regulation "provides no basis for contractually binding the Agency." Id. at 17. The Agency acknowledges that the proposal does not specify the particular management official who will be designated by the Activity head to sign employees' performance appraisals. The Agency states, however, that the proposal "does require that a specific function be assigned to an individual at a particular level of the Activity[.]" Id.

The Agency also contends that the proposal is inconsistent with the requirement for an effective and efficient Government contained in section 7101(b) of the Statute. According to the Agency, the Activity head designee "would be required to sign no fewer than 1500 rating forms and possibly as many as 12000." Id. at 18.

2. Union

The Union contends that Proposal 3 does not directly interfere with management's right to assign work under section 7106(a)(2)(B). The Union argues that a Department of the Navy Instruction (OCPM Instruction 12430.1) and an Agency counter-proposal, made during negotiations between the parties, already require the Activity head designee to "provide final approval" of employees' performance appraisals. Petition for Review at 3. The Union asserts that in order for the work assignment to be accomplished, "the [A]ctivity head designee will have to review and endorse all ratings of record in some manner." Id. The Union also asserts that requiring employees' ratings of record to be endorsed by the Activity head designee would provide: (1) assurances that both the employee's rating of record and the elements and standards were available to the Activity head designee during the approval process; and (2) employees with a record of the person "accountable for final approval of his/her rating." Id. at 3-4. The Union points out that "if approval of ratings were accomplished in any other way[,] the approval would not be of the rating of record but the overall mixture of ratings." Id. at 4.

B. Analysis and Conclusions

We find that Proposal 3 does not directly interfere with management's right to assign work under section 7106(a)(2)(B) of the Statute. Rather, we conclude that the proposal constitutes a negotiable procedure under section 7106(b)(2).

Proposal 3 requires the Agency to include a place on the Agency's performance appraisal form for an endorsement by the Activity head designee. The Agency argues that the effect of the proposal would be to require the Activity head designee to sign the performance appraisal form of each rated employee within the Activity and that the proposal therefore directly interferes with management's right to assign work under section 7106(a)(2)(B). We disagree.

The Agency's regulations require the "Activity head designee" to approve employees' performance appraisals, performance awards, and quality step increases. OCPMINST 12430.1, Section 5.f. See Union's Petition for Review, Exhibit (Tab 4), Encl. (1) at 2. The Agency's regulations also define the "Activity head designee" as the "military officer or civilian official who approves PARS [Performance Appraisal Review System] ratings of record and performance awards." OCPMINST, Section 4.b. Id. Under the Agency's regulations, therefore, the "Activity head designee" could be any military officer or civilian official at the activity.

Because the Agency's regulations require the Activity head designee to approve employees' performance appraisals, the fact that Proposal 3 requires the Agency to provide a place on the performance appraisal form for the endorsement of that individual, or those individuals, simply reflects the Agency's requirement that the Activity head designee approve employees' performance ratings. We also note that: (1) the definition of "Activity head designee" contained in the regulations preserves the Agency's discretion to determine who that individual, or those individuals, will be; and (2) the Agency acknowledges that the proposal does not specify the particular Agency official to be designated by the Activity head to sign employees' performance appraisals. We conclude, therefore, that the requirement in Proposal 3 that there be a place on the performance appraisal form to record the endorsement of the "Activity head designee" constitutes a procedure that management will follow in implementing the Agency's regulatory requirements for employee performance evaluations.

Proposals that establish negotiable procedures under section 7106(b)(2) of the Statute are not rendered nonnegotiable because the implementation of the procedure will require action on the part of agency personnel. See U.S. Department of Health and Human Services, Social Security Administration, Northeastern Program Service Center and American Federation of Government employees, National Council of Social Security Administration Payment Locals, Local 1760, 36 FLRA 466 (1990) (Northeastern Program Service Center) (proposal requiring the use of a specific form to apply for a vacant position held to be a negotiable procedure and not to directly interfere with management's right to assign work). As the Authority stated in National Federation of Federal Employees, Local 2099 and Department of the Navy, Naval Plant Representative Office, St. Louis, Missouri, 35 FLRA 362, 368 (1990) (Naval Plant Representative Office):

Section 7106(b) of the Statute provides that "nothing" in section 7106 shall preclude parties from negotiating "procedures which management officials of the agency will observe in exercising any authority" under section 7106. As we have concluded above, this provision constitutes a procedure for the [a]gency to observe in exercising its right to make selections. This procedure, like many procedures, necessitates the assignment of work to fulfill its requirements. To bar the negotiation of procedures that would otherwise be negotiable under section 7106(b)(2) because they entail the assignment of work to agency personnel would nullify section 7106(b)(2) and overlook the explicit purpose and intent of that subsection.

(Citation omitted.)

Because Proposal 3 constitutes a negotiable procedure governing the approval of employee performance evaluations by the military or civilian official who is assigned that responsibility by the Agency, we conclude, consistent with Northeastern Program Service Center and Naval Plant Representative Office, that Proposal 3 does not directly interfere with management's right to assign work under section 7106(a)(2)(B) of the Statute.

We also find that Proposal 3 in this case is distinguishable from Proposal 8 in Naval Underwater Systems Center, 38 FLRA at 484-85. The proposal in that case concerned the agency's designation of the individual to perform performance evaluations. Proposal 3 concerns providing a space on the performance appraisal form for the endorsement of the official who has been designated by the Agency to approve those appraisals. Proposal 3 takes effect after the Agency has exercised its right to assign work by designating the official who has the responsibility to approve performance appraisals.

The Agency provides no support for its argument that the proposal is inconsistent with the requirement for an effective and efficient Government contained in section 7101(b) of the Statute. Therefore, we reject the Agency's argument.

For the foregoing reasons, therefore, we conclude that Proposal 3 is a negotiable procedure under section 7106(b)(2) of the Statute.

V. Order

The petition for review as to Proposals 1 and 2 is dismissed. The Agency must upon request, or as otherwise agreed to by the parties, bargain concerning Proposal 3. (2)




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