[ v30 p1219 ]
The decision of the Authority follows:
30 FLRA NO. 135 30 FLRA 1219 29 JAN 1988 NATIONAL TREASURY EMPLOYEES UNION, CHAPTER 245 Union and DEPARTMENT OF COMMERCE, PATENT AND TRADEMARK OFFICE Agency Case No. O-NG-1374 DECISION AND ORDER ON NEGOTIABILITY ISSUES I. Statement of the Case This case is before the Authority because of a negotiability appeal filed under section 7105(a)(2)(E) of the Federal Service Labor - Management Relations Statute (the Statute). It concerns the negotiability of three proposals submitted by the Union in response to the Agency's notification that it intended to implement an Agency regulation entitled "Department of Commerce Bulletin 451-1" (PB451-1) concerning performance awards. For the reasons which follow, we find that Proposal 1, which concerns cash awards for performance, is negotiable. We dismiss the Union's petition for review as it relates to Proposal 2 concerning quality salary increases, because the proposal conflicts with a Government-wide regulation. We find that Proposal 3 is not properly before us. Therefore, we dismiss the Union's petition for review as to Proposal 3 without prejudice to its right to file a negotiability appeal if the conditions governing review of negotiability issues are met and if the Union chooses to file such an appeal. II. Proposal 1 I. SUSTAINED SUPERIOR PERFORMANCE AWARDS A. The award ranges for full time employees for a full performance appraisal cycle are as follows: outstanding, 10% (of ] salary); commendable, 6% (of salary); and fully successful, 3% (of salary). C. Employees promoted within the last six months will receive a special achievement award roughly proportional to the performance award they would have received. A. Positions of the Parties The Agency contends that Proposal 1 violates the following Government-wide regulations: (1) 5 C.F.R. 531.606(b), which states that performance awards shall not be mandatory; (2) Federal Personnel Manual (FPM) 451, Subchapter 4-2a(8), which states that "there should be no automatic awards based solely on performance appraisals"; and (3) 5 C.F.R. 430.503(c), which requires review and approval of each award determination by an Agency official. It claims further that the proposal violates management's right to determine its budget under section 7106(a)(1) of the Statute. The Agency claims that Proposal 1, section IC is not negotiable for the following additional reasons: (1) the Agency has made no change which gives rise to a duty to bargain over special achievement awards; and (2) section IC violates a Government-wide regulation, 5 C.F.R. 451.104(j), which provides that, "Superior accomplishment awards shall not be mandatory." The Union contends that the Government-wide regulations cited by the Agency are not applicable because: (1) 5 C.F.R. 531.606(b) has been superseded by 5 C.F.R. 430.501, Subpart E which does not continue the proscription of mandatory performance awards; and (2) FPM chapter 451, subchapter 4-2a(8) does not concern "performance" awards but relates to other "incentive" awards--suggestions, inventions, special acts or services. The Union asserts that the performance awards in issue are governed by 5 C.F.R. 430.502, which states that the granting of performance awards must be "based on the employee's rating of record." The Union further asserts that the applicable Agency regulation involved, Personnel Bulletin 451-1, permits "the use of a performance appraisal as the sole written justification for the performance award." Union Response at 3. The Union also contends that the proposal does not violate the requirement in 5 C.F.R. 430.503(c) for the review of performance award determinations by management officials since nothing in section IA prohibits review under the procedure established in the Agency's regulation, which includes a review of the employee's performance by the employee's supervisor and an incentive awards program officer to ensure compliance with award criteria. Finally, the Union contends that the Agency has not submitted any evidence to support its assertion that the proposal will increase the Agency's operating costs and claims that any increase in costs nevertheless would be offset by the savings generated by a comparable increase in performance and efficiency. B. Analysis and Conclusions This proposal establishes mandatory performance awards of various percentages of salary. An award is triggered under the proposal if an employee receives a fully successful, a commendable, or an outstanding performance rating. We find, as explained below, that the Agency has not supported its claim that the proposal is nonnegotiable. 1. Whether The Proposal Is Barred From Negotiations by 5 C.F.R. 531.606, Subpart F, Entitled "Performance Awards" 5 C.F.R. 531.606, Subpart F provided that performance awards shall not be mandatory. It has been superseded, however, by 5 C.F.R. 430.501, Subpart E, entitled "Performance Awards." The change itself and the reasons for it are described at 51 Fed. Reg. 8409, 8417-18 and 8421 (1986). The regulation now in effect does not proscribe mandatory performance awards based on an employee's performance rating. Rather, it states at section 430.503(b) that: An award under this subpart shall be based on the employee's rating of record for the current appraisal period for which performance awards are being paid. We find no basis on which to construe the wording of the current regulation as prohibiting an agency from basing a performance, award, as is here proposed by the Union, solely on an employee's rating. Therefore, we reject the Agency's claim that 5 C.F.R. 531.606 bars the negotiation of this proposal. 2. Whether the Proposal Is Barred From Negotiations By FPM 451, Subchapter 4-2 The Agency claims that since FPM 451, Subchapter 4-2a(8) states that "(b)ecause other factors affect award decisions, there should be no automatic awards based solely on performance appraisals," negotiations on Proposal 1 are barred. We reject this argument. The provision of the FPM relied on is not mandatory. Introduction to FPM chapter 451 expressly characterizes the chapter as follows: "Italicized material quotes law or regulation which requires compliance by agencies. Non-italicized material is guidance., The quoted provision on which the Agency relies is not italicized and therefore constitutes only guidance. FPM chapter 451 further expressly provides in subchapter 1-3 that: "The regulation on incentive awards is Part 451 of the Code of Federal Regulations. This chapter (451 of the Federal Personnel Manual), is guidance." We, therefore, conclude that the provision relied on by the Agency is guidance and not a Government-wide regulation which could bar negotiations. 3. Whether The Proposal Is Barred From Negotiations By 5 C.F.R. 430.503(c) We find, contrary to the Agency's claim, that Proposal 1 does not conflict with section 430.503(c), which requires that agency procedures for making performance award determinations "must include a requirement for review and approval of each determination by an official of the agency.' The Union states, consistent with the plain wording of its proposal, that Proposal 1 does not prohibit management from reviewing an award. The Union asserts as an example that the proposal does not conflict with the review procedure set forth in the Agency's regulation, which includes "review of the employee's performance by the supervisor and a review by the appropriate incentive awards program officer to assure conformity with regard to the award criteria." Union Response at 4. Therefore, we reject the agency's argument that the proposal is barred from negotiations by 5 C.F.R. 430.503(c) because it would not permit management review and approval. 4. Whether the Proposal Interferes With Management's Right to Determine Its Budget Under Section 7106(a)(1) of the Statute In American Federation of Government Employees, AFL - CIO and Air Force Logistics Command, Wright - Patterson Air Force Base, Ohio, 2 FLRA 604 (1980), enforced as to other matters sub nom. Department of Defense v. FLRA, 659 F.2d 1140 (D.C. Cir. 1981), cert. denied sub nom., AFGE v. FLRA, 455 U.S. 945 (1982), the Authority stated that it would find a proposal inconsistent with an agency's right to determine its budget if (1) the proposal prescribed a particular program or an amount of funds to be included in the agency's budget or,(2) the agency made a substantial demonstration that the proposal would result in costs which would not be offset by compensating benefits. The Agency has not demonstrated that implementation of the Union's proposal would directly interfere with management's right to determine its budget under this test. There is no showing that Proposal 1 prescribes a particular program or operation, or an amount of funds to be included in the Agency's budget. The Agency has not demonstrated that implementation of Proposal 1 would result in a significant and unavoidable increase in costs which would not be offset by compensating benefits. Although the Agency maintains that the proposal would, "create a particular entitlement program affecting so many employees as to require a significant amount of funds to be included in the budget," the Agency concedes that it has not "costed out" the proposal. Agency Statement of Position at 6. Further, management has the right to establish the performance standards that an employee must meet in order to achieve a particular performance rating which, under the proposal, would result in an automatic award. Therefore, management retains control over the fundamental, underlying criteria which affect employee performance ratings and, derivatively, awards under this proposal. Consequently, we cannot find that negotiation of the proposal would result in an unavoidable increase in costs. See National Treasury Employees Union and Internal Revenue Service, 27 FLRA 132, 138-40 (1987). Therefore, the proposal does not violate the Agency's right to determine its budget. 5. Whether Section IC Of The Proposal Is Barred From Negotiations By 5 C.F.R. 451.104(j) In promulgating changes to its regulations in 1986, the Office of Personnel Management (OPM) noted that the changes were designed to "facilitate a clear distinction between performance awards and superior accomplishment awards (cash awards) covered under Part 451, Subpart A." 51 Fed. Reg. 8409 (1986). 5 C.F.R. 451.104(j), relied on by the Agency, is contained in Part 451, Subpart A and provides that, "Superior accomplishment awards shall not be mandatory." Since it is clear and undisputed that section IC of the proposal is not concerned with a superior accomplishment award, 5 C.F.R. 451 is inapplicable. Therefore, we reject the Agency's argument that section 451.104(j) bars negotiation of this proposal. 6. Whether Section IC of the Proposal is Barred from Negotiations Because the Agency Has Not Made a Regulatory Change Which Gave Rise to a Duty to Bargain Where the conditions for review of negotiability issues have been met, that is, where the parties are in dispute as to whether a proposal is inconsistent with law, rule or regulation, a union is entitled to a decision by the Authority as to whether a proposal is negotiable under the Statute. This conclusion is not altered by the existence of additional issues in the case, for example, an alleged conflict between a proposal and a controlling agreement. See American Federation of Government Employees, Local 2736 v. FLRA, 715 F.2d 627, 631 (D.C Cir. 1983). Accordingly, the Agency's allegations that a threshold duty to bargain question exists does not preclude us from determining the negotiability of this proposal which is otherwise properly before us. The Agency also contends that section IC of the proposal contravenes law and Government-wide regulations. Issues regarding the duty to bargain in the specific circumstances of this case should be resolved in other appropriate proceedings such as the parties' negotiated grievance procedure or the unfair labor practice procedures under the Statute. See American Federation of Government Employees, AFL - CIO, Local 2736 and Department of the Air Force, Headquarters 379th Combat Support Group (SAC) Wurtsmith Air Force Base, Michigan, 14 FLRA 302, 306 n.6 (1984). 7. Summary As discussed above, the Agency has not supported its claims that Proposal 1 violates Government-wide regulations promulgated by OPM or the Agency's right to determine its budget. Accordingly, we find that the proposal is within the duty to bargain. III. Proposal 2 II. QUALITY STEP INCREASES A. Criteria. To qualify, an employee must: 1. Have a current outstanding summary rating of Outstanding; 2. Have occupied the same grade and type of position for at least the last six consecutive months of the appraisal cycle and be expected to continue at this high level of performance in the same position for at least 60 days after the effective date of the increase; 3. Not have been on detail to another position during any part of the recognition period ("detail to another position" is when an employee is getting higher pay or a position outside the PTO); 4. Not have received a QSI within the preceding 52 calendar weeks; and 5. Not be in the top step of his or her pay range. C. If the employee satisfies the criteria outlined in A. the employee will be entitled to receive the QSI; however, the employee will have the option of electing between the QSI and the applicable cash award (SSP). This election need not be made by the employee until the amount of the cash award has been determined. A. Positions of the Parties The Agency contends that Proposal 2 is nonnegotiable for all of the reasons it claimed in connection with Proposal 1. Additionally, it argues that Proposal 2 violates 5 C.F.R. 531.504, which provides that a quality step increase (QSI) "shall not be required but may be granted only to an employee who receives a rating of record at level 5 (Outstanding)." Agency Statement of Position at 8. The Union contends that Proposal 2 does not violate the Statute or any Government-wide regulations. B. Analysis and Conclusions We reject here the Agency's arguments raised in connection with Proposal 1 for the reasons previously stated. We find, however, that Proposal 2 is outside the duty to bargain because it conflicts with 5 C.F.R. 531.504, a Government-wide regulation within the meaning of section 7117(a)(1) of the Statute because it is mandatory and generally applicable to Federal employees throughout the Government. Proposal 2 mandates that "if the employee satisfies the criteria outlined in A, the employee will be entitled to receive the QSI." Section 531.504, in contrast, provides that: "A quality step increase shall not be required but may be granted only to an employee who receives (an outstanding rating)." The Union states that this proposal "do(es) not require a QSI. Only employees who meet the established criteria are entitled to a QSI." Union Response at 9. The plain wording of this proposal and the Union's stated intent are that an employee who meets the established criteria must be granted a QSI by the Agency. The wording of the regulation is equally plain: it permits the Agency to grant a QSI to an employee who meets established criteria but it prohibits the Agency from establishing a requirement that a QSI will be granted, even to an employee who meets established criteria. Consequently, we find that this proposal is inconsistent with 5 C.F.R. 531.504 and, therefore, is outside the duty to bargain. IV. Proposal 3 III. TRANSITION A. This award system will continue in effect unless one of the following occurs: (1) a new performance award bulletin is issued by the Office and impact and implementation bargaining has been completed; or (2) the FLRA decision on the negotiability of awards in 14 FLRA 77 is finally overruled or clarified in such a manner that the negotiability of awards is not reasonably at issue. However, this award system will remain effective for FY 1987 even if one of the above events occurs during FY 1987. If event (2) occurs, the union has the option to submit proposals on the subject of awards to the office. Upon receipt of such proposals, the office will have 2 weeks to submit counterproposals and begin negotiations. The parties recognize that standard legal interpretation of the effect of a reversal or clarification of a lower tribunal's decision is applicable. A. Positions of the Parties The Agency contends that this proposal is nonnegotiable because: (1) the parties' collective bargaining agreement covers the matters involved in the proposal; and (2) the Agency has no obligation to reopen this part of the parties' agreement. The Union generally disagrees with the Agency's contentions and contends that the agency cites no law, regulation or administrative ruling in support of its position. B. Analysis and Conclusions As to Proposal 3, the Agency contends only that the subject matter is covered by the parties' Agreement and that the Agency has no obligation to reopen this part of the agreement. The Agency does not argue that this proposal is inconsistent with law, rule, or regulation. Under section 2424.1 of our Regulations, we will consider a petition for review of a negotiability issue only where the parties are in dispute as to whether a proposal is inconsistent with law, rule or regulation. American Federation of Government Employees, Local 12, AFL - CIO and Department of Labor, 26 FLRA 768 (1987). There are no issues before us as to whether Proposal 3 is inconsistent with law, rule or regulation. In these circumstances, the conditions governing review of negotiability issues have not been met. Moreover, other issues concerning the proposal about which the parties are in dispute--whether the subject matter of the proposal is covered by the parties' agreement or whether management has an obligation to reopen--should be resolved in other appropriate proceedings, such as the parties'negotiated grievance procedure or the unfair labor practice procedures under section 7118 of the Statute. Therefore, we will dismiss the Union's petition for review as to this proposal, without prejudice to the Union's right to file a negotiability appeal if the conditions governing review of negotiability issues are met and if the Union chooses to file such an appeal. V. Order The Agency must upon request, or as otherwise agreed to by the parties, negotiate over Proposal 1. 1 The petition for review is dismissed as to Proposal 2. The petition for review as to Proposal 3 is dismissed without prejudice to the Union's right to file a negotiability appeal if the conditions governing review of negotiability issues are met and if the Union chooses to file such an appeal. Issued, Washington, D.C., January 29, 1988. Jerry L. Calhoun, Chairman Jean McKee, Member FEDERAL LABOR RELATIONS AUTHORITY FOOTNOTES Footnote 1 In finding this proposal negotiable we make no judgment as to its merits.