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The decision of the Authority follows:
40 FLRA No. 1
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 Union is appealing the Agency head's disapproval of a portion of a provision concerning performance awards pursuant to section 7114(c) of the Statute.
For the reasons which follow, we find that the provision is inconsistent with a Government-wide regulation. Consequently, the Agency head's disapproval was proper and the petition for review must be dismissed.
II. The Provision
Article 42 - Performance Awards
Consistent PTO-wide, employees shall receive annual performance awards based on the employees' rating in accordance with the following formula:
Outstanding: 3% of salary
Commendable: 2% of salary
No employee receiving an award shall receive less than $250.00, however. If budgetary constraints do not permit management to meet the above, the agency shall notify the Union at the earliest possible date, and the Union may reopen this Article for negotiations. [Only the underscored portion of the provision is in dispute.]
III. Positions of the Parties
A. The Agency
The Agency head disapproved the first sentence of the provision on the basis that it "creates an inseparable link between ratings and awards and causes consideration of a nonmerit factor (the award) when assigning a performance rating, contrary to law and government-wide regulations." Attachment 1 to the Petition for Review at 1. In support of its position, the Agency relies on Department of the Air Force, Langley Air Force Base v. FLRA, 878 F.2d 1430 (4th Cir. 1989) (per curiam) (unpublished opinion) (Langley Air Force Base).(1) Although the Agency acknowledges that Langley Air Force Base is an unpublished decision, the Agency claims that the decision should be given precedential effect in this case.
The Agency further argues that the first sentence of the provision is inconsistent with 5 C.F.R. § 430.503(c)(1), which provides for review of awards by agency officials. According to the Agency, Section 1 of Article 42, which is asserted by the Union as preserving management's discretion to disapprove awards for budgetary reasons, does not, in fact, preserve management's discretion.(2) Instead, the Agency argues that Section 1 is contradicted by the mandate contained in the first sentence of Section 5 that employees receive awards and also by the requirement in the last sentence of Section 5, which would subject management's discretion to bilateral negotiations.
B. The Union
The Union argues that the Agency's reliance on Langley Air Force Base is misplaced and that "mandatory awards programs continue to be held fully negotiable under Authority precedent." Response at 2.
The Union also argues that the provision is consistent with the requirement in 5 C.F.R. § 430.503(c)(1) for review of awards by agency officials. In support of this assertion, the Union relies on portions of an Agency regulation which purportedly provide for the review required by 5 C.F.R. § 430.503(c). The Agency regulation adverted to is the United States Department of Commerce Personnel Bulletin 451-1, Revision #2, (Personnel Bulletin 451-1), pertaining to "Performance-Based Recognition for General Workforce and Foreign Service Employees And NOAA Corps Officers." The sections relied upon are 3.02 and 6.03.(3)
As explained by the Union, Section 3.02 requires review by the Agency official who is responsible for administering the performance award budget and "[b]y implication, it is clear that the purpose of the review is to ensure that the budget will permit pay out of the recommended award." Id. at 5. The Union also notes that Article 42, Section 1 is consistent with the Agency's regulation to the extent that Section 1 provides that "'all awards are subject to budgetary limitations and are paid at the discretion of the Office.'" Id.
With regard to Section 6.03 of the Agency's regulation, the Union argues that the review process conducted by the Incentive Awards Program Officer, as specified in that section, "continues intact" under the provision. The Union further states that "[i]t is implicit in the language [of the provision] that there is no contractual obligation to make payment of an award which fails to meet the eligibility criteria." Id.
In response to the Agency's assertion that the provision is contrary to law because it would require the rating official to consider a non-merit factor in determining an employee's performance rating, the Union contends that the Agency has not demonstrated how the provision would require rating officials to commit prohibited personnel practices. Instead, the Union states "[a]ll rating officials are required by law to consider only merit related factors in assigning performance ratings[,]" and that "[t]he negotiated language is intended to operate in accordance with the law." Id. at 5, 6 (emphasis in original).
Finally, the Union argues that the last sentence of the provision, which would permit the Union to reopen negotiations in the event budgetary constraints do not permit the Agency to comply with the award amounts specified in the provision, does not interfere with the Agency's right to determine its budget. The Union states that "[a]ny substantive bargaining or impact and implementation bargaining in this area must still operate within the zones of negotiability with respect to management's rights to determine its budget." Id. at 6.
IV. Analysis and Conclusions
The Authority recently has issued a number of decisions interpreting and applying applicable regulatory requirements to proposals involving performance awards. As an initial matter, the Authority has determined that the regulations governing performance awards, promulgated by the Office of Personnel Management (OPM) at 5 C.F.R. part 430, are Government-wide regulations within the meaning of section 7117(a)(1) of the Statute. See Tidewater Virginia Federal Employees Metal Trades Council and U.S. Department of the Navy, Norfolk Naval Shipyard, Portsmouth, Virginia, 37 FLRA 938, 950 (1990) (Norfolk Naval Shipyard). The Authority also has determined that performance award proposals that mandate the granting of awards are inconsistent with 5 C.F.R. § 430.503(c)(1) because they prevent the agency from reviewing and approving such awards.(4) As we stated in Norfolk Naval Shipyard, "the expressed authority to review and approve inherently encompasses the authority to review and disapprove." Id. at 950. Consequently, proposals which do not permit disapproval of awards are inconsistent with the regulation and are outside the duty to bargain under section 7117(a)(1) of the Statute. See, for example, International Federation of Professional and Technical Engineers, Local No. 1 and U.S. Department of the Navy, Norfolk Naval Shipyard, 38 FLRA 1589 (1991) (Proposal 2); Association of Civilian Technicians and U.S. Department of Defense, National Guard Bureau, Rhode Island National Guard, Providence, Rhode Island, 38 FLRA 1005 (1990), petition for review filed as to other matters sub nom. U.S. Department of Defense, National Guard Bureau, Rhode Island National Guard, Providence, Rhode Island v. FLRA, No. 91-1090 (D.C. Cir. Feb. 19, 1991) (Proposal 1); American Federation of Government Employees, Local 1770 and U.S. Department of the Army, Headquarters XVIII Airborne Corps and Fort Bragg, Fort Bragg, North Carolina, 38 FLRA 626 (1990); Norfolk Naval Shipyard.
Turning to the provision in this case, it is clear, from both the plain language of the provision and the Union's expressed intent, that the provision is designed to mandate the granting of awards. Thus, the first sentence of the provision explicitly states that "employees shall receive annual performance awards . . . ." Further, in explaining the provision, the Union asserts that "[t]he [Authority] has repeatedly and unequivocally held that mandatory incentive award programs are within the duty to bargain[,] and that "mandatory awards programs continue to be held fully negotiable under Authority precedent." Response at 2.
As indicated above, proposals that mandate the granting of awards are outside the duty to bargain because they do not allow for the disapproval of such awards. To the extent that the provision here requires that awards be given, we find, consistent with the decisions noted above, that the provision is contrary to 5 C.F.R. § 430.503(c)(1). Compare American Federation of Government Employees, Local 1409 and U.S. Department of the Army, Aberdeen Proving Ground Support Activity, Aberdeen Proving Ground, Maryland, 38 FLRA 747 (1990) and 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, Newport, Rhode Island, 38 FLRA 456 (1990), petition for review filed sub nom. United States Department of the Navy, Naval Underwater Systems Center, Newport, Rhode Island v. FLRA, No. 91-1045 (D.C. Cir. Jan. 24, 1991) (Proposals 11 and 12), in which the Authority found negotiable proposals that did not mandate the approval or granting of awards.
The Union argues, however, that the provision does not prohibit management from reviewing the award in accordance with 5 C.F.R. § 430.503(c). In this regard, the Union states that Personnel Bulletin 451-1 contains a procedure to comply with the mandate of § 430.503(c), "which is not in any way contravened by the negotiated language." Response at 4. Essentially, the Union contends that the provision is consistent with the Agency's regulation which, in turn, conforms to the review process contained in 5 C.F.R. § 430.503(c)(1). Without passing on whether the Agency's regulation is consistent with the regulatory requirements established by OPM, an issue that clearly is not before us, we find that the Union's arguments do not establish that the provision is consistent with § 430.503(c)(1).
The thrust of the Union's arguments is that the granting of awards is subject to review in connection with budgetary constraints. In this connection, the Union cites Section 3.02 of Performance Bulletin 451-1, which provides for approval of performance awards by various Agency officials. The Union states that "[b]y implication, it is clear that the purpose of the review is to ensure that the budget will permit pay out of the recommended award." Response at 5. The Union also cites Section 1 of Article 42 to provide additional support for its assertion that awards are subject to budgetary limitations. The Union concludes that "[t]he right of the Agency to review the award under Section 3.02(b) of the Personnel Bulletin is therefore fully preserved under the plain language of Article 42." Id.
Although the Union claims that the Agency's right to review awards is "fully preserved" under Article 42, we find, based on the Union's other arguments, that what is being fully preserved is the Agency's right to review awards only for budgetary reasons. The Union has not indicated that the review process may be conducted for any other reason. In this connection, we find it significant that the Union has not cited to the first sentence of Section 1 of Article 42 ("There is no entitlement to a performance award or other type of incentive award.") as an indication that the review process may result in the denial of an award for reasons other than budgetary limitations. Instead, the Union relies on the second sentence of that section to establish that awards are subject to review for budgetary reasons.
We do not view the review process set forth in 5 C.F.R. § 430.503(c)(1), which allows for the disapproval of awards, to be as narrowly confined as the Union suggests--that is, to permit review of awards solely for budgetary reasons. In our view, the review process is not limited to determinations over whether an agency's budget can sustain the granting of an award. The disapproval of an award can be based on reasons other than budgetary limitations, for example, to ensure conformance with an agency's overall performance awards program. While budgetary concerns clearly are a significant determinant in a performance awards program, we can find nothing in the regulation itself, and the Union has not directed our attention to any language in OPM's regulatory requirements, that would limit the review process in such a fashion.
Our finding that the provision is inconsistent with 5 C.F.R. § 430.503(c)(1) does not rest solely on our view that the cited regulation provides for a range of review that is not limited to budgetary reasons. Rather, we also find that the provision could preclude review and disapproval even on budgetary grounds.
As noted above, the last sentence of the provision, which is not in dispute, would require the Agency to notify the Union and allow the Union to reopen the Article if budgetary constraints prevented the Agency from complying with the specified award amounts. It is unclear what effect such language would have on the Agency's right to disapprove awards. If the Union does not choose to exercise its ability to reopen the Article, it appears that the Agency would be free to effectuate its decision to disapprove awards for budgetary reasons. If the Union chooses to renegotiate the Article, however, the Agency would, at the least, be required to maintain the status quo pending the outcome of negotiations. This might require the payment of awards that otherwise would have been disapproved. Moreover, there is no assurance that as a result of the negotiations the Agency could unilaterally disapprove awards based on its view of budgetary imperatives. For example, if the parties negotiated a change in the awards schedule, the provision still would not permit the Agency to disapprove the award in its entirety. Accordingly, we conclude that the last sentence of the provision does not grant the Agency the full range of review provided in 5 C.F.R § 430.503(c)(1), even if that review permits disapproval only on budgetary grounds.
The Union's reliance on Section 6.03 of Personnel Bulletin 451-1 for the assertion "that there is no contractual obligation to make payment of an award which fails to meet the eligibility criteria[,]" does not compel a finding that the provision is consistent with 5 C.F.R. § 430.503(c)(1). Response at 5. Section 6.03, which provides for review of award nominations by the Incentive Awards Program Officer for conformity to eligibility criteria, must be read in conjunction with the other provisions of that section. As we read the portions of Performance Bulletin 451-1 provided by the Union, and particularly Sections 6.01 and 6.02, the review conducted by the Incentive Awards Program Officer is essentially a ministerial act following the submission of an award nomination that has been referred by the recommending official.(5) By the time of submission of an award nomination, the terms of the provision at issue here would have mandated the granting of an award. The review provided in Section 6.03, by its terms, is designed to ensure that an award "meets all technical requirements[.]" See n.3, supra. The review conducted at this stage does not appear to allow for, and has not been argued to allow for, the disapproval inherent in 5 C.F.R. § 430.503(c)(1).
In sum, we find that the provision is outside the duty to bargain under section 7117(a)(1) of the Statute because it conflicts with 5 C.F.R. § 430.503(c)(1). In view of our conclusion, it is unnecessary to address the Agency's additional contention.
The Union's petition for review is dismissed.
(If blank, the decision does not have footnotes.)
1. In Langley Air Force Base, the court reversed an Authority decision finding negotiable three proposals requiring that cash awards be given to employees based on their performance ratings.
2. Section 1 of Article 42 provides:
There is no entitlement to a performance award or other type of incentive award. All awards are subject to budgetary limitations and are paid at the discretion of the Office.
3. Section 3.02 provides:
a. Each operating unit must specify the delegations of authority for approval of performance awards. The official authorized to approve a performance award must be at the same or higher organizational level than the approving official for the performance appraisal.
b. Performance awards must be approved by the operating unit official who is responsible for administering the performance awards budget.
Section 6.03 provides:
The appropriate Incentive Awards Program Officer or designee reviews the award nomination for conformity to eligibility criteria and, if it meets all technical requirements, certifies it and forwards it to the payroll office for payment.
4. 5 C.F.R. § 430.503(c)(1) provides:
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.
5. Sections 6.01 and 6.02 provide, in pertinent part:
.01 After review of the employee's performance, the supervisor may initiate a recommendation for a performance award . . . by completing the performance recognition section of CD-396, Performance Management Record. The approved performance appraisal document is the sole written justification for a performance award. . . .
.02 Recommending officials must send the CD-396 to the servicing personnel office within 90 days after the annual appraisal cycle.