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The decision of the Authority follows:
41 FLRA No. 81
Before Chairman McKee and Members Talkin and Armendariz.
I. Statement of the Case
This matter is before the Authority on exceptions to an award of Arbitrator David F. Sweeney filed by the Agency under section 7122(a) of the Federal Service Labor-Management Relations Statute (the Statute) and part 2425 of the Authority's Rules and Regulations. The Union filed an opposition to the Agency's exceptions.
The Agency rated the grievant's performance as unacceptable for three critical job elements of his position and rated his performance unacceptable overall. The Arbitrator found that the Agency had failed to substantiate that the grievant had failed to meet the performance standards for two of the elements. Although the Arbitrator determined that the Agency had supported the finding of unacceptable performance with respect to the third element, the Arbitrator found that the single documented instance of failing to meet the performance standard, standing alone, could not sustain the unacceptable performance rating. Accordingly, the Arbitrator ordered the overall rating of unacceptable cancelled.
We find that the award is ambiguous and we will remand the award to the parties to have them obtain a clarification of the award from the Arbitrator.
II. Background and Arbitrator's Award
On May 17, 1989, the grievant, a contract specialist, was given a summary performance rating of unacceptable for the period of July 1, 1988, to May 17, 1989. As relevant to the matter submitted to the Arbitrator, the Agency rated the grievant's performance as unacceptable for three critical job elements of his position: No. 3E: "Determines government negotiation strategies."; No. 8E: "Assists in reviewing and processing contract claims, appeals and terminations."; and No. 6E: "Monitors contractor performance and prepares correspondence, forms, reports and other documents." The grievant filed a grievance over the ratings. The grievance was not resolved and was submitted to arbitration on the stipulated issue of whether the ratings were supported by substantial evidence.
With respect to element 3E, the Agency argued that the grievant's performance was unacceptable in that he failed to prepare the applicable price negotiation memoranda in accordance with appropriate standards. The Arbitrator determined that the Agency's charge that the grievant's performance failed to meet the performance standard was not supported by substantial evidence.
With respect to element 6E, the Agency argued that the grievant's performance was unacceptable because he failed to meet the performance standard providing that actions required to modify the contractor's performance will be documented. The Agency claimed that the grievant failed to meet the standard because he failed to document his attempts to obtain timely compliance by contractors with payroll submissions. The Arbitrator determined that the Agency failed to demonstrate by substantial evidence that the grievant's performance failed to meet the standard.
With respect to element 8E, the Arbitrator stated that the applicable performance standard requires that actions taken to resolve claims and appeals be accurately documented. The Arbitrator noted that there was no dispute that the grievant had failed to insure that a modification to extend the performance time on a certain contract was documented and placed in the appropriate file. The Arbitrator found that the evidence presented by the grievant was not substantial. Accordingly, the Arbitrator determined that there was "substantial evidence to support the finding of [unacceptable] performance with regard to Critical Element 8E." Award at 13.
With respect to the remedy, the Arbitrator noted that "[t]he Agency has stated correctly that it may issue an unacceptable performance rating based upon a failure of the employee in a single Critical Element" and acknowledged that the Agency had cited as support for its position the decision in Lovshin v. Department of the Navy, 767 F.2d 826 (Fed. Cir. 1985) (Lovshin). Id. at 14. However, the Arbitrator determined that Lovshin "does not hold for the proposition that an unacceptable performance rating shall . . . be given based upon the failure of an employee in a single Critical Element." Id. (emphasis in original). Instead, the Arbitrator stated that there was "substantial evidence that [the grievant] failed to appropriately document a time extension modification for a contractor who was heading for default[,]" id., but questioned whether "this single instance . . . [was] sufficient to sustain an [unacceptable] performance rating which was an 'out of cycle rating' issued approximately one month before the end of the period for his annual performance rating[,]" id. at 14-15. "Standing by itself," the Arbitrator was "not satisfied that it [did]." Id. at 15. The Arbitrator explained that "[i]f there were hard evidence in the record establishing prejudice to the government, this single incident might well support an [unacceptable] performance rating." Id. However, "[a]bsent such evidence and since [he found] that the other charges of [unacceptable] performance [were] not supported by substantial evidence," the Arbitrator sustained the grievance and directed that the unacceptable performance rating of May 17, 1989, be removed from the grievant's record. Id. However, the Arbitrator advised that the Agency may consider the grievant's failure "to satisfactorily perform . . . regarding Critical Element No. 8E" in the grievant's annual performance appraisal for the year ending June 30, 1989. Id.
III. First Exception
A. Positions of the Parties
The Agency contends that the award "is contrary to" management's rights to direct employees and to assign work under section 7106(a)(2)(A) and (B) of the Statute. Agency Statement of Position at 2, 4. The Agency argues that the Arbitrator was not authorized to cancel the grievant's ratings of unacceptable in elements 3E and 6E under the Authority's decision in Social Security Administration and American Federation of Government Employees, AFL-CIO, 30 FLRA 1156 (1988) (SSA I). The Agency maintains that under the first prong of the test set forth in SSA I, in order to cancel a grievant's performance rating, the arbitrator must find that management has not applied the established standards or that management has applied the established standards in violation of law, regulation, or a provision of the parties' collective bargaining agreement. The Agency claims that the Arbitrator failed to make any of these findings and that, consequently, the award is deficient by sustaining the grievance and effectively changing the ratings.
The Union first claims that SSA I only applies to cases where an arbitrator changes a rating and not to cases where an arbitrator cancels a rating. The Union argues that, contrary to the contention of the Agency, the Arbitrator did not order any ratings to be changed and that, therefore, SSA I is not applicable. In the alternative, the Union argues that the Arbitrator found that the established standards were applied in violation of law because management did not possess substantial evidence to support the ratings under elements 3E and 6E.
B. Analysis and Conclusions
In SSA I, the Authority reexamined the remedial authority of arbitrators in performance appraisal matters. Subsequently, in U.S. Department of Health and Human Services, Social Security Administration and American Federation of Government Employees, Local 1122, 34 FLRA 323, 328 (1990) (SSA II), we described SSA I as "establish[ing] a two-prong test." We explained the test as follows:
First, an arbitrator must find that management has not applied the established standards or has applied them in violation of law, regulation, or a provision of the parties' collective bargaining agreement. If that finding is made, an arbitrator may cancel the grievant's performance appraisal or rating. Second, if the arbitrator is able to determine based on the record what the performance appraisal or rating would have been had management applied the correct standard or if the violation had not occurred, the arbitrator may order management to grant that appraisal or rating. If the arbitrator is unable to determine what the grievant's rating would have been, he must remand the case to management for reevaluation.
SSA II, 34 FLRA at 328.
Contrary to the position of the Union, SSA I clearly applies to an arbitrator's cancellation of a grievant's performance appraisal or rating. Therefore, although we agree with the Union that, contrary to the claim of the Agency, the Arbitrator did not order any of the ratings of the grievant changed, the first prong of the test in SSA I applies to the Arbitrator's cancellation of the ratings for elements 3E and 6E.
Examining the Arbitrator's cancellation of those ratings, we conclude that the award satisfies the first prong of the test in SSA I. With respect to both elements 3E and 6E, the Arbitrator found that the Agency had failed to demonstrate by substantial evidence that the grievant's performance did not meet the performance standards. In our view, by finding that the Agency failed to substantiate the ratings of unacceptable under elements 3E and 6E, the Arbitrator found that the Agency failed to properly apply the established standards, and, therefore, the award satisfies the first prong of SSA I. Accordingly, we conclude that the Arbitrator's cancellation of the ratings for elements 3E and 6E has not been shown to be contrary to section 7106(a)(2)(A) and (B), and we deny the Agency's exception.
IV. Second Exception
A. Positions of the Parties
The Agency contends that the award is contrary to law and regulations because the award has precluded management from rating the grievant's performance as unacceptable even though the grievant failed to meet the performance standard of a critical element of his position. The Agency notes that the Arbitrator found that there was substantial evidence to support the alleged unacceptable performance of the grievant under element 8E, but that the Arbitrator held, relying on the decision in Lovshin, that the Agency was not required to rate the grievant unacceptable overall based on a rating of unacceptable in a single critical element. The Agency claims that under the definition of "unacceptable performance" in 5 U.S.C. § 4301, under the provisions of 5 C.F.R. § 430.203 and Air Force Regulation (AFR) 40-452 (Performance Management Program), and under the decision in Lovshin, the Arbitrator was required to uphold the summary performance rating of unacceptable because he had upheld the rating of unacceptable for critical element 8E.
The Union contends that the Arbitrator properly voided an out-of-cycle rating of unacceptable that he found to be unsupported. The Union argues that, in an out-of-cycle rating situation, the Arbitrator had the authority to preclude the Agency from imposing a summary rating of unacceptable "for one minor miscue in one of several sub-elements out of the several Critical Elements for which the grievant was responsible." Opposition at 7.
B. Analysis and Conclusions
We find that it is unclear in this case whether the award is deficient. In our view, the award is ambiguous as to whether the Arbitrator found that the Agency had substantiated a rating of unacceptable for critical element 8E as a whole.
We agree with the Agency that the Arbitrator erred if he concluded, based on the decision in Lovshin, that unacceptable performance of the grievant under critical element 8E as a whole did not require that the grievant's overall performance be rated unacceptable. 5 C.F.R. § 430.203 defines the term "critical element" as follows: "a component of a position consisting of one or more duties and responsibilities which contributes toward accomplishing organization goals and objectives and which is of such importance that unacceptable performance on the element would result in unacceptable performance in the position." The Agency indicates that it has implemented this definition of critical element in its performance management program contained in AFR 40-452. The Agency states without contradiction that AFR 40-452 governs summary performance ratings and that AFR 40-452 specifies that a summary rating of unacceptable is to be assigned whenever an employee is rated unacceptable under any of the critical elements of the employee's performance plan. Compare McKenzie v. EEOC, 38 MSPR 380, 382 (1988) (the summary rating for the EEOC's performance appraisal system defined unacceptable performance as performance that fails to meet established performance standards in more than one critical element). Accordingly, we agree with the Agency that under governing regulations, the grievant was required to be assigned a summary rating of unacceptable if his performance was unacceptable under critical element 8E as a whole.
On the other hand, the Union claims that the performance standard for critical element 8E consists of more than one component, and the Union raises the issue of the appraisal of performance under such a critical element. In Shuman v. Department of the Treasury, 23 MSPR 620, 628 (1984) (Shuman), the Merit Systems Protection Board (MSPB) held that when an agency has taken a performance-based action under 5 U.S.C. § 4303, based on unacceptable performance on fewer than all the components of a performance standard for a critical element, the agency must substantiate that the employee's performance warranted an unacceptable rating under the element as a whole. See also Adkins v. Department of Housing and Urban Development, 781 F.2d 891, 895 (Fed. Cir. 1986) (citing Shuman approvingly). The MSPB advised in Shuman that the evidence presented by an agency should demonstrate that the employee knew or should have known the significance of the component or components in dispute, in addition to demonstrating that the employee's deficiencies were significant enough to justify the action that the agency has taken. The record in this case supports the Union's claim that critical element 8E consists of a performance standard with more than one component. Accordingly, we agree with the Union that the Arbitrator could have concluded that the Agency failed to substantiate that the grievant's unacceptable performance under one of the components, but not all of the components, of the performance standard for critical element 8E did not warrant an unacceptable rating under the element as a whole. See Shuman, 23 MSPR at 628.
The award, however, is ambiguous. It is not clear to us whether the Arbitrator sustained the unacceptable rating under critical element 8E, but refused to sustain the summary rating of unacceptable or whether the Arbitrator sustained the unacceptable rating under a component of the performance standard for element 8E, but refused to sustain the rating of unacceptable under critical element 8E as a whole. Because of the award's ambiguity, we cannot determine whether the award is deficient and we will remand the award to the parties to have them obtain a clarification from the Arbitrator, absent settlement. On clarification, the Arbitrator should specify, consistent with this opinion, the basis for his award cancelling the summary rating of unacceptable of the grievant dated May 17, 1989. On issuance of a clarified award, either party may file timely exceptions to the award with the Authority.
The award is remanded to the parties to have them obtain a clarification of the award from the Arbitrator.
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