U.S. Federal Labor Relations Authority

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United States of America



In the Matter of







Case Nos. 00 FSIP 38 and 00 FSIP 45


    Local 2484, American Federation of Government Employees, AFL-CIO (Union) and the Department of Defense, U.S. Army Medical Materiel Agency, Fort Detrick, Maryland (Employer or Agency) filed separate requests for assistance with the Federal Service Impasses Panel (Panel) to consider a negotiation impasse under the Federal Service Labor-Management Relations Statute (Statute), 5 U.S.C. § 7119.

    After investigating the requests for assistance, which arose during negotiations over the parties’ initial collective-bargaining agreement (CBA), the Panel determined that the issue concerning the continued participation of bargaining-unit employees in the Laboratory Personnel Management Demonstration Project (hereinafter demo project), should be resolved through an informal conference between a Panel representative and the parties.(1) If no settlement was reached, the representative would notify the Panel of the status of the dispute, including the parties’ final offers and his recommendations for resolving the matter. After considering this information, the Panel would take whatever action it deemed appropriate to resolve the impasse, including the issuance of a binding decision.

    Accordingly, Panel Member Marvin E. Johnson conducted an informal conference with the parties on April 19, 2000, at Fort Detrick, Maryland. The parties, however, were unable to voluntarily resolve the issue. They have submitted their final offers to the Panel along with summary statements of position. Member Johnson has reported to the Panel and it has now considered the entire record, including the parties’ arguments and supporting evidence.


    The Employer, a subordinate activity of the U.S. Army Medical Research and Materiel Command (USAMRMC), provides logistics support for the Army’s healthcare missions worldwide, develops and implements innovative logistics concepts and technological advances, and acts as the focal point for acquisition and sustainment of medical materiel and technology. The Union represents a bargaining unit consisting of 77 employees in what were formerly GS-7 through GS-11 positions; typically, employees work as computer technicians, in acquisition, or on the clerical support staff.

    On June 7, 1998, before employees were represented by a labor organization, they became participants in a demo project along with approximately 1,000 other Agency employees worldwide. On June 10, 1998, the Union filed a petition with the Federal Labor Relations Authority (FLRA) to be certified as the exclusive representative of bargaining-unit employees; in September 1998, it received certification as the exclusive representative from the FLRA.(2)

    The demo project, in essence, is an experimental personnel system based on the concept of pay for performance. It was designed by the Department of the Army, with the participation of the Department of Defense, and reviewed and approved by the Office of Personnel Management (OPM). Final notice of the demo project was published in 63 Fed. Reg. 10440 (March 3, 1998). It is to remain in effect for 5 years, during which minor changes could be made by USAMRMC; major changes, however, would require OPM approval and publication in the Federal Register. At the end of 5 years, the demo project is to be reevaluated for permanent implementation, continued testing, or expiration.(3)

    Shortly after the demo project went into effect, the Union filed an unfair labor practice (ULP) charge against the Employer contending that the Employer had failed to maintain the status quo while a question concerning representation was pending. In this regard, the Union maintained that the Employer should not have implemented the demo project because the Union had filed a petition with the FLRA to become the exclusive representative of bargaining-unit employees. As a remedy, the Union sought to have employees released from participation in the demo project.(4) Having failed to convince the FLRA that a ULP had been committed, the Union determined to resurrect the issue during term negotiations.


    The parties disagree over whether, or to what extent, bargaining-unit employees should continue to participate in the demo project.


1. The Union’s Position

    The Union proposes alternative solutions to resolve the dispute. Its preferred outcome is that effective October 2000, all bargaining-unit employees would be excluded from participation in the demo project; the conversion of employees to traditional personnel procedures would be carried out in accordance with the regulatory provisions set forth in the March 3, 1998, Federal Register. The proposal effectively would terminate bargaining-unit employee participation in a demo project which was never negotiated with the Union at any level, has been in a constant state of flux since its implementation nearly 2 years ago, and has generated much animosity between the parties, including several ULP charges and a negotiability appeal. Given that bargaining-unit employees number only 77 out of more than 1,100 demo project participants world-wide, excluding them would have little or no impact on the Agency’s ability to continue the program or its mission. Moreover, the Employer does not deny that even if bargaining-unit employees cease to participate, the demo project could and would continue without being jeopardized.

    Notwithstanding all of the agency "hype" surrounding the "virtues" of the demo project, it offers very little by way of employee benefits. Rather, many of the Employer’s objectives in implementing the demo project could have been accomplished under existing regulations governing performance management, which allow management to financially reward employees who perform well; also, current regulations afford management the authority to rehabilitate and/or remove those employees who fail to meet performance objectives. Existing regulations allow management to offer employees’ incentives which, when utilized, enable the agency to attract and retain personnel who posses special skills or abilities. The wholesale changes in the personnel system brought about by the demo project appear to have been unwarranted and there was no demonstrated need to implement the project in June 1998. In this regard, the Employer acknowledges that prior to implementation, management had not taken any performance-based adverse actions against employees. Nor was there any evidence of employee attrition due to the modest salaries offered under the General Schedule pay scale. One of the objectives of the demo project, to improve employee perceptions about their jobs, has not been achieved. Rather, employees resent management’s ability under the demo project to grant competitive service "status" to employees initially hired to fill temporary vacancies; this has created a perception of unfairness because these new hires have been able to bypass competitive and merit promotion procedures. Furthermore, they may have the ability to displace more senior employees in the event of a RIF since seniority status is diminished under the demo project. Also, under the demo, employees have become wary of the Employer’s "revolving door" hiring of former military personnel and contractor employees. These practices are ripe for abuse and should be eliminated. The supposed monetary enhancements offered to employees under a demo project are outweighed by diminished employee benefits and protections, including the elimination of within-grade increases; the abolishment of time-in-grade requirements as they relate to promotions; linking performance to pay; and the diminution of seniority status as a protection against a RIF. The Employer cannot support its claim that the new pay for performance system would increase its ability to better compensate employees who perform well because, at least for now, "the demo comes without additional funding for performance awards."

    The Employer was aware of the Union’s organizing efforts when it hurriedly implemented the demo project in June 1998, before the Union was certified as the exclusive representative of bargaining-unit employees. Had the bargaining unit been represented by the Union at the time the demo project was implemented, the unit would have been able to opt out of participation.(5) In this regard, the final notice of the demo project, as announced in the Federal Register, provides that "bargaining units [] not endorsing the demonstration project will not participate." See 63 Fed. Reg. 10440, 10444 (March 3, 1998). The Employer has been reluctant to negotiate with the Union over any modifications to the demo project and, instead, unilaterally makes changes. This has resulted in animosity between the parties with the Union seeking third-party intervention to protect its interests and employee rights. There is no indication that this will change as long as the demo project remains in effect. Ultimately, it would be better for the parties’ relationship to eliminate employee participation in the demo project rather than for the parties to attempt to negotiate changes thereto because it is unlikely that they would be able to conclude negotiations without considerable acrimony and third-party assistance. Without the demo project to contend with, the parties most likely would be able to quickly conclude negotiations over their initial CBA.

    Employees are overwhelmingly opposed to continued participation in the demo project, and the Union has not heard from any bargaining-unit employee who favors continued participation. Even a survey conducted by OPM, after the project had been in effect for approximately 1 year, reveals employee dissatisfaction with the demo project; in this regard, 59.5 percent of employees who responded to the survey did not believe that pay for performance would improve their job performance; 77.6 percent found that the demo project had not improved their morale; and 51.9 percent did not believe that the demo project was a good way to improve performance, help the organization meet critical mission needs, or retain the best qualified employees.

    If the Panel decides not to order bargaining-unit employees to be excluded from the demo project, as an alternate position, the Union proposes that bargaining-unit employees be permitted to volunteer to participate in a "pilot program" to be negotiated with the Union which would provide alternatives to traditional pay and personnel procedures. Details concerning, but not limited to, the size, scope, duration, policies, and procedures, would be negotiated at a later date. This solution could be a "win-win" for the parties because it would allow employees to choose to participate in a demo-like project without eliminating the Employer’s opportunity to experiment with different personnel management systems. By deferring negotiations over the "details" of this experimental or "pilot" personnel system, the parties could focus on concluding their term agreement and implementing it in the near future.

2. The Employer’s Position

    Under the Employer’s proposal, all bargaining-unit employees would vote, with no abstentions permitted, on whether to continue participation in the demo project, with a simple majority determining the outcome. Prior to the vote, the parties would determine the procedures for conducting the vote, including equal time for each party to address the bargaining unit. Should bargaining-unit members vote to cease participation in the demo project, conversion out would take place no sooner than October 1, 2000. A vote among bargaining-unit employees would test the Union’s assertion that a majority of employees do not favor continued participation in the demo project. There is reason to believe, however, that employees overall are not opposed to the demo project. Its proposal would provide a democratic solution to the problem, which the Employer would accept even if the outcome is adverse to its position. Moreover, by allowing all bargaining-unit employees to participate in a vote, and not merely those who pay Union dues, the Union would be fulfilling its duty of fair representation.(6) Its approach would provide an expeditious solution to a longstanding divisive issue.

    The Union’s alternate proposal could result in the implementation of three personnel systems for a small group of employees which would be impractical, costly and complicated for management to administer.(7) With several personnel and pay systems in effect, employees may perceive that they are being treated disparately because employees under different personnel systems would be working side-by-side performing similar duties, but their pay, position descriptions, performance objectives, and reward systems would be different. On the other hand, the bargaining required to implement the Employer’s proposal would be less complex, completed more quickly, and would be less likely to result in a further impasse than the Union’s alternate proposal. Other than the objections to the demo project proffered by the Union’s representatives, bargaining-unit employees have not communicated any objections to the Employer about it. Employees have much to gain by continuing participation in the demo project and the Employer would present those arguments to bargaining-unit employees to encourage them to vote in favor of their continued participation. Only two employees did not receive performance pay during the first rating cycle under the demo project, which mitigates against the Union’s assertion that employees are not benefitting from participation. Additionally, through broad- banding the demo project offers employees career enhancing alternatives they might not otherwise have had under traditional personnel procedures. For its own reasons, the Union has chosen to downplay the many benefits provided to employees under the demo project.


    Having carefully reviewed the evidence and arguments presented by the parties, we are persuaded that the dispute should be resolved on the basis of the Union’s proposal that bargaining-unit employees cease participation in the demo project. In reaching this conclusion, we find that adoption of the Employer’s proposal would diminish the Union’s institutional role as the exclusive representative for all bargaining-unit employees on matters affecting personnel policy, practices, and conditions of employment. More specifically, an employee vote would undercut the traditional and statutorily protected function of the Union as the duly authorized representative and advocate for bargaining-unit members on matters pertaining to their working conditions.(8) In our view, such an approach would be unwarranted even if there was evidence in the record, which there is not, that the majority of employees favor continuing their participation in the demonstration project. To the contrary, the survey conducted by OPM after the demo project had been in effect for nearly 1 year reveals general employee dissatisfaction with the demo project.

    We are cognizant that in the unique circumstances of this case the Union’s successful effort to become the exclusive representative of bargaining-unit employees coincided with the Employer’s implementation of the demo project. Had the Union been certified as the exclusive representative prior to implementation, it apparently would have been able to elect, on behalf of unit members, to opt out of participation in the demo project.(9) Although the Union was not entitled to make such a decision before the demo project went into effect, both sides acknowledge its right to pursue the issue during negotiations over the parties’ initial CBA, including impasse procedures. In addition, we note that the Employer has not contended that the demo project will fail if the relatively small number of bargaining-unit employees represented by the Union are excluded, and that the adoption of its proposal could lead to the same result. For the reasons set forth above, we shall order the parties to adopt the Union’s proposal that employees cease participation in the demo project effective October 2000.


    Pursuant to the authority vested in it by the Federal Service Labor-Management Relations Statute, 5 U.S.C. § 7119, and because of the failure of the parties to resolve their dispute during the course of the proceedings instituted under the Panel’s regulations 5 C.F.R. § 2471.6(a)(2), the Federal Service Impasses Panel under 5 C.F.R. § 2471.11(a) of its regulations hereby orders adoption of the following:

    The parties shall adopt the Union’s proposal.


By direction of the Panel.

H. Joseph Schimansky

Executive Director

June 7, 2000

Washington, D.C.


1.With respect to all other issues submitted by the parties in their respective requests for assistance, the Panel determined to decline to assert jurisdiction because voluntary efforts to reach agreement concerning those matters had not been exhausted.

2.On two previous occasions, the Union had failed in its bid to become the exclusive representative of bargaining-unit employees. According to the Union, the Employer’s plan to implement a demo project in 1998, was the issue which ultimately resulted in the Union’s being voted “in” by employees.

3.Under the demo project, occupations are grouped into “families” according to similarities in the type of work and customary requirements for formal training or credentials. Each “family” has from three to five discrete pay bands that replace General Schedule grades and steps. Each pay band spans a pay range previously covered by one or more General Schedule grades (known as broad-banding). Unlike General Schedule grades, the project’s pay bands do not have salary “steps” within the pay range of the band. An employee’s salary advancement within the pay band is based on performance. Employees who earn either of the top two annual performance ratings (out of four possible rating levels) automatically receive performance pay. Performance pay always is applied as a base pay increase until an employee’s salary reaches the maximum salary for the pay band; once the maximum is reached, performance pay is issued as a lump sum payment. Among other characteristics of the demo project are a simplified performance appraisal system that is expected to enable supervisors and employees to focus on the quality of work; modifications to reduction in force (RIF) procedures which place more significance on performance ratings than length of service when determining an employee’s retention standing; and expanded developmental opportunities for employees (such as sabbaticals).

4.It appears, however, that the ULP charge was dismissed on a procedural technicality. The FLRA determined that the Union failed to serve the Employer with notice of its representation petition before the demo project was implemented on June 7, 1998; although the FLRA had received the Union’s petition on June 2, 1998, the Employer did not receive it until June 10, 1998, 3 days after the demo project was implemented. In the absence of notice of the representation petition, the FLRA determined that the Employer was under no obligation to maintain the status quo.

5.Moreover, if the Union had timely filed a petition for exclusive representation with the FLRA before the demo project was implemented, it is arguable that the Employer would not have been able to legally implement the demo project. In this regard, in his letter to the Union, although dismissing the ULP charge on technical grounds, the Regional Director of the FLRA’s Washington Regional Office cites U.S. Department of Justice, Immigration and Naturalization Service, 9 FLRA 253 (1982), which states that, where there is no existing recognition or existing collective bargaining agreement, an agency is required to maintain existing conditions of employment to the maximum extent possible during the pendency of a question concerning representation, unless changes in those conditions of employment are required consistent with the necessary functioning of the agency.

6.In support of its position, the Employer cites National Federation of Federal Employees, Local 1827 and Catherine Bratton, 49 FLRA 738 (1994) (NFFE, Local 1827). The Federal Labor Relations Authority found that the union had violated its duty of fair representation when non-union members of the bargaining unit were not permitted to participate in a poll conducted by the union concerning the method of determining seniority to calculate seniority-based benefits in circumstances where the contract granted the union final decisional authority.

7.Currently, in addition to employees subject to pay banding under the demo project, other non-bargaining unit employees remain under the General Schedule and continue to be subject to traditional personnel procedures.

8.The Employer’s reliance on NFFE, Local 1827 is inapposite, primarily because it arose in the context of an unfair labor practice proceeding rather than as a collective-bargaining impasse. In this regard, if the Panel had concluded that this dispute should be resolved on the basis of a vote, the case might be relevant in determining whether those eligible to participate should be limited to dues-paying members or include the entire bargaining unit. As our decision does not resolve the parties’ impasse on this basis, however, we find that NFFE, Local 1827 does not apply.

9.As referenced supra, the Federal Register notice of the Laboratory Personnel Management Demonstration Project within the U.S. Army Medical Research and Materiel Command provides that “bargaining units of MRMC not endorsing the demonstration project will not participate.” See 63 Fed. Reg. 10440, 10444 (March 3, 1998).