U.S. Federal Labor Relations Authority

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United States of America


In the Matter of




Case No. 02 FSIP 89


    Local 2004, American Federation of Government Employees, AFL-CIO (Union), filed a request 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, between it and the Department of Defense, Defense Logistics Agency, Defense Distribution Depot, Susquehanna, New Cumberland, Pennsylvania (Employer).

    After investigation of the request for assistance, the Panel determined that the dispute, which concerns the distribution and amount of incentive awards for Fiscal Year (FY) 2002, should be resolved on the basis of written submissions from the parties, including rebuttal statements. The parties also were advised that following receipt of their submissions, the Panel would take whatever action it deemed appropriate to resolve the impasse, which could include the issuance of a binding decision. Submissions were made in accordance with the Panel’s procedural instructions, and it has now considered the entire record.


    The Employer’s mission is to "supply soldiers in the field;" in this regard, it warehouses and transports everything from "band-aids to reconditioned motor vehicles." Another aspect of the Employer’s mission is to receive, store, pack and certify hazardous materials for international transportation. It operates two depot facilities, one in New Cumberland, Pennsylvania, where there are about 1,000 bargaining-unit employees represented by the Union, and another in Mechanicsburg, Pennsylvania, where employees are represented by two other labor organizations. Bargaining -unit positions at the New Cumberland facility are a mix of "blue collar" and "white collar" jobs, with the majority of employees holding positions as material handler and packer. The parties' current collective-bargaining agreement, which was signed in January 1995, has been rolled over and now is scheduled to expire in January 2004.


    The parties have a fundamental disagreement over whether certain awards for performance should be mandatory or at management’s discretion.

1. The Union’s Position

    In essence, the Union proposes that: (1) a mandatory award of $200 be issued to any employee who has an excellent safety record for the fiscal year; (2) budget permitting, any employee who achieves a performance rating of "fully successful" receive a $200 award, and Union officials on 100-percent official time "receive an amount equal to the employees who meet the criteria for performance;" (3) the Employer retain discretion to issue other monetary awards; while there would be "no need to establish criteria in advance of the recognition," these awards would have to be justified, in writing, with final approval to be made by the deputy for depot mission or the deputy for depot support; and (4) award nominations and decisions be reviewable by the Union for the purpose of allowing it to make recommendations and/or "point out any discrepancies or possible abuses" to management.

    According to the Union, mandatory awards for employees who have excellent safety records and/or who perform their jobs successfully may serve to thwart management tendencies to award only certain favored employees, which could lead to the development of a "good ole boys" network. In addition, awarding employees with excellent safety records benefits both the employees and management. The proposal would provide smaller mandatory awards for employees during FY 2002 than in previous years; in this regard, an employee potentially could earn $400 in mandatory awards during FY 2002, which is less than the $500 cash award which an employee could have earned under the parties’ FY 2000 and FY 2001 awards agreements. Finally, mandatory awards for certain types of performance should continue because, over the years, employees have come to rely on award money as part of their pay.

2. The Employer’s Position

    The Employer proposes that all monetary awards be given at the discretion of management, with supervisors to timely nominate employees for awards. The awards program would be administered fairly and equitably with awards based on performance or achievements judged to deserve special recognition. While no specific criteria would be established for award recognition, all awards would have to be justified, in writing, and approved by the Commander or Deputy Commander. The Union would be permitted to review management submissions and decisions on awards, and entitled to make recommendations concerning awards and comment on any discrepancies or possible abuses of the procedure, including those involving issues of fairness or equatability.

    Management should have sole discretion to issue awards because this would ensure the availability of funds for awarding those employees whose performance is most deserving of special recognition. Furthermore, the proposal is consistent with Article 11, Section 1, of the CBA, which provides that the incentive awards program is to "be administered on a fair and equitable basis." Finally, by granting management sole discretion over whether employees receive awards, the number of grievances over awards, such as the one filed by the Union over the awards agreement for FY 2001, should be minimized.(1)


    Having carefully considered the evidence and arguments presented by the parties, we are persuaded that the impasse should be resolved by adopting the Employer’s proposal. Philosophically, the Panel believes that limitations upon the discretion to distribute performance and incentive awards should not be unilaterally imposed upon management. While employers and unions are free to reach agreements through collective bargaining which cede some or all of management’s discretion in this area, the Panel is reluctant to impose mandatory incentive awards where the parties have not done so voluntarily.

    Turning to the specific issues in this case, the Union’s proposal for a $200 cash award for any employee who receives a performance rating of "fully successful" would reward employee performance that may be merely satisfactory. In our view, it limits management’s ability to reward excellent performance and enhance the likelihood that those employees most deserving of merit increases will continue to serve the Government. Moreover, the Union’s proposal would further constrain management’s ability to issue discretionary awards because budgeted award money for FY 2002 may have to be used, for the most part, to fund mandatory awards.

    The Employer’s proposal, on the other hand, ensures that management has discretion to provide performance based incentives to the appropriate employees. Such discretion is not unchecked, however, as the proposal requires managers to justify awards, in writing, and obtain approval for the recommendation from higher-level officials, enhancing the likelihood that the award distribution process is fair and equitable. Moreover, the Union would have a role in assessing whether awards are distributed fairly, in accordance with Article 11, Section 1, of the CBA, because the proposal permits it to review every submission and decision, make recommendations, and identify any discrepancies or possible abuses of the awards procedure. For all of the above-stated reasons, we shall order its adoption.


    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 proceedings instituted pursuant to the Panel's regulations, 5 C.F.R. § 2471.6(a)(2), the Federal Service Impasses Panel, under § 2471.11(a) of its regulations, hereby orders the parties to adopt the Employer’s proposal.

By direction of the Panel.

H. Joseph Schimansky
Executive Director

August 23, 2002
Washington, D.C.

1. According to the Employer, the Union filed a grievance over wording in the parties’ FY 2001 incentive awards agreement, which provided for a $100 cash award to any employee “who performed their officially assigned duties 50-percent of the regular hours available during pay period beginning February 11, 2001, and pay period ending July 28, 2001; those performing their regularly assigned duties 80-percent of the time during that period would earn a $300 award. Apparently, the parties disagreed over an interpretation of the criteria necessary to receive an award for attendance. As a result of a settlement, the grievants received higher monetary awards.