U.S. Federal Labor Relations Authority

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United States of America




In the Matter of








Case No. 90 FSIP 59




Columbia Lodge 174, International Association of Machinists and Aerospace Workers, AFL-CIO (Union) filed a request for assistance with the Federal Service Impasses Panel (Panel) to consider a negotiation impasse under section 7119 of the Federal Service Labor-Management Relations Statute (Statute) between it and the Department of the Navy, Naval Research Laboratory, Washington, D.C. (Employer).

After investigation of the request for assistance, the Panel directed that Staff Associate Ellen J. Kolansky conduct an informal conference with the parties for the purpose of assisting them in resolving any outstanding issues. If no settlement were reached, she was to notify the Panel of the status of the dispute, including the parties' final offers and her recommendations for resolving the issues. Following consideration of this information, the Panel would take whatever action it deemed appropriate to resolve the impasse.

Mrs. Kolansky met with the parties on May 18, 1990, at the Panel's offices in Washington, D.C. The parties reached agreement on one issue, but two others remained unresolved. She reported to the Panel, and it has now considered the entire record.


The Employer's mission is to research and develop prototype equipment for the Navy. The bargaining unit consists of approximately 60 General Schedule employees who are guards at the facility. The parties current collective-bargaining agreement, which was to expire on October 25, 1989, has been extended until a successor is implemented. When the two issues before the Panel concerning incentive awards are resolved, the contract will be complete. During the informal conference, the parties agreed that employees rated "Outstanding" would receive incentive awards.

At present, there is no contractual provision addressing incentive awards for any employees working at the facility. Most employees rated "Outstanding" and some rated " Exceeds Fully Successful" receive awards; those rated "Fully Successful" rarely receive awards. Naval regulations suggest awarding amounts between 2 and 20 percent of base salary (amounts over 10 percent must be approved by command headquarters), and mandate that those selected for awards at the outstanding level receive a minimum of 2 percent.


The issues are: (1) whether incentive award determinations should be mandatory or discretionary for employees rated "Exceeds Fully Successful"; and (2) the method to be used to determine the AMOUNT of AN award.

1. Mandatory/Discretionary Awards at "Exceeds Fully Successful"

    a. The Employer's Position

The Employer proposes that incentive awards for employees rated "Exceeds Fully Successful" remain discretionary. Preliminarily, the Employer contends that the Union's proposals are nonnegotiable because they: (1) attempt to bargain over pay and money-related fringe benefits which are not conditions of employment; (2) interfere with management's right to determine its budget; and (3) are inconsistent with Office of Personnel Management's regulations which require two levels of review in the granting of awards. On the merits, it argues that the current awards program works well, and has not been the subject of grievances. Retaining discretion below the highest performance rating level would give it control over the budget, and permit it to consider factors other than performance in award decisions c;

    b. The Union's Position

The Union disputes the Employer's preliminary allegations of nonnegotiability. Under its proposal, awards would be mandatory for employees rated "Exceeds Fully Successful." It urges that making awards mandatory at this level would do much to eliminate employees' perceptions that awards often are distributed unfairly, and granted to favored employees. Although there have been no formal grievances in this area, it reports a great deal of dissatisfaction with the status quo. Furthermore, a comparable bargaining unit at the David Taylor Research Center, Carderock, Maryland, has an identical contractual provision.


2. Method to Determine Award Amounts

    a. The Employer's Position

Under the Employer's proposal, award amounts for employees rated "Outstanding" would be distributed "fairly and equitably within budgetary constraints. N It specifies no method for determining amounts for employees who are rated "Exceeds Fully Successful" and selected to receive an award. Retaining discretion over award amounts would maintain the status quo. Such a method would preserve its flexibility to grant amounts which reflect a range of factors beyond the rating level attained, round off odd amounts, and ensure amounts remain within budgetary limits. The system proposed by the Union, on the other hand, is complex and inconsistent as it proposes using gradations in amounts within the " Exceeds Fully Successful" level, but not at "Outstanding."

    b. The Union's Position

In essence, the Union proposes that the Employer (1) grant award amounts between 2 and 10 percent of base salary at the outstanding level, and (2) apply a declining percentage to be determined on the basis of the number of ratings on critical elements in a performance appraisal above fully successful for those rated "Exceeds Fully Successful." It argues that its system would leave less to the judgment of the supervisor, be easy to calculate, and has been working well for over a year at the David Taylor Research Center. Such attributes would do much to create a feeling among employees that the system is fair, and give real incentives for maintaining consistently high performance levels.



Addressing the Employer's allegations of nonnegotiability, jurisdiction over the instant case is supported by clear Authority precedent(1)which finds this matter to be negotiable.(2)

Having considered the evidence and arguments in this case, we conclude, on balance, that the first issue should be resolved by adopting the Union's proposal that awards for employees rated "Exceeds Fully Successful" be mandatory. In reaching such a conclusion, we are persuaded that automatic awards at "Exceeds Fully Successful" should do much to dispel employees' perceptions of unfairness and favoritism. Furthermore, the Employer would retain discretion over employees' performance ratings, and, therefore, a considerable measure of control, despite yielding it for award determinations at the top two levels of performance. Although awards would be automatic, employees still would be motivated to perform well because of the certain prospect of an award for sustained high achievement.

As to the second issue, we conclude that an appropriate resolution is a compromise provision which would extend the Employer's proposal to cover award amounts for those rated "Exceeds Fully Successful." In our view, this position is consistent with the institution of mandatory awards at the two highest performance levels. It permits the Employer greater flexibility than a system which applies a fixed range of percentages, especially for a given year in which the budgeted amounts might be reduced. Also, it allows for adjusting amounts for employees who work for only part of a year. Furthermore, under current regulations, award amounts for those rated "Outstanding" would be at least 2 percent, which is the low end of the percentages proposed by the Union for this achievement level.

When both provisions are read together, the awards system appears equitable, and should serve to motivate employees and improve morale. Moreover, publication of the standards to be applied, "fairly and equitably within budgetary constraints," should afford employees a better understanding of how awards decisions are made and amounts distributed, thus fostering perceptions of fairness.


Pursuant to the authority vested in it by section 7119 of the Federal Service Labor-Management Relations Statute and because of the failure of the parties to resolve their dispute during the course of proceedings instituted pursuant to section 2471.6(a)(2) of the Panel's regulations, the Federal Service Impasses Panel under section 2471.11(a) of its regulations hereby orders the following:

1. Mandatory/Discretionary Awards at "Exceeds Fully Successful"

The parties shall adopt the Union's proposal that performance awards be mandatory for employees rated "Exceeds Fully Successful."

2. Method to Determine Award Amounts

The parties shall adopt a compromise provision based on the Employer's proposal that award amounts be distributed fairly and equitably within budgetary constraints, but extend it to cover employees rated "Outstanding" and "Exceeds Fully Successful."

By direction of the Panel.

Linda A. Lafferty

Executive Director

July 3, 1990

Washington, D.C.


1. In Commander, Carswell Air Force Base, Texas and American Federation of Government Employees. Local 1364, 31 FLRA 620 (1988), the Authority determined that the Panel may apply existing case law to resolve an impasse where a duty-to-bargain issue arises.

2. National Treasury Employees Union and Internal Revenue Service, 27 FLRA 132 (1987); and National Treasury Employees Union, Chapter 245 and Department of Commerce, Patent and Trademark Office, 30 FLRA 1219 (1988).