U.S. Federal Labor Relations Authority

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United States of America



In the Matter of










Case No. 96 FSIP 19


    Local R5-160, National Association of Government Employees, Service Employees International Union, 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 the Army, Headquarters XVIII Airborne Corps and Fort Bragg, Fort Bragg, North Carolina (Employer).

    After investigation of the request for assistance concerning negotiations over a successor collective bargaining agreement (CBA), the Panel directed the parties to participate in an informal conference with Panel Representative (Staff Attorney) Ellen J. Kolansky for the purpose of resolving the outstanding issues. The parties were advised that if no settlement were reached, Mrs. Kolansky would report to the Panel on 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, including the issuance of a binding decision.

    Accordingly, Mrs. Kolansky met with the parties on March 13, 1996, and continued the conference by telephone on March 20 and 25, 1996. Although a settlement was reached on 10 items, parts of 4 articles remain unresolved. She has reported to the Panel based on the record developed by the parties, and the Panel has now considered the entire record.


    The Employer’s mission is to support military families at Fort Bragg through operating the following morale, recreation, and welfare (MRW) programs: food service, child care centers, youth centers, golf courses, a riding stable, bowling alleys, automobile care stores, and billeting. The Union represents 850 nonappropriated fund (NAF) bargaining-unit employees. They work as child development program assistants, food service workers (waiters, waitresses, and cooks), recreation aides, administrative support personnel, marketing, maintenance and custodial workers, and clerks. With respect to pay, NAF unit employees may be divided into 3 categories: (1) approximately 425 trades and crafts employees who are paid in accordance with prevailing rates in the area as determined by an annual wage survey conducted in May and paid in January of each year; (2) approximately 200 NF-1 and -2 NAF pay band employees who receive annual cost-of-living increases in July based on annual wage surveys of relevant occupations in the private sector; and (3) approximately 90 NF-3 and -4 and approximately 100 child care (CC) employees who receive pay increases commensurate with those granted to General Service -2 through -4 employees in January of each year.(1) The parties are covered by a CBA, "the Green Agreement," that expired on September 6, 1995, but remains in effect until the new agreement is executed.(2)


The parties are at impasse over: (1) four exclusions to the negotiated grievance procedure (NGP);(3) (2) performance awards and annual bonuses; and (3) the probationary period.


1. Article 37, Section 6. Grievance Procedure

    a. The Employer’s Position

    The Employer’s proposal is:

Section 6. The following matters are specifically excluded from consideration under the Negotiated Grievance Procedure:

a. Granting or not granting discretionary awards.

e. Performance ratings other than Minimally Satisfactory and Unsatisfactory.

f. Separation for disqualification as stated in AR 215-3.

g. Any matter which has its own review or appeal procedure as part of its regulatory provisions.

Since mid-1992 when the "Green" CBA was executed, the exclusion of performance appraisal ratings above Unsuccessful from the NGP has essentially prevented employees from filing grievances for the purpose of obtaining pay increases. Continuing this exclusion for ratings above Minimally Satisfactory is especially imperative if the Panel should adopt the Union’s proposal to continue mandatory performance awards; otherwise, a flood of such grievances may be expected. Regarding separations for disqualifications, such matters are inappropriate for the NGP because they are based on actions by the police, state regulating bodies, and courts which are outside of the Employer’s control. Furthermore, when employees hired as drivers lose their driver’s licenses, for example, they cannot be allowed to continue to drive, and when child care workers are accused of molestation, they cannot continue to look after children. With respect to subjects which have statutory appeal procedures, it is wasteful to process grievances in such areas when alternative appeal routes are available.

    b. The Union’s Position

    Essentially, the Union proposes that the Panel order the Employer to withdraw the proposed exclusions. Employees should be permitted to grieve performance ratings above Minimally Satisfactory; otherwise, employees who believe that they have been rated unfairly would be prevented from seeking redress in this area. Allowing grievances when a disqualification is alleged would give bargaining-unit employees an opportunity to explain a special situation or prove that the disqualification is based on a mistake. Such a hearing also may prompt the Employer to offer a meaningful remedy in appropriate circumstances, such as finding the employee an alternative position not affected by the disqualification until the temporary cloud is lifted.


    Having considered the arguments presented, we conclude that the parties should adopt a modified version of the Employer’s proposal retaining exclusions (f) on disqualification separations and (g) concerning matters with built-in appeal or review procedures, and dropping exclusion (a) on granting discretionary awards. The parties also should adopt a modified version of (e) retaining the exclusion of grievances over performance appraisal ratings only at the Excellent and Outstanding rating levels. Under the instant circumstances, we are persuaded that retaining exclusions (e), as modified, (f), and (g) does not appreciably narrow the scope of the grievance procedure and, therefore, does not significantly deprive employees of redress through the NGP. This is so because: (1) under exclusion (e) grievances still may be filed at those performance rating levels where employees generally wish most to seek reconsideration; (2) under exclusion (f) the substance of the problem is essentially outside of the Employer’s jurisdictional control; and (3) under exclusion (g) employees still have alternative appeal routes as provided by law and regulation. In addition, exclusion (g) offers the potential for savings in the form of reducing or eliminating duplicative appeal processes. In our view, the Employer has not brought forward evidence that supports a further narrowing of the NGP. In this regard, predictions of a flood of grievances stemming from permitting such performance rating grievances when performance awards are mandatory is speculative; rather, such matters tend to be self-limiting since a union’s available resources dictate that it must select only the most meritorious or egregious instances for redress. Finally, we believe that the compromise provision is an improvement over the current "Green" CBA which contains all four of the proposed exclusions.

2. Article 30. Performance Appraisal/Ratings and New Article, Annual Bonus

    a. The Employer’s Position

    The Employer’s proposal reads:

Section 7. Employees may be recognized for performance through awards.

a. Employees rated Outstanding (or the equivalent) on their annual evaluation will receive a commendation and may receive a monetary lump sum payment and/or pay increase (pay band employees only) not to exceed 15% of the employees’ annual salary.

b. Employees rated Excellent (or the equivalent) on their annual evaluation may receive either a lump sum payment or a pay increase (pay band employees only) not to exceed 5% of the employees’ annual salary.

c. Employees rated Satisfactory (or the equivalent) may also be given a performance award which in no case will be over 3% of the employees’ annual salary.

Section 8. Performance awards may be in the form of either an annual hourly rate increase or a lump sum bonus. All rate increases will be effective the beginning of the first pay period after the employees’ performance appraisal is due. Employees who have been awarded an hourly rate increase or a lump sum bonus may request the equivalent dollar amount as a time off award.

In addition, the Union should withdraw its proposals to spread business losses by reducing the pay of all pay band employees within the affected activity and to add an annual bonus.

    The Employer is opposed to mandatory performance awards and asserts that it cannot afford the Union’s proposals that would essentially double the award percentages to be applied and add an annual bonus for all employees. In this regard, NAF instrumentalities must provide many mandated services directed towards supporting the quality of life of military personnel; unlike private sector businesses, cost increases cannot be easily shifted to these customers, in part, because price increases must be approved in advance. In addition, the Employer must fund a menu of benefits (leave, premium pay differentials, insurances, retirement, etc.) offered to full and part-time employees, which can amount to as much as 24 percent of salaries.(4) Furthermore, the profitability of NAF services and activities is variable; some, such as child care, which is mandated by law, actually operate at a loss. While certain classes of MRW operations are granted appropriated funds, other segments receive no such funding, and even when funds are appropriated, the local commander often retains a high percentage to use for other purposes. Recently, a number of unprofitable activities, including recycling, arts and crafts, and the playhouse were closed. In 1994, there was a net operating loss of $55,937.81 and in 1995, a net income of $21,311.81, before depreciation.(5) Other marginal activities might have to be closed if salaries, bonuses, and awards are set too high. In sum, many MRW activities are struggling to survive.

    Regarding other monies paid to unit employees, they receive annual cost-of-living increases and, recently, a profit-sharing agreement was signed which may result in additional benefits to unit employees in profitable activities such as clubs and the bowling alley. Another program to share savings from cost-cutting initiatives to encourage and benefit employees in unprofitable activities is to be negotiated shortly. If employees were as underpaid as the Union suggests, problems with retaining employees would be expected. The opposite, however, is true, as evidenced by lines of applicants whenever a position is posted. As to the Union’s proposal on business losses, the subject is dealt with in the parties’ new Article 19, Business Based Actions/Reduction in Force, Section 6.b. Placing such a proposal in the appraisal article would be both out of place and unnecessary.

    Although, as the Union indicates, the master CBA between the Army and Air Force Exchange Service (AAFES) and the National Association of Government Employees, SEIU, contains both annual bonus and mandatory performance award provisions similar to those the Union proposes here, significant differences between NAF and AAFES operations demonstrate that AAFES is better able to afford such programs: (1) AAFES operates retail stores based on a 15-percent profit margin while the MRW profit target is only 1 percent; (2) AAFES enjoys economies of scale because it operates on a regional basis while MRW operates locally; and (3) part-time AAFES employees receive fewer benefits than MRW part-time employees.

    b. The Union’s Position

    The Union’s proposal is:

Section 8. Employees may be recognized through monetary awards in accordance with regulations.

Section 9. Employees rated Outstanding on their annual evaluation will receive a minimum wage increase of 5%. Employees rated Excellent will receive a minimum wage increase of 4%. Employees rated Satisfactory will receive a minimum wage increase of 3%.

Increases may be in the form of either an hourly rate increase or a lump sum bonus, at the employee’s option, and will be effective the first pay period after the employee’s annual performance appraisal.

Section 10. With respect to pay band employees, a reduction in pay in a position for any reason other than performance shall not be applied to individual employees, but will be part of a general reduction in pay for an entire function, and will be used only in lieu of closing the function.

New Article, Annual Bonus.

The following scale provides for an Annual Bonus for those employees who maintain at least Satisfactory PER rating for the immediate year’s PER rating period. The Annual Bonus will be paid the last check in November each year. Bonus amounts will be determined for employees as described below by:

Length of Service




1-5 years




6-10 years








 The Bonus will be paid by separate check.

The proposed 2 percent increases to mandatory performance awards at Outstanding and Excellent, respectively, and the addition of an annual bonus, are warranted because employees are paid too little. The problem is particularly evident for NF-1 and -2 employees who receive Satisfactory ratings. Some supervisors never rate these employees above the Satisfactory level regardless of their actual performance. In addition, favored employees who basically "sleep on the job" sometimes get higher ratings than less popular employees who put forth a vigorous effort. The annual bonus which is not tied to performance ratings is a fair way to adjust for low pay and appraisals that do not take into account years of faithful service. Furthermore, its November timing would provide employees with extra cash just before the holiday season. The Employer always claims that it cannot afford such increases and, such claims, proffered without any proof, should be disregarded.


    After careful consideration of the evidence and arguments presented, we conclude that the parties should adopt a compromise provision to resolve the dispute concerning performance awards, and that the Union should withdraw its proposals on the annual bonus and the sharing of salary reductions in the face of business losses. The compromise consists of the current mandatory performance award provision in the "Green" contract modified to increase the minimum performance award amounts from 3 percent to 3.5 percent for employees rated Outstanding and from 2 percent to 2.5 percent for employees rated Excellent on their annual evaluations; management would continue to determine whether the award would be paid as an hourly rate increase or a lump sum bonus. We are persuaded that retaining an enhanced version of the current mandatory award provision preserves a useful management tool to encourage employees to put forth their best efforts. We do not believe, however, that an annual bonus unrelated to productivity would foster the same high levels of performance. We are also persuaded that the modest increase in the percentages to be applied is affordable. In this regard, no evidence was adduced during the informal conference to suggest that the existing provision was close to being too costly. In addition, the Employer’s net profit figures indicate an improving picture, related in part to the closing of some unprofitable activities (the closed recycling program reportedly was losing $300,000 annually). From 1994 to 1995, net profits moved from the red into the black. Within the next year, the Employer is planning to open a sport’s bar which is expected to be profitable. As the Employer voiced no specific complaints regarding the mandatory nature of the current award provision, we shall order its continuation. Furthermore, when award amounts for higher performance levels are ensured by making them mandatory, employees may be more motivated to achieve.

    With respect to the Union’s belief that the applicable percentages should be doubled because bargaining-unit employees are underpaid, the use of wage surveys to calculate cost-of-living increases for NF-1 and -2 employees provides some reassurance that current pay levels are keeping abreast of private sector wages and inflationary rates. Regarding the form of awards, since salary increases continue while lump sum awards are paid only in the year granted, allowing the Employer to make such decisions gives it better control over long-term budgetary consequences. As to time off awards in lieu of monetary awards, though not specifically provided in the adopted resolution, employees who wish to may always request a time off award as a substitute for cash. Finally, with regard to spreading business losses among all employees, we agree with the Employer that the matter is already adequately covered in Article 19, which provides a procedure that includes predecisional consultations with the Union when business-based actions and reductions in force are contemplated.

3. Articles 37 and 10. Probationary Period

    a. The Employer’s Position

    The Employer proposes that:

    The probationary period for all bargaining-unit regular employees is 1 year. Flexible service is creditable when the flexible appointment is converted to a regular appointment with no change in duties and with no break in service. Maximum flexible service credit may not exceed 6 months.

Under Federal Labor Relations Authority (FLRA) case law, the Union’s proposal is nonnegotiable.(6) On the merits, establishing a 1-year probationary period not only is within management’s prerogative, but also provides a sufficient period for evaluating a new employee.

    b. The Union’s Position

    The Union proposes that "the probationary period will be 6 months for all NAF employees."(7) It believes that 6 months provides enough time to evaluate a new employee; the contract between Seymour Johnson Air Force Base and the National Association of Government Employees, Local R5-188 for Nonappropriated Fund Employees contains such a provision.


    We find it unnecessary to address the Employer’s nonnegotiability allegations because we are persuaded that the parties should adopt the Employer’s proposal to resolve the dispute over this issue. In this regard, the 1-year period should provide the Employer with a better opportunity to evaluate a newly-hired employee.


    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 following:

1. Negotiated Grievance Procedure Exclusions

    The parties shall adopt the following compromise provision based on the Employer’s proposal:

The following matters are specifically excluded from the negotiated grievance procedure:


(e) performance ratings above Satisfactory;

(f) separation for disqualification as stated in AR 215-3;

(g) any matter which has its own review or appeal procedure as part of its regulatory provisions.

2. Performance Awards and Annual Bonus

    The parties shall withdraw their proposals and shall adopt the following modified version of the "Green" CBA performance award provision:

Employees rated Outstanding on their annual evaluation will receive a minimum increase of 3.5 percent. Employees rated Excellent will receive a minimum increase of 2.5 percent. Employees rated Satisfactory may also be given an increase. Increases may be in the form of either an hourly rate increase or a lump sum bonus, and will be effective the first pay period after the employee’s annual performance appraisal.

3. Probationary Period

    The parties shall adopt the Employer’s proposal.


By direction of the Panel.

Linda A. Lafferty

Executive Director

May 16, 1996

Washington, D.C.


1.The NAF and crafts and trades pay ranges are established under authority of the Department of Defense Directive 5120.42 "Department of Defense Wage Fixing Authority--Nonappropriated Fund Compensation Programs," May 19, 1977.

2.In 1991, the parties executed a CBA known as the "Blue" contract because of its cover color. As is relevant to this dispute, this agreement briefly stated that "employees may be recognized through monetary awards in accordance with controlling regulations." The agreement contained only eight exclusions to the negotiated grievance procedure. In 1992, less than a year later, the parties executed a CBA known as the "Green" contract, with a green cover, which dealt with the introduction of pay bands and modernization. Although the Union believes that the "Green" contract is not valid or only addresses conditions of employment of pay banded employees, it never formally challenged its validity. This agreement contains a provision for mandatory performance awards at the Outstanding and Excellent levels, discretionary awards at the Satisfactory level, calls for other incentives including revenue sharing programs and nontraditional awards such as televisions and jewelry, and sets forth 19 exclusions to the negotiated grievance procedure.

3.In Vermont Air National Guard, Burlington, Vermont and Association of Civilian Technicians, Inc., 9 FLRA 737 (1982), the FLRA assigned the burden of proof in Panel proceedings to the party seeking to narrow the scope of the NGP; in this case that is the Employer.

4.A 1994 survey of 52 companies in Cumberland County, where Fort Bragg is located, shows that many local employers offer significantly fewer benefits; while part-time NAF employees may select from a full range of benefits, private employers offer such employees sharply fewer benefits. Approximately 87 percent of private sector companies give full-time employees paid vacations; only 35 percent offer part-time employees paid vacations. With respect to sick leave, 46 percent offer such leave to full-time employees and 8 percent offer it to part-time employees. Only 33 percent of employers offer retirement plans to their employees and only 19 percent offer small nonproduction related bonuses to employees.

5.When depreciation of buildings and other property is considered, net losses for 1994 were $1,927,444.47 and for 1995, $2,245,934.47.

6.See, for example, Service Employees International Union, Local 556, AFL-CIO and Department of the Army, United States Army Support Command, Hawaii, Fort Schafter, Hawaii, 29 FLRA 1553, 1554-1557 (1987).

7.When asked to respond to the Employer’s written allegation that its proposal was nonnegotiable, the Union stated orally that it agreed with the Employer’s position and wished to withdraw its proposal. During a conference call held with the parties prior to the informal conference, the Union stated that because similar proposals are found in other contracts negotiated by NAGE with other employers, it wished to rescind its withdrawal of the proposal.