U.S. Federal Labor Relations Authority

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United States of America



In the Matter of









Case No. 98 FSIP 65



    Local 251, Hotel Employees and Restaurant 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 National Aeronautics and Space Administration (NASA), NASA Exchange-Johnson Space Center, Houston, Texas (Exchange or Employer).

    After the investigation of the request for assistance, the Panel determined that the dispute, which concerned all or parts of five articles remaining in negotiations over a successor agreement, should be resolved through the parties’ submission of written statements of positions (SOP), including documentary evidence, if any, followed by an informal conference between a Panel representative and the parties. If no settlement were reached, the Panel representative was to notify the Panel of the status of the dispute; the notification would include the final offers of the parties and the representative's recommendations for resolving the matters. 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.

    Pursuant to the Panel's determination, the parties submitted their SOPs and supporting evidence. On May 20 and 21, Panel Representative (Staff Attorney) Gladys M. Hernandez met with the parties at the Employer’s offices in Houston, Texas. With her assistance, the parties reached agreement on the remaining provisions in three articles (Art.).(1) At the conclusion of the meeting, the parties exchanged their final proposals on the wage rates and annual and sick leave articles (Arts. 17 and 8, respectively) and written summary SOPs, including additional documentary evidence, in support thereof.(2) Ms. Hernandez has reported to the Panel, and it has now considered the entire record.


    The Employer is one of eight NASA exchanges nationwide.(3) Its mission is to operate activities contributing to the efficiency, welfare, and morale of NASA employees; these activities are supported with non-appropriated funds (NAF) (i.e., funds earned by the Exchange through the sale of goods and services, and not appropriated by Congress). The Union represents 38 NAF employees who work in the cafeterias as cooks, bakers, line and pantry workers, cashiers, salad makers and dishwashers/potwashers.(4) Until the successor is implemented, the parties will continue to abide by the terms of the collective bargaining agreement (CBA) which was due to expire in January 1998.(5)

    By way of background, in 1992, a visitors center (known as Space Center Houston (SCH)) owned and operated by the Manned Space Flight Education Foundation, Inc. (MSFEFI), a nonprofit group, opened just outside the gates of the Johnson Space Center. According to the Employer, the SCH provides food services and operates a gift shop.(6) Consequently, in 1993, the Employer suffered a great loss in revenue ($305,517, of which $260,523 were from cafeteria operations).(7) In hopes of staving off massive layoffs, the Employer contends that the Union agreed to 1993 CBA provisions which froze wages and "rolled back" fringe benefits, including leave and insurance benefits.(8) With these and other efforts (e.g., increasing vending machine and cafeteria prices and charging new or higher fees for participation in recreational activities or use of recreational facilities), the Employer insists it was able to keep both cafeterias open and avoid laying off any unit employees; however, it still had to close the souvenir store and lay off 50 percent of non-bargaining unit employees (i.e., non-cafeteria workers). Its present "goal" is to "break[] even in the cafeterias, a very reasonable and achievable business objective."


The parties disagree over what should be the wage rates and annual and sick leave benefits for unit employees during the term of the successor CBA.


1. Wage Rates

    a. The Employer's Position

    Under the Employer’s proposal, unit employees would receive: (1) a 3-percent pay increase retroactive to January 1, 1998, or the date they were hired, whichever is later; (2) additional 3-percent increases the first full pay period in January 1999 and January 2000; (3) a "one time" cash payment in the amount of 3 percent of the gross wages they earned working in the Exchange cafeterias in 1997, within 30 days of the effective date of the CBA; and (4) the same group bonuses given non-unit employees. Also, it establishes starting wage rates for each of six job classifications for 1998, 1999, and 2000.(9)

    Preliminarily, wages and fringe benefits for Exchange bargaining-unit employees are subject to negotiation because they are not already established by law. In this regard, contrary to the Union’s argument, unit employees are not prevailing rate employees as they are defined under 5 U.S.C. § 5342(a)(2).(10)

    As in the past, Exchange compensation policies should be "guided by local wage survey," which would be fair to unit employees. In this regard, the Exchange commissioned The Quorum Group (QG)(11) to "perform a local compensation survey of cafeteria workers." This survey, which was "designed carefully to be objective," looks to "the local market place" (i.e., the Galveston Bay area) and, therefore, is "the most relevant" and provides the most "useful comparison."(12) Specifically, it looks to the wages and benefits earned by employees in jobs similar to those of unit employees who work for local "businesses and institutions (hospitals, school districts, universities) that operate cafeterias" as well as "local commercial cafeterias, including two [(SCH and Luby’s)] which are located immediately outside the gates and compete directly [with the Exchange] for customers and employees."(13) Its proposal is "very reasonable" in light of the QG survey findings. In this regard, even though (1) the survey results show that unit employees are already compensated consistent with local practice,(14) and (2) the Exchange does not have a problem with "attract[ing] and retain[ing] workers with sufficient skills and [in] sufficient numbers to keep [the] cafeterias fully staffed," it proposes wage increases and improved leave benefits at an estimated added 3-year cost of over $79,000.(15) The "reasonableness" of the proposal is also revealed when unit employees wages are compared with those earned by cafeteria workers statewide. Specifically, the 1996 Occupational Employment Statistics (OES) Survey conducted by the Texas Workforce Commission (TWC), as reported by the Houston Chronicle,(16) revealed that cafeteria workers in Texas earned an average hourly wage of $5.68 in 1996.(17) Adjusted for inflation, "the statewide average [hourly wage rate] for cafeteria workers is currently $5.78,"(18) while unit employees’ average wage rate under its proposal will be $5.94 per hour.(19) Moreover, it "project[s]" that the 3-year "profit/loss performance of the cafeterias" under its proposal would total $93,205; this financial impact, although "serious," is manageable. In sum, its proposal would allow the Exchange to continue to operate the cafeterias and pay unit employees fair wages, i.e., wages "consistent with local practice."

    Because the Exchange does not compete for employees or customers with military cafeterias (the closest one is in San Antonio about 250 miles away), it would be inappropriate to pay unit employees the same wages paid prevailing rate employees in the Dallas wage area, as the Union proposes. Further, military cafeterias "operate in a fundamentally different environment" than do the Exchange cafeterias; for example, military cafeterias: (1) have "captive audiences" whereas the Employer’s compete with ones just outside its gates; (2) have more extensive operations (serve three meals a day, 7 days a week) than the Employer (two meals a day, 5 days a week); and (3) have "volume discount buying power and access to surplus agricultural products purchased by the Government" which are not available to the Employer. Besides, the prevailing wage rates proposed by the Union are "clearly excessive" when compared to the findings of both the QG and 1996 OES surveys. Moreover, the projected impact of this proposal, together with the Union’s leave proposal, would be an operational loss of $269,257 over 3 years. "Loss of this magnitude cannot be managed" and would "force" the Exchange to close cafeterias and "use other food alternatives (e.g., vending services, food court arrangements, etc.)." Finally, requiring an across-the-board adjustment in wage rates when any employee’s pay is increased to satisfy Federal minimum wage requirements is objectionable because it: (1) would "automatically increas[e] the wages and associated costs for all [unit] employees when business circumstances may not warrant it;" and (2) is inconsistent with the "intent of the law," which is to increase the buying power of employees making minimum wage.

    b. The Union's Position

    The Union essentially proposes that unit employees be paid wages set forth in the latest (August 22, 1997) prevailing wage schedule for the Dallas, Texas, wage area established by the Department of Defense (DOD) Wage Fixing Authority (DODWFA) in accordance with 5 C.F.R. Part 532 (1998).(20) Specifically, it proposes that the grades for the different job classifications be as follows: NA-8 for first cook; NA-5 for second cook; NA-3 for third cook;(21) NA-2 for L&P worker and cashier; and NA-1 for dishwasher/potwasher.(22) In addition, an employee would advance to the next higher step within a grade level upon completion of the following years of service:(23) (1) 1 year of service in grades NA-1 through -4; (2) 2 years in NA-5 through -7; and (3) 3 years in NA-8 through -10.(24) Finally, if an increase in the Federal minimum wage requires the Employer to increase the wage rate of any job classification, the rates of other job classifications would be increased by an equal amount so as to "maintain the wage differential between each job classification."(25)

    It is appropriate and fair to pay unit employees the prevailing wages rates for the Dallas wage area because they and DOD cafeteria workers are similarly situated. In this regard, both Exchange and DOD cafeteria workers "work[] at [G]overnment facilities under similar NAFI constraints" and Government "policy supports [the] position that all NAFI employees be treated similarly [for] wage[] and benefits [purposes]." The Exchange can afford to pay prevailing wage rates. Its contention that it "is suffering from financial distress is wholly without merit." In this regard, from 1991 to 1997, the Exchange has made cumulative profits of $30,597. In addition, as of September 1997, it has a "fund balance" of $4,325,853, a $400,000-plus increase in the last 5 years.(26) The Employer "misses the point" in arguing it would "go out of business" if required to pay prevailing wage rates because: (1) "it is not a business, [but] a NAFI facility;" (2) it has available cash reserves; and (3) "it defies logic" that the Exchange would "ever operate without a cafeteria on its premises." While the cafeterias have been operating at a loss for the last 5 years, it is due to mismanagement and not the wages paid cafeteria workers. Operational losses should no longer be borne by unit employees through low wages, while funds are spent for (1) capital improvements, and (2) wage increases for non-unit employees.

    Since the Employer did not follow the "OPM guidelines" for conducting wage surveys,(27) the QG survey should not be relied upon to set unit employee wage rates. Specifically, the Union was not afforded an opportunity to give input, nor was it informed of how the survey was conducted.(28) This is important because "there are a myriad of factors that affect the outcome of this type of survey, including the type of goods sold and the type of establishments surveyed." Having been denied a role in how it was conducted, the Union now cannot verify the QG survey findings. Moreover, the QG survey "does not compare [unit employees with] similarly-situated [NAFI] employees." Rather, it looks to "private businesses."(29) It is inappropriate to look to "private business[es]" in setting unit employees’ wages because they must make a profit and have "fixed costs" and "expenses such as tax[], mortgage[], and lease payments," while "the Exchange has only to meet its operating expenses."

    With regard to the designated job classifications for pay purposes, the Union’s proposal "mirror[s]" the job classifications under the prevailing rate system.(30) Also, it "maintains a similar wage differential between the line and pantry [classification] and the fry and grill cook and salad maker classification." The Employer’s proposed designation of classifications is unacceptable because it: (1) "merge[s]" the F&G and L&P classifications, and (2) sets a starting wage for F&G cooks that is below what it was in 1993.


    Upon careful review of the evidence and arguments presented by the parties, we shall order the adoption of the Employer’s proposal. In our view, absent any contrary statutory requirement, it is reasonable to look to compensation (i.e., wages and fringe benefits) paid by local employers in determining what is fair compensation for unit employees. We note that the Union does not dispute the Employer’s claim that this has been their long-standing past practice. Also, contrary to the Union’s argument, this is consistent with how DODWFA determines prevailing rate employees’ wages. With regard to the QG survey, we disagree with the Union that it is an unreliable indicator of local prevailing compensation. Although it would have been preferable for the parties to have cooperated in the selection and compensation of the surveyor, the Union’s lack of participation alone does not, in our view, make the survey unreliable. We have thoroughly reviewed the QG survey and find it a credible indicator of local prevailing compensation for positions held by unit employees. Its findings on wages appear fairly consistent with those of TWC’s 1996 OES survey. In light of the QG survey findings on unit employees’ total compensation, and absent any turnover or hiring problems, we are persuaded that the Employer’s proposed across-the-board wage increases are fair. Overall, the Employer’s proposal meets unit employees’ interest in being compensated fairly, and the Employer’s in managing its financial resources so that it can stay in business.

    The Union’s proposal, on the other hand, gives the great majority of unit employees percentage wage increases in the double digits, which is excessive and unsupported by either the QG or 1996 OES surveys. Also, it benefits junior employees over some senior employees who would be better compensated under the Employer’s proposal. Moreover, the Union does not explain the proposal’s apparent inconsistencies (grade levels and within-grade increases) with the prevailing rate system. Finally, we are convinced that, in its current financial condition, it would not be prudent for the Employer to assume the substantial costs associated with the Union’s proposal.

2. Annual and Sick Leave

    a. The Employer's Position

    The Employer proposes to replace annual leave (AL) and sick leave (SL) benefits with personal leave (PL) benefits. Under this new leave system, employees would be eligible for PL upon completion of their 90-day probationary period. On an annual basis, full-time (FT) employees would earn 40 hours of PL with less than 1 year of service, 80 hours with 1 to 5 years of service, 120 hours with 5 to 10 years of service, and 160 hours with more than 10 years of service. Part-time (PT) employees would earn half as many hours for the same years of service. There would be no limit on the number of accrued hours unit employees could carry over from year to year. For "non-medical reasons," employees could use only the number of hours earned in a year plus 40 hours; however, they would not be limited in their use of PL for "illness and other personal medical reasons" and to attend to "immediate family member[s who are] afflicted with a contagious disease subject to quarantine, isolation, or restriction of movement." Medical certificates would be required for absences of more than 3 days for personal illnesses and in all cases involving the use of PL to attend to family members. Employees who are laid off or resign after giving 5-day notice would be paid for up to 240 hours of accrued leave, while those that are discharged for cause or resign without the requisite notice would be paid for only those hours "earned by the[ir] passing anniversary date." Employees would keep their AL and SL balances and be allowed to use them until depleted. Finally, non-supervisory, non-unit employees hired after the successor CBA takes effect would have these same leave benefits and, if the Employer should determine to provide them different leave benefits, "the Union at its option [would] have the right to instruct the Employer to provide the identical leave system to all bargaining-unit employees." In the alternative, it proposes to keep the current leave benefits which the Union "bargained for in 1993."

    It is proposing a new and "substantially improv[ed]" leave system combining AL and SL benefits, even though the QG survey reveals that there is no need to change unit employees’ current benefits (Arts. XIII and IX of the current CBA(31)) because they are "already compatible" with what is offered by other local businesses.(32) In fact, some employees have left for higher wages only to return because of the generous leave benefits and work schedules (no evening or weekend shifts) that are "relatively uncommon in the food service industry."

    Under its proposed PL system, senior employees could earn as much time off as they did under the previous (1991) CBA at an affordable cost ("projected" at approximately $10,000 above the cost of the current system) to management.(33) Newly hired non-unit employees would be placed under this new system, which should assuage the Union’s concern over their being under a different, and better, system than unit employees. Contrary to the Union’s argument, having two systems (one for unit employees and another for non-unit employees) does not discriminate against unit employees on the basis of their unit status. In fact, there is no legal requirement for unit and non-unit employees to be covered under the same system. Moreover, the Union agreed to the current system as quid pro quo for unit employees keeping their jobs; non-unit employees were not so fortunate. Besides, non-unit employees’ more generous leave benefits "helps compensate for the fact that their wages are somewhat below [the local] average."(34)

    The Union’s proposal is not needed to "maintain compatibility with local industry practice," as indicated by the QG survey.(35) In addition, it would be too costly ("projected" 3-year cost of $83,771 above the cost of current benefits). This added cost makes that proposal unacceptable in the current "environment where [the] cafeterias are operating at a significant loss."

    b. The Union's Position

    Under the Union’s proposal, both FT and PT unit employees would be eligible for AL and SL after 90 days on the job. With regard to AL, on a yearly basis, FT employees would earn 104 hours with 3 or less years of service, 160 hours with 4 to 15 years of service, and 208 hours with more than 15 years of service. PT employees would earn half as many hours for the same years of service. All employees could carry over 240 hours of accrued AL from year to year. Supervisors would determine whether an employee can take AL after considering the employee’s "desires" and the Employer’s "needs." As for SL, FT employees would earn 104 hours per year and PT employees half as many hours, without limitation on the maximum number of hours they could carry over from year to year. Employees in good standing with at least 640 hours of accrued SL would be compensated for them upon retirement at 62 years of age with 10 years of service, or 55 with 15 years of service, or upon resignation after 20 years of service; the compensation rate would be 5 percent of the employee’s annual salary for every 320 hours of accrued SL. Employees could use SL when "physically incapacitated because of illness, injury, or pregnancy and confinement to do his or her job, or related reasons." The Employer would approve use of SL "on any occasion when an employee is truly incapacitated for work."

    Its proposal gives unit employees the same "level of benefits" received by employees of other NAFIs and non-unit employees.(36) The Employer’s estimated 3-year cost of this proposal is unverifiable and, therefore, unreliable.

    While the current system is preferable over the PL system proposed by the Employer, neither is acceptable because it "continue[s] the discriminatory treatment" of unit employees by affording them less generous leave benefits than non-unit employees. It is irrelevant that their current leave benefits are better than those received by other food service workers in the local area. Finally, the Union cannot legally negotiate over the placement of newly-hired non-unit employees under the PL system.


    After thorough consideration of the evidence and arguments presented on this issue, we conclude that neither party has demonstrated a need to change the status quo (Arts. XIII and IX in the current CBA). Once again, we are persuaded that, absent any contrary statutory requirement, unit employees’ leave benefits should be comparable to those afforded employees working in similar or the same jobs for other local employers. In this regard, the record reveals that unit employees’ leave benefits (including holidays) are already comparable, if not better, than those provided their counterparts in local industry. The added cost (substantial or otherwise) of the Union’s proposal for expanded leave benefits appears unwarranted, particularly in view of the fact that the cafeterias are losing money and the Employer will be expending funds for wage increases.(37) In addition, we are reluctant to impose an entirely new system on bargaining-unit employees, as proposed by the Employer, when the Union finds the current system more preferable. Accordingly, we shall order the parties to maintain the status quo.


    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. Wage Rates

    The parties shall adopt the Employer’s proposal.

2. Annual and Sick Leave

    The parties shall maintain the status quo (Arts. VIII and IX in the current CBA).


By direction of the Panel.

H. Joseph Schimansky

Executive Director

June 30, 1998

Washington, D.C.


1.These provisions are § 1 of Art. 13 (Reductions in Force); Art. 15 (Contracting Out); and § 2 of Art. 18 (Promotions and Reassignments).

2.Among the additional documentary evidence provided by the Union is a list of unit employees as of September 30, 1997, including their employment dates, positions, and hourly pay rates. The list was provided to the Union by the Employer on October 28, 1997; at the informal conference, the parties represented that the list is current.

3.According to the Employer, NASA’s authority to create exchanges is in the National Aeronautics and Space Act of 1958, as amended; specifically, 42 U.S.C. § 2473(c) authorizes NASA “to provide by contract or otherwise for cafeterias and other necessary facilities for the welfare of employees of [NASA] at its installations and purchase and maintain equipment therefor.”

4.The Employer operates two cafeterias which are opened for breakfast and lunch only, Mondays through Fridays, 7 a.m. to 2 p.m. Employees work 8-hour shifts, excluding a 30-minute lunch and two 15-minute rest breaks (Art. VI in the current CBA, and 6 in the successor agreement). The Employer also operates an exchange store or gift shop (for NASA and contractor employees only), the Gilruth Recreation Center, and has an administrative support office; these three operations employ 10 full-time permanent and 8 temporary and “on call” employees who are not in the bargaining unit and are unrepresented. The operation of the cafeterias, gift shop, recreation center and vending concessions generates the majority, if not all, of the Employer’s revenues.

5.In January 1997, pursuant to its terms, this CBA automatically rolled over for 1 year when neither party requested to renegotiate it within the prescribed window period.

6.MSFEFI and the Employer entered into what the Employer describes as a “good faith non-recourse agreement” wherein MSFEFI agreed to pay the Employer $800,000 per year to make up for revenue losses resulting from the opening of SCH. This agreement has been amended a few times to defer or forgive unpaid amounts and reduce the amount of annual payments because of MSFEFI’s inability to pay its debts and keep SCH in operation. At present, the agreement provides for MSFEFI to make payments of $25,000 each quarter. The financial statements submitted by the Employer show that the payments received from MSFEFI are as follows: $507,528 (1993); $300,000 (1994); $606,000 (1995); $75,000 (1996); and $100,000 (1997).

7.These figures come from financial statements prepared by independent auditors as required by NASA Policy Directive (NPD) 9050.6E, paragraph 5.c.(5), effective December 2, 1997. The Union does not dispute these statements and, in fact, also relies upon them. These statements cover fiscal years (FY) 1991 through 1997. Generally, these statements show that the Employer has made money in only 3 of the last 7 FYs (1991, 1995 and 1997) and the cafeterias have operated at a loss every year since at least FY 1991; these losses appear to have been subsidized by cash reserves, as likely will be any future losses. It appears that non-operations-related cash received -- interest on investments (certificates of deposit) and SCH payments -- have helped stave off great losses in cash reserves; the amount of money the Employer has maintained in cash and cash investments since FY 1991 is about $2 million.

8.The Union disputes management’s accounting of why it agreed to these provisions.

9.The Employer places fry and grill (F&G) cooks in the line and pantry (L&P), and not cook, classification because they only spend half of their workday at the grill. It explains that the proposed starting wage rates for the L&P classification would not affect the wage rates of employees currently working as F&G cooks (i.e., their wage rates would not be reduced).

10.At the informal conference, the Union withdrew its argument that unit employees are prevailing rate employees. Our review of the applicable law supports the Employer’s contention that unit employees are not prevailing rate employees. In this regard, § 5342(a)(2)(B) states, in relevant part, that such an employee is “an employee of a non-appropriated fund instrumentality [(NAFI)] described in section 2105(c) of this title.” Neither NASA nor NASA Exchange is among the NAFIs described in 5 U.S.C. § 2105(c).

11.In a QG pamphlet provided by the Employer, it states, among other things, that the company, which was founded in 1986, is a “hands-on, business-oriented compensation consulting team” which “carefully evaluates compensation and incentive packages.” Among the services it provides are “base compensation studies.” Its clients have included Atlantic Richfield Companies and Southwestern Bell.

12.The Employer avers that the Union was provided a copy of the survey early in negotiations, but it chose to ignore it.

13.The survey report states that there were 14 employer-participants. The Employer noted that it was one of them.

14.While the average hourly wages of unit employees is $5.77 compared to $6.36 for others in the QG survey group, the value of their benefits package (holidays, annual and sick leave, and medical and life insurance) is $1.81 per hour compared to $1.33 for the survey group. The total cost of unit employees’ compensation package at present (before any pay increases) is on average $7.58 per hour compared to $7.69 for those surveyed. After the first pay increase and implementation of its proposed leave benefits, it values the total compensation package at “an average of $7.77 per hour” ($5.94 in wages and $1.83 in benefits).

15.We note that this is actually the cost of an earlier and less generous Employer wage proposal (annual percentage increases of 3, 2, and 2 percent starting in 1998, and no one-time bonus). The Employer’s final proposal was offered as a compromise at the informal conference making a cost analysis impossible given the Panel’s time constraints.

16.L.M. Sixel, “What Texans earn: The highs and lows of health care,” Houston Chronicle, April 17, 1998.

17.The Employer also submitted a TWC chart showing 1996 mean wage rates for the Houston area. The chart shows, for example, the median hourly wage for cooks (cafeteria) as $7.35 and for cooks (restaurants) as $7.21, while the QG survey shows $8.02; the Exchange cafeterias’ first cook currently earns $7.64 per hour, but would be making $8.35 at the end of 3 years under the Employer’s proposal. Another example, L&P or food service workers’ median hourly pay is $6.20 under the QG survey and $5.67 under the OES survey; the 20 unit employees working in L&P currently earn anywhere from $5.30 to $6.64 per hour. Under the Employer’s proposal, they would be making from $5.79 to $7.26 per hour in 3 years.

18.The Employer uses a 1.7 percent inflation rate (increase in the Consumer Price Index of All Urban Consumers) for 1997. “Indexes Remained Unchanged in January; First Time in Four Years, BLS Reports,” Gov’t Empl. Rel. Rep. (Warren, Gormant & Lamont), Vol. 36, at 258 (Mar. 2, 1998).

19.See supra note 14, at 6.

20.By regulation, the next Dallas-area prevailing wage survey must be done in November 1999 (5 C.F.R. Part 532, Subpart B, Appendix B). The Union does not propose, nor did it indicate at the informal conference, that the Employer would be required to change the schedule each time the DODWFA changes the schedule after a wage survey; therefore, once an employee tops out at his or her grade level, he or she would not receive a pay increase, if any, until another CBA is negotiated.

21.For pay purposes, the Union places F&G cooks and salad makers in the third cook classification.

22.The Union did not provide any evidence that these are the grades assigned to the same or similar prevailing rate jobs. What we have been able to ascertain from our review of Government-wide regulations concerning the prevailing rate system is that DODWFA is required to survey only the following food service industry jobs: food service worker (grades 1 and 2); fast food worker (grade 2); short order cook (grade 5); and cook (grade 8); prior approval from the Office of Personnel Management (OPM) is required to survey additional jobs. 5 C.F.R. § 532.225(a) and (d)(1998). The obvious difference between the Union’s proposal and the cited prevailing rate system regulations is that there is no grade 3 food service industry job under the prevailing rate system, or at least one which is required to be surveyed.

23.The Union’s proposed schedule for automatic advancement to the next higher step within a grade is inconsistent with the statutory requirements under the prevailing rate system. 5 U.S.C. § 5343(e)(2). Under the prevailing rate system, there are distinctions between steps and not grades, the time periods are different than proposed by the Union and, unlike the Union’s proposal, advancement is automatic after completion of the requisite time period only if the employee “has a work performance rating of satisfactory or better, as determined by the head of the agency.”

24.We note that the Union’s proposal would impact current unit employees as identified in the September 1997 list differently. See supra note 2, at 2. For example, the first cook who has over 6 years of service would be placed at the NA-8, step 3 level (one level up from step 1 for each 3 years of service), and make $9.96 per hour; since she currently makes $7.64, she would get a 30.3-percent pay raise. The potwasher with 17-plus years of service, on the other hand, would be placed at the NA-1, step 5 level, and make $6.01 per hour; since he already makes $6.28 per hour, at best, he would get no increase and, at worst, his pay would be reduced because the proposal does not provide for “save pay.” The junior potwasher with 7 years of service also would be placed at the same grade and step level, increasing his hourly wage by 13 percent ($.71 per hour). With regard to the L&P workers who make up the majority of the bargaining unit, junior employees would get a disproportionately larger percentage increase than senior employees. In this regard, all line and pantry workers with more than 5 years of service (total of 13 employees) would be placed at the NA-2, step 5 level making $6.74 per hour; this would amount to a 1.5-percent ($.10) increase for the employee with 20 years of service and a 27-percent ($1.44) increase for the employees with 6 years of service. The junior F&G cook and salad maker would get an average increase of 31 percent, while the senior ones would get an average increase of 16 percent. The cashiers would all be placed on the NA-2, step 5 level which would increase their wages from 11 percent (senior employee) to 18 percent (junior employee). The two second cooks would get increases of 13 and 27 percent, respectively. Finally, the senior potwasher, the L&P workers with 5-plus years of service, the baker, the F&G cooks, the salad makers, and the cashiers would not get another pay increase during the term of the successor CBA because they immediately would top out at their grade levels.

25.This is inconsistent with the requirements under the prevailing rate system. See 5 C.F.R. § 532.205(c)(1998).

26.Our review of the financial statement revealed that it is not an “all cash” fund; in fact, the figure includes the value of fixed assets (buildings, furniture, and equipment) and the amount required to be designated for the replacement of such assets (about $1 million).

27.We take this to mean that the Employer and QG did not follow Federal regulations for determining prevailing rates.

28.The parties dispute whether management provided the Union an opportunity to provide input.

29.We note that prevailing wage rates are determined by surveying private employers. See 5 U.S.C. § 5343(c).

30.The Union provides no evidence in support of its position. In fact, DODWFA is not required to survey any food service jobs at grade 3. See 5 C.F.R. § 532.225(a) (1998).

31.Currently, FT employees with 1 to 2 years of service earn 40 hours of AL each year, while those with 3 or more years of service earn 80 hours; PT employees earn half as much leave for the same years of service. Employees can carry over up to 240 hours from year to year. With regard to SL, FT employees earn 80 hours annually regardless of their years of service, while those working PT earn 40 hours annually. There is no limitation on the accumulation of SL, although it is “not payable in the event of resignation or discharge.” Terms and conditions for use of AL and SL are also specified.

32.While unit employees earn 2 weeks of AL each year (after 3 years of service), another 2 weeks in SL, and get 10 Federal holidays, the average maximum number of AL days given employees in the QG survey is also 2 weeks, but they only get, on average, 5.25 days of SL and 3.33 holidays.

33.Among other things, Arts. VIII and IX in the 1991 CBA provided for unit employees to earn annually up to 160 hours of AL depending on years of service and 80 hours of SL.

34.In support of this argument, the Employer provides a copy of a page to another QG survey of salaries of accounting and administrative clerks and customer service representatives in the “Upper Gulf Coast.” The survey compares the annual salaries paid by surveyed companies to those paid by the Exchange, and indicates that Exchange employees earn less. The Employer, however, does not provide a cost comparison of non-unit employees’ average total compensation package with that of similarly-situated employees working for local industry, as it did for unit employees. Therefore, we do not know whether non-unit employees’ average total compensation is less than, equal to, or greater than what local companies pay their employees.

35.The Employer describes the Union’s proposal as “reinstat[ing]” the AL and SL benefits in place before the current (1993) CBA was implemented. We have reviewed Arts. XIII and IX in the previous (1991) CBA and find that the Union’s proposal is, in fact, substantially more generous; for example, under the 1991 CBA employees earned a maximum of 160 hours of AL (not 208) and 80 hours of SL (not 104).

36.The Union provided no evidence of the AL and SL benefits provided NAFI prevailing rate employees. Also, the Union proposes a different rate at which unused SL would be paid retiring unit employees; the Union proposes that they get 5 percent, while non-unit employees get .05 percent (see NASA Exchange-JSC Employees Handbook (1990 and 1995), at 7-8).

37.While the Union disputes the Employer’s cost analysis, it did not submit its own. In any case, we are convinced that any additional benefits would generate additional costs.