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31 FLRA NO. 107

NATIONAL FEDERATION OF FEDERAL
EMPLOYEES, Local 1256

                    Union

      and

DEPARTMENT OF THE AIR FORCE
K.I. SAWYER AIR FORCE BASE
MICHIGAN

                      Agency

                                        Case No. 0-NG-1469

           DECISION AND ORDER ON NEGOTIABILITY ISSUES

     I. Statement of the Case

     This case is before the Authority because of a negotiability
petition filed by the Union under section 7105(a)(2)(E) of the
Federal Service Labor - Management Relations Statute (the
Statute). The case concerns the negotiability of a union proposal
relating to employees' eligibility to be considered for quality
step increases (QSIs) --awards of pay step increases--which
agencies may grant employees under 5 U.S.C. 5336 in recognition
of "high quality performance."

     As explained below, we find that the petition was not filed
untimely as contended by the Agency. We also find that the
proposal concerns a condition of employment, is consistent with
management's rights, and is negotiable.

     II. Background

     Prior to June 1987, Department of the Air Force regulations
permitted managers to grant QSIs to employees at all steps within
the grades of the General Schedule, at 52-week intervals. In June
1987, the Department modified its regulations (AFR 40-452, para.
7-5) to restrict eligibility for QSIs to employees at
steps 4 and above and to increase the required intervals for QSIs
to 3 years.

     The local parties jointly requested a partial exception to
the new restriction from the Department of the Air Force. They
asked to be allowed to consider QSIs for employees at step 3 and
above. The request for an exception was denied by letter dated
August 17, 1987. The parties subsequently renewed their
negotiations. The Union then proposed that there be no  change in
the prior policy for quality step increases and, on September 24,
1987, requested an allegation as to the negotiability of its
proposal. The Agency alleged that this Union proposal is
nonnegotiable on September 30, 1987.

     III. The Timeliness Issue

     The Agency contends that the denial of the local parties'
request for an exception from the Air Force Regulation in August
1987, constituted an Agency allegation that a substantively
identical provision was nonnegotiable. Therefore, it claims that
the petition for review filed on October 15, 1987, was
untimely.

     This contention cannot be sustained. The record shows that
when the local parties requested the Agency to grant an exception
to the modified Departmental regulation, the Union did not
request an allegation of nonnegotiability. Union Response at 1;
Agency Statement of Position, Attachment 3. The Agency's response
in August 1987, was captioned "Request for Exception" and stated
that the "request for a waiver is denied." Agency Statement of
Position, Attachment 5. The response also directed local
management to "restrict its discussions to the impact of the Air
Force policy" and stated that the issue was "not subject to
negotiation."

     Since the record does not show that the Union had requested
an agency allegation within the meaning of section 2424.3 of the
Authority's Regulations, the Union was not obligated to file a
petition within 15 days of the Agency's August response in order
to preserve its right to appeal. The petition is timely in
relation to the requested allegation of nonnegotiability, which
was served on the Union on October 1, 1987.

     IV. The Proposal

     The Union proposes that unit employees at steps 1 and above
may be considered for QSIs and that the minimum interval for QSI
consideration should be 52 weeks.  

     A. Positions of the Parties

     The Agency contends that under 5 U.S.C. 5536, a QSI is
defined as a part of basic pay, which is a matter specifically
provided by Federal statute. Therefore, it claims that the
proposal concerns a matter which is excluded from the definition
of conditions of employment under section 7103(a)(14)(C) of the
Statute. The Agency also contends that the proposal is
nonnegotiable because it conflicts with management's rights to
direct employees and assign work under section 7106(a)(2)(A) and
(B).

     The Union disputes the Agency's contentions and asserts that
the proposal is negotiable because it "merely requires the agency
to continue to give employees at steps 1 through 3 the same
consideration for QSIs as employees at steps 4 and above
receive." Petition for Review at 4.

     B.   Analysis

     1.   The Proposal Is Not Outside the Duty to Bargain Because
          It Concerns a Matter Provided for by Statute

     Under 5 U.S.C. 5336, an agency may grant a QSI to an
employee "in recognition of high quality performance above that
found in the type of position concerned." Under the Office of
Personnel Management's implementing regulations, "(t)he purpose
of quality step increases is to recognize outstanding
performance." 5 C.F.R. 531.503.

     In our view, these provisions show that although QSIs are
provided for in the "basic pay" provisions of 5 U.S.C. 5331-5338,
in substance QSIs are intended to be forms of incentive pay,
rather than pay for the performance of the essential duties of a
position. Accordingly, we find that QSIs, which provide incentive
pay for employees for superior performance, are substantively
equivalent to incentive awards. Therefore, we conclude that the
Union's proposal concerning QSIs is not excluded from bargaining
under section 7103(a)(14)(C), as contended by the Agency, simply
because QSIs are covered by the provisions of 5 U.S.C.
5331-5338.

     The proposal does not conflict with matters specifically
provided for by statute in other respects. The proposal is wholly
procedural in nature, in that it is only concerned with the pool
of employees who may be considered for QSIs and the frequency at
which QSIs may be granted. It is not concerned with and
does not set the amount of a QSI. Instead, it contemplates that
the step increases which are awarded to employees-as QSIs will be
the step increases which are set by law. Insofar as the proposal
provides that QSIs may be granted at 52-week intervals, the
proposal tracks the interval requirement in the applicable
statute. 5 U.S.C. 5336.

     Finally, the proposal does not establish the performance
criteria for granting a QSI, and it does not mandate that a QSI
be granted to any employee. Compare National Treasury Employees
Union, Chapter 245 and Department of Commerce, Patent and
Trademark Office, 30 FLRA  1219, 1226 (1988) (a proposal which
would mandate a QSI award conflicts with Government-wide
regulation--5 C.F.R. 531.504).

2.   The Proposal Does Not Interfere with Management's Rights to
     Direct and Assign Work

     The Agency argues that this proposal is nonnegotiable under
the rationale used by the Authority in American Federation of
State, County and Municipal Employees, AFL - CIO, Locals 2477 and
2910 and Library of Congress, 17 FLRA  786, 788-89 (1985)
(Library of Congress) and National Treasury Employees Union and
Internal Revenue Service, 14 FLRA  463 (1984) (IRS I). These
decisions have been overruled.

     In NTEU v. FLRA,  793 F.2d 371, 375 (D.C. Cir. 1986), the
court reversed the Authority's conclusion in IRS I that a union
proposal concerning incentive awards conflicted with management's
rights to direct employees and assign work. The court held that
management decisions relating to rewarding superior performance
did not affect the rights to direct and assign work under section
7106(a)(2)(A) and (B). In National Treasury Employees Union and
Internal Revenue Service, 27 FLRA  132, 135 (1987) (IRS II), we
adopted the court's holding regarding the rights to direct and
assign work and held that a union proposal concerning incentive
awards did not affect these rights. In later decisions--for
example, National Treasury Employees Union and Internal Revenue
Service, Indianapolis District, 30 FLRA  1170 (1988), in which we
overruled the Authority's prior decision in Library of
Congress--we continued this approach, concluding that other union
proposals concerning incentive awards did not affect the right to
direct employees or the right to assign work. See also American
Federation of Government Employees, AFL - CIO, Local 1815 and
Army Aviation Center, Fort Rucker, Alabama, 28 FLRA  1172,
1180-81 (1987). 

     As explained in connection with the Agency's contentions
under section 7103(a)(14)(C), we conclude that QSIs are
equivalent to incentive awards. Based on the above-cited
decisions, which overruled the reasoning and conclusions in IRS I
and Library of Congress, we further conclude that the Union's
proposal, which concerns employee eligibility for QSIs, does not
conflict with management's rights to direct employees or assign
work under section 7106(a)(2)(A) and (B).

     C. Conclusion

     The proposal is negotiable. The Agency has not established
either that the proposal (1) encompasses matters established by
law so as to be outside the duty to bargain under section
7103(a)(14)(C), or (2)  interferes with the exercise of
management's rights under section 7106(a)(2)(A) and (B) to direct
employees and assign work to employees. It is not apparent that
the proposal is outside the duty to bargain on other grounds.

     V. Order

     The Agency must negotiate upon request, or as otherwise
agreed to by the parties, concerning the proposal. */

Issued, Washington, D.C., April 22, 1988.

                              Jerry L. Calhoun, Chairman

                              Jean McKee, Member

                              FEDERAL LABOR RELATIONS AUTHORITY 

FOOTNOTES

     Footnote */ In finding this proposal to be within the duty to
bargain, the Authority makes no  judgment as to its merits.

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