for payment to the air carriers for the fiscal years beginning on July 1, 1972 and July 1, 1973.

Under part 288 of the CAB Regulations, entitled "Exemption of Air Carriers for Military Transportation," 14 C.F.R. 288, the CAB prescribes minimum rates and fares which apply for the transportation of MAC cargo and passengers. Although MAC and the airlines may contract for higher charges, in actual practice the minimum rates prescribed by CAB generally become the contract rates. In December 1970 informal proceedings were initiated by the CAB to review the

rates.

Then on May 11, 1971, several air carriers requested the CAB for an increase in the minimum rates for MAC transportation. On December 29, 1972, the CAB issued ER-786, which provided for an increase in the minimum rates, and made those increases retroactive to July 1, 1971. On February 16 and 23, 1973, the air carriers requested reconsideration of CAB's findings and alleged that errors had been made which required further adjustment in the minimum rates. The Department of Defense (DOD) filed a petition in opposition to the carriers' contentions.

Thereafter, and on August 28, 1973, the CAB issued ER-819, which increased the rates and made the increases retroactive to July 1, 1972, except for a short period when the rates were frozen at existing levels. Then on June 11, 1974, the CAB issued ER-861 which authorized application of the increased rates for the transportation rendered during the price freeze period of June 13 to August 12, 1973.

Prior to the issuance of ER-861, and on March 12, 1974, the DOD brought formal proceedings in the United States District Court for the District of Columbia Circuit and requested review of ER-819. The sole issue was whether the CAB had statutory authority to increase charges retroactively. The Court found that the CAB had authority to reopen proceedings to correct factual errors made in the initial proceedings. See United States v. Civil Aeronautics Board, 510 F. 2d 769 (Ct. App. DC Cir. 1975). This judgment became final on May 1,

1975.

Following that decision, the air carriers claimed the additional amounts due and asked for payment of interest on the retroactive payments. The interest claims apparently are based upon paragraph 55 (page L-14) of the contracts. Contracts F-11626–73-C-0023 and F-11626-73-C-0032 with Northwest Airlines, Inc., are representative of the contracts involved. The interest provision in paragraph 55 provides that interest shall accrue from the time a claim is denied to the date a judgment by a court of competent jurisdiction becomes final. With regard to the payment of interest pursuant to contract, see 51 Comp. Gen. 251 (1971).

Prior to the CAB announcements on August 28, 1973, and June 11, 1974, the increases did not factually exist and no claims could be presented to the Government. Since the Government was not responsible for the delay in implementing the increase, there can be no obligation to pay interest for the periods prior to the dates the increases were announced.

Accordingly, interest on the increases is properly payable under the contract from the date of the CAB announcement on August 28, 1973.

[B-180010.01]

Arbitration-Award-Special Achievement Award PaymentImplementation by Agency-Contrary to Agency Procedure Agreement between Federal Aviation Administration and union (PATCO) provided that discrimination would not be used in the agency's awards program. Arbitrator found that employee had been discriminated against by supervisor in violation of agreement and directed that cash performance award be given to employee. Payment of cash award ordered by arbitrator would be improper since granting of awards is discretionary with agency, agency regulations require at least two levels of approval, and labor agreement did not change granting of awards to nondiscretionary agency policy.

In the matter of John H. Brown-arbitrator's award of special achievement award, November 5, 1976:

This matter involves a request dated August 11, 1975, from the Federal Labor Relations Council for a decision on the propriety of a payment ordered by a labor relations arbitrator in Department of Transportation, Federal Aviation Administration (FAA), Montgomery RAPCON/Tower, Montgomery, Alabama, and Professional Air Traffic Controllers Organization (PATCO) (Amis, Arbitrator) FLRC No. 75A-32.

em

The facts in the case as found by the arbitrator are as follows: Mr. John H. Brown, an Air Traffic Control Specialist, grade GS-12, ployed by the Federal Aviation Administration in Montgomery, Alabama, filed a grievance on May 31, 1974, alleging that his supervisor improperly had failed to recommend him for a Special Achievement Award in violation of section 1, article 50, Recognition and Awards Program, of the PATCO/FAA collective bargaining agreement effective April 4, 1973, which provides as follows:

Section 1. The Employer agrees that quality step increases, special achievement awards, or other awards based entirely upon job performance, shall be used exclusively for rewarding emplovees for the performance of assigned duties. This program shall not be used to discriminate among employees or to effect favoritism.

The arbitrator's opinion indicates that John Brown was a model employee. His former supervisor, who retired as a result of sudden illness in February 1973, intended to recommend Mr. Brown for a Special

Achievement Award. Prior to his retirement he advised his replacement that Mr. Brown was eligible for the award and suggested that he prepare a recommendation. Mr. Brown's present supervisor did not submit a recommendation but subsequently stated that he would have done so except that Mr. Brown used extraneous language in giving control instructions. The extraneous language consisted of amenities such as "thank you" and "please" which were not a hindrance to safety. The supervisor had rated Mr. Brown on all other phases of his work as "exceeds requirements" except for this phase, on which he rated him as "meets requirements."

In addition, the arbitrator found that Mr. Brown's performance evaluations for a 2-year period, from September 1, 1972, to September 1, 1974, satisfied the criteria for a Special Achievement Award as set forth in the agency's official eligibility requirements.

The arbitrator further found that the supervisor has exhibited a deep-seated negative bias toward employees receiving dual compensation from the Federal Government and that this bias had caused the supervisor to discriminate against Mr. Brown, who was receiving additional compensation for a service-connected disability, by not recommending him for a Special Achievement Award despite his obvious eligibility for consideration. The arbitrator concluded that such discrimination was a violation of the collective bargaining agreement. Accordingly, he made the following award:

AWARD: Grievance sustained. John H. Brown shall be given a Special Achievement Award effective May 31, 1974, and shall be provided the maximum cash benefit permitted under the regulations.

The Department of Transportation appealed the arbitrator's award to the Federal Labor Relations Council, and the Council has requested our decision as to whether the expenditure of appropriated funds as ordered by the arbitrator may legally be made.

We must look to the Incentive Awards Act, 5 U.S.C. §§ 4501-06 (1970), to determine the legality of the payment. Section 4503 of title 5 provides as follows:

The head of an agency may pay a cash award to, and incur necessary expense for the honorary recognition of. an employee who

(1) by his suggestion, invention, superior accomplishment, or other personal effort contributes to the efficiency, economy, or other improvement of Government operations; or

(2) performs a special act or service in the public interest in connection with or related to his official employment.

Section 4506 of title 5 of the United States Code grants authority to the Civil Service Commission to prescribe regulations and instructions governing agency awards programs.

The Commission has exercised this authority and issued regulations governing the awards program in 5 C.F.R. Part 451. The regulations read in pertinent part as follows:

451.102 Policy.

The policy of the Commission in administering chapter 45 of title 5, United States Code, is to:

(a) Establish broad principles and standards for the administration of the Incentive Awards Program

(b) Delegate to heads of agencies authority to establish and operate incentive awards plans consistent with these principles and standards The awards statute and implementing regulations vest discretion in heads of agencies to make or not to make awards and to tailor the awards as they see fit in accordance with the regulations, and the courts will not upset agency determinations except for a clear showing of abuse of discretion. Shaller v. United States, 202 Ct. Cl. 571 (1973), cert. denied, 414 U.S. 1092. See also Serbin and Stedman v. United States, 168 Ct. Cl. 934 (1964); Kempinski v. United States, 164 Ct. Cl. 451 (1964), cert. denied, 377 U.S. 981; Martilla v. United States, 118 Ct. Cl. 177 (1950). Thus, an agency would normally be free to accept or reject a recommendation in regard to a performance award, and to do so without a review by this Office or the courts of that exercise of discretion, provided it acts in good faith and not in abuse of its discretion. See 46 Comp. Gen. 730, 735 (1967).

In recent decisions this Office has attempted to give meaningful effect to the labor-management program established under Executive Order 11491 and to arbitration awards rendered thereunder if such awards are consistent with laws, regulations and our decisions. 54 Comp. Gen. 312, 320 (1974). We have held that provisions in collective bargaining agreements under the Executive order may become nondiscretionary agency policies and, if the agency has agreed to binding arbitration, that the arbitrator's decision is entitled to the same weight as the agency head's decision would be given. Id. at 316. But we further stated therein that our decision "should not be construed to mean that any provision in a collective bargaining agreement automatically becomes a nondiscretionary agency policy," and we added that "[w]hen there is doubt as to whether an award may be properly implemented, a decision from the Council or from this Office should be sought." Id. at 319, 320.

The issue to be resolved, therefore, is whether the PATCO-FAA agreement makes the grant of a performance award mandatory where, as here, there has been a finding that an employee has been discriminated against by his immediate supervisor in violation of section 1, Article 50, of the agreement. The FAA order which implements the awards program (FAA Order 3450.7B)—which the FAA-PATCO agreement is made subject to by section 12 (a) of Executive Order 11491-specifically provides that, although an employee's immediate supervisor is responsible for initiating a Special Achievement Award recommendation (paragraph 32.d. (1) and 33.b.), there must be at least

two levels of supervision involved in the initiation and approval process for such awards, except for those approved by the Administrator, Deputy Administrator, and officials reporting to the Administrator. Thus, a supervisor's recommendation does not necessarily mean that an award will be granted since approval at a higher level is required.

We find nothing in the negotiated agreement that changes the procedure for making incentive awards established in FAA Order 3450.7B or that creates any vested right in employees to receive awards. Section 1 of Article 50 requires that awards are to be based upon performance of assigned duties and may not be used to discriminate or to effect favoritism. However, that provision does not purport to eliminate the procedures set up by the FAA order or to take away the agency's discretion to select eligible employees for awards. In other words, the agreement did not change the granting of awards into a mandatory agency policy, even where discrimination is found. Therefore, notwithstanding the arbitrator's finding of discrimination in the failure of the grievant's supervisor to recommend him for a Special Achievement Award, the grievant would not necessarily have been granted an award if he had been so recommended, since a single supervisor's recommendation is not by itself the decisive act in the awards process.

Accordingly, since the granting of a Special Achievement Award remained discretionary with the FAA, the expenditure of appropriated funds for the cash award to John H. Brown ordered by the arbitrator may not legally be required. However, we would not object to a remedy which requires that an award recommendation be prepared and considered for Mr. Brown pursuant to agency regulations.

[B-186830]

Compensation-Rates-Highest Previous Rate-Tropical Differ

ential

Employee placed in position within United States following reduction in force in Canal Zone requests ruling on whether tropical differential authorized by section 7(a) (2) of Act of July 25, 1958, 72 Stat. 407, may be included in "rate of basic pay" for purpose of applying "highest previous rate" rule. Question is based on provision of above-cited law requiring inclusion of tropical differentials as basic compensation for, inter alia, “any other benefits which are related to basic compensation." In 39 Comp. Gen. 409 we held that tropical differential may not be included in applying "highest previous rate" rule.

In the matter of Richard S. Day-tropical differential, November 5, 1976:

This action is in response to the letter of Mr. Richard S. Day, dated June 22, 1976, in which a ruling is requested as to whether the tropical