[Appeal Concerning Entitlement to Merit Pay Increase]

A Defense Logistics Agency (DLA) employee appealed the Claims Group's denial of his claim for a merit pay increase. The employee had filed his claim with GAO after DLA had removed his position from merit pay coverage although he had received a highly successful merit pay appraisal which would have warranted a merit pay increase. DLA decided to retroactively limit merit pay coverage to only those employees who clearly were supervisors after a labor union protested that the agency had exceeded its authority by including nearly 75 percent of its potential merit pay population under its merit pay program. This action removed the claimant from coverage. The Claims Group found that Federal regulations prohibit merit pay determinations before the date on which an employee's position would have converted to the merit pay system. While an employee's performance appraisal may dictate the amount of merit pay increase an employee is due, it may not mandate a merit pay increase if the employee is not under the merit pay program at the time of the effective date of the merit pay increase. Since the DLA decision to withhold the employee's merit pay increase was consistent with the language of the implementing regulations, GAO sustained the Claims Group's denial of the employee's claim.