B-235291, Oct 3, 1989

B-235291, Oct 3, 1989

CIVILIAN PERSONNEL - Compensation - Prevailing rate personnel - Wage rates - Determination DIGEST: In response to constituent's concern that his overtime pay was reduced 26 percent by MSC, Congresswoman is advised that MSC sets pay rates for its civilian mariners according to the prevailing rate system set out in 5 U.S.C. Sec. 5348(a) (1982), and MSC's discretionary authority to set rates of pay consistent with the public interest is acknowledged and well settled by decisions of this Office and of the courts. See cases cited.

The Honorable Barbara Boxer

House of Representatives

Ms. Boxer:

We refer further to your letter of April 11, 1989, concerning correspondence you received from one of your constituents, William R. Helton. Mr. Helton is an employee of the Military Sealift Command (MSC) at Mare Island, California, and is concerned about a 26 percent reduction in overtime pay for deck officers that was made by MSC in 1985, and about a Department of Defense program to contract for private shipping services pursuant to Office of Management and Budget Circular A-76. You have requested that we review the MSC response to his concerns and advise you on its accuracy and reasonableness so that you can further respond to Mr. Helton.

Information was furnished to you on April 20, 1989, by our Office of Congressional Relations on the issue you raised as to the A-76 contracting -out program. The following comments relate to our analysis of the MSC response concerning the overtime pay reduction.

The MSC sets pay rates for its civilian mariners under a prevailing rate system authorized by 5 U.S.C. Sec. 5348(a) (1982), which provides that:

"... the pay of officers and members of crews of vessels ... shall be fixed and adjusted from time to time as nearly as is consistent with the public interest in accordance with prevailing rates and practices in the maritime industry."

MSC stated in its letter to you that its reduction in overtime rates in 1985 was based on provisions of an International Organization of Masters, Mates and Pilots commercial contract then in effect. We have received additional information further explaining that a June 16, 1984 Memorandum of Understanding between the International Organization and the Maritime Service Committee, Inc., provided for the establishment of a new tax exempt trust fund, and specified that the new trust would be funded by employer contributions derived by a 26 percent reduction in overtime rates. It was this reduction in overtime pay for crew members serving on commercial ships that MSC used as a basis for reducing the overtime pay of its crew members, apparently on the basis of it being the prevailing rate and practice in the industry. MSC, however, does not appear to have provided any offsetting benefit for the reduction such as the industry agreement's provision for contributions to the tax exempt trust. /1/

The MSC's discretionary authority to set rates of pay consistent with the public interest is acknowledged and well settled by decisions of the courts. See, e.g., Department of the Navy, Military Sealift Command v. Federal Labor Relations Authority, 836 F.2d 1409 (3rd Cir. 1988), where the court held that the MSC was not required to collectively bargain pay proposals for civilian mariners under the labor-management statute since the prevailing rate system authorized by 5 U.S.C. Sec. 5348 vests discretion in the Department of the Navy to set rates of pay. See also National Maritime Union of America v. United States, 682 F.2d 944 (Ct. Cl. 1982); Blaha v. United States; 511 F.2d 1165 (Ct. Cl. 1975); and Daniels v. United States, 407 F.2d 1345 (Ct. Cl. 1969). The Comptroller General has also recognized the agency's discretionary authority to set rates of pay consistent with the public interest under this and similar statutes. 56 Comp.Gen. 870 (1977); 50 Comp.Gen. 93 (1970); 30 Comp.Gen. 356 (1951).

While Mr. Helton apparently disagrees with MSC's use of the industry agreement reducing overtime pay as a basis for reducing MSC overtime pay, as previously stated, MSC has great discretion in setting wages. Thus, we cannot say that MSC's implementation of the reduction, based on the reduction in the industry, was arbitrary, capricious, or otherwise unlawful, even though the industry reduction provided an offsetting benefit which the MSC reduction did not.

Mr. Helton also refers to a statutory freeze on pay rates as having prohibited MSC from reducing the overtime rates. The freeze to which he refers was on Federal Wage System pay for fiscal year 1986 by Pub. L. 99-190, Sec. 101(h), 99 Stat. 1291, incorporating by reference H.R. 3036, title VI, Sec. 6131. This law allowed for no adjustments to wage schedules or wage rates upwards or downwards for fiscal year 1986. However, the Consolidated Omnibus Budget Reconciliation Act of 1985, Pub. L. 99-272, Sec. 15201(b)(4), 100 Stat. 332, modified the pay freeze to allow downward adjustment of wage schedules required by survey results, including wages set under 5 U.S.C. Sec. 5348. Thus, MSC had the authority to reduce the overtime rates based on a wage survey because of the exception to the freeze in Pub. L. 99-272. See also FPM Bulletin 532-71, July 8, 1986.

We would also point out that Congress placed limits on subsequent annual pay adjustments for prevailing rate employees and crews of vessels. E.g., Pub. L. 100-202, Sec. 101(m), 101 Stat. 1329 (1987); Pub. L. 99-500, Sec. 101(m) 100 Stat. 1783-308, 1783-330, (1986); and Pub. L. 99-591, Sec. 101(m) 100 Stat. 3341-308, 3341-330 (1986).

Mr. Helton has also expressed concern about the elimination of penalty pay for members of the crew on deck watch. We note that one of the union proposals outlined in the Department of the Navy, Military Sealift Command v. Federal Labor Relations Authority case, supra, was to reinstate penalty pay for unlicensed members of the crew on deck watch. The court held that MSC was not required to collectively bargain this proposal, as well as the other union proposals, because of its discretionary authority to set rates of pay.

In response to Mr. Helton's inquiry about whether the MSC's pay actions would violate California law, as a federal employee his entitlements and benefits are prescribed by federal statutes and regulations and California law would not be applicable.

We are furnishing you copies of the decisions of the Comptroller General and court cases cited above, and we trust that this is responsive to your inquiry.

/1/ Establishment of such a trust for MSC employees would appear to require additional statutory authority.