Computation of Highest Previous Rate

An employee's union requested a decision concerning the salary rate set for an employee who transferred from the U.S. Postal Service to the Federal Aviation Administration (FAA). The union questioned the FAA refusal to include the Postal Service workers' cost of living adjustment in the computation of his basic rate of pay under the highest previous rate rule. The FAA did not include the cost of living adjustment on the ground that it was not part of basic pay. According to the terms of the National Agreement of the Postal Service, the cost of living adjustment did not become part of the employee's basic salary before he had transferred from the Postal Service to the FAA. GAO held that the FAA was correct in excluding this amount from the employee's basic rate of pay.