IRS Awards: Is It a $70 Million Scandal or Something Else?

There’s a lot of hubbub around D.C. this week owing to a report that despite a presidential order freezing Federal pay, IRS employees are getting a $70,000,000.00 award payout. The Author, not known for his pro-union reporting, seeks to separate the truth from the rhetoric and examine what is going on at the IRS and why.

If the Congress has its shorts in an uproar (mixed metaphor?) about a $70 million awards payout at IRS, it needs a mirror to blame a principally responsible party.  The Congress, in passing the Civil Service Reform Act in 1978 turned loose on the Federal government a new Agency called the Federal Labor Relations Authority (FLRA).  The FLRA has broad discretion to interpret the labor relations section of that law and has done so for almost 35 years.

The bottom line is that virtually anything a Federal Agency Head has discretion to decide is negotiable as long as the decision doesn’t break the law.  The U.S. Office of Personnel Management, also created by the above law and which is supposed to regulate Federal personnel policies such as awards, has become a political platform for a variety of politically correct initiatives and largely abandoned regulation of government systems like performance management and awards.

In OPM’s defense, it claims it is merely delegating freedom to Agencies to make decisions that enhance its mission.  With me so far?

Why The President’s Order Doesn’t Matter

The FLRA has decided that a presidential order has the weight of a government wide regulation.  Under the law, if a government wide regulation goes into effect after a contract with a union is effected, the regulation may not be put in place for employees covered by the contract until after the contract expires and then only after the Agency has bargained to the full extent of the law and Agency discretion within the regulation.  Still with me?

The IRS Contract predates the presidential order so it’s sorry Mr. President, but you’re too late in askin”.  In addition, the IRS/NTEU agreement has a five year term so these guys will get $70 million or more every year.  Why? The Agency gave up a right in order to make this happen.  The Awards article starts out with “The Employer has determined that it will distribute 1.75% of total annual bargaining unit salary pursuant to the NTEU-IRS Contract Award program discussed below.”  The union cannot legally make the Agency do this so someone high up in IRS (Political, maybe?) decided to concede this even though doing so could not be mandated.

Where Does NTEU Fit into All this?

Last time I looked in the rule book, it was a union’s job to get the most it can for represented employees.  NTEU certainly did that regarding awards.  NTEU also crowed about what it got in a breast pounder for employees.  Note the bit about each employee can earn an award up to $3500.00.  The actual average money is $1750 (That’s $70 million divided by 40,000 represented employees.)  The chances are the actual average was probably closer to $2000 among award getters since not everybody will get the same amount.  You can read the Awards article or the whole contract.

So What’s the Big Deal?

The interesting thing here is that the Congress brought this on itself by creating a law that it did not anticipate the effect of.  It created competing Agencies to set government personnel policies.  The fact that one of these Agencies (FLRA) thinks it runs the government (literally) and the other (OPM) runs from any controversy or accountability (no kidding), is a statutory fact of life.

The IRS folks that fixed a part of their budget as a % of salary when they didn’t have to or arguably could have avoided doing so is a legitimate gripe on the part of the Hill, but last time I checked the rule book, Congress also determined Agency budgets and has a reputation for micromanagement. So who is at fault? You decide.

By the way, if IRS were to renege on the deal, the FLRA would certainly find them guilty of an unfair labor practice and seek a court order to enforce its view, if IRS tried to play hardball.  Based on past FLRA decisions, IRS would likely end up paying the awards retroactively with interest at some future date.

So Who’s to Blame?

For all of you out there who think I’m the arch enemy of Federal unions, let me say that NTEU may have taken advantage of the right political climate at the right moment to get what it got, it is arguably, at least, their job to do so.  They got a gift that keeps on giving thanks to the complexity that Congress created that it doesn’t now and likely never did understand.

This $70 million proves that the President is in limited control of his government and that if you’re a fan of the system described above, you don’t want it to change.  If you’re unhappy with the way it works, you need to go to school and study the rule book before you try a fix that will be as crazy as was Jimmy Carter’s reform act the consequences of which creates many, many situations even crazier than described herein.

Last Words

All of the above has a solid factual base. The opinions are mine alone.  I would like to have some company in them if you want to sign up.  Please note that the NTEU shtick on awards is no longer accessible.  For better or worse, Google keeps a cached copy and that’s where I got it.  Those who comment, please read the article through before you do so.  I started doing this to create a dialog and too often get a diatribe.

About the Author

Bob Gilson is a consultant with a specialty in working with and training Federal agencies to resolve employee problems at all levels. A retired agency labor and employee relations director, Bob has authored or co-authored a number of books dealing with Federal issues and also conducts training seminars.