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 17 FLRA No. 145
 
 SOCIAL SECURITY ADMINISTRATION 
 Agency
 
 and 
 
 LOCAL 1760, AMERICAN FEDERATION 
 OF GOVERNMENT EMPLOYEES, AFL-CIO 
 Union
 
                                            Case No. 0-AR-731
 
                                 DECISION
 
    This matter is before the Authority on exceptions to the award of
 Arbitrator Susan T. Mackenzie filed by the Agency and the Union under
 section 7122(a) of the Federal Service Labor-Management Relations
 Statute and part 2425 of the Authority's Rules and Regulations.
 
    The parties submitted to arbitration the issue of whether the
 Activity's decision to withhold the within-grade increase of the
 grievant was proper.  The Arbitrator found that the Activity had
 sustained its determination that the grievant's performance was not at
 an acceptable level of competence (the negative determination).
 However, the Arbitrator also found that the Activity had violated the
 parties' collective bargaining agreement by not affording the grievant a
 minimum of 60 days in which to improve before deciding to withhold the
 within-grade increase and that the violation constituted harmful error.
 As her award, the Arbitrator therefore directed that the grievant be
 given a new 60-day period to demonstrate improvement and that should she
 demonstrate during this period that she is performing at an acceptable
 level of competence, the grievant be granted retroactive to February 7,
 1983, a within-grade increase.
 
    In its exceptions to the award, the Agency primarily contends that by
 providing for the granting retroactively of a within-grade increase to
 the grievant, the award is contrary to 5 U.S.C. 5335(a) and Sec. 5596.
 The Authority agrees.
 
    The Authority has uniformly held that in order for an award of
 backpay to be authorized under the Back Pay Act, 5 U.S.C. 5596, there
 must be not only a determination that the aggrieved employee was
 affected by an unwarranted personnel action, but also a determination
 that such unwarranted action directly resulted in the withdrawal or
 reduction in the pay, allowances, or differentials that the employee
 would otherwise have earned or received.  E.g., American Federation of
 Government Employees, Local 51 and U.S. Department of the Mint, Old Mint
 Building, Customer Service Division, 15 FLRA No. 164 (1984).  In
 addition, with respect to the denying or withholding of a within-grade
 increase, the Authority has recognized under 5 U.S.C. 5335(a) that in
 order for an employee to be entitled to the increase, the work of the
 employee must be determined to be at an acceptable level of competence.
 Social Security Administration and American Federation of Government
 Employees, AFL-CIO, 16 FLRA No. 76 (1984).  Thus, in order for an award
 by an arbitrator of a retroactive within-grade increase to be
 authorized, the arbitrator must find that agency action in connection
 with the withholding or denying of the increase was unwarranted and that
 but for the unwarranted action, the grievant otherwise would have
 received the within-grade increase.  In this regard, the arbitrator must
 find either that the negative determination was not sustained or that
 due to some action or failure to take action on the part of the agency,
 the work of the grievant was determined not to be at an acceptable level
 of competence when it otherwise would have been.  See id. at 2.  In
 terms of this case, as has been noted, the Arbitrator did find that the
 Activity had violated the parties' collective bargaining agreement.
 However, the Arbitrator also found that the Activity had sustained its
 negative determination, and the Arbitrator did not find that but for the
 Activity's failure to afford the grievant a minimum of 60 days in which
 to improve, the grievant's work otherwise would have been determined to
 have been at an acceptable level of competence which would have resulted
 in the granting of the within-grade increase.  Consequently, the
 Arbitrator's provision for a retroactive within-grade increase is
 contrary to 5 U.S.C. 5335(a) and Sec. 5596 and must be modified.  /1/
 
    In its exception to the award the Union contends that the award is
 deficient as contrary to 5 U.S.C. 7701(c) because the Arbitrator was
 required to grant the grievant the within-grade increase on finding that
 the Activity's violation of the collective bargaining agreement was
 harmful error and because the Arbitrator found that the Activity had
 sustained its negative determination by using the standard of
 substantial evidence rather than the standard of preponderance of the
 evidence, which the Union claims is required by section 7701(c)(1)(B).
 /2/ The Authority however concludes that the Union fails to establish
 that the award is deficient in these respects.
 
    In this regard the Authority has previously held that section 7701(C)
 expressly pertains only to the appellate procedures of the Merit Systems
 Protection Board (MSPB) in reviewing agency decisions in any action
 appealed to MSPB and that accordingly section 7701(c) is not applicable
 to grievances submitted to arbitration.  E.g., Naval Weapons Station,
 Yorktown, Virginia and National Association of Government Employees,
 Local R4-96, 13 FLRA 133 (1983).  At the same time, the Authority
 recognized that under section 7121(e)(2) of the Statute, /3/ an
 arbitrator in certain matters is governed by the standards set forth in
 section 7701(c).  However, that section of the Statute does not pertain
 to the denying or withholding of within-grade increases and therefore
 neither that section nor the standards set forth in section 7701(c)
 applies in this case.  Consequently, contrary to the argument of the
 Union, and in view of the findings necessary to a proper award of a
 retroactive within-grade increase discussed with respect to the Agency's
 exception, the Arbitrator correctly did not grant a retroactive increase
 on finding harmful error alone, and the award therefore is not deficient
 in this respect.  Similarly, contrary to the contention of the Union
 respecting the standard of proof, with neither section 7701(c) nor its
 standards applicable to this case, no specific standard of proof is
 required by law.  In this regard the Authority has held that unless a
 specific standard of proof is required, an arbitrator may establish
 whatever standard the arbitrator considers appropriate and the award is
 not subject to being found deficient on that basis.  Department of
 Defense Dependent Schools, Europe and Overseas Education Association, 4
 FLRA 412 (1980).  Furthermore, the Union has additionally failed to
 establish that section 7701(c)(1) requires the application of the
 standard of preponderance of the evidence of section 7701(c)(1)(B)
 applies to denials of within-grade increases.  Although three U.S.
 courts of appeal have held that the standard of preponderance of the
 evidence of section 7701(c)(1)(B) applies to denials of within-grade
 increases, /4/ the standard determined by MSPB and the U.S. Court of
 Appeals for the Federal Circuit, the court of appeals with exclusive
 jurisdiction in the review of MSPB decisions, to be required by section
 7701(c)(1) is substantial evidence.  Parker v. Defense Logistics Agency,
 1 MSPB 489 (1980);  Gordon v. Veterans Administration, No. 84-1327 (Fed.
 Cir. Dec. 11, 1984).  For these reasons the Union's exception provides
 no basis for finding the award deficient.
 
    Accordingly, the Union's exception is denied, and on the basis of the
 Agency's exception the award is modified by striking "retroactive to
 February 7, 1983" and inserting "prospectively." /5/ 
 
 Issued, Washington, D.C., May 13, 1985
 
                                       Henry B. Frazier III, Acting
                                       Chairman
                                       William J. McGinnis, Jr., Member
                                       FEDERAL LABOR RELATIONS AUTHORITY
 
 
 
 
 
 
 --------------- FOOTNOTES$ ---------------
 
 
    /1/ The Authority has previously noted that 5 C.F.R. 430.202(e) (1984
 Supp.), which implements 5 U.S.C. 4301(3), requires the denial of a
 within-grade increase when an employee's performance in any critical
 element is below a minimum standard.  See American Federation of State,
 County and Municipal Employees, AFL-CIO, Local 2027 and Action,
 Washington, D.C., 12 FLRA 643, 646-47 (1983).
 
 
    /2/ Section 7701(c) pertaining to the appellate procedures of the
 Merit Systems Protection Board pertinently provides:
 
          (1) Subject to paragraph (2) of this subsection, the decision
       of the agency shall be sustained under subsection (b) only if the
       agency's decision--
 
          (A) in the case of an action based on unacceptable performance
       described in section 4303 of this title, is supported by
       substantial evidence, or
 
          (B) in any other case, is supported by a preponderance of the
       evidence.
 
          (2) Notwithstanding paragraph (1), the agency's decision may
       not be sustained under subsection (b) of this section if the
       employee or applicant for employment--
 
          (A) shows harmful error in the application of the agency's
       procedures in arriving at such decision(.)
 
 
    /3/ Section 7121(e)(2) provides:  "In matters covered under sections
 4303 and 7512 of (title 5) which have been raised under the negotiated
 grievance procedure in accordance with this section, an arbitrator shall
 be governed by section 7701(c)(1) of (title 5), as applicable."
 
 
    /4/ Ommaya v. National Institutes of Health, 726 F.2d 827 (D.C. Cir.
 1984);  White v. Department of the Army, 720 F.2d 209 (D.C. Cir. 1983),
 Stankis v. EPA, 713 F.2d 1181 (5th Cir. 1983);  Schramm v. Department of
 Health and Human Services, 682 F.2d 85 (3d Cir. 1982).
 
 
    /5/ In view of this decision, it is not necessary to address the
 Agency's other exception to the award. 
 
 
 

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