### United States Court of Appeals for the Federal Circuit

04-3086

WILLEMA HARDY, Petitioner,

v. DEPARTMENT OF THE NAVY, Respondent.

Richard H. Semsker , Lippman & Semsker, PLLC, of Bethesda, Maryland, argued for petitioner. With him on the brief was S. Micah Salb

. Claudia Burke , Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Ju stice, of Washington, DC, ar gued for respondent. With her on the brief were Peter D. Keisler , Assistant Attorney General; David M. Cohen , Director; and James M. Kinsella , Deputy Director.

Appealed from: United States Merit Systems Protection Board

## United States Court of Appeals for the Federal Circuit

04-3086 WILLEMA HARDY, Petitioner,

v. DEPARTMENT OF THE NAVY, Respondent.

__________________________ DECIDED: January 4, 2005

__________________________

Before MICHEL ∗ , Chief Judge , ARCHER, Senior Circuit Judge , and SCHALL, Circuit Judge

. MICHEL, Chief Judge

. Willema Hardy (“Hardy”) petitions for revi ew of the final decision of the Merit Systems Protection Board (“Boar d”), upholding the Department of the Navy’s (“Navy’s”) reassignment offer to Hardy during a reduction in force (“RIF”) after her former position
was abolished and she was reached for release. Hardy v. Dep’t of the Navy , No. DC0351030294-I-1 (M.S.P .B. Aug. 27, 2003) (“ Decision ”). 1 The appeal was

* Chief Judge Paul R. Michel assu med the position of Chief Judge on December 25, 2004.

1 Because Hardy did not challenge the initial decision, it became the final decision of the Board on October 1, 2003. See Wood v. Merit Sys. Prot. Bd. , 938 F.2d 1280 (Fed. Cir. 1991); 5 C.F.R. § 1201. 113. Accordingly, we refe r to the initial decision herein as “Decision.”submitted after oral argument on Novem ber 4, 2004. Because the Board correctly construed the Office of Personnel Managem ent’s (“OPM’s”) RIF regulations and properly concluded that the Navy complied with those regulations in offering to plac e Hardy in a vacancy at a lower grade when hi gher-graded positions were also v a cant, we affirm.

I. BACKGROUND Hardy worked as a Telecommunications Specialist GS 391-11 (“Specialist 11”) for the Navy at the Naval Dist r ict Washi ngton. In May 2002, the Navy initiated a functional analys is s t udy of the informa tion technology and telecommunications divis i ons at its Washington, D.C. location. Based upon the results of that study, the Navy decided to eliminate the entire telecomm unications division, which consisted of five employees, including Hardy. On October 16, 2002, the Navy notifi ed Hardy that her position was being abolished pursuant to a RIF. Th e Navy offered to place Hardy in a vacant Secretary GS 310-07 position (“Sec retary 07”). Hardy challe nged this offer by requesting review by the Board, contending that she was qualified for and t herefore entitled to the higher-graded vacant positions of Cust omer Relations Manager 2210-11 (“Manager 11”) and Secretary GS 318-09 (“Secretary 09”). The Administrative Judge (“AJ”) assigned to her case conducted a hearing at Hardy’s request and issued an initial deter minati on that Hardy was not entitled to eithe r the Manager 11 or t he Secret ary 09 pos itions. The AJ observed that a releas ed employee does not have assignment rights to a vacant position. Decis i on at 4. The AJ recognized that an agency may, however, im plement a mandatory po licy or promulgat e

2its own r egulation to offer vacant pos itions to RIF-displac ed employees. Id. Nevertheless, the AJ noted that it was undi sputed that the Navy di d not have such a policy or s u ch an agency regulation. Id. at 5. Thus, the AJ concluded that the Navy could exercise complete discr etion in c onsidering RIF-displaced emp l oyees for vacancies and that Hardy was not entitled to either the vacant Manager 11 position or the vacant Secret ary 09 position. Id. Despite reaching this conclusion, the AJ went on to address the hypothetical situation where the Na vy had adopted suc h a policy. Th e AJ c onsidered whether in that event Hardy would be entitled to eit her the vacant Manager 11 position or the vacant Sec r etary 09 position. Id. In doing so, the AJ ev aluated whether Hardy could exercis e bump or retreat assignment ri ghts under 5 C.F.R. § 351.701(b) or (c), respectively, ultimately concluding that Har d y could not meet the criteria f o r exercising these rights. Id. at 6. The AJ found that Hardy di d not have bump rights under section 351.701(b) becaus e t here was no assertion that Hardy had higher tenur e group or subgroup s t anding than another employee a ssigned to the vacant positions. Id. T h e A J also found that Hardy did not have retr eat rights under section 351.701( c) because neither the Manager 11 positio n nor the Secretary 09 pos ition was the same, or essentially identical to, her fo rmer Spec ialist 11 pos ition. Id. at 15, 18. Accor d ingly, the AJ concluded that the Navy pr operly applied the applicable RIF procedures in offering to place Hardy in the vacant Secretary 07 position. Id. at 18.
As noted above, Har d y did not challenge the AJ’s init ial decision, whereby it became the final decision of the Board. Hard y now petitions for review of the Board’s decision, asserting she is qualified for th e Manager 11 and Secretar y 09 positions

.

3Hardy seek s to be placed into the position of either Manager 11 or Secretary 09 and to be awarded back pay starting from the date that she was not off e red these positio n s. We have jurisdiction over a final Board dec ision pursuant to 5 U.S.C. § 7703(b)(1).

II. DISCUSSI ON Hardy recognizes that under par t 351 of 5 C.F.R., the Navy had discretio n in choosing whether to f ill vacant positions with RIF-displaced empl oyees. She argues, however, that once the Navy decided to fill vacanc ie s with RIF-displaced employees, she was entitled to an offer of placement in either the Manager 11 or Secretary 09 positions if she established her qualifications for those positions by satisfying the requirements set forth in section 351.703. 2 In this regard, Har d y claims that the substantial weight of the evidenc e readily demonstrates that she met both the educatio n requirement and the capacity, adaptability, and s pecial ski lls requirements containe d within sect ion 351.703. Thus, in essenc e, Hardy appears to contend that section 351.703 alone establishes entitlement to a vacancy of her choosing. Hardy’s ar gument is entirely off t he mark. Sec t ion 351.703 does not independently confer any assign ment rights to vacancies on a RIF-displac e d employee. Rather, section 351.703 is a dependent provision that only c o mes into play during a RIF

2 Section 351.703 states: An agenc y may assign an employee to a vacant position under § 351.201( b) or § 351.701 of this par t without regard to OPM’s standards and requirements for the position if: (a) The employee meets any minimu m education requirement for the position; and (b) The agency determines that t he employee has the capacity, adaptability , and special skills needed to satisfactorily perform the duties and responsibilities of the position.

4action by way of 5 C.F.R. §§ 351.201, 351.704, and 351. 701. Nevertheless, Hardy entirely ignores these sections, relyi ng exc l usively on s e ction 351.703. When sect ions 351.201, 351. 704, and 351.701 ar e applied in t h is cas e , none confer any assignment rights on Hardy, just as the Board found. Section 351.201 is directed generally to the applic ability of the RIF regulations . Section 351.201(b) affords
an agenc y discretion in dec iding whet her to fill vacancies with RI F-displac e d employees, stating in pertinent part: “This part does not require an age ncy to fill a vacant position.” 5 C.F.R. § 351.201(b); see also Madsen v. Veterans Admin. , 754 F.2d 343, 345 (Fed. Cir. 1985) (holding that an agency is not required to fill vacant positio ns in conducting a RIF). Section 351.704(a)(1 ) echoes the discretion afforded to an agency in filling vacancies during a RIF, stating in pertinent part: “An agency may als o offer an employee assignment under § 351.201(b) to a vacant position in lieu of separation by reduction in force u nder 5 CFR part 351.” (Emphasis added). As just noted, section 351.703 provi des that when an age nc y exercises its discretion under sections 351.201(b) and 351.704(a)(1) to pl ace a RIF

- displace d employee in a v a cant position, it is permi tted to do so even if the plac ement does not comply wit h normal OPM standards and requirem ents for the position. Section 351.703 states that “[a]n agency may assign an employee to a vacant position under § 351.201(b) . . . of this part without regard to OPM’ s standards and requirements for the position” if specified c onditions are met. (Emphasis added). In short, section
351.703 m a kes it eas ier to move a RIF-displac ed employee into a vacant position if the agency wis hes in its discretion t o do so. It does not, however, grant a RIF-displac e d employee any rights to a vacant position.

5The only exception is where the agen cy, on its own, has adopt ed an agenc y regulation or mandatory polic y of placing RIF-dis p lac ed employees in available vacancies. Spartin v. Gov’t Printing Office , 46 M.S.P.R. 119, 123 (M.S.P.B

. 1990), aff’ d , 937 F.2d 623 (Fed. Cir. 1991) (Table) (holdi ng that an agency is not obligated to offer vacancies to employ ees subject to a RIF act i on, absent a mandatory policy requiring an agency to fill vaca nt positions in lie u of s eparating RIF-displac ed employ ees). Hardy has not alleged that t he Navy ha d such a regulation or policy. The Navy, c o nsequently, could have elected to fill the vac a ncies sou g h t by Hard y before, during, or after the RIF with RIF-displaced employees. Alternatively, the Navy just as permissibly could hav e elected not to fill any of the vacancies in dis pute or to f ill them with outside a p plic ants

. On this basis, we conclude that the Board correctly det ermined that Hardy was not entitled to an offer of placem ent in either the vacant Manager 11 or Secretary 09 positions. Nevertheless, the Navy, exercis i ng its di s c retion, voluntarily offered to place Hardy into the vacant Secretary 07 position rather than release her from service. Having made this c h oice, the Navy was bound to follow applicable prov isions of part 351. Section 351.201(b) states i n pertinent part: “[W]hen an agency, at its discretion , chooses to fill a v a cancy by an employee who has been reached for rele ase from a competitive level for one of the reasons in paragraph (a)(2) of this section, thi s part shall be followed.” (Emphasis added). Thus, the issue on appeal is whether the Navy followed part 351 in offering to place Hardy in the Secret ary 07 position as opposed t o the Manager 11 or Secret ary 09 positions.

6Section 351.704 addr esses the basic requir ements that an agency must fulfill when it exercises its discretion t o plac e a RIF-displac ed employ ee in a v a c ant position. Section 351.704(a)(1) states in pertinent part: “Any offer of assignment under §351.201(b) to a vacant position must m eet the requirements set forth under § 351.701.” Section 351.701 sets forth the ge neral ass i gnment rights for a RIF-displac ed employ ee. Section 351.701 provides in paragraph (a) as follows: When a group I or II com petitive service employee with a current annual performance rating of reco rd of minimally succe ssful (Level 2) or equivalent, or higher, is released from a competit ive lev e l, an agency shall offer assignment, rather than f u rlough or separate, in accordance with paragraphs (b), (c), and (d) or this section t o another co mpetitive position which requires no reduction, or the lease [sic] possible reduction, in representative rate. The employee must be qualified for the offered position. T he offered position shall be in the same competitive area, lastat least 3 months, and have the same type of work schedule (e.g., fulltime, part-time, intermittent, or seasona l) as the pos i tion from which the employee is released. Upon accepting an offer of assignment, or displacing another employee under this part, an employee r e tains the same status and tenure in the new pos ition. The pr omot ion po tential of the offered position is not a consi deration in determi ning an employee’s rights of assignment. Paragraphs (b) and (c) of section 351. 701 relate to bump and retreat rights, respectively. 3 Paragraph (d) qualifies the retreat ri ghts set forth in pa ragraph (c). Other

3 According to section 351.701(b): A released employee shall be as si gned in accordance with paragraph (a) of this secti on and bump to a position that: (1) Is held by another employee in a lower tenure group or in a lower subgroup within the sa me tenure group; and (2) Is no more than three grades (or appropriate grade int e rvals or equivalent) below the position from which the employee was released.

7paragraphs of section 351.701 relate to pay rates (paragraph (e)) and the determination of applicable grades (or grade intervals) under sections 351.701(b)(2) and 351.701(c)(2) (paragraph (f)). While section 351.704(a)(1) explicitly refers to section 351.701, this section doe s not seem to have any subst antive application in situations involv ing an offer of assignment to a vacant position. The reason is that section 351. 701, beginning with its title “Assignment Involving Displacement,” appears to be devoted to the situation in which an employee s ubject to a RIF displa c e s another employee by exercising bump or retreat rights. It does not sa y anything about the right of a RIF-displaced employee to be offered a vacant position, the subject addressed in section 351.704(a). The only possible c onnection between s e ction 351.701 and section 351.704(a)(1) would be paragraph (a) of section 351.70 1, which states, in pertinent part, that “the employee must be qualified for the offered pos ition. ” This paragraph may suggest that a RIF-displac ed employ ee can only be placed into a vacancy position for which he is qualified under secti on 351.703. However, we need not and do not so decide here, but leave this issue for another day.

According to section 351.701(c): A released employee shall be as signed in accordance with paragraphs (a) and (d) of this section and re treat to a position that: (1) Is held by another employee with lo wer retention standing in the same tenure group and subgroup; and (2) Is not more than three grades (or appropriate grade int e rvals or equivalent) below t he position fr om which the employee was released . . . ; and (3) Is the same position, or an essent ially identical position, formerly he ld by the released employ ee on a permanent bas is as a competing employee in a Federal agency . . . .

8Under both paragraphs (b) and (c) of sectio n 351.701, a RIF-displaced emplo y ee can only exercise ass i gnment rights to a pos ition that is “held by another em ployee.” A discretionary offer of assignment to a vac a nt posit ion, which is all that is at issue in this case, cannot involv e displac e ment of an in cumbent employee. In any event, Hardy has never asserted that she was ent itled to an encumbered position by reason of bump or retreat rights. Indeed, she could not, because the Manager 11 and Secretary 09 positions were vacant. Nor does Hard y argue section 351.701 ot herwise supports her claim. This conc lusion, however, does not end our analysis

. Despite not being c l early argued by Hardy, we still consider whet her the Navy was o b ligated b y any other provision of part 351 to offer Hardy plac ement in either of the two higher-graded vacancies. We conc lude that no provision of the RIF regulat ions obligates an agency to offer placement in the highest-graded av ailabl e vac ancy. To the contrary, sections 351.201(b) and 351. 704(a)(1) affirmatively pr ovide complete discretion whether and how to fill v a cancies d u ring a RIF action. We have not been cited to, nor are we aware of, any RIF regulation that ev en implicitly obligates the agen cy to offer placement to the RIF-displac ed employ ee in the highest-gr ade vac a nt position; the RIF regulations instead only obligate the agency to confo rm any discretionary assignment offer to section 351.701(a), meaning, at most, to evaluate qualific at ions for its chosen vacancy under section 351.703. An agen cy, therefore, can offer to place a RIF-displaced, but qualified, employee in any, a ll, or none of the vacancies without violating part 351. We also note that any requir e ment that an agenc y place a RIF-displaced employee in the highest-grade available vac ancy could defeat the pur pose of many RIF

9actions. Often, a government agency reduces the size of its workforce to match the available s a lary dollar s appropriated by Congress. Se e Int’l F ed’n of Pr of’l & Technica l Eng’rs , 8 F.L.R.A. 212, 213 (1982) ( noting that prerequisite cond itions for a RIF include lack of wor k , shortage of funds, or agency reorganizat i on). If an agency were required under the RIF regulations to offer to pl ac e every RIF-displaced employee in the highest-grade available vacan cy for which s u ch employee is qualified, then t he agency might not be able to reduce its salary expe nditures. Hence, an agency must be free to restructure its work force to meet the constr aints placed upon it by Congress , including by not filling vacanc ies or only filling lower-grade and lower-pay vacanc ies. An y contrary interpretation of the RIF regulat ions, then, would be illog i cal and dysfunctional. We thus conclude that Hardy has no lega l basis for her challenge. The Navy was neither obligated under a mandatory policy nor under an agency regulation to offer Hardy plac ement in a vacant position. Having opted in its discretion to try to do so, the Navy was not required to offer her placement in a l l vacant positi ons for which she was qualified. Instead, the Navy was entitled to elect whether to o ffer Hardy any, all, or none of those vacant positions. Accordingly, we c onclude that the Board’s dec i sion upholdin g the Navy ’s offer to assign Hardy t o the Secr etary 07 position, but not the Ma nager 11 or Secretary 09 positions, must be
AFFIRMED

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