In keeping with the commitment made during our meeting on May 15, 2002. the Agency's last/best pay offer to NAATS is enclosed. The Agency is prepared to proceed with the hearing on July 30-31, 2002.

Sincerely,

Raymond B. Thoman

Deputy Assistant Administrator for Labor and Employee Relations

Enclosure

Agency's Total Package Last/Best Offer.

In addition to the other pay raises already agreed to by the parties, e.g., the general government wide pay increase, the FAA offers the NAATS bargaining unit a 5.5% additional base salary increase over the five-year term of the agreement, subject to the following conditions:

1. The 5.5% increase in pay and benefits shall be offset by mutually agreed, to cost savings that result from efficiencies related to the NAATS bargaining unit If the parties are not able to reach agreement on offsets, the offsets will come from the elimination of holiday premium pay (and the substitution of "floating personal days"), savings from a reduction in the hours of operation at certain flight service facilities, or such other sources as determined by the agency.

2. Contingent on identified offsets, the pay out of the 5.5% would be as follows:

0.75% at the beginning of the first pay period of the first full quarter following the agreement on offsets;

1.00% the first pay period of the next fiscal year starting after the initial pay out;

1.00% the first pay period of the second fiscal year starting after the initial pay out;

1.25% the first pay period of the third fiscal year starting after the initial pay out;

1.50% the first pay period of the fourth fiscal year starting after the initial pay out.

July 23,2002