17:0417(66)NG - AFGE Local 225 and Army, Army Armament Research and Development Command, Dover, NJ -- 1985 FLRAdec NG



[ v17 p417 ]
17:0417(66)NG
The decision of the Authority follows:


 17 FLRA No. 66
 
 AMERICAN FEDERATION OF 
 GOVERNMENT EMPLOYEES, 
 LOCAL 225, AFL-CIO 
 Union 
 
 and 
 
 DEPARTMENT OF THE ARMY, 
 U.S. ARMY ARMAMENT RESEARCH 
 AND DEVELOPMENT COMMAND, 
 DOVER, NEW JERSEY 
 Agency
 
                                            Case No. 0-NG-617
 
                DECISION AND ORDER ON NEGOTIABILITY ISSUES
 
    The petition for review in this case comes before the Authority
 pursuant to section 7105(a)(2)(E) of the Federal Service
 Labor-Management Relations Statute (the Statute), and raises issues
 concerning the negotiability of four Union proposals.  Upon careful
 consideration of the entire record, including the parties' contentions,
 the Authority makes the following determinations.
 
                             Union Proposal 1
 
          3.  The Employer will insure that any cost study reflects the
       most efficient in-house operation and is based on the same Scope
       of Work as the contract proposal.
 
                             Union Proposal 2
 
          5.  The Employer agrees to utilize a Wage Determination area
       which coincides with the Wage Grade Pay Survey area if wage grade
       employees are involved in the CITA study.
 
    Union Proposal 1 is concerned with the comparative cost analysis
 which must be prepared by the Agency, in accordance with Office of
 Management and Budget (OMB) Circular (Revised) No. A-76, prior to
 deciding whether to perform an activity or function in-house or by
 contract.  In particular, the proposal would require the Agency, when it
 calculates the costs of in-house operation, to consider such operations
 at their most efficient as well as to consider the same in-house scope
 of work as considered in the contract proposal.  Union Proposal 2 would
 require the Agency, according to its uncontroverted statements in the
 record, "to use wage data from a specified wage determination area in
 its contracting out studies if those studies involve wage grade
 employees." /1/ Thus, the proposals are to the same effect as Proposals
 1 and 2 in American Federation of Government Employees, AFL-CIO, Local
 2736 and Department of the Air Force, Headquarters 379th Combat Support
 Group (SAC), Wurtsmith Air Force Base, Michigan, 9 FLRA 733 (1982),
 reversed and remanded sub nom. AFGE Local 2736 v. FLRA, 715 F.2d 627
 (D.C. Cir. 1983), decision and order on remand, 14 FLRA No. 55 (1984),
 which were found to be outside the duty to bargain because they directly
 interfered with management's right under section 7106(a)(2)(B) of the
 Statute "to make determinations with respect to contracting out." /2/ In
 that case, the Authority found that Proposals 1 and 2 substantively
 restricted how a cost study used in determining whether to contract out
 could be conducted by prescribing standards to be used in evaluating
 some of the factors upon which a contracting out determination could be
 based.  Therefore, for the reasons set forth in Wurtsmith Air Force
 Base, Union Proposals 1 and 2 herein, which prescribe standards
 management officials must use for evaluation when conducting cost
 studies, are outside the duty to bargain under section 7106(a)(2)(B) of
 the Statute.  /3/
 
    Accordingly, pursuant to section 2424.10 of the Authority's Rules and
 Regulations, IT IS ORDERED that the Union's petition for review as to
 Proposals 1 and 2 be, and it hereby is, dismissed.
 
                             Union Proposal 3
 
          4.  The Employer agrees to abide by the procedural requirements
       of OMB Circular A-76 and further agrees that the cost comparison
       generated under the Circular fully reflects all Government and
       Contractor costs prior to deciding whether or not the contract
       cost is the lowest bid.  Arbitrary guideline figures in the
       Circular (e.g., 4% for contract administration) will not be used
       but rather all elements of the cost comparison will be identified
       and the actual cost determined.  In the case of Contract
       Administration costs, for example, the cost of Government
       Inspectors, Procurement support, etc. will be considered in
       arriving at the cost.  Copies of the cost comparison and backup
       material will be provided to the Union.
 
    Union Proposal 3 would require the Agency, among other things, to
 include all costs involved with contract and in-house performance when
 it prepares cost studies for comparison to determine which will provide
 lowest performance cost.  With respect to some of the costs to be
 included, the proposal would prevent the Agency from using the arbitrary
 guideline figures provided in the Circular by requiring the Agency to
 include in the cost study only actual costs.  According to the Agency,
 the proposal conflicts with the OMB Circular, which it alleges is a
 Government-wide rule or regulation, and thus is outside the duty to
 bargain under section 7117(a)(1) of the Statute.  /4/ As to this
 contention, OMB Circular No. A-76 (Revised), including the Supplement
 thereto, provides that agencies shall use standard cost factors, as
 prescribed in the Supplement, in the preparation of cost comparisons.
 /5/ Therefore, the proposal does conflict with the Circular and its
 Supplement and would be outside the duty to bargain if the Circular
 constitutes a "Government-wide rule or regulation" within the meaning of
 the Statute.
 
    In this connection, the Circular and its Supplement apply to all
 executive agencies with some exceptions provided by law and thus are
 applicable to Federal employees within the executive branch of
 government.  /6/ Consequently, the Circular and its Supplement are
 generally applicable to the Federal civilian work force so as to be
 "Government-wide" within the meaning of section 7117(a)(1) of the
 Statute.  See National Treasury Employees Union, Chapter 6 and Internal
 Revenue Service, New Orleans District, 3 FLRA 748 (1980).
 
    As to whether the provisions of the Circular and its Supplement
 constitute a "rule or regulation" within the meaning of section
 7117(a)(1), the Authority has previously concluded that Congress
 intended that term to include "official declarations of policy of an
 agency which are binding on officials and agencies to which they apply."
 /7/ In this regard, the purpose of the Circular is to establish Federal
 policy regarding the performance of commercial activities.  (See
 paragraph 1. Purpose, of the Circular.) The Circular and Supplement were
 promulgated pursuant to The Budget and Accounting Act of 1921 (31 U.S.C.
 1 et seq.) and The Office of Federal Procurement Policy Act Amendments
 of 1979 (41 U.S.C. 401 et seq.).  (See paragraph 3. Authority, of the
 Circular.) The Circular and Supplement provide administrative direction
 to heads of executive agencies.  (See paragraph 7. Scope, of the
 Circular.) The Circular seeks to ensure that its provisions and those of
 its Supplement are followed.  (See paragraph 9. Action Requirements, of
 the Circular.) Therefore, it must be concluded that the Circular and its
 Supplement establish official policy which is binding on agencies and
 officials in the executive branch of the Federal government and thus
 constitute a "rule or regulation" within the meaning of section
 7117(a)(1).  Consequently, the proposal is inconsistent with provisions
 of a "Government-wide rule or regulation." Thus, even if, as the Union
 claims, the proposal involves procedures which management will observe
 in the exercise of its right to make determinations with respect to
 contracting out under section 7106(a)(2)(B), it is outside the duty to
 bargain as inconsistent with a Government-wide rule or regulation under
 section 7117(a)(1) of the Statute.  /8/
 
    Accordingly, pursuant to section 2424.10 of the Authority's Rules and
 Regulations, IT IS ORDERED that the petition for review of Union
 Proposal 3 be, and it hereby is, dismissed.  /9/
 
                             Union Proposal 4
 
          6.  Any disputes concerning whether the provisions of this
       Article have been complied with shall be submitted to the
       grievance/arbitration procedure.  No contract shall be awarded
       until all grievances arising out of the contracting out decision
       have been resolved.  In addition, no contract shall be awarded
       until any appeal of the Department of Labor Wage Determination,
       under the Federal Contract Services Act, is resolved.
 
    Union Proposal 4 would include any dispute concerning compliance with
 provisions of "this Article," i.e., the collective bargaining agreement,
 within the scope and coverage of the negotiated grievance procedure.  In
 this regard, the proposal was proffered in the context of negotiations
 in which the Union attempted to establish substantive contractual
 limitations on management's authority to contract out under section
 7106(a)(2)(B) of the Statute, see Proposals 1 and 2 herein.  The Agency
 in essence contends the proposal must be excluded from the scope and
 coverage of the negotiated grievance procedure because it is
 inconsistent with Federal law, i.e., section 7106(a)(2)(B) of the
 Statute.  That is, according to the Agency, Union Proposal 4 is
 nonnegotiable under section 7106(a)(2)(B) because it would subject
 management determinations with respect to contracting out to challenge
 through the parties' negotiated grievance procedure.  The Authority
 agrees with the Agency that, based on the language of the proposal and
 the record, and contrary to Union statements that the proposal is only
 procedural in nature, the proposal provides that the scope of the
 negotiated grievance procedure would cover grievances concerning
 management determinations with respect to contracting out including the
 decision to contract out itself.  That is, by attempting to subject
 compliance with provisions of "this Article" to the negotiated grievance
 procedure in the context of these negotiations, the Union would have the
 management determinations themselves be subject to the negotiated
 grievance procedure.
 
    In American Federation of Government Employees, AFL-CIO, Local 3403
 and National Science Foundation, Washington, D.C., 6 FLRA 669 (1981),
 the Authority held a proposal providing for grievances challenging
 management determinations with respect to contracting out to be outside
 the duty to bargain under section 7106(a)(2)(B) of the Statute.  In that
 case, the Authority cited to its decision in American Federation of
 Government Employees, AFL-CIO, Local 1968 and Department of
 Transportation, Saint Lawrence Seaway Development Corporation, Massena,
 New York, 5 FLRA 70 (1981), enforced sub nom. AFGE, Local 1968 v. FLRA,
 691 F.2d 565 (D.C. Cir. 1982), cert. denied, 103 S.Ct. 2085 (1983), that
 no grievance procedure could be negotiated which would deny the
 authority of an agency to exercise its management rights under section
 7106.
 
    Thus, since Union Proposal 4 herein would extend the coverage of the
 negotiated grievance procedure to the decision to contract out itself,
 it is for the reasons set forth in National Science Foundation and Saint
 Lawrence Seaway Development Corporation inconsistent with section
 7106(a)(2)(B) of the Statute.  Therefore, this proposal is
 distinguishable from Proposal 1 which was held negotiable in American
 Federation of Government Employees, AFL-CIO, National Council of EEOC
 Locals and Equal Employment Opportunity Commission, 10 FLRA 3 (1982),
 enforced sub nom. EEOC v. FLRA, 744 F.2d 842 (D.C. Cir. 1984).  That
 proposal required management to exercise its right to make contracting
 out determinations in accordance with whatever applicable laws and
 regulations existed at the time of such action.  Hence, the Authority
 found the proposal contractually recognized external limitations on
 management's right but did not establish, either expressly or by
 incorporation, any particular substantive limitations on management and,
 thus, the Authority decided the proposal was not inconsistent with
 management's right "to make determinations with respect to contracting
 out" under section 7106(a)(2)(B) of the Statute.  In essence, Union
 Proposal 4, as mentioned above, requires that contracting-out decisions
 be made in accordance with provisions of the parties' collective
 bargaining agreement and the Union is seeking to include provisions in
 the parties' agreement which would establish substantive limitations on
 management's authority in this regard.  Thus, since the proposal, rather
 than being only procedural in nature as was the proposal in Equal
 Employment Opportunity Commission, would create substantive limitations
 on management's authority to contract out, it must be found it to be
 outside the duty to bargain.  /10/
 
    Accordingly, pursuant to section 2424.10 of the Authority's Rules and
 Regulations, IT IS ORDERED that the petition for review of Union
 Proposal 4 be, and it hereby is, dismissed.  Issued, Washington, D.C.,
 April 5, 1985
                                       Henry B. Frazier III, Acting
                                       Chairman
                                       William J. McGinnis, Jr., Member
                                       FEDERAL LABOR RELATIONS AUTHORITY
 
 
 
 
 
 
 --------------- FOOTNOTES$ ---------------
 
 
    /1/ Agency Statement of Position at 4.
 
 
    /2/ Section 7106(a)(2)(B) provides in part:
 
          Sec. 7106.  Management rights
 
          (a) Subject to subsection (b) of this section, nothing in this
       chapter shall affect the authority of any management official of
       any agency--
 
                                .  .  .  .
 
          (2) in accordance with applicable laws--
 
                                .  .  .  .
 
          (B) . . . to make determinations with respect to contracting
       out . . . (.)
 
 
    /3/ Accordingly, it is unnecessary to address the Agency's additional
 contentions that Proposals 1 and 2 are not within its duty to bargain.
 
 
    /4/ Section 7117(a)(1) provides:
 
          Sec. 7117.  Duty to bargain in good faith;  compelling need;
       duty to consult
 
          (a)(1) Subject to paragraph (2) of this subsection, the duty to
       bargain in good faith shall, to the extent not inconsistent with
       any Federal law or any Government-wide rule or regulation, extend
       to matters which are the subject of any rule or regulation only if
       the rule or regulation is not a Government-wide rule or
       regulation.
 
 
    /5/ See OMB Circular No. A-76 (Revised), paragraph 6f, and Part I,
 Chpt. 2, paragraph C of the Supplement (1983).
 
 
    /6/ See OMB Circular No. A-76 (Revised), paragraph 7. Scope.
 
 
    /7/ See National Federation of Federal Employees, Local 1497 and
 Department of the Air Force, Lowry Air Force Base, Colo., 9 FLRA 151
 (1982), at 154-55.
 
 
    /8/ In so deciding, th