17:0661(96)NG - AFGE Local 1923 and Health Care Financing Administration, Baltimore, MD -- 1985 FLRAdec NG
[ v17 p661 ]
The decision of the Authority follows:
17 FLRA No. 96 AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO, LOCAL 1923 Union and HEALTH CARE FINANCING ADMINISTRATION, BALTIMORE, MARYLAND Agency Case No. 0-NG-895 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 concerns the negotiability of one Union proposal. Upon careful consideration of the entire record, including the parties' contentions, /1/ the Authority makes the following determinations. Union Proposal If the Administration makes a cost comparison to determine the cost performance of work in-house versus performance by a contractor, the following criteria will apply to the in-house cost estimate: (1) Basic Wages used will be the actual basic wages of affected employees at the time of the cost study. (2) Fringe benefit factors used shall be the actual fringe benefit rates which pertain to the Administration's own true costs for affected employees at the time of the cost study. (3) Material and other costs shall be the actual costs to the Administration for the affected activity. (4) If any increases are computed in 1, 2, or 3 above to cover inflation, expansion of function, change of mission, etc., such increases shall be fair and reasonable. This proposal conflicts with the Agency's right to "make determinations with respect to contracting out" pursuant to section 7106(a)(2)(B) of the Statute. In this regard, the Authority has previously determined that the right of management officials to make determinations with respect to contracting out encompasses not only the right to take such action but also the right to engage in preliminary discussion and deliberation concerning the relevant factors upon which such determinations will be made. National Federation of Federal Employees, Local 1167 and Department of the Air Force, Headquarters, 31st Combat Support Group (TAC), Homestead Air Force Base, Florida, 6 FLRA 574 (1981) (Union Proposal 1), affirmed sub nom. National Federation of Federal Employees, Local 1167 v. Federal Labor Relations Authority, 681 F.2d 886 (D.C. Cir. 1982). Thus, the Authority has found proposals which prescribe standards to be utilized by management to evaluate the factors upon which a decision to contract out could be based to be nonnegotiable because they interfere with the agency's deliberative process. 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, 14 FLRA 302 (1984) (Proposals 1 and 2). Therefore, based on the reasons stated in Wurtsmith Air Force Base and Homestead Air Force Base, the disputed proposal herein which specifically prescribes the standards to be used in making various calculations for the cost comparison analysis, i.e., some of the factors upon which a decision to contract out could be based, is not within the duty to bargain. In addition, and contrary to the Union's assertions, the proposal conflicts with those portions of OMB Circular No. A-76 (hereinafter "the Circular"), which concern the development of the Performance Work Statement (PWS) which provides a comprehensive estimate of the costs of performing tasks through various courses of action and is the basis for the cost comparison between in-house and potential contract performance. Specifically, Section 1 of the Union proposal would require that the Agency use "actual basic wages of affected employees at the time of the cost study" in determining wage costs for the in-house estimate. However, Part 4, Chapter 2(D)(2) of the 1983 Supplement to the Circular (hereinafter "the Supplement") requires that the in-house staffing estimate be based on "the most efficient and effective organization" /2/ necessary to accomplish the task and makes it clear that such a staffing estimate might differ from the current staffing level of the Agency employees at the time of the study. /3/ Further, Part 4, Chapter 2(D)(3)(d) of the Supplement requires the Agency to use a Government-wide standard step rate (i.e., step 5 for GS employees and step 4 for FWS employees) or an average step rate in calculating the in-house wage cost rather than the actual step rates of affected employees. /4/ Thus, pursuant to the requirements of the Supplement, the wage figures used to develop the in-house portion of the PWS do not necessarily correspond to the actual wage costs of agency employees performing the work at the time of the study. Consequently, Section 1 of the proposal, which would require the Agency to use actual wage costs, is inconsistent with the Supplement. Section 2 of the Union proposal conflicts with Part 4, Chapter 2(D)(3)(g) of the Supplement which mandates that when making a cost comparison between in-house and potential contract performance an agency must use various formulas, called standard factors, which calculate the cost of various fringe benefits as a percentage of wages. /5/ For certain of these benefits, i.e., Medicare and FICA, the percentage formula represents the actual cost to the agency of providing the benefits. For others, most notably retirement contributions, the standard factors are only an estimate, based on Government-wide figures, of the cost of providing the benefit. Section 2 of the Union's proposal, however, would require the Agency to use actual costs in all cases to calculate fringe benefits rather than the standard factors mandated by the Supplement. See American Federation of Government Employees, AFL-CIO, Local 1622 and The Directorate Facilities and Engineering Department of the Army, Fort George G. Meade, Maryland, 17 FLRA No. 69 (1985). Section 3 of the proposal conflicts with Part 4, Chapter 2(E)(3) of the Supplement which requires that, when calculating the cost of materials and supplies, an additional percentage is to be added to the purchase price of materials acquired from other government agencies. /6/ This additional percentage is intended to account for the amount spent for acquisition and storage by the General Services Administration which is not included in the cost of the items. Therefore, as Section 3 of the proposal would require that the cost figures used for these materials be based solely on "actual costs" it is inconsistent with the mandate of the Supplement. Since Section 4 of the Union proposal is integrally related to Sections 1, 2 and 3 and cannot be considered separately from them, it is for all the reasons cited above, also inconsistent with the Supplement. Since the proposal is inconsistent with the Circular and its Supplement, it would be outside the duty to bargain if the Circular constitutes a "Government-wide rule or regulation" within the meaning of section 7117(a)(1) of the Statute. The Authority has previously determined that the Circular and its Supplement are Government-wide regulations within the meaning of the Statute. American Federation of Government Employees, AFL-CIO, Local 1622 and The Directorate Facilities and Engineering Department of the Army, Fort George G. Meade, Maryland, 17 FLRA No. 69 (1985); American Federation of Government Employees, Local 225, AFL-CIO and Department of the Army, U.S. Army Armament Research and Development Command, Dover, New Jersey, 17 FLRA No. 66 (1985) (Union Proposal 3). Consequently, the proposal is outside the duty to bargain under section 7117(a)(1) of the Statute. Accordingly, pursuant to section 2424.10 of the Authority's Rules and Regulations, IT IS ORDERED that the petition for review be, and it hereby is, dismissed. Issued, Washington, D.C., April 23, 1985 Henry B. Frazier III, Acting Chairman William J. McGinnis, Jr., Member FEDERAL LABOR RELATIONS AUTHORITY --------------- FOOTNOTES$ --------------- /1/ The Union claims that the Agency's statement of position was not timely filed and should not be considered by the Authority. The Agency states that the Union's petition for review was received on August 30, 1983. Pursuant to section 2424.6 of the Authority's Rules and Regulations, the Agency had 30 days after the date of receipt to file its statement of position. The Agency's statement, however, was not filed with the Authority until October 4, 1983, more than 30 days after receipt. Accordingly, the Agency's statement of position was untimely filed, and the Authority has not considered it herein. /2/ Part 4, Chapter 2(D)(2) of the Supplement provides, in relevant part: 2. In-House Staffing Estimate. Development of the in-house staffing estimate is a crucial step of the cost comparison process. The staffing estimate describes the most efficient and effective organization to accomplish requirements specified in the PWS. /3/ Part 4, Chapter 2(D)(2)(b) of the Supplement provides, in relevant part: b. (I)t is important that the estimated workload be based on the PWS and not necessarily on the current workload, staffing or work methods. If an existing manpower standard or staffing guide is used, it may be necessary to make upward or downward adjustments. The adjustments are necessary because existing standards or guides may be based on work elements or performance standards or describe work methods which may not be appropriate to accomplish the workload described in the PWS. If current staffing patterns are used, similar upward or downward adjustments may also be needed. /4/ Part 4, Chapter 2(D)(3)(d) of the Supplement provides, in relevant part: d. Annual Salary/Wages - (Column D). . . . Use current pay rates based on the Government-wide representative rate of step 5 for GS and step 4 for FWS employees, or, if available and deemed accurate, an organizationally determined average step within each grade. /5/ Part 4, Chapter 2(D)(3)(g) of the Supplement provides, in relevant part: g. Fringe Benefits or FICA-- (Column G). (1) Multiply the following Government-wide standard factors by the appropriate basic pay (column F). (a) The Government cost factor to be used for Federal employee retirement benefits, based on a dynamic normal cost projection for the Civil Service Retirement Fund, is 20.4 percent. (b) The Government cost factor to be used for Federal employee insurance (life and health) benefits, based on actual cost, is 3.7 percent, plus an additional 1.3 percent for Medicare up to annual salary limitations placed on employees covered under FICA. (c) The Government cost factor to be used for Federal employees workmen's compensation, bonuses and awards and unemployment programs is 1.9 percent. (2) The Federal Insurance Contributions Act (FICA) cost factor will be applied to applicable employees (normally intermittent employees). Be careful to apply the FICA rate only to wages and salaries subject to the tax; there is an annual salary limitation for FICA tax and new Federal employees will be affected by FICA taxes. /6/ Part 4, Chapter 2(E)(3) of the Supplement provides, in relevant part: 3. Pricing Material From Other Government Agencies. Costs associated with materials obtained from other agencies will also be added as a material mark-up to the material and supply cost. a. General Services Administration. In most instances, the prices charged by GSA for material do not include all the costs of the acquisition and storage functions performed by GSA. Since inclusion of these costs in GSA prices is not authorized by law, it will be necessary to adjust GSA prices for purposes of the cost estimates. Following is a description of the material and supply services provided by GSA together with mark-up rates to be applied to GSA prices: (1) Wholesale and Stores Direct Delivery. The wholesale program involves the distribution of common-use, commercially available items through a network of supply distribution facilities located throughout the United States. Also included is the Stores Direct Delivery Program. This program provides the same type of items carried in stock which, because of volume orders, are procured from the vendor for direct delivery to the requisitioner in instances when delivery time is not critical.