19:1032(121)CA - USCS and NTEU and all NTEU Customs Service Chapters -- 1985 FLRAdec CA
[ v19 p1032 ]
19:1032(121)CA
The decision of the Authority follows:
19 FLRA No. 121
UNITED STATES CUSTOMS SERVICE
Respondent
and
NATIONAL TREASURY EMPLOYEES UNION AND
ALL NATIONAL TREASURY EMPLOYEES UNION
UNITED STATES CUSTOMS SERVICE CHAPTERS
Charging Party
Case No. 3-CA-20772
DECISION AND ORDER
The Administrative Law Judge issued the attached Decision in the
above-entitled proceeding, finding that the Respondent had engaged in
certain unfair labor practices alleged in the complaint, and
recommending that it be ordered to cease and desist therefrom and take
certain affirmative action. Thereafter, the Respondent filed exceptions
to the Judge's Decision and an accompanying brief.
Pursuant to section 2423.29 of the Authority's Rules and Regulations
and section 7118 of the Federal Service Labor-Management Relations
Statute (the Statute), the Authority has reviewed the rulings of the
Judge made at the hearing and finds that no prejudicial error was
committed. The rulings are hereby affirmed. Upon consideration of the
Judge's Decision and the entire record, the Authority hereby adopts the
Judge's findings, conclusions and recommended Order only to the extent
consistent herewith.
The Judge found that (1) the Respondent bypassed the Charging Party
(the Union) in violation of section 7116(a)(1) and (5) of the Statute by
distributing, without prior notice to the Union, questionnaires to
certain unit employees which elicited their opinions and information
concerning an Employee Performance Appraisal System (EPAS); and (2) the
Respondent also violated section 7116(a)(1) and (5) of the Statute by
failing to bargain with the Union concerning the manner in which such
employees would participate in the development of EPAS. /1/ In reaching
such determination, the Judge first considered but rejected the
Respondent's defense that it did not violate the Statute because the
questionnaires herein were disseminated as part of an internal audit
alluded to in Government-wide rules and regulations designed to protect
the independence of the audit function, finding, inter alia, that the
subject audit was not conducted by an independent agency separated and
insulated from Customs Service supervision and control; nor was it
mandated by statute, Government-wide rule or regulation, by the Office
of Management and Budget, or by the Inspector General of the Treasury
Department.
The Respondent filed exceptions to the Judge's Decision, and in its
brief, essentially argues that the subject questionnaires were designed
for the purpose of gathering information for an internal audit of EPAS
by its Office of Management Integrity (OMI); that such audit was
subject to Government-wide rules and regulations designed to protect the
independence of the audit function; and therefore the distribution of
the questionnaires did not constitute a bypass or otherwise pose a duty
to bargain under section 7116(a)(1) and (5) of the Statute.
In agreement with the Judge, the Authority finds that the
audit/survey herein was not independent in nature noting particularly
that it was not conducted by an independent entity separated and
insulated from the Respondent's control, but rather was conducted by
representatives of the Respondent, and that certain employees not
assigned to OMI assisted the auditors in the conduct of the EPAS survey.
Notwithstanding this, the Authority finds, contrary to the Judge and
for the reasons set forth below, that the Respondent did not bypass the
Union in violation of the Statute by distributing the questionnaires
herein or by failing to bargain with the Union concerning the manner in
which unit employees would participate in the development of EPAS.
In Internal Revenue Service (District, Region, National Office
Units), 19 FLRA No. 48 (1985), the Authority, in considering whether the
agency's conduct therein in distributing questionnaires to unit
employees constituted an unlawful bypass of the exclusive
representative, stated:
(A)s part of its overall management responsibility to conduct
operations in an effective and efficient manner, an agency may
question employees directly provided that it does not do so in a
way which amounts to attempting to negotiate directly with its
employees concerning matters which are properly bargainable with
its employees' exclusive representative. In this regard, as the
Authority has previously noted, management must have the latitude
to gather information, including opinions, from unit employees to
ensure the efficiency and effectiveness of its operations.
The Authority concluded that the agency's conduct therein did not
constitute an unlawful bypass of the exclusive representative because
the questionnaires were an information gathering mechanism in connection
with the management function of studying its operations, and because
there was no indication that management attempted to deal or negotiate
directly with unit employees concerning their conditions of employment.
In the instant case, the Authority finds that the Respondent's
distribution of the questionnaires herein was not an improper direct
communication with its employees in derogation of its duty to bargain
with the Union. In this regard, the record reveals that in October
1981, the Respondent, pursuant to 5 U.S.C. 4302 established the EPAS for
its employees; that it later designed the subject questionnaires as an
information gathering mechanism in order to obtain information
concerning the implementation of the newly established performance
appraisal system, including the identification of problem areas in its
implementation as well as to determine if certain objectives were being
met; and that such information has been used in the preparation of a
draft report. Further, there is no indication in the record that
through the questionnaires the Respondent attempted to or changed any
condition of employment of the unit employees herein. Thus, the
Authority finds that in the circumstances of this case that the
Respondent's distribution of the subject questionnaires was not an
attempt to deal or negotiate directly with unit employees concerning
their conditions of employment, but rather was for the purposes of
gathering information on how the existing performance appraisal system
was working. /2/
Further, the Authority finds that the Respondent did not violate the
Statute by failing to bargain with the Union concerning the manner in
which unit employees would participate in the development of EPAS. In
reaching his decision, the Judge relied on Social Security
Administration, Baltimore, Maryland, 9 FLRA 909 (1982) wherein the
Authority found that the agency therein violated the Statute by failing
and refusing to give the Union an opportunity to negotiate over the
manner in which bargaining unit employees would participate in
establishing performance standards. The Authority disagrees, finding
such case to be inapposite. In that case, certain supervisors conducted
feedback meetings with unit employees concerning performance standards
in order to obtain input to formulate a proposal concerning performance
goals/standards where none had been established pursuant to 5 U.S.C.
4302. Here, as noted above, the record evidence reveals that the
subject performance appraisal system had been established prior to the
distribution of the questionnaires, and that the Respondent was not
attempting to negotiate with unit employees concerning the establishment
of performance standards, but rather was merely seeking the information
as to how the existing standards were working. In these circumstances,
as the employees were not participating in the establishment of
performance standards, the Respondent had no obligation to bargain
concerning the subject questionnaires.
Accordingly, the Authority concludes that the Respondent did not
violate section 7116(a)(1) and (5) of the Statute, and therefore shall
order that the complaint be dismissed in its entirety.
ORDER
IT IS ORDERED that the complaint in Case No. 3-CA-20772 be, and it
hereby is, dismissed in its entirety.
Issued, Washington, D.C., August 27, 1985
Henry B. Frazier III, Acting
Chairman
William J. McGinnis, Jr., Member
FEDERAL LABOR RELATIONS AUTHORITY
-------------------- ALJ$ DECISION FOLLOWS --------------------
Case No.: 3-CA-20772
Allan L. Martin, Esquire
Alfonso Robles, Esquire
For the Respondent
Peter A. Sutton, Esquire
Erica F. Cooper, Esquire
For the General Counsel
Joseph Kaplan, Esquire
John McEleney, Esquire
For the Charging Party
Before: LOUIS SCALZO
Administrative Law Judge
DECISION
Statement of the Case
This case arose as an unfair labor practice proceeding under the
provisions of the Federal Service Labor-Management Relations Statute, 92
Stat. 1191, 5 U.S.C. 7101 et seq. (hereinafter called "the Statute"),
and the Rules and Regulations issued thereunder.
The complaint alleged that in June of 1982, the United States Customs
Service (hereinafter called Respondent, Customs Service or Service),
unilaterally, and without prior notice to the National Treasury
Employees Union (hereinafter called Charging Party or Union) required
certain bargaining unit employees exclusively represented by the Union,
to respond to a 25-question questionnaire designed to elicit opinions
and information concerning an Employee Performance Appraisal System
(EPAS) /3/ instituted by the Respondent. It was further alleged that
such conduct constituted a bypass of the Union, and a failure and
refusal to bargain in good faith with the Union, in violation of
Sections 7116(a)(1) and (5) of the Statute.
Counsel representing the Respondent argues that the questionnaire
mailed to bargaining unit employees in this case was designed for the
sole purpose of gathering information for use in an internal audit of
EPAS by the Respondent's Office of Management Integrity, that the audit
was subject to government-wide rules and regulations promulgated by the
Comptroller General and the Office of Management and Budget; and that
because of these considerations the questionnaire did not constitute a
bypass of the Union, and did not otherwise pose a duty to bargain under
the Statute.
The parties were represented by counsel during the hearing and were
afforded full opportunity to be heard, adduce relevant evidence, and
examine and cross-examine witnesses. Based upon the entire record
herein, including a stipulation of facts, stipulated exhibits, other
relevant evidence adduced at the hearing, /4/ and briefs filed by the
parties, I make the following findings of fact, conclusions and
recommendations.
Findings of Fact
Facts Stipulated
The following stipulations of fact entered into the record are
accepted as true: /5/
1. The original charge was filed by the Union on September 15,
1982, and a copy thereof was served on Respondent, by certified
mail, on September 21, 1982.
2. The first amended charge was filed by the Union on December
9, 1982, and was served on Respondent, by certified mail, on
December 9, 1982.
3. The complaint and answer herein were issued and duly
served.
4. At all times material, the Union was a labor organization
within the meaning of Section 7103(a)(4) of the Statute.
5. At all times material, Respondent has been an agency within
the meaning of Section 7103(a)(3) of the Statute.
6. At all times material Mr. Allen W. Wilk occupied the
position of Area Director, Northwest Area, Office of Management
Integrity, United States Customs Service, and was, during such
periods, an agent of the Respondent and a supervisor or management
official within the meaning of Section 7103(a)(10) and (11) of the
Statute.
7. At all times material Mr. Eugene H. Mach occupied the
position of Regional Commissioner, Chicago Region, United States
Customs Service, and was during such periods, an agent of the
Respondent and a supervisor or management official within the
meaning of Section 7103(a)(10) and (11) of the Statute.
8. At all times material the Respondent recognized the Union
as the certified representative of professional and
non-professional bargaining units which included certain of
Respondent's employees.
9. Pursuant to 5 U.S.C. 4302, Respondent, in October of 1981,
established EPAS.
10. On or about June 3, 1982, Mr. William Inch, Respondent's
agent and an Auditor-In-Charge, distributed a questionnaire
relating to EPAS to approximately 300 randomly selected bargaining
unit employees of Respondent's Chicago and San Francisco Regions,
in accordance with a June 3, 1982 memorandum addressed to
"Selected Employees" in the Chicago and San Francisco Regions by
Mr. Wilk (Jt. Exh. 5).
11. The EPAS questionnaire was issued by Respondent's Office
of Management Integrity as part of a "survey/audit" of EPAS being
conducted by the Office of Management Integrity.
12. The EPAS questionnaire was distributed to bargaining unit
employees without prior notice to, or the consent of, the Union.
Nature of Questions Addressed to Bargaining Unit Employees
In addition to stipulations outlined, the record disclosed, that of
the 25 questions included in the questionnaire (Jt. Exh. 5), Questions 1
through 5 were designed to elicit data concerning the date employees
surveyed were first introduced to EPAS, the source of introductory
information about the program, the quality of the introduction, and
whether employees surveyed had previously read prepared printed material
about EPAS. Question 6 was designed to obtain an evaluative comparison
between EPAS and the employee rating system which had preceded EPAS.
Questions 7 and 8 constituted inquiries concerning the nature of views
held about EPAS by supervisors; and Questions 9 through 12 were
designed to obtain a detailed evaluation of EPAS as implemented by
management. Question 13 was structured to obtain employee views
concerning the most desirable method of developing employee performance
plans. Questions 14 through 19 sought employee evaluations of the
presentation of progress reviews by supervisors. Questions 20 and 21
concerned the issue of whether EPAS provided an adequate vehicle for
discussing work performance with supervisors. Questions 22 through 24
pertained to employee evaluation of the progress review phase of EPAS;
and Question 25 was designed to obtain employee perceptions of
administrative action which might flow from poor performance under EPAS.
/6/
Customs Service Internal Audit Function
Relevant portions of the United States Customs Service Policies and
Procedures Manual (Jt. Exh. 6, hereinafter called "Customs Manual")
disclose that the Assistant Commissioner (Office of Management
Integrity) was the official responsible for the Office of Management
Integrity. /7/ The Office of Management Integrity was responsible for
the performance of an "Internal Audit function," as a service to Customs
Management (Jt. Exh. 6, at 1311.1A). It was comprised of the Internal
Audit and Internal Security Divisions, a Management Inspection Staff,
and four Area Management Integrity Offices in the field. /8/
The Director of the Internal Audit Division, under the general
supervision of the Assistant Commissioner (Management Integrity), was
responsible for the development and establishment of a nationwide
internal audit strategy for the Service. /9/ Under the general
supervision of the Area Director (Management Integrity), the Assistant
Area Director (Internal Audit) was responsible for the execution of the
audit program in the respective areas (Jt. Exh. 6 at 1311.1C). All of
these offices were situated in the chain of command leading directly to
the Commissioner of Customs (Tr. 51). All offices were staffed with
Customs employees (Tr. 28), and the Assistant Commissioner (Office of
Management Integrity) reported directly to the Commissioner (Tr. 25).
Area Directors were not subject to Regional Commissioners of the Customs
Service, the principal Customs Service field officers (Tr. 26). They
reported directly to the Assistant Commissioner (Management Integrity)
(Tr. 26).
The internal audit function was subject to the Customs Manual. It
was not disputed that the internal audit function provided in the
Customs Manual was organized to comply with the statutory mandate
reflected in Section 113 of the Budget and Accounting Procedures Act of
1950, 31 U.S.C. 66a. This Act provides that the systems implemented by
executive agencies "shall conform to the principles, standards and
related requirements prescribed by the Comptroller General . . . . " (31
U.S.C. 66a(b)). These are set forth in a pamphlet entitled, "Standard
for Audit of Governmental Organizations, Programs, Activities and
Functions (1981 Revision), (Jt. Exh. 11, hereinafter called "Comptroller
General Standards").
In addition to the foregoing standards the Service's internal audit
function was organized to comply with Treasury Department Directives
contained in the Department of the Treasury Directives Manual, TD 15-02,
which "prescribes the Department of the Treasury's internal audit
policies, outlines the responsibilities of Treasury's bureaus to develop
and maintain audit systems within the framework of departmental policies
and Federal audit standards, and imposes reporting requirements on the
bureaus." (Jt. Exh. 9, hereinafter called "Treasury Directives Manual").
As set forth in the Treasury Directives Manual, the conduct of federal
internal audits are subject to policies promulgated by the Office of
Management and Budget (OMB) as contained in Revised OMB Circular No.
A-73, dated March 15, 1978 (Jt. Exh. 10, hereinafter called "OMB
Circular No. A-73").
A study of the Comptroller General Standards, OMB Circular No. A-73,
Treasury Directives Manual, and Customs Manual, reflects an intent to
insulate those performing audit functions from those entities being
audited. This goal is designed to help insure the independence and
integrity of audit results. However, these documents also reflect that
such independence is not always possible in situations involving
internal audits.
Comptroller General Standards provide that:
In all matters relating to the audit work, the audit
organization and the individual auditors, whether government or
public, must be free from personal or external impairments to
independence, must be organizationally independent, and shall
maintain an independent attitude and appearance (Jt. Exh. 11 at
17).
The high goal reflected above is not always met, as the Standards
also detail the clear possibility of personal, external, and
organizational impairments to the audit function (Jt. Exh. 11 at 18-20).
Under the heading "Internal auditors," the Standards note that "(a)
Federal, state, or local government auditor may be subject to policy
direction from persons involved in the government management process."
(Jt. Exh. 11 at 19-20). The Standards suggest a methodology for
reducing the impact of impairments, and removing them in whole or in
part, but do not require compliance with the high standard quoted in
connection with the implementation of the internal audit function.
The Comptroller General Standards and OMB Circular No. A-73 both
state that the internal audit function should be organizationally
located outside the staff or line management function of the unit under
audit. (Jt. Exh. 11 at 19, Jt. Exh. 10 at 2-3). However, optimum
realization of this goal is not required in that the audit of the EPAS
Program in the Chicago and San Francisco Regions constituted an audit of
organizational components at the Regional Commissioner level. Regional
activities would necessarily be the appropriate concern and
responsibility of the Commissioner of Customs, and both Regional
Commissioners, and the entire internal audit function, were
organizationally located below the Commissioner of Customs. The
following statement from the Comptroller General Standards reflects a
clear recognition of this dependency in connection with the distribution
of internal audit reports pertaining to the audit of program results:
Internal auditors should follow their entity's own
arrangements. Usually, they report to their entity's top
management and the entity is responsible for distribution of the
report (Jt. Exh. 11 at 49). /10/
The Treasury Directives Manual places on Bureau heads, responsibility
for "(d)eveloping and maintaining an effective internal audit system
within their bureau(s) . . .." (Jt. Exh. 9 at 3). This policy also
illustrates the merger of internal audit and management functions.
The Customs Manual refers to the necessity of a mantle of
independence for Service auditors (Jt. Exh. 6 at 6). Again, this
standard was not mandated. That is, the placement of the audit function
was theoretically designed to effect a separation from those responsible
for the management of Customs activities; however, there was a merger
of functions at the higher levels; and as will be detailed hereinafter,
there was close cooperation between operations management and auditors
at the level where the EPAS audit was implemented.
Agencies are, under the general criteria set forth in OMB Circular
No. A-73, and Comptroller General Standards, required to develop annual
internal audit plans. Audit targets for inclusion in such plans are
conceived at various locations throughout the Customs Service (Tr. 31).
The process of developing the Service's annual plan was described by Mr.
Paul R. Frey, Director of the Internal Audit Division, in the following
terms:
We have developed in the Internal Audit Division what we call
an audit universe. It lists all the areas in the Customs Service
that we would review. It's comprised of approximately 274 areas.
The areas are selected by the field people and headquarters people
based on the newness of the program and the cost of the program,
the risk involved, and abuse of the program, the objectivity of
the program . . . . (Tr. 32).
Possible audit targets are considered at the Internal Audit Division
level of the Service, and are culled for inclusion in the audit plan
(Tr. 20, 29, 32). These plans are approved at the Assistant
Commissioner level, and by the Inspector General of the Department of
the Treasury. /11/ They are then assigned to the field for
implementation (Tr. 20, 31).
The testimony of Respondent's witnesses established that internal
audit reports issued pursuant to the annual audit plan are prepared with
management concerns and management functions in mind (Tr. 43). They are
designed for decision making purposes within the Customs Service (Tr.
43), and efforts are made to issue reports which are material, relevant
and useful to management in the administration of the Customs Service
(Tr. 58, 68). Specific recommendations as to what action Customs
management should take are included in these reports (Tr. 56-57).
Although those directly involved in the audit function do not mandate
action on the basis of such reports, the fruits of their labors are
utilized as a basis for decisions made at the highest levels of the
Customs Service. They are distributed down through chains of command
for appropriate action (Tr. 33, 38, 44-45, 57-58). Internal audit
reports would be prepared upon request of the Commissioner of Customs
(Tr. 67-68). The results of these reports are designed for use solely
within the Customs Service (Tr. 79).
Additional documentary evidence showing high-level Customs Service
management participation in the internal audit function is reflected at
numerous points in the Customs Manual (Jt. Exh. 6 at 13.11.1B, D;
1311.2A, B; 1311.3B; 1311.4A, B, C; 1311.5A, D, E, F; 1311.7B, C(1),
(2), (3); 1311.8A, B; 1311.10A, B, C. D; 1311.11; 1311.12A, B; and
1311.15). Other references indicating that internal auditing is
performed as a service to management are reflected in the Treasury
Directives Manual (Jt. Exh. 9 at 5a; 6; 7b(5)), in OMB Circular No.
A-73 (Jt. Exh. 10 at 6a; 7a; 7b(5)); and in Comptroller General
Standards (Jt. Exh. 11 at i (fourth paragraph)); 6 (Scope of Audit
Work, last paragraph); 14 (last paragraph); 19 (last paragraph); 27
(2a, last paragraph); 39 (last paragraph); 49 (second paragraph).
The Audit of EPAS
Specific details relating to factors relied upon as a basis for
justifying the internal audit of EPAS do not appear in the record. This
fact was acknowledged by counsel representing the Respondent (Tr. 53);
and Mr. William F. Inch, the senior auditor responsible for the audit,
related that he could not testify concerning the subject (Tr. 80). Mr.
Frey and Mr. Inch did state that the audit was approved under
"determination of audit priorities" criteria reflected in OMB Circular
No. A-73, on the ground that EPAS was a new program (Tr. 32, 37, 75).
It was acknowledged that management's concern and interest was deemed a
factor in the selection of EPAS as an audit target (Tr. 43). /12/ The
audit was not required by statute or regulation, and was not mandated by
OMB or by the Inspector General of the Treasury Department (Tr. 59-60).
It was undertaken as a discretionary review by the Customs Service (Tr.
54, 78). /13/ It was specifically designed to be of assistance to the
Customs Service (Tr. 37), to gain information for management concerning
the implementation of EPAS (Tr. 74, 104), and to "identify problem areas
in (the) implementation" of EPAS (Tr. 105).
The questionnaire underlying the complaint was developed in May of
1982 (Tr. 89, 96). Although counsel representing the Respondent
endeavored to show that the content of questions posed emanated solely
from Internal Audit Division personnel (Tr. 25, 59, 65), the record
clearly indicated effectuation of management purposes. This is
evidenced by the June 3, 1982 memorandum from Northwest Area Director
Allen W. Wilk, which forwarded what was termed "the first" of a series
of questionnaires to bargaining unit employees in the Chicago and San
Francisco Regions. The memorandum to bargaining unit employees
contained the following statements:
Your Regional Commissioner is aware of this audit, supports the
intent of the audit and looks forward to the audit results. Your
candid response to the questionnaire is expected as though the
survey audit was being conducted on a face-to-face basis. /14/ A
copy of your Regional Commissioner's Memorandum expressing his
commitment to our review is attached. /15/
Bargaining unit employees selected to participate in the Chicago and
San Francisco Regions received, with the memorandum from Mr. Wilk, a
copy of a memorandum which their respective Regional Commissioners in
Chicago and San Francisco had previously utilized to forward EPAS
questionnaires to supervisory employees under their jurisdiction. /16/
The Regional Commissioner memorandums supplied to bargaining unit
employees reflected that Regional Commissioner interests were tightly
intertwined with those performing the internal audit of EPAS. They
stated:
This survey/audit will permit you to give factual information
on implementation, costs, and other candid information regarding
EPAS. Your honesty in response to the survey questionnaires will
help management determine the effectiveness of the EPAS and
provide feedback for any changes that may be necessary to make the
system as cost effective and practical as possible.
As a manager I look forward to the final audit report which
will summarize the combined responses of over 300 employees
randomly selected from within the Chicago and San Francisco
Regions.
I whole-heartedly support this survey/audit and have expressed
to the Office of Management Integrity my willingness to
participate in any way possible and the positive attitude toward
this survey that I expect employees of this region to demonstrate.
Other evidence in the record supports a finding that Mr. Inch and
those associated with him worked very closely with management elements
of the Customs Service in developing the questions used in the survey
sent to bargaining unit employees. It was admitted that the questions
were, in part, phrased for the purpose of determining whether
established Customs Service policies and procedures were being followed
(Tr. 24); and further that the questions were developed with the
assistance of a Mr. Mike Megillicuttie (phonetic), a labor relations
specialist assigned to the Personnel Office serving the Service's
Chicago Region (Tr. 76, 79-80, 87, 93, 103).
The Personnel Office was under the control of the Regional
Commissioner (Tr. 87), and Mr. Megillicuttie was deeply involved in the
implementation of EPAS policy and procedures in the Chicago Region (Tr.
87-88). He was referred to Mr. Inch by the Regional Commissioner or his
representative as the individual responsible for EPAS in the Region (Tr.
89). /17/
Mr. Inch worked with Mr. Megillicuttie for one week preparing the
questions (Tr. 88). The latter also provided assistance with respect to
similar questionnaires addressed to supervisory employees (Tr. 96-97).
The purpose of the consultation was to provide management with an
opportunity to receive information which management considered relevant
and useful to the EPAS program and the Customs Service (Tr. 88,
104-105).
Discussion and Conclusions
A threshold question posed in this case relates to the issue of
whether the Respondent may be absolved from wrongdoing by reason of the
fact that the questionnaires were disseminated as part of an internal
audit alluded to in government-wide rules and regulations designed to
protect the independence of the audit function. The audit in question
was not conducted by an independent agency separated and insulated from
Customs Service supervision and control; nor was the audit mandated by
statute, government-wide rule or regulation, by the OMB, or by the
Inspector General of the Treasury Department. Those in control of the
internal audit function in this case were under the direct jurisdiction
and operational supervision of Customs Service top management, and
high-level management in the Service fully participated in the internal
audit of EPAS. It was also clear that Comptroller General Standards,
OMB Circular No. A-73, the Treasury Directives Manual, and the Customs
Manual, all contemplated a distinction between the internal audit
function such as was involved here, and audits performed by entities
entirely separate and distinct from the agency being audited. In this
case management interests and concerns were a primary focus of the
audit, and questions were specifically designed for management's use
within the Customs Service.
The audit in this case was jointly performed by auditors assigned to
the Internal Audit Division and Customs Service management officials
and/or their representatives. It is immaterial that auditors were
assigned the actual task of preparing the audit report. They were
closely tied to, and worked in full cooperation with Customs Service
management in order to produce a questionnaire which would be of
significant value to management. Based on the foregoing a defense
predicated upon the independent nature of the internal audit function
must be rejected. /18/
In a series of cases dealing with the issue of whether a
communication amounts to an attempt to bypass an exclusive
representative, the Authority has expressly, and by implication, adapted
the following criteria articulated in Department of the Navy, Naval Air
Station, Fallon, Nevada, A/SLMR No. 432, FLRC No. 74A-80, 3 FLRC 697
(1975), as a basis for deciding whether a bypass exists under the
Statute:
In determining whether a communication is violative of the
Order, it must be judged independently and a determination made as
to whether that communication constitutes, for example, an attempt
by agency management to deal or negotiate directly with unit
employees or to threaten or promise benefits to employees. In
reaching this determination, both the content of the communication
and the circumstances surrounding it must be considered. More
specifically, all communications between agency management and
unit employees over matters relating to the collective bargaining
relationship are not violative. Rather communications which, for
example, amount to an attempt to bypass the exclusive
representative and bargain directly with employees, or which urge
employees to put pressure on the representative to take a certain
course of action, or which threaten or promise benefits to
employees are violative of the Order. /19/
The facts of this case clearly indicate an attempt by management to
negotiate directly with bargaining unit employees. The questionnaire
was designed to elicit individual employee evaluation of a significant
condition of employment, that is, the existing performance appraisal
system; to obtain details of how the system impacted on individual
employees; to obtain employee suggestions or recommendations concerning
further development of the appraisal program; and to surface employee
complaints pertaining to performance appraisal policy implemented as
part of an effort to resolve or allay complaints. The record indicated
that responses received were intended to form the basis of a
management-sponsored audit report to be disseminated to management
officials for action; and further that the Respondent intended to
utilize employee responses received to make "changes that may be
necessary" (Jt. Exh. 5). /20/
Section 7114(a)(1) of the Statute provides that "(a) labor
organization which has been accorded exclusive recognition is the
exclusive representative of the employees in the unit it represents and
is entitled to act for, and negotiate collective bargaining agreements
covering, all employees in the unit." This entitlement requires that as
to "conditions of employment," as defined in 7103(a)(14), management's
"collective bargaining" /21/ be with the exclusive representative. /22/
To engage in collective bargaining directly with unit employees
contradicts the obligation to negotiate in good faith with the labor
organization that is the exclusive representative. International
Communication Agency, supra.
Here the questionnaires disseminated to bargaining unit employees
effectively bypassed the Union and constituted a breach of the
Respondent's obligation to bargain in good faith. It undermined and
impaired the Union's status as the exclusive representative. The bypass
resulted in direct bargaining with employees, and was in derogation of
the Union's rights as the exclusive representative. Accordingly, it is
concluded that the conduct violated Sections 7116(a)(1) and (5).
In addition to the foregoing the Authority has held that performance
appraisal systems, apart from the identification of critical elements,
and the establishment of performance standards, are within the duty to
bargain to the extent that they are consistent with law and regulation.
National Treasury Employees Union, 3 FLRA No. 119, 3 FLRA 768 (1980),
affirmed 691 F.2d 553 (D.C. Cir. 1982); American Federation of
Government Employees, AFL-CIO, Local 32, 3 FLRA No. 120, 3 FLRA 783
(1980). This case involved unilateral questioning of bargaining unit
employees concerning details of the implementation of a performance
appraisal system instituted under 5 U.S.C. 4302, for the purpose of
assisting management in determining whether changes in the system should
be instituted, and if so, for the purpose of helping management to
determine the nature of such changes. Respondent admitted that the
questionnaire was distributed to 300 randomly selected unit employees
without prior notice to the Union. This conduct was also violative of
Sections 7116(a)(1) and (5) because it effectively determined, without
Union participation, the manner in which employees in the unit would
participate in the development of a performance appraisal system, and
thus deprived the Union of the right to bargain with respect to the
manner in which employees in the unit would participate in the
development of the system. Social Security Administration, Baltimore,
Maryland, supra at note 19.
Having found that the Respondent violated Sections 7116(a)(1) and (5)
of the Statute, it is recommended that the Authority issue the following
Order:
ORDER
Pursuant to Section 2423.29 of the Federal Labor Relations
Authority's Rules and Regulations, and Section 7118 of the Statute, the
Authority hereby orders that United States Customs Service, shall:
1. Cease and desist from:
(a) Bypassing the National Treasury Employees Union, the
exclusive representative of units of its employees, and dealing
directly with unit employees, by requesting them to respond to
questionnaires soliciting employee opinions concerning personnel
policies and practices, and matters affecting working conditions.
(b) Utilizing, in the absence of agreement with the National
Treasury Employees Union, responses received from bargaining unit
employees in reply to questionnaires disseminated to unit
employees during audit of the Employee Performance Appraisal
System instituted in the Chicago and San Francisco Regions of the
United States Customs Service.
(c) Failing or refusing to negotiate with the National Treasury
Employees Union, the exclusive representative of units of its
employees, concerning the manner in which unit employees will
participate in the development of the Employee Performance
Appraisal System initiated by the United States Customs Service.
(d) In any like or related manner interfering with, restraining
or coercing employees in the exercise of rights assured by the
Federal Service Labor-Management Relations Statute.
2. Take the following affirmative action in order to effectuate the
purposes and policies of the Federal Service Labor-Management Relations
Statute:
(a) Notify and, to the extent consonant with law and
regulation, bargain upon request with the National Treasury
Employees Union, the exclusive representative of units of its
employees, concerning the manner in which unit employees
participate in the development of the Employee Performance
Appraisal System initiated by the United States Customs Service.
(b) Post at all its facilities in the Chicago and San Francisco
Regions of the United States Customs Service wherein bargaining
unit employees are located, copies of the attached Notice on forms
to be furnished by the Federal Labor Relations Authority. Upon
receipt of such forms, they shall be signed by the Commissioner,
United States Customs Service, and shall be posted and maintained
by him for 60 consecutive days thereafter, in conspicuous places,
including all bulletin boards and other places where notices are
customarily posted. Reasonable steps shall be taken to insure
that said notices are not altered, defaced, or covered by any
other material.
(c) Pursuant to Section 2423.30 of the Authority's Rules and
Regulations, notify the Regional Director of Region III, Federal
Labor Relations Authority, 1111 - 18th Street, N.W., Room 700,
P.O. Box 33758, Washington, D.C. 20033-0758, in writing, within
30 days from the date of this Order, as to what steps have been
taken to comply herewith.
LOUIS SCALZO
Administrative Law Judge
Dated: May 24, 1983
Washington, D.C.
APPENDIX
NOTICE TO ALL EMPLOYEES
PURSUANT TO A DECISION AND ORDER OF THE FEDERAL LABOR
RELATIONS
AUTHORITY AND IN ORDER TO EFFECTUATE THE POLICIES OF CHAPTER 71
OF TITLE
5 OF THE UNITED STATES CODE FEDERAL SERVICE LABOR-MANAGEMENT
RELATIONS
STATUTE We Hereby Notify Our Employees That:
WE WILL NOT bypass the National Treasury Employees Union, the exclusive
representative of units of our employees, and deal directly with unit
employees, by requesting them to respond to questionnaires soliciting
employee opinions concerning personnel policies and practices, and
matters affecting working conditions. WE WILL NOT, in the absence of
agreement with the National Treasury Employees Union, utilize responses
received from bargaining unit employees in reply to questionnaires
disseminated to unit employees during audit of the Employee Performance
Appraisal System instituted in the Chicago and San Francisco Regions of
the United States Customs Service. WE WILL NOT, in any like or related
manner interfere with, restrain, or coerce our employees in the exercise
of rights assured by the Federal Service Labor-Management Relations
Statute. WE WILL notify, and to the extent consonant with law and
regulation, bargain upon request with the National Treasury Employees
Union, the exclusive representative of units of our employees,
concerning the manner in which bargaining unit employees participate in
the development of the United States Customs Service's Employee
Performance Appraisal System.
(Agency or Activity)
Dated: . . . By: (Signature) This Notice must remain posted for 60
consecutive days from the date of posting, and must not be altered,
defaced or covered by any other material. If employees have any
questions concerning this Notice, or compliance with any of its
provisions, they may communicate directly with the Regional Director,
Region III, Federal Labor Relations Authority, whose address is: 1111 -
18th Street, N.W., Room 700, P.O. Box 33758, Washington, D.C.
20033-0758, and whose telephone number is: (202) 653-8507.
--------------- FOOTNOTES$ ---------------
/1/ Section 7116(a)(1) and (5) of the Statute provides:
Sec. 7116. Unfair labor practices
(a) For the purpose of this chapter, it shall be an unfair
labor practice for an agency--
(1) to interfere with, restrain, or coerce any employee in the
exercise by the employee of any right under this chapter;
. . . .
(5) to refuse to consult or negotiate in good faith with a
labor organization as required by this chapter(.)
/2/ See also, Department of Health and Human Services, Social
Security Administration, 19 FLRA No. 56 (1985).
/3/ EPAS was instituted in October of 1981 after collective
bargaining between the Union and the Respondent (Tr. 14).
/4/ Counsel representing the General Counsel moved to correct the
transcript as follows:
Page Line From To
107 3 legal illegal
111 7 Kaiser Slot Kaiserslautern
The motion to correct is granted.
/5/ Jt. Exh. 1.
/6/ As of the date of the hearing the final internal audit report of
EPAS was incomplete (Tr. 34). However, responses from bargaining unit
members had been received, and a draft copy of the audit report had been
prepared (Tr. 35-36, 76-77).
/7/ This organizational component has been renamed. As of the date
of the hearing it was known as the Office of Internal Affairs (Tr.
46-47).
/8/ The Internal Security Division and Management Inspection Staff
had no responsibility for mailing the questionnaires to bargaining unit
employees, and neither was otherwise associated with the audit relating
to EPAS. Similarly, only the Area Director (Management Integrity),
Northwest Area, was concerned with the audit, as the survey was mailed
to selected employees in the Chicago and San Francisco Regions, both of
which were situated within the area of responsibility assigned to the
Area Director for the Northwest Area.
/9/ As a member of the Assistant Commissioner's staff the performance
of the Director of the Internal Audit Division was subject to evaluation
by the Assistant Commissioner (Tr. 24). The Director derived his
appointment from the Commissioner of the Customs Service (Tr. 66), as
distinct from some other independent entity charged with oversight
responsibility over Customs Service activities.
/10/ In contrast, audit reports of program results prepared by truly
independent entities would routinely be distributed to as many
interested officials as practicable, and appropriate distribution would
be expected of those responsible for the audit function (Jt. Exh. 11 at
48).
/11/ Under Department of the Treasury Order 101-15, dated February
27, 1980, the Inspector General, pursuant to a delegation of authority
from the Secretary of the Treasury, is given authority to review and
approve annual audit plans submitted by Department of the Treasury
bureau offices (Jt. Exh. 7). Also, Treasury Order 101-15 requires
Treasury officials holding key inspection and audit positions to report
to the Inspector General "in addition to their present reporting
responsibilities." The Service's Assistant Commissioner (Management
Integrity) was identified as one such official having a dual reporting
responsibility. The Inspector General also routinely receives copies of
completed internal audits (Tr. 49-50). However, the Inspector General
does not supervise the day to day operations of the Assistant
Commissioner, and merely has general oversight responsibility involving
standards and policies (Tr. 42).
Although the Inspector General possesses authority to veto a
scheduled audit encompassed in an annual audit plan, Mr. Frey was not
aware of this ever happening (Tr. 43). It was brought out that the
Service performs about 70 audits each year, and that Customs is only one
of 13 Treasury bureaus that report to the Inspector General (Tr. 43).
As a result the Inspector General, pursuant to his general oversight
authority in the audit and inspection field, receives a large number of
annual audit plans with a larger number of proposed audits embraced
within each plan.
/12/ OMB Circular No. A-73 provides that in determining audit
priorities agencies will, among other factors, consider, "(n)ewness . .
. of . . . program, activity or function;" and "(m)anagement needs to be
met, as developed in consultation with the responsible program officials
. . . . "
/13/ Responsibility for the evaluation of performance appraisal
systems established under 5 U.S.C. 4302, is specifically reposed in the
Comptroller General and the Office of Personnel Management by reason of
the provisions of 5 U.S.C. 4304.
/14/ The record established that although the questionnaire was
mailed to named individuals, those responding were not required to
identify themselves (Tr. 72). Responses were not coded to identify
individual employees (Tr. 85). The Respondent was not aware of the
identity of those who did respond (Tr. 74).
/15/ As previously noted, Regional Commissioners of Customs are the
principal field officers in the Customs Service (Tr. 26).
/16/ Similar questionnaires were also prepared for dissemination to
supervisors (Jt. Exh. 5, Tr. 90-92, 96-97). Jt. Exh. 5 includes a
memorandum dated September 22, 1981, signed by Mr. Eugene H. Mach, the
Regional Commissioner in Chicago. A substantially similar memorandum
was sent on or about the same date by the San Francisco Regional
Commissioner to supervisory employees in the San Francisco Region (Tr.
91). Bargaining unit employees receiving Mr. Wilk's June 3, 1982
memorandum received copies of Regional Commissioner memorandums utilized
in their respective regions (Tr. 91-92).
/17/ Mr. Inch was somewhat vague about the identity of the management
official who referred him to Mr. Megillicuttie. However, it appeared
that either the Regional Commissioner, or someone at the Regional
Commissioner level was contacted by Mr. Inch, and that Mr. Megillicuttie
was identified as the appropriate person to work with (Tr. 89). The
Regional Commissioner was briefed concerning the audit, and was aware of
developments concerning the subject (Tr. 103-104).
/18/ In light of the factual picture presented, it is unnecessary to
decide whether a different result would have been obtained had the audit
function been performed by an independent agency.
/19/ Department of Health, Education and Welfare, Social Security
Administration, Bureau of Retirement and Survivors Insurance,
Northeastern Program Service Center, 1 FLRA No. 59, 1 FLRA 508 (1979);
United States Department of the Air Force, 47th Air Base Group (ATC),
Laughlin Air Force Base, Texas, 4 FLRA No. 65, 4 FLRA 469 (1980);
Division of Military and Naval Affairs, State of New York, Albany, New
York, 8 FLRA No. 71, 8 FLRA 307 (1982); Iowa National Guard and
National Guard Bureau, 8 FLRA No. 101, 8 FLRA 500 (1982);
Kaiserslautern American High School, Department of Defense Dependents
Schools, Germany North Region, 9 FLRA No. 28, 9 FLRA 184 (1982); Social
Security Administration, Baltimore, Maryland, 9 FLRA No. 124, 9 FLRA 909
(1982); Department of Health and Human Services, Social Security
Administration, Bureau of Field Operations, San Francisco, California,
10 FLRA No. 24, 10 FLRA 115 (1982); Internal Revenue Service (District,
Region, National Office Unit), 11 FLRA No. 23, 11 FLRA 69 (1983). The
rules outlined have also been adopted by the Foreign Service Labor
Relations Board in International Communications Agency, Case No.
3-CA-2861(F) (1982).
/20/ The facts of this case closely pattern those in Department of
Health, Education and Welfare, Social Security Administration, Bureau of
Retirement and Survivors Insurance, Northeastern Program Center, supra
at note 19; Social Security Administration, Baltimore, Maryland, supra
at note 19; and International Communications Agency, supra at note 19.
Bypass cases cited by the Respondent in opposition are all
distinguishable as cases clearly involving facts not pertaining to
bypass within the meaning of rules articulated in Authority decisions.
/21/ The term "collective bargaining" is defined in part by Section
7103(a)(12) as "performance of the mutual obligation of the
representative of an agency and the exclusive representative of
employees in an appropriate unit in the agency to . . . consult and
bargain in a good faith effort to reach agreement with respect to the
conditions of employment affecting such employees . . . . "
/22/ The statement of employee rights outlined in Section 7102 of the
Statute includes the right "to engage in collective bargaining with
respect to conditions of employment through representatives chosen by
employees . . . . "