22:1071(106)NG - AFGE Local 1923 and HHS, Office of the Secretary, Office of the General Counsel, Baltimore, MD -- 1986 FLRAdec NG

 22 FLRA No. 106
 
 AMERICAN FEDERATION OF GOVERNMENT 
 EMPLOYEES, AFL-CIO, LOCAL 1923
 Union
 
 and
 
 DEPARTMENT OF HEALTH AND HUMAN SERVICES
 OFFICE OF THE SECRETARY
 OFFICE OF THE GENERAL COUNSEL
 BALTIMORE, MARYLAND
 Agency
 
                                            Case No. 0-NG-1216
 
                 DECISION AND ORDER ON NEGOTIABILITY ISSUE
 
                         I.  Statement of the Case
 
    This case is before the Authority because of a negotiability appeal
 filed under section 7105(a)(2)(E) of the Federal Service
 Labor-Management Relations Statute (the Statute) and concerns the
 negotiability of the following provision of a negotiated agreement
 disapproved by the Agency head pursuant to section 7114(c) of the
 Statute:  /1/
 
                           Article 13, Section 3
 
          The decision by the employer to contract out work presently
       being performed by bargaining unit employees will be made in
       accordance with OMB Circular A-76 (unless application of the
       Circular is prohibited or not required by the Circular).
 
                       II.  Positions of the Parties
 
    The Agency argues that the disputed provision conflicts with section
 7106(a)(2)(B) of the Statute which reserves exclusively to management
 the right to contract out, and subjecting management's contracting out
 determination to review by arbitrators would result in arbitrators
 rather than Federal agencies making substantive contracting out
 decisions.  At the very least, it is argued, the arbitral review process
 would delay the Agency's exercise of its right to contract out.
 Finally, the Agency argues that the provision is inconsistent with the
 exclusive appeal procedures contained in OMB Circular A-76, which should
 be viewed as a Government-wide rule or regulation within the meaning of
 section 7117(a)(1) of the Statute.
 
    In its response, the Union asserts that the disputed provision
 constitutes a negotiable procedure for management to follow in the event
 a decision is made to contract out, and cites Authority decisions to
 support its contention.
 
                              III.  Analysis
 
    The Agency's arguments in this case are essentially the same as those
 rejected by the Authority in finding a similar proposal negotiable in
 American Federation of Government Employees, AFL-CIO, National Council
 of EEOC Locals and Equal Employment Opportunity Commission, 10 FLRA 3
 (1982) (Union Proposal 1), enforced sub nom. EEOC v. FLRA, 744 F.2d 842
 (D.C. Cir. 1984), cert. dismissed, 54 U.S.L.W. 4408 (U.S. April 29,
 1986) (per curiam).  In the EEOC case, the Authority held that a
 proposal which required management to comply with applicable laws and
 regulations, and specifically OMB Circular A-76, in exercising its right
 to make contracting out determinations was not inconsistent with section
 7106(a)(2)(B) of the Statute because the proposal would only
 contractually recognize external limitations on management's right.  The
 proposal would not itself establish any particular substantive
 limitation on management in the exercise of that right.  The D.C.
 Circuit expressly agreed.  EEOC v. FLRA, 744 F.2d at 848-849.
 
    As for the Agency's further assertion that any contractual provisions
 which would subject management's contracting-out decisions to any type
 of grievance or arbitration review are nonnegotiable, the Authority in
 EEOC concluded that such contention also could not be sustained.  The
 Authority noted that the Statute and its relevant legislative history
 requires the grievance procedures negotiated under section 7121 of the
 Statute to cover all matters that under the provisions of law could be
 submitted to the grievance procedure unless the parties exclude them
 through bargaining.  The Authority also noted that the disputed proposal
 in EEOC would not change the statutorily prescribed scope and coverage
 of the parties' negotiated grievance procedure because, even in the
 absence of such a contractual provision, disputes involving conditions
 of employment arising from the application of OMB Circular A-76 would be
 covered by the negotiated grievance procedure.  The D.C. Circuit agreed,
 rejecting the Agency's contrary arguments as follows:
 
          The (Statute) expansively defines the subjects covered under
       the statutory grievance procedure.  Grievances include complaints
       concerning "any claimed violation, misinterpretation, or
       misapplication of any law, rule, or regulation affecting
       conditions of employment" as well as complaints "concerning any
       matter relating to the employment of the employee." 5 U.S.C.
       Section 7103(a) (9).  Only five subjects, not including the
       subject of contracting-out, are expressly excluded from coverage
       under the grievance mechanism.  An allegation that the EEOC failed
       to comply with the OMB Circular, or with any other law or rule
       governing contracting-out, plainly falls within this expansive
       definition.
 
                       . . . . . . .
 
 
          A grievance alleging noncompliance with the Circular, . . .
       does not affect management's substantive authority, within the
       meaning of the statutory language, to contract-out.  Rather, it
       provides a procedure for enforcing the (Statute's) requirement
       that contracting-out decisions be made in accordance with
       applicable law.  Any substantive limitation on management's
       authority stems from the externally established criteria contained
       in the Circular. . . .  We therefore find that a grievance
       asserting that management failed to comply with its statutory or
       regulatory parameters in making a contracting-out decision is not
       precluded by the management rights clause.  (footnotes omitted.)
 
    EEOC v. FLRA, 774 F.2d at 849-851.  /2/
 
    We also reject the Agency's argument that the disputed provision
 would delay the exercise of management's right to contract out.  Nothing
 in the provision would prevent management from reaching the decision to
 contract out or from implementing that decision.  In any event, as noted
 by the D.C. Circuit in EEOC v. FLRA, 774 F.2d at 850 n.19:
 
          Of course, any review of an agency decision, whether conducted