[ v22 p1071 ]
22:1071(106)NG
The decision of the Authority follows:
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
by the courts or through a contractual grievance mechanism, may
cause some delay. This court has previously recognized that a
proposal that may result in delay, including delay created by the
arbitral process, need not infringe management's reserved
authority, and may thus be negotiable. See Department of Defense
v. FLRA, 659 F.2d at 1153-58.
Finally, we reject the Agency's assertion that the provision is
nonnegotiable because it conflicts with the exclusive appeal procedures
contained in OMB Circular A-76. This argument was rejected by the
Authority in EEOC, 10 FLRA at 4, and by the D.C. Circuit on review, 744
F.2d at 851.
That reasoning applies equally here. The provision in question does
not create any new right of appeal; the right to file grievances
concerning contracting-out decisions is created by the Statute. Nothing
in OMB Circular A-76 restricts the statutory right to file such
grievances.
In concluding that the disputed provision is within the duty to
bargain we emphasize that in reviewing management's contracting-out
actions for conformity with applicable laws and regulations, an
arbitrator may not substitute his or her judgment for that of the
agency. Rather, as the Authority recently stated in a related case,
Headquarters, 97th Combat Support Group (SAC), Blytheville Air Force
Base, Arkansas and American Federation of Government Employees, AFL-CIO,
Local 2840, 22 FLRA No. 72, slip op. at 6-7 (1986):
In sum, arbitrators are not authorized to cancel a procurement
action and are authorized to consider only grievances challenging
a decision to contract out on the basis that the agency failed to
comply with mandatory and nondiscretionary provisions of
applicable procurement law or regulation. These provisions must
be sufficiently specific to permit the arbitrator to adjudicate
whether there has been compliance with such provisions. When
presented with such a grievance, an arbitrator on finding a
failure to comply may sustain the grievance. In sustaining the
grievance, the arbitrator as a remedy may properly order a
reconstruction of the procurement action when the arbitrator finds
that an agency's noncompliance materially affected the final
procurement decision and harmed unit employees. An agency in
taking the action required by such an award must reconstruct the
procurement process in accordance with the provisions which were
previously not complied with and must determine on reconstruction
whether the decision to contract out is now in accordance with law
and regulation. If the decision to contract out can no longer be
justified, the agency must determine whether considerations of
cost, performance, and disruption override cancelling the
procurement action and take whatever action is appropriate on the
basis of that determination. For example, an agency could
determine that immediate cancellation is warranted, or an agency
could determine that cancellation is not warranted, but that an
improperly granted contract should not be renewed. Additionally,
an agency may use its discretion to fashion other remedies
appropriate to the circumstances.
Having found that the disputed provision is within the duty to
bargain but that its inclusion in the parties' agreement does not add to
the scope of their contractual grievance procedure because such matters
already are covered unless the parties specifically exclude them during
negotiations, we believe that the parties would be well advised to
concentrate their energies on more meaningful matters.
IV. Conclusion
For the reasons stated above, the disputed provision is not
inconsistent with management's rights under section 7106 of the Statute
to make determinations with respect to contracting out or with
applicable law and regulations.
V. Order
Accordingly, pursuant to section 2424.10 of the Authority's Rules and
Regulations, IT IS ORDERED that the Agency shall rescind its disapproval
of the provision which was bargained on and agreed to by the parties at
the local level.
Issued, Washington, D.C., July 31, 1986.
/s/ Jerry L. Calhoun, Chairman
/s/ Henry B. Frazier III, Member
FEDERAL LABOR RELATIONS AUTHORITY
--------------- FOOTNOTES$ ---------------
(1) The Agency head originally disapproved three provisions of the
agreement and the Union's appeal encompassed all three disapprovals.
Thereafter, the Agency withdrew its disapproval of one provision
(Article 3, Section 6B) and the parties agreed upon alternative language
for another disapproved provision (Article 19, Section 1A).
Accordingly, the dispute with regard to two of the originally
disapproved provisions has been resolved and those matters are no longer
before the Authority for decision.
(2) We respectfully adhere to the view that this position is correct,
although we note that the U.S. Court of Appeals for the Ninth Circuit
rejected this approach in Defense Language Institute, Presidio of
Monterey, California v. FLRA, 767 F.2d 1398 (9th Cir. 1985), denying
enforcement of National Federation of Federal Employees, Local 1263 and
Defense Language Institute, Presidio of Monterey, California, 14 FLRA
761 (1984).