24:0377(41)NG - AFGE Local 1897 and Air Force, Eglin AFB, FL -- 1986 FLRAdec NG



[ v24 p377 ]
24:0377(41)NG
The decision of the Authority follows:


 24 FLRA No. 41
 
 AMERICAN FEDERATION OF GOVERNMENT 
 EMPLOYEES, AFL-CIO, LOCAL 1897
 Union
 
 and
 
 DEPARTMENT OF THE AIR FORCE 
 EGLIN AIR FORCE BASE, FLORIDA
 Agency
 
                                            Case No. 0-NG-757
 
                 DECISION AND ORDER ON NEGOTIABILITY ISSUE
 
                         I.  Statement of the Case
 
    This case comes before the Authority because of a negotiability
 appeal filed under section 7105(a)(2)(D) and (E) of the Federal Service
 Labor-Management Relations Statute (the Statute) and presents issues as
 to the negotiability of a single Union proposal.  We find that the
 proposal is negotiable.
 
                            II.  Union Proposal
 
       . . . that the Eglin and Hurlbut Nonappropriated Fund
       Instrumentality (NAFI) absorb up to 75 percent of the cost of
       health insurance prior to proposing to prorate any portion of the
       additional increase in cost to unit employees.  Further, no
       increase will be imposed until all obligations under 5 USC 7117
       have been fully satisfied.
 
                      III.  Positions of the Parties
 
    The proposal would require the Agency to pay up to 75 percent of the
 premium cost of employee health insurance prior to increasing the amount
 currently paid by bargaining unit employees and to fulfill its duty to
 bargain with the Union prior to implementing any change in cost of
 health insurance premiums for bargaining unit employees.  The Agency
 contends the proposal is outside the duty to bargain because it does not
 concern conditions of employment of bargaining unit employees, affects
 employees outside the bargaining unit, interferes with its right under
 section 7106(a)(1) of the Statute to determine its budget, and is
 inconsistent with an Agency "regulation" for which there is a compelling
 need under section 7117(a)(2).  The Union disputes the Agency's
 contentions.
 
          IV.  Analysis and Conclusions (Footnotes appear in the
 
                Appendix to this Decision)
 
    A.  Background
 
    1.  Establishment of Wages and Fringe Benefits for Federal Employees
 
    In the Federal sector, the wages and fringe benefits of most
 employees are established by law.  For example, 5 U.S.C. Chapter 53
 controls many matters relating to various pay rates and systems.  Among
 other things, it establishes the General Schedule and Prevailing Rate
 pay systems.  Chapter 55 of title 5 contains provisions which govern pay
 administration including overtime and other premium pay.  Chapters 83,
 87 and 89 establish programs covering retirement, life insurance and
 health insurance, respectively.  These laws, however, do not apply
 uniformly to all Federal employees.  Some Federal agencies and some
 types of employees who are covered by the Statute for purposes of
 collective bargaining are not covered by one or another of these laws.
 For example, the Federal Deposit Insurance Corporation is not subject to
 the statutes governing pay rates.  Nonappropriated Fund Instrumentality
 (NAFI) employees as are involved in this case are not covered by laws
 relating to health insurance or retirement.  Teachers employed by the
 Department of Defense Dependents Schools, whether overseas or at schools
 on military installations in the United States, are not subject to
 statutes establishing pay rates for most Federal employees but to laws
 creating different salary systems.  Thus, while wages and fringe
 benefits of most Federal employees are established and controlled by
 law, there are some exceptions where matters concerning the nature or
 amount of the wages and fringe benefits are left to the discretion of
 the employing agencies.
 
    2.  The Scope of Bargaining under the Statute
 
    a.  The Language of the Statute
 
    The Statute provides that the scope of the duty of an agency to
 bargain with an exclusive representative of its employees extends to
 "conditions of employment," which term is further defined as "personnel
 policies, practices and matters affecting working conditions." Section
 7103(a)(12) and (14).  Excluded from the definition of conditions of
 employment are matters:  (1) relating to political activities prohibited
 under subchapter III of chapter 73 of title 5;  (2) relating to the
 classification of any position;  or (3) to the extent such matters are
 specifically provided for by Federal statute.  Section 7114(a)(14).  The
 Statute also excludes from the scope of the duty to bargain proposals
 which concern conditions of employment but which are inconsistent with
 law and regulation.  Section 7117(a).  Thus, under the Statute a
 proposed matter which is a condition of employment and is not
 inconsistent with applicable law or regulation is within the duty to
 bargain.
 
    b.  Legislative History and Congressional Intent
 
    The legislative history of the Statute supports the conclusion that
 Congress intended that matters relating to wages and fringe benefits
 were to be treated in the same manner as other conditions of employment.
  That is, proposals concerning them were to be within the duty to
 bargain under section 7117(a) "to the extent not inconsistent with any
 (applicable law, rule or regulation)" and they were to be excepted from
 the definition of conditions of employment under section 7103(14)(c) if
 they involved matters which were "specifically provided for by Federal
 statute." The Report accompanying the House Committee bill (H.R. 11280)
 states that ". . . Federal pay will continue to be set in accordance
 with the pay provisions of title 5, and fringe benefits, including
 retirement, insurance, and leave, will continue to be set by Congress."
 1/ In discussing the negotiation of matters relating to overtime, the
 House Report states that "(r)ates of overtime pay are not barganinable,
 because they are specifically provided for by statute." 2/
 
    When the House Committee bill was debated on the House floor, Members
 who supported the bill reaffirmed this interpretation.  Congressman
 Ford, discussing the scope of the duty to bargain under the bill,
 asserted that "no matters that are governed by statute (such as pay,
 money-related fringe benefits, retirement, and so forth) could be
 altered by negotiated agreement." 3/ Even opponents of the House
 Committee bill agreed that the duty to bargain under that bill excluded
 wages and fringe benefits because they were established by law. law.
 Congressman Collins, in support of his proposed substitute for the House
 Committee bill, described the duty to bargain under the Committee bill
 as too broach because it only excluded "matter(s) relating to
 discrimination, political activities, and those few specifically
 prescribed by law -- for example, pay and benefits." 4/ And finally,
 Congressman Udall, whose compromise version of H. R. 11280 formed the
 basis of the legislation enacted by Congress and signed into law by the
 President, stressed that under the "Udall substitute" matters concerning
 "wages and hours and retirement and benefits will continue to be
 established by law through congressional action." 5/ There are also a
 number of statements to the effect that bargaining is not intended with
 respect to pay and fringe benefits.  While these statements are not
 explicitly tied to the existence of other legal provisions governing
 those matters, they were made in the context of the general debate on
 the bill. 6/ Moreover, these statements must be read within the context
 of the specific provision of the Statute itself.  The Statute as enacted
 established an explicit scope of bargaining along with explicit
 exceptions.  Nowhere in the Statute is there any language either
 excluding the general subject of wages and fringe benefits from the
 definition of conditions of employment or otherwise prohibiting
 negotiations on such matters in particular.
 
    The only explicit statement regarding the obligation to negotiate
 over wages appears at section 704 of the Civil Service Reform Act of
 1978 7/ (CSRA).  This section authorizes bargaining on wages and
 "employment benefits" for certain prevailing rate employees whose wage
 rates would otherwise be controlled by the procedures established under
 the Prevailing Rate Act of 1972, Pub. L. No. 92-392.  Section 704 is
 simply an extension and clarification of section 9(b) of the Prevailing
 Rate Act, which exempted prevailing rate employees who had previously
 negotiated wages and other conditions of employment from the coverage of
 that Act. 8/ See Columbia Power Trades Council and United States
 Department of Energy, Bonneville Power Administration, 22 FLRA No. 100
 (1986).  In the absence of that exemption, the wages of those employees
 would have been established pursuant to law.  Consequently, section 704
 by authorizing such bargaining, acts as an exception to the limitation
 on bargaining over matters which are specifically provided for by
 Federal statute or which are inconsistent with law.
 
    The Statute and its legislative history should be read in light of
 the Executive Orders which preceded it.  In this regard the Report
 accompanying Executive Order 10988 stated that "(t)he employer in most
 parts of the Federal government cannot negotiate on pay, hours of work
 or most fringe benefits.  These are established by law." 9/ This
 statement accurately reflected the legal context of Federal employment
 as outlined above:  most Federal agencies and employees were, as they
 continue to be, subject to the laws establishing pay and fringe
 benefits, but some are not. 10/ Likewise under Executive Order 11491,
 the duty to bargain similarly extended to personnel policies, practices
 and matters affecting working conditions "so far as may be appropriate
 under applicable laws and regulations." Section 11(a).
 
    Consistent with this principle, only those Federal employees whose
 wages and fringe benefits were not established by law could bargain over
 them under the Executive Order.  For example, in United Federation of
 College Teachers, Local 1460 and U.S. Merchant Marine Academy, 1 FLRC
 211 (1972), the Federal Labor Relations Council (the Council) ruled in
 essence that the pay of the faculty at the Merchant Marine Academy, 1
 FLRC 211 (1972), the Federal Labor Relations Council (the Council) ruled
 in essence that the pay of the faculty at the Merchant Marine Academy
 was not specifically established by law.  Rather, the Merchant Marine
 Act gave the Secretary of Commerce discretion to set faculty salaries.
 The Council held that proposals relating to teacher salary schedules did
 not violate those laws and, since they were otherwise negotiable, were
 within the agency's duty to bargain.  In Overseas Education Association,
 Inc. and Department of Defense, Office of Dependents Schools, 6 FLRC 231
 (1978), the Council held that proposals prescribing procedures and
 formulas to be used in determining teacher compensation were within the
 duty to bargain.  The Council determined that the Department of Defense
 Overseas Teachers Pay and Personnel Practices Act, 73 Stat. 213 (1959),
 did not bar negotiation on the proposal.  In other cases the Council
 held proposals concerning wages and fringe benefits nonnegotiable not
 because they were not matters affecting conditions of employment but,
 rather, because they were inconsistent with applicable laws and
 regulations.  For example, in American Federation of Government
 Employees, Local 1778 and McGuire Air Force Base, New Jersey, 6 FLRC 136
 (1978), the Council held proposals relating to wage rates and retirement
 plans nonnegotiable because the agency established that they conflicted
 with an agency regulation for which a compelling need existed.  Although
 this decision is relied upon by the Agency and the dissenting opinion in
 this case, we believe such reliance is inapposite.  See section B.4. of
 this decision.  Also, in International Association of Siderographers,
 AFL-CIO, Washington Association and Department of the Treasury, Bureau
 of Engraving and Printing, 6 FLRC 1157 (1978), the Council held that a
 proposal, which established a standard for setting the pay of certain
 employees of the Bureau of Engraving and Printing, was nonnegotiable
 because it was inconsistent with law.
 
    c.  Summary
 
    Congress intended the basic scope of the duty to bargain to be at
 least the same under the Statute as it was under the Executive Order.
 11/ Under both, the duty to bargain explicitly extends to personnel
 policies, practices, and matters affecting the working conditions of
 bargaining unit employees.  Bargaining over proposals inconsistent with
 applicable controlling law or regulation, however, is not permitted.
 
    Under the Executive Order the Council held pay and fringe benefits
 proposals to be bargainable to the extent that they concerned matters
 which were (1) within the discretion of agencies and (2) not
 inconsistent with applicable laws and regulations.  These decisions were
 a part of the record before the Congress when it enacted the Statute.
 Usually when Congress adopts a new law which incorporates provision of
 prior law, it is presumed to be aware of administrative interpretation
 of that law and to adopt those interpretations.  See Lorillard v. Pons,
 434 U.S. 575 (1978), see also New York Council, Association of Civilian
 Technicians v. FLRA, 757 F.2d 502, 509 (2nd Cir. 1985);  Florida
 National Guard v. FLRA, 699 F.2d 1082 (11th Cir. 1983).  Had Congress
 intended that a different approach as to the negotiability of pay and
 fringe benefits be applied under the Statute, it could very easily have
 incorporated specific language in the Statute to accomplish that effect.
  It should be noted that Congress used specific language to except from
 the obligation to bargain matters relating to political activities
 prohibited under subchapter III of chapter 73 of title 5 and the
 classification of positions.  Section 7103(a)(14)(A) and (B).  However,
 it has not incorporated such an exclusion regarding pay, fringe benefits
 or any related matters.
 
    We are of the view that the legislative history of the Statute, read
 as a whole regarding bargaining over pay and fringe benefits, does not
 compel a conclusion that Congress sought to deviate from either
 Executive Order practice or from the overall definition of the scope of
 the duty to bargain embodied in the Statute.  Usually legislative
 history is used to clear up ambiguities in statutory language.  However,
 the fact that a statute has relatively plain meaning should not serve to
 thwart or distort the intent of Congress by excluding from consideration
 enlightening material from legislative history.  Nonetheless the clearer
 the statutory language, the more compelling the legislative history must
 be to overcome that language.  2A N. Singer, Sutherland Stat. Const.
 Section 48.01 (4th Ed. 1984).  The more precise statements in the
 legislative history, as noted above, specifically tie the prohibition on
 bargaining over pay and fringe benefits to the existence of other laws
 which govern those subjects.  Other more general statements are couched
 in terms of assurances that the legislation under consideration does not
 represent a radical change or significant expansion in the scope of
 Federal section collective bargaining.  See, for example, the Clay and
 Ford statements quoted at note 6, infra, which appeared at H.R. Rep. No.
 95-1403, 95th Cong., 2nd Sess. 377 (1978);  Legislative History at 721
 and 124 Cong. Rec. H8467 (daily ed. Aug. 11, 1978);  Legislative History
 at 854-6.  Still others, simply state that pay and fringe benefits are
 not negotiable.  See, note 6, infra, at 2 app.
 
    Even taking the legislative history in a light most favorable to the
 Agency's position that pay and fringe benefits are not negotiable, that
 history is at best ambiguous.  However, the definition of the scope of
 bargaining which is embodied in the Statute is perfectly clear.  Under
 that definition, and consistent with practice under the Executive Order,
 substantive proposals regarding pay and fringe benefits which are not
 specifically provided for by Federal statute, and any other conditions
 of employment are negotiable to the extent they are not inconsistent
 with applicable laws, rules and regulations if the matters proposed are
 within an agency's discretion.  To the extent that Chairman Calhoun's
 dissenting opinion implies otherwise, we respectfully disagree.
 Ambiguous legislative history does not compel a different conclusion.
 See American Federation of Government Employees, Locals 225, 1504, and
 3723, AFL-CIO v. FLRA, 712 F.2d 640, 649 (D.C. Cir. 1983);  Citizens to
 Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 412 n.29 (1971).
 
    While not of controlling significance, of course, as to determining
 what is the scope of the duty to bargain under the Statute, we note that
 where Congress expressly establishes pay and fringe benefits for Federal
 employees, that legislative process is not without its elements of
 "negotiation." The setting of wages is accomplished by the same process
 as any other piece of legislation.  Typically, the President submits a
 pay proposal, both the Senate and House of Representatives consider the
 proposal, unions and other interested parties lobby, they along with
 representatives of the Administration may testify, and a compromise may
 have to be reached.  Finally, a bill passes, which the President must
 act on before the process is completed.  So, where Congress does not
 expressly establish pay and fringe benefits, some balancing of forces
 and interests through negotiations is consistent with that process.
 
    3.  Decisions under the Statute
 
    Consistent with this statutory definition of the scope of bargaining,
 the Authority has held substantive proposals regarding pay nonnegotiable
 if they relate to a matter specifically provided for by Federal law.
 For example, American Federation of Government Employees, AFL-CIO,
 Council of Federal Grain Inspection Locals and United States Department
 of Agriculture, Federal Grain Inspection Service, Washington, D.C., 3
 FLRA 530 (1980), aff'd sub nom. American Federation of Government
 Employees, AFL-CIO v. Federal Labor Relations Authority, 653 F.2d 669
 (D.C. Cir. 1981);  National Treasury Employees Union and Pension Benefit
 Guaranty Corporation, 9 FLRA 692 (1982), aff'd sub nom.  National
 Treasury Employees Union v. Federal Labor Relations Authority, 711 F.2d
 420 (D.C. Cir. 1983).  In other cases, the Authority has held proposals
 on wage-related matters negotiable if they do not concern matters
 specially provided for by law and are otherwise consistent with
 applicable law and regulations.  Fort Bragg Unit of North Carolina
 Association of Educators, National Education Association and Fort Bragg
 Dependents Schools, Fort Bragg, North Carolina, 12 FLRA 519, 521 (1983).
 
    B.  Negotiability of the Proposal in This Case
 
    1.  The Proposal Does Not Concern Matters Provided for by Law
 
    The Agency states that "premiums for 'health insurance benefits' for
 the employees (nonappropriated fund employees) concerned in the instant
 case have never been paid pursuant to a Federal statute." Agency
 Statement of Position at 9.  Nonappropriated fund employees are excluded
 from the coverage of Chapter 89 of title 5 of the United States Code,
 which governs health insurance plans administered by the Office of
 Personnel Management. 12/ Health insurance matters with respect to these
 employees are governed by agency regulations.  Since the proration of
 the cost of premiums for health insurance benefits is not a matter
 specifically provided for by Federal statute, this matter is not
 excepted from the definition of conditions of employment under section
 7103(a)(14)(C) of the Statute.
 
    2.  The Proposal Does Not Determine the Conditions of Employment of
 Nonunit Employees
 
    The Agency claims that, since Nonappropriated Fund Instrumentalities
 (NAFIs) with finite amounts of money are involved herein, the proposal
 could affect employees outside the bargaining unit.  Thus, according to
 the Agency, the proposal would concern matters beyond the conditions of
 employment of bargaining unit employees and would be outside its duty to
 bargain.  The Agency, in essence, is claiming that, if it pays more
 toward the cost of health insurance premiums for bargaining unit
 employees than it pays for nonbargaining unit employees, the latter
 employees will be affected thereby either because they will receive less
 toward their health insurance premiums or less towards the cost of some
 other employer-provided benefit than they had previously received.
 
    It is well settled that matters which are conditions of employment of
 employees in a bargaining unit and are within the discretion of the
 agency involved are within the duty to bargain.  For example, National
 Treasury Employees Union, Chapter 6 and Internal Revenue Service, New
 Orleans District, 3 FLRA 748, 759-60 (1980).  Proposals which directly
 determine, that is prescribe, the conditions of employment of nonunit
 employees are outside the duty to bargain.  However, otherwise
 negotiable proposals which directly determine conditions of employment
 of bargaining unit employees are not rendered nonnegotiable simply
 because they also affect conditions of employment outside of the
 bargaining unit to a limited degree or in an indirect way.  American
 Federation of Government Employees, Local 32, AFL-CIO and Office of
 Personnel Management, 22 FLRA No. 49 (1986), petition for review filed
 sub nom. American Federation of Government Employees, Local 32 v.
 Federal Labor Relations Authority, No. 86-1447 (D.C. Cir. Aug. 11,
 1986).
 
    The Union claims that the proposal does not concern employees outside
 of the bargaining units involved and states that it "merely requires the
 agency to do something with respect to bargaining unit employees while
 allowing the agency to maintain the status quo for employees outside the
 unit (.)" Union Reply Brief at 8.  The proposal does not prescribe what
 the Agency would pay towards the cost of nonbargaining unit employee
 benefits or even that it make lesser contributions as opposed to using
 other means to finance its increased costs with respect to bargaining
 unit employee benefits.  Consequently, we cannot conclude that the
 proposal directly determines the conditions of employment of nonunit
 employees.  Based on the principles set forth above, the Agency's
 argument does not present a basis for finding the proposal
 nonnegotiable.
 
    Moreover, we believe the argument is basically flawed.  Much of
 collective bargaining entails the distribution of finite resources.  The
 Agency's argument seems to presume that Congress intended to establish a
 system in which the duty to bargain arises only where infinite resources
 are available to it.  Compare American Federation of Government
 Employees v. Federal Labor Relations Authority, 785 F.2d 333, 337-8,
 (D.C. Cir. 1986) in which the Court noted that under the Statute an
 agency was not released from its duty to bargain whenever it had
 suffered economic hardship.
 
    3.  The Proposal Does Not Directly Interfere With Management's Right
 To Determine Its Budget Under Section 7106(a)(1)
 
    The Agency also contends that since it has decided to pay 46% of the
 cost of health insurance premiums for all covered employees, any
 increase in the employer's share of bargaining unit employee premium
 payments would require adjustments to other budgetary allocations
 considering the funding process of NAFIs.  Thus, according to the
 Agency, the proposal has a direct impact on budgetary items and
 interferes with management's right to determine its budget.
 
    We find that the Union's proposal would not directly interfere with
 the Agency's right to determine its budget.  Under the test set forth in
 American Federation of Government Employees, AFL-CIO and Air Force
 Logistics Command, Wright-Patterson Air Force Base, Ohio, 2 FLRA 604
 (1980), enforced as to other matters sub nom. Department of Defense v.
 Federal Labor Relations Authority, 659 F.2d 1140 (D.C. Cir. 1981), cert.
 denied sub nom. AFGE v. FLRA, 455 U.S. 945 (1982), we find that the
 proposal does not require the Agency to include a particular program or
 operation in its budget.  Employer contributions to the cost of employee
 health insurance premiums are already included in budgets of the NAFIs
 at Eglin and Hurlbut Air Force Bases.  Agency Statement of Position at
 10-14.  The proposal does not directly determine the specific amount
 which the Agency must allocate to that program.  It establishes a
 percentage of the total premium cost to be absorbed by the Agency.  What
 that percentage means in terms of the amount to be budgeted depends on
 factors not covered by the proposal, but within the Agency's control,
 such as total premium cost and number of employees subject to the health
 insurance program.  Furthermore, the Agency has not made a substantial
 demonstration that the proposal would result in significant and
 unavoidable costs which are not offset by compensating benefits.  The
 Agency claims that implementation of the Union's proposal would
 potentially increase the costs of the employer's share of health
 insurance premiums.  Agency Statement of Position at 11-13.  The Agency
 does not show, however, that such an increase would be unavoidable or
 that it would not be offset by compensating benefits.
 
    4.  The Agency Has Not Demonstrated a Conflict Between the Proposal
 and Agency Regulations
 
    The Agency argues that a compelling need exists for a uniform,
 centrally managed health insurance program.  It contends that its
 program, including its policy determinations as to the employer
 contributions to the premium cost, meets the Authority's criteria for
 determining compelling need set forth at 5 CFR Section 2424.11(a).  In
 its statement of position it provides no specific citation to its rules
 and regulations but relies generally on Department of the Air Force and
 Department of Defense regulations which set forth personnel policies and
 procedures pertaining to NAF instrumentalities and employees.  It has
 submitted "relevant excerpts" of Air Force Regulations 34-3 and 40-7 as
 well as Department of Defense Regulation 1401.1-M.
 
    To establish a compelling need for an agency-wide regulation, an
 agency must:  (1) identify a specific agency-wide regulation;  (2) show
 that there is a conflict between its regulation and the proposal;  and
 (3) demonstrate that its regulation is supported by a compelling need
 with reference to the Authority's standards set forth in section 2424.11
 of its regulations.  Generalized and conclusionary reasoning is not
 enough to support a finding of compelling need.  American Federation of
 Government Employees, AFL-CIO, Local 3804 and Federal Deposit Insurance
 Corporation, Madison Region, 21 FLRA No. 104 (1986) (Proposal 7).  Here,
 the Agency has not even demonstrated that the proposal actually
 conflicts with a specific agency-wide regulation.  The excerpts of
 regulations which it has submitted generally set forth policies,
 organization, and practices for the administration and management of
 NAFIs and their employees.  Among other things, the regulations place
 responsibility for policy direction of all Air Force NAFIs with the Air
 Force Welfare Board (AFWB) and provide for an Agency-sponsored group
 health insurance plan.  However, nowhere do the excerpted portions of
 the regulations submitted prescribe what percentage of the premium will
 be paid by the employer or even that the percentage should be uniform
 throughout the Agency NAFI system.  Moreover, we do not view local
 negotiations over the level of employer contribution to the premium as
 inherently inconsistent with the general concept of providing central
 management and policy direction in the NAFI system or a uniform program
 of health insurance benefits.  See American Federation of Government
 Employees, AFL-CIO, Local 2670 and Army and Air Force Exchange Service,
 Keesler Air Force Base Exchange, Mississippi, 10 FLRA 71, 73-75 (1982).
 Therefore, the Agency's assertion that the proposal conflicts with an
 agency rule or regulation for which a compelling need exists cannot be
 sustained.
 
    The reliance placed by the Agency on the decision of the Federal
 Labor Relations Council in American Federation of Government Employees
 Local 1778 and McGuire Air Force Base, New Jersey, 6 FLRC 136 (1978) is
 inapposite.  First of all, in McGuire Air Force Base the Council found
 that the agency had established a conflict between the proposals which
 were in dispute and the agency's regulations.  The Agency has not
 established such a conflict in the present case.  Moreover, the
 proposals which were involved in McGuire Air Force Base are materially
 different from the proposal in the present case for the following
 reasons.
 
    Proposals I and III in McGuire Air Force Base would have rendered
 negotiable the pay of certain categories of NAFI employees.  The Council
 held that the agency had established that its regulations concerning
 employee pay with which the proposal conflicted were essential to
 effectuate the "public interest" which, the Council stated, was
 "expressly set forth by Congress in Public Law 92-392" which covered
 some NAFI employees and had been extended administratively to cover
 other NAFI employees, including those to whom the proposals would apply,
 "'consistent with (an agency) commitment to Congress' during the
 legislative process." In the present case no such public interest,
 either Congressionally or otherwise defined, has been established by the
 Agency.
 
    Proposal IV in McGuire Air Force Base sought to establish a separate
 retirement plan for employees in the bargaining unit in place of the
 single plan which existed to cover all NAFI employees in the Air Force.
 The agency established that the public interest in a financially
 solvent, secure and completely dependable plan for retiring NAFI
 employees would not be effectuated by the separate plan which was
 proposed.  In sharp contrast, the proposal at issue in the present case
 does not seek to except the NAFI employees at Eglin Air Force Base from
 the central health insurance program which the Agency has established.
 Moreover, it has not been shown that the proposal would prevent the
 effectuation of the public interest in assuring a dependable health
 insurance program for any NAFI employees.
 
    Finally, while not of controlling significance as to determining
 whether a matter is within the duty to bargain under the Statute, we
 note that for most Federal employees, there is a wide selection of
 health plans from which to choose.  The choices range from different
 benefits to different levels of contribution by both the individual and
 the Federal government.  These plans have been negotiated with the
 providers of the health plans.  Through this procedure, these employees
 have been given the capability to select the plan which meets their
 needs and, most importantly, is within their financial ability to pay.
 It would seem that this same capability should be available to other
 employees.
 
                        V.  Summary and Conclusion
 
    The subject of wages and fringe benefits is not in and of itself
 excluded from the scope of the duty to bargain as defined by the
 Statute.  The proposal in this case does not relate to a matter which is
 specifically provided for by Federal statute and, therefore, does not
 come within the exceptions to the definition of conditions of employment
 under section 7103(a)(14)(C) of the Statute.  Moreover, the proposal
 does not determine the conditions of employment of nonunit employees or
 interfere with the Agency's right to determine its budget.  Lastly, the
 Agency has not established that the proposal conflicts with an agency
 rule or regulation for which a compelling need exist.  Consequently, we
 find that the proposal is within the duty to bargain.
 
                                VI.  Order
 
    The Agency shall upon request or as otherwise agreed to by the
 parties, negotiate over the Union's proposal. 13/
 
    Issued, Washington, D.C., December 9, 1986.
 
                                       Henry B. Frazier III, Member
                                       Jean McKee, Member
                                       FEDERAL LABOR RELATIONS AUTHORITY
 
 
 
                  DISSENTING OPINION OF CHAIRMAN CALHOUN
 
    I respectfully disagree with my colleagues.  I conclude that the
 proposal in this case is not a proper subject of bargaining.  I also
 disagree with my colleagues in their analysis of the extent to which
 wages and money-related fringe benefits (including the determination of
 health insurance benefits) are appropriate subjects of collective
 bargaining for certain Federal employees beyond this case.
 
    Non-appropriated Fund Instrumentality (NAFI) employees are a unique
 group of Federal employees.  Although they enjoy the right to organize
 and bargain collectively under the Federal Service Labor-Management
 Relations Statute (the Statute), they do not serve in the competitive
 service and are not subject to a wide range of the statutorily created
 benefits (and strictures) shared by most Federal employees.  See 5
 U.S.C. Section 2105.
 
    In lieu of the statutory and regulatory scheme applied to most
 Federal employees, NAFI employment within the Department of Defense is
 generally governed by a comprehensive regulatory scheme emanating from
 the Secretary of Defense and further implemented world-wide by various
 components of the military departments.  In my view, this regulatory
 scheme equates to the statutory provisions affecting the wages and
 monetary fringe benefits of most Federal employees.  As such, I conclude
 that a compelling need exists for the regulatory scheme, and matters
 provided for by those regulations are therefore not a proper subject of
 collective bargaining.
 
    Eight years ago the Authority's predecessor organization, the Federal
 Labor Relations Council, addressed the efficacy of these very same
 regulations.  In American Federation of Government Employees, Local 1778
 and McGuire Air Force Base, New Jersy, 6 FLRC 136 (1978), the Union
 sought to negotiate proposals concerning both the pay and retirement
 systems for NAFI employees.  The Council found both proposals to be
 nonnegotiable because a compelling need existed for the Department of
 Defense and Department of the Air Force Regulations setting forth
 comprehensive compensation schemes concerning the subject matter of the
 proposals.  Specifically with respect to the matter of contributions to
 the retirement plan, the Council found that the centrally administered
 retirement program which provided benefits generally comparable to those
 provided Federal Civil Service employees, "effectuates the public
 interest" and that "uniformity is essential to the assurance of a
 financially solvent and fully reliable retirement program for the NAF
 employees here involved." 6 FLRC at 148.
 
    While I recognize that the criteria used to determine compelling need
 questions have been modified under Authority regulations, those
 modifications do not prevent reaching the same conclusion in the instant
 case.  It is my view that the regulatory scheme remains "essential, as
 distinguished from helpful or desirable, to the accomplishment of the
 mission or execution of functions of the agency . . . in a manner which
 is consistent with the requirements of an effective and efficient
 government." 5 C.F.R. Section 2424.11(a).  I find no reason to depart
 from the holding and precedent of the Council in McGuire Air Force Base.
  See 5 U.S.C. Section 7135.  I share the same concerns expressed by the
 Council about the need for uniformity of treatment of NAFI employees.
 To have such matters negotiable at Eglin Air Force Base and
 nonnegotiable at McGuire Air Force Base makes no sense whatsoever.
 These concerns lead me to conclude that absent evidence of express
 Congressional intent to make wages and monetary fringe benefits a
 subject of collective bargaining in the Federal sector the Authority
 should not, as a general proposition, find such proposals negotiable.
 
    Although I believe this case can, and should be, resolved on the
 basis of compelling need, it is my opinion that extremely important
 public policy considerations attach to the Authority's adjudication of a
 number of pending cases now before us which involve the negotiability of
 bargaining proposals relating to matters of compensation or
 monetary-related fringe benefits.  These cases require uniform
 resolution of issues similar to the one in this case.  Therefore I turn
 to the question my colleagues raise as to what issues relating to wages
 and money-related fringe benefits are in their view appropriate subjects
 of collective bargaining.
 
    As described in the majority opinion, the wages and fringe benefits
 of most Federal employees are established by law.  However, there are in
 excess of 40 Federal pay systems which are not subject to statutorily
 determined salary and wage schedules.  Agency heads have the authority
 under these systems to determine the pay of Federal service employees
 working within their respective agencies.  Many of these compensation
 systems have evolved without any apparent recognition, endorsement, or
 legislative attention by the Congress.
 
    My colleagues conclude that in every case where there is discretion
 involved or when Congress is silent, the matters at issue are
 appropriate for collective bargaining.  The hypothesis has superficial
 appeal.  I would, however, go further to recognize that as Members of
 the Authority we have an affirmative obligation to look behind such
 pronouncements and weigh the interests of the parties, and all related
 policy considerations.  Sometimes examination of these factors will
 indicate a necessity for judicial restraint in the face of Congressional
 silence, and a finding to withhold a matter from bargaining.  I believe
 that is the case here.  In the absence of a clear expression of
 Congressional intent to make these matters negotiable, the Authority
 should not imply such an intent.
 
    The legislative history discussed in the majority opinion is not
 conclusive of the matter but does, I believe, lend support to the
 general proposition that Congress in enacting the Statute did not intend
 wage and monetary fringe benefits to be included in the basic scope of
 Federal sector collective bargaining.  For example, Congressmen Clay and
 Ford, the primary sponsors of the labor management relations bill,
 stated in Supplementary comments to the staff report accompanying their
 bill:
 
       Those of our colleagues who are concerned that this bill will
       significantly expand the collective bargaining rights of Federal
       employees need not worry.  It does not.  Enactment of the
       committee approved labor-management title will continue to deny to
       Federal employees most of the collective bargaining rights which
       their counterparts in the private sector have enjoyed for over 40
       years.  Among the collective bargaining rights not included in the
       bill are:
 
          .     .     .     .     .     .     .
 
 
       (2) The right to bargaining collectively over pay and
       money-related fringe benefits such as retirement benefits and life
       and health insurance(.) H.R. REP. NO. 95-1403, 95th Cong., Sess.
       377 (1978);  Legislative History, at 721.
 
 Congressman Udall, whose substituted version of the Ford-Clay bill
 formed the basis for the legislation enacted by Congress, stated:
 
       There is not really any argument in this bill or in this title
       about Federal collective bargaining for wages and fringe benefits
       and retirement -- the kinds of things that are givin us difficulty
       in the Postal Service today.  All these major regulations about
       wages and hours and retirement and benefits will continue to be
       established by law through congressional action.  (emphasis
       supplied) 124 Cong. Rec. H 9633 (daily ed. Sept. 13, 1978);
       Legislative History, at 923.
 
    Congress did not provide specific authorization for negotiation of
 pay and fringe benefit matters affecting the wide variety of
 administratively determined pay systems which are not a part of the
 statutory Federal pay structure.  Thus, it is my view that the question
 of the negotiability of such matters is not definitively resolved by
 resort to the legislative history of the Statute.  Absent specific
 indication of a Congressional intent to make pay and monetary fringe
 benefits a subject of labor-management negotiations, I believe that
 strong public policy considerations exist for permitting agencies to
 establish unified, consistent systems for determining such matters.  To
 find such matters generally negotiable would likely result in the
 internal balkanization of salaries and benefits within the various pay
 systems.  This would destroy the uniformity sought by the Congress in
 providing specific methodologies for pay setting in administratively
 determined systems.  I find support for this determination in certain
 actions taken by Congress in the past.
 
    When Congress passed the Postal Reorganization Act (PRA), 39 U.S.C.
 Sections 101-5605 (1976 & Supp. V 1981), it gave postal employees the
 right to bargain over all compensation, benefits and other conditions of
 employment.  Congress in effect "created a new kind of Federal
 employee." /1/ "Postal workers would henceforth be hybrid employees,
 with some of the rights and benefits of federal employees and some of
 the rights and benefits of private employees, most importantly, the
 right to bargain collectively (on compensation issues)." American Postal
 Workers Union v. U.S. Postal Service, 707 F.2d 548, 556 (D.C. Cir.
 1983).  Thus where Congress chose to introduce unrestricted wage and
 benefit bargaining into the federal labor relations scheme, it
 manifested such an intent by statutory expression which serves to define
 the parameters within which such activity would be conducted.  /2/
 
    Other variations to the normal Federal pay setting structure are also
 evidenced by affirmative Congressional action.  When Congress
 established the "prevailing rate system," 5 U.S.C. Sections 531-5349,
 /3/ and allowed collective bargaining by certain skilled trade and craft
 employees on monetary issues, it did not leave the parties to determine
 the scope of such negotiations but instead provided clear procedures for
 the determination of such matters.  Previous Congressional expressions
 that collective bargaining by such employees was in the public interest
 were specifically carried forward in section 704 of the Civil Service
 Reform Act.  See, for example, Columbia Power Trades Council and United
 States Department of Energy, Bonneville Power Administration, 22 FLRA
 No. 100 (1986).
 
    In International Organization of Masters, Mates, and Pilots v. Brown,
 698 F.2d 536 (D.C. Cir. 1983), the court, in finding that high ranking
 civilian mariners were subject to the "pay cap" provisions of 5 U.S.C.
 Section 5373, stated that "Congress wanted the pay cap to cut a wide
 swath . . . Congress deliberately and expressly carved out certain
 exceptions . . . but did not exempt the mariners." Id. at 542.  Absent
 indications to the contrary I can only conclude that Congress intended
 by its expressions of intent that wages and money-related fringe
 benefits be excluded from collective bargaining, to cut the same "wide
 swath" when it enacted the Statute.
 
    With the notable exception of prevailing rate employees and postal
 workers, I conclude that Congress envisioned that the pay and monetary
 benefits of Federal employees covered by the Statute be set in a uniform
 manner, whether by statute or administrative action. Congressional
 recognition of the need for stability and uniformity among prevailing
 rate employees is found in 5 U.S.C. Section 5341, and the Authority has
 previously accepted such a finding in determing the existence of a
 "compelling need" for agency regulations setting uniform pay systems for
 employees not covered by, but serving in positions analogous to, those
 covered by the General Schedule.  National Treasury Employees Union,
 Chapter 207 and Federal Deposit Insurance Corporation, Washington, D.C.,
 14 FLRA 598 (1984), decision on remand, 21 FLRA No. 36 (1986).
 
                                       Jerry L. Calhoun, Chairman
 
 
 
 
 
 
                ---------------  FOOTNOTES$ ---------------
 
 
    (1) 116 Cong.Rec. 20,229 (1970) (remarks of Congressman Udall.)
 
    (2) Postal Service labor-management relations are conducted under the
 National Labor Relations Act (NLRA), 29 U.S.C. Section 151, et seq.  In
 enacting the Federal Service Labor-Management Relations Statute,
 Congress did not include employees of the Postal Service, or the
 Tennessee Valley Authority (an analogous labor relations situation)
 within the coverage of the basic Federal section program.
 
    (3) The prevailing rate system provides method by which the pay of
 certain craft and skilled employees may be adjusted from time to time so
 that their compensation is consistent with that of employees in the
 private sector.  Such adjustment must be accomplished "consistent with
 the public interest." See National Maritime Union of America v. United
 States, 682 F.2d 944 (Ct. Cl. 1982).
 
 
 
 
 
 
 
                                 APPENDIX
 
    1/ H.R. REP. NO. 95-1403, 95th Cong., 2nd Sess. 12 (1978);
 Legislative History of the Federal Service Labor-Management Relations
 Statute, Title VII of the Civil Service Reform Act of 1978 at 682.
 (Herein after referred to as "Legislative History.")
 
    2/ H.R. REP. NO. 95-1403, 95th Cong., 2nd Sess. 44 (1978);
 Legislative History at 690.
 
    3/ See the remarks of Congressman Ford, 124 Cong. Rec. H8468 (daily
 ed. Aug. 11, 1987);  Legislative History at 855-56.
 
    4/ See the statement of Congressman Collins in support of his
 substitute for the House Committee bill:
 
          The House committee bill, on the other hand, broadly defines
       scope of bargaining by saying that "conditions of employment"
       excludes only matter relating to discrimination, political
       activities, and those few specifically prescribed by law -- for
       example, pay and benefits.
 
 124 Cong. Rec. H9624 (daily ed. Sept. 13, 1978);  Legislative History at
 906.
 
    5/ See the remarks of Congressman Udall, 124 Cong. Rec. H9633 (daily
 ed. Sept. 13, 1978);  Legislative History at 923:  "All these major
 regulations about wages and hours and retirement and benefits will
 continue to be established by law through congressional action."
 
    6/ See, for example, H.R. REP. No. 95-1403, 95th Cong., 2nd Sess. 5
 (1978);  Legislative History at 681 which states as follows:
 
          Title VII establishes a new program and provides for greater
       employee and employee organization participation.  However, title
       VII does not authorize collective bargaining on substantive issues
       of pay and fringe benefits, as is currently permitted in some
       agencies, such as the Postal Service, the Tennessee Valley
       Authority, and the Bonneville Power Administration.
 
    Congressmen Clay and Ford, the primary sponsors of the
 labor-management relations bills previously introduced in Congress,
 stated in supplementary comments to the Committee Report as follows:
 
       Those of our colleagues who are concerned that this bill will
       significantly expand the collective bargaining rights of Federal
       employees need not worry.  It does not.  Enactment of the
       committee approved labor-management title will continue to deny to
       Federal employees most of the collective bargaining rights which
       their counterparts in private sector have enjoyed for over 40
       years.  Among the collective bargaining rights not included in the
       bill are:
 
       .     .     .     .     .     .     .
 
 
          (2) The right to bargain collectively over pay and
       money-related fring benefits such as retirement benefits and life
       and health insurance(.)
 
 H.R. REP. NO. 95-1403, 95th Cong., 2nd Sess. 377 (1978);  Legislative
 History at 721.
 
    Congressman Clay and Ford reiterated this position in their comments
 supporting H.R. 11280 in the House debate on the bill.  In particular,
 Congressman Clay states as follows:
 
       I also want to assure my colleagues that there is nothing in this
       bill which allows Federal employees . . . to negotiate over pay
       and money-related fringe benefits.
 
 124 Cong. Rec. H8466 (daily ed. Aug. 11, 1978);  Legislative History at
 853.  See also the remarks of Congressman Clay at 124 Cong. Rec. E429
 (daily ed. Aug. 3, 1978);  Legislative History at 839-40.
 
    Congressman Ford stated as follows:
 
       A committee print of title VII was used for markup purposes.  That
       print was similar to H.R. 9094 (a bill sponsored by Congressmen
       Clay and Ford) except that . . . there was no provision for the
       negotiation of pay and other major money related fringe benefits.
 
          I have been quite frankly surprised with the rhetoric and
       hysteria that has accompanied consideration of title VII.  It is
       not a radical departure from the present system, but is a small,
       incremental step forward.
 
          As the sponsor of H.R. 1589, the Federal Employees Labor
       Relation Act of 1977, the predecessor to H.R. 9094, which provided
       for the negotiation of pay and fringe benefits;  the negotiation
       of all agency regulations;  and automatic agency shop;  and a
       limited right to strike (based on Canadian law) -- all of which, I
       might emphasize, have been deleted from title VII -- I can assure
       Members that expansion in the scope of bargaining in title VII has
       been a very modest, incremental step that comes nowhere near the
       scope of bargaining that most (s)tates permit for public employees
       or that we permit for postal workers.
 
 124 Cong. Rec. H8467 (daily ed. Aug. 11, 1978);  Legislative History at
 854-6.
 
    For other statements on this subject in the legislative history, see
 statement of Congressman Clay, 124 Cong. Rec. E4509 (daily ed. Aug. 10,
 1978), Legislative History at 844-845;  statement of Congressman Udall,
 124 Cong. Rec. H8462-3 (daily ed. Aug. 11, 1978), Legislative History at
 850-51;  statement of Congressman Derwinski, 124 Cong. Rec. H9639 (daily
 ed. Sept. 13, 1978), Legislative Hisotry at 935;  statement of
 Congressman Ford, 124 Cong. Rec. H9648-51 (daily ed. Sept. 13, 1978),
 Legislative History at 952-958;  statement of Congressman Rousselot, 124
 Cong. Rec. H9651-52 (daily ed. Sept. 13, 1978), Legislative History at
 958-959;  statement of Congressman Fisher, 124 Cong. Rec. H9668-69
 (daily ed. Sept. 13, 1978), Legislative History at 964;  Statement of
 Senator Sasser, 124 Cong. Rec. S14280-82 (daily ed. Aug. 24, 1978),
 Legislative History at 1014-1015.
 
    See also S. REP. NO. 95-969, 95th Cong., 2nd Sess. 12-13 (1978),
 Legislative History at 749-750.
 
    7/ Section 704 of the Civil Service Reform Act of 1978 provides as
 follows:
 
          Sec. 704.  (a) Those terms and conditions of employment and
       other employment benefits with respect to Government prevailing
       rate employees to whom section 9(b) of Public Law 92-392 applies
       which were the subject of negotiation in accordance with
       prevailing rates and practices prior to August 19, 1972, shall be
       negotiated on and after the date of the enactment of this Act in
       accordance with the provisions of section 9(b) of Public Law
       92-392 without regard to any provision of chapter 71 of title 5,
       United States Code (as amended by this title), to the extent that
       any such provision is inconsistent with this paragraph.
 
          (b) The pay and pay practices relating to employees referred to
       in paragraph (1) of this subsection shall be negotiated in
       accordance with prevailing rates and pay practices without regard
       to any provision of --
 
          (A) chapter 71 of title 5, United States Code (as amended by
       this title), to the extent that any such provision is inconsistent
       with this paragraph;
 
          (B) subchapter IV of chapter 53 and subchapter V of chapter 55
       of title 5, United States Code;  or
 
          (C) any rule, regulation, decision, or order relating to rates
       of pay or pay practices under subchapter IV of chapter 53 or
       subchapter V of chapter 55 of title 5, United States Code.
 
    8/ Pub. L. No. 92-392, Section 9(b), provides as follows:
 
          Sec. 9.  (b) The amendments made by this Act shall not be
       construed to --
 
          (1) abrogate, modify, or otherwise affect in any way the
       provisions of any contract in effect on the date of enactment of
       this Act pertaining to the wages, the terms and conditions of
       employment, and other employment benefits, or any of the foregoing
       matters, for Government prevailing rate employees and resulting
       from negotiations between Government agencies and organizations of
       Government employees;
 
          (2) nullify, curtail, or otherwise impair in any way the right
       of any party to such contract to enter into negotiations after the
       date of enactment of this Act for the renewal, extension,
       modification, or improvement of the provisions of such contract or
       for the replacement of such contract with a new contract;  or
 
          (3) nullify, change, or otherwise affect in any way after such
       date of enactment any agreement, arrangement, or understanding in
       effect on such date with respect to the various items of subject
       matter of the negotiations on which any such contract in effect on
       such date is based or prevent the inclusion of such items of
       subject matter in connection with the renegotiation of any such
       contract with a new contract, after such date.
 
    9/ See A Policy for Employee-Management Cooperation in the Federal
 Service, Report of the President's Task Force on Employee-Management
 Relations in the Federal Service (November 30, 1961, Legislative History
 at 1177, 1200-01.
 
    The Report stated as follows:
 
          It must be recognized that a major and perhaps controlling
       distinction between the type of employee-management relations that
       have developed in private industry and those which are possible in
       the Federal service is that in the latter neither the employer nor
       his employees are free to bargain in the ordinary sense.  The
       employees cannot strike, nor be represented by an organization
       affiliated with a group which asserts the right to strike against
       the Government.  The employer in most parts of the Federal
       Government cannot negotiate on pay, hours of work or most fringe
       benefits.  These are established by law.
 
          Generally, negotiations may take place on policies in such
       areas of employee concern as working conditions, promotion
       standards, grievance procedures, safety, transfers, demotions,
       reductions in force, and other matters, consistent with merit
       system principles.  It may be noted that in the public hearings
       held by the Task Force the representatives of the major employee
       organizations in the Federal Government made it clear that they
       are aware of these limitations and are quite content to negotiate
       within them.
 
          In this matter as in most others, the Task Force is of the
       opinion that each department and agency of the Government should
       be left to determine its own practice.  As a general rule,
       however, it may be said that a negotiable matter must be within
       administrative discretion, that is, it must be within the
       authority of the manager who is negotiating, and permissible by
       applicable laws, executive orders, and Administration and agency
       policy.  In general, it will be in the area of working conditions
       and personnel policies and practices.  It should not include
       matters concerning an agency's mission, its budget, its
       organization and assignment of personnel, or the technology of
       performing its work.  Major reorganizations or changes in work
       methods, while not negotiable themselves, will involve
       implementation problems that may be negotiable such as promotion,
       demotion and training procedurs.
 
          Specific areas that might be included among subjects for
       consultation and collective negotiations include the work
       environment, supervisor-employee relations, work shifts and tours
       of duty, grievance procedures, career development policies, and
       where permitted by law the implementation of policies relative to
       rates of pay and job classification.  This list is not, of course,
       all-inclusive, nor should it be expected that every agency will
       feel free to negotiate in all such areas.
 
    10/ To the extent that a matter affecting conditions of employment is
 not specifically provided for by law and is not otherwise inconsistent
 with law and regulation it is within the agency's discretion.  As the
 portion of the Report accompanying E.O. 10988 quoted above at note 9,
 indicates, such discretion has been subject to bargaining since the
 outset of the labor relations program in the Federal Government.  The
 Federal Labor Relations Council consistently held that otherwise
 negotiable matters which were within an agency's discretion were subject
 to collective bargaining.  See, for example, National Treasury Employees
 Union and Department of the Treasury, U.S. Customs Service, Region VII,
 5 FLRC 250, 252 (1977).  The Authority has similarly interpreted the
 Statute.  See, for example, National Treasury Employees Union, Chapter 6
 an