27:0003(1)AR AFGE, NATIONAL COUNCIL 236 VS GSA -- 1987 FLRAdec AR

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The decision of the Authority follows:

27 FLRA NO. 1






Case No. 0-AR-1243


I. Statement of the Case

This matter is before the Authority on exceptions to the award of Arbitrator Ellen M. Bussey filed by the Agency under section 7122(a) of the Federal Service Labor - Management Relations Statute (the Statute) and part 2425 of the Authority's Rules and Regulations.

II. Background and Arbitrator's Award

The dispute in this case concerned the arbitrability of a grievance over the Agency's decision to reorganize some of its regional offices. According to the Arbitrator's award, the parties' collective bargaining agreement provided that certain management decisions, including a decision to reorganize, would be accomplished in accordance with applicable laws, rules, regulations, and the provisions of the agreement. The agreement defined "grievance" as any complaint concerning "the effect or interpretation, or a claim of breach of (the) agreement, or any claimed violation, misinterpretation, or misapplication of any law, rule, or regulation affecting conditions of employment." The agreement also provided in Article 2, Section 1, that "(in) the administration of all matters covered by (the) agreement, officials and employees shall be governed by existing or future laws, existing Government-wide regulations, and existing or future GSA regulations." 

The only matter submitted to arbitration was whether the grievance was arbitrable. Specifically, the Union grieved the Agency's failure "to comply with OMB Circular A-105, dated April 4, 1974, when (the Agency) announced substantial changes in (GSA) Regions 1, 8 and 10, which in turn, violated Article 2, Section 1 of the National Agreement." Arbitrator's Decision at 3. The Union argued that for a matter to be grievable, conditions of employment must be affected and there must be a violation of law, rule, regulation or contract, and that all of these conditions have been met. The Agency contended before the Arbitrator that the matter was not grievable because the OMB Circular was not a law, rule, or regulation, but was merely an executive level policy document with which management need not comply. The Agency also contended that the reorganization of its employees is solely a management right under section 7106(a)(1) over which an arbitrator has no jurisdiction.

The Arbitrator found that the grievance was arbitrable. She rejected the Agency's argument that it was not compelled to comply with OMB Circular A-105 because the Circular was not issued by an "authority" and did not prescribe binding principles. She found that "a reading of OMB Circular A-105 leaves no doubt that it was intended to do more than provide the executive policy guidelines management claims." Arbitrator's Decision at 5. She further found that the Agency had "not introduced evidence to show that OMB Circular A-105 is sufficiently different from other OMB Circulars to make it an exception." Arbitrator's Decision at 6. She noted that in an earlier hearing, "the Agency never questioned that it, or the Union, (was) required to comply with OMB Circular A-76 (governing contracting out)." Id. She determined that, "(t)here being no evidence which differentiates the legal status of OMB Circular A-105 from that of OMB Circular A-(76), and the provisions of . . . the current Contract being identical to those of the Contract of May 1982 under which the Circular A-76 issue was raised and decided, it must be concluded that management's argument that the Circular's legal status does not meet the grievance requirements of the Contract has no merit." Arbitrator's Decision at 6. Accordingly, she concluded that the Circular has the force of law. She ruled, therefore, that the Agency's decision to reorganize the regions must comply with the provisions of the Circular as required by the collective bargaining agreement. 

In response to the Agency's argument that the union cannot grieve the Agency's exercise of its right to reorganize under section 7106(a)(1) of the Statute, the Arbitrator stated that a review of the parties' agreement indicates that the Agency had "surrendered to the Union" some of its rights. Arbitrator's Decision at 7. The Arbitrator stated that under the parties' contract, management was required to act "in accordance with law, rule, regulation and the (contract) in any area affecting employees," and that employees have a right "to grieve if they are adversely affected by management action which allegedly did not conform to the requirements of law, rule, regulation or contract." Id. She noted that it was undisputed that employees were adversely affected by the reorganization. As her award, she found that the issue was grievable and arbitrable. She made no ruling on the merits of the dispute.

III. Exceptions

The Agency contends that the award is contrary to section 7106(a) of the Statute because it would subject to arbitral review the exercise of the substantive management right to determine organization and because the award erroneously states that the Agency "surrendered" some of its rights when it signed the agreement. The Agency maintains that the issue in this case differs from the issue presented in cases involving contracting out and OMB Circular A-76. In this regard, the Agency argues that section 7106(a)(2) of the Statute requires the right to contract out to be exercised in accordance with applicable laws, while section 7106(a)(1) "specifically does not place such a restriction on management's right to determine its organization, which is at issue here." Agency's Exceptions at 10. The Agency also contends that the award is contrary to section 7103(a)(9) of the Statute because the Union's grievance does not fall within the definition of grievance contained in that section. The Union submitted an opposition to the exceptions, contending that the exceptions provide no basis for vacating the award.

IV. Analysis and Conclusions

We find that the Agency's exceptions fail to establish that the award is contrary to the Statute.

With regard to the right to determine agency organization under the Statute, the Authority has consistently recognized that section 7106(a)(1) expressly reserves to management officials the right to determine the organization of the agency. See, for example, Congressional Research Employees Association and The Library of Congress, 3 FLRA 737 (1980) (Section 1 of the proposal). Management's right to determine the organization of the agency includes the right to determine its administrative or functional structure. See American Federation of Government Employees, AFL - CIO, Local 3805 and Federal Home Loan Bank Board, Boston District Office, 5 FLRA 693 (1981) (a bargaining proposal requiring an agency to maintain duty stations for employees in effect prohibited the agency from eliminating duty stations and therefore interfered with the right to determine agency organization). However, a proposal which would have required an agency to comply with the provisions of an Army regulation in determining the "mix" of civilian and military employees assigned to positions was held not to violate the agency's right to determine its organization. See American Federation of Government Employees, AFL - CIO, Local 1858 and Army Missile and Munitions Center and School, Redstone Arsenal, Alabama, 15 FLRA 273 (1984), in which the Authority applied its ruling in American Federation of Government Employees, AFL - CIO, National Council of EEOC Locals and Equal Employment Opportunity Commission, 10 FLRA 3 (1982), enforced sub nom. EEOC v. FLRA, 744 F.2d 842 (D.C. Cir. 1984), cert. dismissed, 106 S. Ct. 1678 (1986), to find that the proposal on civilian and military "mix" sought only to contractually recognize higher level limitations on local management's rights and therefore was within the duty to bargain.

In the present case, the Union's grievance does not concern the substantive decision of management to reorganize the regions but only seeks to compel compliance with applicable law, rule or regulation under the express terms of the parties' agreement. In finding the grievance to be arbitrable, the Arbitrator did not address the merits of the grievance but merely ruled that the question of compliance with whatever obligations may be imposed on the Agency by OMB Circular A-105 is a proper matter under the parties' agreement for arbitral review. 1 Because the Arbitrator's award concerns only the arbitrability of the Union's  grievance, we are not presented with any question related to the merits of the grievance. This award, finding the matter grievable and arbitrable, does not interfere with the exercise of management's rights under section 7106(a)(1) of the Statute.

The Agency contends that a distinction exists between section 7106(a)(1) and section 7106(a)(2), and argues that its right under section 7106(a)(1) to determine its organization is not restricted by the requirement that its exercise of that right be made "in accordance with applicable laws." This argument provides no basis for overturning the award. The Authority has specifically recognized that the exercise of the rights enumerated in section 7106(a)(2), such as contracting out, must be in accordance with applicable laws. In Congressional Research Employees Association and the Library of Congress, 23 FLRA No. 15 (1986), the Authority discussed the development of case law relating to the arbitration of the exercise of management's rights under section 7106(a) and concluded that a grievance which would have directly challenged a management decision to contract out certain functions was not arbitrable even though it was based on a provision in the collective bargaining agreement. The Authority distinguished between grievances over the failure of management to exercise its right to contract out under section 7106(a)(2) in accordance with applicable laws and a grievance which would interfere with the right to make the original determination to contract out at all. Further, based on its decision in National Federation of Federal Employees, Local 1167 and Department of the Air Force, Headquarters, 31st Combat Support Group (TAC), Homestead Air Force Base, Florida, 6 FLRA 574 (1981) (Proposal 1), enforced sub nom. National Federation of Federal Employees v. FLRA, 681 F.2d 886 (D.C. Cir. 1982), the Authority held that although law or regulation may place limits on management discretion, the Statute precludes the negotiation of contractual limitations on management rights. Library of Congress, 23 FLRA No. 15 (1986).

In the present case, the agreement provision which the Arbitrator applied does not place any contractual limitation on management's discretion to determine its organization. The requirement that the reorganization of the regions must comply with applicable law, rule or regulation, including OMB Circular A-105, which the Arbitrator found to be imposed by the agreement, does not affect management's substantive right to determine its organization. The Agency has failed  to demonstrate in what way that or any other requirement that management rights be exercised in accordance with law, rule or regulation interferes with the exercise of those rights. Consequently, we reject the Agency's contention that a requirement that decisions be made in accordance with applicable law, rule or regulation applies only to actions taken under section 7106(a)(2) and does not apply to actions taken under section 7106(a)(1).

The Agency also contends that the Union's grievance is not a grievance under section