32:0975(139)NG - - NTEU and Treasury, Bureau of Public Debt - - 1988 FLRAdec NG - - v32 p975



[ v32 p975 ]
32:0975(139)NG
The decision of the Authority follows:


32 FLRA No. 139

UNITED STATES OF AMERICA

BEFORE THE

FEDERAL LABOR RELATIONS AUTHORITY

WASHINGTON, D.C.

 

NATIONAL TREASURY EMPLOYEES UNION

Union

and 

U.S. DEPARTMENT OF TREASURY

BUREAU OF PUBLIC DEBT

Agency

Case No. 0-NG-1516

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). It concerns the negotiability of the following provision of a negotiated agreement which was disapproved by the head of the Agency under section 7114(c) of the Statute.(1)

Article 41; Section 1

The Employer agrees to comply with OMB Circular [No.] A-76 and other applicable laws and regulations concerning contracting out.

For the reasons discussed below, we find that the Agency must rescind its disapproval of the provision.

II. Positions of the Parties

The Agency contends that the provision violates management's right to make determinations with respect to contracting out, as set forth in section 7106(a)(2)(B) of the Statute. It further contends that OMB Circular No. A-76 is not: (1) an "applicable law" under section 7106 which creates any enforceable rights, and (2) a "law, rule or regulation" under section 7103(a)(9) which can be enforced through grievance arbitration. Finally, the Agency contends that the part of the provision requiring the agency to comply with "other applicable laws and regulations concerning contracting out" is invalid because "arbitral review of contracting out matters is confined by [section] 7106(a) to application of statutes 'prescribing employee rights and benefits - particularly procedural rights in conjunction with adverse personnel actions.'" Agency Statement of Position at 11 (emphasis in original).

The Union contends that: (1) the provision does not violate management's right to make determinations with respect to contracting out; (2) the Agency's compliance with OMB Circular No. A-76 and other applicable laws and regulations is an enforceable right; and (3) Circular A-76 is a law, rule, or regulation whose violation may give rise to a grievance. Th Union makes four arguments related to these contentions.

First, the Union argues that the provision does not establish any substantive limitations on management's rights, and that the provision is identical to Proposal 1 found negotiable 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) (per curiam). Second, the Union argues that under Authority precedent, disputes concerning conditions of employment arising from the application of Circular A-76 are covered by the negotiated grievance procedure unless the particular grievance is inconsistent with law. The Union argues that since matters relating to Circular A-76 are not among the five subjects excluded from the statutorily-prescribed scope and coverage of grievance procedures under section 7121(c), they fall within the broad scope of the grievance procedure. Third, the Union argues that there is no judicial precedent to support the Agency's view that: (1) Circular A-76 is not a law, rule or regulation, and (2) Congress did not intend Circular A-76 matters to be subject to the Federal labor relations grievance and arbitration mechanism. Finally, the Union argues that a violation of Circular A-76 is a matter relating to employment and, therefore, constitutes a grievance under section 7103(a)(9)(A) and (B).

III. Analysis and Conclusion

In AFSCME Local 3097 and Department of Justice, Justice Management Division, 31 FLRA 322 (1988), petition for review filed sub nom. Department of Justice, Justice Management Division v. FLRA, No. 88-1316 (D.C. Cir. Apr. 22, 1988), we concluded that a proposal which is virtually identical to the provision in this case was within the duty to bargain. We found that the proposal: (1) concerned a condition of employment of bargaining unit employees, (2) concerned a rule or regulation within the meaning of section 7103(a)(9)(C)(ii), (3) did not violate management's right to contract out under section 7106(a)(2)(B), (4) was not inconsistent with law under section 7117(a), and (5) was a negotiable procedure under section 7106(a)(2)(B). We also found in that case that: (1) grievances concerning OMB Circular No. A-76 may be included in negotiated grievance procedures, and (2) arbitral review of contracting out determinations is consistent with section 7106(a)(2)(B).

For the following reasons, we conclude, consistent with our decision in Justice Management Division, that the provision in dispute in this case is negotiable.

A. Management's Right to Contract Out Under Section 7106(a)(2)(B)

We find that the provision is a negotiable procedure under section 7106(b)(2) and does not interfere with management's right to contract out under section 7106(a)(2)(B).

1. External Constraints on Management's Right to Contract Out

The Agency argues that OMB Circular No. A-76 is not an "applicable law" within the meaning of section 7106(a)(2) which imposes external constraints on management's right to contract out. In support, the Agency relies on Justice Steven's dissent in Equal Employment Opportunity Commission v. FLRA, 106 S.Ct. 1678, 1681-82 (1986) (Stevens, J., dissenting) dismissing writ of certiorari granted in Equal Employment Opportunity Commission v. FLRA, 744 F.2d 842 (D.C. Cir. 1984); and Judge Wilkinson's dissent in Department of Health and Human Services v. FLRA, 822 F.2d 430, 441-51 (4th Cir. 1987) (Wilkinson, J., dissenting), enforcing American Federation of Government Employees, AFL-CIO, Local 1923 and Department of Health and Human Services, Office of the Secretary, Office of the General Counsel, Baltimore, Maryland, 22 FLRA 1071 (1986), enforcement reversed on en banc review Department of Health and Human Services v. FLRA, 844 F.2d 1087 (4th Cir. 1988). Agency Statement of Position at 11.

The provision requires the Agency to adhere to the requirements of applicable laws and regulations relating to contracting out. These are requirements which the Agency is obligated to follow even in the absence of this provision. Although section 7106(a) reserves to management the right to take actions enumerated therein, management must exercise its right in accordance with all applicable laws and regulations.

The Agency's assertion that OMB Circular No. A-76 is not a "law" within the meaning of the phrase "in accordance with applicable laws" in section 7106(a)(2) is not dispositive in deciding whether the provision is negotiable. Even assuming that the OMB Circular No. A-76 is not a "law," the Agency must exercise its right to contract out in accordance with the Circular and its Supplement since they constitute official declarations of policy concerning contracting out which are binding on agencies and officials in the executive branch of the Federal Government. Any limitation on management's right to contract out is not imposed by this provision, but rather, is imposed by OMB Circular No. A-76 and its Supplement. Justice Management Division, 31 FLRA at 338-39, 342-43.

The Agency asserts that Congress did not intend the Federal labor relations grievance and arbitration mechanism to serve as a forum for contesting agencies' compliance with what is essentially the President's internal management policy guidance. Agency Statement of Position at 9. The Agency refers us to Justice Stevens dissenting opinion in the United States Supreme Court's decision in Equal Employment Opportunity Commission v. FLRA, 106 S.Ct. at 1681-82 (Stevens, J., dissenting) (stating that Circular A-76 is not one of the "applicable laws" described in section 7106(a)(2)(B) and that requiring compliance with the Circular would intrude on management's rights). The Agency also refers us to Judge Wilkinson's dissenting opinion in Department of Health and Human Services v. FLRA, 822 F.2d at 441-51 (Wilkinson, J., dissenting) (stating that Circular A-76 is not a law and that arbitral review of management's compliance with the Circular is not permitted).

We continue to adhere to the position stated by the Authority in previous decisions: proposals requiring compliance with OMB Circular No. A-76 are negotiable. See Justice Management Division, 31 FLRA at 343; National Treasury Employees Union and Department of the Treasury, Internal Revenue Service, 27 FLRA 976, 979 n.1 (1987), petition for review filed sub nom. Department of the Treasury, Internal Revenue Service v. FLRA, No. 87-1439 (D.C. Cir. Aug. 28, 1987). See also Equal Employment Opportunity Commission, 10 FLRA 3 (Proposal 1).

2. Use of Negotiated Grievance Procedures to Contest Contracting Out Determinations

The Agency argues that the provision violates management's right to contract out by subjecting management's contracting out determinations to review by arbitrators. Agency Statement of Position at 7.

We reject the Agency's view that management's compliance with OMB Circular No. A-76 is not subject to negotiated grievance procedures. In section 7121(c), Congress listed five general subject matters which may not be included in a negotiated grievance procedure. Neither matters related to contracting out in general, nor OMB Circular No. A-76 and its Supplement in particular, are included in that list. Therefore, matters related to contracting out, including compliance with OMB Circular No. A-76 and its Supplement, may be included in a grievance procedure negotiated under section 7121. Justice Management Division, 31 FLRA at 335-37.

B. Grievances Concerning Compliance with OMB Circular No. A-76

The Agency argues that OMB Circular No. A-76 is not a law, rule, or regulation within the meaning of section 7103(a)(9)(C)(ii) and, therefore, matters concerning management's compliance with the Circular cannot form the basis of a grievance. Agency Statement of Position at 7 n.5.

Congress did not define the meaning of rules and regulations in the Statute. However, the House-Senate Conference Committee stated that the rules and regulations referred to in section 7117 include "official declarations of policy of an agency which are binding on officials and agencies to which they apply." The Report of the House-Senate Conference Committee, H.R. Rep. No. 95-1717, 95th Cong. 2d Sess. 158 (1978); reprinted in Subcomm. on Postal Personnel and Modernization of the House Comm. on Post Office and Civil Service, 96th Cong., 1st Sess., Legislative History of the Federal Service Labor-Management Relations Statute, Title VII of the Civil Service Reform Act of 1978, at 826 (Comm. print No. 96-7) (Legislative History). Nothing in the Statute or its legislative history indicates that Congress intended a different meaning for rules and regulations when mentioned in section 7103(a)(9)(C)(ii), or section 7103(a)(14), or section 7117(a). Accordingly, we apply the definition set out by the House-Senate Conference Committee whenever the Statute refers to rules and regulations. Justice Management Division, 31 FLRA at 333.

In Justice Management Division, 31 FLRA at 334-35, we determined that OMB Circular No. A-76 and its Supplement constitute a rule or regulation for the purpose of section 7103(a)(9)(C)(ii). We found that these documents constitute official declarations of policy concerning contracting out which are binding on agencies and officials in the executive branch of the Federal Government. Accordingly, matters concerning management's compliance with Circular A-76 may form the bases for grievances within the meaning of section 7103(a)(9).

C. Application of Laws and Regulations During Arbitral Review of Contracting Out Matters

The Agency argues that arbitral review of contracting out matters is confined by section 7106(a) to application of statutes "prescribing employee rights and benefits" and that the phrase "applicable laws" does not permit Federal employees to grieve unrelated violations of the law. In its view, the provision would permit arbitrators to apply all laws and regulations concerning contracting out to management's actions. In support, the Agency relies on Judge Wilkinson's dissent in HHS v. FLRA. Agency Statement of Position at 11.

We disagree with the Agency's argument. The provision would require management to exercise its right to make contracting out determinations in accordance with whatever applicable laws and regulations exist at the time of such action. The provision would contractually recognize external limitations on management's right but would not establish, either externally or by incorporation, any particular substantive limitations on management. Equal Employment Opportunity Commission, 10 FLRA at 3.

Moreover, the scope of review of disputed procurement actions by arbitrators is narrow and limited. 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. Headquarters, 97th Combat Support Group (SAC), Blytheville Air Force Base, Arkansas and American Federation of Government Employees, AFL-CIO, Local 2840, 22 FLRA 656, 661 (1986).

IV. Order

The Agency must rescind its disapproval of the provision.(2)

Issued, Washington, D.C.,

_________________________
Jerry L. Calhoun, Chairman
Jean McKee, Member
FEDERAL LABOR RELATIONS AUTHORITY

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