43:1202(97)NG - - IAM, Franklin Lodge No. 2135 and IPPDSEUNA, Local Nos. 2, 24 and 32 and GCIU, Local No. 285 and IAS, WA Association and Treasury, Bureau of Engraving and Printing - - 1992 FLRAdec NG - - v43 p1202



[ v43 p1202 ]
43:1202(97)NG
The decision of the Authority follows:


43 FLRA No. 97

FEDERAL LABOR RELATIONS AUTHORITY

WASHINGTON, D.C.

INTERNATIONAL ASSOCIATION OF MACHINISTS

AND AEROSPACE WORKERS

FRANKLIN LODGE NO. 2135

AND

INTERNATIONAL PLATE PRINTERS, DIE STAMPERS AND

ENGRAVERS UNION OF NORTH AMERICA

LOCAL NOS. 2, 24, AND 32

AND

GRAPHIC COMMUNICATIONS INTERNATIONAL UNION

LOCAL NO. 285

AND

INTERNATIONAL ASSOCIATION OF SIDEROGRAPHERS

WASHINGTON ASSOCIATION

(Unions)

and

U.S. DEPARTMENT OF THE TREASURY

BUREAU OF ENGRAVING AND PRINTING

(Agency)

0-NG-1927

DECISION AND ORDER ON NEGOTIABILITY ISSUES

January 29, 1992

Before Chairman McKee and Members Talkin and Armendariz.

I. Statement of the Case

This case is before the Authority pursuant to section 7105(a)(2)(E) of the Federal Service Labor-Management Relations Statute (the Statute).(1) This case concerns the negotiability of four proposals.

The proposals establish a process for determining the wage rates "for the various steel and die craft trades employees working at the Bureau of Engraving and Printing ('Bureau' or 'BEP')," whose pay is established pursuant to 5 U.S.C. § 5349. Petition at 1. We find that the proposals do not concern matters that are specifically provided for by Federal statute so as to be excluded, under section 7103(a)(14)(C) of the Statute, from those conditions of employment about which the Agency is obligated to bargain under the Statute. We also find that the proposals do not directly interfere with the Agency's right under section 7106(a)(1) of the Statute to determine its budget. Consequently, we conclude that the four proposals are negotiable.

II. Preliminary Matters

The Unions filed a petition for review dated April 3, 1991. By order dated April 9, 1991, the Authority notified the Unions that the petition for review did not comply with the requirements of sections 2424.4(b) and 2429.27(a) and (b) of the Authority's Rules and Regulations because the statement of service which was included with the petition did not show that the principal Agency bargaining representative and the Agency head or his designee were served. The Authority provided the Unions an opportunity to cure the deficiencies in the petition for review by filing with the Authority by April 25, 1991, a statement of service that complied with the Authority's Regulations. The Unions failed to respond to the Authority's Order of April 9, 1991. Therefore, on May 10, 1991, the Authority dismissed the petition for review.

The Unions filed a request for reconsideration of the Authority's Order dismissing the petition for review. In their motion for reconsideration, the Unions enclosed a statement of service which certified that the Agency head designee and the Agency's bargaining representative were served with copies of the Unions' petition for review on April 12, 1991. In addition, the Unions provided a copy of a signed receipt which certified that the Agency head received the Unions' petition for review on April 16, 1991.

Because the Unions timely complied with the service requirements of the Authority's regulations, the Authority issued an Order dated May 24, 1991, granting the Unions' request for reconsideration, rescinding the previous Order dismissing the Unions' petition for review, and reopening the case for further processing. The Unions were given 15 days from the date of receipt of the Authority's Order to file a response to the Agency's statement of position with the Authority.

The Unions filed their response with the Authority on June 20, 1991. The Unions also submitted a request, under section 2429.23(b) of the Authority's Rules and Regulations, for a waiver of the time limit for filing their response to the Agency's statement of position. According to the Unions, the untimely filing of their response resulted because the due date was "miscalendared." Unions' Request for a Waiver of Expired Time Limits (Request for Waiver). Therefore, the Unions claim that extraordinary circumstances exist, under section 2429.23(b) of the Authority's Rules and Regulations, for waiving the expired time limit. The Agency objects to the Unions' request for a waiver of the expired time limit.

Section 2429.23(b) of the Authority's Rules and Regulations permits the Authority to waive any expired time limit in "extraordinary circumstances." We find that the Unions have not shown that "extraordinary circumstances" exist warranting a waiver of the expired time limit.

The reason offered by the Unions to explain the untimely filing--namely, the "miscalendaring" of the due date--does not present the type of circumstance warranting a waiver of an expired time limit. Request for Waiver. Delays resulting from a parties' internal administrative or clerical procedures do not establish extraordinary circumstances sufficient to warrant Authority reconsideration of its decision to decline to consider a document because it was untimely filed. See, for example, U.S. Department of Veterans Affairs Hospital, Bedford, Massachusetts and National Association of Government Employees, Local R1-32, 42 FLRA 1364 (1991) (delay resulting from the union's internal administrative mail procedures does not establish extraordinary circumstances warranting reconsideration of the Authority's order dismissing the union's exceptions when it failed to respond to a deficiency notice within the required time period); U.S. Department of Health and Human Services, Social Security Administration, Area II, Philadelphia Region and American Federation of Government Employees, Local 1923, 42 FLRA 1105 (1991) (the agency's clerical misrouting of the Authority's order requiring the agency to document proper service on the parties and provide the name and address of the arbitrator did not establish extraordinary circumstances sufficient to warrant reconsideration of the Authority's order dismissing the agency's exceptions for failure to document proper service). Accordingly, we deny the Unions' request for a waiver of expired time limits.

Consequently, because the Unions' response was untimely filed, and in the absence of a waiver of the expired time limits, we will not consider the Unions' response.

III. Background

The Unions represent six units of Bureau of Engraving and Printing employees in recognized steel and die trades or crafts. Because, under 5 U.S.C. § 5102(c)(7), these employees are excluded from Chapter 51 of title 5 of the United States Code, they are not paid in accordance with the General Schedule pay rates established in 5 U.S.C. § 5332. See 5 U.S.C. § 5331(b). These employees also are not paid pursuant to the provisions of the Prevailing Rate Systems Act (PRSA), codified at 5 U.S.C. § 5343 (Amendments, note) that fix the pay of most employees in recognized trades or crafts, or other skilled mechanical crafts, under the prevailing rate system. 5 U.S.C. § 5342(a)(1)(I). Rather, the pay of the employees represented by the Unions is established pursuant to 5 U.S.C. § 5349(a), which provides that pay

shall be fixed and adjusted from time to time as nearly as is consistent with the public interest in accordance with prevailing rates and in accordance with such provisions of this subchapter, including the provisions of section 5344, relating to retroactive pay, and subchapter VI of this chapter, relating to grade and pay retention, as the pay-fixing authority of each such agency may determine.

Prior to this dispute and in accordance with Department of the Treasury Regulations, most of the employees represented by the Unions "traditionally had their pay rates aligned with those of employees holding similar jobs at the American Bank Note Corporation ('ABNC')." Statement of Position (Statement) at 4. Pursuant to this "tandem pay relationship," "the pay adjustments accorded [Agency] steel-and-die craft employees matched pay for similar jobs at ABNC." Id. In other words, the employees represented by the Unions were paid rates based on comparisons with comparable jobs in the ABNC. The rate as to each individual job classification in BEP was adjusted whenever rates for the comparable job was adjusted in the ABNC.

On or about August 16, 1990, the Agency changed the established method of fixing and adjusting the wage rates of the craft employees by instituting an "interim policy" that established a new methodology for adjusting wage rates. Petition, Appendix B at 2. The Unions sought to bargain over the methodology used to establish the wages of the craft employees represented by the Unions.

IV. Proposals

Proposal 1

Wage rates will be paid as established under 5 U.S.C. §5349(a), which requires that wage rates of employees at the Bureau of Engraving & Printing ("Bureau" or "BEP") shall be fixed and adjusted from time to time as nearly as is consistent with the public interest in accordance with prevailing wage rates. Pursuant to this enactment, the Bureau under delegated authority from the Department of Treasury has maintained and periodically adjusted wage rates based on an established tandem pay relationship with the American Bank Note Corporation (ABN), a wholly-owned subsidiary of the United States Bank Note Corporation.

The parties agree to continue this relationship under established standards until such time as they mutually agree upon another method for fixing and adjusting wage rates. In the event that there no longer exists one or more comparable crafts at ABN, all necessary determinations shall be based on data and information obtained from ABN's parent company, USBN, using the established job by job comparison method for any and all such determinations.

Proposal 2

The wage rates paid to employees in the steel and die craft trades shall be determined through the process of collective bargaining between the unions serving as their exclusive bargaining agent and management of the Bureau of Engraving & Printing based on the prevailing wage and public interest standards embodied in 5 U.S.C. §5349(a).

Prior to the commencement of such negotiations, the parties shall set up [a] joint fact-finding committee and/or select an independent consultant for the purpose of collecting relevant facts and information bearing on the determination of the comparable rates of pay, job classifications, and conditions of employment for work of a similar nature performed under similar circumstances in the security printing and related industries. Due consideration shall be given by the Bureau and the Unions in their negotiations to any facts so established, and to such other information or data as may be submitted by either party.

Proposal 3

Wage Rate Data Collection
and Evaluation of Data

The Bureau shall provide annual cost of living pay adjustments whenever wage rates of the tandem employer are adjusted to the full extent permitted by law. Should parties mutually agree, the Bureau may also rely upon other wage rate survey data provided that it uses the established job by job comparison method and/or other mutually agreed upon methods or criteria in order to establish or to maintain wage rate comparability.

Any union or unions representing employees in the steel and die trades at the Bureau additionally shall have the right to request a full scale wage rate survey, using job by job comparisons and/or other mutually agreed upon methods or criteria, to adjust or revise applicable wage rates. Such requests, together with substantiating data and appropriate recommendations, shall be promptly forwarded to the Department of Treasury for action thereon. In this regard, the Bureau will furnish [] the requesting union(s) with a copy of any and all studies, reports and/or recommendations made by or on behalf of the Bureau to the Department of Treasury.

The Bureau agrees to consult with the affected union(s) on the formulation of any plan for conducting any wage study or survey and to notify the union(s) promptly whenever it receives information pertaining thereto. It further agrees to conclude any such study and to take action thereon within a ninety (90) day period from the date of commencement or, alternatively, to provide the required increases in wage rates retroactively to that date in the event that the final action is not taken within the specified time period.

Administrative Matters

Reasonable time off from work will be authorized to union representatives to participate in or to monitor, as may be appropriate, all surveys, studies or data collection efforts and/or the evaluation of any and all information collected through this process. Upon reasonable notification by affected employees, his/her immediate supervisor shall make necessary arrangements for releasing such employees from their work assignments.

The Employer agrees that any employee requested or permitted to participate in any wage study, survey or analysis described above shall suffer no loss of pay or loss of leave during official and authorized participation in any such survey.

Proposal 4

The Bureau shall establish and maintain an ongoing system to collect and maintain data and other appropriate information necessary to fix and adjust wage rates on an annual basis in conformity with requirements imposed by 5 U.S.C. §5349(a) and Department of Treasury regulations issued thereunder. This information base shall include but shall not be limited to the use of published and privately compiled data as earlier recommended by TPF&C in a draft report issued on March 23, 1988.

The parties, through collective bargaining negotiations or through a joint committee established for this purpose, shall specify the nature and source(s) of all data and information to be utilized; the procedures and methodology to be used to collect and analyze such information and data; and any other methods or means necessary to establish, administer or modify the system established for the purpose of fixing and adjusting wage rates applicable to their respective crafts.

V. Positions of the Parties

A. Agency

The Agency contends that the Unions' proposals concerning the pay of the employees represented by the Unions do not concern conditions of employment because the pay of those employees is specifically provided for under 5 U.S.C. § 5349. The Agency also contends that the proposals are nonnegotiable under section 7117(a)(1) of the Statute because they are inconsistent with the intent and purpose of 5 U.S.C. § 5349. Finally, the Agency contends that the Unions' proposals directly interfere with the Agency's right under section 7106(a)(1) to determine its budget.

The Agency acknowledges that it has an obligation under the Statute to "engage in collective bargaining 'with respect to conditions of employment' through exclusive representatives (unions) chosen by employees." Statement at 7. The Agency states that, under section 7103(a)(14)(C) of the Statute, an agency's obligation to bargain with an exclusive representative does not extend to policies, practices, and matters that are specifically provided for by Federal statute. The Agency asserts that "[t]here is no dispute that the pay of the employees whom [the Unions] represent is set according to 5 U.S.C. Section 5349, a provision of the Prevailing Rate Systems Act[.]" Id. at 8. According to the Agency, "the issue presented here is whether the Prevailing Rate Systems Act precludes bargaining on these wages." Id.

The Agency states that the Unions' reliance on Fort Stewart Schools v. FLRA, 110 S. Ct. 2043 (1990) (Fort Stewart) is misplaced because Fort Stewart did not address the negotiability of wages set pursuant to the PRSA. The Agency states that in Fort Stewart the Court found that 20 U.S.C. § 241(a), which provides the authority for fixing the wages and benefits for the Department of the Army teachers, "place[s] no restraints upon [t]he Defense Department in setting the teachers' pay. Accordingly, the provision did not bring Army teachers' pay within the exception to 'conditions of employment' set out in section 7103[(a)](14)(C)." Id. at 9.

The Agency argues that Fort Stewart is not applicable to this case because the statutory provision in Fort Stewart is different from the provision at issue in this case. The Agency asserts that because 5 U.S.C. § 5349 "establishes the basis on which the Department must set wages, [i.e.,] 'in accordance with prevailing rates,' and 'consistent with the public interest[,]'" the wages and benefits that are set pursuant 5 U.S.C. § 5349 are specifically provided for by Federal statute. Id. The Agency maintains that, in contrast to the provision in Fort Stewart, matters relating to wages and benefits established pursuant to 5 U.S.C. § 5349 are nonnegotiable because, under section 7103(a)(14)(C), those matters are specifically provided for by law and, therefore, do not constitute conditions of employment.

The Agency contends that Department of the Navy, Military Sealift Command v. FLRA, 836 F.2d 1409 (3d Cir. 1988) (Military Sealift Command) and Department of the Treasury, Bureau of Engraving and Printing v. FLRA, 838 F.2d 1341 (D.C. Cir. 1988) (Bureau of Engraving and Printing) control the disposition of this case. The Agency states that in Military Sealift Command the court found that collective bargaining was incompatible with the grant of discretion in 5 U.S.C. § 5348 to set pay for mariners "inasmuch as the language in section 5348 instructed the Agency as to how wages should be established." Statement at 10. The Agency notes that in Bureau of Engraving and Printing, a case involving Bureau of Engraving and Printing electricians, the D.C. Circuit found that Military Sealift Command was "'not rationally distinguishable'" from the case before it and adopted the Third Circuit's analysis as its own. Id. at 11 (citing Bureau of Engraving and Printing, 838 F.2d at 1342). The Agency argues that the Supreme Court's decision in Fort Stewart "did nothing to disturb the Third Circuit's holding that the Prevailing Rate Systems Act vests an agency with discretion to set pay, and that bargaining over pay rates for prevailing rate employees is thus inconsistent with law." Id. at 12.

The Agency notes that the Authority held, in National Association of Government Employees, Local R4-26 and Department of the Air Force, Langley Air Force Base, Virginia, 40 FLRA 118, 141-42 (1991) (Langley Air Force Base), that, "to the extent that a [wage] proposal applied to prevailing rate employees who were not covered by section 9(b) of the [PRSA] and section 704 of the Civil Service Reform Act [of 1978 (CSRA)], the proposal was nonnegotiable[]" because it concerned a matter that is specifically provided for by Federal statute. Id. at 13 (citing Langley Air Force Base, 40 FLRA at 141-42).

As explained by the Agency, section 9(b) of the PRSA and section 704 of the CSRA permit employees who are covered by those provisions, and who negotiated wages prior to August 19, 1972, to continue to negotiate wages. The Agency contends that the employees in this case are not covered by section 9(b) of the PRSA and section 704 of the CSRA. The Agency states that, under 5 U.S.C. § 5542(a)(1)(I), the employees in this case are exempt from all provisions of the PSRA except for 5 U.S.C. § 5349. The Agency also contends that, even if the employees in this case were covered by section 9(b) and section 704, the Unions would not be entitled to negotiate on wages because the Unions "have not historically done so." Id. at 14.

The Agency also contends that the proposals are nonnegotiable under section 7117(a)(1) of the Statute because they are inconsistent with the intent and purpose of 5 U.S.C. § 5349. The Agency states that the Third Circuit "expressly acknowledged this inconsistency in the [Military] Sealift Command decision when it alluded to the fact that equality of pay with employees in the private sector may not always be 'consistent' with the 'public interest.'" Id. The Agency argues that it would be "deprived of its Congressionally bestowed discretion to carry out the section 5349 balancing scheme if it were required to bargain concerning BEP rates." Id. at 15.

Finally, the Agency contends that the Unions' proposals directly interfere with the Agency's right under section 7106(a)(1) of the Statute to determine its budget. The Agency asserts that the proposals, "if implemented, would entail significant and unavoidable increases in [the Agency's] operating costs; these increased costs would not be offset by compensating benefits." Id. at 15-16.

The Agency states that "annual salaries for this group of employees[,] constituting 13.3% of the BEP workforce, account for 18% of BEP's total annual salary budget. (Total salaries for the group in question constitute 6.9% of BEP's entire annual operating budget--excluding funds allocated for capital equipment purchases.)" Id. at 16. The Agency states that "[i]t is expected that negotiations with these unions with respect to pay rates will lead to higher--not the same or lower--wages." Id. The Agency asserts that "[u]nder law, BEP must recover its operating costs from revenues it derives as payment for the services and products it furnishes its customers . . . . Once increased pay rates are translated into higher costs, they must be passed on to these customers." Id. at 17. The Agency maintains that in Fort Stewart the Supreme Court found that the "compensating benefits" factor of the Authority's budget test was "unreasonable." Id. The Agency argues, therefore, that after Fort Stewart "the Authority's 'compensating benefits' test cannot stand." Id. The Agency also argues that if the test is still viable, "there can be no showing of any benefit . . . from the significant increase in the Agency's costs which would result from pay negotiation. Wage increases are not needed to acquire employees skilled in the steel-and-die crafts, as BEP has historically been able to attract and retain qualified employees from the private sector." Id. at 18.

B. Unions

The Unions state that Proposal 1 "requires adherence to essentially the same criteria and methodology governing the exercise of pay-fixing authority as are set forth in longstanding agency regulations and practices thereunder." Petition at 3. The Unions describe Proposal 2 as requiring the determination of all negotiable aspects of the pay-fixing process through collective bargaining. The Unions state that Proposal 3 "establishes criteria and a methodology for the exercise of pay-fixing authority that parallel and supplement obligations currently imposed by law, Department of Treasury regulations adopted pursuant thereto and longstanding pay-fixing practices." Id. at 5. The Unions also state that Proposal 3 contains additional procedural requirements that assure the full and active involvement of the Unions in the pay-fixing process. According to the Unions, Proposal 4 "mandates the exercise of pay-fixing authority administratively by the [A]gency, but subject to the standards, criteria and procedures established through the collective bargaining process." Id. at 6. The Unions state that Proposal 4 requires conformity with the requirements in statute concerning the fixing of pay for the employees represented by the Unions and seeks to incorporate "data collection methodology earlier recommended by an independent consultant firm retained by the Department of Treasury." Id. The Unions maintain that the requirements in Proposals 1, 2, 3, and 4 are within the Agency's discretion to fix pay in accordance with the mandate of 5 U.S.C. § 5349(a).

The Unions assert that Fort Stewart makes it clear that "wage rates and related matters constitute fully negotiable conditions of employment unless 'specifically provided for by Federal statute.'" Id. at 7 (citations omitted). According to the Unions, 5 U.S.C. § 5349(a) "on its face confers discretion upon the pay-fixing authority to determine the method by which wage rates are established and maintained as well as to make all necessary individualized determinations regarding the wage rates paid each craft." Id. at 8. The Unions argue that the statutory standards that are applicable to pay fixing under 5 U.S.C. § 5349(a) do not preclude bargaining over pay matters and "instead merely establish outer limits beyond which bargaining may not proceed." Id. The Unions state that, "as was true in Fort Stewart, the underlying premise of the [A]gency's contrary position--namely, that 'all aspects of pay-fixing under prevailing wage systems are provided by law'--is simply 'wrong.'" Id. at 9 (quoting Fort Stewart, 110 S. Ct. at 2048, emphasis in original) (citation omitted).

VI. Analysis and Conclusions

We find that Proposals 1, 2, 3, and 4 do not concern matters that are specifically provided for by Federal statute so as to be excluded, under section 7103(a)(14)(C), from those conditions of employment about which the Agency is obligated to bargain under the Statute. We also find that the proposals do not directly interfere with the Agency's right under section 7106(a)(1) to determine its budget. Consequently, we conclude that Proposals 1, 2, 3, and 4 are negotiable.

A. The Subject Matter of the Proposals Is Not Specifically Provided for by Federal Statute

Matters pertaining to the wages of Federal employees covered by the Statute are conditions of employment subject to the duty to bargain under the Statute unless they are excluded from the definition of conditions of employment because they are specifically provided for by Federal statute, within the meaning of section 7103(a)(14)(C) of the Statute. See Fort Stewart, 110 S. Ct. at 2045-49. See also National Association of Government Employees, Local R14-52 and U.S. Department of the Army, Red River Army Depot, Texarkana, Texas, 41 FLRA 1057, 1062-63 (1991) (Red River Army Depot), petition for review filed sub nom. U.S. Department of the Army, Red River Army Depot, Texarkana, Texas v. FLRA, No. 91-1472 (D.C. Cir. Sept. 26, 1991).

Where a Federal statute provides discretion to an agency with respect to the determination of matters pertaining to Federal employee wages, the wages of those employees are not a matter specifically provided for by Federal statute within the meaning of section 7103(a)(14)(C) of the Statute. See Fort Stewart, 110 S. Ct. at 2045-49; American Federation of Government Employees, AFL-CIO, Local 3732 and U.S. Department of Transportation, United States Merchant Marine Academy, Kings Point, New York, 39 FLRA 187, 191-93 (1991) (Merchant Marine Academy); American Federation of Government Employees, Local 1857 and U.S. Department of the Air Force, Air Logistics Center, Sacramento, California, 36 FLRA 894 (1990) (Air Logistics Center). See also National Association of Government Employees, Local R1-144, Federal Union of Scientists and Engineers and U.S. Department of the Navy, Naval Underwater Systems Center, Newport, Rhode Island, 38 FLRA 456, 482 (1990) (matters concerning pay and fringe benefits that are not specifically provided for by statute but are left to the discretion of the agency are conditions of employment within the meaning of section 7103(a)(14)(C)), remanded as to other matters sub nom. U.S. Department of the Navy, Naval Underwater Systems Center, Newport, Rhode Island v. FLRA, No. 91-1045 (D.C. Cir. July 23, 1991) (order), decision on remand as to other matters, 43 FLRA 47 (1991); Tidewater Virginia Federal Employees, Metal Trades Council and U.S. Department of the Navy, Norfolk Naval Shipyard, Portsmouth, Virginia, 37 FLRA 938, 946 (1990) (matters concerning the pay and fringe benefits of Federal employees that are not specifically provided for by statute but are left to the agency's discretion are conditions of employment within the meaning of section 7103(a)(14)(C)).

The issue in this case is whether matters pertaining to the wages of Bureau of Engraving and Printing employees are specifically provided for by Federal statute. We find that the wages of Bureau of Engraving and Printing employees are not matters that are specifically provided for by Federal statute so as to be excluded, under section 7103(a)(14)(C), from those conditions of employment about which the Agency is obligated to bargain under the Statute.

We note at the outset that these employees are not subject to the PRSA. 5 U.S.C. § 5342(a)(1)(I). Therefore, cases finding that wages established under the PRSA are specifically provided for by law do not apply. A determination as to whether the wages of craft employees of the Agency are specifically provided for by Federal statute must be based on an analysis of 5 U.S.C. § 5349.

Section 5349 of title 5 of the U.S. Code provides that the wages of the craft employees covered by that section shall be fixed and adjusted from time to time as nearly as is consistent with the public interest in accordance with prevailing rates and other provisions of title 5 relating to retroactive pay and grade and pay retention, as the pay-fixing authority of each agency may determine. Section 5349(a) gives the Agency broad discretion to establish and maintain wage rates for the craft employees represented by the Unions. See Bradley v. United States, 870 F.2d 1578, 1580 (Fed. Cir. 1989) (5 U.S.C. § 5349 gives the Agency broad discretion to determine the wages of craft employees); Archer v. United States, 18 Cl.Ct. 603, 606 (1989) (Congress provided a "broad grant of power to [the Department of the] Treasury to fix and adjust the pay of Bureau [of Engraving] employees."). Although 5 U.S.C. § 5349 provides that the Agency shall establish and maintain wage rates "as nearly as is consistent with the public interest in accordance with prevailing rates," 5 U.S.C. § 5349(a) does not specifically provide either the rate to be paid or the level of any revision or adjustment to those rates which the Agency shall fix and adjust from time to time as nearly as is consistent with the public interest. See Bradley v. United States, 870 F.2d at 1580 (citing National Maritime Union v. United States, 682 F.2d 944, 946 (Ct. Cl. 1982) (phrase "as nearly as is consistent with the public interest" gives agency discretion to override general purpose of prevailing rate statute: to provide parity between public and private sectors)).

The authority granted the Agency under 5 U.S.C. § 5349 to set pay for craft employees is different from the authority granted agencies under 5 U.S.C. § 5343 (which prescribes how wages will be set under the PRSA). Also, unlike 5 U.S.C. § 5338 (the General Schedule), 5 U.S.C. § 5349 does not prescribe the rates of pay for employees. Section 5349 only requires that whatever wages the Agency sets, by whatever process, must be consistent with prevailing rates and with the public interest. Rather than "fixing" wages by prescribing rates of pay or the process of determining wages, 5 U.S.C. § 5349 leaves "fixing" to the Agency, within the general parameters of prevailing rates and public interest.

In our view, 5 U.S.C. § 5349(a) is similar to 20 U.S.C. § 241(a). That is, the discretion exercised by the Agency in fixing wages for Bureau of Engraving and Printing craft employees under 5 U.S.C. § 5349(a) is substantively the same as the discretion exercised by an agency in setting wages under 20 U.S.C. § 241(a). In particular, under 5 U.S.C. § 5349(a), the Agency is not bound by the detailed wage setting mechanism required by the PRSA. See Fort Stewart, 110 S. Ct. at 2048-49. Rather, the Agency is required to fix and adjust pay for employees covered by 5 U.S.C. § 5349(a) "as nearly as is consistent with the public interest in accordance with prevailing rates . . . ." Under 20 U.S.C. § 241(a), the Agency is required to determine rates of pay for personnel subject to that provision by taking action "to ensure that the education provided . . . is comparable to free public education provided for children in comparable communities in the State[.]"

Both of these statutory provisions establish broad requirements of comparability with other pay systems, but leave to an agency's discretion the decision as to particular rates of pay. They are not like the PRSA where the process for fixing wages is specifically prescribed and the union's role is clearly limited and prescribed. See 5 U.S.C. §§ 5343(a) and (c). Consequently, consistent with the Supreme Court's decision in Fort Stewart, we find that the wages for craft employees of the Bureau of Engraving and Printing are fixed at the discretion of the Agency and are not "fixed by law," namely, 5 U.S.C. § 5349. Therefore, we conclude that the wages established by the Agency under 5 U.S.C. § 5349 are not "specifically provided for by Federal statute," within the meaning of section 7103(a)(14)(C) of the Statute. See Red River Army Depot, Texarkana, Texas, 41 FLRA at 1060-62 (1991); National Treasury Employees Union and U.S. Department of the Treasury, Internal Revenue Service, 37 FLRA 147, 151-52 (1990).

In reaching our conclusion, we reject the Agency's reliance on Military Sealift Command and Bureau of Engraving and Printing, which were decided prior to Fort Stewart. Recently, in Merchant Marine Academy, we concluded that "the court's analysis of the legislative history of the Statute in Military Sealift Command, which was subsequently adopted by the court in Bureau of Engraving and Printing, is no longer valid in view of the Supreme Court's decision in Fort Stewart." 39 FLRA at 194. Therefore, in Merchant Marine Academy we rejected the agency's claim that Military Sealift Command and Bureau of Engraving and Printing support a conclusion that Congress intended to exclude matters relating to pay and pay matters from the duty to bargain under the Statute. Thus, in our view, after Fort Stewart, it cannot be concluded that Congress did not intend to include the pay and pay practices established under 5 U.S.C. §§ 5348 and 5349 as bargainable matters under the Statute.

Relying on Fort Stewart and Merchant Marine Academy, we find that the decisions in Military Sealift Command and Bureau of Engraving and Printing, and the Authority cases relying on those decisions, are no longer valid to the extent that they hold that pay and fringe benefits for Federal employees determined under 5 U.S.C. § 5349 do not concern conditions of employment because those matters are specifically provided for by Federal law. Accordingly, we reject the Agency's contention that those cases are controlling.

B. The Proposals Do Not Directly Interfere with Management's Right to Determine Its Budget under Section 7106(a)(1) of the Statute

The Agency contends that the proposals directly interfere with management's right to determine its budget under section 7106(a)(1) of the Statute.

To establish that a proposal interferes with management's right to determine its budget, an agency must either demonstrate that the proposal: (1) prescribes the particular programs or operations the agency would include in its budget or prescribe the amount to be allocated in the budget for them; or (2) entails an increase in costs that is significant and unavoidable and that such costs are not offset by compensating benefits. American Federation of Government Employees, AFL-CIO and Air Force Logistics Command, Wright-Patterson Air Force Base, Ohio, 2 FLRA 604 (1980) (Wright-Patterson), aff'd as to other matters sub nom. Department of Defense v. FLRA, 659 F.2d 1140 (D.C. Cir. 1981), cert. denied, 455 U.S. 945 (1982).

We find that the Agency has failed to demonstrate under either of the tests above that the proposals directly interfere with the Agency's right to determine its budget under section 7106(a)(1) of the Statute.

1. The First Budget Test

The first budget test is a narrow one. It withdraws from bargaining only those proposals that are addressed to the budget per se, not those that would result in expenditures by an agency and, consequently, would have an impact on the budget process. See, for example, Fort Stewart, 110 S. Ct. at 2052-53 and Naval Underwater Systems Center, 38 FLRA at 479-80. Proposals that merely have cost ramifications do not inject a union directly into the budget formulation process that is protected from bargaining under the first budget test. See, for example, Air Logistics Center, 36 FLRA at 904.

Proposals 1, 2, 3, and 4 do not involve the Unions in the budgetary process itself but are limited to establishing the methodology for fixing and adjusting the wages of craft employees represented by the Unions. The proposals do not prescribe a program or operation to be included in the Agency's budget, nor do the proposals prescribe an amount to be included in the Agency's budget. The proposals also do not prescribe an amount to be expended or require that an amount be included in the budget to implement the proposals.

Consequently, we find that the Unions' proposals do not directly interfere with management's right to determine its budget under the first part of the budget test. See National Association of Government Employees, Local R4-6 and Department of the Army Fort Eustis, Virginia, 42 FLRA 687, 701 (1991).

2. The Second Budget Test

In those instances in which proposals, by their terms, do not prescribe a particular program or amount to be included in an agency's budget but, nevertheless, are alleged to violate an agency's right to determine its budget because of increased costs, the Authority has established a second budget test. Under this test, in order to establish that a proposal interferes with management's right to determine its budget because of increased costs, an agency must demonstrate that the proposal would lead to increased costs that are: (1) significant; (2) unavoidable; and (3) not offset by compensating benefits. With regard to an agency's burden under the second test, the Authority has stated:

Only where an agency makes a substantial demonstration that an increase in costs is significant and unavoidable and is not offset by compensating benefits can an otherwise negotiable proposal be found to violate the agency's right to determine its budget under section 7106(a) of the Statute.

Wright-Patterson, 2 FLRA at 608. See also Langley Air Force Base, 40 FLRA at 131.(2)

As noted earlier, the Agency states that "[i]t is to be expected that negotiations with these [U]nions with respect to pay will lead to higher--not the same, or lower--wages." Statement at 16. However, the Agency fails to provide any evidence as to the costs that would be incurred as a result of the implementation of the proposals. The Agency, therefore, has failed to demonstrate that the increased costs, if any, associated with the proposals are significant. Further, the Agency has failed to demonstrate that any anticipated increases in costs associated with the proposals are unavoidable. The proposals merely establish criteria that must be considered by the parties in their negotiations concerning the wages of the Agency's craft employees.

In addition, the second budget test requires the balancing of whatever significant increased costs would unavoidably result from a proposal against the benefits of the proposal to determine whether the "net" costs of the proposals are significant and would in effect determine the agency's budget. Langley Air Force Base, 40 FLRA at 132. The Agency contends that the cost of the Unions' proposals are not offset by compensating benefits to the Agency. The Agency argues that there can be no showing of any benefit other than the personal benefit to employees who receive a pay increase through negotiations. The Agency claims that wage increases are not needed to acquire skilled employees. The Agency also maintains that increases in employees salaries will not result in an increase in productivity.

The Agency's arguments as to costs and benefits do not demonstrate that the costs resulting from the implementation of the proposals would not be offset by compensating benefits. The Agency has not provided any evidence as to the costs that would be incurred as a result of the implementation of the proposals nor has the Agency demonstrated that those costs outweigh the benefits to employees. Accordingly, we find that the Agency has not demonstrated that the proposals directly interfere with its right to determine its budget under the second part of the budget test.

We conclude that Proposals 1, 2, 3 and 4 do not directly interfere with the Agency's right to determine its budget under section 7106(a)(1) of the Statute and that they are, therefore, negotiable.

V. Order

The Agency shall, upon request, or as otherwise agreed to by the parties, bargain on Proposals 1, 2, 3 and 4.(3)




FOOTNOTES:
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1. The Unions also filed a related unfair labor practice charge alleging that the Agency violated section 7116(a)(1), (5) and (8) of the Statute (Case No. 3-CA-10409).Pursuant to section 2424.5 of the Authority's Rules and Regulations, the Unions have elected to defer processing of the unfair labor practice case pending the resolution of the this negotiabil