44:0018(3)NG - - National Weather Service Employees Organization and Commerce, NOAA, National Weather Service, Silver Spring, MD - - 1992 FLRAdec NG - - v44 p18



[ v44 p18 ]
44:0018(3)NG
The decision of the Authority follows:


44 FLRA No. 3

FEDERAL LABOR RELATIONS AUTHORITY

WASHINGTON, D.C.

NATIONAL WEATHER SERVICE EMPLOYEES ORGANIZATION

(Union)

and

U.S. DEPARTMENT OF COMMERCE

NATIONAL OCEANIC AND ATMOSPHERIC ADMINISTRATION

NATIONAL WEATHER SERVICE

SILVER SPRING, MARYLAND

(Agency)

0-NG-1955

0-NG-1997

DECISION AND ORDER ON NEGOTIABILITY ISSUES

February 20, 1992

Before Chairman McKee and Members Talkin and Armendariz.

I. Statement of the Case

This case is before the Authority based on two negotiability appeals filed by the Union under section 7105(a)(2)(E) of the Federal Service Labor-Management Relations Statute (the Statute). The appeals concern a provision, which was disapproved pursuant to section 7114(c) of the Statute (Case No. 0-NG-1955), and a proposal (Case No. 0-NG-1997) that raise the same issues. Both the provision and the proposal establish competitive areas for reduction in force (RIF) purposes that are coextensive with each of the six regions in the Agency's field structure. Adoption of the provision was directed by the Federal Service Impasses Panel (FSIP) in resolving a dispute between the parties that arose during negotiations over a new regulation concerning RIFs, NOAA Administrative Order 202-351. 91 FSIP 71 (1991). Subsequently, the provision was disapproved by the Agency head pursuant to section 7114(c) of the Statute.

The Union submitted the proposal during negotiations for a new collective bargaining agreement and the Agency declared it nonnegotiable. The parties request that the two cases be consolidated. In view of the fact that the two petitions raise identical issues, we grant the request.

For the reasons that follow, we find that the provision and the proposal are negotiable except insofar as they apply to the Agency's Western Region.

II. The Provision and the Proposal

A. The Provision

The Provision requires that in the Agency, "competitive areas shall be defined geographically by using NWS's [National Weather Service's] regional field structure."

B. The Proposal

ARTICLE 15

REDUCTION-IN-FORCE, TRANSFERS OF

FUNCTION AND REORGANIZATION

SECTION 7.

A. There will be six (6) competitive areas for reduction in force actions affecting NWS field components:

1. Eastern Region;

2. Southern Region;

3. Central Region;

4. Western Region;

5. Alaska Region; and

6. Pacific Region[.]

III. Positions of the Parties

Insofar as the petition in Case No. 0-NG-1997 is concerned, both parties rely on the arguments that they submitted in conjunction with the petition in 0-NG-1955.

A. The Agency

The Agency describes its field structure as consisting of six regions, each of which is comprised of a regional headquarters and a number of field offices. According to the Agency, there are a total of 330 field offices in the Agency and over 3,600 employees in the regions. The Agency states that the Union represents a consolidated, nationwide bargaining unit from which employees represented in other bargaining units by other labor organizations are excluded. According to the Agency, there is one such unit consisting of the nonprofessional employees of the Air Resources Laboratory, Las Vegas/Mercury NOAA Research Laboratories, which is represented by American Federation of Government Employees, Local 2396, AFL-CIO (AFGE Local 2396).

The Agency argues that because the provision and the proposal would include all regional employees in the competitive areas, they would determine the terms and conditions of employment for employees who are not in the Union's bargaining unit--specifically, the employees who are in the unit for which AFGE Local 2396 holds exclusive recognition. In response to documents that the Union submitted to support a claim that AFGE Local 2396 has disbanded, the Agency asserts that absent action by the Authority to decertify that local, the Agency must continue to honor its exclusive recognition. The Agency argues that it cannot negotiate with the Union over the terms and conditions of employment of employees in another union's bargaining unit and, therefore, that the provision and the proposal are inconsistent with law and nonnegotiable.

The Agency asserts that the provision and the proposal are nonnegotiable for the additional reason that they violate management's right under section 7106(a)(1) of the Statute to determine its budget. The Agency contends that the provision and the proposal would result in a significant and unavoidable increase in costs to the Agency that is not offset by compensating benefits. In this regard the Agency asserts that the provision and the proposal will cause substantial increases in the amounts of severance pay and relocation costs that it would incur in the event of a RIF.

The Agency states that its total operational budget for 1992 is $313 million. It contends that it is already faced with a "severe budget shortfall . . . ." Agency statement of position at 18. The Agency states that it also currently is undergoing a modernization program that will result in the closure of a number of its field facilities. It states that this process "will take a number of years" and that "[e]ach region . . . will proceed on its own schedule." Id. at 21. According to the Agency, in all likelihood, the modernization program will be phased in and this circumstance in combination with the region-wide competitive areas will produce "multiple overlapping RIFs." Id. at 22. Under this scenario the Agency contends that:

An employee will bump or retreat into a position at another station in a RIF and in what may be a week or a year later will be bumped by or displaced through retreat of another employee in another part of the Region. It is estimated that any employee may find him or herself moving three or four times until the modernization process is completed. The best scenario resulting from regional competitive areas is that each employee will be put into the position of geographically relocating once; and the worst scenario is that 50 percent of the employees in any region will have to relocate geographically more than once.

Id.

The Agency, which provides forecasts and warnings of weather conditions, maintains that different parts of regions have different weather patterns and environmental factors that affect weather and that moving employees within a region would produce a loss of productivity due to the need for additional orientation and on-the-job training. The Agency contends that under the provision and proposal it will incur additional costs as a consequence of "severance pay, relocation costs, reimbursement for real estate transactions, temporary quarters costs, and the upsurge in litigation costs." Id. at 23. The Agency states that in any given year, over 200 employees relocate and are due Permanent Change of Station (PCS) costs. According to the Agency, in fiscal year (FY) 1989, such costs amounted to $5.2 million and FY 1990 they amounted to $8.5 million.

The Agency asserts that under region-wide competitive areas a RIF would result in the placement of employees becoming a "'regional checkerboard' or a domino scheme based primarily on seniority." Id. at 23-24. The Agency argues that this would produce sizable PCS costs. It states that the costs associated with "moves of long distances have run as high as $100,000 or more per employee." Id. at 24. The Agency estimates that if the Agency had to move every bargaining unit employee just once under a RIF using region-wide competitive areas, the total cost for approximately 2,000 moves (using an average of $35,000 per move) would be $70,000,000. The Agency states that "[a]dded to this must be the cost of the third party relocation program," which it describes as rendering employees eligible for Federal assistance when relocating based on home value of up to $300,000. Id.

The Agency argues that given its current fiscal condition, the provision and proposal would result in costs that would necessitate a further reduction of hours and/or station closings and affect its ability to perform its operations effectively.

B. The Union

The Union has submitted copies of correspondence involving the National Secretary-Treasurer of the American Federation of Government Employees indicating that AFGE Local 2396 was disbanded effective January 1, 1984. The Union argues that it has been certified as exclusive representative of all professional and nonprofessional employees of the Agency except those employees excluded by the Statute and employees represented in other exclusively recognized units. The Union contends that, in view of the terms of its certification, the employees at the Air Resources Laboratory, Las Vegas/Mercury NOAA Research Laboratories accreted to its bargaining unit when AFGE Local 2396 disbanded.

The Union further asserts that even if those employees are not now in its bargaining unit, the provision and the proposal affect vital interests of bargaining unit employees and therefore their impact on employees in a bargaining unit represented by another union is immaterial to the determination of their negotiability.

In response to the Agency's contention that the provision and the proposal directly interfere with management's right to determine its budget, the Union contends that the appropriate inquiry is whether they excessively interfere with that right. In this regard the Union contends that the provision and the proposal constitute an appropriate arrangement for employees adversely affected by the Agency's modernization program, which will entail the closure of 130 stations where unit employees are currently employed, as well as by RIFs that may occur as a result of the Agency's anticipated budget shortfall.

The Union asserts that in determining whether a proposal interferes with the Agency's right to determine its budget, the budget that is relevant is that of the entity that meets the definition of "agency" under section 7103(a)(3) of the Statute. In this case, the Union contends that the relevant budget is that of the Department of Commerce and not that of the National Weather Service, the Agency that is party to this case. The Union points out that the Agency has not provided budget figures for the Department of Commerce in its statement of position.

The Union contends that the estimated financial costs flowing from the provision and the proposal that are presented by the Agency are "wildly inflated." Union reply brief at 4. In support of this contention the Union has submitted a copy of a memorandum from the Department of Commerce Inspector General recommending against offering employees the services of third-party relocation contractors because such services increase relocation costs to an average of $22,000 per employee as compared to an average of $3,700 per employee without those services.

The Union challenges the Agency's claim that the number of employees who would be entitled to severance pay would increase under the provision and the proposal. The Union contends that the same number of employees would be entitled to severance pay under the provision and the proposal as would be without them. The Union asserts that, in fact, the provision and proposal would save the Agency substantial amounts of severance pay, which is based on length of service, because employees with greater service would be retained while employees with lesser service would be released.

The Union contends that the Agency has failed to explain how the provision and the proposal would result in multiple relocations. It asserts that the Agency's claims in this regard appear to be based on a misunderstanding of the mechanics of the RIF process. Specifically, the Union challenges a scenario offered by the Agency in which an employee in Ohio displaces an employee in South Carolina who, in turn, displaces an employee in Vermont. The Union contends that the employee in Ohio could move to Vermont and there would be no need for the intervening displacement.

The Union states that under the planned modernization only one classification of employee will be significantly decreased in number--that of meteorological technician. The Union contends that a significant number of employees in those positions will retire over the next decade as the modernization is implemented and that "only several hundred PCS moves" will occur in the bargaining unit of 3,500 employees. Id. at 7.

The Union contends that the provision and the proposal offer benefits to both the Agency and the employees. The Union argues that the Agency would benefit from the fact that the employees with the most experience and best performance appraisals would be retained. According to the Union, employees would benefit because older employees who have fewer employment options would stand a greater chance of retaining their jobs.

IV. Analysis and Conclusions

The Agency claims that the provision and the proposal are nonnegotiable because of their impact on employees in another bargaining unit. In the past, we have rejected arguments that proposals are nonnegotiable because they affect employees in another bargaining unit. We held that a proposal's effect on non-unit employees and positions, including employees and positions in other bargaining units, was not dispositive of the negotiability of the proposal.(1) See, for example, American Federation of Government Employees, Council of Marine Corps Locals (C-240) and Department of the Navy, U.S. Marine Corps, 35 FLRA 1023 (1990). Rather, we held that a proposal that affected employees or positions outside the bargaining unit was negotiable under the Statute if it vitally affected the working conditions of unit employees and was consistent with applicable law and regulation. See, for example, id.

While this case was pending, the U.S. Court of Appeals for the District of Columbia Circuit issued a decision in United States Department of the Navy, Naval Aviation Depot, Cherry Point, North Carolina v. FLRA, No. 91-1123 (D.C. Cir. Jan. 14, 1992) (Cherry Point). In Cherry Point, the court reversed and remanded the Authority's decision in International Association of Machinists and Aerospace Workers, Local Lodge 2297 and U.S. Department of the Navy, Naval Aviation Depot, Cherry Point, North Carolina, 38 FLRA 1451 (1991), in which the Authority had applied the test that is described above. While acknowledging the Authority's right to adopt the private sector vitally affects test, the court concluded that the test as applied by the Authority was inconsistent with the Statute, the Authority's own precedents, and the private sector labor law from which the test was drawn. Cherry Point, slip op. at 2-3. In the court's view, the vitally affects test is appropriately used "to define the limited circumstances in which subjects not normally seen to be within the compass of mandatory bargaining--e.g., the terms of a relationship between the employer and a third party--may become mandatory subjects due to their effect on bargaining unit employees." Id. at 10. The court added that the test "is not implicated, however, merely because a union proposal, which is otherwise within the scope of mandatory bargaining, would, if accepted, have some impact on persons outside the bargaining unit." Id. at 11 (emphasis in original). The court recognized that most union bargaining demands would have some "extra-unit effects" on non-unit personnel but held that such effects would not alter an employer's duty to bargain over mandatory subjects of bargaining. Id. at n.6. The court found that "proposals that principally relate to the conditions of employment of bargaining unit personnel are within the traditional scope of mandatory bargaining." Id. at 13. The vitally affects test is not relevant to such proposals.

In addressing the applicability of the vitally affects test, the court differentiated among four groups: non-bargaining unit employees, non-employees, management personnel and employees in other bargaining units. According to the court, the vitally affects test has no application unless the interests of non-bargaining unit personnel are "directly implicated" by a union proposal or, phrased alternatively, when a proposal "purports to regulate the terms and conditions of employment of non-unit employees." Id. In such circumstances, the proposals would fall outside the mandatory scope of bargaining absent a showing that the proposals vitally affect conditions of employment of bargaining unit employees. The court reached the same conclusion as to proposals that seek to bargain with respect to non-employees, finding that a union may bargain over "a non-employee matter [that] vitally affects bargaining unit interests . . . ." Id. at 16. However, the court held that the vitally affects test does not apply in circumstances where a union seeks to regulate through collective bargaining the conditions of employment of employees in other bargaining units and management personnel who are excluded by the Statute from bargaining units.(2) Id. at 12.

The court's decision in Cherry Point bears on this case because the provision and the proposal have extra-unit effects. The provision and the proposal define the competitive areas for RIF actions affecting the Agency's field components. The Agency claims that as to one region, the competitive area that is defined would encompass employees who are in a bargaining unit for which another union holds exclusive recognition. And, although the Agency does not raise the issue, we cannot ignore the fact that the competitive areas that are defined by the provision and proposal also would encompass the management personnel who are assigned to the Agency's regions.

Competitive areas are the boundaries within which employees compete for retention under RIF procedures. With certain limited exceptions not relevant here, competitive areas must meet standards that are specified in 5 C.F.R. § 351.402, a Government-wide regulation issued by the Office of Personnel Management (OPM). See, for example, National Treasury Employees Union and Department of Health and Human Services, Region X, 25 FLRA 1041, 1043-44 (1987). As relevant here, 5 C.F.R. § 351.402(b) provides:

(b) A competitive area may consist of all or part of an agency. The minimum competitive area in the departmental service is a bureau, major command, directorate or other equivalent major subdivision of an agency within the local commuting area. In the field, the minimum competitive area is an activity under separate administration within the local commuting area. A competitive area must be defined solely in terms of an agency's organizational unit(s) and geographical location, and it must include all employees within the competitive area so defined.

Defining a competitive area solely in terms of bargaining unit positions is "clearly prohibited" by these regulations. U.S. Merit Systems Protection Board v. FLRA, 913 F.2d 976, 980 (D.C. Cir. 1990). Thus, in order to comply with these regulations, a competitive area must include all employees, bargaining unit and non-unit alike, who are within the organizational and geographic boundaries that constitute the competitive area.

The record in these cases supports a conclusion that the need to have the provision and the proposal comply with the OPM regulatory requirement resulted in the competitive areas being defined in a manner that would include management personnel as well as bargaining unit employees. In particular, we note that the decision of the FSIP shows that the Union had originally proposed a competitive area that referred only to positions in its bargaining unit. 91 FSIP 71. The Agency asserted before the FSIP that the proposal was inconsistent with a Government-wide regulation because it referred only to bargaining unit employees. Id. at 4. In response to this claim by the Agency, the FSIP modified the Union's proposal to remove its limitation of the competitive areas to bargaining unit positions. Id. at 6-8. The FSIP ordered the parties to implement "a modified version of NOAA Administrative Order 202-351 such that, with respect only to NWS, competitive areas shall be defined geographically by using NWS's field structure." Id. at 8. The Union also had requested that that the FSIP incorporate its proposal regarding competitive areas into the nationwide agreement to be negotiated by the parties later in 1991. Id. at 2. The FSIP denied this request. Id. at 8. It is clear from the record that the instant proposal represents an effort by the Union to incorporate into the nationwide agreement the provision directed by the FSIP and, like the provision, the proposal necessarily includes management personnel within the scope of the competitive areas defined.

Also significant is the fact that because of circumstances over which the Union has no control, specifically, the OPM regulations, the Union is foreclosed from proposing a definition of competitive area that does not include management personnel except in rare instances--for example, where there is an organizational component in a commuting area that consists only of bargaining unit employees. Thus, in order to negotiate over competitive areas, a matter that is highly significant to the employees whom the Union represents, the Union will generally be forced to define any competitive area in terms that include non-unit employees.

In a RIF, employees may be subject to reassignment, demotion or termination. Clearly, the latter two are among the most severe actions that can occur in an employee's career. In view of the potential impact of a RIF, the procedures by which any RIF is conducted is of paramount interest to the employees and the unions that represent them. Those procedures determine how a RIF will affect individual employees. For example, the definition of a competitive area can make the difference between retention in the agency and termination from Federal employment. It is axiomatic that continued employment is a matter that is fundamental to working conditions as a whole. In our view it would produce an anomalous result to bar unions from negotiating over so elemental a working condition simply because an OPM regulation prevents the severance of management personnel from any competitive area proposed. This is especially true where, as here, a union has demonstrated no interest in determining the competitive area for management personnel but rather is concerned solely with the interests of the bargaining unit employees.

In the circumstances of this case, we conclude that the fact that the competitive areas defined by the provision and the proposal encompass management personnel as well as bargaining unit employees does not indicate that the Union is seeking to regulate the conditions of employment of the management personnel. Rather, it represents an effort to draft a proposal directly affecting the competitive areas of bargaining unit employees that meets the regulatory requirements governing the definition of competitive areas. Therefore, we conclude that the Union does not, through the provision and the proposal, purport or seek to regulate the terms and conditions of employment of management personnel.

We reach a different conclusion with respect to the inclusion of the employees at the Air Resources Laboratory, Las Vegas/Mercury NOAA Research Laboratories. Among other things, the Union claims that those employees have accreted to its bargaining unit. This assertion indicates that the Union affirmatively seeks to negotiate concerning the terms and conditions of employment of that group of employees. In other words, the Union does purport to regulate their terms and conditions of employment. We find that the question of the representation of the employees at the Air Resources Laboratory, Las Vegas/Mercury NOAA Research Laboratories, is unresolved. While the Union claims that AFGE Local 2396 has disbanded, the record does not permit a definitive conclusion as to the status of the bargaining unit for which it held exclusive recognition. For example, we cannot tell whether another union claims recognition, the employees are unrepresented, or whether they have accreted to the Union's bargaining unit. In view of the unresolved representation issue, we do not know whether the Union purports to regulate the conditions of employment for employees who are in its own unit, another union's unit, or unrepresented. Consequently, the record in this case does not permit a determination of the negotiability of the competitive area that would include those employees.

The record indicates that the Air Resources Laboratory, Las Vegas/Mercury NOAA Research Laboratories, is contained in the Agency's Western Region. Agency's statement of position, Exhibit No. 1. As we do not know the representational status of the employees at that laboratory, we cannot determine how the analysis in Cherry Point would apply to a competitive area that encompasses the entire region. Therefore, we will sever that region from the provision and the proposal and dismiss the petitions insofar as they concern the competitive area for that region.

Based on the foregoing, we conclude that insofar as the provision and the proposal define the competitive areas for all regions except for the Western Region they concern the conditions of employment of bargaining unit employees and are not rendered nonnegotiable by virtue of their extra-unit effects.

Next we turn to the Agency's assertion that the provision and the proposal are inconsistent with management's right to determine its budget under section 7106(a) of the Statute.

In American Federation of Government Employees, AFL-CIO and Air Force Logistics Command, Wright-Patterson Air Force Base, Ohio, 2 FLRA 604, 606-08 (1980), aff'd as to other matters sub nom. Department of Defense, Army Exchange Service v. FLRA, 659 F.2d 1140 (D.C. Cir. 1981), cert. denied, 455 U.S. 945 (1982), the Authority established two separate tests for determining whether a proposal conflicts with an agency's right to determine its budget. The Authority held that to establish that a union's proposal directly interferes with management's right to determine its budget, an agency must either: (1) demonstrate that the proposal prescribes the particular programs or operations the agency will include in its budget or prescribes the amount to be allocated in the budget for them; or (2) demonstrate substantially that the proposal entails an increase in costs that is significant and unavoidable and is not offset by compensating benefits. See Fort Stewart Schools v. FLRA, 110 S. Ct. 2043, 2049 (1990).

The Agency's arguments concern the second test only and, therefore, we do not address the first test. We find that the Agency has not provided adequate support for its claim that the provision and the proposal would entail an increase in costs that is significant and unavoidable and not offset by compensating benefits.(3)

Initially, we reject the Union's assertion that the relevant budget to be considered is that of the Department of Commerce as contrasted with that of the National Weather Service. In applying the test for determining whether a proposal directly interferes with management's right to determine the budget of the agency under section 7106(a)(1) of the Statute, the Authority has not limited its consideration to the budget of the parent executive agency, as suggested by the Union. Rather, the Authority has considered such proposals relative to the budget that applies to the organizational level to which the proposal applies. See, for example, National Association of Government Employees, Local R4-26 and Department of the Air Force, Langley Air Force Base, Virginia, 40 FLRA 118, 133-34 (1991) (in applying the second budget test the Authority compared the cost of the proposal with the Nonappropriated Fund Instrumentality (NAFI) budget at Langley Air Force); American Federation of Government Employees, AFL-CIO, Local 3106 and U.S. Department of Agriculture, 21 FLRA 711, 712-13 (1986) (in applying the second test the Authority compared the cost of the proposal with the total budgets for the Tick Eradication Program and for the Animal and Plant Health Inspection Service, a subordinate organization within the Department of Agriculture); National Treasury Employees Union, Chapter 6 and Internal Revenue Service, New Orleans District, 3 FLRA 748, 766 (1980) (in applying the second test the Authority compared the cost of the proposal with the total budget for the New Orleans Regional Office of the Internal Revenue Service).

We recognize that it is not possible to predict with complete accuracy the costs that may be involved in conducting a RIF. However, we find that the Agency has not provided reliable support for the cost predictions that it has offered. In this regard, the record provides no basis for determining whether the Agency's projections as to the number and cost of the relocations that would result as a consequence of the provision and the proposal take into account factors that would operate to minimize the number and cost of the geographical relocations that may result from a RIF. For example, there are insufficient details in the record to allow a determination of whether the Agency's projections take into consideration the number of employees who would be eligible for retirement during the period that it anticipates that a RIF would occur. Also, the information available in the record does not allow a determination of whether the Agency's projections take into consideration the flexibility that an agency has in choosing which position it will offer an employee whose position has been abolished or who has been released from a competitive level and is entitled to assignment rights.

When an employee's position is abolished the employee is not automatically released from his or her competitive level. Federal Personnel Manual (FPM) Supplement 351-1, subchapter S4-2. The agency may choose to reassign employees within the competitive level. Id. In any event, unless one of the exceptions authorized by 5 C.F.R. §§ 351.605-351.608 applies, the lowest-standing employee must be the one who is released from the competitive level. FPM Supplement 351-1, subchapter S4. Thus, an employee in an abolished position has a right to one of the other positions in the level as long as he or she is not the lowest-standing employee. FPM Supplement 351-1, subchapter S4-1. In satisfying an assignment right of an employee who has been released from a different competitive level, an agency is not required to offer the job of the lowest-standing employee in the competitive level to which the released employee has assignment rights but may reassign employees within the level and offer any position in the level as long as the assignment right is satisfied and the proper order of release from the level is followed. Id. When more than one available position will satisfy an employee's assignment right, the employee is entitled to the position with the highest representative rate.(4) FPM Supplement 351-1, subchapter S5-2. When two or more positions exist all with the same representative rate, the agency may offer the employee any one of them. Id. An employee has no right to choose a position. Id.

From the foregoing, it is clear that under the regulations governing RIFs the Agency has some flexibility to choose which precise position it will offer an employee whose position has been abolished and who has higher retention standing than other employees in the competitive level or who has been released from a competitive level and has assignment rights in another competitive level. This flexibility affords the Agency the ability to limit the number and/or distance of the geographical relocations that result from the abolishment of positions.

The Agency fails to provide an explanation of how it derived the figure of $35,000 as the average cost of a relocation stemming from a RIF conducted using region-wide competitive areas. Thus, we cannot judge the validity of the Union's claim that that figure is inflated. While, the Agency offers some figures as to previous total annual expenditures for PCS costs, it offers no breakdown of these figures in terms of the costs of intraregional moves as contrasted with moves involving greater distances. Nor does it offer any information as to how much of the cost involved resulted from payments that are mandatory under law or Government-wide regulation(5) and how much resulted from payments that under law and Government-wide regulation are not mandatory in nature but are discretionary.(6) As to the latter types of payments, the Agency has offered no basis for a conclusion that such would constitute unavoidable costs.(7)

Additionally, we note that the Agency has stated that the anticipated modernization program will be implemented over "a number of years." Agency statement of position at 21. However, in presenting its cost estimates, the Agency fails to state the number of years over which the costs would be spread and, thus, what the anticipated cost would be in a single budget year.

The Agency contends that regional competitive areas applied in the context of its modernization program will produce "multiple, overlapping RIF's," a factor which will significantly increase costs. However, we find that the Agency's claim of inability to control regional timing, which underlies this contention, is unconvincing. We recognize that external factors over which the Agency has little or no control may affect the time frame within which various aspects of the modernization program are implemented. However, we are not convinced that the Agency has no control over the timing and could not influence the extent to which "multiple, overlapping RIF's" occur. Thus, while it is plausible that the modernization program may entail more than one RIF in any one region, it would seem equally likely that the Agency could, through planning and coordination, limit the number of RIFs that occur and minimize the extent to which employees would be subject to multiple geographical relocations. The Agency's contention simply does not persuade us that it could not take actions that would minimize the increase in costs that it claims would result from the provision and the proposal. We find that the Agency has failed to demonstrate through this contention that the provision and the proposal would entail an increase in costs that is significant and unavoidable.

Therefore, the Agency has not provided a record to support its assertion that the provision and the proposal would entail an increase in cost that is significant and unavoidable and is not offset by compensating benefits. Consequently, it has not met the second budget test. It is well established that the parties bear the burden of creating a record upon which the Authority can make a negotiability determination. A party failing to meet its burden acts at its peril. National Federation of Federal Employees, Local 1167 v. FLRA, 681 F.2d 886, 891 (D.C. Cir. 1982); National Federation of Federal Employees, Local 341 and U.S. Department of the Interior, Bureau of Indian Affairs, Wapato Irrigation Project, Wapato, Washington, 39 FLRA 1272, 1274 (1991). In view of the Agency's failure to demonstrate that the provision and the proposal directly interfere with management's right to determine the budget of the agency, it is unnecessary to address the Union's claim that the provision and the proposal constitute an appropriate arrangement that is negotiable under section 7106(b)(3) of the Statute.

Based on the foregoing, we reject the Agency's argument that the provision and the proposal are nonnegotiable.

V. Order

The Agency shall rescind its disapproval of the provision at issue in Case No. 0-NG-1955 except insofar as the provision concerns the Western Region. The Agency shall bargain, upon request or as otherwise agreed to by the parties, over the proposal that is at issue in Case No. 0-NG-1997 except insofar as the proposal concerns the Western Region.(8) Insofar as the provision and the proposal define a competitive area that is coextensive with the Western Region, the petitions for review are dismissed.




FOOTNOTES:
(If blank, the decision does not have footnotes.)
 

1. The U.S. Court of Appeals for the District of Columbia Circuit previously remanded a decision in which the Authority had concluded that a proposal that defined "competitive area" was nonnegotiable because it directly determined conditions of employment for employees outside the bargaining unit. American Federation of Government Employees, Local 32, AFL-CIO v. FLRA, 853 F.2d 986 (D.C. Cir. 1988), remanding American Federation of Government Employees, Local 32, AFL-CIO and Office of Personnel Management, 22 FLRA 478 (1986). In remanding, the court directed the Authority to "reconsider the standard that obtains in the private sector" under which "the expert adjudicator inquires only whether vital interests of unit employees would be affected by a given proposal, and permits bargaining over such proposals without regard to potential effect on nonunit employees." 853 F.2d at 993. On remand, the Authority adopted and applied that standard and concluded that the proposal, which defined "competitive area," was negotiable. American Federation of Government Employees, Local 32, AFL-CIO and Office of Personnel Management, 33 FLRA 335. The court subsequently affirmed that decision. U.S. Office of Personnel Management v. FLRA, 905 F.2d 430 (D.C. Cir. 1990).

2. As will be discussed further herein, we conclude that the Union in this case does not seek to regulate the conditions of employment of management personnel who are excluded by the Statute from bargaining units. We do not address in this case the extent to which we adopt the court's interpretation that the vitally affects test does not apply in circumstances where a union seeks to regulate the conditions of employment of such personnel.

3. We express no view on the continued validity of this second test, or on whether the "compensating benefits" portion of the test should include monetary benefits only. See, for example, Tidewater Virginia Federal Employees Metal Trades Council and U.S. Department of the Navy, Norfolk Naval Shipyard, Portsmouth, Virginia, 37 FLRA 938, 949 n.2 (1990). However, as we find, the Agency has failed to satisfy this test.

4. Representative rate means the fourth step of the grade for a position under the General Schedule; the prevailing rate as defined by FPM Supplement 532-1 for a position under the Federal Wage System or similar wage-determining procedure; and for other positions, the rate designated by the agency as representative of the position. FPM Supplement 351-1, subchapter 2-1.

5. For example, 5 U.S.C. § 5724 states that:

[T]he agency shall pay from Government funds--

(1) the travel expenses of an employee transferred in the interest of the Government from one official station or agency to another for permanent duty, and the transportation expenses of his immediate family, or a commutation thereof under section 5704 of this title;

(2) the expenses of transporting, packing, crating, temporarily storing, draying, and unpacking his household g