Panama Canal Commission (Agency) and Marine Engineers Beneficial, Association, District No. 1 (Union)

[ v56 p451 ]

56 FLRA No. 67

PANAMA CANAL COMMISSION
(Agency)

and

MARINE ENGINEERS BENEFICIAL
ASSOCIATION, DISTRICT NO. 1
(Union)

0-AR-3223

_____

DECISION

June 22, 2000

_____

Before the Authority: Donald S. Wasserman, Chairman and Dale Cabaniss, Member.

Decision by Member Cabaniss for the Authority.

I.     Statement of the Case

      This matter is before the Authority on exceptions to an award of Arbitrator Charles R. Greer filed by the Agency under section 7122(a) of the Federal Service Labor-Management Relations Statute (the Statute) and part 2425 of the Authority's Regulations. The Union filed an opposition to the Agency's exceptions.

      The Arbitrator denied in part and sustained in part a grievance challenging the Agency's application of its selection and appraisal procedures for positions of Engineer Manager, ME-16 (ME-16) and Chief-Engineers-in-Charge, ME-15 (ME-15s). Specifically, in an Interim Award, the Arbitrator first determined that the grievance was arbitrable. In a Supplemental Award, the Arbitrator denied the grievance as it pertained to the ME-16 position and sustained the grievance as it concerned the ME-15 positions. The Arbitrator directed the Agency to remove the selectees from the ME-15 positions, to re-advertise the positions, and to conduct a new selection with the appraisals completed by each applicant's supervisor.

      For reasons that follow, we conclude that the Agency has not established that the award is deficient under section 7122(a) of the Statute. Accordingly, we deny the Agency's exceptions. [ v56 p452 ]

II.     Background and Arbitrator's Award

      The Agency announced vacancies for an ME-16 and for three ME-15 positions. After the selections were made, the Union filed a grievance alleging that the Agency violated 5 U.S.C. § 2302(b)(6) (section 2302(b)(6)) [n1]  in the selection and appraisal procedures for the positions.

      As part of the selection/promotion procedure, supervisory appraisal forms had to be completed for applicants. As relevant here, the grievance asserted that a management official who served on the Appraisal Board for the ME-15 positions had completed the supervisory appraisal forms for several applicants considered by the Board. The management official "completed the supervisory appraisal forms for applicants in his chain of command instead of having them filled out by [the employees'] immediate supervisors." [n2]  Supplemental Award at 1. The grievance also complained that applicants were harmed by evaluators who assigned ratings of zero on some evaluation items when they had no knowledge of the applicant's specific KSAs.

      The grievance was not resolved and was submitted to arbitration. The Arbitrator stated the issues as follows: [n3] 

1.     Is the Grievance arbitrable?
. . . .
3.     Did the [Agency] violate the Collective Bargaining Agreement or any applicable rules, regulations, or laws when it filled the ME-15 positions? If so, what shall the remedy be?

Interim Award at 3, Supplemental Award at 2 and 7.

A.     Interim Award

      The Agency sought dismissal of the grievance without a hearing, arguing that the grievance was not arbitrable under Article 19, section 19.05(e) of the collective bargaining agreement (the Agreement). [n4]  The Arbitrator found that this section excludes "'nonselection for promotion from a group of properly ranked and certified candidates.'" Interim Award at 6 (quoting the Agreement, Attachment 7 to Exceptions at 85). The Arbitrator found that the implication of the Union's arguments and evidence was that procedural errors caused the applicants to be improperly ranked. Given the Union's argument and the record evidence, the Arbitrator concluded that the grievance was not excluded by Article 19, section 19.05(e), and determined that a hearing was required on the merits.

B.     Supplemental Award

      The Arbitrator summarized his findings on Issue 1 stating that he found the grievance arbitrable because:

(1) there were allegations of procedural errors leading to improper ranking of applicants and [s]ection 19.05(e) of the [Agreement] excludes grievances about nonselection for promotion only when applicants are properly ranked, (2) the grievance contested the appraisal of applicants by a higher level manager instead of their immediate supervisor as required by the appraisal form-and thus constituted a potential violation of past practice and the [Agreement], (3) only one of the challenges of ME-15 promotions appeared to be moot, and (4) there was considerable disagreement about the facts.

Supplemental Award at 2.

      Concerning Issue 3, the Arbitrator found "substantial evidence" that the Agency's policy and past practice was that the appraisal for promotions was done by the employee's immediate supervisor. Id. at 13. The Arbitrator found that the management official who served on [ v56 p453 ] the Appraisal Board for the ME-15 positions was not the applicants' immediate supervisor and, therefore, his appraisals violated the Agency's own rules, policy, and past practice. The Arbitrator found that reasons mentioned by the Agency for not following the policy, for example, that the immediate supervisor was sick or on leave or temporary assignment, were not applicable in the circumstances of this case.

      The Arbitrator next found that the management official "could have reasonably obtained the appraisals of the supervisors" of the grievants. Id. at 14. However, according to the Arbitrator, the evidence showed that he wanted to complete the appraisals because he "intended for them to be lower than they should be because [of] ulterior motives." Id. The Arbitrator found that the management official was in a position to exercise ulterior motives in the promotional decision because he was both the appraiser of applicants in his chain of command and chairman of the Appraisal Board. Noting that the management official had changed his reason for rating the applicants more than once, the Arbitrator found that his claimed rationale, i.e., that he rated the applicants because of the pressure of time constraints, was not supported by the evidence. To the Arbitrator, the fact that the management official had changed his story by claiming a more legitimate reason indicated that he was aware his action was inconsistent with merit criteria required by the Agreement and, therefore, was "arbitrary or capricious." Id. at 17.

      The Arbitrator rejected the Agency's claim that except for the whistle-blowing provision, it was not subject to section 2302(b). The Arbitrator found that the Agreement in "both Articles 18.01 and 19.18" adopted as the standard of review the provisions of section 2302(b). Id. The Arbitrator interpreted the Agreement to allow him to overturn the Agency's actions when they: "(1) constitute prohibited personnel practices specified in [section] 2302(b), (2) result in harmful error, and (3) are arbitrary, capricious, an abuse of discretion or are otherwise contrary to law." Id. The Arbitrator also stated that, to find the violation claimed here he had to find that an Agency manager acted in opposition to law, rules, or regulations for the purpose of improving or injuring the prospects of a person for employment.

      The Arbitrator found that the facts of this case satisfied these requirements in that the management official's actions: (1) constituted a prohibited personnel practice pursuant to the standard adopted in the Agreement; (2) violated a rule or policy of the Agency with respect to the appraisal form's requirement that appraisers must have first-hand knowledge of the applicant; (3) violated the Agreement by rating the applicants on the basis of ulterior motives instead of the merit requirements for promotion found in section 13.01(a); and (4) violated unwritten policy, rule and past practice that requires immediate supervisors to complete the appraisals. Referring to language in section 19.05, the Arbitrator stated that the subject manager's actions violated the Agreement because his failure to follow the Agency's own rules resulted in improper ranking of the applicants.

      As to ulterior motives, the Arbitrator found that the management official "treated [four] employees differently [assigned them lower ratings] for the 'specific purpose of injuring [the] employee[s'] prospects for employment and for improving those of another' in order to show that he was the boss." Id. at 18. Consequently, he determined that the management official's action decreased the chance for promotion of the four employees while benefitting an employee whom he assigned a higher rating. He found, therefore, that this "was purposeful, arbitrary, and harmful error" to the four employees. Id. at 19.

      The Arbitrator rejected the Agency's argument that the grievance concerned violations of law and the Panama Canal Personnel Manual (PCPM) and not the Agreement. Noting the grievant was not a lawyer, the Arbitrator stated that it was not unreasonable to infer that the references to violations of law in the grievance were to prohibited personnel practices obtained from the law and adopted in sections 18.01 and 19.18 of the Agreement. The Arbitrator further found that the Union's brief on the arbitrability issue, which was prepared by a lawyer, included references to the Agreement as foundation for the grievance. He further determined that the PCPM was not at issue, and any consideration of it was unnecessary to decide that a hearing was needed and to rule on the arbitrability and merits issues.

      The Arbitrator also found the Union provided no evidence showing that an applicant was denied a promotion because of a zero rating, and that there was no conclusive proof showing that the absence of correlation between grievants' annual performance evaluations and the promotion appraisal resulted from favoritism.

      Based on the above, the Arbitrator sustained Issue 3. He directed the Agency to remove the individuals selected for the ME-15 positions, to re-advertise the positions, and to conduct a new selection for each position with the applicants' appraisals being completed by his or her immediate supervisor. The Arbitrator also directed that if the process was completed with respect to one position that the Agency claimed had been [ v56 p454 ] re-advertised, the incumbent of that position should remain.

C.     Post-filing Conference

      The Panama Canal Treaty of 1979 provided that the Panama Canal (the Canal) would be transferred to Panama on December 31, 1999. Before that date, the Agency notified the Authority that its address would change effective December 31, 1999 when it would consist of a single office--the Office of Transition Administration (OTA)--which is tasked with closing out the Agency's affairs.

      Subsequently, the Authority conducted a telephone conference with the parties to discuss the impact of the transfer on this case. During the conference, the Agency explained that under the Panama Canal Treaty of 1977, on December 31, 1999, it would cease to operate the Canal and would be separating its employees, who would in most cases either become employees of the Panama Canal Authority (PCA), the Panamanian entity that would administer the Canal, or retire from Federal Service. The Agency further stated that employees of the PCA would be subject to the employment system established by Panamanian law. [n5] 

      The Agency stated that after December 31, 1999, as the OTA, it would be responsible for closing out Agency matters still pending as of December 31. The Agency stated that it would not have the authority to comply with a decision sustaining the award because the positions involved become part of the PCA after December 31. The Agency stated that it had been advised by the PCA Administrator that the PCA intends to honor and implement a decision issued by the Authority in this matter. According to the Agency, the PCA's intent to do so is based on the status of this case and concerns of fairness and due process for the Union.

      The Union representative was not aware of how the PCA would treat such decision. In a supplemental statement clarifying the record of the conference, the Union "urges the Authority not to abdicate its obligations" to the Canal employees because the Agency will continue to exist to satisfy its financial obligations, close out its affairs, and to coordinate the transition with the PCA. Union's Clarification to Record of Conference (Union's Clarification) at 1.

III.     Positions of the Parties

A.     The Agency's Exceptions

1.     Arbitrability

      The Agency excepts to the Arbitrator's determination that the grievance was arbitrable, and that the Agency violated the Agreement, Agency rules and policy, and past practice with respect to the ME-15 positions.

      The Agency contends that the grievance is not arbitrable for four reasons. First, the Agency asserts that "section 2302(b)(6) does not apply" to it and, therefore, it is contrary to section 3652(a)(5) of the Panama Canal Act, as amended, (the Act), codified in Title 22 of the United States Code, 22 U.S.C. § 3601, et. seq, for the Arbitrator to hold a hearing on this matter. [n6]  Exceptions at 4. The Agency refers to section 3664(3) of the Act and asserts that this section only adopts 5 U.S.C. § 2302(b)(8), relating to whistleblower protection. [n7]  Therefore, the Agency contends that finding grievable a grievance alleging a violation of section 2302(b)(6) violates section 3652(a)(5). [n8]  In support, the Agency cites International Association of Firefighters, Local 13 and Panama Canal Commission, General Services Bureau, Balboa, Republic of Panama, 43 FLRA 1012 (1992) (IAF, Local 13).

      Second, the Agency asserts that section 2302(b)(6) was not adopted in the Agreement. Referring to Article 19, section 19.18, the Agency contends that this section was agreed to at a time when section 2302(b)(6) [ v56 p455 ] "applied to the Agency." Exceptions at 5. The Agency asserts that Congress amended the Act in September 1996 and exempted it from certain provisions of section 2302(b), including (b)(6). The Agency contends that because the Agreement became effective August 25, 1995, before the amendment, it cannot be claimed that the Agency bargained to bind itself to this provision.

      Third, the Agency contends that the arbitrability finding does not draw its essence from the Agreement because, in accordance with section 7121(a)(2) of the Statute, [n9]  nonselections for promotion from a group of properly ranked and certified candidates are excluded from the Agreement by Article 19, section 19.05(e). The Agency asserts that the selections were made pursuant to section 7106, in accordance with applicable law and, therefore, the grievance is outside the scope of the grievance procedure and not arbitrable.

      Fourth, the Agency contends that even if section 2302(b) was adopted by Article 19, section 19.18, a violation of section 2302(b)(6) cannot be found because there was no underlying violation of law, rule or regulation. The Agency asserts, therefore, that it is contrary to Authority law to find the Agency violated section 2302(b)(6) and, thus the grievance is not arbitrable.

2.     Merits

      The Agency argues that even if the grievance is arbitrable, the award on the merits does not draw its essence from the Agreement and is contrary to law.

      According to the Agency, the Arbitrator's interpretation of sections 13.01, 19.05, and 19.18 does not draw its essence from the Agreement. The Agency makes the same argument for section 19.05 as it did concerning arbitrability. The Agency acknowledges that Article 19, section 19.18 refers to section 2302(b)(6). However, the Agency claims that this provision "does not provide a substantive right of action[,] . . . but instead, it limits the Arbitrator's authority to modify or overturn Agency actions." Id. at errata 2. As to section 13.01, the Agency contends that the Arbitrator, by finding that the management official violated this provision by filling out the supervisors' evaluations, is attempting to prescribe the method for completing the supervisors' forms and, therefore, "substituting his judgment for that of the Agency." Exceptions at 14. The Agency claims that this constitutes a manifest disregard for the Agreement.

      The Agency next claims that even if section 2302(b) was adopted in the parties' Agreement, the Arbitrator's finding of a section 2302(b)(6) violation is contrary to Authority law because it does not meet the legal standard for establishing a violation of a prohibited personnel practice. In support, the Agency cites National Treasury Employees Union Chapter 32 and U.S. Department of the Treasury, Internal Revenue Service, Denver District, Denver, Colorado, 49 FLRA 1105, 1109 (1994); National Association of Government Employees, Local R4-78 and U.S. Department of Veterans Affairs Medical Center, Martinsburg, West Virginia, 46 FLRA 631, 636 (1992), among other cases, which it asserts requires a party to show that: (1) the disputed personnel action violated law, rule, or regulation; and (2) the law, rule or regulation implements or directly concerns merit principles.

      The Agency asserts that the award does not meet the legal standard because the appraisal form's requirement that an appraiser must have first-hand knowledge of the applicant "is not a rule" and, further the form does not say that it has to be completed by the immediate supervisor. Exceptions at 9. The Agency also contends that there is no law, rule, or regulation that provides that someone who completes the supervisors' evaluations cannot sit on the Appraisal Board. The Agency asserts that section 13.01(a) of the Agreement is not a law, rule, or regulation, and past practice does not constitute a law, rule, or regulation. The Agency argues, therefore, that the award is contrary to Authority law.

      The Agency further asserts that management has the right to make selections for appointments from among properly ranked and certified candidates for promotion under section 7106(a)(2)(C)(i) and that the award affects this right. [n10]  In support, the Agency cites American Federation of Government Employees, Local 31 and U.S. Department of Veterans Affairs, Medical [ v56 p456 ] Center, Wade Park Unit, Cleveland Ohio, 49 FLRA 957, 962 (1994) (Wade Park). The Agency also cites U.S. Department of the Treasury, Bureau of Engraving and Printing, Washington, D.C. and National Treasury Employees Union, Chapter 201, 53 FLRA 146, 151-54 (1997) (BEP), and asserts that the award does not satisfy the two-prong test applied when a management right is involved.

      Referencing Prong I of BEP, the Agency asserts that sections 13.01, 19.05, and 19.18 of the Agreement are not "procedures" or "appropriate arrangements" under the Statute. Exceptions at 11. In support of its position that section 13.01 is not an arrangement, the Agency cites Wade Park.

      The Agency further states that Prong II was not met because it cannot be established that the management official would have forwarded the applicants' evaluations to their immediate supervisors.

      Lastly, the Agency asserts that the Arbitrator "overstepped his authority in granting a remedy[]" for the ME-15 positions. Id. at 16. The Agency contends that the Arbitrator does not have authority to order the appraisal forms be completed by applicants' supervisors. The Agency states that there are situations where this is not possible.

B.     Union Opposition

1.     Arbitrability

      According to the Union, the Agency's arbitrability arguments concern the application of section 2302(b). The Union asserts that sections 13.01(a) and 19.05(e) require merit based promotion decisions and allow employees to grieve favoritism. The Union contends that the promotions were not excluded from the negotiated grievance procedure under section 19.05(e) because the Arbitrator found the applicants were not properly ranked. Consequently, the Union asserts that the award draws its essence from the Agreement.

      The Union contends that the Agency's obligations under the contract remain because in the September 1996 amendments, Congress did not amend the Agreement or even refer to any grievance procedures. According to the Union, the Arbitrator applied section 2302(b) to the facts of this case based on section 19.18 of the Agreement, which incorporates section 2302(b) and, therefore, the application of section 2302(b) is contractual. In support, the Union cites 24th Combat Support Group, Howard Air Force Base, Republic of Panama and Unlicenced Division of District No.1, MEBA/NMU, 55 FLRA 273 (1999) (Howard AFB); American Federation of Government Employees, Local 3258 and U.S. Department of Housing and Urban Development, Boston, Massachusetts, 53 FLRA 1320 (1998). Contrary to the Agency's claim, the Union also asserts that International Association of Firefighter is not applicable to this case.

      The Union also asserts that section 3.03 provides for negotiations to amend or modify the Agreement and the Agency should have notified it and negotiated an amendment if it wanted to change the Agreement.

      The Union, noting the Agency's contention that the management official did not commit a prohibited personnel practice because he did not violate a law, rule, or regulation, asserts that the Agency misconstrues the award and the law. The Union contends that the Agency is "factually wrong" because the management official did violate a rule. Opposition at 12. Relying on the definition of "rule" in Black's Law Dictionary, the Union claims that the management official violated the instructions on the evaluation form--the standard or guidance of having personal knowledge of the applicant.

      The Union also asserts that the Agency is "wrong as a matter of law" because the Arbitrator found that the management official "'treated employees differently for the specific purpose of injuring one employee's prospects for employment and for improving those of another' merely to show the employees that 'he was the boss.'" Id. at 13 and 14 (quoting Supplemental Award at 18). The Union states that "favoritism" is a violation of section 2302(b)(6). In support the Union cites Special Counsel v. Byrd and Rubinstein, 59 M.S.P.R. 561 (1993) (Byrd). The Union also asserts that the Authority cases cited by the Agency are distinguishable from this case.

2.     Merits

      The Union contends that the Agency "misconstrues" the Authority's standard for determining whether an award infringes on a management right. Id. at 16. The Union asserts that the award does not violate section 7106 because the award allows the Agency to "reconstruct what it would have done if it had acted properly and in accordance with the Agreement." Id. at 17.

      The Union asserts that the remedy does not exceed the Arbitrator's authority. [ v56 p457 ]

IV.     Analysis and Conclusions

A.     The Arbitrator's Arbitrability Determination is: (1) Not Contrary to Law, and (2) Does Not Fail to Draw Its Essence From the Parties' Agreement

1.     Contrary to Law

      Section 7122(a)(1) of the Statute provides in pertinent part that an arbitration award will be found deficient if it conflicts with any law, rule, or regulation. As the exceptions involve the award's consistency with law, the questions of law raised by the Arbitrator's award and the Agency's exceptions must be reviewed de novo. National Treasury Employees Union, Chapter 24 and U.S. Department of the Treasury, Internal Revenue Service, 50 FLRA 330, 332 (1995) (citing U.S. Customs Service v. FLRA, 43 F.3d 682, 686-87 (D.C. Cir. 1994)). In applying a standard of de novo review, the Authority assesses whether the Arbitrator's legal conclusions are consistent with the applicable standard of law, based on the underlying factual findings. See National Federation of Federal Employees, Local 1437 and U.S. Department of the Army, Army Research, Development and Engineering Center, 53 FLRA 1703, 1710 (1998). In making that assessment, the Authority defers to the Arbitrator's underlying factual findings. See id.

      In this case, the Arbitrator rejected the Agency's claim that the grievance was not arbitrable because it concerned a section 2302(b)(6) matter finding that the parties' agreement in Articles 18.01 and 19.18 adopted as the standard of review the provisions of section 2302(b). The Agency challenges the Arbitrator's substantive arbitrability determination arguing that the grievance is not arbitrable under section 3652(a)(5) of the Act because under this section, section 2302(b)(6) is not applicable.

      The courts and the Authority have determined that Federal law outside the Statute can limit the scope of the negotiated grievance procedure. Department of Defense Dependents Schools and Overseas Education Association, 22 FLRA 142, 145 (1986). However, "where laws other than the Statute limit the scope of negotiated grievance procedures, there have been clear, specific indications that the statutory procedures were intended to be exclusive." American Federation of Government Employees, Local 3258 and U.S. Department of Housing and Urban Development, Boston, Massachusetts, 53 FLRA 1320, 1325 (1998) (U.S. Department of HUD) (citing National Treasury Employees Union, Chapter 15 and Internal Revenue Service (Los Angeles District), 33 FLRA 229, 235 (1988). "[W]here a law or regulation does not use such [language as] 'notwithstanding,' the Authority will find matters excluded from the negotiated grievance process if the expressed intent to do so is unmistakable." U.S. Department of HUD, 53 FLRA at 1326.

      Applying the rationale set forth above, we find that section 3652(a)(5) does not preclude the Arbitrator from deciding the issue presented in this case. Section 3652(a)(5) of the Act provides that the Panama Canal Employment System shall-

(a)(5) not be subject to the provisions of title 5, United States Code, unless specifically made applicable by this Act.

Section 3664 (22 U.S.C. § 3664) of the Act describes provisions of title 5 applicable to the Agency, including section 2302(b)(8) (relating to whistleblower protection), and Chapter 71 (relating to labor relations). With respect to Chapter 71, section 3701 of the Act, provides in part, that "[n]othing in this chapter shall be construed to affect the applicability of chapter 71 of title 5, relating to labor-management and employee relations, with respect to the Commission[.] [n11] 

      Also, further examination of the above mentioned provisions shows that subsection (5) of section 3652(a) was added by section 3521 of the Panama Canal Act Amendments of 1996 (1996 Amendments), Pub. L. No. 104-201 and that section 3664 was also amended by section 3536 of the 1996 Amendments "to clarify those provisions of title 5 . . . which are applicable to the Panama Canal Commission." 1996 U.S. Code Cong. and Adm. News, 104th Cong., 2nd Sess. at 3086. Section 3701 was not amended by the 1996 Amendments, but this section was amended in 1997 by Pub. L. No. 105-85, which added subsection (c). However, there is nothing in the 1997 Amendments that pertain to the negotiated grievance procedures referred to under section 3701.

      Having examined the Act, we find that although section 3652(a)(5) excludes the Agency from coverage of title 5 unless specifically made applicable by the Act, there is nothing in the 1996 or 1997 Amendments that limits the grievance procedure negotiated by the parties under section 3701. Thus, as the Arbitrator found, the issue in this case concerns violations of the parties' negotiated contractual provisions, including Article 19, section 19.18, which refers to "[any] prohibited personnel practice[] obtained from [5 U.S.C. § 2302(b)] and adopted" in this provision. Supplemental Award at 19. [ v56 p458 ] The grievance is not, therefore, predicated on a statutory violation--a violation of 5 U.S.C. § 2302(b)(6), but rather, is predicated on a provision of the parties' Agreement that adopted "any prohibited personnel practice described in . . . section 2302(b)" as a standard for measuring whether the Agency's conduct complied with the merit promotion process provided in the agreement. Supplemental Award at 4. We find, therefore, that absent a limitation, which the Arbitrator did not find, the word "any" would include all prohibited personnel practices.

      Additionally, IAF, Local 13, 43 FLRA at 1028-29, cited by the Agency, is distinguishable from the instant case. Unlike that case, where the Authority found an award requiring the agency to pay employees overtime pay for annual and sick leave deficient because the employees were specifically excluded from provisions of title 5 governing sick and annual leave, this case is not governed by a provision of title 5, but is governed by provisions of the parties' agreement.

      Also, to the extent that the Agency asserts that even if section 2302(b)(6) was adopted by section 19.18 of the parties' Agreement, the grievance is still not arbitrable because there was no violation of section 2302(b)(6) as required by Authority law, such claim provides no basis for finding the arbitrability determination deficient. The Agency has failed to explain how a finding that no prohibited personnel practice was committed would make the grievance nonarbitrable. Under section 7121(a)(2) of the Statute, the parties are free to exclude any matter from the coverage of their negotiated grievance procedure. As discussed below, the Arbitrator found that the parties did not exclude the issue involved here. Accordingly, the Agency's claim that the grievance was not arbitrable because no commission of a prohibited personnel practice could be found provides no basis for finding the arbitrability determination deficient.

      As the grievance is based on standards referenced in the parties' Agreement rather than section 2302(b)(6), it is not precluded by section 3652(a)(5) of the Act. The Agency's contentions, therefore, provide no basis for finding the award deficient.

2.     The Arbitrator's Arbitrability Determination Does Not Fail to Draw Its Essence from the Parties' Agreement

      In order for an award to be found deficient as failing to draw its essence from the collective bargaining agreement, it must be established that the award: (1) cannot in any rationale way be derived from the agreement; (2) is so unfounded in reason and fact and so unconnected with the wording and purposes of the agreement as to manifest an infidelity to the obligation of the arbitrator; (3) does not represent a plausible interpretation of the agreement; or (4) evidences a manifest disregard of the agreement. See U.S. Department of Defense, Defense Logistics Agency, Defense Distribution Center, New Cumberland, Pennsylvania and American Federation of Government Employees, Local 2004, 55 FLRA 1303, 1306-07 (2000) (Member Cabaniss concurring); United States Department of Labor (OSHA) and National Council of Field Labor Locals, 34 FLRA 573, 575 (1990).

      The Arbitrator addressed the Agency's claim that the grievance was not arbitrable under section 19.05(e) because "nonselection for promotions from a group of properly ranked and certified candidates[]" is excluded from the Agreement by this provision. The Arbitrator found that the implication of the Union's arguments and evidence was that "procedural errors lead[] to improper ranking of applicants[]" for the ME-15 positions. Supplemental Award at 2. The Arbitrator interpreted section 19.05(e) and concluded that this section excludes grievances concerning nonselection "only when applicants are properly ranked[.]" Id. The Arbitrator determined that because the grievance concerned procedural errors leading to the improper ranking of applicants it was not excluded by Article 19.05(e). The Agency has not demonstrated that the Arbitrator's interpretation and application of Article 19, section 19.05(e) is unfounded, implausible, irrational, or evidences a manifest disregard of the Agreement.

      Also, to the extent that the Agency claims that Article 19, section 19.18 of the Agreement cannot bind the Agency because this provision became effective before the 1996 Amendments, we construe this claim as a contention that the award fails to draw its essence from the parties' collective bargaining agreement. We find, for the reasons discussed below in Section IV.B.1., that such claim provides no basis for finding the award deficient.

      Further, to the extent that the Agency claims that the grievance is not arbitrable because the selections were made pursuant to section 7106, in accordance with applicable law, such claim does not provide a basis for finding the Arbitrator's arbitrability determination deficient. The Agency misunderstands the Arbitrator's determination. The arbitrability determination did not concern the Agency's right to make selections, but rather whether procedural errors in the ranking of applicants for selection could be arbitrated under the parties' [ v56 p459 ] Agreement. Accordingly, we find that this exception fails to demonstrate that the award is deficient.

B.     The Arbitrator's Determination on the Merits:(1) Does Not Fail to Draw Its Essence from the Parties' Agreement; (2) Is Not Contrary to Law; and (3) Does Not Exceed the Arbitrator's Authority

1.     Essence

      The Agency contends that the Arbitrator's interpretation of sections 13.01, 19.05, and 19.18 does not draw its essence from the parties' agreement. The Agency asserts that section 19.18 does not provide a substantive right of action and that by finding a violation of section 13.01, the Arbitrator is "substituting his judgment for that of the Agency." Exceptions at 14.

      With respect to section 13.01, the Agency has not demonstrated that the award fails to draw its essence from the parties' agreement under any of the essence tests set forth above. Section 13.01 provides that "[p]romotions and other personnel movements requiring competitive procedures of Commission employees into bargaining unit positions shall . . . be governed exclusively by the procedures set forth in this article. Actions under these procedures . . . shall be based on merit. . . ." Supplemental Award at 3. The Arbitrator interpreted section 13.01 and found that the evidence established that the Agency violated this section by rating the grievants on the "basis of ulterior motives as opposed to the merit requirements for promotion outlined in [section] 13.01(a)." Id. at 18. The Arbitrator's interpretation is based on the agreement and does not show a manifest disregard for the agreement. Accordingly, the Agency has not demonstrated that the Arbitrator's interpretation of section 13.01(a) fails to draw its essence from the agreement.

      As to Article 19, the Arbitrator rejected the Agency's claim that, except for the whistleblowing provision of section 2302(b) it was not subject to any other part of section 2302(b). The Arbitrator found that his authority to decide the dispute was not based on section 2302(b) of Title 5, but was based on the parties' collective bargaining agreement which, in Article 19, section 19.18, adopted as the "[s]tandard of [a]rbitral [r]eview" the provisions of section 2302(b) that outline "prohibited personnel practice[s]." Supplemental Award at 4. See also id. at 17. The Agency itself acknowledges that section 19.18 refers to section 2302(b).

      The Agency's argument that section 19.18 does not provide a substantive right of action but, instead, limits the Arbitrator's authority to modify or overturn agency actions, does not demonstrate that the Arbitrator's interpretation and application of Article 19, section 19.18 is unreasonable, unfounded, implausible, or in any way manifests a disregard for section 19.18. Rather, the Arbitrator recognized the standard for reviewing grievances provided in this provision and applied these standards to the instant grievance. The Agency's exception, therefore, provides no basis for finding the award deficient.

      Lastly, the Agency claim that Article 19, section 19.05 does not draw its essence from the agreement is based on the same reasons as those discussed in the arbitrability section above. Based on the discussion in that section, the Agency's claim provides no basis for finding the award deficient.

2.     Contrary to Law

a.     Section 2302(b)(6)

      The Agency asserts that, even if section 2302(b) was adopted in the parties' agreement, the finding that it violated prohibited personnel practices provided in section 2302(b)(6) is contrary to Authority law because the finding does not meet the legal standard for establishing a prohibited personnel practice.

      As the exception involves the award's consistency with law, it is reviewed based on the de novo standard set out in Section IV.a.1., above.

      The Authority recently held that a prohibited personnel practice within the meaning of 5 U.S.C. § 2302(b)(6) requires an intentional or "purposeful taking of a personnel action in such a way as to give a preference to a particular individual for the purposes of improving her prospects for employment." National Federation of Federal Employees, Local 1658 and U.S. Department of the Interior, Bureau of Indian Affairs, Albuquerque, New Mexico, 55 FLRA 668, 672 (1999) (quoting Byrd, 59 M.S.P.R. at 570. Using a "hiring method" in a manner so as to "improve or injure a particular person's prospects for employment" would violate section 2302(b)(6). Byrd, Id.

      The Agency has not demonstrated that the award is contrary to section 2302(b)(6). The Arbitrator found that the Agency in the nonselection of grievants "treated employees differently for the 'specific purpose of injuring one employee's prospects for employment and for improving those of another[.]" Supplemental Award at 18. In this regard, the Arbitrator found that the evidence showed that the Agency manager's failure to follow the Agency's rules or policy for rating applicants for promotions--e.g., failure to comply with the appraisal form's requirement, rating on the basis of ulterior [ v56 p460 ] motives as opposed to the merit requirements for promotion, failure to comply with Agency policy that immediate supervisors rate applicants--"purposely manipulated" the ratings of applicants to benefit one candidate who received the promotion while decreasing the chances of other applicants for the promotion.

      The Arbitrator's factual findings show that the Agency manager "purposely" used the Agency's promotion process to improve a particular applicant's chance for promotion while injuring the other applicants' chances. Such conduct is similar to conduct the MSPB stated would constitute a violation of section 2302(b)(6). See Byrd, 59 M.S.P.R. at 570. Consequently, the Agency's claim, that the Arbitrator's finding is not consistent with the legal standard applied by the Authority, provides no basis for finding the award deficient. The Arbitrator's factual findings are sufficient to find that, under Authority and MSPB law, the Agency committed a prohibited personnel practice within the meaning of section 2302(b)(6).

b.     Section 7106(a)(2)(C)(i)

      In this case, referencing Wade Park, 49 FLRA at 962, as support, the Agency contends that the award is contrary to management's right to make selections under section 7106(a)(2)(C)(i) of the Statute.

      The Authority's framework for resolving exceptions alleging that an award violates management's rights under section 7106 of the Statute is set forth in BEP, 53 FLRA at 151-54. Upon finding that an award affects a management right under section 7106(a) of the Statute, the Authority applies a two-prong test to determine if the award is deficient.

      Under prong I of this framework, the Authority examines whether the award provides a remedy for a violation of either an applicable law, within the meaning of section 7106(a)(2) of the Statute, or a contract provision that was negotiated pursuant to section 7106(b) of the Statute. Id. at 153. If the award provides such a remedy, the Authority will find that the award satisfies prong I of the framework and will then address prong II.

      Under prong II of BEP, the Authority considers whether the arbitrator's remedy reflects a reconstruction of what management would have done if management had not violated the law or contractual provision at issue. Id. at 154. If the arbitrator's remedy reflects such a reconstruction, the Authority will find that the award satisfies prong II. An award that fails to satisfy either prong I or prong II will be set aside or remanded to the parties, as appropriate. See U.S. Department of Veterans Affairs, Medical Center, Coatesville, Pennsylvania and National Association of Government Employees, Local R3-35, 53 FLRA 1426, 1430-31 (1998).

      The Authority has held that an award that orders an agency to rerun a selection action for a particular position affects management's right to select under section 7106(a)(2)(C) of the Statute. Social Security Administration, Chicago North District Office and American Federation of Government Employees, Local 1346, 56 FLRA 274, 277 (2000) (SSA).

      In this case, with regard to Prong I, the Arbitrator found that the Agency violated the merit requirements for promotion contained in Article 13, Section 13.01(a) of the parties' agreement. The remedy awarded by the Arbitrator, therefore, addresses the Agency's violation of this provision. The Authority has found proposals requiring the use of competitive promotion procedures in filling positions that do not prevent management from considering applicants from other appropriate sources, to be negotiable procedures. See, e.g., National Federation of Federal Employees, Local 33 and U.S. Department of the Army, Corps of Engineers, Galveston, Texas, 47 FLRA 765, 772-75 ((1993) (proposal requiring the use of competitive promotion procedures in filling positions constituted a negotiable procedure); Pennsylvania National Guard and Association of Civilian Technicians and Pennsylvania National Guard and Association of Civilian Technicians, Pennsylvania State Council, 35 FLRA 478, 487 1990) (requirement in the collective bargaining agreement to use competitive procedures in the parties' agreement before filling a position through whatever means its chooses constituted a negotiable procedure). Accordingly, we find that the award enforces a contract provision that was negotiated pursuant to section 7106(b).

      Under Prong II, the question is whether the Arbitrator's remedy is a proper reconstruction of what the Agency would have done had it not violated the parties' agreement. In this case, the Arbitrator did not require the Agency to retroactively promote any grievant or to select any candidate. Instead, the Arbitrator directed that the selections be rerun. Thus, the Arbitrator here, unlike the arbitrator in Wade Park, did not require the Agency to select or promote any grievant. Ordering an agency to rerun a selection so as to accord with contractual requirements is an action satisfying prong II of the BEP analysis. See SSA, 56 FLRA at 277. Accordingly, we find that the award also satisfies prong II of the BEP analysis, and thus does not violate the Agency's right to select under section 7106(a)(2)(C). [ v56 p461 ]

3.     Exceed Authority

      The Agency asserts that the Arbitrator overstepped his authority in granting a remedy for the ME-15 positions in that he did not have the authority to order the appraisal evaluations to be completed by the applicants' supervisors. We construe the Agency's assertion as a claim that the Arbitrator exceeded his authority.

      An arbitrator exceeds his or her authority when the arbitrator fails to resolve an issue submitted to arbitration, resolves an issue not submitted to arbitration, disregards specific limitations on his or her authority, or awards relief to persons who are not encompassed within the grievance. U.S. Department of the Navy, Naval Base, Norfolk, Virginia and American Federation of Government Employees, Local 22, 5l FLRA 305, 307-08 (1995).

      The Agency has not established that the Arbitrator exceeded his authority. The Arbitrator stated the issue on the merits as follows:

Did the [Agency] violate the Collective Bargaining Agreement or any applicable rules, regulations, or laws when it filled the ME-15 positions? If so, what shall the remedy be?

Award at 7. The Arbitrator resolved this issue by interpreting and applying provisions of the parties' Agreement and applicable rules, policy and past practice as it concerned the Agency's merit promotion process. The Arbitrator found that the Agency in filling the ME-15 positions violated policy and past practice that requires immediate supervisors to complete applicant evaluations. In directing that the evaluation form for applicants be completed by their immediate supervisors, the award is directly responsive to the issue before the Arbitrator. The Agency, therefore, has not demonstrated that the Arbitrator exceeded his authority. Accordingly, we find that this exception provides no basis for finding the award deficient.

V.     Order

      The Agency's exceptions are denied.


Appendix

The pertinent provisions of the parties' agreement are as follows:

ARTICLE 2
APPLICATION OF CIVIL SERVICE REFORM ACT

The parties are governed by Title VII of the Civil Service Reform Act, as supplemented by the Panama Canal Act of 1979, and by other applicable laws and regulations.

ARTICLE 13
MERIT PROMOTION PROCEDURES

SECTION 13.01 POLICY.

      (a)     Promotions and other personnel movements requiring competitive procedures of Commission employees into bargaining unit positions shall, consistent with applicable statutes, be governed exclusively by the procedures set forth in this article. Actions under these procedures shall be based solely on job-related criteria and, to the extent that they are not inconsistent with the Panama Canal Treaty of 1977 and other international agreements, selections shall be based on merit, without regard to political, religious or labor organization affiliation or nonaffiliation, marital status, race, color, sex, national origin, citizenship, age, or nondisqualifying physical or mental handicap. These procedures shall provide employees an avenue for career development, and assist the Commission in achieving the most efficient utilization of available manpower in meeting its present employment needs and future employment goals.

ARTICLE 18
ADVERSE ACTIONS

SECTION 18.01 POLICY, BURDEN OF PROOF AND STANDARD OF REVIEW.

      (d) Standard of Review.     The decision of the Commission in any adverse action shall be sustained if no harmful error was committed in the application of the procedures in arriving at the decision; the action was not based on any prohibited personnel practice described in 5 U.S.C., section 2302(b); the decision was not arbitrary, capricious, an abuse of discretion or otherwise contrary to law; . . . . [ v56 p462 ]

ARTICLE 19
GRIEVANCE AND ARBITRATION PROCEDURE
PART A - GRIEVANCE PROCEDURE

SECTION 19.05 EXCLUSIONS. Matters excluded from this grievance procedure are those relating to:

. . . .

      (e)     Nonselection for promotion from a group of properly ranked and certified candidates[.]

. . . .

SECTION 19.18 Standard OF ARBITRAL REVIEW. Arbitrators are not empowered to overturn, modify, or otherwise mitigate the decision of the Commission in any disciplinary action or matter that is grieved if no harmful error was committed in the application of the procedures in arriving at the decision; the action was not based on any prohibited personnel practice described in 5 U.S.C. section 2302(b); and the decision was not arbitrary, capricious, or abuse of discretion or otherwise contrary to the terms of this agreement or to law.

THE PANAMA CANAL ACT OF 1979

The relevant parts of the Act are as follows:

§ 3602.     Definitions
(b)     Definitions
Subject to the provisions of subsection (c) of this section, for purposes of applying laws of the United States and regulations issued pursuant to such laws with respect to transactions, occurrences, or status on or after October 1, 1979-
. . . .
(d)     For purposes of this Act:
(1)     The term "Canal Transfer Date" means December 31, 1999, such date being the date specified in the Panama Canal Treaty of 1977 for the transfer of the Panama Canal from the United States of America to the Republic of Panama.
(2)     The term "Panama Canal Authority" means the entity created by the Republic of Panama to succeed the Panama Canal Commission as of the Canal Transfer Date.
. . . .

      § 3652.     Panama Canal Employment System; merit and other employment requirements

      (a) Establishment; merit and other employment requirements

      The Commission shall establish a Panama Canal Employment System and prescribe the regulations necessary for its administration. The Panama Canal Employment System shall--

. . . .

(5) not be subject to the provisions of Title 5, unless specifically made applicable by this chapter.

. . . .
§ 3664. Applicability of Title 5

      The following provisions of Title 5 apply to the Panama Canal Commission:

      (1) Part I of Title 5 (relating to agencies generally).

      (2) Chapter 21 (relating to employee definitions).

      (3) Section 2302(b)(8) (relating to whistleblower protection) and all provisions of Title 5 relating to the [ v56 p463 ] administration or enforcement or any other aspect thereof, as identified in regulations prescribed by the Commission in consultation with the Office of Personnel Management.

. . . .

(13)     Chapter 71 (relating to labor relations).

. . . .

§ 3701. Labor-Management relations
(a)     Nothing in this chapter shall be construed to affect the applicability of chapter 71 of Title 5, relating to labor-management and employee relations, with respect to the Commission . . .
. . . .
     (3)     any negotiated grievance procedures under section 7121 of Title 5, including any provisions relating to binding arbitration, shall, with respect to any personnel action to which subchapter II of chapter 75 of such title [5 U.S.C. § 7511 et seq.] applies (as determined under section 7512 of such title), be available to the same extent and in the same manner as if employees of the Panama Canal Commission were not excluded from such subchapter under section 7511(b)(8) of such title.
(b)     Labor-management and employee relations of the Commission . . . shall be governed and regulated solely by the applicable laws, rules, and regulations of the United States.
(c)(1)     This subsection applies to any matter that becomes the subject of collective bargaining between the Commission and the exclusive representative for any bargaining unit of employees of the Commission during the period beginning on November 18, 1997 and ending on the Canal Transfer Date.
(2)(A)     The resolution of impasses resulting from collective bargaining between the Commission and any such exclusive representative during that period shall be conducted in accordance with such procedures as may be mutually agreed upon between the Commission and the exclusive representative (without regard to any otherwise applicable provisions of chapter 71 of Title 5). Such mutually agreed upon procedures shall become effective upon transmittal by the Chairman of the Supervisory Board of the Commission to the Congress of notice of the agreement to use those procedures and a description of those procedures.
(B)     The Federal Service Impasses Panel shall not have jurisdiction to resolve any impasse between the Commission and any such exclusive representative in negotiations over a procedure for resolving impasses.
(3)     If the Commission and such an exclusive representative do not reach an agreement concerning a procedure for resolving impasses with respect to a bargaining unit and transmit notice of the agreement under paragraph (2) on or before July 1, 1998, the following shall be the procedure by which collective bargaining impasses between the Commission and the exclusive representative for that bargaining unit shall be resolved:
(A)     [sections (A)-(D) describe procedures to be followed if the Commission and an exclusive representative do not reach an agreement on a procedure for resolving bargaining impasses.]
(4)     In the case of a notice of agreement described in paragraph (2)(A) that is transmitted to the Congress as described in the second sentence of that paragraph after July 1, 1998, the impasses resolution procedures covered by that notice shall apply to any impasse between the Commission and the other party to the agreement that is unresolved on the date on which that notice is transmitted to the Congress.
§ 3714a.     Dissolution of Commission
. . . .
(b)     Termination office
The Commission shall during fiscal year 1998 establish an office to close out the affairs of the Commission that are still pending after the termination of the Panama Canal Treaty of 1977.
. . . .



Footnote # 1 for 56 FLRA No. 67

   5 U.S.C. § 2302(b)(6) states, in pertinent part, that it is a prohibited personnel practice to

grant any preference or advantage not authorized by law, rule, or regulation to any employee or applicant for employment (including defining the scope or manner of competition or the requirements for any position) for the purpose of improving or injuring the prospects of any particular person for employment.

Footnote # 2 for 56 FLRA No. 67

   The appraisal form states:

      Instructions to Supervisors. From your personal knowledge, evaluate the candidate on each listed item. Base your evaluation on actual observation of applicant's knowledge, skill or ability (KSA) in the area described. If you do not possess first hand knowledge of the applicant's KSA on any element, mark the element "NO Knowledge." Do not base evaluation on opinion heard from someone else or on what you believe the applicant is capable of. See Supplemental Award at 8 and Exceptions at 9 n.13.


Footnote # 3 for 56 FLRA No. 67

   The Arbitrator framed a second issue (Issue 2): "Did the [Agency] violate the Collective Bargaining Agreement or any applicable rules, regulations, or laws when it filled the ME-16 position? If so, what shall the remedy be?" Supplemental Award at 4. The Arbitrator found that the parties had not provided evidence to show that the ME-16 position was in the unit and, as he had no authority to clarify the unit, denied this part of the grievance based on arbitrability. Neither party excepted to this finding. Therefore, the award on Issue 2 will not be discussed further in this decision.


Footnote # 4 for 56 FLRA No. 67

   Relevant parts of the parties' Agreement are set forth in the Appendix to this decision.


Footnote # 5 for 56 FLRA No. 67

   The PCA was established in Article 310 of the "Political Constitution of the Republic of Panama." A temporary provision in the Constitution provides as follows:

TEMPORARY PROVISIONS. Unless otherwise provided in the Constitution, the Panama Canal Authority shall incorporate into its organization the administrative and operating structure existing in the Panama Canal Commission on December 31, 1999, including its departments, Offices, positions, police in force, regulations, and collective bargaining agreements, until such time as they are modified according to the law.

      The Panama Legislative Assembly also enacted a law on personnel and labor relations, Chapter V -Personnel Administration and Labor Relations. A provisional paragraph in Chapter V, Section Two - Labor Relations provides as follows:

Provisional Paragraph: The bargaining units and their exclusive representatives recognized on December 31, 1999, may continue to perform as such under the Authority [PCA] for up to 12 months, counted from December 31, 1999, while their recognition and certification are processed by the Board of Labor Relations.

Footnote # 6 for 56 FLRA No. 67

   Section 3652 of the Act, in pertinent part, is set forth in the Appendix to this decision.


Footnote # 7 for 56 FLRA No. 67

   Section 3664 of the Act, in pertinent part, is set forth in the Appendix to this decision.


Footnote # 8 for 56 FLRA No. 67

   As the Agency makes the same argument with respect to the Arbitrator's award on the merits, this contention will not be mentioned in the discussion on the merits.


Footnote # 9 for 56 FLRA No. 67

   Section 7121(a)(2) provides:

(2) Any collective bargaining agreement may exclude any matter from the application of the grievance procedures which are provided for in the agreement.

Footnote # 10 for 56 FLRA No. 67

   Section 7106(a) provides in pertinent part as follows:

(a) Subject to subsection (b) of the section, nothing in this chapter shall affect the authority of any management official of any agency -

. . . .

(2) in accordance with applicable laws-

. . . .

           (C)&nb