American Federation of Government Employees, Local 1827 (Union) and United States, Department of Defense, National Imagery and Mapping Agency, St. Louis, Missouri (Agency)

[ v58 p344 ]

58 FLRA No. 82

AMERICAN FEDERATION
OF GOVERNMENT EMPLOYEES
LOCAL 1827
(Union)

and

UNITED STATES
DEPARTMENT OF DEFENSE
NATIONAL IMAGERY AND MAPPING AGENCY
ST. LOUIS, MISSOURI
(Agency)

0-NG-2626

_____

DECISION AND ORDER
ON NEGOTIABILITY ISSUES

February 4, 2003

_____

Before the Authority: Dale Cabaniss, Chairman, and
Carol Waller Pope and Tony Armendariz, Members [n1] 

I.     Statement of the Case

      This case is before the Authority on a negotiability appeal filed by the Union under § 7105(a)(2)(E) of the Federal Service Labor-Management Relations Statute (the Statute), and involves eight proposals concerning the Agency's decision to contract out specific functions to the Native Joint Venture Corporation (NJVC).  [n2]  The Agency filed a Statement of Position to which the Union filed a Response, and the Agency filed a Reply to the Union's Response. For the reasons that follow, we find that Proposals 1-1, 1-4, and 4-1 are within the duty to bargain. We find that Proposals 2-1, 2-3, 5-2a, 6-2a, and 7-3 are outside the duty to bargain and dismiss the petition as to those proposals.  [n3] 

II.     Background

      The Agency decided to contract out two functions through a phased, seven-year transition process using the "direct conversion" method, which exempted the Agency from conducting a cost comparison study if it selected a "preferential procurement source" to perform the contracted functions. See OMB Circular A-76 Supplemental Handbook, Revised at Chapter 1, § D.8 (1999) (Circular A-76). The source selected by the Agency was NJVC, an Alaskan Native Corporation. The proposals at issue here were submitted by the Union in response to the Agency's decision.

III.     Proposals 1-1 and 1-4

      Proposal 1-1

The Agency will provide VERA authority with VSIP for positions targeted for outsourcing. At the [A]gency's discretion this authority will be in lieu of or concurrent with any other methods being used to draw down the workforce or/and facilitate the outsourcing initiative.

      Proposal 1-4

Each time there are more volunteers for VSIP opportunities than there are slots authorized, applicants will be released based on seniority.

A.     Meaning of the Proposals

      The parties agree that Proposal 1-1 requires the Agency to use both VERA (Voluntary Early Retirement Authority) and VSIP (Voluntary Separation Incentive Program) to reduce the number of employees who are occupying positions the Agency has determined will be contracted out. As explained by the Union, the proposal does not prohibit the Agency from using another method to reduce its workforce, provided that the Agency is using VERA and VSIP at the same time. The parties agree that Proposal 1-4 would require the Agency to provide VSIP opportunities to applicants based on seniority, where there are more VSIP applicants than number of VSIP opportunities being offered [n4]  [ v58 p345 ]

B.     Positions of the Parties

1.     Agency

      The Agency asserts that Proposals 1-1 and 1-4 affect management's rights to layoff and retain employees under § 7106(a)(2)(A) of the Statute because they would require it to provide VSIPs to qualified employees whom the Agency wants to otherwise retain. In this connection, the Agency asserts that although it wants employees in positions targeted for contracting out to leave their position in the Agency, it wants them to continue serving the Agency by taking a position with NJVC. The Agency also asserts that the proposals affect its right to make determinations as to contracting out under § 7106(a)(2)(B) because by offering VSIP, its costs are increased and the Agency loses its ability to retain skilled and experienced employees or to encourage them to work for the contractor. The Agency claims that the proposals are not procedures or appropriate arrangements under § 7106(b)(2) or (3).

2.     Union

      The Union asserts that the proposals do not affect management's right to layoff and retain employees under § 7106(a)(2)(A) because nothing in the proposals precludes the Agency from conducting a RIF, and nothing would impair the Agency's ability to maintain skilled employees to work for the contractor. The Union further argues that Proposal 1-4 does not affect management's right to retain employees because the proposal is simply a method to distribute VSIPs. The Union also asserts that the proposals do not affect management's right to contract out under § 7106(a)(2)(B) because the Agency is free to make the decision to contract out. Finally, the Union contends that both proposals are procedures and appropriate arrangements under § 7106(b)(2) and (3). The Union argues that the proposals address adverse effects on employees who may be left without positions or subject to a RIF because of the decision to contract out, and that the proposals could alleviate the need for a RIF by encouraging employees to leave voluntarily.

C.     Analysis and Conclusions

1.     The proposals do not affect management's right to layoff employees under § 7106(a)(2)(A)

      The Authority has consistently held that the right to layoff employees under § 7106(a)(2)(A) includes the Agency's right to conduct a RIF and to exercise its discretion in determining which positions will be abolished and retained in a reorganization or RIF. American Federation of Government Employees, Local 2004, 56 FLRA 660, 661 (2000) (AFGE, Local 2004); NFFE, Council of Veterans Admin. Locals, 31 FLRA 360, 434-37 (1988) (Council of Veterans); Fed. Union of Scientists and Eng'rs, 22 FLRA 731, 732-33 (1986) (Union of Scientists).

      Under Proposals 1-1 and 1-4, the Agency retains the right to conduct -- or not conduct -- a RIF or use any other method to reduce its workforce, as well as the right to exercise its discretion to determine the functions and positions it intends to contract out. In this regard, the Agency's reliance on AFGE, Local 2004, 56 FLRA at 661, is misplaced because unlike Proposals 1-1 and 1-4, the proposal in that case prohibited the agency from conducting a RIF to reduce its workforce. Accordingly, we conclude that the proposals do not affect management's right to layoff employees under § 7106(a)(2)(A) of the Statute.

2.     The proposals affect management's right to retain employees under § 7106(a)(2)(A)

      The Agency further argues that the proposals are inconsistent with its right to retain employees under § 7106(a)(2)(A) of the Statute because they would require it to provide VSIPs to qualified employees whom the Agency wants to otherwise retain as either an Agency or NJVC employee. This is a novel issue, as the right to retain employees has never been separately defined in Authority case law and has always been addressed in connection with the right to layoff. See Council of Veterans, 31 FLRA at 434-36; Union of Scientists, 22 FLRA at 732-33; AFGE, AFL-CIO, Int'l Counc. of Marshals Serv. Locals, 15 FLRA 333, 334-35 (1984). Nevertheless, § 7106(a)(2)(A) of the Statute refers to the two rights separately, providing that management retains the right to "hire, assign, direct, layoff, and retain employees." Accordingly, reading the right to retain as simply being the converse of the right to layoff would be "contrary to the `fundamental principle of statutory construction that effect must be given, if possible, to every word, clause, and sentence of a statute . . . so that no part will be inoperative or superfluous, void, or insignificant.'" United States Gov. Printing Office, Wash., D.C., 57 FLRA 299, 302 (2001) (quoting Indianapolis Power and Light Co. v. Interstate Commerce Comm'n, 687 F.2d 1098, 1101 (7th Cir. 1982)) (internal quotations omitted).

      Under principles of statutory interpretation, terms that are undefined in a statute or its legislative history are understood to have their ordinary meaning, which includes dictionary definitions. Koyo Seiko Co., Ltd. v. United States, 36 F.3d 1565, 1571 n.9 (Fed. Cir. 1994); ACT, Razorback Chpt. 117, 56 FLRA 427, 430 (2000); [ v58 p346 ] Columbia Power Trades Council, 54 FLRA 189, 193 (1998). The American Heritage College Dictionary, Third Edition, 1997, defines the term "retain" as "to maintain possession of," or to "keep in one's service or pay." In applying this definition, we note that agencies do not "possess" employees and that employees are free to leave employment at any time. As such, we do not construe the right to retain employees as including the right to demand actual continued employment. Accordingly, we define the right to retain employees as the right to establish policies or practices that encourage or discourage employees from remaining employed by an agency.

      Proposal 1-1 would require the Agency to use VSIPs to reduce the number of employees occupying positions that the Agency has determined will be contracted out, and Proposal 1-4 would require the Agency to provide those VSIP opportunities in order of seniority. The offer of a VSIP, a lump sum payment to leave the Agency, may discourage employees from remaining employed by the Agency. In addition, the requirement that VSIPs be awarded in order of seniority precludes the Agency from exercising its discretion to take steps to retain particular employees --who would otherwise not be eligible for a VSIP -- as Agency employees. It may also impair the Agency's ability to retain particular employees whose positions will not be transferred to NJVC until later in the seven-year transition to the contractor.

      Applying the foregoing standard, we find that Proposals 1-1 and 1-4 affect management's right to retain employees under § 7106(a)(2)(A) of the Statute.

3.     The proposals do not affect management's right to make determinations with respect to contracting out under § 7106(a)(2)(B)

      The Agency asserts that, but does not explain how, the proposals would affect its ability to make determinations with respect to contracting out. In this regard, the Agency has not provided any evidence or arguments demonstrating that the proposals limit the Agency's ability to contract out or interfere with the Agency's contractual relationship with NJVC or its employees. In addition, the Agency provides no evidence that providing VSIP to departing employees, in addition to the money the Agency already intends to give NJVC for incentive payments, would so increase costs as to affect its ability to contract out work. Moreover, while the proposals require the Agency to offer VSIP opportunities, nothing requires that any particular number of opportunities be offered or that the VSIPs be in a particular dollar amount. Accordingly, we conclude that Proposals 1-1 and 1-4 do not affect management's right to make determinations with respect to contracting out.

D.     Proposals 1-1 and 1-4 constitute appropriate arrangements under § 7106(b)(3)

      In determining whether a proposal is an appropriate arrangement, the Authority follows the analysis set forth in NAGE, Local R14-87, 21 FLRA 24 (1986) (KANG). Under this analysis, the Authority first determines whether the proposal is intended to be an arrangement for employees adversely affected by the exercise of a management right. See id. at 31; see also United States Dep't of the Treasury, Office of the Chief Counsel, IRS v. FLRA, 960 F.2d 1068, 1073 (D.C. Cir. 1992). To establish that a proposal is an arrangement, a union must identify the effects or reasonably foreseeable effects on employees that flow from the exercise of management's rights and how those effects are adverse. See KANG, 21 FLRA at 31. The claimed arrangement must also be sufficiently tailored to compensate employees suffering adverse effects attributable to the exercise of management's rights. See NAGE, Local R1-100, 39 FLRA 762, 766 (1991).

      If the proposal is determined to be an arrangement, then the Authority determines whether it is appropriate, or whether it is inappropriate because it excessively interferes with the relevant management right(s). See KANG, 21 FLRA at 31-33. In doing so, the Authority weighs the benefits afforded to employees under the arrangement against the intrusion on the exercise of management's rights. See id.

      The Authority has found that management's decision to contract out can have "significant adverse effects on unit employees," as it can result in, among other things, employees being assigned to new duties or being laid off. AFGE, Local 2077, 43 FLRA 344, 366 (1991); NFFE, Local 405, 42 FLRA 1112, 1117 (1991). The Authority has also found that an agency's decision to transfer a function "has serious repercussions for employees whose positions are affected[.]" NTEU, 43 FLRA 1442, 1460 (1992), remanded as to other matters, NTEU v. FLRA, 30 F.3d 1510 (D.C. Cir. 1994). In a similar vein, the Authority has held that suffering involuntary removal from employment and a corresponding loss of the compensation and benefits that employment provides has a severe and negative impact on any employee. United States Dep't of Defense, Fort Bragg Dependents Sch., Fort Bragg, N.C., 49 FLRA 333, 352 (1994) (Fort Bragg).

      While the Agency does not anticipate that the exercise of its right to contract out will result in the Agency [ v58 p347 ] conducting a RIF, it is undisputed that it will result in employees' functions and positions being eliminated within the Agency. The Agency explains that those employees whose functions and positions are eliminated may either go to work for NJVC or take another position performing different duties within the Agency. With regard to the former option, it is not disputed that, in order to take a position with NJVC, employees would have to terminate their employment with the Agency. With regard to the latter, even though the employee would remain employed with the Agency, it is not disputed that the employee would be displaced from his or her current duties and functions and would be required to perform new duties. Under either option, it is undisputed that employees whose functions and positions are eliminated would be involuntarily displaced from their current positions, suffering adverse affects.

      The Agency asserts that VSIPs compensate employees for the adverse effects of a RIF, and because the Agency does not intend to conduct a RIF, there is no adverse effect on employees. However, contrary to the Agency's claims, the fact that employees may have other employment offers within the Agency or with NJVC does not eliminate the direct and immediate result of the Agency's decision to contract out, which is that employees will lose their current positions. The fact that the employees' positions are eliminated as a result of contracting out, rather than a RIF, does not undermine a finding that employees are adversely affected. [n5]  Accordingly, consistent with AFGE, Local 2077, NFFE, Local 405, and NTEU, we find that the decision to contract out and the elimination of employees' positions and functions has an adverse effect on employees covered by the proposals. In addition, we find that because, by their terms, the proposals at issue here would provide VSIPs only to those individuals whose functions and positions had been eliminated as a result of the Agency's decision to contract out, the proposals are sufficiently tailored.

      Turning to whether the proposals are appropriate, as explained by the Union, the benefit of offering VSIPs to employees adversely affected by the decision to contract out is significant. It is clear, in this regard, that providing employees with a lump-sum payment to voluntarily leave the Agency is a substantial financial benefit to employees whose positions have been eliminated. In addition to providing a direct benefit to individual employees whose positions have been eliminated, the proposals offer a meaningful benefit to all employees whose functions and positions the Agency has determined will be contacted out. In particular, by encouraging employees whose jobs have been eliminated to leave the Agency, the possibility of the Agency conducting a RIF may be diminished and the likelihood increases that employees who stay within the Agency will be reassigned.

      The Agency argues that under the proposals, the Agency would be likely to lose skilled employees and its cost of contracting out would increase. However, this claim is undercut by the fact that the Agency has already eliminated the functions and positions of the employees covered by the proposals. In addition, under the proposals, the Agency retains the ability to take additional steps or institute any policies or programs to encourage particular employees to remain Agency employees. Further, while it is reasonable that offering VSIPs will increase the Agency's costs associated with contracting out, the Agency has not indicated how significant that increase is likely to be. In this regard, there is nothing requiring the Agency to offer a particular number of VSIPs, and there is nothing indicating how many employees could in fact be eligible for VSIPs if offered by the Agency. Moreover, the Agency does not address the costs associated with a RIF if it is unable to adequately voluntarily reduce its workforce.

      Weighing the significant benefit to employees whose positions were eliminated against the marginal limitation on management's right to retain employees and the possible cost to the Agency, we find that Proposal 1-1 and 1-4 do not excessively interfere with management's right under § 7106(a)(2)(A).

      Based on the foregoing, we conclude that Proposals 1-1 and 1-4 are appropriate arrangements under § 7106(b)(3) of the Statute, and are within the duty to bargain on that ground.

IV.     Proposal 2-1 and 2-3

      Proposal 2-1

The [A]gency will require that the NJVC has in place a written EEO policy that complies with federal EEO requirements to include record keeping that is adequate to identify trends i.e.: hiring, wage and benefit practices and discipline. [ v58 p348 ]

      Proposal 2-3

The [A]gency will require that NJVC will not impose, as a hiring prerequisite or condition of employment that employees waive or modify their full statutory right to seek redress for alleged violations of their EEO or OWCP rights.

A.     Meaning of the Proposals

      The parties agree that Proposal 2-1 requires the Agency to include in its contract with NJVC a provision requiring NJVC to have a written Equal Employment Opportunity (EEO) policy covering NJVC employees, which complies with Federal EEO requirements and includes a procedure for keeping records concerning the information identified in the proposal. The parties also agree that Proposal 2-3 requires the Agency to include in its contract with NJVC a provision prohibiting NJVC from requiring NJVC employees to waive or modify the rights set forth in the proposal as a prerequisite to being hired or as a condition of employment.

B.     Positions of the Parties

1.     Agency

      The Agency asserts that the proposals are outside the duty to bargain because they do not concern conditions of employment of bargaining unit employees. In addition, the Agency asserts that the proposals affect management's right under § 7106(a)(2)(B) to make determinations with respect to contracting out, and that they are not negotiable under § 7106(b)(2) or (3) of the Statute.

2.     Union

      The Union asserts that the proposals concern conditions of employment of bargaining unit employees because the proposals would apply while employees -- who have not yet left the Agency's employ -- are NJVC applicants. The Union further asserts that the proposals are within the duty to bargain because the Agency is required by Federal Acquisition Regulation to monitor contractor compliance with EEO statutes and regulations, and to protect the EEO rights of contract employees. The Union disputes the Agency's claim that the proposals interfere with management's right to contract out, and also asserts that the proposals are negotiable under § 7106(b)(2) and (3).

C.     The proposals do not concern a condition of employment of bargaining unit employees under § 7103(a)(14)

      A proposal that "directly implicate[s]" individuals who are not employees within the meaning of the Statute is outside the duty to bargain unless it "vitally affects" the conditions of employment of bargaining unit employees. United States Dep't of the Navy, Naval Aviation Depot, Cherry Point, N.C. v. FLRA, 952 F.2d 1434, 1441-42 (D.C. Cir. 1992); AFGE, Local 32, 51 FLRA at 507. Proposals 2-1 and 2-3 pertain to the rights and employment benefits of NJVC personnel, who are not employees within the meaning of § 7103(a)(2) and (3) of the Statute. NAGE, Local R1-109, 54 FLRA 521, 526 n.9. (1998). As such, the proposals directly implicate the conditions of employment of individuals who are not employees within the meaning of the Statute, and are not within the duty to bargain unless they vitally affect bargaining unit employees' conditions of employment.

      In determining whether or not a proposal vitally affects bargaining unit employees, the Authority looks to whether "the effect of that proposal upon unit employees' conditions of employment is significant and material, as opposed to indirect or incidental." NAGE, Fed. Union of Scientists & Eng'rs, Local R1-144, 42 FLRA 730, 745-47 (1991). Applying that standard, the Authority has held that proposals entitling employees to benefits after their termination from employment do not vitally effect those employees because there is no direct connection between the proposals and the work situation or employment relationship of unit employees. Compare Overseas Educ. Ass'n, Inc., 27 FLRA 492, 524-25, 543 (1987) (proposals addressing travel and education for current employees upon their retirement do not concern a condition of employment because they do not relate to the working conditions or employment relationship of bargaining unit employees), aff'd sub nom. Overseas Education Association, Inc. v. FLRA, 858 F.2d 769 (D.C. Cir. 1988); with POPA, 53 FLRA 625, 694-95 (1997) (proposal addressing conflicts resulting from employees' search for outside employment concerns a condition of employment because the conflicts would "arise in connection with an employee's current job duties" and "implicate employees' positions and job duties in the [a]gency").

      Contrary to the Union's claim in this case, even though bargaining unit employees may be Agency employees when applying or being recruited for positions with NJVC, the proposals would relate only to their conditions of employment when and if they became NJVC employees. In this regard, the proposals [ v58 p349 ] concern specific employment policies and rights as they relate to NJVC employees -- not Agency employees. While the proposals do apply to the NJVC application and hiring process, during which time applicants may still be employed by the Agency, nothing about either process implicate employees' positions and job duties in the Agency. As such, there is nothing in the proposals having a significant and material effect on the working conditions of unit employees while they are unit employees. Moreover, the Union makes no claims involving unit employees' working situations or their employment relationship with the Agency; the Union's claims focus only on the working situations of NJVC employees.

      In addition, the Union's claim that the proposals are within the duty to bargain because the Federal Acquisition Regulations require the Agency to monitor contractor compliance with EEO statutes and regulations is misplaced. As set forth above, proposals that do not concern conditions of employment are outside the duty to bargain. Nothing in the Federal Acquisition Regulations makes this requirement inapplicable here, and nothing in the regulations modify the impact of the proposals. Monitoring responsibilities do not bring NJVC employees into the Agency's bargaining unit or establish any relationship between the conditions of employment of Agency unit employees and the NJVC EEO policies that the proposals concern. Accordingly, there is no basis upon which to find that the proposals vitally affect the conditions of employment of bargaining unit employees.

      Based on the foregoing, we conclude that Proposals 2-1 and 2-3 are outside the duty to bargain because they do not concern conditions of employment of bargaining unit employees. [n6] 

V.     Proposal 4-1

      The [A]gency will require of the NJVC that employees that occupy positions targeted for outsourcing will have the right of first refusal to NJVC positions requiring substantially the same skills and/or experience as employees and work being contracted to NJVC when there are multiple employees vying for the same position/work with the NJVC and there are more applicants than positions.

A.     Meaning of the Proposal

      The parties agree that Proposal 4-1 requires the Agency to include in its contract with NJVC a provision providing that unit employees, who occupy a position targeted for contracting out, will have the right-of-first-refusal for NJVC positions that require substantially the same skills as the positions those employees encumber and for which there is more than one applicant. The Union explains that the proposal is intended to cover the period during which the Agency is transitioning functions and work to NJVC, and would not apply "in the eventuality of a RIF." Union Response 4-1 at 3. Because the Union's explanation of Proposal 4-1 is not inconsistent with the wording of the proposal, we adopt it. See Nat'l Educ. Ass'n, Overseas Educ. Ass'n, Laurel Bay Teachers Ass'n, 51 FLRA 733, 737 (1996) (NEA). Accordingly, we find that the proposal would require the Agency to include in its contract with NJVC a provision providing that -- in non-RIF situations -- the employees set forth in the proposal will have the right-of-first-refusal for the NJVC positions set forth in the proposal.

B.     Positions of the Parties

1.     Agency

      The Agency asserts that Proposal 4-1 is inconsistent with Circular A-76 because the proposal would provide a right-of-first-refusal to employees who are not entitled to that right under Circular A-76. In this regard, the Agency claims that the proposal requires that all bargaining unit employees who occupy positions targeted for contracting out receive the right-of-first-refusal, but that Circular A-76 limits that right to employees "adversely affected" --i.e., employees who are subject to RIF -- by a decision to contract out. Citing AFGE, Local 1345, 48 FLRA 168, 208-09 (1993), the Agency also asserts that the proposal is inconsistent with Circular A-76 because it makes the right-of-first-refusal grievable under the parties' agreement.

2.     Union

      The Union asserts that because the Agency's contract with NJVC is exempt from the cost comparison requirement of Circular A-76, the whole of Circular A-76 is not binding on the Agency. The Union further argues that it is negotiating a procedure to be used during the contracting out transition period and that Circular A-76 and its procedures do not apply during this period. According to the Union, if a RIF does occur, then the Circular -- not the proposal -- would apply and NJVC would be required to offer the right-of-first-refusal to adversely affected employees. In addition, the [ v58 p350 ] Union argues that the proposal is negotiable under § 7106(b)(2) and (3) of the Statute.

C.     The proposal is not inconsistent with Circular A-76

      Circular A-76 establishes policies regarding the performance of commercial activities and implements certain statutory requirements. [n7]  As relevant here, Circular A-76 provides that agencies engaging in contracting out must secure for employees who are subject to RIF as a result of the decision to contract out the right-of-first-refusal for positions with the contractor. [n8] 

      Proposal 4-1 gives the right-of-first-refusal to employees whose positions are targeted for contracting out where the Agency has not conducted a RIF; Circular A-76 provides that right to employees whose positions are identified for release pursuant to a RIF. As such, the rights-of-first-refusal provided under Proposal 4-1 and Circular A-76 are different in that they would apply in different circumstances -- the proposal applies in non-RIF situations, while Circular A-76 applies in RIF situations. Nothing in the proposal infringes on the right-of-first-refusal provided under Circular A-76. Contrary to the Agency's assertions, nothing in Circular A-76 prohibits the Agency from providing the right-of-first-refusal in non-RIF situations, and nothing indicates that additional rights cannot be negotiated for such situations. Accordingly, there is no basis for concluding that the proposal is inconsistent with the Circular on this ground.

      In addition, the Agency's argument that the proposal is inconsistent with Circular A-76 because it would make the Circular's right-of-first-refusal grievable under the parties' agreement is misplaced. Contrary to the Agency's assertions, Proposal 4-1 would not subject any aspect of the Circular to the negotiated grievance procedure -- the proposal applies in non-RIF situations, while Circular A-76 applies in RIF situations. Under the proposal, grievances over the right-of-first-refusal would be limited to the right guaranteed by the contract -- not the right guaranteed by Circular A-76. In this connection, AFGE, Local 1345, 48 FLRA at 206, -- where the Authority held that proposals subjecting disputes over compliance with Circular A-76 to resolution under the negotiated grievance procedure are nonnegotiable as inconsistent with the Circular -- is not applicable here. Accordingly, the Agency's claim in this regard does not provide a basis for finding the proposal inconsistent with Circular A-76.

      Based on the foregoing, we conclude that Proposal 4-1 is not inconsistent with Circular A-76.

VI.     Proposal 5-2a

The [A]gency will insure that NJVC contractors do not participate in: pay for performance panels, pay pools or awards programs, promotion panels or occupation councils when employees under consideration are employees in a work group or functional area targeted for contracting to NJVC.

A.     Meaning of the Proposal

      The parties agree that Proposal 5-2a would prohibit NJVC employees from being assigned to serve on any of the committees identified in the proposal if the committee considers matters concerning any unit employee who occupies a position that the Agency has targeted to contract out.

B.     Positions of the Parties

1.     Agency

      The Agency asserts that the proposal is inconsistent with management's rights to assign work and determine the personnel by which agency operations shall be conducted under § 7106(a)(2)(B) of the Statute. The Agency further asserts that the proposal is not negotiable under § 7106(b)(2) or (3) of the Statute.

2.     Union

      The Union asserts that the proposal is consistent with management's rights because it does not completely prohibit the Agency from using contract employees. The Union asserts that the proposal is a procedure under § 7106(b)(2) and an appropriate arrangement [ v58 p351 ] under § 7106(b)(3) because it provides a significant benefit to employees in workgroups whose positions are targeted for contracting-out. In this regard, the Union argues that deliberations in the committees can affect the pay, awards, work, and performance ratings of employees, and having a contract employee a part of those deliberations could result in bargaining unit employees losing pay, work and promotions.

C.     Proposal 5-2a affects management's right to assign work under § 7106(a)(2)(B)

      The right to assign work under § 7106(a)(2)(B) of the Statute encompasses the right to determine the particular duties to be assigned, when work assignments will occur, and to whom or what positions the duties will be assigned. See AFGE, Local 1985, 55 FLRA 1145, 1148 (1999). Here, the proposal would preclude the Agency from assigning NJVC employees to participate on Agency committees that determine wage increases, awards, performance appraisals, promotions and occupational duties when the matters before the committee relate to an employee who performs work targeted for outsourcing. As such, Proposal 5-2a affects management's right to assign work. See IFPTE, Local 1, 49 FLRA 225, 248-49 (1994) (proposal precluding the assignment of particular duties to certain contract and federal employees affects the right to assign work).

1.     The proposal does not constitute a procedure or appropriate arrangement under § 7106(b)(2) or (3)

      The Authority has held that proposals precluding an agency from assigning particular functions to particular individuals are not procedures within the meaning of § 7106(b)(2). See NLRB Union, 42 FLRA 1305, 1309-10 (1991) (proposal not a procedure that precluded agency from assigning regional directors to review employee appraisals). Proposal 5-2a would operate in certain circumstances to prohibit NJVC employees from being assigned to serve on any of the committees identified in the proposal. Applying the foregoing Authority precedent, which is not challenged by the parties, we find that Proposal 5-2a does not constitute a procedure under § 7106(b)(2) of the Statute.

      While the Union claims that Proposal 5-2a is an appropriate arrangement intended to ameliorate adverse effects resulting from NJVC employees being on committees, the Union does not offer any explanation or evidence that demonstrates that its asserted adverse effects are reasonably foreseeable. Contrary to the Union's assertions, nothing indicates that NJVC employees would be loyal only to NJVC or that their participation on Agency committees would adversely affect employee working conditions. As the adverse effects asserted by the Union are speculative, we conclude that the Union has failed to demonstrate that Proposal 5-2a constitutes an appropriate arrangement under § 7106(b)(3) of the Statute. See AFGE, Local 3529, 56 FLRA 1049, 1051-52 (2001); NAGE, Local R5-184, 55 FLRA 549, 551-52 (1999).

      Based on the foregoing, we conclude that Proposal 5-2a is outside the duty to bargain because it is inconsistent with management's right to assign work under § 7106(a)(2)(B) of the Statute. [n9] 

VII.     Proposal 6-2a

      The [A]gency will require that any information about a bargaining unit employee which is derogatory, raises a question about improper work methods or be the starting point for an inquiry or action against that employee which is made by a contractor employee or contractor management, will be transmitted from the contractor to [A]gency management in writing.

A.     Meaning of the Proposal

      The parties agree that Proposal 6-2a obligates the Agency to require that the information set forth in the proposal be in writing when that information derives from a contract employee and concerns a bargaining unit employee. As explained by both parties, the proposal would prohibit the Agency from taking disciplinary action against a bargaining unit employee based on an allegation made by a contract employee unless that allegation was in writing.

B.     Positions of the Parties

1.     Agency

      The Agency asserts that Proposal 6-2a is inconsistent with management's right to discipline employees under § 7106(a)(2)(A) of the Statute because it precludes the Agency from considering certain evidence concerning misconduct and from disciplining an employee. The Agency asserts that the proposal is not an appropriate arrangement under § 7106(b)(3).

2.     Union

      The Union asserts that the proposal does not prohibit the Agency from taking action against or disciplining [ v58 p352 ] an employee. In addition, the Union asserts that the proposal is a procedure and an appropriate arrangement under § 7106(b)(2) and (3).

C.     Proposal 6-2a affects management's right to discipline employees under § 7106(a)(2)(A)

      The Authority has consistently held that proposals restricting the evidence that an agency may use to evaluate an employee's performance or rely on to support a disciplinary action affect the agency's right to discipline employees under §_7106(a)(2)(A) of the Statute. POPA, 56 FLRA 69, 99 (2000); AFGE, Local 1345, 48 FLRA 168, 198-99 (1993); AFGE, AFL-CIO, Local 1931, 32 FLRA 1023, 1047-50 (1988), rev'd as to other matters sub nom. Dep't of the Navy, Naval Weapons Stat., Concord, Cal. v. FLRA, No. 88-7408 (9th Cir. Feb. 7, 1989). As relevant here, the Authority has found that proposals preventing the use of unwritten complaints at any stage of the disciplinary process affect management's right to discipline. POPA, 47 FLRA 10, 63-64 (1993); AFGE, Local 1931, 32 FLRA at 1048-49.

      Proposal 6-2a prohibits the Agency from taking disciplinary action against a bargaining unit employee based on an unwritten allegation made by a contract employee. Because the proposal restricts the evidence that the Agency may rely on -- i.e., the Agency can not rely on oral evidence from a contract employee to support a disciplinary action -- the proposal affects management's right to discipline employees under § 7106(a)(2)(A) of the Statute. AFGE, Local 1931, 32 FLRA at 1049.

1.     The proposal does not constitute a procedure or appropriate arrangement under § 7106(b)(2) or (3)

      The Authority has held that proposals limiting the evidence an agency can use to support a disciplinary action do not constitute procedures within the meaning of § 7106(b)(2) of the Statute. AFGE, AFL-CIO, Local 3732, 39 FLRA 187, 223-24 (1991); Portsmouth Fed. Empls. Metal Trades Counc., 34 FLRA 1150, 1157-58 (1990). Proposal 6-2a would limit the evidence the Agency could use to take disciplinary action against a bargaining unit employee. Applying the foregoing Authority precedent, which is not challenged by the parties, we find that Proposal 6-2a does not constitute a procedure under § 7106(b)(2) of the Statute.

      In AFGE, Local 1931, the Authority addressed two provisions having the same effect as Proposal 6-2a on management's right to discipline and concluded that the proposals were not appropriate arrangements as they excessively interfered with that right. 32 FLRA at 1049-50. In this regard, the Authority has repeatedly held that blanket restrictions on an agency's use of evidence to support disciplinary action excessively interfere with the right to discipline and do not constitute an appropriate arrangement on that ground. See AFGE, Local 1603, 47 FLRA at 316-17; AFGE, Local 900, 46 FLRA 1494, 1512-13 (1993); AFGE, AFL-CIO, Local 3732, 39 FLRA at 224; Portsmouth Fed. Empls. Metal Trade Counc., 34 FLRA at 1157-58.

      Applying the foregoing, even assuming that the prohibition against using unwritten evidence provides significant protections to employees, such a benefit does not outweigh the severe limitation the proposal places on management's right. The proposal completely precludes the Agency from using the kind of evidence covered by the proposal, which could significantly undermine the Agency's ability to take appropriate discipline or to even take any discipline against an employee. As such, the proposal excessively interferes with management's right to discipline employees and, accordingly, does not constitute an appropriate arrangement under § 7106(b)(3) of the Statute. See AFGE, Local 1931, 32 FLRA 1049-50.

      Based on the foregoing, we conclude that Proposal 6-2a is outside the duty to bargain because it is inconsistent with management's right to discipline employees under § 7106(a)(2)(A) of the Statute.

VIII.     Proposal 7-3

When work is assigned to work groups composed of both contractor and Federal employees the [A]gency will not have Federal employees hand off jobs requiring overtime to contractor employees for the purpose of having that work performed on overtime by contractor employees.

A.     Meaning of the Proposal

      Proposal 7-3 applies to work that is assigned to workgroups consisting of both contractor and federal employees. The parties agree that under the proposal, where overtime is assigned involving work that has been performed by a bargaining unit employee, that overtime will be assigned to unit employee volunteers, not contractor employees.

B.     Positions of the Parties

1.     Agency

      The Agency asserts that the proposal is inconsistent with management's right to assign work under § 7106(a)(2)(B). In this regard, the Agency contends that the proposal prohibits the Agency from assigning [ v58 p353 ] overtime work to a contract employee, and therefore, limits the Agency's ability to utilize its personnel to accomplish its mission. The Agency further asserts that the proposal is not negotiable under § 7106(b)(2) or (3) of the Statute. In response to the Union's claim that the proposal is identical to a provision in the parties' current agreement, the Agency asserts that that provision -- unlike Proposal 7-3 -- addresses work that the Agency has already determined should be done by a bargaining unit employee.

2.     Union

      The Union asserts that Proposal 7-3 requires the Agency to comply with an applicable law within the meaning of § 7106(a)(2), because "the Agency is requir[ed] under the Statute to bargain in good faith and execute an agreement." Union Response § 7-3 at 5. The Union also asserts that the proposal does not interfere with management's right to assign work, as evidenced by the fact that a similar provision concerning volunteering for overtime is in the parties' current agreement. The Union further asserts that the proposal constitutes a procedure under § 7106(b)(2) because it is a method for distributing overtime involving work that has already been assigned to bargaining unit employees.

C.     Proposal 7-3 does not require the Agency to comply with an applicable law within the meaning of § 7106(a)(2)

      The Union contends that the proposal requires the Agency to comply with an applicable law within the meaning of § 7106(a)(2) of the Statute, claiming only that the Agency is required under the Statute to bargain in good faith and execute an agreement. Other than this statement, the Union does not support its contention, and no basis is otherwise apparent for finding that the proposal involves compliance with an applicable law within the meaning of § 7106(a)(2). Consistent with Authority precedent, we find that the Union's claim in this regard is a bare assertion, and reject it on that ground. See AFGE, Local 2031, 56 FLRA 32, 34 (2000).

D.     Proposal 7-3 affects management's right to assign work under § 7106(a)(2)(B) and does not constitute a procedure under § 7106(b)(2)

      The Authority has held that proposals limiting an agency's discretion to decide whether to restrict overtime assignments to unit employees affect management's right to assign work under § 7106(a)(2)(B) of the Statute and do not constitute a procedure under § 7106(b)(2) of the Statute. See AGFE, AFL-CIO, Local 2317, 29 FLRA 1587, 1593 (1987) (proposal precluding the agency from assigning overtime work to non-unit employees "as far as practicable" affected the right to assign work), dismissed as to other matters, No. 88-8006 (11th Cir. Aug. 30, 1990); AFGE, Local 1409, AFL-CIO, 16 FLRA 352, 353 (1984) (provision having "net effect of limiting the assignment of overtime to bargaining unit employees" affected the right to assign work).

      Proposal 7-3 would preclude the Agency from assigning overtime work to NJVC employees unless there were no bargaining unit employees available. As such, the proposal limits the Agency's discretion to assign overtime to non-unit employees, and affects management's right to assign work under § 7106(a)(2)(B). AGFE, AFL-CIO, Local 2317, 29 FLRA at 1593. Applying the foregoing precedent, which is not challenged by the parties, we further find that Proposal 7-3 does not constitute a procedure under § 7106(b)(2) of the Statute. We note that the fact that the parties have included a similar provision in their agreement is not dispositive in determining whether or not proposed contract language is negotiable under the Statute. See SEIU, Local 556, AFL-CIO, 26 FLRA 380, 385 (1987), aff'd sub nom. Dep't of the Army v. FLRA, 914 F.2d 1291 (9th Cir. 1990).

      Accordingly, we conclude that Proposal 7-3 is outside the duty to bargain because it is inconsistent with management's right to assign work under § 7106(a)(2)(B) of the Statute.

IX.     Order

      The Agency shall, upon request, or as otherwise agreed to by the parties, negotiate over Proposals 1-1, 1-4, and 4-1. The petition for review is dismissed with regard to Proposals 2-1, 2-3, 5-2a, 6-2a, and 7-3 because the proposals are outside the duty to bargain.


Concurring Opinion of Chairman Cabaniss:

      I write separately to explain why I find Proposals 1-1 and 1-4 to not be outside the duty to bargain as argued by the Agency, and to express concern with the parties' failure to address what appears to be a key consideration regarding the legality of offering voluntary separation incentive payments (VSIPs) in this matter.

      As part of the underlying background to Proposals 1-1 and 1-4, regarding the positions whose work is identified for transfer to the contractor, I note that the Agency does not intend to use a reduction in force or other involuntary separation for employees who decide [ v58 p354 ] to not go to work for the contractor. Agency Statement of Position, Proposal 1-1, paragraph 7b. To the contrary, the Agency wants to have these affected employees either go to work for the contractor or stay with the Agency by having them work in other positions, stating at one point, for example, that it "wants to retain, rather than lay off, employees who do not intend to work for the contractor." Id., paragraph 9.c. I also note that the Agency has already determined to provide voluntary early retirement authority (VERA) to the affected employees.

      Accordingly, the only impact on employees would be from the Agency's action of reassigning them to other positions if the employee does not voluntarily avail himself or herself of some other option (e.g., leave Federal employment (retirement or otherwise) and go to work for the contractor, leave Federal employment (retirement or otherwise) and go to work elsewhere, or remain a Federal employee but seek employment elsewhere). The competing consideration is the Agency's right to retain employees (the only agency right found to be affected by the proposals). While a VSIP provides employees with a benefit, I also believe that there is a concomitant impact on the Agency's right to retain employees (by requiring that VSIPs be offered) as well, especially since most if not all Federal agencies are already facing a substantial loss of experienced personnel in the near term by virtue of the "graying" of the work force. I also have concerns that requiring the offering of VSIPs may be too excessive a benefit, especially since no employees face the possibility of losing employment. However, I note that the Agency has already determined to offer VERA to this employee group, which will encourage employees to leave employment with the Agency, and is also inducing employees to leave by having the contractor offer a financial benefit to these employees if they will come work for the contractor. As the Agency is already taking these steps to encourage employees to leave the Agency, I conclude that a proposal to offer these employees VSIPs is not so excessive as to impermissibly interfere with the Agency's right to retain these employees. The Agency's arguments in this instance are best left for any merits determination that might be necessary (assuming voluntary resolution does not occur) before the Federal Service Impasses Panel or other approved procedure.

      One of the last few comments noted above points out a critical problem with the whole concept of offering VSIPs in the situation underlying the negotiability appeal, even though neither party has identified or discussed this consideration. In support of its argument that the proposal interferes with its agency rights, the Agency argues a case that discusses the impact of 5 U.S.C. § 5597 on circumstances similar to this case. Id., citing to United States Dep't of the Air Force, Air Force Materiel Command, 54 FLRA 914 (1998). However, the Agency does not argue that the proposal is contrary to that statute in and of itself. As a predicate to establishing VSIP authority, it appears that there must first be "the need for involuntary separations." 5 U.S.C. 5597(b). As the record indicates that no involuntary separations are envisioned in the circumstances underlying this case, I question how such an entitlement can be accomplished, but that concern will have to be addressed later as it is not a part of these proceedings.


Opinion of Member Armendariz, dissenting in part:

      I agree with the disposition of the petition for review, except that I would also find that Proposals 1-1, 1-4 and 4-1 are outside the duty to bargain. Accordingly, I would dismiss the petition for review in its entirety.

      First, I agree that Proposals 1-1 and 1-4 affect management's right to retain employees. By requiring the Agency to use the Voluntary Separation Incentive Program (VSIP) and to offer VSIP opportunities to employees based on seniority, the proposals seek to discourage employees from remaining in the Agency's employ. However, even assuming that the proposals constitute arrangements, I would find that they are not appropriate under § 7106(b)(3) of the Statute.

      As worded, the proposals would require that VSIPs be made available and offered to incumbents in all positions that the Agency has determined would be contracted out. There is no limit on the number of VSIPs that would have to be offered. Indeed, while recognizing the Agency's ability to use other methods to reduce the workforce, Proposal 1-1 would permit those methods to be used only in conjunction with VSIPs. The Agency would have no discretion not to offer VSIPs to all employees whose positions are targeted for outsourcing. See, e.g., NAGE, Local R14-87, 21 FLRA 905, 906-08 (1986) (proposal that management select employees affected by reduction-in-force for certain positions found to excessively interfere with management's rights because, among other things, management would be divested of discretion not to fill positions). See also AFGE, Local 3529, 56 FLRA 1049, 1051-52 (2001) (blanket prohibition on management's ability to take certain actions constituted significant burden that outweighed possible benefits to employees). [ v58 p355 ]

      Further, the conversion of targeted positions from federal employment to contractor employment is to occur over a seven-year period, with the expectation that the Agency will retain, or the contractor will employ, skilled employees. Yet the proposals make no mention as to when the VSIPs will be offered. As such, the proposals would operate to encourage employees to leave federal employment without regard to when the positions occupied by those employees are targeted for contracting out, or to leave federal employment altogether, potentially leaving the Agency with a diminished skilled workforce.

      Even if the proposals could be read as applying concurrently with the actual contracting out, however, the Agency persuasively argues that its costs would be significantly increased. In this regard, the Agency states that it has already agreed to provide a hiring incentive to the contractor for the purpose of enhancing the contractor's ability to hire Agency employees with sufficient expertise to support the Agency's mission. Because there is no limit on the number of VSIPs that may be offered and accepted, and in view of the Agency's other stated costs in connection with the contracting out of various functions and positions, the costs to the Agency of offering VSIPs may be quite significant.

      While I recognize that VSIPs confer a benefit on employees who may be subject to an involuntary loss of employment, I would find, on balance, that these proposals excessively interfere with the exercise of the right to retain employees. In view of this result, I would further reject the Union's claim that the proposals constitute negotiable procedures under the Statute. See NAGE, Local R5-184, 55 FLRA 549, 551 (1999) (Member Wasserman dissenting on other grounds) (proposals that are inconsistent with the exercise of a management right do not constitute procedures under section 7106(b)(2) of the Statute).

      I would also find that Proposal 4-1 is outside the duty to bargain under § 7117(a)(1) of the Statute, which precludes bargaining over proposals that are inconsistent with a Government-wide regulation. See, e.g., FOP, Lodge #1F, 57 FLRA 373, 378 (2001). In this connection, the Authority has previously recognized that OMB Circular A-76 is a Government-wide regulation. See AFGE, Local 1345, 48 FLRA 168, 206 (1993) (Local 1345) (adopting conclusion of United States Court of Appeals for the District of Columbia Circuit in United States Dep't of the Treasury, Internal Revenue Serv. v. FLRA, 996 F.2d 1246, 1250 (D.C. Cir. 1993)).

      OMB Circular A-76 provides that federal employees who are "adversely affected by a decision to convert to contract . . . have the Right-of-First Refusal for jobs for which they are qualified that are created by the award of the conversion." OMB Circular A-76, Revised Supplemental Handbook, Chpt. 1, § H.2. The Circular also requires agencies to include "[a] standard clause . . . notifying potential contractors of this requirement[.]" Id. at § H.2.a. As I read the Circular, an agency's ability to bind a contractor to a right of first refusal is limited to situations involving a reduction-in-force. There is no dispute in this case that Proposal 4-1 is intended to operate in the absence of a reduction-in-force.

      Unlike OMB Circular A-76, which provides authority to agencies to bind third parties to take a specific action, no authority is cited, or is otherwise apparent, that would authorize the Agency to bind the contractor to offering employees a right of first refusal in a non-RIF situation. Yet, that is clearly the intent of the proposal, which states that "The [A]gency will require of the [contractor] that employees that occupy positions targeted for outsourcing will have the right of first refusal . . . ."

      In my view, this proposal is comparable to cases in which the Authority has found that proposals seeking to bind a third party were outside the duty to bargain. See, e.g., POPA, 53 FLRA 625, 682-83 (1997) (where discretion as to an action pertaining to conditions of employment resides with a third party outside the bargaining relationship, a proposal requiring an agency to take that action is outside the duty to bargain). Cf. Library of Congress v. FLRA, 699 F.2d 1280, 1290 (D.C. Cir. 1983) (affirming Authority's holding that an agency is obligated to bargain to the extent of its discretion even if that discretion is limited to making requests and recommendations to an outside party).

      Consistent with Authority precedent, I would find that Proposal 4-1 is outside the duty to bargain as inconsistent with OMB Circular A-76. As the proposal is contrary to law, there is no need to address the Union's arguments under § 7106(b)(2) and (3) of the Statute. See, e.g., NAGE, Local R4-6, 52 FLRA 124, 127, 130 (1996).



Footnote # 1 for 58 FLRA No. 82 - Authority's Decision

   Chairman Cabaniss' opinion, concurring in part, and Member Armendariz's opinion, dissenting in part, are set forth at the end of this decision.


Footnote # 2 for 58 FLRA No. 82 - Authority's Decision

   In its Response, the Union withdrew two proposals, leaving at issue eight of the ten proposals submitted in the Petition for Review.


Footnote # 3 for 58 FLRA No. 82 - Authority's Decision

   In addition, we deny the Union's request for a hearing because nothing in the request or in the record raises a factual issue that needs to be resolved to determine the negotiability of the proposals at issue. See 5 C.F.R. § 2424.31 (a hearing is appropriate "[w]hen necessary to resolve disputed issues of material fact").


Footnote # 4 for 58 FLRA No. 82 - Authority's Decision

   We note that the meaning that the Authority adopts for these proposals, and the other proposals in this case, unless modified by the parties, would apply in other disputes, such as arbitration proceedings, where the construction of the proposals is at issue. See Nat'l Educ. Ass'n, Overseas Educ. Ass'n, Laurel Bay Teachers Ass'n, 51 FLRA 733, 741-42 (1996).


Footnote # 5 for 58 FLRA No. 82 - Authority's Decision

   In this connection, we note that in determining whether a proposal is negotiable under § 7106(b)(3), the adverse effect need not flow from the management right that a given proposal affects. See Fraternal Order of Police, Lodge #1F, 57 FLRA 373, 381 (2001). Accordingly, although we have found that Proposals 1-1 and 1-4 do not affect management's rights to lay off employees or make determinations with respect to contracting out, that does not preclude a finding that the proposals are intended to address the adverse effects of the Agency's decision to contract out and to eliminate particular positions and functions.


Footnote # 6 for 58 FLRA No. 82 - Authority's Decision

   In view of this conclusion, we do not address the Agency's additional claim that the proposals are inconsistent with management's right to make determinations with respect to contracting out.


Footnote # 7 for 58 FLRA No. 82 - Authority's Decision

   Contrary to the Union's claim, the policies and procedures in Circular A-76 apply without regard to whether an agency is exempt from the Circular's cost comparison requirements. See OMB Circular A-76 Supplemental Handbook, Revised at Chpt. 1, §§ E, H, Chpt. 3, § K (providing, among other things, that employees adversely affected by a decision to waive a cost comparison shall be afforded the same personnel considerations provided to employees generally under the Circular A-76). Accordingly, despite the fact that the Agency is exempt from the Circular A-76 cost comparison requirement, the Circular otherwise applies.


Footnote # 8 for 58 FLRA No. 82 - Authority's Decision

   More specifically, Circular A-76 provides that an agency must include in its agreement with a contractor a standard clause requiring the contractor to provide all