[ v19 p1032 ]
The decision of the Authority follows:
19 FLRA No. 121 UNITED STATES CUSTOMS SERVICE Respondent and NATIONAL TREASURY EMPLOYEES UNION AND ALL NATIONAL TREASURY EMPLOYEES UNION UNITED STATES CUSTOMS SERVICE CHAPTERS Charging Party Case No. 3-CA-20772 DECISION AND ORDER The Administrative Law Judge issued the attached Decision in the above-entitled proceeding, finding that the Respondent had engaged in certain unfair labor practices alleged in the complaint, and recommending that it be ordered to cease and desist therefrom and take certain affirmative action. Thereafter, the Respondent filed exceptions to the Judge's Decision and an accompanying brief. Pursuant to section 2423.29 of the Authority's Rules and Regulations and section 7118 of the Federal Service Labor-Management Relations Statute (the Statute), the Authority has reviewed the rulings of the Judge made at the hearing and finds that no prejudicial error was committed. The rulings are hereby affirmed. Upon consideration of the Judge's Decision and the entire record, the Authority hereby adopts the Judge's findings, conclusions and recommended Order only to the extent consistent herewith. The Judge found that (1) the Respondent bypassed the Charging Party (the Union) in violation of section 7116(a)(1) and (5) of the Statute by distributing, without prior notice to the Union, questionnaires to certain unit employees which elicited their opinions and information concerning an Employee Performance Appraisal System (EPAS); and (2) the Respondent also violated section 7116(a)(1) and (5) of the Statute by failing to bargain with the Union concerning the manner in which such employees would participate in the development of EPAS. /1/ In reaching such determination, the Judge first considered but rejected the Respondent's defense that it did not violate the Statute because the questionnaires herein were disseminated as part of an internal audit alluded to in Government-wide rules and regulations designed to protect the independence of the audit function, finding, inter alia, that the subject audit was not conducted by an independent agency separated and insulated from Customs Service supervision and control; nor was it mandated by statute, Government-wide rule or regulation, by the Office of Management and Budget, or by the Inspector General of the Treasury Department. The Respondent filed exceptions to the Judge's Decision, and in its brief, essentially argues that the subject questionnaires were designed for the purpose of gathering information for an internal audit of EPAS by its Office of Management Integrity (OMI); that such audit was subject to Government-wide rules and regulations designed to protect the independence of the audit function; and therefore the distribution of the questionnaires did not constitute a bypass or otherwise pose a duty to bargain under section 7116(a)(1) and (5) of the Statute. In agreement with the Judge, the Authority finds that the audit/survey herein was not independent in nature noting particularly that it was not conducted by an independent entity separated and insulated from the Respondent's control, but rather was conducted by representatives of the Respondent, and that certain employees not assigned to OMI assisted the auditors in the conduct of the EPAS survey. Notwithstanding this, the Authority finds, contrary to the Judge and for the reasons set forth below, that the Respondent did not bypass the Union in violation of the Statute by distributing the questionnaires herein or by failing to bargain with the Union concerning the manner in which unit employees would participate in the development of EPAS. In Internal Revenue Service (District, Region, National Office Units), 19 FLRA No. 48 (1985), the Authority, in considering whether the agency's conduct therein in distributing questionnaires to unit employees constituted an unlawful bypass of the exclusive representative, stated: (A)s part of its overall management responsibility to conduct operations in an effective and efficient manner, an agency may question employees directly provided that it does not do so in a way which amounts to attempting to negotiate directly with its employees concerning matters which are properly bargainable with its employees' exclusive representative. In this regard, as the Authority has previously noted, management must have the latitude to gather information, including opinions, from unit employees to ensure the efficiency and effectiveness of its operations. The Authority concluded that the agency's conduct therein did not constitute an unlawful bypass of the exclusive representative because the questionnaires were an information gathering mechanism in connection with the management function of studying its operations, and because there was no indication that management attempted to deal or negotiate directly with unit employees concerning their conditions of employment. In the instant case, the Authority finds that the Respondent's distribution of the questionnaires herein was not an improper direct communication with its employees in derogation of its duty to bargain with the Union. In this regard, the record reveals that in October 1981, the Respondent, pursuant to 5 U.S.C. 4302 established the EPAS for its employees; that it later designed the subject questionnaires as an information gathering mechanism in order to obtain information concerning the implementation of the newly established performance appraisal system, including the identification of problem areas in its implementation as well as to determine if certain objectives were being met; and that such information has been used in the preparation of a draft report. Further, there is no indication in the record that through the questionnaires the Respondent attempted to or changed any condition of employment of the unit employees herein. Thus, the Authority finds that in the circumstances of this case that the Respondent's distribution of the subject questionnaires was not an attempt to deal or negotiate directly with unit employees concerning their conditions of employment, but rather was for the purposes of gathering information on how the existing performance appraisal system was working. /2/ Further, the Authority finds that the Respondent did not violate the Statute by failing to bargain with the Union concerning the manner in which unit employees would participate in the development of EPAS. In reaching his decision, the Judge relied on Social Security Administration, Baltimore, Maryland, 9 FLRA 909 (1982) wherein the Authority found that the agency therein violated the Statute by failing and refusing to give the Union an opportunity to negotiate over the manner in which bargaining unit employees would participate in establishing performance standards. The Authority disagrees, finding such case to be inapposite. In that case, certain supervisors conducted feedback meetings with unit employees concerning performance standards in order to obtain input to formulate a proposal concerning performance goals/standards where none had been established pursuant to 5 U.S.C. 4302. Here, as noted above, the record evidence reveals that the subject performance appraisal system had been established prior to the distribution of the questionnaires, and that the Respondent was not attempting to negotiate with unit employees concerning the establishment of performance standards, but rather was merely seeking the information as to how the existing standards were working. In these circumstances, as the employees were not participating in the establishment of performance standards, the Respondent had no obligation to bargain concerning the subject questionnaires. Accordingly, the Authority concludes that the Respondent did not violate section 7116(a)(1) and (5) of the Statute, and therefore shall order that the complaint be dismissed in its entirety. ORDER IT IS ORDERED that the complaint in Case No. 3-CA-20772 be, and it hereby is, dismissed in its entirety. Issued, Washington, D.C., August 27, 1985 Henry B. Frazier III, Acting Chairman William J. McGinnis, Jr., Member FEDERAL LABOR RELATIONS AUTHORITY -------------------- ALJ$ DECISION FOLLOWS -------------------- Case No.: 3-CA-20772 Allan L. Martin, Esquire Alfonso Robles, Esquire For the Respondent Peter A. Sutton, Esquire Erica F. Cooper, Esquire For the General Counsel Joseph Kaplan, Esquire John McEleney, Esquire For the Charging Party Before: LOUIS SCALZO Administrative Law Judge DECISION Statement of the Case This case arose as an unfair labor practice proceeding under the provisions of the Federal Service Labor-Management Relations Statute, 92 Stat. 1191, 5 U.S.C. 7101 et seq. (hereinafter called "the Statute"), and the Rules and Regulations issued thereunder. The complaint alleged that in June of 1982, the United States Customs Service (hereinafter called Respondent, Customs Service or Service), unilaterally, and without prior notice to the National Treasury Employees Union (hereinafter called Charging Party or Union) required certain bargaining unit employees exclusively represented by the Union, to respond to a 25-question questionnaire designed to elicit opinions and information concerning an Employee Performance Appraisal System (EPAS) /3/ instituted by the Respondent. It was further alleged that such conduct constituted a bypass of the Union, and a failure and refusal to bargain in good faith with the Union, in violation of Sections 7116(a)(1) and (5) of the Statute. Counsel representing the Respondent argues that the questionnaire mailed to bargaining unit employees in this case was designed for the sole purpose of gathering information for use in an internal audit of EPAS by the Respondent's Office of Management Integrity, that the audit was subject to government-wide rules and regulations promulgated by the Comptroller General and the Office of Management and Budget; and that because of these considerations the questionnaire did not constitute a bypass of the Union, and did not otherwise pose a duty to bargain under the Statute. The parties were represented by counsel during the hearing and were afforded full opportunity to be heard, adduce relevant evidence, and examine and cross-examine witnesses. Based upon the entire record herein, including a stipulation of facts, stipulated exhibits, other relevant evidence adduced at the hearing, /4/ and briefs filed by the parties, I make the following findings of fact, conclusions and recommendations. Findings of Fact Facts Stipulated The following stipulations of fact entered into the record are accepted as true: /5/ 1. The original charge was filed by the Union on September 15, 1982, and a copy thereof was served on Respondent, by certified mail, on September 21, 1982. 2. The first amended charge was filed by the Union on December 9, 1982, and was served on Respondent, by certified mail, on December 9, 1982. 3. The complaint and answer herein were issued and duly served. 4. At all times material, the Union was a labor organization within the meaning of Section 7103(a)(4) of the Statute. 5. At all times material, Respondent has been an agency within the meaning of Section 7103(a)(3) of the Statute. 6. At all times material Mr. Allen W. Wilk occupied the position of Area Director, Northwest Area, Office of Management Integrity, United States Customs Service, and was, during such periods, an agent of the Respondent and a supervisor or management official within the meaning of Section 7103(a)(10) and (11) of the Statute. 7. At all times material Mr. Eugene H. Mach occupied the position of Regional Commissioner, Chicago Region, United States Customs Service, and was during such periods, an agent of the Respondent and a supervisor or management official within the meaning of Section 7103(a)(10) and (11) of the Statute. 8. At all times material the Respondent recognized the Union as the certified representative of professional and non-professional bargaining units which included certain of Respondent's employees. 9. Pursuant to 5 U.S.C. 4302, Respondent, in October of 1981, established EPAS. 10. On or about June 3, 1982, Mr. William Inch, Respondent's agent and an Auditor-In-Charge, distributed a questionnaire relating to EPAS to approximately 300 randomly selected bargaining unit employees of Respondent's Chicago and San Francisco Regions, in accordance with a June 3, 1982 memorandum addressed to "Selected Employees" in the Chicago and San Francisco Regions by Mr. Wilk (Jt. Exh. 5). 11. The EPAS questionnaire was issued by Respondent's Office of Management Integrity as part of a "survey/audit" of EPAS being conducted by the Office of Management Integrity. 12. The EPAS questionnaire was distributed to bargaining unit employees without prior notice to, or the consent of, the Union. Nature of Questions Addressed to Bargaining Unit Employees In addition to stipulations outlined, the record disclosed, that of the 25 questions included in the questionnaire (Jt. Exh. 5), Questions 1 through 5 were designed to elicit data concerning the date employees surveyed were first introduced to EPAS, the source of introductory information about the program, the quality of the introduction, and whether employees surveyed had previously read prepared printed material about EPAS. Question 6 was designed to obtain an evaluative comparison between EPAS and the employee rating system which had preceded EPAS. Questions 7 and 8 constituted inquiries concerning the nature of views held about EPAS by supervisors; and Questions 9 through 12 were designed to obtain a detailed evaluation of EPAS as implemented by management. Question 13 was structured to obtain employee views concerning the most desirable method of developing employee performance plans. Questions 14 through 19 sought employee evaluations of the presentation of progress reviews by supervisors. Questions 20 and 21 concerned the issue of whether EPAS provided an adequate vehicle for discussing work performance with supervisors. Questions 22 through 24 pertained to employee evaluation of the progress review phase of EPAS; and Question 25 was designed to obtain employee perceptions of administrative action which might flow from poor performance under EPAS. /6/ Customs Service Internal Audit Function Relevant portions of the United States Customs Service Policies and Procedures Manual (Jt. Exh. 6, hereinafter called "Customs Manual") disclose that the Assistant Commissioner (Office of Management Integrity) was the official responsible for the Office of Management Integrity. /7/ The Office of Management Integrity was responsible for the performance of an "Internal Audit function," as a service to Customs Management (Jt. Exh. 6, at 1311.1A). It was comprised of the Internal Audit and Internal Security Divisions, a Management Inspection Staff, and four Area Management Integrity Offices in the field. /8/ The Director of the Internal Audit Division, under the general supervision of the Assistant Commissioner (Management Integrity), was responsible for the development and establishment of a nationwide internal audit strategy for the Service. /9/ Under the general supervision of the Area Director (Management Integrity), the Assistant Area Director (Internal Audit) was responsible for the execution of the audit program in the respective areas (Jt. Exh. 6 at 1311.1C). All of these offices were situated in the chain of command leading directly to the Commissioner of Customs (Tr. 51). All offices were staffed with Customs employees (Tr. 28), and the Assistant Commissioner (Office of Management Integrity) reported directly to the Commissioner (Tr. 25). Area Directors were not subject to Regional Commissioners of the Customs Service, the principal Customs Service field officers (Tr. 26). They reported directly to the Assistant Commissioner (Management Integrity) (Tr. 26). The internal audit function was subject to the Customs Manual. It was not disputed that the internal audit function provided in the Customs Manual was organized to comply with the statutory mandate reflected in Section 113 of the Budget and Accounting Procedures Act of 1950, 31 U.S.C. 66a. This Act provides that the systems implemented by executive agencies "shall conform to the principles, standards and related requirements prescribed by the Comptroller General . . . . " (31 U.S.C. 66a(b)). These are set forth in a pamphlet entitled, "Standard for Audit of Governmental Organizations, Programs, Activities and Functions (1981 Revision), (Jt. Exh. 11, hereinafter called "Comptroller General Standards"). In addition to the foregoing standards the Service's internal audit function was organized to comply with Treasury Department Directives contained in the Department of the Treasury Directives Manual, TD 15-02, which "prescribes the Department of the Treasury's internal audit policies, outlines the responsibilities of Treasury's bureaus to develop and maintain audit systems within the framework of departmental policies and Federal audit standards, and imposes reporting requirements on the bureaus." (Jt. Exh. 9, hereinafter called "Treasury Directives Manual"). As set forth in the Treasury Directives Manual, the conduct of federal internal audits are subject to policies promulgated by the Office of Management and Budget (OMB) as contained in Revised OMB Circular No. A-73, dated March 15, 1978 (Jt. Exh. 10, hereinafter called "OMB Circular No. A-73"). A study of the Comptroller General Standards, OMB Circular No. A-73, Treasury Directives Manual, and Customs Manual, reflects an intent to insulate those performing audit functions from those entities being audited. This goal is designed to help insure the independence and integrity of audit results. However, these documents also reflect that such independence is not always possible in situations involving internal audits. Comptroller General Standards provide that: In all matters relating to the audit work, the audit organization and the individual auditors, whether government or public, must be free from personal or external impairments to independence, must be organizationally independent, and shall maintain an independent attitude and appearance (Jt. Exh. 11 at 17). The high goal reflected above is not always met, as the Standards also detail the clear possibility of personal, external, and organizational impairments to the audit function (Jt. Exh. 11 at 18-20). Under the heading "Internal auditors," the Standards note that "(a) Federal, state, or local government auditor may be subject to policy direction from persons involved in the government management process." (Jt. Exh. 11 at 19-20). The Standards suggest a methodology for reducing the impact of impairments, and removing them in whole or in part, but do not require compliance with the high standard quoted in connection with the implementation of the internal audit function. The Comptroller General Standards and OMB Circular No. A-73 both state that the internal audit function should be organizationally located outside the staff or line management function of the unit under audit. (Jt. Exh. 11 at 19, Jt. Exh. 10 at 2-3). However, optimum realization of this goal is not required in that the audit of the EPAS Program in the Chicago and San Francisco Regions constituted an audit of organizational components at the Regional Commissioner level. Regional activities would necessarily be the appropriate concern and responsibility of the Commissioner of Customs, and both Regional Commissioners, and the entire internal audit function, were organizationally located below the Commissioner of Customs. The following statement from the Comptroller General Standards reflects a clear recognition of this dependency in connection with the distribution of internal audit reports pertaining to the audit of program results: Internal auditors should follow their entity's own arrangements. Usually, they report to their entity's top management and the entity is responsible for distribution of the report (Jt. Exh. 11 at 49). /10/ The Treasury Directives Manual places on Bureau heads, responsibility for "(d)eveloping and maintaining an effective internal audit system within their bureau(s) . . .." (Jt. Exh. 9 at 3). This policy also illustrates the merger of internal audit and management functions. The Customs Manual refers to the necessity of a mantle of independence for Service auditors (Jt. Exh. 6 at 6). Again, this standard was not mandated. That is, the placement of the audit function was theoretically designed to effect a separation from those responsible for the management of Customs activities; however, there was a merger of functions at the higher levels; and as will be detailed hereinafter, there was close cooperation between operations management and auditors at the level where the EPAS audit was implemented. Agencies are, under the general criteria set forth in OMB Circular No. A-73, and Comptroller General Standards, required to develop annual internal audit plans. Audit targets for inclusion in such plans are conceived at various locations throughout the Customs Service (Tr. 31). The process of developing the Service's annual plan was described by Mr. Paul R. Frey, Director of the Internal Audit Division, in the following terms: We have developed in the Internal Audit Division what we call an audit universe. It lists all the areas in the Customs Service that we would review. It's comprised of approximately 274 areas. The areas are selected by the field people and headquarters people based on the newness of the program and the cost of the program, the risk involved, and abuse of the program, the objectivity of the program . . . . (Tr. 32). Possible audit targets are considered at the Internal Audit Division level of the Service, and are culled for inclusion in the audit plan (Tr. 20, 29, 32). These plans are approved at the Assistant Commissioner level, and by the Inspector General of the Department of the Treasury. /11/ They are then assigned to the field for implementation (Tr. 20, 31). The testimony of Respondent's witnesses established that internal audit reports issued pursuant to the annual audit plan are prepared with management concerns and management functions in mind (Tr. 43). They are designed for decision making purposes within the Customs Service (Tr. 43), and efforts are made to issue reports which are material, relevant and useful to management in the administration of the Customs Service (Tr. 58, 68). Specific recommendations as to what action Customs management should take are included in these reports (Tr. 56-57). Although those directly involved in the audit function do not mandate action on the basis of such reports, the fruits of their labors are utilized as a basis for decisions made at the highest levels of the Customs Service. They are distributed down through chains of command for appropriate action (Tr. 33, 38, 44-45, 57-58). Internal audit reports would be prepared upon request of the Commissioner of Customs (Tr. 67-68). The results of these reports are designed for use solely within the Customs Service (Tr. 79). Additional documentary evidence showing high-level Customs Service management participation in the internal audit function is reflected at numerous points in the Customs Manual (Jt. Exh. 6 at 13.11.1B, D; 1311.2A, B; 1311.3B; 1311.4A, B, C; 1311.5A, D, E, F; 1311.7B, C(1), (2), (3); 1311.8A, B; 1311.10A, B, C. D; 1311.11; 1311.12A, B; and 1311.15). Other references indicating that internal auditing is performed as a service to management are reflected in the Treasury Directives Manual (Jt. Exh. 9 at 5a; 6; 7b(5)), in OMB Circular No. A-73 (Jt. Exh. 10 at 6a; 7a; 7b(5)); and in Comptroller General Standards (Jt. Exh. 11 at i (fourth paragraph)); 6 (Scope of Audit Work, last paragraph); 14 (last paragraph); 19 (last paragraph); 27 (2a, last paragraph); 39 (last paragraph); 49 (second paragraph). The Audit of EPAS Specific details relating to factors relied upon as a basis for justifying the internal audit of EPAS do not appear in the record. This fact was acknowledged by counsel representing the Respondent (Tr. 53); and Mr. William F. Inch, the senior auditor responsible for the audit, related that he could not testify concerning the subject (Tr. 80). Mr. Frey and Mr. Inch did state that the audit was approved under "determination of audit priorities" criteria reflected in OMB Circular No. A-73, on the ground that EPAS was a new program (Tr. 32, 37, 75). It was acknowledged that management's concern and interest was deemed a factor in the selection of EPAS as an audit target (Tr. 43). /12/ The audit was not required by statute or regulation, and was not mandated by OMB or by the Inspector General of the Treasury Department (Tr. 59-60). It was undertaken as a discretionary review by the Customs Service (Tr. 54, 78). /13/ It was specifically designed to be of assistance to the Customs Service (Tr. 37), to gain information for management concerning the implementation of EPAS (Tr. 74, 104), and to "identify problem areas in (the) implementation" of EPAS (Tr. 105). The questionnaire underlying the complaint was developed in May of 1982 (Tr. 89, 96). Although counsel representing the Respondent endeavored to show that the content of questions posed emanated solely from Internal Audit Division personnel (Tr. 25, 59, 65), the record clearly indicated effectuation of management purposes. This is evidenced by the June 3, 1982 memorandum from Northwest Area Director Allen W. Wilk, which forwarded what was termed "the first" of a series of questionnaires to bargaining unit employees in the Chicago and San Francisco Regions. The memorandum to bargaining unit employees contained the following statements: Your Regional Commissioner is aware of this audit, supports the intent of the audit and looks forward to the audit results. Your candid response to the questionnaire is expected as though the survey audit was being conducted on a face-to-face basis. /14/ A copy of your Regional Commissioner's Memorandum expressing his commitment to our review is attached. /15/ Bargaining unit employees selected to participate in the Chicago and San Francisco Regions received, with the memorandum from Mr. Wilk, a copy of a memorandum which their respective Regional Commissioners in Chicago and San Francisco had previously utilized to forward EPAS questionnaires to supervisory employees under their jurisdiction. /16/ The Regional Commissioner memorandums supplied to bargaining unit employees reflected that Regional Commissioner interests were tightly intertwined with those performing the internal audit of EPAS. They stated: This survey/audit will permit you to give factual information on implementation, costs, and other candid information regarding EPAS. Your honesty in response to the survey questionnaires will help management determine the effectiveness of the EPAS and provide feedback for any changes that may be necessary to make the system as cost effective and practical as possible. As a manager I look forward to the final audit report which will summarize the combined responses of over 300 employees randomly selected from within the Chicago and San Francisco Regions. I whole-heartedly support this survey/audit and have expressed to the Office of Management Integrity my willingness to participate in any way possible and the positive attitude toward this survey that I expect employees of this region to demonstrate. Other evidence in the record supports a finding that Mr. Inch and those associated with him worked very closely with management elements of the Customs Service in developing the questions used in the survey sent to bargaining unit employees. It was admitted that the questions were, in part, phrased for the purpose of determining whether established Customs Service policies and procedures were being followed (Tr. 24); and further that the questions were developed with the assistance of a Mr. Mike Megillicuttie (phonetic), a labor relations specialist assigned to the Personnel Office serving the Service's Chicago Region (Tr. 76, 79-80, 87, 93, 103). The Personnel Office was under the control of the Regional Commissioner (Tr. 87), and Mr. Megillicuttie was deeply involved in the implementation of EPAS policy and procedures in the Chicago Region (Tr. 87-88). He was referred to Mr. Inch by the Regional Commissioner or his representative as the individual responsible for EPAS in the Region (Tr. 89). /17/ Mr. Inch worked with Mr. Megillicuttie for one week preparing the questions (Tr. 88). The latter also provided assistance with respect to similar questionnaires addressed to supervisory employees (Tr. 96-97). The purpose of the consultation was to provide management with an opportunity to receive information which management considered relevant and useful to the EPAS program and the Customs Service (Tr. 88, 104-105). Discussion and Conclusions A threshold question posed in this case relates to the issue of whether the Respondent may be absolved from wrongdoing by reason of the fact that the questionnaires were disseminated as part of an internal audit alluded to in government-wide rules and regulations designed to protect the independence of the audit function. The audit in question was not conducted by an independent agency separated and insulated from Customs Service supervision and control; nor was the audit mandated by statute, government-wide rule or regulation, by the OMB, or by the Inspector General of the Treasury Department. Those in control of the internal audit function in this case were under the direct jurisdiction and operational supervision of Customs Service top management, and high-level management in the Service fully participated in the internal audit of EPAS. It was also clear that Comptroller General Standards, OMB Circular No. A-73, the Treasury Directives Manual, and the Customs Manual, all contemplated a distinction between the internal audit function such as was involved here, and audits performed by entities entirely separate and distinct from the agency being audited. In this case management interests and concerns were a primary focus of the audit, and questions were specifically designed for management's use within the Customs Service. The audit in this case was jointly performed by auditors assigned to the Internal Audit Division and Customs Service management officials and/or their representatives. It is immaterial that auditors were assigned the actual task of preparing the audit report. They were closely tied to, and worked in full cooperation with Customs Service management in order to produce a questionnaire which would be of significant value to management. Based on the foregoing a defense predicated upon the independent nature of the internal audit function must be rejected. /18/ In a series of cases dealing with the issue of whether a communication amounts to an attempt to bypass an exclusive representative, the Authority has expressly, and by implication, adapted the following criteria articulated in Department of the Navy, Naval Air Station, Fallon, Nevada, A/SLMR No. 432, FLRC No. 74A-80, 3 FLRC 697 (1975), as a basis for deciding whether a bypass exists under the Statute: In determining whether a communication is violative of the Order, it must be judged independently and a determination made as to whether that communication constitutes, for example, an attempt by agency management to deal or negotiate directly with unit employees or to threaten or promise benefits to employees. In reaching this determination, both the content of the communication and the circumstances surrounding it must be considered. More specifically, all communications between agency management and unit employees over matters relating to the collective bargaining relationship are not violative. Rather communications which, for example, amount to an attempt to bypass the exclusive representative and bargain directly with employees, or which urge employees to put pressure on the representative to take a certain course of action, or which threaten or promise benefits to employees are violative of the Order. /19/ The facts of this case clearly indicate an attempt by management to negotiate directly with bargaining unit employees. The questionnaire was designed to elicit individual employee evaluation of a significant condition of employment, that is, the existing performance appraisal system; to obtain details of how the system impacted on individual employees; to obtain employee suggestions or recommendations concerning further development of the appraisal program; and to surface employee complaints pertaining to performance appraisal policy implemented as part of an effort to resolve or allay complaints. The record indicated that responses received were intended to form the basis of a management-sponsored audit report to be disseminated to management officials for action; and further that the Respondent intended to utilize employee responses received to make "changes that may be necessary" (Jt. Exh. 5). /20/ Section 7114(a)(1) of the Statute provides that "(a) labor organization which has been accorded exclusive recognition is the exclusive representative of the employees in the unit it represents and is entitled to act for, and negotiate collective bargaining agreements covering, all employees in the unit." This entitlement requires that as to "conditions of employment," as defined in 7103(a)(14), management's "collective bargaining" /21/ be with the exclusive representative. /22/ To engage in collective bargaining directly with unit employees contradicts the obligation to negotiate in good faith with the labor organization that is the exclusive representative. International Communication Agency, supra. Here the questionnaires disseminated to bargaining unit employees effectively bypassed the Union and constituted a breach of the Respondent's obligation to bargain in good faith. It undermined and impaired the Union's status as the exclusive representative. The bypass resulted in direct bargaining with employees, and was in derogation of the Union's rights as the exclusive representative. Accordingly, it is concluded that the conduct violated Sections 7116(a)(1) and (5). In addition to the foregoing the Authority has held that performance appraisal systems, apart from the identification of critical elements, and the establishment of performance standards, are within the duty to bargain to the extent that they are consistent with law and regulation. National Treasury Employees Union, 3 FLRA No. 119, 3 FLRA 768 (1980), affirmed 691 F.2d 553 (D.C. Cir. 1982); American Federation of Government Employees, AFL-CIO, Local 32, 3 FLRA No. 120, 3 FLRA 783 (1980). This case involved unilateral questioning of bargaining unit employees concerning details of the implementation of a performance appraisal system instituted under 5 U.S.C. 4302, for the purpose of assisting management in determining whether changes in the system should be instituted, and if so, for the purpose of helping management to determine the nature of such changes. Respondent admitted that the questionnaire was distributed to 300 randomly selected unit employees without prior notice to the Union. This conduct was also violative of Sections 7116(a)(1) and (5) because it effectively determined, without Union participation, the manner in which employees in the unit would participate in the development of a performance appraisal system, and thus deprived the Union of the right to bargain with respect to the manner in which employees in the unit would participate in the development of the system. Social Security Administration, Baltimore, Maryland, supra at note 19. Having found that the Respondent violated Sections 7116(a)(1) and (5) of the Statute, it is recommended that the Authority issue the following Order: ORDER Pursuant to Section 2423.29 of the Federal Labor Relations Authority's Rules and Regulations, and Section 7118 of the Statute, the Authority hereby orders that United States Customs Service, shall: 1. Cease and desist from: (a) Bypassing the National Treasury Employees Union, the exclusive representative of units of its employees, and dealing directly with unit employees, by requesting them to respond to questionnaires soliciting employee opinions concerning personnel policies and practices, and matters affecting working conditions. (b) Utilizing, in the absence of agreement with the National Treasury Employees Union, responses received from bargaining unit employees in reply to questionnaires disseminated to unit employees during audit of the Employee Performance Appraisal System instituted in the Chicago and San Francisco Regions of the United States Customs Service. (c) Failing or refusing to negotiate with the National Treasury Employees Union, the exclusive representative of units of its employees, concerning the manner in which unit employees will participate in the development of the Employee Performance Appraisal System initiated by the United States Customs Service. (d) In any like or related manner interfering with, restraining or coercing employees in the exercise of rights assured by the Federal Service Labor-Management Relations Statute. 2. Take the following affirmative action in order to effectuate the purposes and policies of the Federal Service Labor-Management Relations Statute: (a) Notify and, to the extent consonant with law and regulation, bargain upon request with the National Treasury Employees Union, the exclusive representative of units of its employees, concerning the manner in which unit employees participate in the development of the Employee Performance Appraisal System initiated by the United States Customs Service. (b) Post at all its facilities in the Chicago and San Francisco Regions of the United States Customs Service wherein bargaining unit employees are located, copies of the attached Notice on forms to be furnished by the Federal Labor Relations Authority. Upon receipt of such forms, they shall be signed by the Commissioner, United States Customs Service, and shall be posted and maintained by him for 60 consecutive days thereafter, in conspicuous places, including all bulletin boards and other places where notices are customarily posted. Reasonable steps shall be taken to insure that said notices are not altered, defaced, or covered by any other material. (c) Pursuant to Section 2423.30 of the Authority's Rules and Regulations, notify the Regional Director of Region III, Federal Labor Relations Authority, 1111 - 18th Street, N.W., Room 700, P.O. Box 33758, Washington, D.C. 20033-0758, in writing, within 30 days from the date of this Order, as to what steps have been taken to comply herewith. LOUIS SCALZO Administrative Law Judge Dated: May 24, 1983 Washington, D.C. APPENDIX NOTICE TO ALL EMPLOYEES PURSUANT TO A DECISION AND ORDER OF THE FEDERAL LABOR RELATIONS AUTHORITY AND IN ORDER TO EFFECTUATE THE POLICIES OF CHAPTER 71 OF TITLE 5 OF THE UNITED STATES CODE FEDERAL SERVICE LABOR-MANAGEMENT RELATIONS STATUTE We Hereby Notify Our Employees That: WE WILL NOT bypass the National Treasury Employees Union, the exclusive representative of units of our employees, and deal directly with unit employees, by requesting them to respond to questionnaires soliciting employee opinions concerning personnel policies and practices, and matters affecting working conditions. WE WILL NOT, in the absence of agreement with the National Treasury Employees Union, utilize responses received from bargaining unit employees in reply to questionnaires disseminated to unit employees during audit of the Employee Performance Appraisal System instituted in the Chicago and San Francisco Regions of the United States Customs Service. WE WILL NOT, in any like or related manner interfere with, restrain, or coerce our employees in the exercise of rights assured by the Federal Service Labor-Management Relations Statute. WE WILL notify, and to the extent consonant with law and regulation, bargain upon request with the National Treasury Employees Union, the exclusive representative of units of our employees, concerning the manner in which bargaining unit employees participate in the development of the United States Customs Service's Employee Performance Appraisal System. (Agency or Activity) Dated: . . . By: (Signature) This Notice must remain posted for 60 consecutive days from the date of posting, and must not be altered, defaced or covered by any other material. If employees have any questions concerning this Notice, or compliance with any of its provisions, they may communicate directly with the Regional Director, Region III, Federal Labor Relations Authority, whose address is: 1111 - 18th Street, N.W., Room 700, P.O. Box 33758, Washington, D.C. 20033-0758, and whose telephone number is: (202) 653-8507. --------------- FOOTNOTES$ --------------- /1/ Section 7116(a)(1) and (5) of the Statute provides: Sec. 7116. Unfair labor practices (a) For the purpose of this chapter, it shall be an unfair labor practice for an agency-- (1) to interfere with, restrain, or coerce any employee in the exercise by the employee of any right under this chapter; . . . . (5) to refuse to consult or negotiate in good faith with a labor organization as required by this chapter(.) /2/ See also, Department of Health and Human Services, Social Security Administration, 19 FLRA No. 56 (1985). /3/ EPAS was instituted in October of 1981 after collective bargaining between the Union and the Respondent (Tr. 14). /4/ Counsel representing the General Counsel moved to correct the transcript as follows: Page Line From To 107 3 legal illegal 111 7 Kaiser Slot Kaiserslautern The motion to correct is granted. /5/ Jt. Exh. 1. /6/ As of the date of the hearing the final internal audit report of EPAS was incomplete (Tr. 34). However, responses from bargaining unit members had been received, and a draft copy of the audit report had been prepared (Tr. 35-36, 76-77). /7/ This organizational component has been renamed. As of the date of the hearing it was known as the Office of Internal Affairs (Tr. 46-47). /8/ The Internal Security Division and Management Inspection Staff had no responsibility for mailing the questionnaires to bargaining unit employees, and neither was otherwise associated with the audit relating to EPAS. Similarly, only the Area Director (Management Integrity), Northwest Area, was concerned with the audit, as the survey was mailed to selected employees in the Chicago and San Francisco Regions, both of which were situated within the area of responsibility assigned to the Area Director for the Northwest Area. /9/ As a member of the Assistant Commissioner's staff the performance of the Director of the Internal Audit Division was subject to evaluation by the Assistant Commissioner (Tr. 24). The Director derived his appointment from the Commissioner of the Customs Service (Tr. 66), as distinct from some other independent entity charged with oversight responsibility over Customs Service activities. /10/ In contrast, audit reports of program results prepared by truly independent entities would routinely be distributed to as many interested officials as practicable, and appropriate distribution would be expected of those responsible for the audit function (Jt. Exh. 11 at 48). /11/ Under Department of the Treasury Order 101-15, dated February 27, 1980, the Inspector General, pursuant to a delegation of authority from the Secretary of the Treasury, is given authority to review and approve annual audit plans submitted by Department of the Treasury bureau offices (Jt. Exh. 7). Also, Treasury Order 101-15 requires Treasury officials holding key inspection and audit positions to report to the Inspector General "in addition to their present reporting responsibilities." The Service's Assistant Commissioner (Management Integrity) was identified as one such official having a dual reporting responsibility. The Inspector General also routinely receives copies of completed internal audits (Tr. 49-50). However, the Inspector General does not supervise the day to day operations of the Assistant Commissioner, and merely has general oversight responsibility involving standards and policies (Tr. 42). Although the Inspector General possesses authority to veto a scheduled audit encompassed in an annual audit plan, Mr. Frey was not aware of this ever happening (Tr. 43). It was brought out that the Service performs about 70 audits each year, and that Customs is only one of 13 Treasury bureaus that report to the Inspector General (Tr. 43). As a result the Inspector General, pursuant to his general oversight authority in the audit and inspection field, receives a large number of annual audit plans with a larger number of proposed audits embraced within each plan. /12/ OMB Circular No. A-73 provides that in determining audit priorities agencies will, among other factors, consider, "(n)ewness . . . of . . . program, activity or function;" and "(m)anagement needs to be met, as developed in consultation with the responsible program officials . . . . " /13/ Responsibility for the evaluation of performance appraisal systems established under 5 U.S.C. 4302, is specifically reposed in the Comptroller General and the Office of Personnel Management by reason of the provisions of 5 U.S.C. 4304. /14/ The record established that although the questionnaire was mailed to named individuals, those responding were not required to identify themselves (Tr. 72). Responses were not coded to identify individual employees (Tr. 85). The Respondent was not aware of the identity of those who did respond (Tr. 74). /15/ As previously noted, Regional Commissioners of Customs are the principal field officers in the Customs Service (Tr. 26). /16/ Similar questionnaires were also prepared for dissemination to supervisors (Jt. Exh. 5, Tr. 90-92, 96-97). Jt. Exh. 5 includes a memorandum dated September 22, 1981, signed by Mr. Eugene H. Mach, the Regional Commissioner in Chicago. A substantially similar memorandum was sent on or about the same date by the San Francisco Regional Commissioner to supervisory employees in the San Francisco Region (Tr. 91). Bargaining unit employees receiving Mr. Wilk's June 3, 1982 memorandum received copies of Regional Commissioner memorandums utilized in their respective regions (Tr. 91-92). /17/ Mr. Inch was somewhat vague about the identity of the management official who referred him to Mr. Megillicuttie. However, it appeared that either the Regional Commissioner, or someone at the Regional Commissioner level was contacted by Mr. Inch, and that Mr. Megillicuttie was identified as the appropriate person to work with (Tr. 89). The Regional Commissioner was briefed concerning the audit, and was aware of developments concerning the subject (Tr. 103-104). /18/ In light of the factual picture presented, it is unnecessary to decide whether a different result would have been obtained had the audit function been performed by an independent agency. /19/ Department of Health, Education and Welfare, Social Security Administration, Bureau of Retirement and Survivors Insurance, Northeastern Program Service Center, 1 FLRA No. 59, 1 FLRA 508 (1979); United States Department of the Air Force, 47th Air Base Group (ATC), Laughlin Air Force Base, Texas, 4 FLRA No. 65, 4 FLRA 469 (1980); Division of Military and Naval Affairs, State of New York, Albany, New York, 8 FLRA No. 71, 8 FLRA 307 (1982); Iowa National Guard and National Guard Bureau, 8 FLRA No. 101, 8 FLRA 500 (1982); Kaiserslautern American High School, Department of Defense Dependents Schools, Germany North Region, 9 FLRA No. 28, 9 FLRA 184 (1982); Social Security Administration, Baltimore, Maryland, 9 FLRA No. 124, 9 FLRA 909 (1982); Department of Health and Human Services, Social Security Administration, Bureau of Field Operations, San Francisco, California, 10 FLRA No. 24, 10 FLRA 115 (1982); Internal Revenue Service (District, Region, National Office Unit), 11 FLRA No. 23, 11 FLRA 69 (1983). The rules outlined have also been adopted by the Foreign Service Labor Relations Board in International Communications Agency, Case No. 3-CA-2861(F) (1982). /20/ The facts of this case closely pattern those in Department of Health, Education and Welfare, Social Security Administration, Bureau of Retirement and Survivors Insurance, Northeastern Program Center, supra at note 19; Social Security Administration, Baltimore, Maryland, supra at note 19; and International Communications Agency, supra at note 19. Bypass cases cited by the Respondent in opposition are all distinguishable as cases clearly involving facts not pertaining to bypass within the meaning of rules articulated in Authority decisions. /21/ The term "collective bargaining" is defined in part by Section 7103(a)(12) as "performance of the mutual obligation of the representative of an agency and the exclusive representative of employees in an appropriate unit in the agency to . . . consult and bargain in a good faith effort to reach agreement with respect to the conditions of employment affecting such employees . . . . " /22/ The statement of employee rights outlined in Section 7102 of the Statute includes the right "to engage in collective bargaining with respect to conditions of employment through representatives chosen by employees . . . . "