[ v20 p606 ]
The decision of the Authority follows:
20 FLRA No. 73 UNITED STATES DEPARTMENT OF DEFENSE DEPARTMENT OF THE ARMY MCALESTER ARMY AMMUNITION PLANT Respondent and AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, LOCAL 2815, AFL-CIO Charging Party Case No. 6-CA-1041 DECISION AND ORDER The Administrative Law Judge issued his Decision in the above-entitled proceeding, finding that the Respondent, United States Department of Defense, Department of the Army, McAlester Army Ammunition Plant, had engaged in the 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 a supporting 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), as amended, 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 recommendations only to the extent consistent herewith. The Judge concluded that the Respondent violated section 7116(a)(1) and (5) of the Statute when it unilaterally changed its practice of delivering employee paychecks from hand delivery to mail delivery without bargaining concerning such change with the American Federation of Government Employees, Local 2815, AFL-CIO, the exclusive representative of a unit of the Respondent's employees. The Authority disagrees. Subsequent to the issuance of the Judge's Decision in this case, the Authority issued its decision in Federal Employees Metal Trades Council, AFL-CIO and Department of the Navy, Mare Island Naval Shipyard, Vallejo, California, 16 FLRA No. 88 (1984), petition for review filed, No. 85-7039 (9th Cir. Jan. 22, 1985), wherein it found that the process which an agency adopts to fulfill its payroll obligation so as to ensure the continued, uninterrupted operation of the agency constitutes a support operation without which the agency's mission could not be accomplished. Thus, the Authority found that mission-related matters which fall within the meaning of "performing work" under section 7106(b)(1) include support functions which are integrally related to the agency's mission. In Federal Employees Metal Trades Council, the Authority found a proposal pertaining to the method of paycheck distribution to concern the methods and means of performing work, i.e., the agency's payroll function, within the meaning of section 7106(b)(1) of the Statute /1/ and thus negotiable only at the election of the agency. See also Department of Transportation, 19 FLRA No. 1(1985) and Department of the Navy, Washington, D.C. and Department of the Navy, U.S. Naval Supply Center, Oakland, California, 19 FLRA No. 7 (1985). The parties' collective bargaining agreement, which had provided in part that changes in pay practices would be negotiable, /2/ expired in March 1980, prior to the Respondent's decision herein to change the method of paycheck delivery. The Authority has held that once the parties' agreement has expired, either party may elect to no longer be bound by provisions therein concerning "permissive" subjects of bargaining, but instead may reassert the right not to negotiate with regard to such permissive subjects of bargaining. See, e.g., Federal Aviation Administration, Northwest Mountain Region, Seattle, Washington and Federal Aviation Administration, Washington, D.C., 14 FLRA 644(1984) and Department of Transportation, Federal Aviation Administration, Washington, D.C. and its Chicago Airways Facilities Sector, 16 FLRA No. 71(1984). /3/ Thus, the Authority concludes that the Respondent's notice to the Union of its intent to change the method of paycheck delivery, a matter excepted from the obligation to negotiate by section 7106(b)(1) of the Statute, and its refusal to bargain concerning the decision to do so, in effect constituted notice to the Union that the Respondent would no longer be bound by the provision concerning the permissive subject of bargaining in the parties' agreement regarding the negotiation of pay practices. Therefore, the Authority concludes that the Respondent's refusal to bargain concerning a change in the method of paycheck delivery did not constitute a violation of section 7116(a)(1) and (5) of the Statute. /4/ Accordingly, the complaint shall be dismissed. ORDER IT IS ORDERED that the complaint in Case No. 6-CA-1041 be, and it hereby is, dismissed. Issued, Washington, D.C., November 6, 1985 Henry B. Frazier III, Acting Chairman William J. McGinnis, Jr., Member FEDERAL LABOR RELATIONS AUTHORITY -------------------- ALJ$ DECISION FOLLOWS -------------------- Case No.: 6-CA-1041 Robert L. Blackwood, Esquire Mr. James Quincey Jacobs For the Respondent Susan E. Jelen, Esquire For the General Counsel Mr. Elmo House For the Charging Party Before: WILLIAM B. DEVANEY Administrative Law Judge DECISION Statement of the Case This proceeding, under the Federal Service Labor-Management Relations Statute, Chapter 71 of Title 5 of the United States Code, 5 U.S.C. 7101, et seq., /5/ and the Final Rules and Regulations issued thereunder, 5 C.F.R. 2423.1, et seq., was initiated by a charge filed on March 5, 1981 (G.C. Exh. 1(a)). A Complaint and Notice of Hearing issued on December 9, 1981 (G.C. Exh. 1(d)); and an Amended Complaint and Notice of Hearing issued on January 6, 1982 (G.C. Exh. 1(p)), pursuant to which a hearing was duly held before the undersigned on January 21, 1982, in McAlester, Oklahoma. /6/ All parties were represented at the hearing, were afforded full opportunity to be heard, to examine and cross-examine witnesses, to introduce evidence bearing on the issues involved, and were afforded opportunity to present oral argument. At the close of the hearing, for good cause shown, March 8, 1982, was fixed as the date for mailing post-hearing briefs and Counsel for Respondent and for the General Counsel each timely mailed excellent briefs, received on or before March 12, 1982, which have been carefully considered. Upon the basis of the entire record, including my observation of the witnesses and their demeanor, I make the following findings and conclusions: THE CHANGE Respondent, and its predecessor, had delivered employee pay checks on the premises unless the employee had requested that it be mailed, either to a home address or to a bank. In 1981, Respondent, in the interest of economy, /7/ decided to change the method of delivery of employee pay checks to eliminate on premises delivery, i.e., all checks would be mailed, either to a home address or to a bank as each employee elected. THE ISSUE The threshold, and controlling, issue is whether the change in the delivery of employee pay checks is excepted from the obligation to bargain by Sec. 6 of the Statute, i.e., whether such change was pursuant to a reserved right of management as to which Respondent was obligated to bargain only as to impact and implementation; and/or whether the change concerned a condition of employment, inasmuch as the obligation to bargain attaches only to "conditions of employment" (Sec. 3(12), (14)). There is no dispute that notice was given to the Union; that the parties met to negotiate on the proposed change; but that, subsequently, Respondent asserted that the change was not negotiable, i.e., was a reserved right of management, and that it would bargain only as to impact and implementation. Various other contentions were made none of which did I find was meritorious. For reasons set forth hereinafter, I conclude that delivery of employee pay checks is a condition of employment and that Respondent's proposed change in the delivery of employee pay check was not a reserved right of management. FINDINGS 1. The McAlester Army Ammunition Plant was opened in 1941 under the jurisdiction of the Department of the Navy. On October 1, 1977, the Department of the Army assumed control of the installation. 2. The American Federation of Government Employees, Local 2815, AFL-CIO (herein also referred to as the "Union") is the certified bargaining representative of Respondent's employees as more fully set forth in the agreement of the parties. (G.C. Exh. 2). /8/ 3. The employees work a four day week, with every Friday off. Their hours are 6:30 a.m. to 5:00 p.m., Monday through Thursday. 4. It is undisputed, as Mr. Elmo House, President of the Union, testified, that, to his personal knowledge from the date of his employment on May 1, 1967 (Tr. 74), and from information from employees who had been at the plant since it opened in 1941 (Tr. 74), employees had always had the option of receiving their paycheck on the premises or having it mailed, either to a home address or to a bank (Tr. 45, 46); and that in 1981 only 70 employees, out of the more than 700 employed, were receiving their checks by mail (Tr. 45), i.e., that more than 90% of the employees received their paychecks on the premises. 5. On February 17, 1981, Mr. Alvin Holman, the Union's First Vice President, received an anonymous telephone call from a caller who asked if he knew anything about a paycheck change. He did not (Tr. 119) but immediately called Mr. Woody King, the Personnel Officer, and asked "if there was any truth about the checks or change of checks or whatever" (Tr. 120) and that Mr. King said, "Well, we have got some ideas. We were planning on getting with you" (Tr. 120). Mr. King suggested a meeting at 10:00 a.m. the following day, February 18, 1981 (Tr. 120). Mr. Holman told Mr. King that so far as he knew a meeting on the 18th would be fine. 6. Mr. House was off on February 17, but on the morning of February 18, Mr. Holman called Mr. House and informed him of what had transpired and asked Mr. House if he was aware of any changes to be made about the paychecks. Mr. House knew of no proposed change and he, House, called Mr. Jim Jacobs, Chief of the Labor Management Services Division, about the meeting scheduled for later that day. Mr. Jacobs said the meeting was about the pay system but declined to give any further details over the telephone (Tr. 39, 42). 7. The meeting was held on February 18 in Mr. Jacobs' office. Present for Respondent were Mr. Jacobs and Mr. Atkinson, Finance and Accounting Officer; and present for the Union were Messrs. House and Holman. There is no dispute that Respondent informed the Union representatives that the purpose of the meeting was to discuss a change in the delivery of paychecks; that, as Mr. Atkinson stated, Respondent proposed /9/ "to mail all payroll checks versus hand delivery as was the practice at that time" (Tr. 207); that Mr. Atkinson presented a handwritten chart which allegedly reflected the savings Respondent could achieve by mailing paychecks; or that both Mr. House and Mr. Holman expressed opposition. However, there is strong disagreement as to the final outcome of the meeting, Respondent asserting that the Union agreed to the change and the Union categorically denied that there was ever any agreement to the change; but, to the contrary, that the meeting was adjourned to permit a poll of the employees. In view of the conflict of testimony, it will be helpful to examine the record in this regard with care. Mr. House testified, in part, as follows: "A. I made an off-the-record comment that I personally had been having my paycheck sent to my bank here in McAlester to (sic) quite a period of time as a personal choice, but that as President of Local 2815 and representative of the members of the bargaining unit there we would need time to poll the employees to see what their reactions would be to this plan that had been submitted. "Having no prior knowledge of this before time, we needed time to poll the employees. They agreed to allow us to have time for that. "Q. Who did? "A. Mr. Jacobs. "Q. Did Mr. Holman say anything during this? "A. Mr. Holman was very strongly opposed to the changing of the practice right then and so expressed. "I remember that Mr. Holman made the statement-- After my statement he made the statement to Mr. Jacobs and Mr. Atkinson that, 'You are going to have a bunch of very angry employees. I am completely and totally opposed to it-- to the plan.' "Q. Okay. "How did the meeting end? "A. The meeting ended when I informed Mr. Jacobs we would need time to poll the members of the bargaining unit. The meeting ended at that juncture." (Tr. 44-45). Mr. Holman testified, in part, as follows: "Q. What did you say at this meeting, if anything? "A. I was strictly opposed to it. "Q. Did you say this at this meeting? "A. Yes, I did. "Q. Did you explain why? "A. I did explain why because this has been a privilege as far as mailing checks. If you wanted to mail your check to you, it has been a privilege. "I would say for three or four years anyway that you could go over and have your check mailed to you. "Most of the people on the base they wanted their check handed to them. At that time they told us approximately 100 were getting checks by mail. "When we checked it out, it was actually 70, so that left something like 700 people that wanted their checks handed to them. "Q. What did Mr. House say? "A. Mr. House said at that time he was getting his check mailed to him, and he was fairly pleased with his check being mailed to him. "But he said, 'I will have to check with the members of the Unit to see what their feelings are.' "Q. Did the union representative give their position regarding this change? "A. The only thing was just my opposition . . . (Tr. 122-123) * * * * "Q. Directing your attention to the 18th of February at 10:00 when the meeting commenced with Mr. Jacobs, yourself, Mr. House and Mr. Atkinson. Do you recall that date and that meeting? "A. Yes. "Q. At that meeting were you opposed or in favor of the paycheck change? "A. I was definitely opposed. "Q. Was that personally or on behalf of the union? "A. I would say both. * * * * "Q. Did you inform management that it was your desire to keep it at status quo at that time? "A. No, not my desire. I just told them that I was strictly opposed to it because I would like for it to stay status quo. "Q. At that meeting did you ever agree with or in any way, shape or form that you would not contest the implementation of this decision? * * * * "A. No, they knew I was opposed to it. "Q. What did you tell them that you intended to do in objection to this decision? "A. I didn't tell them anything. "Q. Did you tell them you would make a poll? "A. Mr. House told them that we would have to get back with the membership. "Personally I didn't tell them anything. "Q. Do you recall if there was a-- that you, you being the union, proposed that you would get back with them after you made a poll of the employees? "A. That was the normal procedure. The way we had done about everything in the past. That has been the normal procedure. "Q. You mean every meeting that you have with management you take a poll of the employees afterward? "A. If it is a new item that affects the unit members where they need to be notified. Now we don't take a poll as such. We may ask some of them or have some of our stewards to ask some of them. * * * * "Q. And you didn't take a poll after this meeting? "A. We did take some-- I don't think you would call it a poll. We had our stewards to ask our employees about it . . . . " (Tr. 131-133). * * * * "Q. On the 18th of February did you inform management that you wanted to get back with them? "A. The only thing that was said there was Elmo said, 'We will have to get with the union members.' "He could have said we will get back with you or whatever. I can't say for sure. "But he did tell them that. He said, 'Although my check is mailed to the bank and I am pleased with it, we have got to get with the union members and see what their feelings are.' "In other words he was saying his feelings didn't count. He was looking out for the unit members." (Tr. 141). Mr. Atkinson testified, in part, as follows: "A. We presented a proposal to mail all payroll checks versus hand delivery as was the practice at that time. There was considerable discussion. Mr. Jacobs did most of the talking. "The gist of the conversation as I recall it was Mr. House stated his check went to the bank. He personally had no objection. "Mr. Holman said he objected. "I recall them saying they thought the employees would not like the proposal. I had no indication that there would be any objection from the union even though they stated they felt the employees would not like it. "Q. At that meeting do you recall what the nature of the union's objections to this policy were? "A. I don't recall a specific statement as to why they would not like it other than the change of procedure. There may have been, but I don't recall. "Q. At the conclusion of the meeting was there any disagreement on the part of the union to the implementation of this paycheck mailing policy? "A. Other than the fact that they stated that they didn't really like it, I don't recall a specific. If I understand what you are saying. "Q. Did they at that time say they absolutely and positively did not want the policy implemented? "A. I don't recall a positive statement to that effect other than the fact that they did not like it and thought the employees wouldn't like it." (Tr. 207-208) Mr. Jacobs testified, in part, as follows: "A. We advised the union that the Commander of the Army Ammunition Plant desired to commence mailing payroll checks to employees as opposed to hand delivery. "We proposed that this take place the target date of 17 March 1981. "Q. When you informed the union officials of this decision that was to be subsequently implemented, what was their reaction? "A. We received a negative response initially from both Mr. House and Mr. Holman. The first part of the conversation, as much as the first ten minutes or so, was negative. "Mr. Holman said he personally did not like it one little bit. Mr. House saying he personally has his check sent to the bank and he finds it to be a convenience. "Management then proceeded to advise the union of the reasons for the proposal and that we considered it more efficient et cetera. "Towards the end of the meeting Mr. House indicated that while some members of the union would not like it he understood the reasons for the change and as such the union would not fight us on this issue or give us a hard time. "Q. What was the approximate duration of the meeting on this date? "A. It was approximately 35 minutes. "Q. At the conclusion of that meeting was it your impression that the union intended to further resists (sic) the implementation of this paycheck mailing decision? "A. It was not. During the meeting we discussed the fact that we wanted to mail payroll checks and we wanted to do it by the 17th of March; that we had to get the publicity out to the employees to give them an opportunity to get their home address corrected or to determine if they wanted it mailed to their home or a banking institution. "This was discussed at the meeting. We advised that we would be putting out a memo to all employees advising them of this change. We would publish it in the plant newspaper. . . . * * * * "A. . . . Again, at the end of this meeting Mr. House-- and I want to emphasize this-- stated that he understood the reasons for it and again said they were not going to fight us or give us a hard time on this matter. . . . " (Tr. 222-224). Mr. House was recalled as a rebuttal witness and testified, in part, as follows: "Q. Mr. House, you were sitting in the courtroom when we heard the testimony of Mr. Jacobs and I would like to ask you a few questions regarding that. "At the meeting that was held on February 18th, 1981, is it true that you said that some members of the union would not like the decision but that you understand the reasons for it and would not fight it? "A. That is totally untrue. "Q. Can you say again what you said? "A. In the meeting I had made the statement that I had personally been having my paycheck mailed to my bank for some period of time and that it was a personal choice that I had made. "As far as president of Local 2815 representing the bargaining unit employees we would have to run a poll of the employees to see how we should proceed as their representative in this matter and check to see if they would be acceptable to the chart that had been presented to us in that meeting. "Q. So the union never did indicate that they wouldn't fight this proposal, is that correct? "A. Never, no, ma'am. "Q. Also at this February 18th meeting was there any discussion that a letter would be sent to the employees regarding the decision at this meeting? "A. We were not aware of any letter. No letter was ever mentioned in the meeting of the 18th. The only that that was under discussion at that meeting-- the meeting lasted some 20 or 25 minutes or so was the chart that had been prepared and presented to us. "There was nothing else mentioned or discussed than that except the chart itself and then my statement at the end of that meeting of polling the employees. "Of course Mr. Holman's objection to it. "Q. Also at this meeting on February 18th was there any discussion regarding moving the payday from Thursday to Wednesday? "A. Never. It was never discussed. There was nothing said about paydays at all." (Tr. 253-254). * * * * "Q. Okay. "You once again stated you were going to make a poll of employees, and that you were going to do this and get back with Mr. Jacobs? "A. Yes, sir, which we did the morning of the 19th at 0930 by telephone call. "Q. Now as I understand it, and please correct me if I am wrong, Mr. Jacobs says he doesn't recall on the meeting of the 18th about your mentioning any poll. "Is Mr. Jacobs mistaken or are you mistaken? "A. Well, sir, the fact that I did inform Mr. Jacobs of the poll-- of the taking of the poll-- and then the facts, sir, that on the morning of the 19th at 0930 I did call Mr. Jacobs, which he has acknowledged that phone call and gave him the results of the poll. That should be sufficient evidence that it was discussed on the 18th." (Tr. 257). 8. Immediately after the meeting on the 18th, Mr. House contacted Mrs. Norma Bookout, Financial Secretary-Treasurer of the Union, and asked her to contact all stewards and have each poll the people in their respective areas concerning Respondent's proposal to eliminate hand delivery of paychecks. At about 9:00 a.m. the next day, February 19, 1981, Mrs. Bookout called Mr. House and gave him the result of the stewards' poll of employees which showed that about 99 percent of the employees were opposed to any change. (Tr. 46-47). Mr. House called Mr. Jacobs at 9:30 a.m. and " . . . told him that the people were strongly-- I believe I used the word vehemently-- but very strongly opposed to any changes in their pay practices as evidenced by the poll that we had asked for on the 18th." (Tr. 47). Mr. Jacobs admitted that Mr. House called him at 9:30 or 10:00 but stated that, "This was at the time Mr. House then said he was getting complaints from his bargaining unit employees on the mailing of pay checks and as such he could no longer support a change. He must object to it." (Tr. 227-228). 9. Mr. House testified that "Mr. Jacobs requested that we meet the next day (Friday March 20) or Monday (March 23) if possible to discuss it further. . . . " (Tr. 47); and Mr. Jacobs stated that "I suggested that we get together early the next week. . . . " (R. 233). Mr. Jacobs further stated that he " . . . advised Mr. House that due to the previous day's, in my opinion, agreement, that the notice to the employees was already being prepared. I would check on the status of it, and I would advise him" and (notice to employees) had either been signed and sent to the printer or on the way. It had left his office for publication." (Tr. 229). Mr. Atkinson testified that the letter (notice to employees) had been prepared "for the Commander's signature" and sent to the print shop on February 18 (Tr. 219); that when Mr. House called him on February 19 at about 9:45 a.m. (Tr. 53), he (Atkinson) did not know when the print shop would finish the work and actually distribute it and that he told Mr. House that "this notice will be put out hopefully this afternoon" (Tr. 219) and the notice, entitled "Memorandum For all Employees", Subject: "Mailing Payroll Checks", dated February 19, 1981 (G.C. Exh. 4), was issued on the afternoon of February 19, 1981 (Tr. 54). 10. At this time the McAlester Plant was the subject of a study called CITA (Commercial and Industrial Type Activity) to determine whether it should remain under government operation, i.e., remain GOGO (Government Owned, Government Operated) or should become GOCO (Government Owned, Contract Operated), and because of prior commitments relating to the CITA study, and, because "we at that time considered it more important in saving our jobs" (Tr. 48), Mr. House asked Mr. Jacobs to postpone meeting on the payroll check matter; and later, about 12:30 p.m., Mr. Jacobs called and suggested March 2 to which he tentatively agreed. (Tr. 57). 11. Mr. House testified that when he told Mr. Jacobs in the 9:30 a.m. call that "the people were very angry and that if they continued with their plans to change the paycheck distribution system that there would be an extreme amount of anger" (Tr. 47), that Mr. Jacobs "requested that we meet the next day or Monday"; that Mr. Jacobs did not indicate that a decision had been made on the proposal although Mr. Jacobs said "that he had already gone down the hall and talked with the CO and he had told the CO that he had gotten no opposition from the union on this" (Tr. 49) to which Mr. House stated he responded stating "that he (Jacobs) was quite well aware of the fact that we had very strongly objected to it on (sic) the meeting of the 18th. Mr. Holman was quite vocal in his objection. I also refreshed Mr. Jacobs' memory to the fact that we had requested a poll to poll the employees. He had granted us that, yet Mr. Jacobs had contacted the CO prior to allowing us to have time to finish the poll." (Tr. 49). Mr. House denied any knowledge whatever of any notice, or letter, to employees until after his conversation with Mr. Jacobs when Mrs. Bookout called and told him "she had received a rumor by telephone from a reliable source that there was a letter at the print shop, Building 106, that was being printed at that very moment; that it was signed by Colonel Simpson, Deputy Commanding Officer; that it stated that effective March 17 their paychecks would be mailed; and that the letter originated in the Comptroller's Office (Tr. 51-52); whereupon, he called Mr. Atkinson at 9:45 a.m. and that Mr. Atkinson confirmed Mrs. Bookout's information, stating that "We expect to have it back in about two and a half hours." (Tr. 53). Mr. House stated that at 10:30 a.m. he had called Mr. Lloyd Emmons who told him that he, Emmons, had run a short sample survey of employees and that "About 95 percent were extremely opposed" (Tr. 56) to any change in the handling of paychecks - "They wanted to leave it like it was". (Tr. 56). As noted above, Mr. House stated that Mr. Jacobs called him at 12:30 p.m. to suggest March 2 as the date for the next meeting. 12. There is no dispute that Mr. House on February 19 made it clear to Mr. Jacobs that he wanted to negotiate. Mr. Jacobs stated that Mr. House "indicated to me that he would request in writing to negotiate." (Tr. 230). Mr. Jacobs stated that he told Mr. House if he wanted to negotiate, to submit some proposals". (Tr. 230). I find no merit to either Mr. House's contention that the Union had never received a proposal from Respondent (Tr. 63) or to Mr. Jacobs's contention that Respondent never received a proposal from the Union. Obviously, Respondent on February 18 gave its proposal, namely, to mail all paychecks and, accordingly, to change the existing practice of hand delivery of paychecks on the premises; and equally obviously, that on February 19, 1981, the Union made its proposal, namely, that there be no change in the existing practice of the hand delivery of paychecks on the premises. Nor is there any dispute whatever that Respondent refused to negotiate the decision to mail all paychecks, although there is a dispute as to when this position was first asserted and whether it was asserted as a reserved right of management and/or because, as Mr. Jacobs contends, the Union on February 18 agreed to the change. I am aware, as Mr. House testified, n. 5 supra, that there is a basis in the record for the view that Respondent, from the outset, refused to negotiate concerning its decision to change the manual delivery of paychecks, conceded by Mr. Jacobs to have been a change of an established practice (Tr. 242), which is further supported by Mr. Jacobs' testimony, as follows: "A. We advised the union that the Commander of the Army Ammunition Plant desired to commence mailing payroll checks to employees as opposed to hand delivery. "We proposed that this take place the target date of 17 March 1981. "Q. When you informed the union officials of this decision that was to be subsequently implemented, what was their reaction? "A. We received a negative response initially from both Mr. House and Mr. Holman. . . . " (Tr. 222). If the question of negotiability of the decision to mail all paychecks, which encompassed discontinuance of their hand delivery, was not reached on February 18, 1981, Mr. Jacobs testified that on February 19, he told Mr. House that he "was referring to impact, impact and implementation." (Tr. 230). Of course, Respondent's issuance of its memorandum to all employees (G.C. Exh. 4) on February 19, 1981, if there were no agreement by the Union, plainly constituted an assertion of the right, unilaterally, to make the decision to discontinue hand delivery of paychecks. The meeting arranged for on February 19 was held, as scheduled, on March 2, 1981, and Mr. House testified that at that time, "Mr. Jacobs stated that it was not negotiable and that he would not entertain the idea of negotiating this with us. "Then Mr. Jacobs stated it was a two-fold thing. He said, 'We will negotiate the changing of the payday' which also came into play. "The payday itself had also been changed from Thursday to a Wednesday in the letter of the 19th signed by Colonel Simpson. "He said, 'We will acknowledge that this is negotiable, but it is management's right to determine methods of (sic) means of getting the pay to the employees. That is management's right. That is not negotiable.' "We mentioned to him in that meeting that the basic agreement, Article 6, Section 1, (G.C. Exh. 2) states clearly and very concisely 'matters approximate for consultation or negotiation are pay practices' and that the contract when it was negotiated included all parts and aspects of the pay practices. "Q. What else did you say? "A. I at that time asked Mr. Jacobs if he would withdraw the letter. "Q. What did he say? "A. He said, 'No, this is our position. We will not withdraw the letter. The letter stands' "At that particular juncture I told me (sic) Jacobs, 'I have no recourse . . . but to proceed to file unfair labor practice charges. . . . " (Tr. 60-61). Mr. House's testimony was fully confirmed but he testimony of Mr. Holman (See, Tr. 127, 138). Mr. Atkinson was not asked about negotiability but stated, "There was quite a bit of discussion that day" (Tr. 210); that the Union was opposed to "this procedure and asked if we were still going to implement it. We stated we were" (Tr. 210); that Mr. House said he would file; and that the Union made no bargaining proposal to management (Tr. 210). Mr. Jacobs contended that negotiability was not raised until March 3 or 4 in a telephone conversation at which time he had stated, "It was my opinion that the decision to mail payroll checks was nonnegotiable." (Tr. 241). 13. Respondent recognized an obligation to bargain on impact and implementation. Indeed, Respondent asserts that, pursuant to that obligation, it withdrew from its proposal to move payday from Thursday to Wednesday because the Union objected. (Tr. 238). 14. On March 12, 1981, the Commanding Officer, Colonel Kimura, issued a document entitled "Memorandum For All Employees", "Subject: Designation of Payday" which stated as follows: "1. Reference Memorandum For All Employees, Subject: Mailing Payroll Checks dated 19 February 1981. Subject memorandum designated payday as the second Wednesday following the end of a pay period. Checks were to have been mailed on Tuesday before payday. "2. Agreement, on this change in payday, has not been reached between representatives of the plant and the local bargaining unit. Payday will therefore remain as the second Thursday following the end of a pay period. Checks will be mailed on Wednesday before payday." (G.C. Exh. 6). 15. Beginning with the pay period of March 17, 1981, paychecks were mailed and hand delivery of paychecks on the premises ceased. CONCLUSIONS I have considered the record carefully, portions of which are set forth above, and fully credit the testimony of Mr. House. I credit the testimony of Mr. House for various reasons. First, I found Mr. House to be a very credible witness. Second, his testimony was fully corroborated by the testimony of Mr. Holman who was also a very credible witness. Third, his testimony was further substantially corroborated by the testimony of Mr. Atkinson, who was also a very capable witness, although I am aware that Mr. Atkinson stated, when asked if Mr. House made any statement about polling the employees, that "I did not hear such a statement" (Tr. 209); and that Mr. Atkinson stated it was his impression that they (the Union representatives) acquiesced to the implementation of the decision (Tr. 208); notwithstanding that he testified that at the conclusion of the meeting on February 18, " . . . they stated that they didn't really like it . . . that they did not like it and thought the employees wouldn't like it." (Tr. 208). Fourth, Mr. House's testimony that he told Mr. Jacobs on February 18 that "we needed time to poll the employees. They agreed to allow us to have time for that" (Tr. 44), is fully corroborated by the unchallenged testimony that: a) immediately after the meeting of February 18, Mr. House contacted Mrs. Bookout and instructed her to contact all stewards and have them poll the employees; b) that Mrs. Bookout called Mr. House at about 9:00 a.m. on February 19 and gave him the results of the poll; and c) that Mr. House called Mr. Jacobs at 9:30 a.m. on February 19 and reported that "the people were . . . very strongly opposed to any changes in their pay practices as evidenced by the poll that we had asked for on the 18th. I was now giving him the results of the poll as we told him we would when it was finished." (Tr. 47). Indeed, while not requested, it was undenied that Mr. Emmons had made a sample survey of employees which had shown "About 95 percent were extremely opposed" to any change in the handling of paychecks-- "They wanted to leave it like it was" (Tr. 56), /10/ which fully confirmed the wholly like result of the Union's survey. On the otherhand, I did not find Mr. Jacobs' testimony convincing in various respects. For example, his version of the meeting of February 18 was not convincing; his testimony that a memo to employees was discussed was categorically denied by Mr. House, and was wholly unsupported by the testimony of Mr. Atkinson or of Mr. Holman; his testimony that Mr. House agreed to Respondent's proposal was directly and emphatically denied by Messrs. House and Holman and Mr. Atkinson, although he asserted an "impression" of acquiescence which is itself highly specious in view of his testimony that at the conclusion of the meeting they stated, " . . . that they did not like it and thought the employees wouldn't like it", did not say there was any "agreement". In like manner, I did not find Mr. Jacobs' version of the March 2, 1981, meeting convincing and, accordingly, I fully credit the testimony of Mr. House which was corroborated in all material respects by the testimony of Mr. Holman and Mr. Atkinson. Accordingly, I do not credit the testimony of Mr. Jacobs and, specifically, do not credit his testimony that the Union on February 18, 1981, agreed to Respondent's proposal to mail all payroll checks rather than to hand deliver them; nor do I credit his testimony that Mr. House indicated that the Union "would not fight us on this issue or give us a hard time". Rather, I fully credit the testimony of Mr. House, corroborated by the testimony of Mr. Holman, that on February 18, 1981, the Union, in substance, by Messrs. House and Holman objected to any change in the hand delivery of paychecks but, before proceeding further with negotiations, requested time to "poll", or survey, the employees, to which Respondent agreed. At 9:30 a.m. the following morning, February 19, Mr. House called Mr. Jacobs to advise him of the result of the poll, which showed that 99% of the employees were opposed to any change, and told him that "the people were . . . very strongly opposed to any changes in their pay practice. . . . " (Tr. 47). Mr. House requested further negotiations and Mr. Jacobs requested that they meet the next day, February 20, or the following Monday, February 23; however, because of prior commitments, Mr. House requested that the meeting be deferred and the parties agreed to meet on March 2. Although I find that Mr. Jacobs told Mr. House that "he had told the CO that he had gotten no opposition from the Union" (Tr. 49) to which Mr. House responded that "we had very strongly objected to it" at the meeting on the 18 and further reminded Mr. Jacobs that "we had requested a poll to poll the employees. He had granted us that" (Tr. 49), I further find, as Mr. House very credibly testified, that Mr. Jacobs did not mention a letter, or notice, to employees; however, immediately after his telephone conversation with Mr. Jacobs, Mr. House received a call from Mrs. Bookout in which she told him she had learned that a letter to employees announcing the mailing of all paychecks was then being printed. Mr. House called Mr. Atkinson who verified Mrs. Bookout's report. The letter was distributed to all employees on the afternoon of February 19. The parties did meet on March 2, 1981, and I find, as Mr. House testified, that on March 2, Respondent refused to bargain on the decision to discontinue the hand delivery of paychecks and, in lieu thereof, to mail all paychecks, although Respondent recognized an obligation to bargain on impact and implementation. Indeed, Respondent's action, in announcing the change to all employees on February 19, constituted the assertion of a reserved right of management since there was not, as I have found, any agreement by the Union to the proposed change and, clearly negotiations, begun on February 18, had not progressed beyond a preliminary exchange of information. In fact, based on the credited testimony, including Mr. Atkinson's, I conclude that the parties did not engage in any serious bargaining on February 18. Respondent submitted its proposal, with a target date of March 17, and set forth the asserted cost reduction that would be achieved and the discussion centered on Respondent's cost analysis; the Union stated its opposition to any change and requested time to poll, or survey, the employees, to which Respondent agreed. Respondent did not mention any change of payday and/or the date paychecks could or would be mailed; nor did Respondent mention any letter to employees. Both from the Union's request for time to poll, or survey, the employees, and Respondent's agreement to the request, it is clear, and I so find, that the parties fully expected negotiations to continue. Nor is there any doubt whatever that on February 18, the Union sought to bargain on the decision itself and that Respondent on February 18 did not assert that the decision to change the delivery of paychecks was a reserved right of management. On March 2, 1981, Respondent specifically refused to bargain on its decision to change the delivery of paychecks and specifically refused to withdraw its letter to all employees of February 19, 1981. As Mr. Atkinson testified, Respondent, on March 2, 1981, advised the Union that it intended to implement the change on March 17, 1981. I have found that there was neither agreement nor acquiescence by the Union to the proposed change on February 18, 1981. Nevertheless, even if, contrary to this conclusion, Mr. Jacobs' testimony were accepted, neither laches nor estoppel could, or would, apply so as to preclude the Union's rejection of Respondent's proposed change at 9:30 a.m. on February 19, 1981. Obviously, at the time of Mr. House's call, Respondent had issued no notice to employees and it can not be said that Respondent, in reliance on the Union's "agreement" or "acquiescence" of February 18, had acted to its detriment, although, to be sure, Mr. Atkinson had prepared the letter on February 18, 1981, and it was at the printers when Mr. House called Mr. Jacobs at 9:30 a.m. To the contrary, Respondent, with conceded notice of the Union's rejection of its proposed change at 9:30 a.m. on February 19, and the accompanying request for negotiations, acted at its peril by its unilateral notice to employees implementing the change effective March 17, 1981, a position it reaffirmed on March 2, 1981, when it refused to withdraw the notice of February 19, 1981, and refused to bargain on its decision to change the delivery of paychecks for the reason that it asserted the decision to be a reserved right of management. I have given careful consideration to each of Respondent's assertions concerning Sec. 6(a) of the Statute and commend Respondent's Counsel for his enterprise and ingenuity, but, contrary to Respondent's contentions, find nothing in Sec. 6(a) which reserved to management the right to change established pay practices. Sec. 6(a)(1) reserves to management authority: "(1) to determine the mission, budget, organization, number of employees, and internal security practices of the agency" a) The right to determine its budget To be sure, virtually everything an agency or activity does involves a cost; but this does not mean that every act, because it carries with it a cost, brings it within the reserved authority of an agency to determine its budget. The contention that a proposal is inconsistent with the authority of the agency to determine its budget merely because it involves a cost has been expressly considered by the Authority and rejected. Thus, in American Federation of Government Employees, AFL-CIO and Air Force Logistics Command, Wright-Patterson Air Force Base, Ohio, 2 FLRA 603 (1980), which, as material here, involved a union proposal that the employer "will provide adequate space and facilities for a day care center (to be operated by the union and to be self-supporting) at each ALC", the Authority stated, " . . . Such a construction of the Statute, however, could preclude negotiation on virtually all otherwise negotiable proposals, since, to one extent or another, most proposals would have the effect of imposing costs upon the agency which would require the expenditure of appropriated agency funds. Nothing in the relevant legislative history indicates that Congress intended the right of management to determine its budget to be so inclusive as to negate in this manner the obligation to bargain." (2 FLRA at 607). In the Wright-Patterson case, the Authority further discussed the meaning of "budget" as follows: "There is no question but that Congress intended that any proposal which would directly infringe on the exercise of management rights under section 7106 of the Statute would be barred from negotiation (footnotes to Authority's decision are omitted). Whether a proposal directly affects the agency's determination of its budget depends upon the definition of 'budget' as used in the Statute. The Statute and legislative history do not contain such a definition. In the absence of a clearly stated legislative intent, it is appropriate to give the term its common or dictionary definition. As defined by the dictionary, 'budget' means a statement of the financial position of a body for a definite period of time based on detailed estimates of planned or expected expenditures during the period and proposals for financing them. In this sense, the agency's authority to determine its budget extends to the determination of the programs and operations which will be included in the estimate of proposed expenditures and the determination of the amounts to fund them. Under the Statute, therefore, an agency cannot be required to negotiate those particular budgetary determinations. That is, a union proposal attempting to prescribe the particular programs or operations the agency would include in its budget or to prescribe the amount to be allocated in the budget for them would infringe upon the agency's right to determine its budget under section 7106(a)(1) of the Statute. /11/ "Moreover, where a proposal which does not by its terms prescribe the particular programs or amounts to be included in an agency's budget, nevertheless is alleged to violate the agency's right to determine its budget because of increased cost, consideration must be given to all the factors involved. That is, rather than basing a determination as to the negotiability of the proposal on increased cost alone, that one factor must be weighed against such factors as the potential for improved employee performance, increased productivity, reduced turnover, fewer grievances, and the like. Only where an agency makes a substantial demonstration that an increase in costs is significant and unavoidable and is not offset by compensating benefits can an otherwise negotiable proposal be found to violate the agency's right to determine its budget under section 7106(a) of the Statute." (2 FLRA at 607-608). In International Association of Fire Fighters, Local F-61 and Philadelphia Naval Shipyard, 3 FLRA No. 66, 3 FLRA 437(1980), with respect the union's proposal that for the purpose of applying Section 7(k) of the Fair Labor Standard Act the work period shall consist of a 7 day period, as to the "budget" provision of Sec. 6(a)(1) of the Statute, the Authority set forth, in part, its decision in Wright-Patterson quoted above and further stated, "The proposal here in dispute does not by its express terms prescribe the particular amount to be included in the agency's budget. The agency argues that adoption of the proposal would result in an increased cost in excess of $3.1 million per year 'with no countervailing benefits to the Government.' This claimed increase in cost is not based solely on adoption of the proposal in the bargaining unit here involved which contains less than 50 fire fighters. Rather, it is the product of computations involving all the more than 10,000 fire fighters in the Department of Defense and assumes that they all arrange for work and leave schedules which would entitle them to the maximum amount of overtime to which one could be entitled under the disputed proposal. Moreover, the agency has made no substantial demonstration that the increased costs, with it hypothesizes, are unavoidable and will not be offset by increased employee performance, reduced turnover, fewer grievances and the like. Consequently, proposal IV does not violate the right of the agency to determine its budget under section 7106(a)(1) of the Statute." (3 FLRA at 451-452). In National Treasury Employees Union, Chapter 6 and Internal Revenue Service, New Orleans District 3 FLRA No. 118, 3 FLRA 747 (1980), which involved a union proposal that pre-paid parking spaces for bargaining unit employees' private vehicles not be released to GSA, the Authority, as to the "budget" provision of Sec. 6(a)(1) of the Statute, again set forth, in part, its decision is Wright-Patterson quoted above, and further stated, "The proposal at issue herein, however, which would require the agency to retain certain parking spaces and could thereby, under FPMR Temporary Regulation D-65, require it to absorb up to one-half the cost of employee parking, does not require the agency to negotiate its budget. That is, the proposal does not on its face prescribe that the agency's budget will include a specific provision for those parking spaces or a specific monetary amount to fund them. Furthermore, the agency has not demonstrated that retention of the parking spaces at issue herein will result in a significant increase in costs. In particular, the agency made no attempt to refute the figures, or the calculations based on those figures, by which the union showed that the cost of retaining the parking spaces represented only 1/6 of 1% to 1/7 of 1% of the total budget for the New Orleans Regional Office for the last fiscal year. Moreover, under FPMR Temporary Regulation D-65, the possible budgetary impact of retaining those spaces would be even less. It is not necessary, therefore, to reach the issue of whether the alleged increase in costs is outweighed by compensating benefits. Consequently, the proposal at issue does not violate the right of the agency to determine its budget under section 7106(a) of the Statute." (3 FLRA at 766). In American Federation of Government Employees, AFL-CIO, Local 32 and Office of Personnel Management, Washington, D.C., 6 FLRA No. 76, 6 FLRA 423 (1981), the union proposal was that management shall establish free day care facilities for the children of OPM employees, which the Authority found "bears no material difference from the proposal which was before the Authority in the Wright-Patterson case", and the Authority stated, in part, as follows: " . . . The proposal does not by its express terms prescribe that the Agency shall include in its budget a day care program or an amount of funds to be allocated therefor and, despite having been granted an additional opportunity to do so, the Agency has not submitted any specific information concerning increased costs under the proposal. Instead, the Agency's claim is unsupported and general. Consequently, under the record it must be concluded that the Agency has not made a substantial demonstration that the proposal would result in a significant and unavoidable increase in costs. Nor has the Agency even attempted to demonstrate that any increase in costs would not be offset by compensating benefits. Accordingly, under Wright-Patterson, supra, the Agency's allegation that the proposal is inconsistent with its right to determine its budget must be rejected. "In a related argument that the proposal is outside the duty to bargain, the Agency claims it could not guarantee its ability to provide for a free day care facility because funds therefore would have to be approved by the Office of Management and Budget (OMB) and then by Congress. The thrust of this argument is that no duty to bargain exists in the absence of total discretion to implement any agreement reached. However, an agency has a duty to bargain over conditions of employment to the extent it has any discretion concerning them. Thus, if the Agency's discretion in this case, as it claims, is limited to requesting approval from OMB, the Agency would be obligated to bargain to that extent." (6 FLRA at 426). Under the Statute, "collective bargaining" means, inter alia, consulting and bargaining "with respect to the conditions of employment" (Sec. 3(12)) and "conditions of employment" means "personnel policies, practices, and matters, whether established by rule, regulations, or otherwise, affecting working conditions" (Sec. 3(14)). Pay practices are "conditions of employment" within the meaning of the Statute. Indeed, other than employment itself, no other matter is of more immediate, direct, or personal concern to each employee than pay practices. Specifically, the hand delivery of paychecks on the premises on payday had been an established condition of employment since the inception of the Plant in 1941 and had been continued without change from the date the Department of the Army assumed control on October 1, 1977. In connection therewith, a bank provided facilities, on the premises, to cash paychecks on payday. Of course, employees relied on receipt of their checks on payday and on the assurance that they could convert those checks to cash on payday. Mailing of paychecks, whether to a home address or to a bank, altered the prior practice, frequently, as the record shows, to the considerable inconvenience and expense to employees. Not only do I find that "pay practices" are conditions of employment; but Article VI, Section 1 of the parties' agreement (G.C. Exh. 2) expressly provided that "matters appropriate for consultation or negotiation" includes "pay practices" which certainly, in my opinion, includes the delivery of paychecks to employees. Here, the proposed change was not a new proposal by the Union, but, rather, was a proposal by Respondent to change an established condition of employment. If this were a matter of first impression, I would not view it either necessary or even appropriate to consider whether, to retain an existing condition of employment, if it imposes a cost, an otherwise negotiable matter could be rendered non-negotiable by the "budget" provision of Sec. 6(a)(1) of the Statute; but in view of the Authority's decision in National Treasury Employees Union, Chapter 6 and Internal Revenue Service, New Orleans District, supra, which also involved retention of an established condition of employment (there retention of parking spaces), I am constrained to consider whether Respondent has made a substantial demonstration that retention of the established practice of the hand delivery of paychecks involved a cost which is significant and unavoidable and which was not offset by compensating benefits. /12/ The cost to Respondent of preparing the checks was the same regardless of the manner of delivery. Respondent asserted that it would cost between $11,000 to $14,000 less per year to mail the checks rather than deliver them on the premises. The principal savings resulted from elimination of "Labor Lost in Hand Distribution of Checks" of which $117.20 was paid time each payday for picking up checks, and $292.75 was paid time each pay day for cashing checks. (G.C. Exh. 3). As the principal cost involved the use by employees of paid time to receive and to cash paychecks, I can not conclude that such cost was unavoidable, although, certainly, it was inevitable under the prevailing practice; but accepting a savings of approximately $14,000.00 per year, I would not view the cost as substantial in terms of the overall budget of the Plant, cf., National Treasury Employees Union, Chapter 6 and Internal Revenue Service, New Orleans District, supra. That is, as in the Internal Revenue Service case, the budgetary impact of retaining the hand delivery of paycheck was insubstantial. Nor, of course, did the Union's proposal, that the existing practice not be changed, by its express terms prescribe that Respondent's budget should include a specific provision for the cost of hand delivery of pay checks. Indeed, the only specific budget line item was Respondent's proposed purchase of an inserting machine to effectuate the change it sought to make. Moreover, even if the cost were deemed unavoidable and the budgetary impact substantial, the cost was outweighed by compensating benefits. First, it was a benefit long enjoyed by employees and upon which they relied. Second, the mailing of checks caused both a substantial inconvenience to employees and, for many, resulted in substantial added cost in that they had to make a trip to a bank to cash their checks which had not been required previously. Third, the employees were overwhelmingly opposed to the change, as Respondent's own sample survey had shown, from which it is reasonable to infer that employee morale was adversely affected. Fourth, the parties had expressly made "pay practices" a subject for negotiation in their agreement. Accordingly, the Union's demand that the existing condition of employment be continued did not violate Respondent's right to determine its budget under section 6(a)(1) of the Statute. b) Internal security While it is obvious that the handling of checks involves a security interest, mailing of payroll checks, versus hand delivery on the premises, was not an "internal security" practice of Respondent within the meaning of Sec. 6(a)(1) of the Statute. Respondent's objective, as it informed the Union, was to save money. I am aware that internal security practices encompasses more than identification cards and procedures, integrity of files and disclosure of information, inspections, etc.; but, nevertheless, as the Federal Labor Relations Council noted as to the wholly like provisions in Section 11(a) of the Executive Order, "No intent is evident in the Order, or in the various reports and recommendations which accompanied the Order and its subsequent amendments, that the phrase 'internal security' practices is to be accorded any meaning other than the common meaning ascribed to it. . . . Hence, as used in the Order . . . the term 'security' practices includes, inter alia, those policies, procedures and actions that are established and undertaken to defend, protect, make safe or secure (i.e., to render relatively less subject to danger, risk or apprehension) the property of an organization. /13/ "Clearly, the specific nature of the 'internal security' practice which would best accomplish these objectives for a particular organization generally will depend upon the functions of that organization and its derivative goals, activities and processes; the character and vulnerability of what is being protected; and whether security is sought against a risk or danger from within or from outside the organization. Hence, such practices might include any of a wide range of measures intended to render secure the physical property of an organization. As a consequence of the variety of risks which might be involved, the specific methods employed, i.e., the security practices themselves, will of necessity differ according to the particular circumstances. Thus, depending upon the circumstances, they may involve one or a combination of practices, for example, guard forces, barriers, alarms and special lighting. Further, they may involve procedures to be followed by employees, which procedures are designed to eliminate or minimize particular risks to the property of an organization from such employees." American Federation of Government Employees, AFL-CIO, Local 1592 and Army-Air Force Exchange Service, Hill Air Force Base, Utah, FLRC No. 77A-123, 6 FLRC 612, 619-620(1978). The union proposal in question in the Hill Air Force Base case was that "Military dependents who are employees of the AAFES (Army, Air Force Exchange Service) will not be restricted from buying marked down merchandise". The agency's internal security program provided that "Exchange employees, including military dependent employees, will not be permitted to purchase any item of retail merchandise marked down for clearance until it has been on sale for at least one full day". The Council held that the union's proposal concerned a matter with respect to internal security which is excepted from the obligations to bargain and stated, in part, as follows: " . . . In these circumstances, in our view, the union proposal . . . clearly is concerned with the agency's 'internal security practices' (even though the proposal on its face, standing alone, does not appear to involve internal security matters). In particular, the proposal would negate the agency's adoption of a practice designed to prevent, or to render the Exchange Service relatively less subject to the risk of an employee abusing his or her 'markdown authority' with respect to agency property held for sale, for personal benefit or the advantage of a fellow employee. In this regard . . . the union agrees that the Exchange Service practice is concerned with 'insuring employee honesty and safeguarding against thefts of the employer's property by employees.'" (6 FLRA at 620). In National Treasury Employees Union and Internal Revenue Service, 3 FLRA No. 112, 3 FLRA 692 (1980), the Authority held the union's proposal, that employees may obtain outside employment which does not: interfere with the performance of official duties; bring discredit on or cause unfavorable and justifiable criticism of the Government; or result in a conflict or apparent conflict of interest, with their official duties, was within the agency's duty to bargain, i.e., was not excepted from the obligation to bargain by Sec. 6(a)(1) of the Statute. The Authority stated, in part, as follows: "The agency asserts . . . that Union Proposal I violates management's reserved rights under Section 7106(a)(2)(A) . . . and under Section 7106(a)(1) . . . to determine the internal security practices of the Agency. Such assertions are unsupported by the record herein and appear to be based upon a misinterpretation by the agency of the disputed proposal . . . . " (3 FLRA at 695). In National Federation of Federal Employees, Local 1363 and Headquarters, U.S. Army Garrison, Yongsan, Korea, 4 FLRA No. 23 (1980), the Authority held that the union's proposal concerning changes in ration control regulations was negotiable and stated, in part, as follows: "The Agency asserts . . . that the proposal herein violates management's reserved right . . . to determine the internal security practices of the Agency. In this regard, the Agency argues the dollar and quantity limits on the purchase of certain merchandise contained in the ration control regulation. . . . 'helps control blackmarketeering by limiting the availability of these goods to authorized personnel.' However, in the Authority's view, Regulation 60-1 does not concern the internal security practices of the Agency. Unlike the regulations at issue in American Federation of Government Employees, AFL-CIO, Local 15 and Department of the Treasury, Internal Revenue Service, North Atlantic Region, 2 FLRA No. 109 (2 FLRA 874(1980)) . . . (which directly involved identification cards and/or credentials) the Agency has not established that the regulation involved herein relates to or contains a management plan for external risks, or in any other manner concerns the internal security practices of the Agency. . . . " In National Labor Relations Board Union and General Counsel of the National Labor Relations Board, 5 FLRA No. 95(1981), the Authority held the union proposal, which, in part, provided that " . . . employees and Union officials will be permitted to photocopy case file material for the purpose of grievance processing . . . . ", inconsistent with the Agency's authority to determine its internal security practices (the union's right to obtain information, upon request, necessary to carry out its representational functions was not affected in any manner), and stated, in part, as follows: " . . . Management's determination of the internal security practices under section 7106(a)(1) of the Statute includes the right to prevent unauthorized disclosure of the Agency's investigative files by restricting access to those files . . . Nevertheless, the express language . . . of the Union's proposal would require the Agency to grant employees and Union officials unquestioned access to such material. Accordingly, it interferes with the Agency's authority under Section 7106(a)(1) to determine the internal security practices of the Agency." If A had a prized bull whose great strength and aggressive nature made it difficult to keep him confined to any desired pasturage, security, properly, would include all policies, procedures, and actions undertaken to defend, protect, make safe, or secure him: but, while it most assuredly would end the problem, it could scarcely be considered security of the bull to shoot him. Nor could Respondent terminate the hand delivery of pay checks and call it security. More seriously, only measures which are part of an agency's internal security program, as in Hill Air Force Base, supra, or which concern an agency's responsibility for internal security, as in National Labor Relations Board Union, supra, are removed from the obligation to bargain by Sec. 6(a)(1) of the Statute. The fact that security may be of concern, as in National Treasury Employees Union, supra, or in Headquarters, U.S. Army Garrison, Yongsan, Korea, supra, is not sufficient to remove a matter from the obligation to bargain. Of course, here, the termination of the established condition of employment of the hand delivery of paychecks was not part of any internal security program nor did the record show any legitimate security problem. To the contrary, the premises are enclosed, guards at gates control ingress and egress, and guards patrol the area; checks, while they negotiable instruments, are not cash; and the record shows no basis to believe that hand delivery of checks had become any less secure than in the past 40 years when no security problem had been perceived. Accordingly, I conclude that Respondent's proposal to terminate the hand delivery of pay checks was not excepted from the obligation to bargain by Sec. 6(a)(1) of the Statute. c) Efficiency Section 12(b)(4) of Executive Order 11491, as amended, had provided that "Management officials of the agency retain the right . . . " "(4) to maintain the efficiency of the Government operations entrusted to them" This was not carried over to Sec. 6 of the Statute. House Report No. 95-1403 stated, in part, as follows: "The committee's intention in section 7106 is to achieve a broadening of the scope of collective bargaining to an extent greater than the scope has been under the Executive Order program, but to preserve the essential prerogatives and flexibility federal managers must have. . . . The committee intends that section 7106-- which retains several of management's rights under the Executive Order, but also eliminates several-- be read to favor collective bargaining whenever there is doubt as to the negotiability of a subject or a proposal." (Legislative History of the Federal Service Labor Management Relations Statute, Title VII of the Civil Service Reform Act of 1978, Subcommittee on Postal Personnel and Modernization of the Committee on Post Office and Civil Service, House of Representatives, Committee Print No. 96-7, 96th Congress; 1st Session, pp. 689-690) Notwithstanding Section 12(b)(4), the Council had made it clear that efficiency, i.e., economic impact, standing alone did not render a matter non-negotiable, AFGE Local 2595 and Immigration and Naturalization Service, U.S. Border Patrol, Yuma Sector (Yuma, Arizona), FLRC No. 70A-10, 1 FLRC 71(1971); Local Union No. 2219, International Brotherhood of Electrical Workers, AFL-CIO and Department of the Army, Corps of Engineers, Little Rock District, Little Rock, Ark., FLRC No. 71A-46, 1 FLRC 219(1972); Federal Employees Metal Trades Council of Charleston and U.S. Naval Supply Center, Charleston, South Carolina, FLRC No. 71A-52, 1 FLRC 235(1972); American Federation of Government Employees, National Joint Council of Food Inspection Locals and Office of the Administrator, Animal and Plant Health Inspection Service, U.S. Department of Agriculture, FLRC No. 73A-36, 3 FLRC 324(1975). Nor does cost alone render a proposal non-negotiable under the Statute, Internal Revenue Service, Brookhaven Service Center, 5 FLRA No. 64 (1981). For reasons set forth hereinabove, I have concluded that, notwithstanding that there was a cost involved, the Union's demand that the existing condition of employment be continued was subject to the obligation to bargain. d) Contracting out Section 6(a)(2)(B) of the Statute provides, in part, that management may, "(2) in accordance with applicable laws-- (B) " . . . make determinations with respect to contracting out . . . . " The short answer is that Respondent entered into to no sub-contract for the delivery of paychecks and, certainly, its decision to mail paychecks, albeit that it used the facilities of the U.S. Postal Service, did not constitute a determination "with respect to contracting out" within the meaning of Sec. 6(a)(2)(B) of the Statute. Nor do I find anything in Sec. 6(b) which renders the right to change established pay practices a management right subject to bargaining only at the election of management. Sec. 6(b) provides, in part, as follows: "(b) Nothing in this section shall preclude any agency and any labor organization from negotiating-- (1) at the election of the agency, on the numbers, types, and grades of employees or positions assigned to any organizational subdivision, work project, or tour of duty, or on the technology, methods, and means of performing work" Respondent asserts that its decision to mail all paychecks was encompassed by "the technology, methods, and means of performing work." However, the Authority has made clear that "methods" and "means" applies only to the performance of the work of the agency. Thus, in National Treasury Employees Union, Chapter 6, and Internal Revenue Service, New Orleans District, 3 FLRA 747(1980), the Authority stated, "The right of the agency under section 7106(b)(1) of the Statute to elect whether or not it will negotiate over 'methods' and 'means' extends only to matters which pertain to the performance of the work of the agency. The purpose for which the parking spaces in this case are to be retained under the union's proposal are not related to the performance of the agency's work." (3 FLRA at 764). Similarly, delivery of employee pay checks was not related to the performing of Respondent's work, namely, the manufacture and storage of ammunition. However, even if this were a matter negotiable only at the election of the agency, Respondent had made the election to negotiate by adoption of the negotiated agreement which in Article VI, Section 1, makes bargainable, inter alia, "pay practices". Accordingly, I conclude that the established practice of the hand delivery of employee paychecks on the premises was a condition of employment; that Respondent's decision to change this established condition of employment was not excepted from the obligation to bargain by Sec. 6 of the Statute; and that Respondent violated Secs. 16(a)(5) and (1) of the Statute by its failure and refusal to bargain in good faith with the Union prior to announcing to all employees its decision to change the existing practice of the hand delivery of paychecks, and prior to implementation of its decision on March 17, 1981. Obviously, a status quo ante order would not be possible inasmuch as payroll checks mailed on and after March 17, 1981, are beyond recall; however, as part of the remedy I shall order that Respondent forthwith withdraw its policy of mailing all paychecks and immediately reinstate its policy and practice of the hand delivery of paychecks on the premises to all employees who desire to receive their paychecks on the premises. No other remedy would adequately or completely remedy the unfair labor practice committed and reinstatement of the condition of employment unlawfully terminated will result neither in a hardship nor cause disruption of Respondent's operations. Therefore, having found that Respondent violated Secs. 16(a)(5) and (1) of the Statute by its failure and refusal to bargain in good faith prior to its change of an established condition of employment, I recommend that the Authority adopt the following: ORDER Pursuant to Sec. 2423.29 of the Regulations, 5 C.F.R. 2423.29, and Sec. 18 of the Statute, 5 U.S.C. 7118, the Authority hereby orders that the United States Department of Defense, Department of the Army, McAlester Army Ammunition Plant, shall: 1. Cease and desist from: (a) Instituting any change in the established policy and practice of the hand delivery of employee pay checks on the premises without first notifying the American Federation of Government Employees, Local 2815, AFL-CIO (hereinafter referred to as the "Union"), the exclusive representative of its employees, and affording such representative the opportunity to negotiate in good faith, to the extent consonant with law, regulations and the Statute, prior to any decision concerning such policy and practice. (b) In any like or related manner, interfering with, restraining, or coercing its employees in the rights assured by the Statute. 2. Take the following affirmative action in order to effectuate the purposes and policies of the Statute: (a) Rescind and withdraw its decision on "Mailing Payroll Checks", unlawfully announced by its memorandum of February 19, 1981, and unlawfully implemented on March 17, 1981. (b) Forthwith reinstate the policy and practice of the hand delivery of pay checks on the premises as it existed prior to February 19, 1981. (c) Notify the Union of any proposed change regarding the hand delivery of paychecks on the premises and, upon request, negotiate with such representative, to the extent consonant with law and regulations, on any such proposal. (d) Post at its facility at the McAlester Army Ammunition Plant, McAlester, Oklahoma, copies of the attached notice marked "Appendix", on forms to be furnished by the Federal Labor Relations Authority. Upon receipt of such forms, they shall be signed by the Commanding Officer, McAlester Army Ammunition Plant, and they shall be posted for 60 consecutive days thereafter in conspicuous places, including all places where notices to employees are customarily posted. The Commanding Officer shall take reasonable steps to insure that such notices are not altered, defaced, or covered by any other material. (e) Notify the Regional Director of the Federal Labor Relations Authority for Region VI, whose address is: P.O. Box 2640, Dallas, Texas, 75221, in writing, within 30 days from the date of this Order, what steps have been taken to comply therewith. WILLIAM B. DEVANEY Administrative Law Judge Dated: April 30, 1982 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 institute any change in the established policy and practice of the hand delivery of employees pay checks on the premises without first notifying the American Federation of Government Employees, Local 2815, AFL-CIO, the exclusive representative of our employees, and affording it the opportunity to negotiate in good faith, to the extent consonant with law and regulations, prior to any decision concerning such policy and practice. WE WILL NOT in any like or related manner interfere with, restrain, or coerce our employees in the exercise of their rights assured by the Federal Labor-Management Relations Statute. WE WILL rescind and withdraw the decision on "Mailing Payroll Checks", which we unlawfully announced by the memorandum dated February 19, 1981, and which we unlawfully implemented on March 17, 1981. WE WILL forthwith reinstate the policy and practice of the hand delivery of payroll checks on the premises as it existed prior to February 19, 1981. WE WILL notify the American Federation of Government Employees, Local 2815, AFL-CIO, of any proposed change regarding the hand delivery of paychecks on the premises and will, upon request, negotiate with such representative, to the extent consonant with law and regulations, on any such proposal. (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 any employee has any question concerning this Notice or compliance with any of its provisions, any employee may communicate directly with the Regional Director, Federal Labor Relations Authority, whose address is: P.O. Box 2640, Dallas, Texas, 75221, and whose telephone number is: (214) 767-4996. --------------- FOOTNOTES$ --------------- /1/ Section 7106(b)(1) provides in pertinent part: Sec. 7106. Management rights * * * * (b) Nothing in this section shall preclude any agency and any labor organization from negotiating-- (1) at the election of the agency, . . . on the technology, methods, and means of performing work(.) /2/ Article VI, Section 1 of the parties' agreement had provided in pertinent part as follows: It is agreed and understood that matters appropriate for consultation or negotiation between the parties are . . . procedures related to working conditions which are within the discretion of the Employer, including . . . pay practices(.) /3/ While there is a reference in the record suggesting that the parties had agreed to extend the terms of the expired agreement until a new one was negotiated, no extension agreement was introduced into evidence. /4/ Respondent also asserted that the assignment of paycheck delivery responsibilities to employees of the United States Postal Service constituted the exercise of management's right under section 7106(a)(2)(B) of the Statute to determine the personnel by which its operations shall be conducted. In view of the foregoing conclusion, the Authority finds it unnecessary to pass upon this contention. The Authority also finds it unnecessary to reach or pass upon the Judge's conclusions concerning the Respondent's other assertions that the change in the method of delivering employees' paychecks is excepted from the obligation to bargain by section 7106(a) of the Statute. /5/ For convenience of reference, sections of the Statute hereinafter are, also, referred to without inclusion of the initial "71" of the Statute reference, e.g., Section 7116(a)(5) will be referred to, simply, as "16(a)(5)". /6/ Respondent filed motions and interrogatories with the Regional Director all of which were denied. Prior to hearing, Counsel for Respondent advised this Office of his intent to file a Motion to Postpone; however, nothing was received by this Office prior to the hearing and, accordingly, Respondent renewed its Motion to Postpone and its Motion to Compel Answers to Interrogatories at the commencement of the hearing. Both were denied. The Motion to Postpone was, in essence, a request to postpone the hearing to permit Respondent to file an interlocutory appeal to the Authority from the Decision of the Regional Director denying Respondent's Motion To Compel Answers to Interrogatories; and the Interrogatories, in essence, sought information which Respondent asserted would show that Local 2815 had indicated support for PATCO's strike. The reasons for denying Respondent's motions were fully stated on the record and are hereby reaffirmed. /7/ Respondent estimated an annual saving of $14,125.80, or $14,489.02 with the purchase of an inserting machine ($4,740.00) (G.C. Exh. 3); or $11,945 per year as estimated by Mr. Carl J. Atkinson, Finance and Accounting Director (Tr. 214). Although the amount of the estimated savings may be suspect, for example, the estimate includes no postage cost for the use of franked envelopes, there is no doubt that Respondent expected to achieve a direct cost savings. (cf. Res. Exh. 4). /8/ This agreement, by its terms, expired March 4, 1980; however its terms remain in effect pending negotiation of a new agreement. /9/ I am aware that Mr. House testified, in part, as follows: " . . . Then I asked Mr. Atkinson, 'Is this finalized?' "Mr. Atkinson said, 'Yes, this is finalized.' "I said, 'Then you are saying that it is set in concrete?' "He said, 'Yes, it is set in concrete.'" (Tr. 43). /10/ The record does not show that Mr. Emmons communicated this information to Mr. Jacobs. /11/ See, American Federation of Government Employees, Local 3632 and Corpus Christi Army Depot, FLRC No. 77A-140, 6 FLRC 1071, 1082-1084(1978); National Treasury Employees Union and U.S. Customs Service, Region VII, Los Angeles, California, FLRC No. 76A-111, 5 FLRC 609(1977). /12/ This troubles me none the less for the reason that, with all due deference, it does not seem appropriate to engraft such a requirement where management seeks to change an existing condition of employment. I would view as more appropriate, for the reason, as the Authority stated in Wright-Patterson, supra, that, "Nothing in the relevant legislative history indicates that Congress intended the right of management to determine its budget to be so inclusive as to negate in this manner the obligation to bargain", an unequivocal obligation to bargain in good faith whenever management seeks to change an existing term or condition of employment, i.e., cost should be immaterial to the existence of the duty to bargain, although cost may quite appropriately be urged in support of management's bargaining position. If the parties bargain to impasse, the Statute provides procedures for resolution of the impasse. It is quite another matter when a Union proposes a new benefit, or some change of an existing benefit, which imposes a new cost, or an increased cost as the result of some proposed modification, and there is persuasive logic that the effect on the agency's right to determine its budget must then be considered. /13/ I find nothing the legislative history of the Statute which indicates that Congress ascribed any different meaning to its use of the same phrase in Sec. 6(a)(1) of the Statute. See, United States Department of Defense, Department of the Air Force, Carswell Air Force Base, Texas and American Federation of Government Employees, Local 1364, AFL-CIO, Case No. 6-CA-523 (ALJ, March 26, 1982 (OALJ-82-65) pp. 16-18.