U.S. Federal Labor Relations Authority

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22:1071(106)NG - AFGE Local 1923 and HHS, Office of the Secretary, Office of the General Counsel, Baltimore, MD -- 1986 FLRAdec NG

[ v22 p1071 ]
The decision of the Authority follows:

 22 FLRA No. 106
                                            Case No. 0-NG-1216
                         I.  Statement of the Case
    This case is before the Authority because of a negotiability appeal
 filed under section 7105(a)(2)(E) of the Federal Service
 Labor-Management Relations Statute (the Statute) and concerns the
 negotiability of the following provision of a negotiated agreement
 disapproved by the Agency head pursuant to section 7114(c) of the
 Statute:  /1/
                           Article 13, Section 3
          The decision by the employer to contract out work presently
       being performed by bargaining unit employees will be made in
       accordance with OMB Circular A-76 (unless application of the
       Circular is prohibited or not required by the Circular).
                       II.  Positions of the Parties
    The Agency argues that the disputed provision conflicts with section
 7106(a)(2)(B) of the Statute which reserves exclusively to management
 the right to contract out, and subjecting management's contracting out
 determination to review by arbitrators would result in arbitrators
 rather than Federal agencies making substantive contracting out
 decisions.  At the very least, it is argued, the arbitral review process
 would delay the Agency's exercise of its right to contract out.
 Finally, the Agency argues that the provision is inconsistent with the
 exclusive appeal procedures contained in OMB Circular A-76, which should
 be viewed as a Government-wide rule or regulation within the meaning of
 section 7117(a)(1) of the Statute.
    In its response, the Union asserts that the disputed provision
 constitutes a negotiable procedure for management to follow in the event
 a decision is made to contract out, and cites Authority decisions to
 support its contention.
                              III.  Analysis
    The Agency's arguments in this case are essentially the same as those
 rejected by the Authority in finding a similar proposal negotiable in
 American Federation of Government Employees, AFL-CIO, National Council
 of EEOC Locals and Equal Employment Opportunity Commission, 10 FLRA 3
 (1982) (Union Proposal 1), enforced sub nom. EEOC v. FLRA, 744 F.2d 842
 (D.C. Cir. 1984), cert. dismissed, 54 U.S.L.W. 4408 (U.S. April 29,
 1986) (per curiam).  In the EEOC case, the Authority held that a
 proposal which required management to comply with applicable laws and
 regulations, and specifically OMB Circular A-76, in exercising its right
 to make contracting out determinations was not inconsistent with section
 7106(a)(2)(B) of the Statute because the proposal would only
 contractually recognize external limitations on management's right.  The
 proposal would not itself establish any particular substantive
 limitation on management in the exercise of that right.  The D.C.
 Circuit expressly agreed.  EEOC v. FLRA, 744 F.2d at 848-849.
    As for the Agency's further assertion that any contractual provisions
 which would subject management's contracting-out decisions to any type
 of grievance or arbitration review are nonnegotiable, the Authority in
 EEOC concluded that such contention also could not be sustained.  The
 Authority noted that the Statute and its relevant legislative history
 requires the grievance procedures negotiated under section 7121 of the
 Statute to cover all matters that under the provisions of law could be
 submitted to the grievance procedure unless the parties exclude them
 through bargaining.  The Authority also noted that the disputed proposal
 in EEOC would not change the statutorily prescribed scope and coverage
 of the parties' negotiated grievance procedure because, even in the
 absence of such a contractual provision, disputes involving conditions
 of employment arising from the application of OMB Circular A-76 would be
 covered by the negotiated grievance procedure.  The D.C. Circuit agreed,
 rejecting the Agency's contrary arguments as follows:
          The (Statute) expansively defines the subjects covered under
       the statutory grievance procedure.  Grievances include complaints
       concerning "any claimed violation, misinterpretation, or
       misapplication of any law, rule, or regulation affecting
       conditions of employment" as well as complaints "concerning any
       matter relating to the employment of the employee." 5 U.S.C.
       Section 7103(a) (9).  Only five subjects, not including the
       subject of contracting-out, are expressly excluded from coverage
       under the grievance mechanism.  An allegation that the EEOC failed
       to comply with the OMB Circular, or with any other law or rule
       governing contracting-out, plainly falls within this expansive
                       . . . . . . .
          A grievance alleging noncompliance with the Circular, . . .
       does not affect management's substantive authority, within the
       meaning of the statutory language, to contract-out.  Rather, it
       provides a procedure for enforcing the (Statute's) requirement
       that contracting-out decisions be made in accordance with
       applicable law.  Any substantive limitation on management's
       authority stems from the externally established criteria contained
       in the Circular. . . .  We therefore find that a grievance
       asserting that management failed to comply with its statutory or
       regulatory parameters in making a contracting-out decision is not
       precluded by the management rights clause.  (footnotes omitted.)
    EEOC v. FLRA, 774 F.2d at 849-851.  /2/
    We also reject the Agency's argument that the disputed provision
 would delay the exercise of management's right to contract out.  Nothing
 in the provision would prevent management from reaching the decision to
 contract out or from implementing that decision.  In any event, as noted
 by the D.C. Circuit in EEOC v. FLRA, 774 F.2d at 850 n.19:
          Of course, any review of an agency decision, whether conducted
       by the courts or through a contractual grievance mechanism, may
       cause some delay.  This court has previously recognized that a
       proposal that may result in delay, including delay created by the
       arbitral process, need not infringe management's reserved
       authority, and may thus be negotiable.  See Department of Defense
       v. FLRA, 659 F.2d at 1153-58.
    Finally, we reject the Agency's assertion that the provision is
 nonnegotiable because it conflicts with the exclusive appeal procedures
 contained in OMB Circular A-76.  This argument was rejected by the
 Authority in EEOC, 10 FLRA at 4, and by the D.C. Circuit on review, 744
 F.2d at 851.
    That reasoning applies equally here.  The provision in question does
 not create any new right of appeal;  the right to file grievances
 concerning contracting-out decisions is created by the Statute.  Nothing
 in OMB Circular A-76 restricts the statutory right to file such
    In concluding that the disputed provision is within the duty to
 bargain we emphasize that in reviewing management's contracting-out
 actions for conformity with applicable laws and regulations, an
 arbitrator may not substitute his or her judgment for that of the
 agency.  Rather, as the Authority recently stated in a related case,
 Headquarters, 97th Combat Support Group (SAC), Blytheville Air Force
 Base, Arkansas and American Federation of Government Employees, AFL-CIO,
 Local 2840, 22 FLRA No. 72, slip op. at 6-7 (1986):
          In sum, arbitrators are not authorized to cancel a procurement
       action and are authorized to consider only grievances challenging
       a decision to contract out on the basis that the agency failed to
       comply with mandatory and nondiscretionary provisions of
       applicable procurement law or regulation.  These provisions must
       be sufficiently specific to permit the arbitrator to adjudicate
       whether there has been compliance with such provisions.  When
       presented with such a grievance, an arbitrator on finding a
       failure to comply may sustain the grievance.  In sustaining the
       grievance, the arbitrator as a remedy may properly order a
       reconstruction of the procurement action when the arbitrator finds
       that an agency's noncompliance materially affected the final
       procurement decision and harmed unit employees.  An agency in
       taking the action required by such an award must reconstruct the
       procurement process in accordance with the provisions which were
       previously not complied with and must determine on reconstruction
       whether the decision to contract out is now in accordance with law
       and regulation.  If the decision to contract out can no longer be
       justified, the agency must determine whether considerations of
       cost, performance, and disruption override cancelling the
       procurement action and take whatever action is appropriate on the
       basis of that determination.  For example, an agency could
       determine that immediate cancellation is warranted, or an agency
       could determine that cancellation is not warranted, but that an
       improperly granted contract should not be renewed.  Additionally,
       an agency may use its discretion to fashion other remedies
       appropriate to the circumstances.
    Having found that the disputed provision is within the duty to
 bargain but that its inclusion in the parties' agreement does not add to
 the scope of their contractual grievance procedure because such matters
 already are covered unless the parties specifically exclude them during
 negotiations, we believe that the parties would be well advised to
 concentrate their energies on more meaningful matters.
                              IV.  Conclusion
    For the reasons stated above, the disputed provision is not
 inconsistent with management's rights under section 7106 of the Statute
 to make determinations with respect to contracting out or with
 applicable law and regulations.
                                 V.  Order
    Accordingly, pursuant to section 2424.10 of the Authority's Rules and
 Regulations, IT IS ORDERED that the Agency shall rescind its disapproval
 of the provision which was bargained on and agreed to by the parties at
 the local level.
    Issued, Washington, D.C., July 31, 1986.
                                       /s/ Jerry L. Calhoun, Chairman
                                       /s/ Henry B. Frazier III, Member
                                       FEDERAL LABOR RELATIONS AUTHORITY
                ---------------  FOOTNOTES$ ---------------
    (1) The Agency head originally disapproved three provisions of the
 agreement and the Union's appeal encompassed all three disapprovals.
 Thereafter, the Agency withdrew its disapproval of one provision
 (Article 3, Section 6B) and the parties agreed upon alternative language
 for another disapproved provision (Article 19, Section 1A).
 Accordingly, the dispute with regard to two of the originally
 disapproved provisions has been resolved and those matters are no longer
 before the Authority for decision.
    (2) We respectfully adhere to the view that this position is correct,
 although we note that the U.S. Court of Appeals for the Ninth Circuit
 rejected this approach in Defense Language Institute, Presidio of
 Monterey, California v. FLRA, 767 F.2d 1398 (9th Cir. 1985), denying
 enforcement of National Federation of Federal Employees, Local 1263 and
 Defense Language Institute, Presidio of Monterey, California, 14 FLRA
 761 (1984).