[ v22 p1071 ]
The decision of the Authority follows:
22 FLRA No. 106 AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO, LOCAL 1923 Union and DEPARTMENT OF HEALTH AND HUMAN SERVICES OFFICE OF THE SECRETARY OFFICE OF THE GENERAL COUNSEL BALTIMORE, MARYLAND Agency Case No. 0-NG-1216 DECISION AND ORDER ON NEGOTIABILITY ISSUE 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 definition. . . . . . . . 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 grievances. 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).