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The decision of the Authority follows:
23 FLRA No. 15 CONGRESSIONAL RESEARCH EMPLOYEES ASSOCIATION Union and THE LIBRARY OF CONGRESS Agency Case No. 0-AR-624 DECISION I. STATEMENT OF THE CASE This matter is before the Authority on exceptions to the award of Arbitrator Jacob Seidenberg filed by the Agency under section 7122(a) of the Federal Service Labor-Management Relations Statute and part 2425 of the Authority's Rules and Regulations. II. BACKGROUND AND ARBITRATOR'S AWARD A grievance was filed and submitted to arbitration challenging the Agency's determination to contract out certain functions as violative of Article XVI /1/ of the parties' collective bargaining agreement. The Arbitrator as his award found that the grievance was arbitrable, but denied the grievance on the merits. III. Exceptions In its exceptions, the Agency contends that the award is contrary to law and regulation in several respects. In particular, the Agency contends that by finding the grievance to be arbitrable, the award is contrary to the Agency's right under section 7106(a)(2)(B) of the Statute to make determinations with respect to contracting out. IV. ANALYSIS AND CONCLUSIONS The Authority concludes that the award is deficient under the Statute. The plain language of section 7106 of the Statute provides that "nothing" in the Statute shall "affect the authority" of an agency to exercise the rights enumerated in that section. Thus, the Authority has expressly held that a matter cannot be grieved which would deny the authority of an agency to exercise its statutory rights under section 7106. American Federation of Government Employees, AFL-CIO, Local 1968 and Department of Transportation, Saint Lawrence Seaway Development Corporation, Massena, New York, 5 FLRA 70, 79 (1981), aff'd sub nom. AFGE Local 1968 v. FLRA, 691 F.2d 565 (D.C. Cir. 1982), cert. denied, 461 U.S. 926 (1983). Specifically, the Authority has held that proposals which would, as their sole effect, subject management's determinations concerning the identification of critical elements of a position and the content of performance standards to the grievance procedure and arbitral review constituted improper interference with management's rights. Saint Lawrence Seaway Development Corporation, (Proposal 4). In so holding, the Authority has noted that subjecting managerial evaluations concerning critical elements and performance standards to arbitral review would require an arbitrator to substitute his or her judgment as to how the agency should be run for that of management. National Treasury Employees Union and Department of Health and Human Services, Region 10, 13 FLRA 732, 734 (1982), aff'd sub nom. NTEU v. FLRA, 767 F2d 1315 (9th Cir. 1985). Thus, the Authority has found that an arbitrator cannot determine that a grievance directly challenging an agency's identification of job elements or establishment of performance standards is grievable and arbitrable. Bureau of Prisons, Department of Justice and American Federation of Government Employees, Local 148, 21 FLRA No. 15 (1986); Bureau of Engraving and Printing, U.S. Department of the Treasury and Washington Plate Printers Union, Local No. 2, IPDEU, AFL-CIO, 20 FLRA No. 39 (1985). The Authority has also found an arbitration award deficient which enforced a collective bargaining agreement provision that imposed a substantive limitation on management's right to identify critical elements. The Authority concluded that by imposing such a limitation, the agreement provision prompted the interference by grievance and arbitration with management's rights because the provision provided the basis for the arbitrator's review of management's identification of an element as critical and permitted the substitution of judgment by the arbitrator for that of management as to how the agency should be run. National Treasury Employees Union and U.S. Customs Service, 17 FLRA 38 (1985). Of course, section 7106 provides that the exercise by management of the rights enumerated in section 7106(a)(2) must be in accordance with applicable laws and is subject to any procedures or appropriate arrangements that have been negotiated by the parties. In 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 (1986), this principle was applied to a grievance alleging that a decision to contract out was not made in accordance with applicable procurement law and regulation governing such determinations. The Authority concluded that such a grievance was not contrary to section 7106(a)(2)(B) of the Statute and was grievable and arbitrable. The grievance in this case does not concern whether the disputed procurement action is in accordance with applicable laws. Similarly, Article XVI of the agreement does not constitute a negotiated procedure to be observed in, or an appropriate arrangement for employees adversely affected by, the exercise by management of its right to make a determination to contract out. Instead, Article XVI expressly prohibits the Agency from contracting out when "the regular staff" possesses the required specialized skills or knowledge or can obtain the required skills or knowledge through normal employment procedures. By preventing the Agency from contracting out in these circumstances, the provision is inconsistent with section 7106(a)(2)(B) which reserves such determinations with respect to contracting out management. See National Federation of Federal Employees, Local 1167 and Department of the Air Force, Headquarters, 31st Combat Support Group (TAC), Homestead Air Force Base, Florida, 6 FLRA 574 (1981) (Proposal 2), enforced sub nom. National Federation of Federal Employees v. FLRA, 681 F. 2d 886 (D.C. Cir. 1982). The Arbitrator's determination that Article XVI merely incorporated by reference the provisions of existing procurement laws and regulations, including specifically 2 U.S.C. Section 166, does not alter this conclusion. As the Authority explained in Homestead Air Force Base, 6 FLRA at 577, incorporation into the collective bargaining agreement of specific terms of law or regulation would require management to comply with those terms during the period of the collective bargaining agreement regardless of whether the specific provisions from which they were derived might subsequently be revised or rescinded. Thus, the Authority concluded that incorporation of specific terms "would impose an independent contractual requirement upon management's discretion with respect to contracting out" and therefore "goes beyond contractual recognition of an external limitations and imposes substantive limitations in and of itself." In short, the Authority stated that although law or regulation may place limitations on management discretion, the Statute precludes the negotiation of contractual limitations on management's rights. The grievance in this case sought to enforce through grievance and arbitration a provision of the parties' collective bargaining agreement that denies the authority of the Agency to make determinations with respect to contracting out under section 7106(a)(2)(B) of the Statute. Consistent with established precedent pertaining to arbitral review of management's exercise of its rights in performance appraisal matters, we find that such a grievance is precluded by section 7106 from grievance and arbitration. Thus, the Arbitrator's award finding the grievance to be arbitrable is deficient as contrary to the Statute. V. DECISION Accordingly, paragraphs 2-3 of the award, finding the grievance arbitrable and resolving the grievance on the merits, are set aside. /2/ Issued, Washington, D.C., August 14, 1986. /s/ Jerry L. Calhoun, Chairman /s/ Henry B. Frazier III, Member FEDERAL LABOR RELATIONS AUTHORITY --------------- FOOTNOTES$ --------------- (1) Article XVI of the parties' collective bargaining agreement pertinently provides: Section 1. With the approval of the Libratian of Congress, the Library may employ, in order to improve its service and operation, experts and consultants on a temporary basis in those situations when the regular staff does not possess the required specialized skills or knowledge which cannot practicably be obtained through normal employment procedures. (2) In view of this decision, it is not necessary to address the other contentions of the Agency in its exceptions to the award.