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 26 FLRA No. 49
 
 U.S. ARMY ENGINEER DISTRICT, 
 ST. LOUIS
 Activity
 
 and
 
 AMERICAN FEDERATION OF GOVERNMENT 
 EMPLOYEES, LOCAL NO. 3838
 Union
 
                                            Case No. 0-AR-1247
 
                                 DECISION
 
                         I.  STATEMENT OF THE CASE
 
    This matter is before the Authority on exceptions to the award of
 Arbitrator James M. O'Reilly filed by the Department of the Army (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 contending that
 management's determination to contract out the operation and maintenance
 functions at four sewage treatment plants violated applicable
 procurement law and OMB Circular A-76.  The Arbitrator first ruled that
 the grievance was grievable and arbitrable.  On the merits, the
 Arbitrator found that the Activity had contracted out solely to avoid
 personnel ceilings.  Specifically, he found that the Activity had had
 contracted out in order to abolish six positions and had subjected the
 incumbents of those positions to a reduction-in-force (RIF).  Noting
 that OMB Circular A-76 and its Supplement specifically prohibit
 contracting out solely to avoid personnel ceilings, the Arbitrator
 accordingly ruled that the Activity had failed to comply with the
 Circular in its determination to contract out, and he sustained the
 grievance.  However, he expressly sustained the grievance only to the
 extent of the six employees whose positions had been abolished because
 he found that they were the only employees specifically affected by the
 Activity's failure to comply with the Circular.  As a remedy, the
 Arbitrator in paragraph 1.B. of the award ordered the procurement action
 cancelled and the six employees restored to their former positions.
 
                          III.  FIRST EXCEPTIONS
 
    A.  Contentions
 
    The Agency contends that by finding the grievance to be arbitrable,
 the award is deficient as contrary to law and regulation.
 
    B.  Analysis and Conclusions
 
    This exception provides no basis for finding the award deficient.  We
 have consistently held that a grievance like the one in this case is
 within the grievance procedure prescribed by the Statute and is not
 precluded by law or regulation.  For example, American Federation of
 Government Employees, Local 1513 and Naval Air Station, Whidbey Island,
 26 FLRA No. 36 (1987).  Accordingly, this exception is denied.
 
                           IV.  SECOND EXCEPTION
 
    A.  Contentions
 
    The Agency contends that under 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), the Arbitrator's award ordering cancellation of the procurement
 action and restoring the six employees to their former positions is
 contrary to section 7106(a)(2)(B) of the Statute.  The Agency also
 argues that under Blytheville AFB, there is no basis for ordering the
 procurement action reconstructed.
 
    B.  Analysis and Conclusions
 
    We agree with the Agency that the award ordering the cancellation of
 the procurement action and restoring the six employees to their former
 positions is deficient.  We expressly held in Blytheville AFB that under
 the Statute and procurement law and regulation, arbitrators are not
 authorized to cancel a procurement action.  Slip op. at 6.  Thus, the
 Arbitrator's order that the Activity cease contracting out the sewage
 treatment functions is clearly deficient.  The award directing the
 Activity to restore the six employees affected by the procurement action
 to their former positions is also deficient because it follows directly
 from the cancellation.  For example, United States Army Communications
 Command, Fort McClellen and Local No. 1941, American Federation of
 Government Employees, AFL-CIO, 23 FLRA No. 23 (1986), slip op. at 4.
 
    However, we disagree with the Agency that there is no basis to order
 the procurement action reconstructed.
 
    We decided in Blytheville AFB that an arbitrator can sustain a
 challenge to a procurement action only on the basis that the agency
 failed to comply with mandatory and nondiscretionary provisions of
 applicable procurement law or regulation.  We also decided that 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.  Applying that test in this case, we
 conclude, contrary to the argument of the Agency, that the Arbitrator's
 award establishes a sufficient basis for directing the Activity to
 reconstruct the procurement action.  The Arbitrator specifically found
 that contrary to the express prohibition of OMB Circular A-76, the
 Activity contracted out solely to avoid personnel ceilings.  He also
 expressly found that six employees were specifically affected by this
 defective procurement action in that they were subjected to a RIF and
 displaced from their positions.  In these circumstances, we conclude, as
 we concluded under similar circumstances in Blytheville AFB, slip op. at
 7, that the Arbitrator effectively found that the Activity's violation
 harmed the employees involved and that the violation materially affected
 the Activity's final procurement decision.  Accordingly, we will order
 reconstruction in accordance with the guidance provided in Blytheville
 AFB.  Slip op. at 7.
 
                               V.  DECISION
 
    The Arbitrator's award is modified to substitute the following for
 paragraph 1.B. of the award:
 
          The Activity is directed to reconstruct the disputed
       procurement action in accordance with the requirements of OMB
       Circular A-76 and to take appropriate action in accordance with
       the decisions of the Authority based upon the results of such
       reconstruction.
 
    Issued, Washington, D.C., March 27, 1987.
                                       /s/ Jerry L. Calhoun, Chairman
                                       /s/ Henry B. Frazier III, Member
                                       /s/ Jean McKee, Member
                                       FEDERAL LABOR RELATIONS AUTHORITY 
 
 
 

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