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The decision of the Authority follows:
42 FLRA No. 94
Before Chairman McKee and Members Talkin and Armendariz.
I. Statement of the Case
This case is before the Authority on a negotiability appeal filed under section 7105(a)(2)(E) of the Federal Service Labor-Management Relations Statute (the Statute). It concerns the negotiability of three proposals submitted by the Union during negotiations for a new collective bargaining agreement.
Proposal 1 concerns the procedures to be followed by the parties to resolve disputes over Agency disapprovals of local supplemental agreements under section 7114(c) of the Statute. Proposal 2 requires the Agency to notify the Union of: (1) Agency solicitations of contracting out bids under the Office of Management and Budget's (OMB) Circular A-76 and (2) bid opening times and locations so that a Union official may attend. Proposal 3 concerns the Agency's obligation under the requirement of OMB Circular A-76 that all contracts awarded include a provision requiring that Federal employees adversely affected or separated as a result of contracting out be given the "right of first refusal" for employment openings with the contractor.
We conclude that Proposals 1 is inconsistent with law and, thus, is nonnegotiable. We conclude that Proposal 2 is within the duty to bargain, for the reasons explained below. We conclude that Proposal 3 is no longer in dispute. Accordingly, we will dismiss the Union's appeal with regard to Proposals 1 and 3.
II. Proposal 1
Article 9, Section 9.09
Any dispute as to whether a part of a local supplemental agreement was properly disapproved shall be referred to the negotiated grievance procedure for resolution. Any portion found to be improperly disapproved shall be effective retroactively to no later than the thirty-first day after it was agreed to at the local level. [Only the underlined sentence is in dispute.]
A. Positions of the Parties
The Agency asserts that Proposal 1 is negotiable only insofar as it applies to disputes over whether supplemental agreements are consistent with the parties' master agreement. It contends that Proposal 1 is nonnegotiable to the extent that it requires that all Agency disapprovals of local supplemental agreements be referred to the negotiated grievance procedure for resolution. The Agency relies on Louis A. Johnson Veterans Administration Medical Center, Clarksburg, West Virginia and American Federation of Government Employees, Local 2384, 15 FLRA 347 (1984) (Louis A. Johnson VAMC), and other Authority decisions stating that disputes over whether provisions are consistent with law, rule, or regulation constitute negotiability disputes that must be resolved by the Authority. The Agency argues that the proposal is nonnegotiable because it would allow arbitrators to render negotiability decisions.
The Union asserts that Proposal 1 is negotiable because it implements section 7114(c)(4) of the Statute, which provides that local agreements subject to a national or other controlling agreement at a higher level shall be approved under the procedures of the controlling agreement. The Union asserts that "disputes relating to the meaning and application of provisions of a negotiated agreement . . . [are] subject to resolution under the negotiated grievance procedure and [a negotiability] appeal is not the proper forum in which to resolve such disputes[,]" quoting Louis A Johnson VAMC, 15 FLRA at 350. The Union argues that, therefore, an arbitrator may properly resolve a dispute over whether a supplemental agreement violates law, rule, or regulation by applying Authority precedent. If the dispute cannot be resolved by applying Authority precedent, the Union argues that the arbitrator must refer the dispute back to the parties, at which time the Union may bring the matter to the Authority as a negotiability appeal.
B. Analysis and Conclusions
Proposal 1 provides a procedure to resolve disputes over Agency disapprovals of local supplemental agreements. The parties agree that a grievance arbitrator properly may resolve a dispute over an Agency disapproval that is based on an alleged inconsistency between the local supplement and the master agreement. The parties disagree over whether a grievance arbitrator may properly resolve a dispute that results from an Agency disapproval based on an alleged inconsistency with law, rule, or regulation.
In Louis A. Johnson VAMC, the Authority held that although arbitrators may consider collateral issues regarding the obligation to bargain in the course of resolving a grievance, they may do so only to the extent those decisions are "consistent with the Statute and relevant decisions of the Authority . . . ." 15 FLRA at 351. See also Panama Canal Commission and International Organization of Masters, Mates and Pilots, 27 FLRA 907, 910-11 (1987). The Authority also held, however, that under section 7105(a)(2)(E) of the Statute, a pure negotiability dispute "may not be resolved by an arbitrator in the guise of a grievance under the negotiated grievance procedure . . . ." 15 FLRA at 350.
In Commander, Carswell Air Force Base, Texas and American Federation of Government Employees, Local 1364, 31 FLRA 620 (1988) (Carswell), the Authority addressed the authority of the Federal Service Impasses Panel (Panel) and interest arbitrators to resolve duty to bargain questions. The Authority reiterated its previous holdings that "the resolution of duty to bargain issues arising in the context of specific proposals is a matter reserved to the Authority under the Statute . . . ." Id. at 624. In Carswell the Authority concluded that although interest arbitrators may not make negotiability rulings in order to resolve questions concerning the duty to bargain, the Panel and interest arbitrators could resolve negotiation impasses "which raise substantively identical duty to bargain issues to those already decided by the Authority." Id. See also U.S. Department of the Interior, Bureau of Reclamation, Lower Colorado Region, Yuma, Arizona and National Federation of Federal Employees, Local 1487, 41 FLRA 3, 9 (1991).
Thus, the Authority has consistently held that under section 7105(a)(2)(E) of the Statute only the Authority may make negotiability rulings on issues that have not previously been before the Authority.
Under the exact language of Proposal 1, the parties must refer all disputes stemming from the disapproval of a supplemental agreement to a grievance arbitrator "for resolution." The Union states that the proposal is intended to enable an arbitrator to resolve negotiability disputes by applying Authority precedent, but that it would not enable an arbitrator to rule on negotiability issues if the Authority had not ruled on a substantively identical proposal. We conclude that the Union's statement of intent is not consistent with the plain wording of the proposal.
Under the proposal, the arbitrator is expected to resolve all disputes, even though the Union acknowledges that a large number of those disputes (those involving issues on which there is no clear Authority precedent) may not be subject to arbitral determination. Although the Union asserts that those matters will be referred back to the parties and can then be brought to the Authority in a negotiability appeal, we do not consider such a procedure to constitute the "resolution" of such disputes, especially in view of the fact that it is unlikely that a timely appeal under section 7117(c)(2) of the Statute would still be possible in such circumstances. See, for example, American Federation of Government Employees, Local 1923 and U.S. Department of Health and Human Services, Social Security Administration, Newport News, Virginia, 34 FLRA 3 (1989) (a petition for review of negotiability issues in a disapproved agreement must be filed with the Authority within 15 days after service on the Union of the agency head's disapproval). We do not base a negotiability determination on a statement of intent that is inconsistent with a proposal's plain wording. For example, American Federation of Government Employees, Local 3013 and U.S. Department of Defense, National Guard Bureau, Maine Air National Guard, Augusta, Maine, 40 FLRA 203, 212 (1991).
The plain language of Proposal 1 requires that grievance arbitrators must resolve all disputes as to whether local supplemental agreements were properly disapproved. Therefore, for the reasons stated in Louis A. Johnson VAMC, Carswell, and their progeny, the proposal would require arbitral resolution of disputes that, under section 7105(a)(2)(E) of the Statute, are within the exclusive jurisdiction of the Authority. Therefore, it is inconsistent with that statutory provision and is nonnegotiable for that reason.
III. Proposals 2 and 3
Article 11, Section 11.06(B)
B. The union will be notified when A-76 bids pertaining to work performed by unit employees are solicited. Further, they will be notified of the bid opening time and location so they may attend on official time.
Article 11, Section 11.08
The Department recognizes the "right to first refusal" required by OMB Circular A-76, which provides that the contractor will grant those federal employees displaced by direct result of such contract, the right of first refusal of employment openings created by the contractor. This applies only to job openings for which such displaced employees are qualified and does not apply when such employees would otherwise be prohibited from such employment by the government post-employment conflict of interest standards.
A. Positions of the Parties
1. The Agency
The Agency contends that Proposals 2 and 3 directly and excessively interfere with management's right under section 7106(a)(2)(B) of the Statute to make determinations with respect to contracting out. It argues that the proposals confer jurisdiction on arbitrators to adjudicate grievances concerning Agency decisions to contract out and to reverse and/or significantly delay Agency decisions to contract out based on findings of harmless procedural error or even in the absence of error. The Agency argues that for these reasons Proposals 2 and 3 conflict with sections 7106(a) and 7117(a)(1) of the Statute and the Federal "common law of labor relations." Statement of Position at 5. The Agency contends that, under that common law, courts have held that arbitrators do not have jurisdiction over matters concerning contracting out. The Agency relies on court decisions in U.S. Department of Health and Human Services v. FLRA, 844 F.2d 1087 (4th Cir. 1988) (en banc) (HHS v. FLRA); Defense Language Institute, Presidio of Monterey, California v. FLRA, 767 F.2d 1398 (9th Cir. 1985), cert. denied, 106 S. Ct. 2004 (1986) (DLI v. FLRA); and American Federation of Government Employees, Local 2017 v. Brown, 680 F.2d 722 (11th Cir. 1982), cert. denied, 459 U.S. 1104 (1983) (AFGE v. Brown).
The Agency also contends that to the extent the proposals would allow an arbitrator to set aside a decision to contract out because of procedural error, they interfere with management's rights under section 7106(a)(1) of the Statute to determine its organizational structure and number of employees, as well as various management rights under section 7106(a)(2)(A), 7106(a)(2)(B) and 7106(b)(1).
The Agency further asserts that Proposal 2 is not a procedure under section 7106(b)(2) of the Statute. It argues that Proposal 2 applies criteria to solicitation of bids, which it asserts is, "by definition, pre-decisional" and that it is a "standing information request" that intrudes into management's internal deliberative process for contracting out decisions under section 7106(a)(2)(B). Statement of Position at 8. The Agency also argues that Proposal 2 does not concern conditions of employment of bargaining unit employees, because it is concerned with Agency decisions to assign work outside the bargaining unit.
The Agency asserts that Proposal 3 is not an appropriate arrangement under section 7106(b)(3) of the Statute. It contends that Proposal 3 does not concern conditions of employment of bargaining unit employees because it concerns the actions of contractors not covered by the collective bargaining agreement. The Agency states that it withdraws its objection to this proposal if the proposal requires the Agency only to apprise contractors of their obligations concerning employees' first-refusal rights under OMB Circular A-76. However, if the Agency is to be held accountable for the acts or omissions of contractors, the Agency asserts that Proposal 3 conflicts with the doctrine of "sovereign immunity" and the "common law of arbitration." Statement of Position at 9.
The Agency also argues that Proposal 3 is nonnegotiable under section 7117 of the Statute because it subjects disputes over the Agency's compliance with OMB Circular A-76 to resolution under the parties' negotiated grievance procedure and is, therefore, contrary to law. Further, the Agency asserts that Proposal 3 establishes an independent contractual right of first refusal that would continue for the life of the parties' collective bargaining agreement, even if OMB Circular A-76 were amended.
Finally, the Agency contends that Proposal 3 is a "job security/work preservation proposal" that interferes with management's right to assign work under section 7106(a)(2)(B). Id. at 10.
2. The Union
The Union contends that Proposals 2 and 3 are negotiable. It asserts that Proposal 2 is a procedure that merely requires the Agency to notify the Union when bids will be solicited so that the Union may attend. Therefore, it contends that the proposal would not interfere with the Agency's decisions or actions with respect to contracting out.
The Union states that Proposal 3 requires the Agency only to "recognize" its obligations regarding the right of first refusal for employment openings granted to employees under OMB Circular A-76, and that these obligations would not continue should there be a "modification or cancellation" of OMB Circular A-76. Union Petition at 2; Response at 8.
B. Analysis and Conclusions
1. The Possibility of Arbitral Review Does Not Affect the Negotiability of Proposals 2 and 3
The Agency contends that courts have determined that management decisions regarding contracting out are not subject to arbitration, and that, therefore, both Proposal 2 and Proposal 3 are nonnegotiable because they would confer jurisdiction on arbitrators to adjudicate grievances concerning contracting out. We reject this contention.
In National Treasury Employees Union and U.S. Department of the Treasury, Internal Revenue Service, 42 FLRA 377 (1991) (NTEU and IRS), we held, among other things, that OMB Circular A-76 contains numerous mandatory procedures and standards with which agencies must comply in determining whether to contract out services. We concluded that OMB Circular A-76 is an "applicable law" within the meaning of section 7106(a)(2) of the Statute and that, accordingly, actions taken pursuant to Circular A-76 may be subject to arbitral review. 42 FLRA at 399-403. See also Diebold v. United States, No. 90-5373 (6th Cir. October 15, 1991) (OMB Circular A-76 provides "law to apply" and, therefore, an action taken pursuant to the Circular is reviewable in a federal district court under the Administrative Procedure Act). In determining that Circular A-76 is an applicable law, we discussed a number of the court decisions relied on by the Agency herein. We found that AFGE, Local 2107 v. Brown was distinguishable because that case involved an earlier version of OMB Circular A-76 that did not provide meaningful criteria against which to measure an agency's action on review. We concluded that DLI v. FLRA did not determine the scope of the term "applicable laws" in section 7106(a)(2), and, therefore, was not inconsistent with our finding that OMB Circular A-76 is an applicable law. Finally, we stated our respectful disagreement with the decision in HHS v. FLRA. For the reasons fully set forth in our decision in NTEU and IRS, we conclude that the fact that Proposals 2 and 3 could permit arbitral review of certain Agency actions taken pursuant to OMB Circular A-76 does not render the proposals nonnegotiable.
To the extent the Agency argues that submission of contracting out determinations to arbitral review could result in an award that would constitute direct interference with management's rights under section 7106(a)(1), 7106(a)(2)(A) and (B), and 7106(b)(1) of the Statute, the Authority has held that it will not find that a proposal is nonnegotiable merely because it could subject management's actions to arbitral review. For example, American Federation of Government Employees, National Border Patrol Council and National Immigration and Naturalization Service Council and U.S. Department of Justice, Immigration and Naturalization Service, 40 FLRA 521, 527-28 (1991) petition for review filed as to other matters sub nom. U.S. Department of Justice, Immigration and Naturalization Service v. FLRA, No. 91-4525 (5th Cir. June 25, 1991). See also NTEU and IRS, 42 FLRA at 403. Further, the Agency's argument that Proposals 2 and 3 would subject contracting out decisions to reversal by arbitrators based on harmless procedural error or even in the absence of any error is misplaced. See Headquarters, 97th Combat Support Group (SAC), Blytheville Air Force Base, Arkansas and American Federation of Government Employees, AFL-CIO, Local 2840, 22 FLRA 656, 659 (1986) (Authority noted that the scope of review of procurement actions by administrative bodies and the courts has been "narrow and limited"). We will decide the negotiability of each proposal before us on its own merits. If an arbitrator acting pursuant to these proposals issues an award that the Agency views as infringing on its authority to contract out under law or regulation, the Agency can file exceptions to the award with the Authority under section 7122 of the Statute.
2. The Agency's Other Arguments
a. Proposal 2
Proposal 2 concerns the process used by the Agency to exercise its right to contract out work performed by bargaining unit employees. The proposal requires the Agency to notify the Union: (1) when bids are solicited; and (2) when and where bids will be opened so that the Union will have an opportunity to be present.(1)
We disagree with the Agency's argument that Proposal 2 does not concern the conditions of employment of unit employees. Proposal 2 clearly concerns conditions of employment. The Authority has long held that the potential loss by bargaining unit employees of their employment due to a decision by the Agency to contract out bargaining unit functions affects the conditions of employment of those employees. AFSCME Local 3097 and Department of Justice, Justice Management Division, 31 FLRA 322, 326-27 (1988), remanded sub nom. Department of Justice, Justice Management Division v. FLRA, No. 88-1316 (D.C. Cir. July 27, 1990), decision on remand, 42 FLRA 587 (1991) (Department of Justice).
We conclude that the Agency has not shown how Proposal 2 interferes with its right to make determinations with respect to contracting out work. The plain wording of Proposal 2 does not prescribe criteria that the Agency must apply in making its determinations of whether or not to contract out work. Rather, Proposal 2 requires only notice of bid solicitations and notice and an opportunity to attend bid openings. Proposals requiring only that management notify a union of exercises of its management rights are negotiable as long as the proposals concern conditions of employment and do not require the release of information that otherwise is protected. For example, American Federation of Government Employees, Local 3407 and U.S. Department of Defense, Defense Mapping Agency, Hydrographic-Topographic, Washington, D.C., 39 FLRA 557, 561 (1991) and cases cited therein.
Furthermore, we reject the Agency's argument that Proposal 2 is not a procedure because it "applies to the pre-decisional, deliberative process of determining whether a particular function will . . . be contracted out . . . ." Statement of Position at 8. Insofar as the proposal merely requires the Agency to notify the Union when bids under OMB Circular A-76 are solicited, it in no way permits the Union to intrude on management's deliberations with regard to the bidding process. Compare National Treasury Employees Union and U.S. Department of the Treasury, Office of Chief Counsel, Internal Revenue Service, 39 FLRA 27, 53-54 (1991) petition for review filed as to other matters sub nom. U.S. Department of the Treasury, Office of Chief Counsel, Internal Revenue Service v. FLRA, No. 91-1139 (D.C. Cir. March 25, 1991) (union's receipt of information relating to an agency decision to exercise a management right does not constitute union participation in the deliberative process itself).
Insofar as the proposal requires notification of the bid opening times and locations, the record does not establish that bid openings constitute "'wholly management related meetings at which the management aspects of the contracting out issue are either discussed or acted on.'" National Federation of Federal Employees, Local 1263 and Defense Language Institute, Presidio of Monterey, California, 14 FLRA 761, 762 (1984), enforcement denied as to other matters sub nom. DLI v. FLRA, quoting 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, 577-78 (1981) (Homestead) aff'd sub nom. NFFE v. FLRA, 681 F.2d 886 (D.C. Cir. 1982). There is, therefore, no basis on which to conclude that the requirement to notify the Union of the time and place of bid solicitations and openings violates management's right to contract out by enabling the Union to intrude into management's internal deliberative process with regard to contracting out decisions, as argued by the Agency.
Proposal 2 concerns conditions of employment of unit employees and does not directly interfere with the Agency's right to contract out work. Accordingly, we find that Proposal 2 is a negotiable procedure under section 7106(b)(2) of the Statute.
b. Proposal 3
We reject the Agency's argument that Proposal 3 is nonnegotiable because it establishes an independent contractual restriction on the Agency's right to contract out work. Proposal 3 states that the Agency "recognizes the 'right of first refusal' required by OMB Circular A-76[.]" Under Proposal 3, the right of "first refusal" applies only "to job openings for which such displaced employees are qualified . . . ." It does not apply "when such employees would otherwise be prohibited from such employment by the government post-employment conflict of interest standards."
Part I, Chapter 2, section F of the Supplement to OMB Circular A-76 (revised Aug. 1983), states:
4. All contracts awarded . . . shall:
a. Include a provision, consistent with Government post employment conflict of interest standards, requiring that the contractor shall give Federal employees adversely affected or separated (as a result of the conversion to contract) the right of first refusal for employment openings under the contract in positions for which they are qualified and shall inform the agency within 90 days after the contract effective date of all measures taken to comply with this requirement and the specific results[.]
Comparing the texts of Proposal 3 and the OMB Circular A-76, we find that Proposal 3: (1) restates the requirements of OMB Circular A-76; and (2) requires the Agency to recognize only what is "required by OMB Circular A-76[.]" The Union explains that Proposal 3 is intended only to require adherence to the requirement to grant a right of first refusal established by OMB Circular A-76. The Union expressly states that the proposal "does not 'fix' the terms of A-76" and that if the Circular were modified to remove the requirement regarding a right of first refusal, "the clause would no longer have effect[.]" Union's Petition at 2. The Union's explanation is consistent with the plain wording of Proposal 3 and we adopt it for the purposes of this decision.
Because the proposal is intended only to require compliance with OMB Circular A-76, the proposal would not establish a right of "first refusal" independent of the Circular. Therefore, we reject the Agency's contention that Proposal 3 would establish a requirement under the parties' collective bargaining agreement that could be enforced even if the right of "first refusal" were deleted from OMB Circular A-76.
Under OMB Circular A-76, contracts awarded by an agency to outside entities to perform agency functions must provide agency employees with a "right of first refusal" for positions with the contractor. Proposal 3 requires the Agency only to comply with that requirement of the Circular when the Agency contracts out work. Any grievances submitted for resolution through the parties' negotiated grievance procedure would concern the Agency's compliance with that requirement. Therefore, Proposal 3 concerns the Agency's, and not the contractor's, obligations under the Circular.
It follows that we also reject the Agency's interpretation that the intent of Proposal 3 could be to hold the Agency accountable for the acts or omissions of contractors who are not parties to the collective bargaining agreement between the Agency and the Union. The Agency states that if the Authority were to interpret the proposal as merely intending "that the Agency be responsible for ensuring that contractors are apprised of their obligations regarding rights of first refusal[,]" it would "withdraw[ ] its objection to negotiability[.]" Statement of Position at 9. As we state above, we do interpret the proposal in this manner. Accordingly, it does not appear that Proposal 3 is in dispute. We will dismiss the Union's appeal with regard to Proposal 3 on this basis.
Even if we were to find that the matter is still in dispute, however, Proposal 3 would be negotiable because it does not directly interfere with the Agency's management rights. In Department of Justice, 42 FLRA at 590-91, we found that a proposal requiring the agency to comply with OMB Circular A-76 was negotiable, based on our conclusion in NTEU and IRS that OMB Circular A-76 is an applicable law and that proposals requiring compliance with applicable laws do not directly interfere with the exercise of management's rights. Proposal 3 in the instant case obligates the Agency to conform only to one particular requirement of OMB Circular A-76, the obligation to include a provision in its contracts requiring that the contractor give employees adversely affected by the conversion to contract the "right of first refusal." The applicable provision of OMB Circular A-76 states that all contracts awarded "shall" include such a provision. Thus, it is clear from the wording of the provision that it is a mandatory and nondiscretionary requirement placed on all agencies that contract out work previously done by Federal employees. Accordingly, as discussed above, it may properly be the subject of arbitral review. We reiterate, in this regard, that the proposal does not impose this requirement as an independent contractual limitation. Therefore, consistent with our decisions in NTEU and IRS and Department of Justice, Proposal 3 does not directly interfere with management's right under section 7106(a)(2)(B) to make determinations with respect to contracting out or with other management rights under section 7106. Thus, it is unnecessary to rule on whether the proposal is an appropriate arrangement under section 7106(b)(3). American Federation of Government Employees, AFL-CIO, Department of Education Council of AFGE Locals and Department of Education, 34 FLRA 1078, 1087 (1990).
Proposal 2 requires the Agency to disclose information that (1) concerns unit employees' conditions of employment, and (2) does not conflict with law or regulation. Proposal 2 does not interfere with management's right to make determinations with respect to contracting out under section 7106(a)(2)(B or other management rights under section 7106. Therefore, Proposal 2 is within the duty to bargain.
We will dismiss the Union's petition for review with regard to Proposal 3, which is no longer in dispute.
The Agency must upon request, or as otherwise agreed to by the parties, bargain concerning Proposal 2. The petition for review is dismissed as to Proposals 1 and 3.(2)
(If blank, the decision does not have footnotes.)
1. The proposal also states that the Union representatives will attend bid openings on official time. The Agency has not addressed this requirement in its statement of position. Accordingly, we will not treat that portion of the proposal as being in dispute.
2. In finding Proposal 2 to be negotiable, we make no judgment as to its merits.