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The decision of the Authority follows:
52 FLRA No. 70
FEDERAL LABOR RELATIONS AUTHORITY
AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES
U.S. DEPARTMENT OF THE NAVY
NAVAL AIR STATION
WHIDBEY ISLAND, WASHINGTON
December 20, 1996
Before the Authority: Phyllis N. Segal, Chair; Tony Armendariz and Donald S. Wasserman, Members.
I. Statement of the Case
This matter is before the Authority on exceptions to an award of Arbitrator Kenneth M. McCaffree filed by the Union under section 7122(a) of the Federal Service Labor-Management Relations Statute (the Statute) and part 2425 of the Authority's Regulations. The Agency filed an opposition to the Union's exceptions.
The Arbitrator dismissed the Union's grievance concerning the Agency's decision to contract out certain of its functions on the ground that the substance of the grievance was not a grievable or arbitrable matter.
For the following reasons, we conclude that the award is not deficient as inconsistent with law. Accordingly, we deny the Union's exceptions.
II. Background and Arbitrator's Award
The Union filed a grievance over the Agency's unwillingness to conduct a cost study of government performance and develop a government proposal for comparison to contractor proposals in connection with resolicitation of the Agency's Base Operating Support contract. The Agency denied the grievance on the ground that the substance of the grievance was not arbitrable.
The Arbitrator found that the substance of the grievance was not a grievable or arbitrable matter. He based this determination on the Authority's holding in American Federation of Government Employees, Local 1345 and U.S. Department of the Army Headquarters, Fort Carson and Headquarters, 4th Infantry Division, Fort Carson, Colorado, 48 FLRA 168, 206 (1993) (Fort Carson). The Arbitrator stated that in Fort Carson, the Authority adopted the conclusion of the United States Court of Appeals for the District of Columbia Circuit in U.S. Department of the Treasury, Internal Revenue Service v. FLRA, 996 F.2d 1246, 1250 (D.C. Cir. 1993) (IRS) that Office of Management and Budget (OMB) Circular A-76, which concerns contracting out, is a Government-wide regulation and that proposals subjecting disputes over compliance with the Circular to resolution under a negotiated grievance procedure are nonnegotiable. The Arbitrator concluded that, under Fort Carson and IRS, any award on the merits of the grievance "would be unenforceable as contrary to law." Award at 17.
A. Union's Contentions
The Union argues that the grievance is arbitrable because OMB Circular A-76 is an applicable law within the meaning of section 7106(a)(2) of the Statute. In this regard, the Union asserts that the grievance "is nothing more than what is otherwise required by section 7106(a)(2)[,] which is that determinations as to contracting out must be made 'in accordance with applicable laws.'" Exceptions at 5. The Union also argues that because OMB Circular A-76 is an applicable law, it is "within the scope of the negotiated grievance procedure under section 7103(a)(9)(C) of the Statute" and "OMB cannot limit the scope of a grievance procedure by precluding grievances." Id. at 6.
B. Agency's Opposition
The Agency relies on IRS and Fort Carson in contending that the Arbitrator correctly found that claimed violations of OMB Circular A-76 are not subject to the negotiated grievance procedure.
IV. Analysis and Conclusions
As the Union's exceptions challenge the award's consistency with law, the Authority must review the questions of law raised by the Arbitrator's award and the Union's exceptions de novo. E.g., U.S. Department of Health and Human Services, National Institute for Occupational Safety and Health, Cincinnati Operations, Cincinnati, Ohio, and American Federation of Government Employees, Local 3840, 52 FLRA 217, 220 (1996).
The Arbitrator's award, in which he found that the claim of a violation of OMB Circular A-76 does not concern a grievable or arbitrable matter, is fully consistent with the Authority and judicial precedent upon which the Arbitrator relied. In Fort Carson, the Authority adopted the D.C. Circuit's conclusion in IRS that OMB Circular A-76, which includes the Supplemental Handbook thereto, is a Government-wide regulation that bars subjecting disputes over an agency's compliance with that Circular to arbitration.(1) In this regard, the D.C. Circuit stated:
It is obvious that collective bargaining over the method for resolving disputes concerning application of the Circular and arbitration of claimed "violations" of the Circular would both be inconsistent with the terms of the Circular. The regulation sets out an exclusive method of resolving any claims regarding its implementation and forbids negotiation or arbitration over the process or decisions issuing from the process.
IRS, 996 F.2d at 1250 (emphasis added). Accordingly, the Arbitrator correctly concluded, in light of the controlling case law, that the grievance is not arbitrable because the Supplemental Handbook to OMB Circular A-76 provides an exclusive appeal procedure within the Agency to challenge the Agency's compliance with that Circular.
The Union correctly notes that the Authority has held that OMB Circular A-76 is an "applicable law," within the meaning of section 7106(a)(2). See, e.g., National Treasury Employees Union and U.S. Department of the Treasury, Internal Revenue Service, 42 FLRA 377, 399 (1991), enforcement denied on other grounds sub nom. U.S. Department of the Treasury, Internal Revenue Service v. FLRA, 996 F.2d 1246 (D.C. Cir. 1993). However, the fact that OMB Circular A-76 is an "applicable law" does not necessarily mean that disputes concerning its application are arbitrable. In this regard, section 7106(a)(2)(B) of the Statute provides that the right to contract out must be exercised in accordance with applicable laws and, as Circular A-76 constitutes an applicable law, the right must be exercised in accordance with the terms of the Circular. By its terms, the Circular "sets out an exclusive method of resolving any claims regarding its implementation and forbids . . . arbitration over the process or decisions issuing from the process." IRS, 996 F.2d at 1250 (footnote omitted). Thus, even though determinations regarding contracting out must be made in accordance with the Circular, the Circular itself bars grievances under the negotiated grievance process. As such, the Arbitrator correctly held that the grievance is not arbitrable.
Finally, we reject the Union's claims that because the Circular is an applicable law, it is within the scope of the negotiated grievance procedure under section 7103(a)(9)(C) of the Statute and OMB cannot limit the scope of a grievance procedure by precluding grievances. In IRS, the court stated that the Circular itself "supplant[s] the grievance procedures, [and to allow the Union] to add them back would . . . destroy the exemption from bargaining" in section 7117(a). Id. at 1252. The court held:
[I]f a [G]overnment-wide regulation under section 7117(a) is itself the only basis for a union grievance--that is, if there is no pre-existing legal right upon which the grievance can be based--and the regulation precludes bargaining over its implementation or prohibits grievances concerning alleged violations, the Authority may not require a [G]overnment agency to bargain over grievance procedures directed at implementation of the regulation.
The court specifically rejected the argument made by the Union in this case that OMB is not authorized to promulgate a Government-wide regulation that limits the scope of grievance procedures by precluding grievances concerning an agency's compliance with that same Government-wide regulation. As an initial matter, the court stated that there are "important limitations on the [G]overnment's ability to diminish the scope of collective bargaining through [G]overnment-wide regulations." Id. at 1251 (citing Office of Personnel Management v. FLRA, 864 F.2d 165 (D.C. Cir. 1988) (OPM)). Specifically, the court stated that:
the [G]overnment could not gain the exemption from bargaining in section 7117(a) merely by restating with broader effect a provision in the management rights section. But . . . the [G]overnment could obtain the full benefit of the exemption if instead of developing new management powers not granted by the [Statute], it "directs the exercise of existing management prerogatives in a specific way, so that particular subjects . . . are identified as inappropriate topics of bargaining."
Id. (quoting OPM, 864 F.2d at 171). The court found that Circular A-76 "meets this test" because, unlike the Government-wide regulation at issue in OPM, it sets forth substantive and procedural limitations on an agency's right to contract out under section 7106(a)(2)(B) of the Statute. Id. Thus, because "[t]he Circular does not purport to expand on management rights[,]" the court concluded that OMB may limit the scope of grievance procedures concerning an agency's compliance with the Circular's substantive requirements.(3) Id.
The Authority has adopted the court's conclusion in IRS that collective bargaining agreements may not contain provisions that would subject disputes over compliance with OMB Circular A-76 to the negotiated grievance procedure. Fort Carson, 48 FLRA at 206. Therefore, for the reasons stated by the court in IRS, we reject the Union's argument with respect to the facts in this case that OMB cannot limit the scope of a grievance procedure by precluding grievances.
Accordingly, we deny the Union's exceptions.(4)
The Union's exceptions are denied.
(If blank, the decision does not have footnotes.)
1. "[T]he Supplement provides that the Circular's administrative review provision 'does not authorize an appeal outside the agency or judicial review' and that 'the procedure and the decision upon appeal may not be subject to negotiation, arbitration, or agreement.'" IRS, 996 F.2d at 1249. Further, paragraph 7 of the Circular provides that the Circular and its Supplement apply to all executive agencies. See id. at 1250 n.5.
2. We note that Article 35 of the parties' bargaining agreement, which concerns realignment of workforce/contracting out, incorporates the provisions of OMB Circular A-76 and the Union's grievance is not based on any other contractual right.
3. As explained above, the court observed that, as the Government may not promulgate a Government-wide regulation that restates with broader effect a management rights provision in section 7106(a), a Government-wide regulation may not preclude bargaining over appropriate arrangements that would otherwise accompany an exercise of management's rights under section 7106(a) of the Statute. IRS, 996 F.2d at 1251 (harmonizing the holding in OPM).
4. Effective March 27, 1996, OMB revised the Supplemental Handbook to Circular A-76, which contains the appeal procedure at issue. See 61 Fed. Reg. 14338, 14345-46 (Apr. 1, 1996). The revisions indicate OMB's intent to maintain the exclusivity of an agency's internal administrative appeals process for challenging an agency's contracting-out determination. See id. at 14345 (in explaining the revised Supplement, OMB stated that the appeal procedure "does not authorize an appeal outside the agency or judicial review . . . ."). OMB's statement in the Introduction to the Revised Supplemental Handbook is consistent with the latter intent:
The Circular and this Supplement are not intended and should not be construed to create any right or benefit, substantive or procedural, enforceable at law by a party against the United States, its agencies, its officers or any person. It should not be construed to create any substantive or procedural basis on which to challenge any agency action or inaction, except as set forth in Part I, Chapter 3, Paragraph K, of this Supplement.
OMB Circular A-76--Revised Supplemental Handbook, Introduction p. iii (March 1996). As referenced in the Introduction, Part I, Chapter 3, Paragraph K concerns internal agency administrative appeals of tentative waiver or cost comparison decisions filed by eligible applicants. Subparagraph 7 of Paragraph 7, in relevant part, states: "The procedure does not authorize an appeal outside the agency or judicial review, nor does it authorize sequential appeals . . . ."
Even if the Revised Supplemental Handbook were construed to permit grievances outside the internal agency administrative appeals process, we would not apply these revisions in this case because they were not in existence at the time of the actions giving rise to the grievance and the Agency's rights would be impaired were we to apply the revisions by rendering the grievance arbitrable when it was not arbitrable under the old Supplemental Handbook. See U.S. Department of Commerce, Patent and Trademark Office and National Treasury Employees Union, Chapter 243, 52 FLRA 358, 368 n.6 (1996).