United States of America
BEFORE THE FEDERAL SERVICE IMPASSES PANEL
In the Matter of
DEPARTMENT OF THE NAVY
LOCAL 77, INTERNATIONAL
Case No.06 FSIP 1
DECISION AND ORDER
The Department of the Navy, Naval Air Station (NAS) North Island, San Diego, California (Employer), filed a request for assistance with the Federal Service Impasses Panel (Panel) to consider an impasse under the Federal Service Labor-Management Relations Statute, 5 U.S.C. § 7119, between it and Local 77, International Federation of Professional and Technical Engineers, AFL-CIO (Union).
After an investigation of the request for assistance concerning discontinuation of cash sales (serving of meals) to civilians at the Navy Galley, the Panel determined that the parties' dispute should be resolved through single written submissions. The parties were informed that after considering the entire record, the Panel would take whatever action it deems appropriate to settle the impasse, which could include the issuance of a Decision and Order. Written statements were made pursuant to this procedure and the Panel has now considered the entire record.
The Employer's mission is to support Naval aircraft and related systems. The Union represents approximately 400 professional employees who work as engineers and scientists, at grades GS-5 through -13. The collective bargaining agreement (CBA) covering these employees expired on February 26, 2004; its terms and conditions will remain in effect until a successor agreement is implemented.
ISSUE AT IMPASSE
The parties disagree over whether the Navy Galley should discontinue cash sales to the bargaining-unit employees (BUEs) represented by the Union.
POSITIONS OF THE PARTIES
1. The Employer's Position
The Employer proposes to discontinue cash sales to all civilian employees represented by the Union at the Navy Galley.1/ This is consistent with a memorandum issued in September 2004 by the Commander, Navy Installations Command, which is responsible for Navy-wide shore installation management, requiring the closing of all galleys in the Continental United States to civilians "because of the inability to capture sufficient revenue to make cash sales of meals cost neutral." In this regard, data covering a 10-month period (October 2004 through July 2005) indicate the Galley served 34,542 lunches to civilian cash customers at $3.50 per lunch. The actual cost, including food, service, maintenance, utilities, depreciation, supplies, and administration, was $12.42 per lunch; thus, the Navy lost $8.92 per meal, or $308,114.64, with an overall loss during that period of $444,326.24 when breakfast and dinner also are included.
Its cost data confirm a November 2003 study by the Center for Naval Analyses (CNA) Corporation that serving meals to civilians is not cost effective.2/ CNA found that "ashore galleys are expensive to operate, and much of the Navy's cost is to subsidize the meal purchases of people other than those for whom the galley exists."3/ According to CNA, "[a] cash customer pays $8.10 for a three-meal day; the Navy pays the rest, amounting to a subsidy between 40 and 90 percent." Moreover, raising prices to recoup these losses, as the Union suggests, is not a "viable alternative" to ceasing cash sales because the "cost per meal" would then be less competitive with private retailers, and would cause Galley patrons to eat elsewhere.
Implementation of the Union's proposal, on the other hand, would be burdensome since thousands of civilians work at Naval Base Coronado, which includes NAS North Island. To continue cash sales to the 400 BUEs represented by the Union, a method would have to be created that would distinguish them from other civilians to determine who may or may not eat at the Galley. The proposal also would force the Navy to continue to operate at a significant financial loss. Finally, the continuation of cash sales is unnecessary because there are several "comparable alternative" dining options nearby, on and off base, that are similar in price and variety as Galley meals. Other dining options also are available, such as mobile cantinas and break rooms equipped with vending machines, refrigerators, and microwave ovens.
2. The Union's Position
The Union proposes that the status quo be maintained. In this regard, the Employer has a "long-standing practice" of selling meals to civilians and has not provided sufficient evidence to justify the proposed change. A closer look at the costs associated with cash sales to BUEs reveals that "the [Employer] will not save money by closing the Galley to bargaining unit members. In fact, the [Employer] would lose money." This is because "the only cost that is properly attributable to [BUEs] is the cost of food." Fixed costs (personnel, utilities, maintenance, equipment, and depreciation) will not decrease as a result of ceasing cash sales to civilians, who consumed roughly 6.6 percent of the total number of meals served from October 2004 to July 2005.4/ According to the Employer's figures for this period, all civilians eating at the Galley paid a total of $168,448 for meals. The cost of the food for those meals was $131,554, resulting in a net gain of $36,894. Since the price BUEs pay for meals is "greater than the cost incurred by the [Employer] itself," the Employer's argument that "it would save a significant amount of money as a result of closing the Galley to civilians fails." Thus, the Employer should not be allowed to change the past practice of permitting BUEs access to the Galley.
Furthermore, the Union argues there are no "suitable" alternatives to Galley food at NAS North Island. Most of the commercial establishments available to BUEs do not provide "healthy and nutritious meals," i.e., Pizza Hut, A&W, Long John Silver, Subway, and Kentucky Fried Chicken; others serve Chinese and Mexican food, or are snack bars that offer hamburgers and pizza. The broader choices of food provided in the Galley allow BUEs to "maintain a proper diet" in accordance with guidelines established by the U.S. Department of Agriculture and the guidance of the Chief of Naval Operations to maintain military readiness. In addition, it would not be practical for BUEs to eat at off base establishments. They have only a ½-hour lunch period, while the trip to and from off base eateries could take up to 20 minutes roundtrip, not including the security checks employees would be subject to upon entering and exiting the base.
Having carefully considered the evidence and arguments presented by the parties on this issue, we shall order the adoption of the Employer's proposal to resolve their impasse. Overall, the change appears to be part of Department-wide initiatives to eliminate or reduce expenditures that do not directly support military readiness. It is clear from the record that the primary mission of the Galley is to feed enlisted personnel, and that the prices charged for meals are significantly less than their actual cost.5/ In our view, these considerations outweigh the impact on BUEs, particularly given the variety of nearby eating establishments, and the fact that employees have the option of bringing their own food if the available alternatives do not meet their personal nutrition or budgetary requirements.
Pursuant to the authority vested in it by the Federal Service Labor-Management Statute, 5 U.S.C. § 7119, and because of the failure of the parties to resolve their dispute during the course of proceedings instituted under the Panel's regulations, 5 C.F.R. § 2471.6(a)(2), the Federal Service Impasses Panel, under 5 C.F.R. § 2711(a) of its regulations, hereby orders the following:
The parties shall adopt the Employer's proposal.
By direction of the Panel.
H. Joseph Schimansky
April 7, 2006
According to the Employer, the other labor organizations representing employees at the installation have agreed to the change. If the Panel resolves the issue in its favor, the Employer also plans to cease cash sales for military personnel who receive a meal allowance.
The CNA Corporation is a not-for-profit organization specializing in providing analyses and evaluations of government programs, policies, operations, and systems. It has a lengthy history of providing such analyses to the Navy dating from 1946.
NAVSUP P-486 Volume 1 - Food Service Management (2001), paragraph 2000 states, “ . . . ashore galleys are designed, staffed, and operated specifically to feed enlisted military.”
According to a survey of 375 BUEs conducted by the Union, each employee ate an average of 45.6 meals (17,100 total) over the 10-month period for which the Employer provided data. Therefore, BUEs accounted for only 2 percent of the meals eaten at the Galley during this time period.
This conclusion is based on undisputed information that the price the Galley charges for meals is only $1.65 for breakfast and $3.50 for lunch or dinner, and not on any of the other data provided by the parties.