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United States of America


In the Matter of








Case No. 94 FSIP 054


    The Department of the Navy, Navy Exchange, Guam Naval Base, Agana, Guam (Employer or Exchange) filed a request for assistance with the Federal Service Impasses Panel (Panel) to consider a negotiation impasse under the Federal Service Labor-Management Relations Statute, 5 U.S.C. § 7119, between it and Local 1689, American Federation of Government Employees, AFL-CIO (Union).

    After investigation of the request for assistance, the Panel determined that the dispute, which concerns Exchange employees' shopping privileges, should be resolved on the basis of a single written submission from each party, with the Panel to take whatever action it deemed appropriate to resolve the impasse. Written submissions were made pursuant to this procedure, and the Panel has now considered the entire record.


    The Employer's mission is to provide goods and services for purchase by military personnel and their dependents, retirees, and other authorized individuals, and from its profits, to fund Morale, Recreation and Welfare programs and activities. The bargaining unit consists of approximately 800 nonappropriated-fund employees in such jobs as cashier; checker; sales clerk; food-service worker; vending clerk; warehouse worker; plumber; carpenter; painter; electrician; mechanic; and motor vehicle operator, among others. The parties are covered by a master collective-bargaining agreement due to expire on January 17, 1995.

    The dispute arose during negotiations over the Employer's proposal to implement changes to paragraph 4201, of the Navy Exchange Manual, imposing restrictions on employees' purchase of reduced-price goods. Currently, employees are only prohibited from (1) making purchases while on duty and (2) purchasing military uniforms and accessories, and liquor.


    The parties disagree over whether employees' purchase of reduced-price merchandise should be restricted.


1. The Employer's Position

    Essentially, the Employer proposes that employees who are not also military dependents or off-duty military personnel, be prohibited from purchasing this merchandise until the passing of (1) 1/2 business day after the start of a 1-day sale and (2) 1 business day in the case of more than a 1-day sale. With regard to markdowns, employees would be required to wait "an additional business day after each successive markdown." In Guam, goods are in short or limited supply and "acceptable alternatives" to shopping at the Exchange are limited and costly. Given this, the approximately 22,000 military personnel and their dependents, the Exchange's "primary customers" whom employees were "hired to serve," should have the opportunity to purchase this kind of merchandise before employees.

    Military personnel and their dependents "perceive" that employees have been "exploit[ing] their employment status so as to enjoy purchasing privileges not available to all authorized patrons." In this regard, over the years, there have been "numerous complaints" relayed to the Navy Exchange Advisory Board (Board) regarding the unavailability of reduced-price goods because employees purchase such merchandise before it is made available to all authorized patrons. The restrictions it proposes are intended to address this problem. Contrary to the Union's argument, the new purchasing restrictions would apply to all employees not just sales personnel, as indicated by the Commander, Navy Exchange Service Command (NESC), in his letter of March 17, 1993, to the Officer-in-Charge of the Exchange. Also, limiting such restrictions to sales personnel, who make up only 33 percent of the bargaining unit, would "serve little purpose" and "cause friction within and among members of the bargaining unit." By comparison, "providing the principal customers first access to sale, [clearance,] promotional, and markdown merchandise will eliminate customer complaints, serve the paramount interest of those principal customers and still provide [employees] with access to merchandise."

2. The Union's Position

    The Union proposes that new restrictions on employees' purchase of bargain merchandise extend only to those employees who are "involved in" the merchandise, "regardless of position and assignment location." Its proposal is "the only one that will solve the problem of the shopping privileges" at the Exchange and, therefore, should be adopted by the Panel. In this regard, it is fair and reasonable and follows "appropriate business practice in any retail outlet in the private sector." It also should eliminate the "perception" problem alleged by the Employer. The real problem of the insufficient availability of advertised sale merchandise is caused by the shortage of goods in Guam, and management's refusal to increase its purchase of goods to meet demands, and would not be addressed by either party's proposal.

    The Employer's argument that it is inequitable to restrict the purchasing privileges of some employees and not others "is without merit in light of the lack of a study" on the problem of the unavailability of reduced-price goods. There is no "solid evidence" showing that employees are making purchases before such items are made available to other Exchange patrons. In fact, the Exchange's many civilian patrons could easily have been mistaken for employees. Nor is there documentation regarding complaints that may have been registered to the Board on the matter. These allegations arose only after the Director of the NESC visited the Exchange in March 1993. Finally, the NESC is "not serious" about restricting employees' shopping privileges because it has extended the same privileges to their family members.


    Having considered the evidence and arguments presented, we are persuaded that the Employer's proposal should serve as the basis for resolving the dispute. In our view, military personnel, their dependents, and retirees should be afforded the opportunity to purchase reduced-price goods before they are offered to employees given that (1) they are the Exchange's primary customers and the reason for its existence, and (2) it is undisputed that goods are in limited supply on the Island. Simply limiting the purchasing restrictions to sales personnel, as the Union proposes, would not correct the problems established in the record, both real and perceived, with the unavailability of goods, and would probably cause dissension in the bargaining unit. Finally, we find no inconsistency between management's proposed restriction of employees' shopping privileges and its recent extension of the same restricted shopping privileges to their family members; in this regard, extending the same privileges should increase business for the Exchange while the purchasing restrictions proposed by the Employer, would ensure that military personnel and their dependents are given the first opportunity to purchase bargain merchandise.


    Pursuant to the authority vested in it by the Federal Service Labor-Management Relations Statute, 5 U.S.C. § 7119, and because of the failure of the parties to resolve their dispute during the course of proceedings instituted pursuant to the Panel's regulations, 5 C.F.R. § 2471.6 (a)(2), the Federal Service Impasses Panel under § 2471.11(a) of its regulations hereby orders the following:

    The parties shall adopt the Employer's proposal.


By direction of the Panel.

Linda A. Lafferty

Executive Director

May 5, 1994

Washington, D.C.