# Petition for Writ of Certiorari — Equal Employment Opportunity Commission v. Federal Labor Relations Authority > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0913%3A02 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1985 - **Citation:** 472 U.S. 1026 ## Text 8417280 [om rp onus No. MAY 2 1985 VVV srevaa, In the Supreme Court of the United States OCTOBER TERM, 1984 EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, PETITIONER * FEDERAL LABOR RELATIONS AUTHORITY AND AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO, NATIONAL COUNCIL OF EEOC LOCALS PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT REX E. LEE Solicitor General RICHARD K. WILLARD Acting Assistant Attorney General CHARLES FRIED Deputy Solicitor General CAROLYN F. CORWIN Assistant to the Solicitor General WILLIAM KANTER HAROLD J. KRENT Attorneys Department of Justice Washington, D.C. 20530 (202) 633-2217 QUESTION PRESENTED Whether a federal agency’s compliance with Office of Management and Budget Circular A-76, an Executive Branch management policy directive that establishes guidelines for agency decisions whether to contract out functions to private enterprise, and with laws and regu- lations concerning contracting out is a proper subject of negotiation and arbitration between the agency and an employee union under Title VII of the Civil Service Re- form Act of 1978, 5 U.S.C. 7101 et seq. (I) TABLE OF CONTENTS Page r è ⅛•ã AAA 1 ee 1 F ⁰—uwA . 2 / ˙ TTT 3 Reasons for granting the petition 8 , ˙ cctcccccces 24 ,, ᷣ SASS„5„5595959ꝙ59 5 la V 38a , ud 40a F ̃ ũ¶—᷑ rTrrr dcceccevcesces 49a TABLE OF AUTHORITIES Cases: AFGE, AFL-CIO v. Carmen, 669 F.2d // / / 666 6 19 AFGE, Local 225 and Dep't of the Army, 17 F.L.R.A. No 66 (Apr. 5, 1985) ...... 15, 18, 20 AFGE, Local 2017 v. Brown, 680 F.2d 722, cert. denied, 459 U.S. 1104 ............ 16-17 Andrade v. Lauer, 729 F. 2d 1475. 23 Bureau of Alcohol, Tobacco & Firearms v. FLRA, No. 82-799 (Nov. 29, 1983) 4 California National Guard v. FLRA, 697 , iii cc. 21, 22 Ae. 17 Dep’t of the Army, Oakland Army Base, and AFGE, Local 1157, FMCS NO. 83K/24072 (Nov. 26, 1984) ............. 22 First National Maintenance Corp. v. Ee 17 (IIT) IV Cases—Continued: Headquarters, 97th Combat Support Group (SAC), Blytheville Air Force Base, and AFGE, Local No. 2840, FMCS No. 82K/20840 (Aug. 9, 1982) .............. Indiana Air National Guard v. FLRA, 712 BERR Local 2855, AFGE (AFL-CIO) v. United States, 602 F. 2d 574................05. Myers v. United States, 272 U.S. 52 National Federation of Federal Employees and Dep’t of the Air Force, Lowry Air Force Base, 9 F. L. R. A. 151............ Naval Air Station, Whiting Field, and AFGE, Local Union No. 1954, FMCS No. 83K/06143 (Apr. 29, 1983). ............. New Jersey Air National Guard v. FLRA, 677 F. 2d 276, cert. denied, 459 U.S. 988 . Panama Canal Co. v. Grace Line, Inc., 356 State of Nebraska, Military Dep’t v. FLRA, r ˙ cctiscees U.S. Army Communications Command, Fort McClellan, and Local No. 1941, AFGE, FMCS No. 83K/00570 (Aug. 9, o ek enh ante de cee U.S. Army Communications Command Agency—Redstone Arsenal, and AFGE Local 1858, FMCS No. 83K/05094 (May 11700 United States Marshals Service v. FLRA, J 0-00000s4 cdkcnnvovumeenee Page 16 21 V Statutes, rules and regulations: Page Civil Service Reform Act of 1978, Pub. L. No. 95-454, 92 Stat. 1111 et seq. ........ 3 Tit. VII, 5 U.S.C. 7101 et seg. 3 5 U.S.C. 7108(aX2) ............. 4 © UEC, THUD ccc ccccccesss 4 5 U.S.C. 7103(a)(9) ....... 2, 7, 8, 17, 19 5 U.S.C. 7103(a)(9(C)G)......... 5 5 U.S.C. 7103(a) (9 (CC) 17 SU . 4 5 U. S. C. 71030 -l) 4, 18 5 U.S.C. 7100 a) (2) (A )-) . 5 fb i 2, 13, 15, 16, 18 6 U.S.C. THOR)... cc neess 6, 7, 9, 18 5 U.S.C. 7106(a)(2)(B)........... 5, 18 D 15 D ere 5 5 U. S. C. 71060-b(3))) 5 5 U.S.C. 7110 % ůhꝙ))ꝛihrꝛ 4 D seeks ds ceevuns bet 20, 21 5 U.S.C. 7117(a)(1) .......-. 3, 5, 19, 20 an won cesecececes 4 5 U.S.C. 7119 005 ())) 4 5 U.S.C. 7119000 5% co) 4 r A bak enw 5, 17 D ⸗C vi ic cccudsenns 14 2 wo pccaecscnscess 5, 23 Ee 5 National Guard Technicians Act of 1968, 32 r 22 r 1 VI Statutes, rules and regulations—Continued: pe se 8 PPT ree Sa cis Ce ˙ . cnctne Exec. Order No. 10988, 3 C. F. R. (1959-1963 comp.)...............65: IL ae Exec. Order No. 11491, 3 C. F. R. (1966-1970 comp. )))i „ Exec. Order No. 11616, 3 C. F. R. . 5 oo wc ce ccincsiccces Exec. Order No. 11636, 3 C.F.R. PCP TTT eee ee Exec. Order No. 11838, 3 C.F.R. (1971-1975 comp.) ꝗ é Miscellaneous: 521 — * 861 605 634 957 Cox, Reflections Upon Labor Arbitration, 72 Harv. L. Rev. 1482 (1959)........ H.R. Conf. Rep. 95-1717, 95th Cong., 2d 13, 20, 21 H.R. Rep. 95-1403, 95th Cong., 2d Sess. r va vacances GD x nnn ᷣ ˙ UA Labor-Management Relations in the Federal Service: Report and Recommendations of the Federal Labor Relations Council on the Amendment of Executive Order 11491 (1975), reprinted in Subcomm. on Postal Personnel and Modernization of the House Comm. on Post Office and Civil Service, 96th Cong., Ist Sess., Legislative History of the Federal Service Labor-Management Relations Statute, Title VII of the Civil Service Reform Act of 1978 (Comm. Print SUE Ck ncdcSkvws tenn vonvendeuse ss 4, 18 18 VII Miscellaneous Continued: Page Office of Management and Budget Circular , tad a kno vn cec'ene cos passim 44 Fed. Reg. (1979): GUC s uy «anne ess kee ee 11 D 10-11, 12 D ci oeebenevsussae ees 11, 14 NO eS re 12 45 Fed. Reg. 69322 (1980) ........... 11 47 Fed. Reg. (1982): rr ĩ˙ ĩ˙•ʃUWW—W 11 D o ⸗ ôc˙ôc ˙˖ A.. 11 48 Fed. Reg. 37114 (19833) 11, 14 Supplement (1983) .................. 14 10 President’s Private Sector Survey on Cost Control, Report on Management Of- fice Selected Issues: Opportunities Be- yond PPSSCC (1983) ................. 11-12 Shulman, Reason, Contract, and Law in La- bor Relations, 68 Harv. L. Rev. 999 77 14 Study Committee Report and Recommenda- tions, August 1969, reprinted in Subcomm. on Postal Personnel and Mod- ernization of the House Comm. on Post Office and Civil Service, 96th Cong., Ist Sess., Legislative History of the Federal Service Labor-Management Relations Statute, Title VII of the Civil Service Re- form Act of 1978 (Comm. Print 1979)... . 16 2 U.S. General Accounting Office, Report of the Comptroller General: Compendium of GAO’s Views on the Cost Saving Propos- als of the Grace Commission (1985) 12 VIII Miscellaneous Continued: U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 1986 (1985)................ U.S. Office of Management and Budget, Management of the United States Govern- ment: Fiscal Year 1986 (1985) In the Supreme Court of the United States OCTOBER TERM, 1984 No. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, PETITIONER v. FEDERAL LABOR RELATIONS AUTHORITY AND AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO, NATIONAL COUNCIL OF EEOC LOCALS PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA C'RCUIT The Solicitor General, on behalf of the Equal Em- ployment Opportunity Commission, petitions for a writ of certiorari to review the judgment of the United States Court of Appeals for the District of Columbia Circuit in this case. OPINIONS BELOW The opinion of the court of appeals (App., infra, la-37a) is reported at 744 F.2d 842. The decision and order of the Federal Labor Relations Authority (App., infra, 40a-48a) is reported at 10 F. L. R. A. 3. JURISDICTION The judgment of the court of appeals (App., infra, 49a-50a) was entered on September 21, 1984. A timely petition for rehearing was cenied on December 3, (1) 2 1984 (App., infra, 38a-39a). On February 26, 1985, the Chief Justice extended the time within which to file a petition for a writ of certiorari to and including May 2, 1985. The jurisdiction of this Court is invoked under 28 U.S.C. 1254(1). STATUTES INVOLVED 5 U.S.C. 7103(a)(9) provides: “(G]rievance” means any complaint (A) by any employee concerning any matter relating to the employment of the employee; (B) by any labor organization concerning any matter relating to the employment of any em- ployee; or (C) by any employee labor organization, or agency concerning— (i) the effect or interpretation, or a claim of breach, of a collective bargaining agreement; or (ii) any claimed violation, misinterpretation, or misapplication of any law, rule, or regula- tion affecting conditions of employment(. | 5 U.S.C. 7106 provides: Management rights (a) Subject to subsection (b) of this section, noth- ing in this chapter shall affect the authority of any management official of any agency— (1) to determine the mission, budget, organiza- tion, number of employees, and internal security practices of the agency; and (2) in accordance with applicable laws— (A) to hire, assign, direct, layoff, and retain employees in the agency, or to suspend, re- move, reduce in grade or pay, or take other disciplinary action against such employees; (B) to assign work, to make determinations with respect to contracting out, and to deter- 3 mine the personnel by which agency opera- tions shall be conducted; (C) with respect to filling positions, to make selections for appointments from— (i) among properly ranked and certified candidates for promotion; or (ii) any other appropriate source; and (D) to take whatever actions may be neces- sary to carry out the agency mission during emergencies. (b) Nothing in this section shall preclude any agency and labor organization from negotiating— (1) at the election of the agency, on the num- bers, types, and grades of employees or positions assigned to any organizational subdivision, work project, or tour of duty, or on the technology, methods, and means of performing work; (2) procedures which management officials of the agency will observe in exercising any author- ity under this section; or (3) appropriate arrangements for employees adversely affected by the exercise of any author- ity under this section by such management officials. 5 U.S.C. 7117(a)(1) provides: Subject to paragraph (2) of this subsection, the duty to bargain in good faith shall, to the extent not inconsistent with any Federal law or any Government-wide rule or regulation, extend to matters which are the subject of any rule or regu- lation only if the rule or regulation is not a Government-wide rule or regulation. STATEMENT 1. In October 1978 Congress enacted the Civil Serv- ice Reform Act of 1978 (the Act), Pub. L. No. 95-454, 92 Stat. 1111 et seg. Title VII of the Act, 5 U.S.C. 7101 et seq., governs labor-management relations, including 1 collective bargaining, for nearly all federal agencies. Title VII replaced the federal labor relations program created in 1962 by Executive Order No. 10988, 3 C. F. R. 521 (1959-1963 comp.).” Under the Act, a federal agency is required to bar- gain in good faith with a federal employee union about conditions of employment. 5 U.S.C. 7103(a) (12), 7114(b)(2); Bureau of Alcohol, Tobacco & Firearms v. FLRA, No. 82-799 (Nov. 29, 1983), slip op. 2-3. [Clon- ditions of employment” are defined as “personnel poli- cies, practices, and matters, whether established by rule, regulation, or otherwise, affecting working condi- tions.” 5 U.S.C. 7103(a)(14). The Act provides that if an impasse is reached, either party to the negotiations may ask the Federal Service Impasses Panel (the Panel) to intervene. 5 U.S.C. 7119(c). The Panel has the authority to judge a proposal on its merits and to order the parties to adopt it. 5 U.S.C. 7119(c)(5)(B) and (C); see 5 C.F.R. 2471.11(a). Thus, unlike the situation in the private sector, a determination that a bargaining proposal is negotiable carries with it the possibility that the proposal ultimately will be incorporated as part of the collective bargaining agreement pursuant to an or- der of the Panel. A union may use the grievance and ar- bitration process to challenge management actions that ' Certain federal employees, including members of the uni- formed services and the Foreign Service, and certain agencies, in- cluding the General Accounting Office, Federal Bureau of Investi- gation, Central Intelligence Agency, and National Security Agency, are excluded from the coverage of Title VII. See 5 U.S.C. 7103(a)(2) and (3). United States Postal Service employees also are excluded from Title VII coverage, since labor relations matters involving those employees are within the jurisdiction of the National Labor Relations Board. See 39 U.S.C. 1209. The executive order program was revised and continued by Executive Order No. 11491, 3 C.F.R. 861 (1966-1970 comp.), as amended by Executive Orders Nos. 11616, 11636, and 11838, 3 C. F. R. 605, 634, 957 (1971-1975 comp.). 5 allegedly violate the collective bargaining agreement. 5 U.S.C. 7103(a)(9\(C\Xi), 7121. Congress excluded from the requirements of the Act matters affecting certain management rights, including the right “to make determinations with respect to con- tracting out.” 5 U.S.C. 7106(a)(2)(B). An agency’s duty to bargain with respect to these reserved rights is lim- ited to the “procedures which management * * * will observe in exercising” the rights and “appropriate ar- rangements for employees adversely affected” by exer- cise of the rights. 5 U.S.C. 7106(b)(2) and (3). The Act also precludes an agency from bargaining when it would be “inconsistent with any Federal law or any Government-wide rule or regulation” and over any “matters which are the subject of * * * a Government- wide rule or regulation.” 5 U.S.C. 7117(a)(1). The Act established the Federal Labor Relations Au- thority (FLRA or Authority) as a three-member inde- pendent body within the Executive Branch with re- sponsibility for, inter alia, supervising the federal collective bargaining process and the grievance and ar- bitration machinery established by Title VII. Among other responsibilities, the Authority adjudicates negoti- ability disputes and unfair labor practice complaints and reviews arbitral awards. 5 U.S.C. 7105(a)(2)(A)-(1). The Authority may seek enforcement of its orders in appropriate United States courts of appeals. 5 U.S.C. 7123(b). Persons, including federal agencies, who are aggrieved by certain types of FLRA orders may seek judicial review in the courts of appeals. 5 U.S.C. 7123(a). 2. In 1980, during the course of contract negotia- tions with the Equal Employment Opportunity Com- mission, respondent American Federation of Govern- ment Employees, AFL-CIO, National Council of EEOC Locals (the union) proposed the following contract provision: 6 The EMPLOYER agrees to comply with OMB Cir- cular A-76 and other applicable laws and regula- tions concerning contracting-out. App., infra, 40a. Office of Management and Budget Circular A-76, to which the proposal refers, is a man- agement policy directive applicable to all Executive Branch agencies that establishes guidelines for agency decisions whether to contract out to private enterprise for products and services the government needs. The EEOC took the position that the duty to bargain in good faith did not extend to the union’s proposal and that bargaining on such matters “would be inconsistent with law, rule and regulations” (C.A. App. 9). The union subsequently submitted the proposal to the FLRA for a negotiability determination (id. at 1-2). 3. The FLRA ruled that the union’s proposal was ne- gotiable (App., infra, 40a-48a). The Authority recog- nized that the proposal addressed a subject listed in the management rights provision of the Act, 5 U.S.C. 7106(a) (App., infra, 40a-41a). The Authority neverthe- less concluded that the proposal would not contravene that provision, because it “would contractually recog- nize external limitations on management’s right but would not establish, either expressly or by incorpora- tion, any particular substantive limitations on manage- ment” (id. at 41a). The Authority also acknowledged that bargaining about the union proposal ultimately could result in sub- jecting disputes about compliance with Circular A-76 to the grievance and arbitration process, in apparent con- flict with the exclusive nature of the appeals procedure provided in the Circular (App., infra, 42a). It con- cluded, however, that even assuming the existence of a conflict between the proposal and the Circular and that the latter fit within the statutory definition of a “Government-wide rule or regulation,” the Circular could not “limit the statutorily prescribed scope and 7 coverage of the parties’ negotiated grievance proce- dure” (ibid.; emphasis in original).* 4. A divided panel of the court of appeals enforced the order of the Authority (App., infra, la-37a). The court concluded that the union proposal would not un- duly restrict management’s reserved right to make contracting-out determinations for two reasons. First, the court reasoned that the phrase “in accordance with applicable laws” in the management rights clause, 5 U.S.C. 7106(a), operated to restrict the authority re- served to management. Thus, while agencies generally need not bargain with respect to their right to make contracting-out determinations, the court concluded that they were required to bargain about the duty to comply with all “applicable laws” affecting that right. App., infra, Sa-Ila. Second, the court of appeals concluded that the union proposal would not divest management of any existing control over the contracting-out process. The court be- lieved that a union claim that management had failed to comply with contracting-out guidelines would fall within the statutory definition of a grievance, 5 U.S.C. 7103(a)(9), and that arbitrators therefore would have jurisdiction to decide such claims even if there were no collective bargaining agreement provision requiring compliance. App., infra, IIa-16a. The Authority also found negotiable a proposal that the EEOC should notify the union of its intention to solicit bids for contract work that could result in reductions-in-force or transfers affecting employees, with a full explanation of the reasons for the agency's actions and opportunity for the union to respond in writing. The Authority found nonnegotiable a proposal that would have re- quired the EEOC to minimize the effect of contracting-out deci- sions on employees, on the ground that the proposal would inter- fere with management’s statutorily reserved right to lay off employees. App., infra, 43a-47a. Neither of these determinations is at issue at this stage of the proceedings. 8 The court of appeals also rejected the EEOC’s claim that the union proposal was inconsistent with the exclu- sive appeals procedure established by Circular A-76. In the court’s view, allowing the text of the Circular to re- strict the scope of grievances under the Act would in- ject limitations not created by Congress. App., infra, 16a-17a. Judge MacKinnon dissented (App., infra, 18a-37a). He concluded that the union proposal conflicted with the plain language of the management rights provision because it required compliance with substantive policy- making criteria for contracting out (id. at 22a-26a). Judge MacKinnon also determined that alleged viola- tions of Circular A-76 would not be statutorily grieva- ble in the absence of a contractual provision requiring compliance with such directives because the Circular does not “affect{ ] conditions of employment” within the meaning of 5 U.S.C. 7103(a)(9). Inciusion in a collective bargaining agreement of an agency commitment to comply with the terms of the Circular therefore would permit a union to obtain arbitration of issues that other- wise would not be grievable and would allow arbitra- tors to review determinations specifically committed to agencies by the management rights provision of the Act. App., infra, 29a-36a. The court of appeals denied the EEOC’s petition for rehearing with suggestion for rehearing en banc, with Judges Bork, Scalia, and Starr dissenting from denial of the suggestion for rehearing en banc (App., infra, 38a-39a). REASONS FOR GRANTING THE PETITION This case presents an important question concerning administration of the federal labor relations program established under Title VII of the Civil Service Reform Act of 1978. The court of appeals’ decision requires a federal agency to bargain with the union about a pro- posed collective bargaining agreement provision that 9 would require the agency to comply with Office of Man- agement and Budget Circular A-76, an executive man- agement policy directive that establishes guidelines for determinations whether to contract out agency func- tions to private enterprise.“ The decision opens the door to a system under which labor arbitrators (with ul- timate enforcement by the FLRA) may review substan- tive agency contracting-out determinations, despite Congress’s specific reservation of such determinations to management under 5 U.S.C. 7106(a). In view of the economic interest of their members in any determina- tion to contract out an agency function, federal em- ployee unions have a strong incentive to mount vigor- ous challenges to such determinations and to search diligently for arguable agency violations of the detailed provisions of Circular A-76. As Judge MacKinnon ex- plained, the decision creates an “extraordinary poten- tial for vexatious litigation” (App., infra, 36a) and af- fords unions “a fertile source of weapons for obstructing or delaying contracting-out decisions, a situation Con- gress specifically sought to prevent” (id. at 35a). The system of arbitral review authorized by the deci- sion below would undermine seriously the potential for realizing efficiency gains through the contracting-out process. The Office of Management and Budget advises us that the estimated loss in cost savings to the federal government from delays due to arbitral review of dis- putes concerning future contracting-out determinations would an.vunt to approximately $142 million for the pe- * The union proposal refers to compliance with Circular A-76 and “other applicable laws and regulations concerning contracting- out.” See App., infra, 40a. The EEOC does not have its own contracting-out regulations, but it is generally subject to the provi- sions of the federal acquisition regulations, 48 C.F.R. Ch. 1. Since the parties in this case have focused on Circular A-76, we will re- fer primarily to the Circular in this petition. 10 riod from fiscal year 1986 through fiscal year 1989.° Po- tential contractors may become reluctant to bid on gov- ernment projects, since market changes during the pe- riod of arbitral review may render the original bids obsolete. Losses also may result if an agency elects to proceed with a project while a grievance is pending and an arbitrator later disagrees with the agency’s judg- ment concerning the application of Circular A-76 and orders rescission of the contract and back pay for dis- placed federal employees. The decision below thus cre- ates a serious potential for slowing the contracting-out process very significantly, or even halting it entirely. The impact of the decision below extends beyond the area of contracting out. Under the court of appeals’ rea- soning, it appears that a union could obtain arbitral re- view of an agency’s exercise of any of the enumerated rights reserved to management under the Act merely by asserting that the agency had failed to comply with some relevant legal requirement. In addition, by ex- tending its analysis to Circular A-76, an executive man- agement policy directive, the court of appeals appears to have created a precedent for other steps that would infringe on the President’s inherent authority to man- age Executive Branch agencies. Review by this Court is plainly warranted. 1. OMB Circular A-76 was issued by the Office of Management and Budget, a part of the Executive Of- fice of the President, pursuant to delegated presidential management authority. The Circular establishes “the policies and procedures used to determine whether needed commercial or industrial type work should be done by contract with private sources or in-house using Government facilities and personnel.” 44 Fed. Reg. ® See page 11, infra, for an estimate of cost savings now being realized by the Department of Defense from past contracting-out determinations. 11 20557 (1979).“ The Cireular preseribes detailed steps that agencies should follow in making the cost analyses that are used to determine whether to contract out to private industry for goods and services the government needs or to retain performance of a function in-house. The Department of Defense has reported that Circular A-76 studies it has completed since 1979 now generate more than $409 million annually in cost reductions. U.S. Office of Management and Budget, Management of the United States Government: Fiscal Year 1986, at 45 (1985). The President has established as a priority pro- gram the implementation of various efficiency meas- ures, including increased use of contracting out pursu- ant to Circular A-76. Jd. at 43-46; U.S. Office of Management and Budget, Budget of the United States Government, Fiscal Year 1986, at 2-26 (1985).” The longstanding policy of the federal government to acquire needed goods and services from the private sector whenever it would be feasible and efficient to do so was first recognized offi- cially in Bureau of the Budget Bulletins, issued in 1955, 1957 and 1960. In 1967, this policy was expressed and implemented in a di- rective known as Circular A-76. See 44 Fed. Reg. 20558 (1979). The Circular was revised substantially in 1979. 44 Fed. Reg. 20556. It has been amended in several respects since then. See 45 Fed. Reg. 69322 (1980); 47 Fed. Reg. 6511 (1982); id. at 46783; 48 Fed. Reg. 37114 (1983). The 1979 version of the Circular was in ef- fect at the time of the contract negotiations in this case. In recent years Circular A-76 and amendments thereto have been published in the notice section of the Federal Register. The supplement to the current version of the Circular is not reprinted in the Federal Register because of its length. We are lodging with the Clerk of the Court and providing to counsel for respondents copies of the supplement. The President's Private Sector Survey on Cost Control (also known as the Grace Commission) has strongly endorsed the use of Circular A-76 to bring badly needed reform and cost savings to governmental operations. The Grace Commission has estimated that the federal government could save $7.39 billion over a three- year period by implementing the Circular aggressively. 10 Presi- 12 The Circular provides that it “does not establish, and shall not be construed to create, any substantive or pro- cedural basis for any person to challenge any agency ac- tion or inaction on the basis that such action was not in accordance with this Circular,” except as provided in the Circular itself. 44 Fed. Reg. 20558 (1979). See also 48 Fed. Reg. 37114 (1983). The Circular directs each agency to establish an appeals procedure that protects “the rights of all affected parties—Federal employees and their representative organizations, contractors and potential contractors, and contract employees and their representatives.” 44 Fed. Reg. 20561 (1979). Under such procedures, a party directly affected by an initial agency contracting-out determination may file an objec- tion; an impartial agency official at a level organiza- tionally higher than the official who approved the origi- nal decision must rule on any objection within 30 days. The Circular provides that the decision on appeal is “fi- nal” and that the appeals “procedure and agency deter- minations may not be subject to negotiation, arbitra- tion, or agreements.” Jbid. * dent’s Private Sector Survey on Cost Control, Report on Manage- ment Office Selected Issues: Opportunities Beyond PPSSCC 2-4 (1983). The Congressional Budget Office has estimated that in the long term savings from full implementation of the Circular on a government-wide basis would amount to $1.1 billion annually. 2 U.S. General Accounting Office, Report of the Comptroller Gen- eral: Compendium of GAO’s Views on the Cost Saving Proposals of the Grace Commission 230 (1985). At the time the appeals procedure was first included in Cireu- lar A-76, the Office of Management and Budget explained that it was designed to “promote more effective and consistent implemen- tation” of the Circular and to “provide a level of visibility and dis- cipline that should significantly enhance implementation.” 44 Fed. Reg. 20557 (1979). The appeals procedure provisions are now found in the supple- ment to Circular A-76 (at I-14 to I-15). Under the current proce- dures, a party directly affected by an agency decision to contract out may request detailed documentation supporting the agency’s 13 2. The court of appeals’ holding that the EEOC must bargain about compliance with Circular A-76 is plainly inconsistent with the Act. a. Congress enacted the management rights provi- sion of the Act, 5 U.S.C. 7106, “to preserve the essen- tial prerogatives and flexibility Federal managers must have.” H.R. Rep. 95-1403, 95th Cong., 2d Sess. 43-44 (1978). Section 7106(a) specifically provides that “noth- ing” in the Act shall affect “the authority of any man- agement official of any agency * * * in accordance with applicable laws * * * to make determinations with re- spect to contracting out.” On its face the provision renders nonnegotiable any bargaining proposal that would affect substantive agency decisions involving contracting out for goods and services. See H.R. Conf. Rep. 95-1717, 95th Cong., 2d Sess. 154 (1978) (Section 7106 “requires the agency to retain the right to make determinations with respect to contracting out work”). Since the union proposal at issue in this case requires management to comply with substantive policy guidelines for contracting-out determinations, it en- croaches on a reserved management right and is nonnegotiable under Section 7106. Moreover, bargaining about the union’s proposal ulti- mately means that labor arbitrators, rather than fed- eral agencies, may be making substantive contracting- out decisions. As we explained above (at page 4), if the Federal Service Impasses Panel orders inclusion of the union proposal at issue here as part of the collective bargaining agreement, the union may file grievances challenging management’s determinations to contract out certain functions, by alleging some arguable viola- tion of the detailed provisions of Circular A-76. If the cost comparison analysis; appeals must be filed within 15 working days of receipt of the documentation. As in the 1979 version of the Circular, a decision must be rendered within 30 calendar days of receipt of the appeal. 14 agency denies the grievance, the union may request ar- bitration. Review by the Authority of any arbitral award is not plenary. See 5 U.S.C. 7122. And it is unclear whether and to what extent the agency could obtain judicial review of an order of the Authority upholding an award against the agency. See page 23 note 20, infra. The introduction of labor arbitrators into the contracting-out process inevitably would affect an agen- cy’s freedom to act. The grievance and arbitration pro- cedure, followed by FLRA review, may last months or even years, thus delaying final resolution of the validity of a determination to contract out. See App., infra, 35a-36a. Moreover, since arbitrators normally are ori- ented toward compromise and solutions that will reduce labor-management friction, rather than precise inter- pretation of applicable provisions,“ they may well dis- agree with management concerning application of Cir- cular A-76. The problem is compounded by the fact that management necessarily uses discretion in applying the terms of the Circular. For instance, the Circular directs management to develop a “staffing estimate” of the an- nual productive hours necessary to accomplish an activ- ity in-house as part of the cost analysis, but recognizes that there may be no way to make a precise estimate and that “informed judgment” is a “tool” to be used in the calculation. Supplement to OMB Circular A-76, at IV-7 (1983). As another example, management must re- tain in-house those commercial activities involving pro- grams related to the direction of “national defense.” 48 Fed. Reg. 37114 (1983); 44 Fed. Reg. 20558 (1979). De- veloping a staffing estimate or deciding whether an ac- tivity involves direction of the national defense may See, e.g., Cox, Reflections Upon Labor Arbitration, 72 Harv. L. Rev. 1482, 1487-1489, 1493-1507 (1959); Shulman, Reason, Con- tract, and Law in Labor Relations, 68 Harv. L. Rev. 999, 1016-1024 (1955). 15 well involve exercise of the specialized expertise and discretion of agency managers. In view of the judgmental nature of such determinations, an arbitra- tor might well arrive at a different conclusion from that of the agency. Thus, while negotiation concerning agency compliance with Circular A-76 might appear at first glance to be harmless (as the court of appeals assumed), in fact it ultimately could deprive agencies of control over substantive contracting-out determinations. b. The court of appeals conciuded (App., infra, 8a-9a) that the union proposal would not interfere with an agency’s right to make contracting-out determinations reserved under Section 7106 because the phrase “in ac- cordance with applicable laws” in that section operates to limit the scope of reserved rights.“ That is a mis- reading of the statutory language. The reference to “applicable laws” appeared in a comparable manage- ment rights provision at the inception of the original federal labor relations program created by executive order in 1962.'' The President plainly could not have in- The court of appeals also noted (App., infra, 8a) that proce- dures used in the exercise of management rights are negotiable under 5 U.S.C. 7106(b) and suggested (App., infra, 9a-10a n. 12) that the union’s proposal here was more procedural than substan- tive. The FLRA, however, did not find the proposal to be proce- dural in nature in the decision and order it rendered in this case, although in another, subsequent case it has referred to the pro- posal in this case and has characterized it as “only procedural in nature.” AFGE, Local 225 and Dep't of the Army, 17 F. L. R. A. No. 66 (Apr. 5, 1985), slip op. 6. As we show in the text, the pro- posal imposes substantive criteria on management and ultimately could be read to permit arbitrators to second guess an agency's substantive contracting-out determinations. Thus, the proposal cannot be regarded as “procedural.” The original management rights provision of the executive or- der program stated that “[mjanagement officials of the agency re- tain the right, in accordance with applicable laws and regulations,” to exercise enumerated management rights. Exec. Order No. 10988, § 7(2), 3 C. F. R. 525 (1959-1963 comp.). 16 tended that language to provide a basis for limiting the exercise of management rights, particularly since there was no mechanism for binding arbitration in place in 1962.'2 The words “in accordance with applicable laws” are most naturally read as an indication that agencies were not to rely on the management rights provision as itself a source of legal authority for exercise of those rights, but were to base such activities on an independ- ent source of authority. It is most unlikely that Congress would have used the “applicable laws” language to create a private right of action through which unions could enforce the terms of internal management directives without express mention of such an intention. The court of appeals’ reading of Section 7106 is particularly questionable in light of the fact that several courts of appeals have held that Circular A-76 and other contracting-out guidelines do not create rights that are enforceable by third par- ties. In Local 2855, AFGE (AFL-CIO) v. United States, 602 F.2d 574 (3d Cir. 1979), the court observed that the studies and evaluations on which a contracting- out decision “rested involved ‘questions of judgment re- quiring close analysis and nice choices.’ Id. at 580-581 (quoting Panama Canal Co. v. Grace Line, Inc., 356 U.S. 309, 318 (1958)). The court therefore concluded that Circular A-76, as well as pertinent agency regula- tions governing contracting-out determinations, failled] to provide meaningful criteria against which a court may analyze the lageney's] decision” (602 F. 2d at 581). See also AFGE, Local 2017 v. Brown, 680 F.2d '2 See Study Committee Report and Recommendations, August 1969, reprinted in Subcomm. on Postal Personnel and Moderniza- tion of the House Comm. on Post Office and Civil Service, 96th Cong., Ist Sess., Legislative History of the Federal Service Labor- Management Relations Statute, Title VII of the Civil Service Re- form Act of 1978, at 1240-1241 (Comm. Print 1979) [hereinafter cited as Legislative History). 17 722, 726-727 (11th Cir. 1982), cert. denied, 459 U.S. 1104 (1983) (Army’s determination to contract out was “an inappropriate subject for judicial review because the decision involves military and managerial choices inherently unsuitable for the judiciary to consider”). Since disputes concerning compliance with guidelines for contracting out are considered unsuitable for judi- cial review, there is no reason to think that Congress would have acted sub silentio to make such guidelines enforceable through labor arbitration. Cf. Cort v. Ash, 422 U.S. 66, 82-84 (1975). The court of appeals was untroubled by the fact that the union proposal ultimately could result in arbitration of challenges to substantive agency contracting-out de- terminations, because, in the court’s view, such chal- lenges were subject to the statutory grievance and ar- bitration procedure even in the absence of a provision in the collective bargaining agreement requiring com- pliance with applicable laws and regulations (App., infra, 1la-16a). The court’s reference was to the griev- ance procedure that may be invoked under the Act in the case of, inter alia, “any claimed violation, misinter- pretation, or misapplication of any law, rule, or regula- tion affecting conditions of employment.” 5 U.S.C. 7103(aX9C)ii), 7121. Even if the court of appeals had been correct in characterizing guidelines for contracting out as a “law, rule, or regulation affecting conditions of employment” within the meaning of 5 U.S.C. 7103(a)(9),"* the man- 'S Congress’s reference to “any law, rule, or regulation affecting conditions of employment” in Section 7103(a)(9) should not be read to encompass guidelines for substantive decisions to shift agency operations to the private sector “purely for economic reasons.” First National Maintenance Corp. v. NLRB, 452 U.S. 666, 686 (1982) (private employer's decision to terminate a part of its busi- ness was not part of the “terms and conditions of employment” as to which Congress mandated bargaining under the National Labor 18 agement rights provision would bar application of the statutory grievance and arbitration procedure to dis- putes concerning compliance with such guidelines. The explicit statement in Section 7106(a) that “nothing in this chapter” shall affect management’s authority to make determinations with respect to contracting out constitutes an express limitation on the statutory griev- ance and arbitration procedure created by the Act.“ As Judge MacKinnon noted in dissent, Aiſt is absurd to construe the act to say that ‘nothing’ in the rest of Chapter 71 affects management’s right, but that the rest of Chapter 71 does affect that right” (App., infra, 28a; emphasis in original). The majority’s reading of Section 7106 would effectively nullify Congress’s ex- press reservation to management of the enumerated rights. The court of appeals compounded its error in resting its analysis on the implicit assumption that OMB Circu- lar A-76 qualifies as “applicable laws,” within the mean- ing of Section 7106, or as “any law, rule, or regulation Relations Act). Judge MacKinnon correctly noted (App., infra, 29a-33a) that the term “conditions of employment” is defined un- der the Act as “personnel policies, practices, and matters * * * af- fecting working conditions” (5 U.S.C. 7103(a)(14)) and that the term “working conditions” generally has been defined narrowly. The Authority itself recently concluded that a union proposal that “would extend the coverage of the negotiated grievance pro- cedure to the decision to contract out itself * * * [is] inconsistent with [5 U.S. C.] 7106(a\(2)(B).” AFGE, Local 225 and Dep't of the Army, slip op. 6. Under the pre-Act federal labor relations program it was clear that employees could not grieve “matters otherwise excluded from the negotiations by [the management rights clause of Executive Order No. 11491.“ Labor-Management Relations in the Federal Service: Report and Recommendations of the Federal Labor Rela- tions Council on the Amendment of Executive Order 11491 (1975), Legislative History 1317. There is no indication that Congress meant to change that practice when it passed the Act in 1978. 19 „,“ within the meaning of Section 7103(a)(9). Circu- lar A-76, like most OMB Circulars, is an executive man- agement policy directive issued pursuant to delegated presidential budgetary and management authority. As an internal Executive Branch management directive, the Circular is interpreted and enforced internally, ulti- mately through the President’s authority over ap- pointed officials (see, e. g., Myers v. United States, 272 U.S. 52, 163-164 (1926)). The court of appeals’ reading of the statutory terms apparently would make arbitrators—rather than the President himself—the fi- nal arbiters of whether agencies have adhered ade- quately to the President’s management policy direc- tives. The result would be to transform a tool of presidential management authority into an occasion for interference by outsiders into that management proc- ess. At least in the absence of some explicit statement to the contrary in the legislative history, there is no reason to believe that Congress, in using the statutory terms construed by the court of appeals, intended to encroach on the President’s authority in this manner. Compare, e.g., AFGE, AFL-CIO v. Carmen, 669 F. 2d 815, 822-826 (D.C. Cir. 1981). c. The union’s proposal is nonnegotiable for the addi- tional reason that it is inconsistent with the exclusive appeals procedure prescribed by the Circular. Under the Act, 5 U.S.C. 7117(a)(1), the duty to bargain in good faith exists only “to the extent not inconsistent with any Federal law or any Government-wide rule or regulation;” it does not extend to “matters which are the subject of any * * * Government-wide rule or regu- lation.” Congress intended that Circular A-76, while not a “rule” or “regulation” within the meaning of 5 U.S.C. 7103(a)(9) (see pages 17-19, supra), be treated as a “Government-wide rule or regulation” within the 20 specialized meaning of Section 7117(a)(1)."° The union’s proposal conflicts with the express provisions of the Circular (see page 12, supra) that its appeals proce- dures are to be exclusive; that agency contracting-out determinations are not to be subject to negotiation, ar- bitration, or agreement; and that agency decisions pur- suant to the appeals procedure of the Circular shall be final. The lengthy grievance and arbitration procedures: that would be introduced as a result of the union’s pro- posal would render pointless the Circular provisions re- quiring expedited resolution of contracting-out disputes.“ And if the grievance and arbitration proce- dures of the Act may override the appeals procedure prescribed by the Circular, contractors and their em- ployees would no longer be represented in connection Although executive management policy directives do not con- stitute “rules” or “regulations” within the ordinary meaning of those terms, the legislative history of the Act makes clear that Congress intended the phrase “Government-wide rule or regula- tion” to include such policy directives for the limited purposes of Section 7117. See H.R. Conf. Rep. 95-1717, supra, at 158 (term “rules or regulations” used in Section 7117 is to be interpreted as including “official declarations of policy of an agency which are binding on officials and agencies to which they apply”). See also AFGE, Local 225 and Dep't of the Army, slip op. 4 (Circular A-76 constitutes a “Government-wide rule or regulation” within the meaning of Section 7117(a)(1)); National Federation of Federal Employees and Dep't of the Air Force, Lowry Air Force Base, 9 F. L. R. A. 151, 154 (1982) (Congress interded that the term “Government-wide rule or regulation” used in Section 7117(a)(1) “not be confined only to those rules or regulations which meet for- mal requirements for notice and comment”). Congress presumably wished to make certain that the collective bargaining process would not interfere with government-wide directives, regardless of their nature. The short deadlines established by the Circular are critical to the contracting-out process, because data must be current in order for cost comparisons to be valid and because contractors normally are expected to adhere to a firm bid. 21 with the ultimate resolution of any dispute. See page 12, supra." The court of appeals disregarded these inconsisten- cies between the union proposal and the terms of Circu- lar A-76, on the ground that “the Circular’s restrictive language cannot be construed to limit the statutory right to file grievances asserting a violation of contracting-out regulations” (App., infra, 16a). But the whole point of Section 7117 is that a “Government-wide rule or regulation” does limit the scope of rights under the Act. Section 7117 expresses Congress’s intention that agencies not be required to bargain about propos- als that, if incorporated into the collective bargaining agreement, would be inconsistent with a government- wide directive ike Circular A-76. See H.R. Conf. Rep. 95-7117, supra, at 155 (Section 7117 “authorizes * * * the issuance of governmentwide rules or regulations which may restrict the scope of collective bargaining which might otherwise be permissible under the provi- sions of this title”). Since bargaining about the union proposal in this case ultimately would introduce a form of third-party review that would be inconsistent with the terms of the Circular, Section 7117 precludes such Under the system authorized by the decision below, the arbi- trator apparently may reach a result different from that of the agency appeals procedure prescribed by the Circular It is unclear from the decision what weight (if any) is to be given to the latter result, which normally would be available long before any arbitral proceeding was resolved. In the case of a similar conflict between the grievance proce- dures authorized by the Act and exclusive appeal procedures pre- scribed by the National Guard Technicians Act of 1968, the courts of appeals have uniformly held that the former must yield to the latter. See Indiana Air National Guard v. FLRA, 712 F.2d 1187 (7th Cir. 1983); State of Nebraska, Military Dep't v. FLRA, 705 F. 2d 945 (8th Cir. 1983); California National Guard v. FLRA, 697 F. 2d 874 (9th Cir. 1983); New Jersey Air National Guard v. 3. We recognize that there is currently no conflict among the circuits on the question presented by this petition. However, we view the decision below as of special importance to the federal government, both be- cause of its potential threat to the integrity of the rights reserved to management under the Act and be- cause of the precedent it appears to create for interfer- ence with the President’s ability to manage the Execu- tive Branch through written policy directives. The decision also is of concern because of the magnitude of its potential financial impact. Indeed, there is already evidence of that impact; arbitrators in several cases have ordered the rescission of agency contracting-out determinations that were alleged by unions to have vio- lated some part of Circular A-76 or related guidelines and have awarded back pay against the agencies. F LRA, 677 F.2d 276 (3d Cir.), cert. denied, 459 U.S. 988 (1982). The National Guard Technicians Act of 1968, 32 U.S.C. 70%e)5), provides that “[njotwithstanding any other provision of law **** a right of appeal which may exist with respect to [an ad- verse action] shall not extend beyond the adjutant general of the jurisdiction concerned.” The courts have reasoned that union pro- posals calling for a negotiated grievance procedure in connection with adverse actions affecting National Guard technicians were not negotiable, “since the Labor-Management Act itself provides that an agency's duty to bargain in good faith exists ‘to the extent not — — Caliſornia National Guard v. FLRA, 697 F.2d at 879 (quoting 5 U.S.C. 7117(a(1)). In one case, the Navy estimates that it may be required to ex- pend approximately $400,000 in back pay as a result of an arbitra- tor’s order to terminate a contract and to reinstate displaced em- ployees with full back pay and fringe benefits. See Naval Air Station, Whiting Field, and AFGE, Local Union No. 1954, FMCS No. 83K/06143 (Apr. 29, 1983). See also Dep't of the Army, Oakland Army Base, and AFGE, Local 1157, FMCS No. 83K/24072 (Nov. 26, 1984) (directing termination of contract, reinstatement of displaced employees, and back pay from date of termination to date of reinstatement), US Army Communica- tions Command, Fort McClellan, and Local No. 1941, AGE. FMCS No. 83K/00570 (Aug. 9, 1983) (ordering agency to cease and 23 Moreover, there is some uncertainty whether the gov- ernment will be able to obtain review of future arbitral awards entered on the authority of the decision below.?“ We therefore believe that review by this Court is warranted at this time. desist from contracting out telephone services and implementing reduction in force pending proper notification to union and to rein- state any displaced employees); U.S. Army Communications Command Agency—Redstone Arsenal, and AFGE, Local 1858, FMCS No. 83K/05094 (May 16, 1983) (contract must be cancelled until agency complies with arbitrator’s interpretation of collective bargaining agreement provisions involving provision of documents to union); Headquarters, eth Combat Support Group (SAC), Blytheville Air Force Base, and AFGE, Lecal No. 2840, FMCS No. 82K/20840 (Aug. 9, 1982) (ordering cancellation of procure- ment action). Exceptions to these awards have been filed with the FLRA, but the Authority has not yet ruled on any of the exceptions. We are lodging with the Clerk of the Court and providing to counsel for respondents copies of the cited arbitral decisions. 2° Under 5 U.S.C. 7123(a), not all orders of the Authority on ex- ceptions to arbitral awards are reviewable. The decision of the Ninth Circuit in United States Marshals Service v. FLRA, 708 F.2d 1417 (1983), has created uncertainty about the extent to which an agency may obtain judicial review of the Authority's or- der affirming an arbitral award alleged to infringe on a reserved management right. See Andrade v. Lauer, 729 F. 2d 1475, 1485 & n.16 (D.C. Cir. 1984); App., infra, 35a-36a n.17. If further judicial review of this issue were foreclosed, a conflict among the circuits could never arise. A case involving the negotiability of a bargaining proposal that would require correction of in-house estimates that are not pre- pared in accordance with existing contracting-out directives is cur- rently pending in the Ninth Circuit. Defense Language Institute v. FLRA, Nos. 84-7498 and 84-7610 (argued Mar. 11, 1985). 24 CONCLUSION The petition for a writ of certiorari should be granted. Respectfully submitted. Rex E. LEE Solicitor General RICHARD K. WILLARD Acting Assistant Attorney General CHARLES FRIED Deputy Solicitor General CAROLYN F. CORWIN Assistant to the Solicitor General WILLIAM KANTER HAROLD J. KRENT Attorneys MAY 1985 APPENDIX A UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT No. 82-2310 EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, PETITIONER V. FEDERAL LABOR RELATIONS AUTHORITY, RESPONDENT AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO, ETC., INTERVENOR Petition for Review and Cross-Application for Enforcement of an Order of the Federal Labor Relations Authority Argued October 26, 1983 Decided September 21, 1984 Before WRIGHT and TAMM, Circuit Judges, and MACKINNON, Senior Circuit Judge. Opinion for the court filed by Circuit Judge TAMM. Dissenting opinion filed by Senior Circuit Judge MACKINNON. TAMM, Circuit Judge: This is an appeal from a deci- sion of the Federal Labor Relations Authority (the Au- thority) ordering petitioner Equal Employment Oppor- tunity Commission (EEOC) to bargain over a union contract proposal that requires compliance with applica- ble laws and regulations regarding “contracting-out.” EEOC contends that it has no duty to bargain because the proposal concerns a subject exclusively reserved to management. The Authority has cross-petitioned for (la) 2a enforcement. For the reasons stated below, we enforce the Authority’s order. I. BACKGROUND A. Statutory Framework Title VII of the Civil Service Reform Act of 1978 (the Act), 5 U.S.C. §§ 7101-7135 (1982), substantially re- vised labor-management relations in the federal sector. The Act was designed to balance the right of federal employees to engage in concerted activity with the need of federal managers to achieve an “effective and efficient [federal] Government.” 5 U.S.C. § 7101(b). To administer the Act and establish labor-management re- lations policy, Congress created the Federal Labor Re- lations Authority. The Authority’s responsibilities in- clude resolving issues relating to the duty to bargain. The Act established a system of collective bargaining that requires federal agencies and employee unions to bargain in good faith “with respect to ... conditions of employment.” 5 U.S.C. § 7103(12). The term “condi- tions of employment” is expansively defined in the Act as “personnel policies, practices, and matters, whether established by rule, regulation, or otherwise, affecting working conditions.” 5 U.S.C. § 7103(14). This broad duty to bargain is subject to certain limi- tations. Specifically, the Act contains a management rights clause that reserves certain prerogatives to man- agement. 5 U.S.C. § 7106(a). Most important, for this case, the management rights clause reserves to man- agement the authority “to make determinations with respect to contracting out.” 5 U.S.C. § 7106(a)(2)(B). The procedures used in exercising these reserved man- agement rights are subject to negotiation. 5 U.S.C. § 7106(b).' ' Section 7106 provides in pertinent part: (a) Subject to subsection (b) of this section, nothing in this chapter shall affect the authority of any management official of any agency— B. The Facts The facts in this case are undisputed. During contract negotiations with the EEOC, the union? advanced the following proposal: “The EMPLOYER agrees to comply with OMB Circular A-76 and other applicable laws and regula- tions concerning contracting- out.“ Joint Appendix (J.A.) at 2. EEOC declared the pro- posal nonnegotiable and refused to bargain over it. To (2) in accordance with applicable laws— * (B) to assign work, to make determinations with re- spect to contracting out, and to determine the personnel by which agency operations shall be conducted; (b) Nothing in this section shall preclude any agency and any labor organization from negotiating— 2 procedures which management officials of the agency will observe in exercising any authority under this section; 5 U.S.C. §§ 7106(a)(2)(B), (b)(2). The union, intervenor in this appeal, is the American Federa- tion of Government Employees, AFL-CIO, National Council of EEOC Locals. * OMB Circular A-76 (the Circular) prescribes guidelines for de- termining whether the goods and services needed by the federal government should be acquired from the private sector or obtained “in-house” with government facilities and personnel. Joint Appen- dix (J.A.) at 37. The Circular specifies that the government gener- ally should acquire its goods and services from private enterprise if it is cost-effective. The Circular contains a Cost Comparison Handbook outlining procedures to be followed in determining whether contracting-out is most cost-effective. Since the petition in this case was filed, OMB Circular A-76 has been revised. The revision in no way affects the issues before us. 4a resolve the dispute, the union filed a petition for review with the Authority. J.A. at 1.4 EEOC argued before the Authority that the union proposal was nonnegotiable primarily for two reasons.“ First, it contended that the proposal conflicted with the Act’s express reservation to management of the right “to make determinations with respect to contracting out.” 5 U.S.C. § 71066 CB). Second, the EEOC ar- gued that OMB Circular A-76 (the Circular) itself pro- hibited negotiation over the proposal.“ J. A. at 12-13. 5 U.S.C. S 7105(aX2)E) provides that the authority shall re- Solvel] issues relating to the duty to bargain.” The Act further provides that “if an agency involved in collective bargaining .. al- leges that the duty to bargain in good faith does not extend to any matter, the [union] may appeal the allegation to the Authority.” 5 U.S.C. Site). The Authority is required to issue a written decision containing reasons for its determination. If the Authority concludes that the disputed issue is within the scope of the duty to bargain, it orders the agency to bargain in good faith. The Author- ity does not, however, address the merits of the proposal. See Li- brary of Congress v. FLRA, 699 F.2d 1280, 1284 (D.C. Cir. 1983). If a proposal is determined to be within the duty to bargain, the parties must negotiate, although they may adhere to a particular position to the point of impasse. If an impasse is reached, the par- ties may refer the dispute to the Federal Service Impasses Panel. 5 U.S.C. §§ 7119%b), (e). In addition to the two arguments noted here, the agency also asserted that the proposal fell outside the scope of the duty to bar- gain because it involved matters that do not directly affect condi- tions of employment. The FLRA's decision did not address this contention. American Federation of Government Employees, AFL-CIO, National Council of EEOC Locals and Equal Employ- ment Opportunity Commission, 10 FLRA 3 (1982). Since the EEOC did not raise this argument in its petition to this court, we the Circular provides that its text “shall not be construed to create] any substantive or procedural basis for any person to chal- lenge any agency action or inaction on the basis that such action was not in accordance with (this) Circular, except as specifically set forth in this Circular. J. A. at 37. The Circular further di- 5a On September 2, 1982, the Authority issued a deci- sion holding that the union proposal was a mandatory subject of bargaining. American Federation of Govern- ment Employees, AFL-CIO National Council of EEOC Locals and Equal Employment Commission, 10 FLRA 3 (1982). The Authority concluded that the pro- posal did not impair EEOC’s statutory right to make contracting-out decisions because it recognized only ex- isting limitations on EEOC’s power. By its terms, ruled the Authority, the proposal established no substantive limitations on management discretion. /d. The Authority further concluded that the proposal was not rendered nonnegotiable by the terms of the Circular. EEOC apparently asserted that adoption of the proposal would result in subjecting all contracting- out disputes to the negotiated grievance procedure, thus conflicting with the Circular’s intent to allow EEOC to resolve such disputes internally.’ The Au- thority rejected EEOC’s underlying assumption that contracting-out disputes are not grievable in the ab- sence of the proposed contract language. 10 FLRA at 4-5. Rather, the Authority found that such disputes were already grievable under section 7121 of the Act and that the Circular alone could not limit the statutorily prescribed scope of the grievance proce- rects agencies to develop procedures for an informal review of de- terminations made pursuant to its provisions and states that those procedures and agency determinations are not subject to negotia- tion or arbitration. J.A. at 50. This argument is not expressly articulated in the EEOC’s statement of position before the Authority. We therefore rely on the Authority’s characterization of the agency's position. See American Federation of Government Employees, AFL-CIO, Na- tional Council of EEOC Locals and Equal Employment Opportu- nity Commission, 10 FLRA at 4-5 (1982). 6a dure. 10 FLRA at 4-5. Concluding that the contract proposal was not prohibited by either the Act or the Circular, the Authority ordered EEOC to bargain. /d. at 5. EEOC filed a timely petition for review in this court.“ The FLRA filed a cross-petition for enforce- ment. We have jurisdiction pursuant to 5 U.S.C. § 7123."° II. STANDARD OF REVIEW The Act provides that the Authority’s rulings are re- viewable in accordance with section 10(e) of the Admin- istrative Procedure Act (APA), 5 U.S.C. § 706 (1982). See 5 U.S.C. § 7123(c) (1982). The Authority’s determi- nations will thus be upheld “if they are supported by substantial evidencel, ... are not arbitrary, capricious, or an abuse of discretion{,] and are otherwise in accord- ance with law.” National Treasury Employees Union v. FLRA, 721 F.2d 1402, 1405 (D.C. Cir. 1983). Review is further circumscribed where, as here, the Authority has construed its enabiue legislation. Indeed, the Au- 5 U.S.C. § 7121(a) requires all collective bargaining agree- ments to include a system for settling grievances. The negotiated grievance procedure must provide for binding arbitration for grievances not settled through the procedure. 5 U.S.C. § 7121(b3KC). “Grievance” is broadly defined in the Act as any complaint concerning employment, the terms of a collective agree- ment, or the interpretation of any law, rule or regulation affecting conditions of employment. 5 U.S.C. § 7103(aX9). * EEOC filed a request for reconsideration with the Authority on September 16, 1982. J.A. at 64. On March 18, 1983, the Author- ity issued an order denying the EEOC’s request. Brief for Federai Labor Relations Authority at C-1. 5 U.S.C. —— tae Ons — ＋—U any final order of the Authority ... may ... institute an action for judicial review of the Authority's order . in the United States Court of Appeals for the District of Columbia.” The Authority may petition any appropriate United States court of appeals for en- forcement of any of its orders. 5 U.S.C. § 7123(b). 7a thority is entitled to “considerable deference” when in- terpreting and applying the Act’s provisions to specific situations. Bureau of Alcohol, Tobacco and Firearms v. FLRA, 104 S. Ct. 439, 444 (1983). Accordingly, we will uphold the Authority's interpretation of the Act if it is “reasonably defensible,” Department of Defense v. FLRA, 659 F. 2d 1140, 1162 n.121 (D.C. Cir. 1981), cert. denied, 455 U.S. 945 (1982); Bureau of Alcohol, Tobacco and Firearms v. FLRA, 104 S. Ct. at 444 (1983), and not inconsistent with any congressional mandate or policy. The dissent contends that the Act's reservation to manage- ment of the right to contract. out is a limitation on the Authority's tinction between proposals encroaching on management's nonnegotiable substantive authority and those concerning properly — —— — — — thority in an exertion of its expertise. National Treasury Em- ployees Union v. FLRA, 691 F. 20 553, 561 (D.C. Cir. 1982) (foot- note omitted) (citing Department of Defense v. FLRA, 659 F. 2d 1140, 1161 (D.C. Cir. 1981), cert. denied, 455 U.S. 945 (1982)). The dissent's reliance on Vanguard Interstate Tours, Inc. v. ICC, 735 F.2d 591 (D.C. Cir. 1984), is misplaced. In the statute at issue in Vanguard, Congress expressly limited the discretion pre- viously granted to the ICC and set out the precise criteria gov- erning the issue in the case. Here, in contrast, Congress has ex- — — ine Getinie amet eamaiaiet’ entitled to deference. 8a III. ANALYSIS EEOC asserts that the Authority improperly con- strued the terms of the management rights clause, as well as the probable effect of the disputed proposal. EEOC suggests first that the plain text of the manage- ment rights clause insulates from collective bargaining all proposals regarding contracting-out. Second, EEOC contends that the proposal is nonnegotiable because its adoption would subject contracting-out decisions to the statutorily prescribed grievance procedure, thus infringing on EEOC’s reserved authority to make contracting-out decisions. Finally, EEOC argues that the proposal is inconsistent with the Circular. A. EEOC asserts that the management rights clause gives management unfettered authority to make contracting-out determinations. Apparently assuming that any proposal regarding contracting-out will re- strict this authority, EEOC suggests that the manage- ment rights clause renders nonnegotiable all proposals EEOC’s argument is untenable in light of the plain text of the clause. The management rights clause pro- vides that “nothing in [Title VIII shall affect the au- thority of any management official of any agency—. .. in accordance with applicable laws—... to make deter- minations with respect to contracting out.” 5 U.S.C. § 7106(a)(2)B). This language plainly restricts the au- thority reserved to management by requiring that it be exercised “in accordance with applicable laws.” In addi- tion, section 7106(b) provides that procedures used to exercise rights are negotiable. See supra note 1. Be- cause the Act does not grant to management unquali- fied authority to contract-out, union proposals touching upon that authority are not automatically rendered nonnegotiable. Rather, management may refuse to bar- 9a gain over only those proposals that would expand upon the restrictions contained in the Act. See infra note 12. The union proposal here suggests contract language that essentially echoes the statutory requirement thai contracting-out determinations be made in accordance with applicable laws. Any restriction imposed by the proposal on management’s contracting-out authority thus stems from the Act’s mandate. EEOC, of course, must comply with these requirements regardless of whether the proposal is adopted as part of the collective agreement. The union proposal at issue here thus does not of itself establish any substantive criteria guiding management’s contracting-out determinations. We therefore agree with the Authority’s conclusion that the proposal does not affect management’s reserved author- ity, within the meaning of the statutory language, to make contracting-out decisions. ' '2 The precise scope of management's reserved authority is diffi- cult to define. In previous rulings, the Authority has effectively defined the protection accorded management by classifying pro- posals as either negotiable procedures under section 7106(b) or nonnegotiable substantive rights. To distinguish between the two, the Authority has developed a “direct interference” test. Under this test, a proposal involves a nonnegotiable substantive right if it would “directly interfere” with management's ability to make the releva ‘etermination. We have repeatedly affirmed the Authori- ty’s use of this test. See Department of Defense v. FLRA, 659 F.2d 1140, 1159 (D.C. Cir. 1981), cert. denied, 455 U.S. 945 (1982). Although in the present case the Authority did not expressly clas- sify the proposal as procedural and did not explicitly apply the di- rect interference test, the analysis used was quite similar. In con- cluding that the proposal was negotiable, the Authority focused on the agency's retention of the full degree of discretion that exists in the absence of the proposal. We find this analysis fully acceptable as a guideline to determine the scope of substantive rights re- served to management. The dissent misconstrues both the direct interference test and the import of our conclusion here. The direct interference test is essentially definitional. It determines whether a particular pro- 10a EEOC points to no expression of intent in the legisla- tive history that contradicts this conclusion. Though far from conclusive, the legislative history indicates that the management rights clause should not be interpreted to negate the Act’s broad duty to bargain. In adopting the management rights clause, Congress sought to re- serve to management the authority necessary to achieve an effective and efficient government. At the same time, however, Congress intended to broaden the scope of bargaining beyond that sanctioned under the previous labor-management relations system.“ Thus, as one member explained, the clause was designed to protect “genuine managerial prerogatives. Indeed, directed that the clause was to “be read to fa- vor collective bargaining whenever there is doubt as to the negotiability of a subject or a proposal. posal is in fact substantive and therefore nonnegotiable. Although the Authority did not expressly apply this test here, it did use the same functional analysis: only proposals that limit substantively management's contracting-out determinations involve nonnego- tiable rights. Implicit in the Avthority’s opinion is the conclusion that the disputed proposal represents more of a procedural than a substantive limitation on management's right to contract-out. 1 H. R. REP. No. 1403, 95th Cong., 2d Sess. 43 (1978), re- printed in House of Representatives Committee on Post Office and Civil Service, 96th Cong., Ist Sess. Legislative History of the Federal Service Labor-Management Relations Statute, Title VII of the Civil Service Reform Act of 1978 [hereinafter cited as Legis- lative History] at 689 (1979); see National Treasury Employees Union v. FLRA, 691 F.2d 553, 559 (D.C. Cir. 1982). 4 124 Conc. REC. 29,199 (1978) (remarks of Rep. Ford), re- printed in Legislative History at 956. % H.R. Rep. No. 1403, 95th Cong., 2d Sess. 44 (1978), re- printed in Legislative History at 690. The management rights clause that appears in the Act was adopted as an amendment on the House floor to the clause reported by the House Committee on Post Office and Civil Service. This amendment, however, did not change the purpose behind the clause as explained in the report ac- companying the Committee version of the bill. “This substitute lla In sum, neither the text nor the legislative history mandates a conclusion other than that reached by the Authority. We cannot say, therefore, that the Author- ity acted arbitrarily in concluding that the proposal does not affect EEOC’s reserved rights. We reject EEOC’s argument that the management rights clause renders the proposal nonnegotiable. EEOC argues that even if the text of the proposal does not impose additional restrictions, its adoption would effectively hinder EEOC’s ability to make contracting-out decisions. Specifically, EEOC contends that the proposal would invade its reserved manage- ment rights by making compliance with the Circular a contractual prerequisite of any decision regarding contracting-out. The union could then challenge EEOC’s decisions to contract-out by alleging that EEOC violated the collective agreement in failing to comply with appropriate procedures. Any contracting- out decision would then be subject to grievance proce- dures and ultimately to arbitral review. According to EEOC, contracting-out decisions could thus become the not of management, but of the arbitrator. In this way, EEOC implies, the union would be able to achieve precisely what the management rights clause was intended to prevent. EEOC’s argument assumes that a complaint as- serting that a contracting-out determination was not [the amendment that was adopted on the floor) strengthens the ‘Management rights’ section reported by the Committee, but it is still to be treated narrowly as an exception to the general obliga- tion to bargain over conditions of employment.” 124 Conc. REC. 29,183 (1978), reprinted in Legislative History at 924. The amend- ment adopted on the House floor was adopted by the House- Senate Conference Committee without change. H.R. REP. No. 1717, 95th Cong., 2d Sess. 153-54 (1978) (Conference Report), re- printed in Legislative History at 821-22. trary to the text of the Act. The Act defines the subjects covered un- der the statutory grievance Grievances in- 5 U.S.C. § 7103(a) (9) provides in full: (9) “grievance” means any complaint— application of any law, rule. or regulation affecting con- ditions of employment. 13a with any other law or rule governing contracting-out, plainly falls within this expansive definition.“ 1s The dissent contends that a complaint asserting a failure to comply with the Circular does not fall within the statutory defini- tion of grievance. Because the Act defines grievance to include claims alleging violations of regulations “affecting conditions of em- ployment,” and because “conditions of employment” is in turn de- fined as “matters affecting working conditions,” the dissent main- tains that grievances are restricted to claims involving surroundings and hazards. The dissent’s narrow definition of “working conditions” does not apply in the context of this Act. The definition of working condi- tions as hazards and surroundings derives from Corning Glass Works v. Brennan, 417 U.S. 188, 201-03 (1974), a case construing the language of the Equal Pay Act. The Court in Corning Glass Works based its definition of the term “working conditions” on Congress’s intent as expressed in an extensive discussion of the term in the legislative history of the Equal Pay Act. The Court noted that “working conditions” has a generally accepted meaning in the “specialized language of job evaluation systems.” 417 U.S. at 202. A definition adopted in the context of a specific statute and in light of a detailed legislative history, however, is not immedi- ately transferable to this case. See Copper Valley Machine Works, Inc. v. Andrus, 653 F.2d 595, 600 n.7 (D.C. Cir. 1981). The legisla- tive history of Title VII nowhere indicates that Congress intended such a restriction on the rights granted employees. Indeed, the Authority has consistently adopted, with this court’s sanction, a broad interpretation of the phrase “conditions of employment.” See Department of Defense v. FLRA, 685 F.2d 641, 647-48 & n.3 (D.C. Cir. 1982); National Treasury Employees Union and Inter- nal Revenue Service, 3 FLRA No. 112 at 693, 695 (1980) (condi- tions of employment concerns working situation and employment relations of bargaining unit employee). Moreover, as the dissent it- self notes, the term “conditions of employment” includes personnel policies and practices as well as matters affecting working condi- tions. See Dissent at n.12. Even if the phrase “matters affecting working conditions” comprises only hazards and surroundings, contracting-out decisions, which ultimately may result in a layoff, undoubtedly fall under the umbrella of personnel policies or In addition, we note that the dissent’s restrictive definition applies only to grievances defined in section 7103(a)(9)(C)(ii) as vio- lations of regulations affecting conditions of employment. The dis- sent’s analysis, of course, does not apply to grievances defined in l4a EEOC maintains, however, that in addition to the five subjects expressly designated in section 7121 of the Act, all prerogatives reserved to management under the management rights clause are excluded from the scope of matters grievable. EEOC asserts that because the management rights clause provides that “nothing in this chapter shall affect” management’s authority to contract-out, such decisions are removed from griev- ance procedures. 5 U.S.C. § 7106(a) (emphasis added). A grievance alleging noncompliance with the Circular, however, does not affect management’s substantive au- thority, within the meaning of the statutory language, to contract-out. Rather, it provides a procedure for enforcing the Act’s requirement that contracting-out decisions be made in accordance with applicable laws.“ Any substantive limitation on management’s authority stems from the externally established criteria contained in the Circular. See supra text accompanying note 12. We therefore find that a grievance asserting that man- agement failed to comply with its statutory or regula- tory parameters in making a contracting-out decision is not precluded by the management rights clause.”” sections 7103(a)(9)(A) or (B) as any matter relating to the employ- ment of an employee. A claim that work was improperly con- tracted out surely falls within this definition of grievance. 1° The dissent maintains that grievances alleging a failure to comply with applicable laws regarding contracting-out will affect management by delaying implementation of a decision. Of course, any review of an agency decision, whether conducted by the courts or through a contractual grievance mechanism, may cause some delay. This court has previously recognized that a proposal that may result in delay, including delay created by the arbitral proc- ess, need not infringe management’s reserved authority, and may thus be negotiable. See Department of Defense v. FLRA, 659 F.2d at 1153-58. 2° Our reading of the text of the Act is supported by the legisla- tive history. Congress unambiguously stated that the management rights clause, at least in one instance, does not affect an employ- ee’s right to enforce the Act’s requirement that management exer- 15a The statutorily defined grievance procedure there- fore encompasses a claim that a contracting-out deter- mination was not made in accordance with law. EEOC’s initial assumption that including the proposal in the col- lective bargaining agreement would expose for the first time EEOC’s contracting-out determinations to em- ployee grievance challenges, and arbitral review, is contradicted by the plain text of the Act. We thus con- clude that adoption of the proposal in no way expands an employee’s right to challenge management’s contracting-out decisions under the grievance proce- cise its reserved right in accordance with applicable laws and regulations. Mlanagement nas the reserved right to make the final deci- sion to “remove” an employee, but that decision must be made in accordance with applicable laws and procedures, and the provisions of any applicable collective agree- ment. The reserved management rights to “remove” would in no way affect the employee's right to appeal the decision through statutory procedures or, if applicable, through the procedures set forth in a collective bargaining agreement. 124 CONG. REC. 29,183 (1978), reprinted in Legislative History at 924. Similarly, we believe that EEOC’s reserved right to make de- terminations regarding contracting-out does not insulate EEOC from challenges, through the grievance mechanism, asserting vio- lations of applicable laws or regulations. Cf. National Treasury Employees Union v. FLRA, 691 F.2d 558, 564-65 (D.C. Cir. 1982) (noting that although establishment of performance standards is encompassed within management's reserved rights, employees may challenge those standards in grievance proceedings). The dissent suggests that this conclusion requires us to construe the statutory grievance mechanism as an applicable law with which management must comply. This construction, suggests the dissent, does not comport with the statutory language which states that “nothing in Title VII shall affect” management’s au- thority to make determinations regarding contracting-out. We do not determine here whether the section 7121 grievance mechanism is an “applicable law.” Rather, we conclude only that a grievance alleging that management has not complied with externally estab- lished criteria does not affect management’s reserved substantive authority. 16a dure.” Accordingly, we reject EEOC’s contention that the proposal will impair its management rights by mak- ing compliance with the Circular a contractual prerequi- site of contracting-out decisions. C. Finally, EEOC argues that the language of the OMB Circular renders the proposal iable. As noted, the Circular states that its provisions not be con- strued to create” dny right of appeal except as provided in the Circular itself. J.A. at 37. EEOC maintains that the Authority’s ruling that the proposal is negotiable conflicts with the Circular’s limiting language because it allows alternative enforcement actions through the grievance mechanism. Two considerations compel us to reject this argument. First, the proposal is not inconsistent with the Circu- lar’s limiting language. The proposal does not “create” any new right of appeal. Rather, as we have already determined, the right to file grievances regarding contracting-out decisions is created by the Act. Second, and more important, the Circular’s restric- tive language cannot be construed to limit the statutory right to file grievances asserting a violation of contracting-out regulations. There is no indication in the Act or elsewhere of a congressional intent to allow agencies to limit by regulation the statutorily defined grievance procedure. To allow the text of the Circular to restrict the scope of grievances would place “limita- tions in the statute not placed there by Congress.” Colgate-Palmolive Peet Co. v. NLRB, 338 U.S. 355, 21 The scope of the grievance procedure can of course be limited in negotiation. We address here only the statutorily defined griev- ance procedure. 17a 363 (1949). Accordingly, we reject EEOC’s argument that the Circular bars negotiation over the proposal.~ IV. CONCLUSION For the reasons stated herein, we conclude that the Authority’s interpretation should be upheld and that its order should be enforced. Judgment accordingly. 18a MACKINNON, Senior Circuit Judge, dissenting: Be- cause I believe that the majority opinion seriously mis- reads the statute which controls this case, I consider it my duty to dissent. The opinion of the majority holds that the EEOC must bargain over a proposal which, under the Federal Labor Relations Authority’s (FLRA’s) interpretation of the statute, is a total nul- lity. The majority holds that incorporation into the col- lective bargaining agreement of a promise to comply with applicable regulations, including OMB Circular A-76, does require that all “contracting-out” decisions be subject to grievance determinations, but that such a provision affects neither management’s authority to contract out nor the existing union remedies for viola- tions of that The FLRA essentially held that (1) management has a right to make determinations regarding contracting out; (2) such determinations must be made in accord- ance with applicable regulations; (3) violations of such regulations are already grievable under the Civil Serv- ice Reform Act of 1978 without regard to the necessity of making them grievable in a collective bargaining agreement; and thus (4) a provision in a collective bar- gaining agreement requiring adherence to such regula- poy the 5 — right to contract out” because it does not make non- grievable matters grievable. The essential flaw in the ' The FLRA has previously held that a proposal which pur- ported to bind an agency to the specific terms of Circular A-76 as of the date of the proposal—thus, in effect, prohibiting the govern- ment from subsequently changing the regulation—was non- . Seg National Federation of Federal Employees, Local 1167, 6 F. L. R. A 574, 577 (1981). In the instant case, the language at issue (“The [agency] agrees to comply with OMB Circular A-76”) can also be read, like that in Local 1167, to require compli- ance with the present terms of the Circular. The FLRA, however, apparently has interpreted the proposal only to require the agency to comply with the Circular as it is amended from time to time. 19a FLRA's reasoning—and the one adopted by the major- ity—is that, contrary to its assertion, violations of Cir- cular A-76 and other regulations regarding substantive Hence, inclusion in a collective bargaining agreement of a promise to comply with the Circular’s terms would permit the union to seek arbitration on issues that are not now grievable, and would create arbitral review of determinations specifically entrusted by Congress to the EEOC and all other federal agencies. This far- ben t terity implicit! — nothing it did not already possess? Far from being a nullity, the decision of the majority seriously infringes on the authority, specifically reserved to the EEOC and ali other agencies by Congress, “to make determina- tions with respect to contracting out.” 5 U.S.C. § 7106(a)(2)(E). I. STANDARD OF REVIEW The majority recognizes that “[rjeview of the Author- ity’s order shall be on the record in accordance with [5 U.S.C. § 706].” 5 U.S.C. § 7123(c). Section 706 provides. The reviewing court shall— (2) hold unlawful and set aside agency action, findings, and conclusions found to be— (A) arbitrary, capricious, an abuse of discre- tion, or otherwise not in accordance with law; lor] (C) in excess of statutory jurisdiction, au- thority, or limitations, or short of statutory 20a (Emphasis added.) Thus, the standard of review for v. FLRA, 104 S. Ct. 439, 444 (1983): Like the National Labor Relations Board, ... the FLRA was intended to develop specialized exper- that 111 3 1 Hg : sumption by an agency of major policy decisions properly made by Congress.” ... Accordingly, while reviewing courts should uphold reasonable and defensible constructions of an agency's cuaimoasy severed the PLRA’ oon eonstrestion of Courts should be especially cautious abont giving un- due deference to agen y construction of enabling legis- lation when the particular provision being construed is one designed to act as a limitation on the agency. As this court recently pointed out, 21a the agency, we must undertake full interpretive re- sponsibility ourselves, and we look to the agency view as a relevant, but not controlling, principle. It remains for this court initially to exercise its re- sponsibility to interpret the statute to determine whether Congress delegated the definitional func- tion to the agency. Vanguard Interstate Tours v. ICC, 735 F.2d 591, 596 (D.C. Cir. 1984); Trailways, Inc. v. ICC, 727 F.2d 1284, 1288 (D.C. Cir. 1984). If Congress intended a particular provision to limit the authority of an agency, deferring to an agency deci- of an agency, a court is remiss if it permits the agency to circumvent that limitation through construction of the statute.” It is doubly remiss if in doing so it violates a clear grant of specific management discretion to an- other agency. In Chapter 71 of Title 5 (“Labor-Management Rela- tions”), which creates the FLRA, Congress specifically provided that “nothing in [Chapter 71] shall affect the authority of any management official of any agency . . in accordance with applicable laws . . to make determi- nations with respect to contracting out.” 5 U.S.C. § 7106(a(2)(B) (emphasis added). This specific recogni- tion of authority in all federal agencies affirmatively In Department of Justice v. FLRA, 709 F. 2d 724, 729-30 (D.C. Cir. 1983), the FLRA tried to require bargaining by an agency over procedural protections for probationary employees. (The right to dismiss probationary employees is reserved to manage ment under provisions in other parts of U.S.C. Title 5.) This court refused to defer to the agency’s construction of the labor relations provisions at issue. But in AFGE, Local 2963 v. FLRA, 730 F. 2d 1534, 1547-48 (D.C. Cir. 1984), we affirmed the agency's decision that a proposal requiring National Guard units to ignore military efficiency when implementing reductions-in-force was non- bargainable. denies to the FLRA any authority to “affect” the au- thority of an agency to “contract out.” An FLRA deci- sion which encroached on this specifically recognized power would thus violate the plain intent of Congress. Since Congress cannot have intended to give the FLRA discretion to erode the limitations it specifically placed on that Authority by statute, it cannot have intended that courts give great deference to the FLRA’s con- struction of such limitations.* To the extent, then, that the FLRA’s decision exceeds its “statutory jurisdiction, authority, or limitations, 5 U.S.C. 706(2)(C), it is not entitled to deference. This court “must undertake full interpretive responsibility [itself], and ... look to the agency view as a relevant, but not controlling, princi- ple.” Vanguard Interstate, supra, 735 F. 2d at 596. II. ANALYSIS Although the majority asserts that the plain language of the relevant statutory provisions supports its con- struction, see Maj. at 9, 16, the relevant language points plainly to exactly the opposite interpretation. A. Section 7106 provides: (a) Subject to subsection (b) of this section, noth- ing in this chapter shall affect the authority of any (1) to determine the mission, budget, organiza- tion, number of employees, and internal security practices of the agency; and CO CED SES —7 0 to assign work, to make determinations with respect to contracting out, and to deter- mine the personnel by which agency opera- tions shall be conducted (b) Nothing in this section shall preclude any agency and any labor organization from (1) at the election of the agency, on the num- — ee work; (2) procedures which management officials of the agency will observe in exercising any author- ity under this section; or (3) arrangements for employees by the exercise of any author- ity under this section by such management 5 U.S.C. § 7106 (emphasis added). In other words, this section of the Act on its face specifically provides that contracting except for the limitations in § 7106(b). Subsection 7106(b) provides that management may negotiate (1) “procedures which ... the agency will observe in exercising [its reserved] authority,” (2) “appropriate arrangements for employees adversely affected by the exercise of [such] authority” (emphasis added), and (3) at its election, assignment of employees to particular work projects and the means of carrying out such projects. Significantly, the FLRA did not attempt to construe the contract proposal at issue as relating to “procedures ... the agency will observe” in implementing its contracting-out decisions, a fact which the majority rec- ognizes. See Maj. at n.12. Indeed, it is difficult to com- how OMB Circular A-76 could fit under the provisions of § 7106 (b). The purpose and scope of that Circular are spelled out in its first paragraph: Purpose. This Circular establishes Federal pol- N Ir ities. Supplement to the Circular sets forth activities should be performed under contract with commercial sources or in-house using Government OMB Circular No. A-76 (rev. Aug. 4, 1983) (emphasis added). In other words, the Circular and its accompa- nying Supplement are designed to offer guidance to agencies in making the decision to contract out—.e., to dures for carrying out decisions already made. If (1) the Circular provides substantive criteria for contracting out, and (2) bargaining over substantive criteria for contracting out is prohibited by law, then (3) a collect- ive bargaining proposal which purports to require an agency to meet substantive criteria is not negotiable. It therefore does not appear that the FLRA could ration- ally have based its decision on the “procedures” provi- sion of § 7106(b). In any event—even assuming that the language could be twisted into supporting that FLRA did not do so, and this court is from relying on a ground not advanced by the agency. See SEC v. Chenery Corp., 318 U.S. 80, 95 (1943) (“administrative order cannot be upheld unless the grounds upon which the agency acted in exercising its powers were those upon which its action can be sus- tained”); NLRB v. Enterprise Association of Pipefitters, 429 U.S. 507, 522 n.9 (1977) (Chenery rule “has not been disturbed” by subsequent decisions). 2 11111 171 1144 ö aunt 1 17117 He 2171121 Ht 1 1 0 fit Li ihe tal He abe 1 may well be 27a Under the plain language of section 7106(a), of course, “nothing” in the Statute shall “affect the authority” of an agency to exercise the rights enu- merated therein. Hence, no matter could be grieved under a procedure negotiated pursuant to section 7121 of the Statute which would deny the authority of an agency to exercise its statutory rights under section 7106. AFGE Local 2782, 6 F.L.R.A. 314, 319-21 (1981) (foot- note omitted). There is no suggestion in Local 2782 that the phrase “in accordance with applicable laws” can be used to permit grievance review of non-negotiable sub- stantive decisions.“ But even assuming that the FLRA had proffered this interpretation,’ it could not withstand scrutiny. Con- The FLRA’s decision in Local 2782 dealt with a proposal for repromoting individuals who had been reduced in grade due to management cutbacks. It was not a case where substantive regula- tions were involved; the FLRA carefully pointed out, 6 F.L.R.A. at 321, that it involved simply “appropriate arrangements for em- ployees adversely affected by management’s exercise of its author- ity under section 7106(a),” which are negotiable under the explicit provisions of 5 U.S.C. § 7106(b)(3). This interpretation arguably was advanced by the FLRA in National Federation of Federal Employees, Local 1497, 9 F. L. R. A. 151 (1982). In that case, the union proposed that “(work assignments shall not be in violation of prohibited personnel prac- tices nor any relevant law, rule, or regulation.” The right to assign work is one of the management rights reserved under § 7106(a). The FLRA held that since the agency was required to exercise its management rights “in accordance with applicable law,” a contract provision binding it to do so did not interfere with its rights. 9 F.L.R.A. at 156. Implicit in this determination is the assumption that a violation of the work assignment regulations would fall within the grievance procedure of § 7121, the same argument relied on in this case; as demonstrated here, this view is at odds with the statutory scheme of the Act. But even assuming that the result in Local 1497 is correct, it does not control this case. The as- signment of work to employees in that case—unlike the decision to contract out in this case—arguably does have an impact on “work- 28a gress provided that, except for § 7106(b), nothing in Chapter 71 shall affect management’s authority, “in ac- cordance with applicable laws,” to make determinations with respect to contracting-out. To reach its conclusion that the whole grievance procedure is somehow ex- cluded from that sweep, the majority must read the phrase “applicable laws” to include the remainder of Chapter 71. Thus, it in effect reads the statute as fol- lows: “Nothing in this chapter [71], EXCEPT ALL THE OTHER PROVISIONS OF CHAPTER 71, IN- CLUDING § 7121 (PRESCRIBING GRIEVANCE PROCEDURES), shall affect the authority of any man- agement official of any agency ... to make determina- tions with respect to contracting out ...” (italicized matter supplied). It is absurd to construe the act to say that “nothing” in the rest of Chapter 71 affects manage- ment’s right, but that the rest of Chapter 71 does affect that right. This construction is at variance with any reasonable interpretation of the statute. The majority points to nothing in the legislative history which indi- cates that specifically denominated, non-negotiable rights conferred on “management officials” were never- theless to be subjected to grievance and arbitral review. It may be that the majority is not reading the statute that broadly, that not all of the remainder of Chapter 71 falls under “applicable laws.” It may, perhaps, be suggesting simply that Congress’ (unarticulated) intent in § 7106(a) was to shield the decision-making process from negotiation, but not from subsequent review by la- bor arbitrators and the FLRA. Again, there is no shred of legislative history which indicates that Congress in- tended contracting-out decisions to be grievable. But the intent of Congress can be inferred from what it wrote. It did not say that contracting-out decisions (and ing conditions,” and | int fall under the ine definiti of “grievance” in § 7103(a)(9). See pages 12-13 infra. 29a the other management rights) are “non-negotiable.” Had it done so, grievance review arguably would still remain. Instead, it said that, except for § 7106(b), noth- ing in Chapter 71 can affect the right of the agency to make contracting-out decisions. The latter phrase would be singularly inept if what Congress meant was the former, and at least in the absence of clear Con- gressional intent or a manifestly unsound result this court should refrain from directly violating the express language adopted by Congress. C. Next, even if we assume that (1) the term “applicable laws” does include all the rest of Chapter 71, and (2) the exercise of a non-negotiable management right is sub- ject to the grievance provisions, it is far from clear that a failure to comply with Circular A-76 would meet the definition of a “grievance” for purposes of 5 U.S.C. § 7121. The term “grievance” is defined restrictively by Con- gress in 5 U.S.C. § 7103(a)(9)(C)(ii), as here relevant, to mean® “any claimed violation, misinterpretation, or misapplication of any law, rule, or regulation affecting conditions of employment” (emphasis added).“ The A statute that defines a term with the phrase “to mean” is gen- erally restrictive; “to include” is generally expansive. The majori- ty’s description of the term “conditions of employment” as “expan- sive,” see Maj. at 3, is thus incorrect. ® The majority also notes that the definition of “grievance” also includes “any matter relating to the employment of any em- ployee,” 5 U.S.C. § 7103(aX9)(B), and then asserts that a violation of substantive contracting-out criteria “surely falls within this defi- nition.” Maj. at n.18. But there is nothing “sure” about it. Again, the Authority has not made this claim and the majority offers no support. I note that under the majority’s apparent reasoning, the very decision to adopt a particular economic formula itself would be grievable, because it might at some time in the future, if imple- mented, have some effect on employment. There is no indication 30a term “conditions of employment” is also restrictively defined to mean “personnel policies, practices, and mat- ters ... affecting working conditions.” 5 U.S.C. § 7103(a)(14) (emphasis added). Thus, even under the majority’s interpretation of the statute, a violation of agency regulations is a “grievance” under § 7103(aX(9)(C)ii) only to the extent that such violation involves personnel policies and practices or the working conditions of the employees. These are plainly words of limitation—i.e., not all violations are grievable—and there is no indication that such limitation was inserted inadvertently. The majority’s footnote suggestion that Circular A-76 may have something to do with personnel policies or practices is insubstantial. “ It must, then, be fitted (if anywhere) under the phrase “matters ... affecting working conditions.” But a contracting-out decision, even when it results in a loss of jobs, is not necessarily a decision affecting the working conditions of the em- ployees. While ordinarily the term “working conditions” is to be broadly interpreted, see Independent Federa- tion of Flight Attendants v. Trans World Airlines, that Congress intended such decisions to be subject to arbitral review. 10 The majority asserts that even if the Supreme Court's inter- pretation of “working conditions” (see infra) applies, failure to comply with the Circular’s substantive economic guidelines for making contracting-out decisions would nevertheless “undoubtedly fall under the umbrella of personnel policies or practices.” Not even the Authority in this case has suggested that substantive contracting-out criteria are transmuted into “personnel policies or practices” by virtue of the fact that they may at some point have some sort of impact on the continued employment of particular em- ployees. Not surprisingly, the majority offers no support whetever for this extraordinarily broad reading. Had Congress intended the term “conditions of employment” to include “anything which has or may at some time in the future have an impact on the employment of an employee,” it could easily have said so. It did not. 3la Inc., 1655 F. 2d 155, 157 (8th Cir. 1981), it nevertheless “has a... specific meaning in the language of industrial relations,” Corning Glass Works v. Brennan, 417 U.S. 188, 202 (1974), and clearly means “something less than the employment relationship in its entirety.” Southern Railway Co. v. OSHRC, 539 F.2d 335, 339 (4th Cir.), cert. denied, 429 U.S. 999 (1976). In interpreting the same term in another statute, the Supreme Court ex- plained that “the element of working conditions encom- passes two subfactors: ‘surroundings’ and ‘hazards.’” Corning Glass, supra, 417 U.S. at 202 (interpreting the Equal Pay Act). This court subsequently noted that only “surroundings” and “hazards” fall within the labor relations meaning of “working conditions,” Laffey v. Northwest Airlines, Inc., 567 F.2d 429, 452 n. 153 (D.C. Cir. 1976), and in the FLRA we are dealing with a la- bor relations” act. With reference to the term “working conditions” in yet another act, other circuits have held that the term refers to the “environmental area in which an employee customarily goes about his daily tasks.” Columbia Gas of Pennsylvania, Inc. v. Marshall, 636 F.2d 913, 916 (3d Cir. 1980); Southern Railway, supra, 539 F. 2d at 339. There is no indication that the term “working conditions” in the statute at is- sue here (which was used by Congress several years af- ter the Corning Glass decision, presumably with knowledge of the meaning assigned to those words by the Court) was intended to have a different, much broader meaning that it enjoys in other labor relations statutes passed by Congress.“ The majority relies on Department of Defense v. FLRA, 685 F. 2d 641 (D.C. Cir. 1982), as sanctioning a “broad” construction of the phrase “conditions of employment” in the Act. That case, how- ever, involved union proposals reiating to (1) registration of em- ployee automobiles, and (2) provision of certain consumer goods to employees in overseas post exchanges. Both provisions fall clearly within the scope of personnel practices and procedures, and nei- 32a It might be argued, on analogy to the National Labor Relations Act (NLRA), that contracting-out decisions do fall within the term “conditions of employment.” In one NLRA case, Fibreboard Paper Products Corp. v. NLRB, 379 U.S. 203, 210 (1964), the Supreme Court in- terpreted the term—which is not defined in the NLRA—to include contracting-out. However, in the Federal Labor Relations Act, unlike the NLRA, Congress—which presumably was aware of both Fibre- board Paper and Corning Glass—chose to define the term strictly in a much narrower fashion: it means only personnel poiicies and practices and matters affecting “working conditions.” The meaning attached to a term in one statute, where Congress has not defined it, is ir- relevant to its meaning in another statute where Con- gress has defined it. It is the phrase working condi- tions, not conditions of employment, which acts to narrow the scope of grievances under the FLRA. ther even remotely interferes with any reserved management right. I am unpersuaded by the majority’s flat assertion—it is nothing more—that Congress’ definition of “working conditions” in one statute simply “does not apply” in another statute. Noting that Congress did not elaborate on its definition in the statute’s legisla- tive history, the majority just presumes that it must have meant something different in this statute than it meant when it used the identical phrase in other statutes. But the most plausible explana- tion for the lack of discussion in the legislative materials is that Congress assumed that its use of the words “working condi- tions”—words that it had used previously and which the Supreme Court recognized have a definite, specialized meaning in the labor relations field—made it unnecessary to waste additional pages of its committee reports illuminating the obvious. ‘2 | must note that, contrary to the majority’s assertion, I do not maintain | that grievances are restricted to claims involving sur roundings and hazards.” See Maj. at n.18. On the contrary, the statute at issue requires bargaining over (1) personnel policies,” and (2) personnel “practices,” as well as (3) “matters . affecting working conditions.” 5 U.S.C. § 7108(a)(14). tract out; it does not specify the internal agency person- nel policies which would implement such decisions. It That would, as pointed out supra, submit each work project contracted out to mandatory negotiation, in violation of the purely elective negotiation provided for in § 7106(b)\(1). “ FLRA review of an arbitrator's decision is very similar to ju- dicial review of ordinary arbitral awards. It may set aside an , : FLRA, finding that the request presented no “extrace- Hence, under the FLRA’s construction, every alleged violation of the Circular, the basic purpose of which is to provide SUB- dinary circumstances,” curtly denied it. STANTIVE guidance for management decisions re- garding contracting out, must go to an arbitrator. The FLRA’s cavalier, conclusory treatment of the EEOC’s legitimate request can be seen as an implicit admission that disclosure of the parts it considers might be grievable would amount to such an extreme denial of “© The EEOC explained its request for clarification in its letter F 73 ay a intent expressed by Congress. ‘The same conclusion can be reached with respect to the construction adopted by the majority here. The majority’s construction assures that every managerial decisioa with respect to “contracting-out,” if questioned, will ultimately be made, not by the agency, but by an arbitrator, subject to very limited review. This results in a complete nega- tion of the intent expressed by Congress. This interpretation of the grievance procedure offers the union a fertile sour-e of weapons for obstructing or delaying contracting-out decisions, a situation Congress specifically sought to prevent. It is not difficult to visu- alize what will happen. The union can file a grievance, claiming that one of the technical standards of the Cir- cular (wholly unrelated to working conditions) was not and months—or, drawing on the experience of the Na- § 712%), which grants review to: i, b i i i rf i f E : H 1 sti a 1 i, HHP HIE completely statutes, drastically undercuts the specific statutory right of management to contract out, and effectively guts the specific reserved limitations that Congress placed on the agency’s duty to bargain and the author- ity of the FLRA. I accordingly dissent. Ik, as the majority claims, it is entirely obvious from the stat- ute that violations of the Circular are already grievable as a mat ter of law, why would the union waste its time, effort, and money in pursuing first the contract proposal and now this action? Even if EEOC eventually agrees to : UNITES STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT SEPTEMBER TERM, 1984 No. 82-2310 EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, PETITIONER v. FEDERAL LABOR RELATIONS AUTHORITY, RESPONDENT AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO, ET AL. INTERVENOR [Filed Dec. 3, 1984) Before: WRIGHT and TAMM, Circuit Judges and MACKINNON, Senior Circuit Judge* ORDER On consideration of petitioner's petition for rehear- ing, it is ORDERED, by the Court, that the petition is denied. Per Curiam For the Court Grone A. Fenn, Cen 2 Chief Deputy Clerk *Senior Circuit Judge MacKinnon would grant the petition for rehearing. UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT SEPTEMBER TERM, 1984 No. 82-2310 EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, PETITIONER FEDERAL LABOR RELATIONS AUTHORITY, RESPONDENT AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO, ET AL. INTERVENOR Filed Dee. 3, 1984 Before: ROBINSON, Chief Judge, WRIGHT, TAMM, WILKEY, WALD, MIKVA, EDWARDS, GINSBURG, BORK, SCALIA, and STARR, Cirewit Judges“ APPENDIX C UNITED STATES OF AMERICA BEFORE THE FEDERAL LABOR RELATIONS AUTHORITY WASHINGTON, D.C. Case No. O-NG-314 TBH Hi il 1 ul Hi if 11 i EMPLOYEES, AFL-CIO, NATIONAL COUNCIL OF EEOC LOCALS AMERICAN FEDERATION OF GOVERNMENT UNION and EQUAL EMPLOYMENT OPPORTUNITY COMMISSION AGENCY 4la right to make contracting out determinations in accord- ance with whatever applicable laws and regulations ex- ist at the time of such action. Hence, it would contractually recognize external limitations on manage- ment’s right but would not establish, either expressly or by incorporation, any particular substantive limita- tions on management. Thus, this proposal is distinguishable from proposal 1 which was held nonnegotiable in 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 No. 105 (1981), affirmed as to other matters sub nom. National Federation of Federal Employees, Lo- cal 1167 v. Federal Labor Relations Authority,. F.2d — (D.C. Cir. 1982). That proposal, in contrast with the present disputed proposal, would have incor- sions of OMB Circular No. A-76; hence, it would have required management to comply with those terms dur- ing the life of the contract regardless of whether the di- rective from which they were derived were to be re- vised or rescinded. In reaching that decision the Authority stated, at 4 of the decision, as follows: This [ J is to be Are — — OMB directives/ ——— — — * ee tamer ent , acts, it — — — 45D dee tives existing at the time. Accordingly, it is concluded that the present proposal is not inconsistent with section 7106(a)(2)B). _ The Agency’s further claim that the proposal would conflict with OMB Circular No. A-76, itself, because it would subject grievances concerning application of the 42a Circular to the negotiated grievance procedure, also cannot be sustained. The Agency states in this regard that grievances arising in connection with the applica- tion of the Circular only can be pursued through the procedures prescribed by the Circular, i. e., that the provisions of the Circular limit the scope and coverage of grievance procedures negotiated pursuant to the Statute. This contention is without merit. A materially identical argument with respect to directives of the Office of Personnel Management was considered and re- jected in American Federation of Government Employ- ees, AFL-CIO, Local 2782 and Department of Com- merce, Bureau of the Census, Washington, D.C., 6 FLRA No. 56 (1981). There, the Authority concluded, at 9 of the decision, that “OPM regulations ... may not be applied in a manner inconsistent with the scope of negotiated grievance procedures allowed under section 7121 of the Statute.” [Footnote omitted.) Rather, the Authority held that the Statute and its relevant legisla- tive history required that grievance procedures negoti- ated under section 7121 cover all matters that under the provisions of law could be submitted to the griev- ance procedure unless the parties exclude them through bargaining. Consequently, even assuming in the pres- ent case that a conflict between the proposal and the Circular exists, as claimed by the agency, and that the Circular is a Government-wide rule or regulation within the meaning of the Statute, it must be concluded herein, for the reasons stated in Bureau of the Census, that the Circular in question does not limit the statuiorily prescribed scope and coverage of the par- ties’ negotiated grievance procedure. It must be emphasized in this regard that the Agency has misinterpreted the legal effect of the disputed pro- posal: the proposal would not itself change the scope and coverage of the parties’ grievance procedure. That is, under the Statute, even in the absence of the con- ton, D.C., 6 FLRA No. 114 (1981) (proposal 3)) or un- less the parties exclude such grievances through negotiations (see, e.g., American Federation of Govern- ment Employees, AFL-CIO, Local 3354 and U.S. De- partment of Agriculture, Farmers Home Administra- tion, St. Louis, Missouri, 3 FLRA 320 (1980)). In view of the above, the Authority concludes that Union Proposal 1 is within the duty to bargain. Union Proposal 2 Section II—The EMPLOYER shall notify the council and appropriate Local President(s) of its intention to solicit bids for contract work which could result in a reduction-in-force or transfer or abolition of function affecting em- ployees in the unit. Such advance notice shall provide a full explanation of the reasons for such actions and provide the UNION sufficient opportunity to respond in writing. This proposal would provide the Union with advance notice and an opportunity to respond to the Agency’s reasons for its “intention” to contract out work when such action could adversely impact unit employees. Giv- ing the language of the proposal its common meaning in the absence of any contrary indication in the record, the Authority finds that the proposal would apply when management has decided to solicit bids for contract work which in its judgment could lead to, e. g., a reduc- tion in force, but has not yet implemented its decision. It is concluded, as claimed by the Union, that under 44a these circumstances the proposal is not too remote and speculative, and instead would directly affect the condi- tions of employment of unit employees under the Stat- ute so as to be within the duty to bargain to the extent American Federation of Government Employees, AF L- CIO, Local 1999 and Army-Air Force Exchange Serv- ice, Diz-McGuire Exchange, Fort Dix, New Jersey, 2 FLRA 152 (1979), enforced sub nom. Department of Defense v. Federal Labor Relations Authority, 659 F.2d 1140 (D.C. Cir. 1981), cert. denied sub nom. AFGE v. FLRA, — U.S. , 102 S. Ct. 1443 (1982). Cf. National Federation of Federal Employees, Local 1167 and Department of the Air Force, Headquarters, Ist Combat Support Group (TAC), Homestead Air Force Base, Florida, 6 FLRA No. 105 (1981), affirmed that they could bar negotiation of a conflicting proposal, the Agency has not established that Union Proposal 2 is inconsistent with such regulations. Specifically, section 1-1.011-2 declares that Congress’ policy is to promote under the Statute and the Agency has not Union Proposal 3 Section III The parties shall negotiate the [e}ffect of any contracting-out decision which could alter the conditions of employment in the bargaining unit prior to implementing the deci- sion to contract-out. The EMPLOYER agrees 46a to eliminate or minimize any potential adverse lelffeet through reassignment or training and to take whatever other action may be neces- sary to protect bargaining unit employees. The Union’s statement before the Authority indicates that its proposal would require the Agency to minimize the effect of contracting out as to “all persons being af- fected.” Thus, under the language of the disputed pro- posal, confirmed by the Union's statement as to its in. tended meaning, the proposal would go beyond — for applicable laws including the Statute, as did held negotiable by the Authority in /nter- —— Association of Machinists and Aerospace Workers, Local 2424 and Department of the Army, Ab- erdeen Proving Ground, Maryland, 8 FLRA No. 117 (1982). Rather, the instant proposal would specifically require the Agency to reassign or train “all persons” who would be adversely affected by contracting out and to take “whatever other action may be necessary” to protect each one of them. Accordingly, in agreement with the Agency, the Au- thority concludes that this proposal in effect would pre- serve absolute employment security for such employ- ees. As a consequence it would not constitute an “appropriate” arrangement for employees adversely af- fected by management's exercise of its statutory rights.' Cf. National Federation of Federal Employ- Section 7106(b\3) of the Statute provides: = Management nghts (b Nothing in this section shall preclude any agency and 22238 — 47a ees, Local 1167 and Department of the Air Force, Headquarters, 31st Combat Support Group (TAC), Homestead Air Force Base, Florida, 6 FLRA No. 105 (1981), affirmed as to other matters sui nom. National Federation of Federal Employees, Local 1167 v. Fed- eral Labor Relations Authority, — F.2d — (D.C. Cir. 1982) (wherein proposal 4, requiring the agency only to consider restricting new hires in order to retain arrangement tion 7106(b)(3)). Rather, this proposal would directly in- terfere with the Agency’s exercise of, inter alia, its right under section 7106(a)(2)(A) of the Statute to “lay- off” employees and. thus, is outside the duty to bar- gain.” National Treasury Employees Union and Inter- nal Revenue Service, 7 FLRA No. 42 (1981) (proposal 5). Therefore, pursuant to section 2424.10 of the Author- ity’s Rules and Regulations, IT IS ORDERED that the by the parties) bargain concerning Union Proposals 1 and 2. IT IS FURTHER ORDERED that the portion qe ee the exercise of any authority under this section by such management officials. In view of this decision, the Authority finds its unnecessary to rule as to other statutory rights claimed by the Agency to be vio- lated by the proposal. In finding these proposals to be negotiable, the Authority makes no judgment as to their merits. 48a of the Union’s petition for review concerning Union Proposal 3 be, and it hereby is, dismissed. Issued, Washington, D.C. September 2, 1982 /s/ Ronald W. Haughton RONALD W. HAUGHTON, Chairman /s/ Henry B. Frazier III HENRY B. FRAZIER III, Member /s/ Leon B. Applewhaite LEON B. APPLEWHAITE, Member FEDERAL LABOR RELATIONS AUTHORITY 49a APPENDIX D UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT SEPTEMBER TERM, 1984 No. 82-2310 EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, PETITIONER *. FEDERAL LABOR RELATIONS AUTHORITY, RESPONDENT AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO, ET AL., INTERVENOR PETITION FOR REVIEW AND CROSS-APPLICATION FOR ENFORCEMENT OF AN ORDER OF THE FEDERAL LABOR RELATIONS AUTHORITY [Filed Sept. 21, 1984] Before: WRIGHT AND TAMM, Circuit Judges, and MACKINNON, Senior Circuit Judge. JUDGMENT This cause came on to be heard in a petition for re- view and cross-application for enforcement of an order of the Federal Labor Relations Authority, and was ar- gued by counsel. On consideration thereof it is 50a ORDERED, and ADJUDGED, by this Court, that the Authority’s order is enforced, in accordance with the Opinion for the Court filed herein this date. Per Curiam For the Court GEORGE A. FISHER, Clerk Date: September 21, 1984 Opinion for the Court filed by Circuit Judge Tamm. Dissenting opinion filed by Senior Circuit Judge MacKinnon. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0913%3A02. Public record. Not legal advice.