Respondents Brief — Equal Employment Opportunity Commission v. Federal Labor Relations Authority

Supreme Court brief1985

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In the Supreme Court of the Huited States

OCTOBER TERM, 1985

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION,

PETITIONER

Vv.

FEDERAL LABOR RELATIONS AUTHORITY

AND AMERICAN FEDERATION OF

GOVERNMENT EMPLOYEES, AFL-CIO,

NATIONAL COUNCIL OF EEOC LOCALS

ON WRIT OF CERTIORARI TO THE UNIT_D STATES COURT

OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF FOR THE RESPONDENT

FEDERAL LABOR RELATIONS AUTHORITY

RuTH E. Perers*

Solicitor

STEVEN H. SVARTZ

Deputy Solicitor

WILLIAM E. PERSINA

Associate Solicitor

Ropert J. ENGLEHART

Attorney ,

Federal Labor Relations Authority

500 C Street, SW.

Washington, D.C. 20424

(202) 382-0781

* Counsel of Record

QUESTION PRESENTED

Whether a collective bargaining proposal that does not substan-

tively limit the authority of a federal agency, in accordance with

applicable laws, to make determinations with respect to

contracting-out, but instead does no more than restate an agency’s

existing obligation to comply with requirements in Office of

Management and Budget Circular A-76 and other applicable laws

and regulations concerning contracting-out, is within the duty

to bargain under the Federal Service Labor-Management Rela-

tions Statute, 5 U.S.C. 7101-7135.

(1)

TABLE OF CONTENTS

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A. The statutory scheme for resolving negotiability

appeals in the federal sector ...............

The proceedings before the Authority.......

The decision and order of the Court of Appeals

nn ccc ccbecascccesececcce

A collective bargaining proposal that does not

establish any substantive limitation on a federal

agency’s right, in accordance with applicable laws,

to make determinations with respect to contracting-

out, but instead simply restates an agency’s existing

obligation to comply with requirements in applicable

laws and regulations concerning contracting-out, is

within the duty to bargain under the Federal Service

Labor-Management Relations Statute ..........

A. The Statute precludes bargaining over proposals

Cc.

that would substantively limit the exercise of

authority reserved to management, not over a

proposal that only restates management's un-

disputed obligation to comply with applicable

laws and regulations ......................

The Statute does not exempt from the scope of

the negotiated grievance procedure matters

relating to the exercise of management’s

contracting-out authority in accordance with

applicable legal requirements ..............

The Circular’s appeals procedure cannot over-

ride the operation of the Statute’s grievance

EEE ES

TABLE OF AUTHORITIES

Cases:

ACT, Inc., Pennsylvania State Council and The Ad-

jutant General, Department of Military Affairs,

Commonwealth of Pennsylvania, 7 F.L.R.A. 346

CIGBED . co cccccccccctcecccccvccasccccceseces

ACT, New York State Council and State of New

York, Division of Military and Naval Affairs,

Albany, New York, 11 F.L.R.A. 475 (1983) ..

AFGE, Council of Prison Locals, Local 1286 v.

United States Department of Justice,

TOD Oe FER. cic vc vecewcecdbddendsesewes oe

AFGE, International Council of U.S. Marshals Serv-

ice Locals and Department of Justice, U.S. Mar-

shals Service, 11 F.L.R.A. 672 (1983)........

AFGE, Local 12 and U.S. Department of Labor,

15 F.L.R.A. No. 113 (1984) ............-45.

AFGE, Local 12 and Department of Labor, 18

PBR. Bin. SB GRRE ccccccccccccceceses:

AFGE, Local 32 and Office of Personnel Manage-

ment, Washington, D.C., 6 F.L.R.A. 423 (1981),

enf’d sub nom. Office of Personnel Management

v. FERA, FOB B.BB UGE cccccccecesecccces.

AFGE, Local 32 and Office of Personnel Manage-

ment, 16 F.L.R.A. No. 127 (1985), petition for

review filed sub nom. Local 32, AFGEv. FLRA,

No. 85-1038 (Jan. 16, 1985) ............55-5.

AFGE, Local 225 and Department of the Army,

U.S. Army Management Research and Develop-

ment Command, Dover, New Jersey, 17 F.L.R.A.

eS 1 erro or Pts Tre

AFGE, Local 547 and Tampa Veterans Administra-

tion Hospital, 19 F.L.R.A. No. 87 (1985) ....

AFGE, Local 1546 and Department of the Army,

Sharpe Army Depot, Lathrop, California, 19

AR SS Gf)... Rr

Page

Cases Continued: Page

AFGE, Local 1622 and The Directorate Facilities and

Engineering Department of the Army, Fort

George G. Meade, Maryland, 17 F.L.R.A. No.

a 15

AFGE, Local 1692 and Department of the Air Force,

Mather Air Force Base, California, 8 F.L.R.A.

SP Sikh OURS Chvebu dade cs sé Gceselcces 18

AFGE, Local 1858 and Army Missile and Munitions

Center and School, Redstone Arsenal, Alabama,

1S F.L.R.A. No. 59 (1984) .... 0.000000... 19

AFGE, Local 1923 and Health Care Financing Ad-

ministration, Baltimore, Maryland, 17 F.L.R.A.

ee acc icicsc de lobvbdevdcadke 15, 27, 35

AFGE, Local 1940 and Department of Agriculture,

Plum Island Disease Center, 16 F .L.R.A. No. 114

Dine ntiemiee cen enad« ce dheacectends: 19

AFGE, Local 1968 and Department of Transporta-

tion, Saint Lawrence Seaway Development Corp.,

Massena, New York, § F.L.R.A. 70 (1981), aff'd

sub nom. AFGE, Local 1968 v. FLRA, 691 F.2d

565, cert. denied, 461 U.S. 926.............. 27

AFGE, Local 2017 and Department of the Army,

U.S. Army Signal Center and Fort Gordon, Fort

Gordon, Georgia, § F.L.R.C. 435 (1977) ..... 29

AFGE, Local 2736 and Department of the Air Force

Headquarters 379th Combat Support Group

(SAC), Wurtsmith Air Force Base, Michigan, 14

F.L.R.A. 302 (1984) ..... 1 EE Regs ole PE 15

AFGE, Locals 225, 1504, and 3723, v. FLRA, 712

DP ckcckecesévnbeteskhs 5, 11, 21, 28, 33, 39

AFGE, Local 2782 v. FLRA, 702 F. 2d

SP Mad dikes Cn Gdbachiatdenndoedeevkoeces 3, 16, 26

AFGE, Local 2782 and Department of Commerce,

Bureau of the Census, Washington, D.C., 6

Pe SE ls Vive, conabodéctebe. 6, 39

Cases—Continued: Page

AFGE, Local 3354 and U.S. Department of

Agriculture, Farmers Home Administration, St.

Louis, Missouri, 3 F.L.R.A. 320 (1980) ...... 7

AFGE, Local 3403 and National Science Founda-

tion, Washington, D.C., 6F.L.R.A. 669

PCS orerr er irri re 7, 15, 19, 27

Allis-Chalmers Corp. v. Lueck, No. 83-1748

(Age. 06, IDBS).. occ ccccccccccccccscccccces 32

Andrade v. Lauer, 729 F.2d 1475........... 22, 23, 36

Bureau of Alcohol, Tobacco and Firearms v. FLRA,

GES CRB, Gia occ ce cncccccoccecescscess scons passim

Bureau of Engraving and Printing, U.S. Department

of the Treasury and Washington Plate Printers

Union, Local No. 2, 20 F.L.R.A.

> PP rrerrrrr rrr rr 27

Carducci v. Regan, 714 F.2d 171 .............. 34

Chevron, U.S.A., Inc. v. National Resources

Defense Council, Inc., Nos. 82-1005, 82-1247 and

82-1591 (Jume 25, 1984)... 2... eee eee 20

Colgate-Palmolive Peet Co. v. NLRB,

lL 2 ee 9, 12, 39

Cornelius v. Nutt, No. 83-1673 (June 24,

Dt <) s56 apaneudedesdeataes banasenee 16, 21, 23

Council of Prison Locals v. Brewer,

, § 5 | rrr rrr Te 4, 40

Delaware Army and Air National Guard, 16

F.L.R.A. No. 66 (1984)... 2... 6 cece 19

Department of Defense v. FLRA, 659 F.2d 1140,

cert. denied, 455 U.S. 945 ...........655055. passim

Department of Defense, Department of the Army

v. FLRA, 685 F.2d 641 ... 2... 6. cece 13, 38

Department of the Air Force, United States Air

Force Academy v. FLRA, 717 F.2d 1314..... 26

Department of the Air Force, 341st Combat Sup-

port Group, Malmstrom Air Force Base, Mon-

tana and Local 2609, AFGE, Case No. 82 FSIP

_ 2 APPT ITICrTTiry se 4

Department of the Army, Aberdeen Proving

Ground, Maryland, 8 F.L.R.A. 679 (1982) ... 15

Vil

Cases—Continued

Department of the Treasury v. FLRA,

tl aia a oes bi 4, 17, 30

Department of the Treasury, U.S. Customs Service

v. FLRA, 762 F.2d 1119 ...................

Federal Aviation Administration, Department of

Transportation, Tampa, Florida and Federal

Aviation Science and Technological Association,

NAGE, Tampa, Florida, 8 F.L.R.A.

Pl ehrttaatdieshinhetedesescoenesee

Federal/Postal/Retiree Coalition v. Devine, 751 F.2d

RN AEE cB cd naiss udbdobuavedceed nc

LIE Heda deweoesbsaccabeacedds éenses

Finnegan v. Leu, 456 U.S. 431 ................

Ford Motor Co. v. NLRB, 441 U.S. 488 .......

Gateway Coal Co. v. United Mine Workers, 414

Dy Mr adadthcbbaovetecinddddicsckieesile:

SOE 6 be vb cU ed eun ed dobedeUPe sesE ccs ecces

ILGWU v. Quality Mfg. Co., 420 U.S. 276.....

Immigration and Naturalization Service, Eastern

Regional Office (Burlington, Vermont), 18

F.L.R.A. No. 103 (1985) ............0..00..

IAM and AW, Local 2424 and Department of the

Army, Aberdeen Proving Ground, Maryland, 8

Pactiahes GHP EEE ch cdodcdcdcddccccccesss

James v. Federal Energy Regulatory Commission,

Phin ok ocacudsduccssonnndbbdess

Library of Congress v. FLRA, 699 F.2d 1280...

Local 2855, AFGE vv. United States,

ER i a ay ae ee a ae ae

Mastro Plastics Corp. v. NLRB, 350 U.S. 270 ..

Mitsubishi Motors Corp., v. Soler Chrysler-

Plymouth Inc., Nos. 83-1569, 83-1733 (July 2,

SoU baesnecccoddddccgueddbieebtiadsbhetee

Page

Ss &

Vill

Cases—Continued Page

NFFE, Local 1167 and Department of the Air Force

Headquarters, 31st Combat Support Group

(TAC), Homestead Air Force Base, Florida, 6

F.L.R.A. 574 (1981), aff’d as to other matters sub

nom. NFFE, Local 1167 v. FLRA, 681

WORE vic ccvcnd 66 cbddees pebcdesecenes 6, 15, 20

NFFE, Local 1167 v. FLRA, 681 F.2d 886. 3, 4, 16, 17

NFFE, Local 1497 and Department of the Air Force,

Lowry Air Force Base, Colorado, 9 F.L.R.A. 151

Gs bid bcdevccccsédevidsctescenveccoure 18

NFFE, Locals 1707, 1737, and 1708 and Head-

quarters, Louisiana Air and Army National

Guard, New Orleans, Louisiana, 9 F.L.R.A. 148

(IGE. c cccccccccccccccccesescoccccoeesecs 15

NTEU v. Cornelius, No. 85-0129 (D.D.C. July 15,

1985), appeal docketed, No. 85-5938 (D.C. Cir.

Sept. 10, 1986S)... . cc ccccccccccccccceccces 39

NTEU v. FLRA, 767 F.2d 1315 ........--.+--. 27

NTEU and Department of the Treasury, Bureau of

the Public Debt, 3 F.L.R.A. 769 (1980), aff'd sub

nom. NTEU vy. FLRA, 691 F.2d 553 ....... 14

NTEU and Department of the Treasury, IRS, 6

PABA, FB GGG ccccscccccceccccocecess 15

NTEU and IRS, 2 F.L.R.A. 281 (1979) ........ 14

NTEU and IRS, 3 F.L.R.A. 693 (1980) ........ 19

NTEU and IRS, 7 F.L.R.A. 275 (1981) ........ 14

NTEU and U.S. Customs Service, 17 F.L.R.A. No.

PRR pniccccendsctmendsnavedsdoencctéeses 28

NTEU, Chapter 204 and Federal Election Commis-

sion, 19 F.L.R.A. No. 25 (1985) ............ 19

New York Council, ACT v. FLRA, 757 F.2d 502,

cert. denied, No. 85-106 (Oct. 7, 1985)....... 14

PATCO and FAA, § F.L.R.A. 763 (198! ...... 15, 27

Pattern Makers’ League of North America v. NLRB,

No. 83-1894 (June 27, 1985) ............-+4-. 20

Cases—Continued: Page

Steelworkers v. Warrior & Gulf Navigation Co., 363

8 eS a ae ee 30, 32

Tidewater Virginia Federal Employees Metal Trades

Council and Naval Public Works Center, Norfolk,

Virginia, | F.L.R.A. 431 (1973)............. 14

U.S. Department of Housing and Urban Develop-

ment and AFGE, 12 F.L.R.A. 41 (1983) ..... 29

U.S. Department of Justice, Federal Prison System

and AFGE, Local 1741, 15 F.L.R.A. No. 178

Pi K<tpendsoutnadanitidiete tdhud peetae 28

U.S. Department of Justice, Immigration and

Naturalization Service, Western Regional Office,

San Pedro, California and AFGE, Local 2805, \8

Sere § [ are ey 28

United States v. Shimer, 367 U.S. 374 (1961) ... 20

Veterans Administration Hospital and AFGE, Lodge

2201, 4 F.L.P..A. 419 (1980) ................ 23

Veterans Administration Medical Center, Fort

Howard and AFGE, Local 2146, § F.L.R.A. 250

DP edhanddebudsedidbnewcoodcedvceccce: 26

Veterans Administration Medical Center, Tampa,

Florida v. FLRA, 675 F.2d 260 ............. 4

Veterans Administration Medical Center, Togus,

Maine and AFGE, Local 2610, 17 F.L.R.A. No.

Dish hite > julien edudunndandebesces + 5

Statutes:

The Federal Service Labor-Management Relations

Statute, as amended, § U.S.C. §§ 7101-7135 (1982

ENS SR 2

ns. coi cbcnvcosedced’ 36

cs ccccsccevsséoshe passim

De PUI o vc cccccccccccs 11, 21, 35

DD Oe PUD oe vcccccccccccocsses 35

$5 U.S.C. 7103aK9OMCHiii) ........ 2... 11, 21, 35

nn 8. . cunmewenes 3,4

es ST, cisco edcessesecns 3, 13, 3a

Statutes—Continued: Page

OO Fb onde cen deccosdecdssecedys 2

SOR SE cine wees cecceseeseeseeseoses 2

9 ORE, FED cc ccccccccseessecs: 3

6 Os Se tacuccceccccscancesesabess passim

9 Ge Ce dc coccccccs 10, 13, 14, 16, 22, 4a

Sie Ss coccceecénccecesceses passim

9 UE, CED cccccncccccecess 23, 28, 4a

5 U.S.C. 7106(aX2B) ....... 3, 14, 16, 25, 28, 4a

D Ue Tec ccccccccséoscecees 23, 4a

Die Se Accnccoceucescsaesces 14, 4a

5 U.S.C. 7106(6M(2) . .......... 3, 9, 16, 25, 30, 4a

5 U.S.C. 7106(b)(3) ...... ~~... 3, 9, 16, 25, 30, Sa

OG, Pee cccccuccevescddevces 3

DU, Se vccecvccececcctonssees 4

PT 0 Ee er ee oe 3, 13, 35

PR Fe 12, 37, 38, 39, 40, Sa

5 es ED pocecccuccecesovecees 3, 4,6, 17 |

SR, Ss 6c cedsducesetucséeese 35

OO, Fes nc ncdccesedCecsecedses 4

$ U.S.C. 711MNcKSMBMili) ......... 6.66 ee 4

5 UB Wee atbndccocdccsccosceecseces passim

FUT eRe 8 rr 5, 10, 32, 39, Sa

Os Sc cocccccnseceeneseees 5, Sa

FM 5, 11, 26, 28, 33, Sa

Ds Sc cc ccccocbeccesccce 32, 6a

DO Sn nnn 8. cccnchaceseceseent passim

5 OR, MED ecaccecesesuescense 23, 25, 6a

tt Pir ohnd<casiieeseseeeseucennin 26, 28

DR, Ms 6 doccucecenceseesesss %

DORI, BED Sé deccccvoccoeceosaseces 30

Ss i incdcdcecacsccesedéoenqnseeece 19

Re ED candgce -ennéudncessonnessecs 32

SS GE. BOER. ccccccoces (sadelanadacese 34

UDB. GE GR. cccccccccccccscececcces 34

Miscellaneous:

Executive Order No. 10988, 3 C.F.R. 521 (1959-1963

GAD a. cocccccceccssccccecessocesscoce: 2

Executive Order No. 11491, 3 C.F_R. 861 (1966-1970

GOED oc cccccces coccecescccesceccesccess 17

Miscellaneous—Continued:

Executive Order 11491 § 12(b)(5)

Executive Order Nos. 11616,

C.F.R. 605, 634, 957 (1971-1975 Comp.) .....

H.R. 9094, 95th Cong.,

H.R. 11280, 95th Cong., 2d Sess. (1978)

Page

a eee 14

11636, and 11838, 3

Ist Sess. (1977) ........ 31

ae 14, 24, 31

H.R. Conf. Rep. 95-1717, 95th Cong., 2d

Sess. (1978)

11, 14, 21, 25, 35, 38

H.R. Rep. 95-1403, 95th Cong., 2d Sess. (1978),

reprinted in Subcomm. on Postal Perso.inel and

Modernization of the House Comm. on Post Of-

fice 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.

Pe En ikccekesocesest S$, 11, 17, 21, 22, 24

S. 2640, 95th Cong., 2d Sess. (1978) ........... 24

Federal Personnel Manual Supplement 532-1,

SET Rbdcpadteessbbestesedecceedeses 36

Office of Management and Budget Circular A-76. Passim

oS 34

Fl 5

44 Fed. Reg. 20558 (1979) ..... 2... occ 38, 40

Sr ins c cdécccceseseee 34

45 Fed. Reg. 69322 (1980) ........ 2... 66... 5

FF ae Ge eo dccccccecccccees 5

lS ee 34

& Fed. Rag. 37116 (1GBS) . .. 2. ccc ccess 5, 40

48 Fed. Reg. 37115 (1983) ....... ©... 6c eee. 34

MIDs 0 cnc ccccecesecese 5, 37

Supplement (1979)........ eee eee 34

Be Gy Gs A Ic co ccccccccecccces 14

124 Cong. Rec. 29180 (1978)... . 2... occu 31

124 Cong. Rec. 29182 (1978)... ... 2. oc ce 25

124 Cong. Rec. 29183 (1978) ............. 8, 23, 24, 31

124 Cong. Rec. 29185 (1978)... ... ©... ec ce 25

Miscellaneous—Continued: Page

124 Cong. Rec. 29187 (1978)... .. 2... 6c ee eee 17

124 Cong. Rec. 29199 (1978)... .. 6... ce cece 17

124 Cong. Rec. 29221 (1978)... .. 2.6... cece e ee 14

SG i lb. dc dede ceeccedeeccateccenscese 38

9 Gs Mi dbs dé ce cdeccetucedétcoddeccecse 38

DE ck de cs Sebbeeseedeneceeebeecess 38

SR ED ns scccocesaescecsecesetenceess 4

DE so. ddbcccoccccescoceestbeoess 4,17

OO ED hobs cece cccvcdctevevcedeosess 17

SC, BD co cidccccccccecccccesecess 4,17

po } ER PAPPTTTTOTITITIT OTT 4,17

Tl Gg — ere errrrrrrr rit tr er 4

S CIB. DESO EED oc cccccccccccecccsces 35

Gs, SN o Kane ede ccetocdecdeecetocccas 38

Ce SE OB cncccvcscccccecsecsusodutesss 33

Elkouri and Elkouri, Legal Status of Federal Sec-

tor Arbitration, supp. to How Arbitration Works,

FF = eeeeererrerrrrer rt te 16, 36

Gentile, ‘Arbitration in the Federal Sector: Selected

Problem Areas,’ 34 Labor Law Journal 482

CED. oc kccccesccscndedddpebocdedestécees 36

Harkless, ‘Comment, Grievance Arbitration in the

Federal Service,’’ in Proceedings of Thirty-Fourth

Annual Meeting of National Academy of

Arbitrators, 206 (1982) ...... 2... 6c cee e ec eeee %6

Phelps, “Management's Reserved Rights: An In-

dustry View,”’ in Proceedings of Ninth Annual

Meeting of National Academy of Arbitrators, 102

Es iv cscecevcsdasdssdudenetebenese tds: 16

Prasow & Peters, Arbitration and Collective

Bargaining (1970)... . 0... 66 cc cece eens 16

Rabin, Fibreboard and the Termination of Bargain-

ing Unit Work: The Search for Standards in

Defining the Scope of the Duty to Bargain, 71

Colum. L. Rev. 803 (1971) ... 2... 66.6 c nue 16

In the Supreme Court of the United States

OCTOBER TERM, 1985

No. 84-1728

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION,

PETITIONER

Vv.

FEDERAL LABOR RELATIONS AUTHORITY

AND AMERICAN FEDERATION OF

GOVERNMENT EMPLOYEES, AFL-CIO,

NATIONAL COUNCIL OF EEOC LOCALS

ON WRIT OF CERTIORARI TO THE UNITED STATES COURT

OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT

BRIEF FOR THE RESPONDENT

FEDERAL LABOR RELATIONS AUTHORITY

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. la-37a) is

reported at 744 F.2d 842. The decision and order of the Federal

Labor Relations Authority (Pet. App. 40a-48a) is reported at 10

F.L.R.A. 3; the Authority’s denial of the Equal Employment Op-

portunity Commission's request for recommendation is reported

at 11 F.L.R.A. 720 (FLRA App. la-2a).

JURISDICTION

The Authority issued its decision and order on September 2,

1982. The Equal Employment Opportunity Commission requested

reconsideration of that decision on September 16, 1982. On

November 1, 1982, EEOC filed a petition for review of the

Authority’s decision and order in the court of appeals; on

December 8, 1982, the Authority filed a cross-application for en-

forcement. On March 18, 1983, the Authority issued an order

(1)

denying EEOC’s request for reconsideration of the Authority’s

decision and order.

The judgment of the court of appeals was entered on September

21, 1984 and a timely petition for rehearing was denied on

December 3, 1984. On February 26, 1985, the Chief Justice ex-

tended the time within which to file a petition for a writ of cer-

tiorari to May 2, 1985. The petition was filed on that date and

was granted on June 24, 1985. The jurisdiction of this Court is

invoked under 28 U.S.C. 1254(1).

STATUTES INVOLVED

The relevant portions of the Federal Service Labor-

Management Relations Statute, as amended, 5 U.S.C. 7101-7135

(1982 & Supp. II 1984) are reproduced in the appendix to this

brief (FLRA App. 3a-6a).

STATEMENT

A. The Statutory Scheme For Resolving

Negotiability Appeals In The Federal Sector

Labor-management relations in the federal service are governed

by the Federal Service Labor-Management Relations Statute (‘‘the

Statute’’), as amended, 5 U.S.C. 7101-7135 (1982 & Supp. Il

1984). The Statute was enacted as section 701 of the Civil Serv-

ice Reform Act of 1978.' Under the Statute, the responsibilities

of the Federal Labor Relations Authority (‘‘the Authority’’), a

three-member independent and bipartisan body within the Ex-

ecutive Branch, include, among other things, adjudicating col-

lective bargaining disputes and providing leadership in establishing

policies and guidance relating to matters arising under the Statute.

5 U.S.C. 7104-7105. The Authority performs a role analogous

to that of the National Labor Relations Board (“‘NLRB”’) in the

private sector. Bureau of Alcohol, Tobacco and Firearms v.

FLRA, 464 U.S. 89, 92-93 (1983); Federal/Postal/Retiree

' Pub. L. No. 95-454, 92 Stat. 1111 (1978). Prior to the enactment of the

Statute, thereat ry mae oe th ap apenas

a program established in 1962 by Executive Order No. 10988, 3 C.F.R. 521

(1959-1963 comp.). The Executive Order program was revised and continued

by Exec. Order No. 11491, 3 C.F.R. 861 (1966-1970 comp.), as amended by

Exec. Orders Nos. 11616, 11636, and 11838, 3 C_F.R. 605, 634, 957 (1971-1975

comp.).

Coalition v. Devine, 751 F. 2d 1424, 1430 (D.C. Cir. 1985). Con-

gress intended the Authority, like the NLRB, “‘to develop

specialized expertise in its field of labor relations and to use that

expertise to give content to the principles and goals set forth in

the [Statute].’’ Bureau of Alcohol, Tobacco and Firearms v.

FLRA, 464 U.S. at 97.

Under the Statute, a federal agency must bargain in good faith

with the exclusive representative of an appropriate bargaining

unit about unit employees’ conditions of employment. § U.S.C.

7103(aX( 12), 7114(b)(2). The term “‘conditions of employment”’

is defined as ‘‘personnel policies, practices and matters, whether

established by rule, regulation, or otherwise, affecting working

conditions * * * ."’ § U.S.C. 7103%(a)(14). However, there is no

duty to bargain over contract language which would bring about

an inconsistency with a federal law, government-wide rule or

regulation, or an agency regulation for which a compelling need

exists. 5 U.S.C. 7117(a).

The Statute also contains a management rights clause that

removes the exercise of certain management authority from the

scope of negotiations. § U.S.C. 7106. As here pertinent, the

Statute reserves as nonnegotiable, subject to subsection (b) of

Section 7106, the authority of management ‘‘in accordance with

applicable laws * * * to make determinations with respect to con-

tracting out.”’ 5 U.S.C. 7106(a)(2\B); NFFE, Local 1167 v.

FLRA, 681 F.2d 886, 892 (D.C. Cir. 1982). Subsection (b) of

Section 7106 provides in relevant part that nothing in Section 7106

shall preclude an agency and an exclusive representative from

negotiating procedures which management officials of the agency

will observe in, and appropriate arrangements for employees

adversely affected by, the exercise of any authority by manage-

ment officials under Section 7106. 5 U.S.C. 7106(b)(2) and (3);

see AFGE, Local 2782 v. FLRA, 702F .2d 1183 (D.C. Cir. 1983).

In the instant case, the Authority adjudicated a dispute over

whether a collective bargaining proposal is within the duty to

bargain established by the Statute. 5 U.S.C. 710S5(aX2\E),

7117(c). Under the Statute, if a federal agency alleges that a

bargaining proposal is outside the duty to bargain, the exclu-

sive representative may appeal the agency's allegation of

nonnegotiability to the Authority. § U.S.C. 7117%(c).’ The

Authority examines the disputed proposal based on the record

presented to it by the parties. NFFE, Local 1167 v. FLRA, 681

F.2d at 891. If the Authority finds the proposai within the duty

to bargain, the Authority orders that the agency upon request,

or as otherwise agreed to by the parties, bargain over the pro-

posal. § C_F.R. 2424.10. The Authority's decisior addresses only

the negotiability of the bargaining proposal; the Authority neither

considers the merits of the proposal nor orders the agency to agree

to it. Department of Defense v. FLRA, 659 F.2d 1140, 1147 (D.C.

Cir. 1981), cert. denied, 455 U.S. 945 (1982).

The bargaining obligation imposed by the Statute does not re-

quire the agency to agree to the proposal or to make a conces-

sion. § U.S.C. 7103%a)(12). If the parties, in the course of their

collective bargaining, reach an impasse, either party may request

the assistance of the Federal Service Impasses Panel. 5 U.S.C.

711%b). The Impasses Panel is empowered to take whatever ac-

uloNn Is Necessary and not inconsistent with the Statute to resolve

an impasse, including ordering parties to agree to specific pro-

posal language. See § U.S.C. 7119%cMS)\ Bill). See also e.g,

Council of Prison Locals v. Brewer, 735 F.2d 1497, 1501 (D.C.

Cir. 1984); Department of the Treasury v. FLRA, 707 F.2d 574,

$77 n.7 (D.C. Cir. 1983). The Impasses Panel will consider the

reasonableness of any proposal at issue in determining what con-

tract language will be imposed. E.g., Department of the Air Force,

341s Combat Support Group, Mailmstrom Au Force Base, Mon-

tana and Local 2609, AFGE, Case No. 82 FSIP 142 (1983) slip

op. 2; see also Veterans Administration Medical Center, Tam-

pe, Florida v. FLRA, 675 F.2d 260, 265 n.9 (11th Cir. 1982).

The Statute requires that, at the request of either party, the

product of collective bargaining negotiations be reduced to

a written collective bargaining agreement. § U.S.C. 7103(a)(12),

7114(>MS5). Such a collective bargaining agreement must

If the exclusive representative wishes to appeal, « first obtains a written

allegation of nonnegotiabulity from the agency. § CF _R. 2424.3. The exchusive

representative ‘hen files a petuion seeking the Authority's determination of

the negotiability issue. 5 C_F_R. 2424.4. The agency is served with a copy of

thes petrhon, to whch « may respond with a statement esther withdrawing its

allegation (hat (he proposal s nonnegouabie or setting forth reasons supporting

its position of nonnegotabelity S$ C_F R. 2424.6¢aK2). The exclusive represen-

tateve then has a mght to respond to the agency's statement of position. $C FR.

24247.

**provide procedures for the settlement of grievances, including

questions of arbitrability.”’ 5 U.S.C. 7121(a)(1). Absent agree-

ment otherwise by the parties, the Statute defines broadly the

kinds of disputes that are grievable under a negotiated grievance

procedure. 5 U.S.C. 7103(aX(9) and § U.S.C. 7121(a). See AFGE,

Locals 225, 1504, and 3723 v. FLRA, 712 F.2d 640, 641-642 (D.C.

Cir. 1983). The Statute ‘“‘is virtually all-inclusive in defining

‘grievance’ °’;? Section 7121 lists only five subject matters that

are statutorily excluded from the permissible scope of the

negotiated grievance procedure.‘

B. The Proceedings Before The Authority

During the course of collective bargaining agreement negotia-

tions with the Equal Employment Opportunity Commission

(‘“‘EEOC’’), the American Federation of Government Employees,

AFL-CIO, National Council of EEOC Locals (*‘AFGE’’) pro-

posed the following contract provision:

The EMPLOYER agrees to comply with OMB Circular A-76,

and other applicable laws and regulations concerning

contracting-out.[*]

> H.R. Rep. 95-1403, 95th Cong., 2d Sess. 40 (1978), reprinted in Sub-

comm. 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, at 686 (Comm. Print No. 96-7) (Legis. Hist.).

* The five subject matters excluded are:

(1) any claimed violation of subchapter III of chapter 73 of this title

(relating to prohibited political activities);

(2) retirement, life insurance, or health insurance;

(3) a suspension or removal under section 7532 of this title;

(4) any examination, certification, or appointment; or

(S) the classification of any position which does not result in the reduc-

tion in grade or pay of an employee.

5 U.S.C. 712i(c). See, e.g., The Veterans Administration Medical Center,

Togus, Maine and AFGE, Local 2610, 17 F.L.R.A. No. 129 (1985); Federal

Aviation Administration, Department of Transportation, Tampa, Florida and

Federal Aviation Science and Technological Association, NAGE, Tampa,

Florida, 8 F.L.R.A. 532 (1982). Parties can, in negotiations, agree to exclude

additional matters. § U.S.C. 7121(a){2).

5 OMB Circular A-76 (‘the Circular’’) applies to Executive agencies and

provides direction for agency decisions whether to contract-out to private enter-

prise for products and services the government needs. 44 Fed. Reg. 20556 (1979),

as amended by 45 Fed. Reg. 69322 (1980); 47 Fed. 6511 (1982); id. at 46783;

48 Fed. Reg. 37114 (1983); 50 Fed. 32812 (1985).

(Pet. App. 40a.) EEOC alleged that the proposal was non-

negotiable and refused to bargain over it (ibid.). To resolve the

dispute, AFGE sought a negotiability determination from the

Authority pursuant to § U.S.C. 7117(c) (ibid.). Upon considera-

tion of the record before it, the Authority issued a decision find-

ing the proposal negotiable (Pet. App. 40a-48a).

The Authority determined that the proposal did not impair

EEOC’s right to make contracting-out determinations because

the proposal would not impose any substantive limitations upon

management’s right to make contracting-out determinations apart

from those already existing (Pet. App. 41a). The Authority

distinguished this proposal from one it had found nonnegotiable

in NFFE, Local 1167 and Department of the Air Force Head-

quarters, 31st Combat Support Group (TAC), Homestead Air

Force Base, Florida, 6 F.L.R.A. 574 (1981), aff'd as to other

matters sub nom. NFFE, Local 1167 v. FLRA, 681 F.2d 886

(D.C. Cir. 1982). In that case the proposal would have required

the agency to comply with the specific terms of OMB Circular

A-76 regardless of whether the Circular were to be revised or

rescinded (Pet. App. 41a). By locking management into observ-

ing specific terms in the Circular, the Authority stated in that

case, the proposal impermissibly would have imposed its own

limitations on management’s right (ibid.). The instant proposal,

however, simply obligated EEOC to act in accordance with

whatever laws and regulations may be extant at the time EEOC

exercises its right to contract-out and therefore the proposal did

not narrow the scope of the discretion the Statute reserved to

EEOC as nonnegotiable (ibid.).

The Authority also rejected EEOC’s claim that because the

proposal would subject grievances concerning the application of

the Circular to the negotiated grievance procedure, the proposal

conflicted with the Circular and was thus nonnegotiable (Pet.

App. 42a). The Authority, quoting AFGE, Local 2782 and

Department of Commerce, Bureau of the Census, Washington,

D.C., 6 F.L.R.A. 314, 322 (1981), stated that government-wide

‘regulations . . . may not be applied in a manner inconsistent

with the scope of negotiated grievance procedures allowed under

section 7121 of the Statute’’ (ibid.). In this regard, the Authority

noted that the Statute and its legislative history require that

grievance procedures negotiated under Section 7121 cover all mat-

ters that under provisions of law could be submitted to the

ee ——EEEE———

grievance procedure unless the parties exclude them through

bargaining (ibid.). Accordingly, the Authority concluded that even

assuming that a conflict existed between the proposal and the

Circular, the Circular cannot limit ‘‘the statutorily prescribed

scope and coverage of the parties’ negotiated grievance pro-

cedure’’ (Pet. App. 42a; emphasis in decision).

Finally, the Authority noted that, to the extent EEOC had

argued that the proposal would change the scope and coverage

of the parties’ negotiated grievance procedure, EEOC had

misinterpreted the legal effect of the proposal (Pet. App. 42a).

The Authority stated that even in the absence of the proposed

contract provision, under the Statute disputes concerning con-

ditions of employment arising in connection with the applica-

tion of the Circular would be covered by the negotiated grievance

procedure unless a particular grievance is inconsistent with law

(see AFGE, Local 3403 and National Science Foundation,

Washington, D.C., 6 F.L.R.A. 669, 673 (1981)) or unless the par-

ties exclude such grievances through negotiations (see, e.z.,

AFGE, Local 3354 and U.S. Department of Agriculture, Farmers

Home Administration, St. Louis, Missouri, 3 F.L.R.A. 320

(1980)) (ibid.).

EEOC sought reconsideration of the Authority’s decision, re-

questing in part that the Authority ‘‘explain in what fashion OMB

Circular A-76 and other applicable laws and regulations concern-

ing contracting out fall within the ambit of . . . the grievance

resolution machinery under the Statute’’ (FLRA App. 2a).

The Authority denied the request, finding that EEOC in essence

was asking the Authority to make arbitrability determinations

in the absence of a specific factual context (FLRA App. 2a).

The Authority noted that, to the extent that arbitrability ques-

tions may arise in the future, EEOC could file exceptions to

specific arbitration awards as provided in Section 7121 of the

Statute (ibid.).

C. The Decision And Order Of The Court Of Appeals

In an opinion by Judge Tamm, the court of appeals (Senior

Judge MacKinnon, dissenting) upheld the Authority’s decision

and enforced the Authority’s order (Pet. App. la-37a). The court,

citing this Court’s decision in Bureau of Alcohol, Tobacco and

Firearms v. FLRA, 464 U.S. 89, 97 (1983), stated at the outset

that ‘‘the Authority is entitled to ‘considerable deference’ when

interpreting and applying the [Statute’s] provisions to specific

situations’’ (Pet. App. 7a; see also Pet. App. 7a n.11).

The court rejected EEOC’s argument that the Statute’s

management rights clause gives management unfettered authority

to make contracting-out determinations and that any bargain-

ing proposal regarding contracting-out would restrict that author-

ity (Pet. App. 8a-1 1a). The court found that the Statute’s language

plainly requires management to exercise its authority ‘‘in accor-

dance with applicable laws’’ (Pet. App. 8a). Since the bargain-

ing proposal essentially echoed the statutory requirement that

contracting-out determinations be made in accordance with

applicable laws, the court agreed with the Authority’s conclu-

sion that the proposal, which did not itself establish any substan-

tive criteria guiding management's contracting-out determina-

tions, did not affect the scope of that authority reserved to

management by the Statute (Pet. App. 9a).

Second, the court rejected EEOC’s argument that adoption

of the proposal would invade management’s rights by sub-

jecting management’s contracting-out determinations to the

negotiated grievance procedure (Pet. App. 1 1a-16a). The court

noted that this argument assumes that a complaint asserting that

a contracting-out determination was not made in accordance with

applicable laws, including the Circular, would not be grievable

in the absence of the contract proposal (Pet. App. 1 la-12a). Such

an assumption, the court found, was ‘‘contrary to the text’’ of

the Statute, which ‘‘expansively defines the subjects covered under

the [statutorily created negotiated] grievance procedure’’ (Pet.

App. 12a). In this regard, the court noted that under the Statute,

‘*fojnly five subjects, not including the subject of contracting-

out, are expressly excluded from coverage under the grievance

mechanism’”’ (Pet. App. 12a; footnote omitted).°

Finally, the court rejected EEOC’s argument that the language

of the Circular (that its provisions ‘‘shall not be construed to

create’’ any right of appeal except as provided in the Circular

itself) renders the proposal nonnegotiable (Pet. App. 16a-17a).

® The court also rejected EEOC’s argument that all prerogatives reserved

to management under the management rights clause are excluded from the scope

of matters grievabie (Pet. App. 14a-15a). In this connection, the court referred

to the legislative history of the Statute which stated that management's reserved

right to ‘“‘remove’’ employees ‘‘would in no way affect the employee's right

to appeal the decision * * * through the procedures set forth in a collective

bargaining agreement.’’ (Pet. App. i Sa, citing 124 Cong. Rec. 29183 (1978),

reprinted in Legis. Hist. at 924.)

First, the court noted that the proposal is not inconsistent with

the Circular because the proposal does not “‘create’’ a new appeal

right (Pet. App. 16a). Rather, as the court had already deter-

mined, the right to file grievances regarding contracting-out

decisions is created by the Statute, not by the proposal (ibid.).

Second, and ‘‘more important[ly],’’ even if the proposal were

inconsistent with the Circular, ‘‘[t}here is no indication in the

[Statute] or elsewhere of a congressional intent to allow agen-

cies to limit by regulation the statutorily defined grievance pro-

cedure’ (ibid.). The court concluded that to allow the text of

the Circular to restrict the scope of grievances would place

‘limitations in the statute not placed there by Congress.’’ (Pet.

App. 16a-17a, quoting Colgate-Palmolive Peet Co. v. NLRB,

338 U.S. 355, 363 (1949).)

The court of appeals denied EEOC’s petition for rehearing and

its suggestion for rehearing en banc (Pet. App. 38a-39a).

SUMMARY OF ARGUMENT

Construing the duty to bargain under the Federal Service

Labor-Management Relations Statute is a ‘‘task[{ ] lying at the

heart of the [Authority’s] function.”’ Ford Motor Co. v. NLRB,

441 U.S. 488, 497 (1979). in this case, the Authority determined

that a bargaining proposal which simply restates EEOC’s obliga-

tion to do that which it must do in any event—make contracting-

out determinations in compliance with OMB Circular No. A-76

and other applicable laws and regulations—.is within the statutory

duty to bargain. The hallmark of the Authority’s decision is

consistency—consistency with the literal terms of the Statute, con

sistency with congressional intent as evinced in the Statute and

its legislative history, consistency with traditional principles of

labor law, and consistency with Authority decisional precedent

on what is and is not within the duty to bargain in the federal

sector. The Authority’s decision, enforced by the court of appeals

below, warrants affirmance by this Court.

A. The Statute reserves to management the nonnegotiable

substantive authority, subject to 5 U.S.C. 7106(b)(2) and (3) and

‘in accordance with applicable laws,’’ to make determinations

with respect to contracting-out. Thus, management’s contracting-

out authority is not boundless. That authority is ‘‘subject to’’

the negotiation of procedures which management will observe

in exercising its right to contract-out and the negotiation of ap-

propriate arrangements for employees adversely affected by the

exercise of the right. Further, that authority must be exercised

in accordance with any existing laws and regulations that govern

the exercise of that authority. Consequently, a bargaining pro-

posal is not nonnegotiable simply because it mentions a subject

matter that is a management right. Instead, an inquiry must be

made to determine what impact, if any, the proposal would have

on management's exercise of its reserved authority. 5 U.S.C.

7106(a).

In making such an inquiry, the Authority has distinguished

between proposals that only reiterate management’s obligation

to act in accordance with applicable legal requirements and pro-

posals that add restrictions to management’s exercise of its

authority. Bargaining proposals that do no more than restate

management's obligation to adhere to whatever legal and

regulatory requirements may be extant at the time management

exercises its Section 7106(a)(2) rights are within the duty to

tive limitations of their own making on the exercise of manage-

ment rights are not within the duty to bargain. The Authority

has consistently applied this distinction in resolving disputes about

the negotiability of proposais that address contracting-out as well

as other rights covered in Section 7106(a)(2) of the Statute.

The Authority properly applied these principles to the proposal

in this case, which simply restates EEOC’s obligation to comply

with applicable laws and regulations when it exercises its authority

to contract-out. The proposal therefore reserves to EEOC the

full range of discretion available to it under law, which is precisely

the same range of discretion reserved to EEOC under the Statute.

Thus, as found by the Authority and as affirmed by the court

of appeals, any limitations on EEOC’s contracting-out author-

ity stem not from the proposal but from external legal require-

ments with which EEOC is obligated to comply in any event.

Because the proposal in this case does not impose any substan-

tive limitation on EEOC, it is within the duty to bargain.

B.1. Congress mandated that every collective bargaining agree-

ment under the Statute contain a negotiated grievance procedure

which includes binding arbitration. 5 U.S.C. 7121(a). The term

**grievance’’ is broadly defined to include, among other things,

any complaint by any employee concerning ‘‘any matter relating

to the employment of the employee’’ (5 U.S.C. 7103(ay(9)A))

or ‘‘any claimed violation, misinterpretation, or misapplication

of any law, rule or regulation affecting conditions of employ-

ment’’ (5 U.S.C. 7103(axK9KC)ii)).

pe tara ron ll

contracting-out decisions within the scope of the negotiated

grievance procedure does not square with the terms of the Statute.

Unless the parties in negotiations agree otherwise, Congress

prescribed those matters which are to be submitted as a matter

of law to the negotiated grievance procedure. § U.S.C. 7121 and

7103(aX(9); H.R. Conf. Rep. 95-1717, 95th Cong., 2d Sess. 157

(1978). Congress exempted by law only five subject-matters from

the permissible scope of the negotiated grievance procedure;

contracting-out was not one of the five exempted. 5 U.S.C.

712K(c); H.R. Rep. 95-1403, 95th Cong., 2d Sess. 40 (1978). Thus,

even in the absence of the proposal, disputes over contracting-

out are within the permissible scope of the negotiated grievance

procedure unless the parties decide to exclude them.

Nonetheless, EEOC argues that by designating a subject as a

management right, Congress intended not only to take that sub-

ject outside the duty to bargain but to remove it from the scope

of the negotiated grievance procedure as well. But as is evident

from EEOC’s acknowledgment that grievances over discipline

and promotions are permissible, even though discipline and pro-

motions are management rights, the management rights provi-

sion of the Statute does not also operate to remove the specified

rights from the scope of the negotiated grievance procedure. The

legislative history demonstrates that Congress intended the

management rights provision only to preclude bargaining, and

then only with respect to proposals which improperly intrude upon

the exercise of the right; the management rights provision does

not address what matters can or cannot be grieved under the

Of course, nothing in the Statute precludes EEOC or any other

employing agency from proposing .n collective bargaining to ex-

clude contracting out matters from the scope of the grievance pro-

cedure. Indeed, Congress expressly permitted parties to negoti-

ate for the exclusion of any matter from the Statute’s broad-scope

negotiated grievance procedure. § U.S.C. 7121(aX(2); AFGE,

Locals 225, 1504, and 3723 v. FLRA, 712 F.2d 640 (D.C.

Cir. 1983).

2. Petitioner’s alternative argument that contracting-out

should be exempt from coverage under the Statute’s grievance

mechanism because it is different in character from other manage-

ment rights ignores the fact that the Statute makes no such distinc-

tion. Further, the legislative history gives no indication that when

Congress reserved to management as nonnegotiable the substan-

tive authority to contract-out, it intended contracting-out to be

the one Section 7106(a)(2) right over which grievances were to

be impermissible.

EEOC also argues that the portion of the bargaining proposal

that would permit grievances over violations of the Circular is

inappropriate because the Circular is not a rule or regulation,

but merely a policy directive which does not limit management’s

discretion in any meaningful sense. This argument emphasizes

the discretionary aspects of the Circular, ignores the mandatory

aspects, and disregards the fact, acknowledged by EEOC, that

the Circular requires EEOC’s compliance. Moreover, insofar as

EEOC’s argument goes to the nature of the review to be given

EEOC’s exercise of the discretionary aspects of the Circuiaz, the

Authority’s precedent clearly demonstrates that arbitrators may

not substitute their judgment for the exercise of management

discretion in areas reserved to management by Section 7106,

C. Finally, EEOC errs in asserting that the Circular itself

operates to curtail the permissible reach established by Congress

for the negotiated grievance procedure. EEOC’s argument that

Section 7117(a)(1) of the Statute bars negotiation over proposals

simply because they happen to share the same subject matter as

a government-wide rule or regulation is incorrect because Sec-

tion 7117(a)(1) only bars negotiation over proposals which would

bring abevt an inconsistency with government-wide rules or

regulations like the Circular. EEOC argues in the alternative that

there is an inconsistency between the Circular and the proposal

and, under Section 7117(a)(1), this inconsistency should bar

negotiation over the proposal. However, even assuming that

coverage of contracting-out disputes under the negotiated

grievance procedure is inconsistent with the terms of the Circular,

the Statute’s establishment of a right to a broad-scope negotiated

grievance procedure can not be restr’ ~d by the Circular. To allow

the Circular to limit the statutory scope of grievances would place

“‘limitations in the statute not placed there by Congress.”’ Colgate-

Paimolive Peet Co. v. NLRB, 338 U.S. 355, 363 (1949).

ARGUMENT

A COLLECTIVE BARGAINING PROPOSAL THAT DOES NOT

ESTABLISH ANY SUBSTANTIVE LIMITATION ON A

FEDERAL AGENCY'S RIGHT, IN ACCORDANCE WITH

APPLICABLE LAWS, TO MAKE DETERMINATIONS WITH

RESPECT TO CONTRACTING-OUT, BUT INSTEAD SIMPLY

RESTATES AN AGENCY'S EXISTING OBLIGATION TO COM-

PLY WITH REQUIREMENTS IN APPLICABLE LAWS AND

REGULATIONS CONCERNING CONTRACTING-OUT, IS

WITHIN THE DUTY TO BARGAIN UNDER THE FEDERAL

SERVICE LABOR-MANAGEMENT RELATIONS STATUTE

A. The Statute Precludes Bargaining Over Proposals That

Would Substantively Limit The Exercise Of Authority

Reserved To Management, Not Over A Proposal That Only

Restates Management's Undisputed Obligation To Com-

ply With Applicable Laws and Regulations

The duty to bargain in the federal sector extends generally to

“conditions of employment,’’ which include ‘‘personnel policies,

practices, and matters, whether established by rule, regulation,

or otherwise, affecting working conditions * * *.’’ 5 U.S.C.

7103aX(14); Department of Defense v. FLRA, 659 F.2d 1140,

1143 n.2 (D.C. Cir. 1981), cert. denied, 455 U.S. 945 (1982).

Absent other considerz iions, bargaining proposals falling within

the ambit of this definition are within the duty to bargain. See

AFGE, Local 32 and Office of Personnel Management,

Washington, D.C., 6 F.L.R.A. 423, 423-424 (1981), enf’d sub

nom. Office of Personnel Management v. FLRA, 706 F.2d 1229

(D.C. Cir. 1983). See also Library of Congress v. FLRA, 699

F.2d 1280, 1283-1286 (D.C. Cir. 1983); Department of Defense,

Department of the Army v. FLRA, 685 F.2d 641, 644 (D.C. Cir.

1982). The duty to bargain under the Statute does not encom-

pass proposals that are inconsistent with federal law or applicable

regulation (S U.S.C. 7117(a)) or proposals that improperly in-

trude on the authority of management officials of an agency to

exercise the rights enumerated in Section 7106(a) of the Statute

(5 U.S.C. 7106(a)). Department of Defense v. FLRA, 659 F.2d

at 1143 n.3, 1146.

Among the rights the Statute reserves to management is the

authority ‘in accordance with applicable laws * * * to make

determinations with respect to contracting-out[.]"" 5 U.S.C.

7106(a(2)(B). This management right was first included in the

bill reported out of the House Committee. H.R. 11280, 95th

Cong., 2d Sess. § 7106(a)(2)(B) (1978), reprinted in Legis. Hist.

at 391. The House adopted this as one of the management rights.

124 Cong. Kec. 29176, 29221 (1978), reprinted in Legis. Hist.

as 911, 966. The Senate bill did not include a management right

to contract-out, and in the Conference Committee the Senate

receded to its inclusion in the Statute. H.R. Conf. Rep. 95-1717,

95th Cong., 2d Sess. 154 (1978), reprinted in Legis. Hist. at

822."

Just as it has held with respect to the other rights listed in Sec-

tion 7106(a)(2),° the Authority has recognized consistently that

the Statute reserves to management as nonbargainable the

substantive exercise of its authority to make contracting-out deter-

minations. The Authority’s first and lead decision in this area

’ Proposals concerning certain matters, set forth in Section 7106(b\1) of

the Statute, are negotiable only at the election of the agency. § U.S.C. 7106(b) 1).

See New York Council, ACT v. FLRA, 757 F.2d $02, 508 (2d Cir. 1985), cert.

denied, No. 85-106 (Oct. 7, 1985).

* The right to contract-out was not specifically listed as a separate manage-

ment right under the Executive Order program. However, in Tidewater Virginia

Federal Employees Metal Trades Council and Naval Public Works Center, Nor-

folk, Virginia, | F.L.R.C. 431, 440 (1973), a proposal restricting the factors

an agency could rely on in reaching a contracting-out decision, and thus “‘pro-

scribing management action based on OMB Circular A-76,"" was found non-

negotiable by the Federal Labor Relations Council (‘‘the Council’’). The Counc!

found that the proposal conflicted with management's rights, under Section

12(b\S) of Executive Order 11491, to determine the methods, means, and per-

sonnel by which agency operations were to be conducted. | F.L.R.C. at 440-441.

However, the Counci!’s decision also stated that ‘‘proposals to establish pro-

cedures which management would observe leading to the exercise of the re.

tained management rights under | 2(b\5) would be negotiable to the extent they

do not interfere with the exercise of the rights themselves."’ | F.L.R.C. at 442.

* With respect to the right to hire, see NTEU and IRS, 2 F.L.R.A. 281

(1979); the right to assign work and direct employees, see NTEU and Depart-

ment of the Treasury, Bureau of the Public Debt, 3 F .L.R.A. 769 (1980), aff'd

sub nom. NTEU v. FLRA, 691 F.2d $53 (D.C. Cir. 1982); the right to layoff

employees, see NTEU and IRS, 7 F.L.R.A. 275, 286-288 (1981); the right to

is NFFE, Local 1167 and Department of the Air Force, Head-

quarters, 31st Combat Support Group (TAC), Homestead Air

Force Base, Florida, 6 F.L.R.A. $74 (1981), aff'd sub nom.

NFFE, Local 1167 v. FLRA, 681 F.2d 886 (D.C. Cir. 1982). Since

then, the Authority consistently has found nonnegotiable pro-

posals which would impose substantive limitations on the exer-

cise of management's contracting-out authority. E.g., AFGE,

Local 2736 and Department of the Air Force, Headquarters 379th

Combat Support Group (SAC), Wurtsmith Air Force Base,

Michigan, 14 F.L.R.A. 302 (1984) (proposals | and 2); JAM and

AW, Local 2424 and Department of the Army, Aberdeen Prov-

ing Ground, Maryland, 8 F.L.R.A. 679 (1982) (proposals 3 and

4); AFGE, Local 3403 and National Science Foundation,

Washington, D.C., 6 F.L.R.A. 669 (1981) (proposal 3)."°

However, as the Authority correctly found and the court of

appeals properly affirmed, the Statute does not automatically

render nonnegotiable a// proposals regarding contracting-out, and

management's discretion in this area is not unfettered (Pet. App.

8a).

First, management must make its contracting-out determina-

tions in accordance with any existing laws and regulations that

govern the exercise of such authority. This proposition is not

discipline employees, see PATCO and FAA, $ F.L.R.A. 763 (1981): the right

to assign work, see NTEU and Department of the Treasury, IRS, 6 F.L.R.A.

508, 517-518 (1981), the right to determine the personnel by which agency opera-

tions shall be conducted, see NFFE, Locals 1707, 1737 and 1708 and Head-

quarters, Louisiana Air and Army National Guard, New Orleans, Louisiana,

9 F.L.R.A. 148 (1982); the right to make selections for appoitments, see /m-

migration and Naturalization Service, Eastern Regional Office (Burlington, Ver.

mont), 18 F.L.R.A. No. 103 (1985) slip op." 8; and the right to take whatever

actions may be necessary to carry out the agency mission during emergencies,

see ACT, Inc., Pennsylvania State Council and the Adjutant General, Depart-

ment of Military Affairs, Commonwealth of Pennsylvania, 7 F.L.R.A. 346.

348-350 (1981).

See also AFGE, Local 1546 and Department of the Army, Sharpe Army

Depot, Lathrop, California, 19 F .L.R.A. No. 118 (1985) (provision 2); AFGE,

Local 12 and Department of Labor, 18 F.1..R.A. No. 58 (1985) (proposal 6);

AFGE, Local 1923 and Health Care Financing Administration, Baltimore,

Maryland, \7 F.L.R.A. No. 96 (1985); AFGE, Local 162? and The Directorate

Facilities and Engineering Department of the Army. Fort George G. Meade,

Maryland, 17 F.L.R.A. No. 69 (1985).

merely self-evident.'' The plain language of the Statute states

that management is reserved the authority ‘‘in accordance with

applicable laws * * * to make determinations with respect to

contracting out.”’ § U.S.C. 7106(a)(2)B)."

Second, Section 7106(a) of the Statute makes this management

authority “*[sjubject to’’ Section 7106(b)(2) and (3), which pro-

vides for the negotiation of procedures which management will

observe in exercising its right to contract-out and ‘‘appropriate

arrangements’ for employees adversely affected by the exercise

of the right. § U.S.C. 7106(b)(2) and (b)(3). See, e.g., AFGE,

Local 2782 v. FLRA, 702 F.2d 1183, 1185 (D.C. Cir. 1983);

NFFE, Local 1167 v. FLRA, 681 F.2d 886, 892 (D.C. Cir. 1982);

Department of Defense v. FLRA, 689 F.2d 1140, 1146 and n.28,

1151, 1153 (D.C. Cir. 1981), cert. denied, 455 U.S. 945 (1982).

See also Cornelius v. Nutt, No. 83-1673 (June 24, 1985) slip op.

15; Bureau of Alcohol, Tobacco and Firearms v. FLRA, 464 U.S.

89, 92 (1983).

‘Under general labor law principles, the designation of a matter as a

reserved management right does not exempt management's exercise of that nght

from restrichons imposed by applicable law and regulations. See, e.g., Prasow

& Peters, Arbitration and Collective Bargaining 31 (1970) (“Stated in an un-

qualified semplistic form, the reserved-rights theory holds that management's

authority is supreme * * * im all areas except those where its authority is

restricted by law."’ [footnote omitted]); Rabin, Fibreboerd and the Termina-

tion of Bargaining Unit Work the Search for Standards in Defining the Scope

of the Duty to Bargain, 71 Colum. L. Rev. 803, 814 (1971) ("The ‘manage-

ment rights doctrine’ is a valid rule of construction which holds that manage-

ment is presumed to retain its unfettered common law right to run its business

except as abridged by contract or statute.” ); Phelps, “‘Management's Reserved

Rights: An Industry View,”’ in Proceedings of Ninth Annual Meeting of

National Academy of Arbitrators, 102, 105 (1956) (‘In the absence of [a col-

lective bargaining agreement narrowing management's reserved nights}, manage

ment has absolute discretion im the hiring, firing, and the orgamization and direc

tion of the working forces, subject only to such limitations as may be imposed

by law.”").

'? See Elkouri and Elkouri, Lega! Status of Federal-Sector Arburation

supp. to How Arbitration Works, 3d ed., 13 (1980) (“The statutory words ‘in

accordance with applicable laws’ do limit management rights, and this limita

tion would spear to be properly enforceable by contractual grievance and ar-

bitration procedures. Apart from this, however, the statutory reservation of

management rights necessarily reduces the scope of grievance-procedure or ar

bitral authority to disturb actions taken by agency management officials '').

Consequently, the fact that a bargaining proposal mentions

a management right enumerated in Section 7106(a)(2), including

the right to contract-out, does not of itself render the proposal

nonnegotiable. In order to determine whether such a proposal

is within the statutory duty to bargain, the Authority examines

the proposal to ascertain what effect, if any, it would have on

management's exercise of its reserved authority. The Authority

makes that examination based on the language of the proposal

and the submissions of the parties. § U.S.C. 7117%c): § CFR.

2424.4-2424.7. See Department of Treasury v. FLRA, 707 F.2d

574, $79 (D.C. Cir. 1983); NFFE, Local 1167 v. FLRA, 681 F 2d

at 891.

The proposal in this case states: *‘The EMPLOYER agrees

to comply with OMB Circular A-76, and other applicable laws

and regulations concerning contracting-out"’ (Pet. App.

With respect to the interpretation to be given the management rights pro-

vision im the Statute, the House Committee Report stated.

rights’* language of Executive Order 11491 has been a substantial barrier

against negotiations. The committee intends that section 7106— which re-

tains several of management's rights under the Executive Order. but also

eliminates several—be read to favor collective bargaining whenever there

1s doubt as to the negonability of 2 subject or a proposal

H.R. Rep. 95-1403, 95th Cong... 2d Sess. 43-44 (1978). reprinted im Legis Mist

2 689-690)

As Representative Ford stated :

It ts our expectation and that of others supporting the substitute’s manage

ment rights clause that such a clause will adequately Protect’ genuine

managerial prerogatives but that, construed strictly, such a clause will alo

allow the flexibility that ts the hallmark of a successful labor-management

Program. Thus, although management has the night to direct the workforce.

Proposals aumed ai lessening the adverse impact on employees of an exer.

cise, perhaps arbitrary, of that mghi are fully negouable

124 Cong. Rec. 29199 (1978), reprinted mn Lege. Hist. at 956. See also 124 Cong.

Rec. 29187 (1978) (stacement of Rep. Clay), reprinted in Legis. Hist, at 933.

40a).* As the Authority found, and the court below affirmed,

this proposal does not establish any substantive criteria guiding

EEOC’s contracting-out determinations (Pet. App. 41a, 9a). In-

stead, the proposal echoes the existing statutory requirement that

F EOC make its contracting-out determinations in accordance with

applicable laws. Accordingly, any restrictions on EEOC's

contracting-out authority stem not from the proposal but from

external legal limitations with which EEOC is obligated to com-

ply in any event.

The Authority has consistently held to be within the duty to

bargain proposals which, like the one here invorved, simply restate

management's obligation to exercise its Section 7106(a\(2) rights

im accordance with applicable laws and regulation. Thus, for ex-

ample, the Authority has held negotiable a proposal that **[ajll

reductions in force will be carried out in strict compliance with

ment of the Air Force, Mather Air Force Base, California, 8

F.L.R.A. 194 (1982) (provision 2)); a proposal which provided

that work assignments not violate any relevant law, rule or regula-

unions (NFFE, Local 1497 and Department of the Air Force, Lowry

Air Force Base, Colorado, 9 F.L.R.A. 151 (1982) (union pro-

posal 2)); and a proposal stating that involuntary job

reassignments would only be made to promote the efficiency of

the service and not to discriminate or punish, or for any reason

that would violate law, rule, regulation or agreement (AFGE,

International Council of U.S. Marshals Service Locals and

Department of Justice, U.S. Marshais Service, 11 F.L.R.A. 672

“The maue resolved Dy the Authorty and bngated m the court below ss

whether EEOC s obhgated to bargam over the proposal Heretofore, EEOC

has never suggested that mt 1s not obigated to comply eth the Carcular See

EBROC’s petition for rehearing to the court below, at & “[T)he EBOC does

not dispute that & must comply with the terms of the Circular * * * .” The

extent and the nature of the comphance obhgation umposed Dy the Circular.

@ matter now raned by EBOC (Pet. Br. 24-29), was not an issue before the

Authonty and 6 sot an msue that thes Court must resolve in Getermening whether

the Authonty property decaded that the proposal is eithen the duty to bargamn

In amy event. those portions of the Carcular whch conta only guidance would

not be subyect to artetrral rewew See discusmon at 37 mfre.

(1983) (union proposal 4)).' In each of these cases, the pro-

posals were properly found negotiable because they did not

establish any substantive limitation on the exercise of a manage-

ment right.

On the other hand, the Authority has just as consistently found

nonnegotiable proposals which impose substantive limitations of

their own making on the exercise of management rights, even

though those limitations may arguably appear benign. Thus, the

Authority has found nonnegotiable a proposal that would have

required contracting-out determinations to be ‘‘fair, equitable,

and in accordance with established policy’’ because an arbitrator

would not simply monitor compliance with mandatory portions

of applicable laws and regulations but would instead substitute

his or her judgment for that of the agency in areas reserved to

management discretion. AFGE, Local 3403 and National Science

Foundation, 6 F.L.R.A. at 673-675." Similarly, the Authority

has found proposed contract language nonnegotiable,

'* See also AFGE, Local 1940 and Department of Agriculture, Plum Island

Disease Center, 16 F.L.R.A. No. 114 (1984) slip op. 5 n.6 (proposals limited

to requiring that performance standards be established in accordance with ap-

plicable laws would be within the duty to bargain); Delaware Army and Air

National Guard, 16 F.L.R.A. No. 66 (1984) (proposal 6) (proposal that manage-

ment fill bargaining unit positions consistent with law is negotiable); AFGE,

Local 1858 and Army Missile and Munitions Center and School, Redstone

Arsenal, Alabama, 15 F .L.R.A. No. 59 (1985) (proposal that the ratio of civilian

and military positions will be in accordance with agency regulation is negotiable);

ACT, New York State Council and State of New York, Division of Military

and Naval Affairs, Albany, New York, 11 F.L.R.A. 475 (1983) (proposal 1)

(proposal that management act in accordance with merit system principles in

5 U.S.C. 2301 is negotiable); JAM and AW, Local 2424 and Department of

the Army, Aberdeen Proving Ground, Maryland, 8 F .L.R.A. 679 (1982) (pro-

posals S and 6) (proposals that management will minimize the adverse effect

of contracting-out decisions in accordance wah applicable laws are negotiable),

NTEU and IRS, 3 F.L.R.A. 693 (1980) (proposals 2 and 3) (proposals that

management act in accordance with merit system principles in § U.S.C. 2301

are negotiable).

'*See also NTEU, Chapter 204 and Federal Election Commission, \9

F.L.R.A. No. 25 (1985) (proposal would have subjected management's deter-

mination as to which days employees should work to a test of ‘‘reasonableness’’),

AFGE, Local 32 and Office of Personnel Management, 16 F.L.R.A. No. 127

(1985) (proposal 3) (proposal requiring performance standards to be ‘‘fair and

equitable’ would have improperly permitted arbitrators to substitute their judg-

ment as to the proper content of performance standards), petition for review

filed sub nom. Local 32, AFGE v. FLRA, No. 85-1038 (D.C. Cir. Jan. 16, 1985).

even though it tracked the current language of the Circular,

because it would require management to comply with that

language ‘‘regardless of whether OMB subsequently revised or

eliminated the directives/circulars from which they were taken.”’

NFFE, Local 1167 and Department of the Air Force, Head-

quarters, 3lst Combat Support Group (TAC), Homestead Air

Force Base, Florida, 6 F.L.R.A. 574, 577 (1981), aff’d as to other

matters sub nom., NFFE v. Local 1167 FLRA, 681 F.2d 886

(D.C. Cir. 1982)."

In determining that the proposal in this case is negotiable, the

Authority properly applied the principle developed in the above

cases involving contracting-out as well as other management rights

in Section 7106(a)(2) of the Statute. Simply put, proposals which

do no more than restate the obligation to adhere to whatever legal

and regulatory requirements may be extant at the time are within

the duty to bargain, but those proposals which impose their own

criteria affecting the substantive exercise of management’s re-

served rights are nonnegotiable. In applying this distinction to

negotiability determinations that Congress entrusted to be the

primary function and responsibility of the Authority, the Author-

ity has performed ‘‘its ‘special function of applying the general

provisions of [the Statute] to the complexities’ of federal labor

relations.’’ Bureau of Alcohol, Tobacco and Firearms v. FLRA,

464 U.S. 89, 97 (1983) (citation omitted). See also Ford Motor

Co. v. NLRB, 441 U.S. 488, 496-497 (1979). The Authority’s deci-

sion ‘‘represents a reasonable accommodation of conflicting

policies that were committed to the agency’s care by the statute,”’

and this accommodation should not be disturbed ‘‘unless it ap-

pears from the statute or its legislative history that the accom-

modation is not one that Congress would have sanctioned.”’

Chevron, U.S.A., Inc. v. National Resources Defense Council,

Inc., Nos. 82-1005, 82-1247 and 82-1591 (June 25, 1984) slip op.

6-7, quoting United States v. Shimer, 367 U.S. 374, 382, 383

(1961). The consistency of the Authority’s decisional precedent

in this negotiability area is a further reason that the Court should

be particularly reluctant to hold that the Authority’s interpreta-

tion of the Statute is impermissible. See Pattern Makers’ League

of North America v. NLRB, No. 83-1894 (June 27, 1985) slip

op. 19-20.

"” See also cases cited in notes 9, 10, supra.

B. The Statute Does Not Exempt From The Scope Of The

Negotiated Grievance Procedure Matters Relating To The

Exercise Of Management's Contracting-Out Authority In

Accordance With Applicable Legal Requirements

EEOC argues (Pet. Br. 17-22, 35-42) that even if the language

of the proposal does not limit EEOC’s authority to make

contracting-out determinations, the effect of the proposal would

be to hinder its exercise by subjecting such decisions to the

negotiated grievance procedure mandated by Congress in Sec-

tion 7121 of the Statute. However, EEOC’s argument assumes

that a complaint asserting that a contracting-out determination

was not made in accordance with applicable legal requirements

would not be grievable in the absence of the contract proposal.

As the Authority properly found and the court below correctly

affirmed, this assumption is contrary to the text and history of

the Statute.

1. As stated in the House Committee Report, Congress enacted

the Statute to ‘improve the civil service system, ensure adequate

protection for employees against unlawful abuse by agency

management, and provide a framework for labor-management

relations in the Federal Government.’’ H.R. Rep. 95-1403, 95th

Cong., 2d Sess. 3 (1978), reprinted in Legis. Hist. at 679. In fur-

therance of these goals, Congress required that every collective

bargaining agreement contain a negotiated grievance procedure

which includes binding arbitration. 5 U.S.C. 7121. The Statute

“prescribes those matters which * * * have to be submitted, as

a matter of law, to the grievance procedures * * * unless the

parties agree as part of the collective bargaining process that cer-

tain matters shall not be covered by the grievance procedures.”

H.R. Conf. Rep. 95-1717, 95th Cong., 2d Sess. 157 (1978),

reprinted in Legis. Hist. at 825.

This Court has recognized that Section 7103(a)(9) of the Statute

‘broadly defines ‘grievance’ .’’ Cornelius v. Nutt, No. 83-1673

(June 24, 1985) slip op. 15. The term grievance includes, among

other things, any complaint by any employee concerning ‘‘any

matter relating to the employment of the employee’’ (Section

7103(aX9(A)), or ‘‘any claimed violation, misinterpretation, or

misapplication of any law, rule or regulation affecting conditions

of employment * * * *’ (Section 7103(aX(9)C)ii)). See AFGE,

Locals 225, 1504, and 3723 v. FLRA, 712 F.2d at 641.

‘*[A]lthough this subsection [7103(a)(9)] is virtually all-inclusive

in defining ‘grievance,’ section 7121 excludes certain grievances

from being processed under a negotiated grievance procedure,

thereby limiting the net effect of the term.’’ H.R. Rep. 95-1403,

95th Cong., 2d Sess. 40 (1978), reprinted in Legis. Hist. at 686.

See note 4, supra. See also Andrade v. Lauer, 729 F.2d 1475,

1487 n.22 (D.C. Cir. 1984) (‘‘Congress demonstrated its care in

defining the scope of the negotiated grievance procedures by

defining several types of claims that it intended to keep outside

the scope of the grievance procedure. See § U.S.C. §7121(c)

(1982).’’). As the court below correctly noted, contracting-out

was not one of the five subjects Congress chose in Section 7121(c)

of the Statute to exclude from coverage under the grievance

mechanism (Pet. App. 12a). Thus, the language and the legislative

history of the Statute constitute a ‘‘clear expression of congres-

sional intent’’ with regard to the permissible scope of the

negotiated grievance procedure under the Statute. See Bureau of

Alcohol, Tobacco and Firearms v. FLRA, 464 U.S. at 99.

Despite the fact that Congress did not list contracting-out in

Section 7121(c) as a subject excluded from the scope of the

grievance procedure, EEOC nonetheless contends (Pet. Br. 35-42)

that disputes concerning its compliance with applicable

contracting-out requirements are not grievable or arbitrable. In-

deed, EEOC’s principle argument throughout this case has been

that when the Statute designates a subject as a management right,

the negotiated grievance procedure is not available to resolve

disputes over whether management exercised that right within

legal and regulatory requirements. Yet apparently even EEOC

does not apply this proposition to all management rights since

it accepts (see Pet. Br. 29-31) as appropriate grievances over such

management rights as the right to discipline or the right to select

for employment vacancies (which includes the right to promote

employees).

The Statute’s reservation of authority to management by opera-

tion of Section 7106(a) does not also thereby operate to remove

complaints regarding allegedly improper exercise of that authority

from the permissible scope of the negotiated grievance procedure.

For example, the right to grieve management’s compliance with

applicable reduction-in-force rules and regulations under the

negotiated grievance procedure is unquestioned, even though the

authority to layoff employees is made nonnegotiable by

Section 7106(a)(2). See Andrade v. Lauer, 729 F.2d at 1484-1489

(D.C. Cit. 1984). Also, the right to grieve disciplinary actions

under the negotiated grievance procedure is unchallenged, even

though the right to take such actions is a nonnegotiable manage-

ment right. 124 Cong. Rec. 29183 (1978), reprinted in Legis. Hist.

at 924 and cited at Pet. App. 14a-15a. See also Cornelius v. Nutt,

supra, slip op. 3."* Similarly, the right to grieve noncompliance

with proper selection procedures under the negotiated grievance

procedure is statutorily permissible, again by operation of Sec-

tion 7103(a)(9)’s definition of grievance, even though the right

to make selections for employee positions is nonnegotiable under

Section 7106(a)(2(C). E.g., AFGE, Local 12 and U.S. Depart-

ment of Labor, 15 F.L.R.A. No. 113 (1984); Veterans Admin-

istration Hospital and AFGE, Lodge 2201, 4 F.L.R.A. 419 (1980).

Thus, Congress’ decision to remove a matter from the duty to

bargain cannot be equated with an intent to remove that matter

from the scope of the negotiated grievance procedure as well.

Nevertheless, EEOC argues (Pet. Br. 38, 41 and n.22) that by

using the language ‘‘nothing in this chapter shall affect’’ manage-

ment’s rights, Congress intended that Section 7106(a)(2) rights

would be immune from application of the negotiated grievance

procedure mandated by Section 7121 of the Statute. This argu-

ment improperly reads the phrase ‘‘nothing in this chapter’’ in

isolation from the Statute’s legislative history as well as from the

remainder of Section 7106."

'® Section 7121(c\3) of the Statute sets forth an exception to the general

right to grieve discipline. § U.S.C. 7121(c(3). There, Congress exempted from

the scope of the negotiated grievance procedure grievances concerning an

employee's suspension or removal taken for national security reasons. This ex-

emption demonstrates congressional awareness that the Statute’s removal of

a subject from the bargaining table did not also operate to remove complaints

about the impermissible exercise of the subject from the grievance procedure.

The authority to take discipline is reserved to management as nonnegotiable

by Section 7106(aX 2A); yet, when Congress intended to remove an aspect

of that nonnegotiable subject from the grievance procedure, it did so by writing

an exemption in Section 712i(c\3) from the grievance procedure. Congress

could have done likewise for contracting-out matters, but did not.

'* As stated by this Court in Mastro Plastics Corp. v. NLRB, 350 U.S. 270,

285 (1956), ‘If the above words are read in complete isolation from their con-

text in the Act, such an interpretation is possible. However, ‘[i]n expounding

a statute, we must not be guided by a single sentence or member of a sentence,

but look to the provisions of the whole law and to its object and policy.’’’ (Cita-

tion omitted.)

The Statute’s legislative history contradicts EEOC’s assertion

(Pet. Br. 38, 41) that the language “‘nothing in this chapter shall

affect’’ was intended to do more than make the exercise of the

listed rights nonnegotiable. The quoted language comes from the

management rights provision of the bill reported out of the House

Committee.” In discussing this provision, the House Commit-

tee Report stated that “*[t}he effect of this section is to place limits

on the number of subjects about which agency management may

bargain with a labor organization.’’* See Bureau of Alcohol,

Tobacco and Firearms v. FLRA, 464 U.S. at 92 (‘The [Statute]

excludes certain management prerogatives from the scope of

negotiations, although an agency must bargain over the pro-

cedures by which these management rights are exercised. See

§7106."").

Although several other management rights were added to Sec-

tion 7106 of the House bill on the floor immediately prior to

passage, the intent of the House remained unchanged; that is,

that the management rights sectic preclude the parties only from

bargaining over the exercise of (.. \isted rights. See 124 Cong.

Rec. 29183 (1978), reprinted in Legis. Hist. at 924. As stated by

Representative Udall, who introduced this floor amendment ex-

panding the number of management rights, the management

rights section was ‘‘still to be treated narrowly as an exception

to the general obligation to bargain over conditions of employ-

ment."’ /bid. Further, Representative Udall stated: “*{This amend-

ment] preserves management's right to make the fina! decisions

in these additional areas in accordance with applicable laws, in-

cluding other provisions of chapter 71 of title 5. For example,

management has the reserved right to make the final decision to

‘remove’ an employee, but that decision * * * would in no way

affect the employee's right to appeal the decision through * * *

the procedures set forth in a coilective bargaining agreement.’

* H.R. 11280, 95th Cong., 2d Sess. § 7106(a) (1978) reprinted in Legis.

Hist. at 391-392. The Senate bill paralleled the Executive Order language. S.

2640, 95th Cong., 2d Sess. §$§ 721 S(c), 7218(a) (1978), reprinted in Legis. Hist.

at 578, 588-590.

* H.R. Rep. 95-1403, 95th Cong. 2d Sess. 43 (1978), reprinted in Legis.

Hist. at 689 (emphasis added). This version of the House bill contained manage-

ment’s right “in accordance with applicable laws * * * to make determinations

with respect to cor iracting out." See also note 13, supra.

Ibid., emphasis added.” The Horse-Senate Conference Com-

mittee adopted the House version of Section 7106—the version

introduced by Representative Udall.”

Nothing in the pertinent legislative history demonstrates that

Congress intended the management rights clause to take matters

outside the grievance procedure in addition to making them non-

negotiable. Accordingly, EEOC’s assertion that when the Statute

designates a topic as a management right it not only removes the

exercise of that right from collective bargaining but also removes

grievances concerning that subject-matter from coverage under

the negotiated grievance procedure is without merit.*

Moreover, EEOC’s reliance on the phrase “nothing in this

chapter shall affect’ improperly reads the phrase in isoiation from

the other relevant statutory language. In its entirety, the

contracting-out right in section 7106(a2)B) of the Statute pro-

vides: ‘*‘Subject to subsection (b) of this section, nothing in this

chapter shall affect the authority of any management official of

any agency * * * in accordance with applicable laws * * * to make

determinations with respect to contracting out.”’ 5 U.S.C.

7106(a2)B). As discussed at 15-16, supra, this language does

not provide for an unfettered exercise of management authority.

The Statute makes management's exercise subject to subsection

(b), which in Section 7106(b)(2) and (b)(3) imposes the affirmative

obligation to negotiate procedures which management will observe

in exercising its right and “appropriate arrangements’’ for

22 Read in context, Representative Udall’s statement that “‘umons do not

get much out of [the Statute] that is not already in the Executive order [,}"

124 Cong. Rec. 29182 (1978) (cited at Pet. Br. 33), refers to such matters as

the right to strike, agency shop, and bargaining over wages, fringe benefits

and retirement which were not included in the new law. 124 Cong. Rec. 29182.

29185 (1978), reprinted in Legis. Hist. at 923, 929. With regard to the matters

relevant to this case, Represeutative Udail’s statement in the text above ts clear

and specific. Moreover, with respect to what umons did gain. Kepresentative

Udall cited * ‘guarantees about procedures that management must follow” and

a broader scope of matters that can be arbitrated. 124 Cong. Rec. 29182 (1978),

reprinted in Legis. Hist. at 923. See also Bureau of Alcohol, Tobecco and

Firearms v. FLRA, 464 U.S. 89, 103 9.13.

* H.R. Conf. Rep. 95-1717, 95th Cong... 2d Sess. 153-154 (1978), reprinted

in Legis. Hist. at 821-822. See Department of Defense ». FLRA, 659 F.2d 1140,

1156 (D.C. Cir. 1981), cert. denied, 455 U.S. 945 (1982).

* Moreover, as discussed at 22, supra, when Congress tended to remove

from the gnevance procedure an aspect of a management right, it created a

specific exemption from the scope of the grievance procedure. See § U S.C.

TIZNCKS).

employees adversely affected by the exercise of the right. See

AFGE, Local 2782 v. FLRA, 702 F.2d 1183 (D.C. Cir. 1983);

Department of the Air Force, United States Air Force Academy

v. FLRA, 717 F.2d 1314 (10th Cir. 1983). The Statute, by its ex-

press terms, also makes management's exercise subject to the

obligation that it be done “‘in accordance with applicable

laws.""”

As Authority case law discussed above at 19 demonstrates, ex-

ercise of management discretion within the bounds of applicable

law and regulation is not subject to review through the negotiated

grievance procedure. Bargaining proposals that would invite ar-

bitral encroachment on the exercise of discretion reserved to

management consistently have been held nonnegotiable by the

Authority. See cases cited at 19-20, supra. For example, the

Authority has held that management's nonnegotiable authority

to set employee performance standards means that no grievance

procedure can be negotiated which would permit arbitral review of

* Petitioner contends (Pet. Br. 20-21) that subjecting determinations re-

garding contracting-out to the grievance and arbitration mechanisio will result

in delay and added expense in the contracting-out process. As to the arbitrators’

awards cited at Pet. Br. 20 0.9, no such expense has been incurred. In cach

case, the Authority has granted the agency's request for a stay of the award

pending the Authority's resolution of the exceptions filed by the agency pur.

suamt to $ U.S.C. 7122. (Copies of the stay orders have been lodged with the

Clerk of the Court and provided to counsel for the other parties.) Further,

as to the time involved m the grievance and arbitration process, the Statute

requires a negotiated grievance procedure to ‘provide for expeditious process.

ing’ (5 U.S.C. 7121(bM2)); the parties may, of course, consistent with that

requirement, negotiate applicable time limits for grievance and arbitration proc.

essing that meet thew needs with respect to contracting-out or any other mat-

ters. In addition, parties may bargain to exclude matters from the scope of

the negotiated grievance procedure. § U.S.C. 7121(a,(2).

In essence, FEOC’s argument sets forth considerations that an agency might

advance if i were to propose to negotiate an exclusion for contracting-out mat.

ters from the scope of the grievance procedure, or to suggest that Congress

should exempt such matters by law But even assuming the validity of such

considerations, Congress chose not to add such a sixth exemption to the five

exemptions enumerated in Section 7121(c) of the Statute. Instead, while Con-

gress made contracting-oul a management right, just as it made the right to

take disciplinary action a management right, | exempted neither matter from

permissible coverage by a negotiated grievance procedure See Gray v Office

of Personnel Management, 77) F.2d 1504, 1511 (D.C. Cir. 1985) ("We can

not and will not * * * add a statutory provision which the First Branch did

not include."*).

the establishment of the performance standards, as that would

invite arbitrators to substitute their judgment for that of the agency

in the exercise of the aiscretion reserved to the agency as non-

negotiable. AFGE, Local 1968 and Department of Transporta-

York, 5 F.L.R.A. 70, 77-82 (1981), aff'd sub nom. AFGE, Local

1968 v. FLRA, 691 F.2d 565 (D.C. Cir. 1982), cert. denied, 461

U.S. 926 (1983). See also NTEU v. FLRA, 767 F.2d 1315,

1317-1318 (9th Cir. 1985).

Petitioner’s contention (Pet. Br. 39 n.20) that the AFGE, Local

1968 case, and the other cases cited at Pet. Br. 29, require a dif-

ferent result from the one herein ignores the critical distinction

which Authority precedent consistently preserves. Whether it be

in the area of contracting-out or employee performance standards,

nonnegotiable prerogative to choose the criteria which govern

the exercise of its rights. See, e.g., AFGE, Local 1923 and Health

Care Financing Administration, Baitimore, Maryland, \7

F.L.R.A. No. 96 (1985) (contracting-out); Bureau of Engraving

and Printing, U.S. Department of the Treasury and Washington

Plate Printers Union, Local No. 2, 20 F.L.R.A. No. 39 (1985)

(performance standards). Not only has ihe Authority held non-

negotiable proposals which would allow arbitrators to substitute

their judgment for that of management in the exercise of its right

(see, e.g., AFGE, Local 3403 and National Science Foundation,

6 F.L.R.A. at 673-675), but it has also granted management's

exceptions to arbitral awards that would have given effect to a

contract provision that infringed on the full scope of manage-

ment authority. See PATCO and FAA, 5 F.L.R.A. 763 (1981)

(contract provision granting immunity from discipline if employee

properly reported air traffic incident; Authority modified award

to retain to management its authority to discipline). Thus, even

if a proposal were negotiated and then implemented by an arbi-

tral award in a way that infringed on the exercise of the

discretion reserved to management by one of the management

rights, the Statute ensures management the opportunity to secure

appropriate relief from that award.”

On the other hand, the express terms of the Statute itself pro-

vide that the negotiated grievance procedure can address mat-

ters relating to the exercise of management's authority in accor-

dance with applicable legal requirements, as that exercise relates

to conditions of employment. § U.S.C. 7121 and 7103a)(9).

Bargaining proposals, like the one in this case, that do no more

than restate this operative effect of the Statute are negotiable.

Congress did not remove the subject matter of contracting-

out from the Statute’s broad-scope negotiated grievance pro-

cedure. However, nothing in the Statute precludes EEOC or any

other employing agency from proposing in collective bargaining

to exclude contracting-out matters from the scope of the grievance

procedure. Indeed, Congress authorized parties, as part of the

collective bargaining process, to agree to exclude matters from

the grievance procedure in addition to the five matters excluded

by 5 U.S.C. 7121(c). § U.S.C. 7121(ay2); APGE, Locals 225,

1504, and 3723 v. FLRA, 712 F.2d at 649. In doing so, Con-

gress created a broad-scope grievance procedure as a starting point

for parties to the collective bargaining process. If both parties

do nothing to change it, the broad-scope procedure applies; if

either party desires to add exclusions to the grievance procedure,

the matter is subject to mandatory negotiations. AFGE, Locals

225, 1504, and 3723 v. FLRA, 712 F.2d at 649.” Accordingly,

through the collective bargaining process established by Congress,

EEOC can seek to exclude matters related to contracting-out from

* $ U.S.C. 7122. See, ¢.¢., U.S. Department of Justice, Immigration and

Naturalization Service, Western Regional Office, San Pedro, California and

AFGE, Local 2805, 18 F.L.R.A. No. 20 (1985) (provision in parties’ contract

that assignment of training be equitable cannot be enforced because it interferes

with agency's right to assign work under Section 7106(ax2B)); NTEU and

U.S. Customs Service, 17 F.L.R.A. No. 12 (1985) (provision in parties’ con-

tract that performance standards be ‘reasonable for each position’ cannot

be enforced because it interferes with agency's rights under Section 7106(aK 2A)

and (B) to direct employees and assign work), U.S Department of Justice,

Federal Prison System and AFGE, Local 1741, 15 F.L.R.A. No. 178 (1984)

(arbitral award vacating an employce 's assignment and conditioning reassign

ment on a 60-day trial period must be set aside because it interferes with

agency's right under Section 7106(a 2A) to assign employees).

” For example, parties in the federal sector have excluded from the scope

of the negotiated grievance procedure such matters as decisions on incentive

the grievance procedure. And, as the D.C. Circuit has noted, **{i}n

collective bargaining, government managers are presumably com-

petent to look out for government interests.’’ Department of

Defense v. FLRA, 659 F.2d 1140, 1157 (D.C. Cir. 1981), cert.

denied, 455 U.S. 945 (1982).

In sum, as properly determined by the Authority and affirmed

by the court of appeals, the proposal’s effect of allowing matters

concerning EEOC’s adherence to applicable laws and regulations

concerning contracting-out to be raised under the negotiated

grievance procedure would not add a restriction to management's

contracting-out authority because those matters would be

grievable in any event by operation of the Statute, absent an

exclusion negotiated by the parties.

2. EEOC advances two alternative arguments in support of

its view that the scope of the negotiated grievance procedure

cannot encompass questions as to whether EEOC exercised its

contracting-out authority in accordance with applicable laws,

rules, and regulations. Neither argument withstands analysis.

a. EBOC first contends (Pet. Br. 29-34) that even if by making

contracting-out a management right Congress did not

automatically remove that matter from the scope of the negotiated

grievance procedure, contracting-out should be removed because

it is different in character from other management rights over

whose exercise grievances are permitted. EEOC argues (Pet. Br.

32) that contracting-out determinations bear only indirectly on

the employer-employee relationship and that Congress intended

arbitrators to resolve only disputes over subjects that are central

to any systein of labor management relations, such as discipline

and promotions (Pet. Br. 31).”

awards (AFGE Local 547 and Tampa Veterans Administration Hospual, \9

F.L.R.A. No. 87 (1985)) and matters for which a statutory appeals procedure

exists (U.S. Department of Housing and Urban Development and AFGE, \2

F.L.R.A. 41 (1989).

* EBOC argues (Pet. Br. 31-32) that this distinction was made under the

pre-Statute program, citing two cases decided by the Federal Labor Relations

Council. However, it is not clear that the Council fashioned such a distinc.

tion. See APGE, Local 20/7 and Department of the Army, U.S. Army Signal

Center and Fort Gordon, Fort Gordon, Georgia, § FL. RC. 435, 437 (1977)

(grievance concerning the assignment of military personnel to bargaiming unit

work) In any event, the plain language of the Statute and its legislative history

constitute ‘‘clear expression of congressional iment’ with regard to the per

missible scope of the negotiated grievance procedure under the Statute See

Bureau of Alcohol, Tobacco and Firearms +. FLRA, 44 US. a W.

EEOC’s attempted distinction between those management

rights over which grievances are permissible and others over which

grievances should be impermissible is not based on the language

of the Statute and is not supported by the Statute’s legislative

history. Not only is this argument raised late in the development

of this case,” it is advanced late in the development of the law

of labor arbitration which has long recognized that ‘‘{cjontracting-

out work is the basis of many grievances; and that of claim

is grist in the mills of arbitrators."’ Steelworkers v. Warrior &

Gulf Navigation Co. , 363 U.S. $74, $84 (1960) (footnote omitted).

Management's nonnegotiable authority to make determinations

with respect to contracting-out is set forth in the Statute along

with such other rights as the authority to hire, direct, discipline

and layoff employees, assign work, and select for employee vacan-

cies. See § U.S.C. 7106(a)(2). In each case, management's author-

ity is subject to the same affirmative obligation imposed by

Section 7106(b\(2) and (b\(3) of the Statute. Further, in each case,

management's authority is subject to the same obligation that

it be exercised ‘‘in accordance with applicable laws."’ § U.S.C.

7106(a(2). EEOC acknowledges (Pet. Br. 31) that the language

of the Statute permits the negotiated grievance procedure to han-

die grievances over discipline and promotions. EEOC points to

no language of the Statute which would make this result any dif-

ferent for the similarly situated right to make determinations with

respect to contracting-out.

Nor does the Statute’s legislative history provide any basis for

concluding that alleged violations of law, rule, or regulation af-

fecting conditions of employment are gricvable when they con-

cern some management rights but not others. EEOC's argument

(Pet. Br. 32 n.15) that Congress “implicitly recognized” distinc-

tions between the management nights, making some grievable and

others not, rests entirely on the contention that because some

rights were added on the House floor, whereas others were

included in the House Committee bill, the nghts added on the *

House floor were grievable while the others were not. Certainly

* EBOC’s argument was not raised before the Authority or the court of

appeals, and therefore is not properly before the Court. § U.S.C. 712Me). See,

4, LOWY +. Quality Mfg. Co., 420 U.S. 276, 281 0.3 (1979); Jemes »

Federal Energy Regulatory Commission, 755 F 2d 154, 195-156 (Ped. Cir. 1985),

Department af Treasury ¥. FLRA, 707 F.2d $74, $79 (D.C. Cir, 1989).

if Congress had so intended, it would in some way have expressed

that intent. Instead, the language of the Statute treats these rights

the same and there is no legislative discussion of a different treat-

ment intended.

To the contrary, when Representative Udall introduced the

floor amendment which added the new rights to Section

7106(a\(2), he emphasized that the language of section 7106(a)(2),

while making these new rights nonnegotiable, also provided for

their exercise ‘‘in accordance with apphcable laws, including other

provisions of chapter 71 of title $."" 124 Cong. Rec. 29183 (1978),

reprinted in Legis. Hist. at 924. These “other provisions” in-

cluded, of course, provisions (which were already in the bill at

that time) establishing the broad-scope negotiated grievance pro-

cedure, subject to narrowing by the parties’ negotiations. See H_R.

11280, 95th Cong., 2d Sess. § 7121, reprinted in Legis. Hist. at

419-421 and 124 Cong. Rec. 29180 (1978), reprinted in Legis. Hist.

at 918. Moreover, in noting that his amendment increased the

number of nights reserved to management, Representative Udall

stated that ‘‘[t}his substitute strengthens the ‘Management rights’

section reported by the Committee, but it is still to be treated

narrowly as an exception to the general obligation to bargain over

conditions of employment.’ 124 Cong. Rec. 29183, reprinted in

Legis. Hist. at 924. Thus, it is clear that Section 7106 addresses

what matters are within or outside the duty to bargain, not what

matters are or are not grievable.

Turning specifically to contracting-out, nothing in the language

or the legislative history of the Statute supports EEOC's posi-

tion that Congress viewed the exercise of this right as bearing

only indirectly on employees so as to exempt that matter from

the negotiated grievance procedure. To the contrary, the work-

ing text, from which the House Committee refined most of the

labor-management provisions of the Committee bill (see Depart-

ment of Defense v. FLRA, 639 F.2d at 1156 0.81), actually made

contracting-out a negotiable condition of employment. H.R.

9094, 95th Cong., Ist Sess. § 7103(a 16) (1977), reprinted in

Legis. Hist. at 244. While the bill the House Committee reported

out made the substantive exercise of contracting-out authority

, there is no suggestion that contracting-out's place-

ment in Section 7106(a\2) altered the fact, made obvious in the

bill which formed the basis for the Committee's working text,

that contracting-out remained a condition of employment.”

EEOC’s argument also draws no support from the law of labor

arbitration in the private sector. In the Taft-Hartley Act, Con-

gress established the federal policy favoring arbitration of labor

disputes when it stated: ‘‘Final adjustment by a method agreed

upon by the parties is declared to be the desirable method for

settlement of gnevance disputes arising over the application or

imterpretation of an existing collective-bargaining agreement.”’

29 U.S.C. 17Md). From this congressional statement of policy,

thes Court enunciated “‘the now well-known presumption of ar-

bitrability for labor disputes"’:"

An order to arbitrate the particular grievance should not be

demed unless tt may be said with positive assurance that the

arbitration clause is not susceptible of an imterpretation that

covers the asserted dispute. Doubts should be resolved im favor

of coverage. [Footnote omitted}

In the absence of any express provision excluding a particular

grvevance from arbitrtion, we think only the most forceful

evidence of a purpose to exclude the claim from arbitration

can prevail * * * .”

Steelworkers v. Werrior & Gulf Nevigation Co., 363 U.S. 574,

S82-583, S84-S8S (1960). Finally, in circumstances in which the

parties’ contract language excluded from arbitration matters

whoch were ‘“strnctly a function of management,” the Court found

within the presumption of arbitrability a grievance over

contracting-out. /d. at $84.

For the federal sector, Congress likewtse established a strong

policy favoring arbitration of labor disputes. As noted at 21,

supra, every collective bargaiming agreement in the federal sec-

tor is required to have a negotiated gnevance procedure including

binding arbitration (S U.S.C. 712(a), (®K3NC)). Congress

“ Semalarty un the private sector comtracting-owt 6 a condmeon of employ-

ment. Pileeboerd Paper Products Comp + NLAB, 379 US. WS (1964).

" Gateway Coal Co. +. United Mine Workers, 414 U.S. 368, 377 (1974).

See Allte-Chatmers Corp. + Lucct, No. 83-1748 (Apr. 16, 1985) clip op. 17.

See alo Mitewhiet: Motors Corp +. Seder Cirvaler-Pivereett, fee, Nos.

83-1569, 63-1733 (duly 2. 1985) chp op 10-12 (commercial arbitration).

prescribed a broad-scope grievance procedure in the federal sec-

tor, with the exceptions being those five subjects specifically

enumerated by Congress (5 U.S.C. 7121(c)) or the. : which the

parties specifically bargain to exclude (§ U.S.C. 7121(a)(2)).

AFGE, Locals 225, 1504, and 3723 v. FLRA, 712 F.2d at 648

n.34.

In sum, the provisions of the Statute strongly support the con-

clusion that disputes over management’s compliance with appli-

cable contracting-out requirements are arbitrable.” There is no

basis in the Statute, its legislative history, or under general labor

law principles to support EEOC’s contention that contracting-

out has only an indirect effect on employees and therefore disputes

over management’s exercise of its contracting-out authority

should be nongrievable.

b. EEOC further argues (Pet. Br. 24-29) that even if

contracting-out is a matter encompassed by the broad-scope

negotiated grievance procedure, compliance issues relating to the

Circular are inappropriate for resolution under that procedure

because the Circular is not a law, rule, of regulation (Pet. Br.

37), and as such it is ‘“binding’’ only in the sense that the Presi-

dent may choose to remove an Executive Branch officer who

disregards its direction (Pet. Br. 24). However, as the Author-

ity stated in denying EEOC’s request for reconsideration (FLRA

App. 2a), the extent of the compliance obligation imposed by

the Circular is essentially a question of arbitrability. And that

question need not be resolved in order to determine the

negotiability of the instant proposal. See note 14, supra.

Further, EEOC’s assertion that the Circular is not a law, rule,

or regulation rests principally on cases holding that alleged viola-

tions of the Circular are not judicially cognizable.” But

” The fact that management's exercise of its authority with respect to a

number of conditions of employment in the federal sector is outside the duty

to bargain because the conditions of employment are management rights

precludes an arbitrator from reviewing management's exercise of discretion in

these areas (see 19, supra), but as discussed at 22-23, supra, it does not narrow

the scope of the negotiated grievance procedure.

* EEOC’s argument only disputes the negotiability of the portion of the

proposal referencing the Circular; it leaves unchallenged the negotiability of

the language of the proposal requiring EEOC’s compliance with ‘‘other ap-

plicable laws and regulations,”’ ¢.g., 48 C.F.R. Ch. | (cited by EEOC at Pet.

Br. 9 n.4).

™ For example, Local 2855, AFGE v. United States, 602 F.2d 574, $82 n.28

(3d Cir. 1979) stated that because the Circular ‘‘appear|s] to be primarily a

whether an alleged violation of a rule or regulation is judicially

cognizable is inapposite to whether a matter alleging that an

agency did not adhere to applicable legal requirements in exer-

cising its authority is subject to the negotiated grievance procedure

Congress established for collective bargaining agreements. See,

e.g., Carducci v. Regan, 714 F.2d 171 (D.C. Cir. 1983) (finding

no judical review available for an employee reassignment based

on “‘poor performance,”’ a matter clearly within the range of mat-

ters the Statute makes grievable under a negotiated grievance

procedure). Moreover, there is no dispute that EEOC must com-

ply with the Circular. See note 14, supra.”

EEOC contends (Pet. Br. 24-26, 37), again for the first time

in this case, that grievances over alleged noncompliance with the

Circular cannot be pursued under a negotiated grievance pro-

cedure because the Circular is not a “‘rule or regulation’’ within

loose managerial tool for implementing the government's stated policy of relying

whenever possible on private concerns to supply its needs,"’ it cannot ap-

propriately be seen as ‘‘creat{ing] a legally enforceable standard.’ However,

the “‘loose managerial tool’’ referred to is not the current Circular, but the

pre-1979 Circular. In 1979, Supplement No. | to the Circular, the Cost Com-

parison Handbook, explained why revisions were being made to the Circular:

As Government cost accounting techniques progressed, it became obvious

that Circular A-76 guidelines were too general to achieve desirable uni-

formity, and were insufficient as a basis for comprehensive cost studies.

Detailed instructions for making a cost comparison are set forth in this Hand-

book for use by all Federal agencies.

Cost Comparison Handbook, at |, 2. The Handbook was also intended ‘‘to

establish consistency, assurance that all substantive factors are considered when

making cost comparisons, and a desirable level of uniformity among agencies

in comparative cost analyses.”’ /d. at 1. Thus, the revised Circular was specifi-

cally designed to remedy the “‘looseness"’ of the pre-1979 Circular. In fact,

the requirement in the 1979 Circular that agencies establish an appeals pro-

cedure (44 Fed. Reg. 20561 (1979)) is a further indication that the Circular im-

poses requirements against which compliance can be measured.

* The Circular was published for notice and comment in the Federal

The Circular is enacted, as its Section 3 states (48 Fed. Reg. 37115 (1983)),

under the authority of the Budget and Accounting Act of 1921 (31 U.S.C. 1

et seq.) and the Office of the Federal Procurement Policy Act of 1979 (41 U.S.C.

401 et seq.). An agency is obligated to comply with the Circular because, quite

simply, the Circular by its own terms requires compliance. OMB Circular No.

A-76 (Revised), paragraph 9. 48 Fed. Reg. 37115 (1983).

the meaning of Section 7103(a)(9)(C)ii) of the Statute.” While

Congress did not elaborate on the meaning of ‘‘rule or regula-

tion’’ for purposes of that section, the House-Senate Conference

Report did specifically intend, wih regard to the meaning of ‘‘rule

or regulation’’ as used in Section 7117(a) of the Statute, that the

term ‘‘be interpreted as including official declarations of policy

of an agency which are binding on officials and agencies to which

they apply.’’ H.R. Conf. Rep. 95-1717, 95th Cong., 2d Sess. 158,

reprinted in Legis. Hist. at 826. OMB Circular A-76 meets this

definition of ‘‘rule or regulation,’’ as EEOC (Pet. Br. 43) has

acknowledged, and as the Authority has held. AFGE, Local 1923

and Health Care Financing Administration, Baltimore, Maryland,

17 F.L.R.A. No. 96 (1985) slip op. 6; AFGE, Local 225 and

Department of the Army, U.S. Army Management Research and

Development Command, Dover, New Jersey, 17 F.L.R.A. No.

66 (1985) slip op. 4.

Petitioner argues (Pet. Br. 43 n.23), however, that Congress

intended a different meaning for ‘‘rule or regulation’’ when it

intended to restrict bargaining (in Section 7117(a)) as opposed

to when it intended to expand employee rights by bringing al-

leged violations of ‘‘rules or regulations,’’ as those violations af-

fected conditions of employment, within the negotiated grievance

procedure (Section 7103(aX(9(C\ii)). EEOC provides no support

for this contention. In the absence of any such indication, it is

reasonable to conclude that Congress intended the same terms

to have the same meaning in the same statute. See, e.g., Finnegan

v. Leu, 456 U.S. 431, 438 and n.9 (1982).”

* Even if the Circular were not a rule or regulation, contracting-out

disputes could still be matters ‘‘relating to the employment of

* * * employee{s},"’ bringing them within the scope of the negotiated grievance

procedure by operation of the definition of grievance contained in Section

7103aK9MA) and (B) of the Statute. § U.S.C. 7103(a9A) and (B).

” Moreover, notwithstanding EEOC’s contention (Pet. Br. 43 n.23) that

**rules or regulations’’ cannot include the Circular whenever that would serve

to expand employee rights, the Office of Management and Budget extended

to federal sector unions national consultation rights over the Circular in accord-

ance with the requirement in Section 7117(d)(1) that such rights be accorded

by ‘‘any agency with respect to any Government-wide rule or regulation issued

by the agency effecting any substantive change in any condition of employ-

ment."’ § U.S.C. 7117(d)(1). National consultation rights enable unions holding

exclusive recognition for at least 3,500 employees to provide comments to the

issuing agency on proposed government-wide regulations affecting conditions

of employment. See § C.F.R. 2426.11-2426.13.

At bottom, EEOC’s argument that the Circular is not the kind

of rule or regulation which can be subject to Section 7121 misap-

prehends how Congress intended the grievance procedure in col-

lective bargaining agreements to operate in the federal sector.”

Notwithstanding EEOC’s contentions (Pet. Br. 21-22) about the

role of arbitrators in the private sector, in the federal sector Con-

gress made it clear that ‘‘any claimed violation, misinterpreta-

ton, or misapplication of any law, rule, or regulation affecting

conditions of employment * * * "’ constitutes a grievance, and

that consequently arbitrators would be required to consider laws,

rules, and regulations. 5 U.S.C. 7103(a)(9); Andrade v. Lauer,

729 F.2d at 1488-1489.” Further, Congress empowered the

Authority to resolve exceptions to arbitral awards to ensure that

such awards conform to applicable laws, rules, and regulations.

5 U.S.C. 7122(aX(1).” Accordingly, the Circular represents the

kind of rule or regulation that Congress intended to be within the

“See Elkouri and Elkouri, Lega! Status of Federal-Sector Arbitration,

supp. to How Arbitration Works, 34 ed., 7 (1980) (“‘Arbitral disposition of

federal-sector grievances will often be governed or materially affected by laws,

rules, and regulations apart from the collective bargaining agreement|.]''). See

also Gentile, ‘‘Arbitration in the Federal Sector: Selected Problem Areas,”’

34 Labor Law Journal 482, 484 (1983); Harkless, ‘“Comment, Grievance Ar-

bitration in the Federal Service,"’ in Proceedings of Thirty-Fourth Annual

Meeting of National Academy of Arbitrators, 206, 209 (1982).

See Elkouri and Elkouri, Lega/ Status of Federal-Sector Arbitration,

supp. to How Arbitration Works, 34 ed., 6-7 (1980) (‘‘The basic function of

the grievance procedure and arbitration in private employment is to assure com-

pliance with the collective bargaining agreement. While this is also a key func-

tion of the grievance procedure and arbitration in the federal sector, there they

have dual basic roles. The second and also very important function of the

grievance procedure and arbitration in the federal sector is to review or police

compliance with controlling laws, rules, and regulations by federal agency

employers and employees alike [footnote omitted]."'). The grievance mechanism

encompasses not only formal rules but also, for example, provisions of the

Federal Personnel Manual. See, e.g., Veterans Administration Medical Center,

Fort Howard and AFGE, Local 2146, 5 F.L.R.A. 250 (1981) (the arbitrated

issue was whether the agency had fai.ed to comply with Appendix J to Federal

Personnel Manual Supplement §32-1 in denying employees 4% environmental

differential pay).

“ The Authority's responsibility to ensure that arbitrators’ awards to which

exceptions are taken conform to applicable legal requirements exemplifies Con-

gress’ effort ‘‘to establish procedures which are designed to meet the special

requirements and needs of the Governmeni."’ § U.S.C. 7101(b).

permissible scope of negotiated grievance procedures, insofar as

a complaint concerning the rule or regulation affects conditions

of employment of bargaining unit employees.

In the alternative, EEOC argues (Pet. Br. 26-29) that even if

the Circular is a rule or regulation within the meaning of the

Statute, the Circular does not, as a practical matter, limit the

exercise of management's discretion in any meaningful sense so

as to provide a basis for arbitral review. Of course, the Circular

does contain aspects involving the exercise of management's

discretion, and those aspects would not be subject to arbitral

review. See discussion at 19, supra. But to argue, as EEOC does

(Pet. Br. 23), that “‘the Circular does not impose any identifiable

constraints on management’’ ignores the language of the

Circular."

C. The Circular’s Appeals Procedure Cannot Override The

Operation Of The Statute’s Grievance Machinery

Finally, EEOC’s contention (Pet. Br. 34-35, 42-47) that the

Circular itself bars negotiation over the proposal is without merit.

EEOC contends in this regard that Section 7117(a)(1) of the

Statute bars negotiations not only over proposals that are incon-

sistent with a government-wide rule or regulation (Pet. Br. 42-46),

but also over proposals that share the same subject matter as a

government-wide rule or regulation (Pet. Br. 46-47). However,

as this Court has recognized, Section 7117(a)(1) does not preclude

bargaining ‘‘unless a bargaining proposal is inconsistent with ex-

isting federal law, rule, or regulation."’ Bureau of Alcohol, To-

bacco and Firearms v. FLRA, 464 U.S. at 92. See also Depart-

ment of the Treasury, U.S. Customs Service v. FLRA, 762 F.2d

“ For example, Part IV of the Circular’s 1983 Supplement is the seventy-

odd page Cost Comparison Handbook which ‘provides detailed instructions

for developing a comprehensive comparison of the estimated cost’’ of in-house

versus contract performance and the procedures ‘‘are intended to establish a

practical level of consistency and uniformity to assure all substantive factors

at |. The Circular and its Supplement specify figures to be used in the cost

comparison process, ranging from retirement costs for federal employees (50

Fed. Reg. 32812 (1985)) to the useful life to be attached to various classes of

equipment (Cost Comparison Handbook, at 21). Moreover, to the extent that

there are discretionary aspects in the Circular, those aspects would not be sub-

ject to arbitral review. See discussion at 19, supra.

1119, 1122 (D.C. Cir. 1985); Library of Congress v. FLRA, 699

F.2d at 1284 n.16; Department of Defense, Department of the

Army v. FLRA, 685 F.2d at 644.

Additionally, the legislative history of Section 7117(a\1) makes

clear that Congress intended only to bar negotiation over pro-

regulation. In describing what is now Section 7117(a)(1) of the

Statute, the House-Senate Conference Report stated that ‘‘[bjoth

the House and Senate authorize negotiations except to the ex-

tent inconsistent with law, rules, and regulations * * * ."’ H.R.

Conf. Rep. 95-1717, 95th Cong., 2d Sess. 158, reprinted in Legis.

Hist. at 826.

Moreover, a broader reading of the bar to negotiations con-

tained in Section 7117(a)(1) would not make sense in the federal

sector labor relations program. Many subjects in federal sector

bargaining agreements are also the subject of a government-wide

rule or regulation, e.g., health and safety (29 C.F.R. 1960);

employee performance appraisal procedures (§ C.F.R. 430);

reduction-in-force procedures (§ C.F.R. 351); adverse action pro-

cedures (S C.F.R. 752). If collective bargaining were allowed only

over proposals that did not address the same subject matter as

a government-wide rule or regulation, it is questionable what

would be left of the collective bargaining obligation created by

the Statute in light of the myriad of government-wide rules or

regulations covering a large number of subjects. No court has

endorsed such a construction of Section 7117(a)(1).

EEOC additionally argues (Pet. Br. 42-46), however, that Sec-

tion 7117(aX(1)’s acknowledged bar over proposals that would

bring about results inconsistent with goverament-wide rule or

regulation applies to the instant proposal. Specifically, EEOC

argues (Pet. Br. 6, 44) that the Circular’s statement that its pro-

visions “shall not be construed to create’’ any new right of ap-

would be brought into play by operation of the proposal.

However, this application of Section 7117(a)(1) to the instant pro-

posal must be rejected for two reasons.

First, the proposal is not inconsistent with the Circular because

the proposal does not “‘create’’ any new right of appeal. The Cir-

cular specifies that the terms of the Circular “‘shall not be con-

strued to create{ | any substantive or procedural” right of ap-

peal (44 Fed. Reg. 20558 (1979)); however, the right to file

grievances regarding contracting-out is created not by the Cir-

cular but by the broad-scope negotiated grievance procedure

authorized by Congress in the Statute. § U.S.C. 7103(aX(9) and

§ U.S.C. 7i2Ma). See AFGE, Locals 225, 1504, and 3723 v.

FLRA, 712 F 2d at 649. As the Authority properly determined

and the court of appeals correctly affirmed, the Statute itself,

the ambit of the negotiated grievance procedure.

Second, even assuming that there is an inconsistency between

the grievance procedure the Statute prescribes for collective

bargaining agreements and the grievance procedure set forth in

the Circular, there is no indication in the Statute or elsewhere

that Congress intended to allow agencies to limit by regulation

the statutorily defined grievance procedure. See AFGE, Local

2782 and Department of Commerce, Bureau of the Census,

Washington, D.C., 6 F.L.R.A. 314, 322 (1981) (Office of Per-

sonnel Management regulation limiting nght to gneve nonselec-

tion of a repromotion eligible cannot be applied in a manner in-

consistent with the scope of negotiated grievance procedures

allowed under Section 7121 of the Statute). See also NTEU v.

Cornelius, No. 85-0129 (D.D.C. July 15, 1985) slip op. 12-13,

appeal docketed, No. 85-5938 (D.C. Cir. Sept. 10, 1985) (“*[ The

Statute] does not permit [the Office of Personnel Management]

to regulate away an appeals procedure granted by Congress .””

[Footnote omitted.}). As the court below recognized, to allow

the text of the Circular to restrict the statutory scope of grievances

would place ‘‘limitations in the statute not placed there by Con-

gress."’ Colgate-Paimolive Peet Co. v. NLRB, 338 U.S. 355, 363

(1949). While a government-wide regulation bars negotiations over

a proposal through which a party would acquire rights that are

inconsistent with the regulation, Section 7117(a\1) does not

authorize government-wide regulations io remove the entitlement

specifically conferred by Section 7121 of the Statute. Indeed, the

logical extension of EEOC's argument would allow an agency

that has the authority to issue government-wide rules to alter pro-

visions of the Statute.“

“ EBOC argues (Pet. Br. 45-46) that courts have previously removed dis-

in cach case cited by EBOC, it has been the result of a conflict between two

separate statutes over the mghts flowing to 2 specific category of employees.

Finally, EEOC argues (Pet. Br. 34-35) that in order for manage-

ment to be able to make its contracting-out determinations in

accordance with applicable laws, as required by Section 7106(a)(2)

of the Statute, it must be able to comply with not just the substan-

tive aspects of the Circular, but with all aspects of the Circular,

including its appeals procedure. EEOC argues (Pet. Br. 34-35)

that the proposal prevents EEOC from so complying and

therefore interferes with the obligation imposed by Section

7106(a)(2).

This argument ignores the fact that Congress prescribed a

statutory broad-scope negotiated grievance procedure which, as

set forth at 39, supra, cannot be restricted by the Circular.

Moreover, this argument incorrectly suggests that the Circular’s

appeals procedure is part of the way in which management makes

its contracting-out determinations in accordance with applicable

law. The appeals procedure is not how management exercises its

authority to make contracting-out determinations; rather, the ap-

peals procedure is a separate vehicle offered to parties, other than

management, who believe they have been aggrieved because

management has already made a contracting-out determination

not in accordance with applicable law, rule, and regulation. 44

Fed. Reg. 20558 (1979); 48 Fed. Reg. 37114 (1983).

In sum, the proposal is within the duty to bargain. The Cir-

cular does not, by its own terms or through the operation of Sec-

tion 7117(a)(1) of the Statute, curtail the permissible reach

established by Congress for the negotiated grievance procedure.

No court has removed a general subject matter from the scope authorized by

Congress for negotiated grievance procedures. Of course, Congress could have

chosen to exclude matters relating to contracting-out determinations from the

permissible scope of a negotiated grievance procedure. The simple fact, however,

is that it did not do so. Petitioner’s argument is more appropriately directed

to Congress. See, e.g., AFGE, Council of Prison Locals, Local 1286 v. United

States Department of Justice, 738 F.2d 742, 747 (6th Cir. 1984); Council of

Prison Locals v. Brewer, 735 F.2d 1497 1502 n.9 (D.C. Cir. 1984).

CONCLUSION

The judgment of the court of appeals should be affirmed.‘

Respectfully submitted.

RUTH E. PETERS*

Solicitor

STEVEN H. SVARTZ

Deputy Solicitor

WILLIAM E. PERSINA

Associate Solicitor

ROBERT J. ENGLEHART

Attorney

* Counsel of Record

NOVEMBER 1985

The Solicitor General authorizes the filing of this brief by Respondent

Federal Labor Relations Authority

APPENDIX A

UNITED STATES OF AMERICA

BEFORE THE

FEDERAL LABOR RELATIONS AUTHORITY

WASHINGTON, D.C.

AMERICAN FEDERATION OF

GOVERNMENT EMPLOYEES, AFL-CIO,

NATIONAL COUNCIL OF EEOC

LOCALS

Union

and Case No. O-NG-314

10 FLRA No. |}

EQUAL EMPLOYMENT OPPORTUNITY

COMMISSION

Agency

ORDER DENYING REQUEST FOR RECONSIDERATION

OF DECISION ON NEGOTIABILITY ISSUE

This matter is before the Authority on a request by the Equal

Employment Opportunity Commission for reconsideration of the

Authority’s decision as to Union Proposal | in American Federa-

tion of Government Employees, AFL-CIO, National Council of

EEOC Locals and Equal Employment Opportunity Commission,

10 FLRA No. 1 (1982). The Union filed an opposition to the

Agency’s request.

In relevant part, the Authority held in Equal Employment Op-

portunity Commission that, contrary to the Agency’s claim,

Union Proposal | would not affect the scope and coverage of

the parties’ negotiated grievance procedure since a contractual

provision to comply with applicable laws and regulations con-

cerning contracting-out does not itself change the scope and

coverage of the parties’ grievance procedure beyond that which

is authorized under the Statute. In so holding, the Authority em-

phasized that under the Statute disputes concerning conditions

of employment arising in connection with the application of

OMB Circular A-76 and other applicable laws and regulations

concerning contracting out would be covered by the negotiated

grievance procedure unless the particular grievance is incon-

sistent with law or the parties exclude such grievances through

negotiations.

In seeking reconsideration, the Agency requests that the

Authority ‘explain in what fashion OMB Circular A-76 and other

applicable laws and regulations concerning contracting out fall

within the ambit of . . . the grievance resolution machinery under

the Statute.”’ The Authority finds that such a request does not

establish ‘‘extraordinary circumstances’’ warranting reconsidera-

tion as required under section 2429.17 of the Authority’s Rules

and Regulations.* Rather, the Agency in essence is asking the

Authority to make arbitrability determinations in the absence of

a specific factual context. To the extent that an arbitrability ques-

tion may arise in the future, the Agency may, of course, avail

itself of the procedures set forth in section 7121 of the Statute

for the resolution of such questions. Accordingly, IT IS

ORDERED that the Agency’s request for reconsideration of the

Authority’s decision in the instant case be, and it hereby is, denied.

Issued, Washington, D.C., March 18, 1983

Ronald W. Haughton, Chairman

Henry B. Frazier III, Member

Leon B. Applewhaite, Member

FEDERAL LABOR RELATIONS AUTHORITY

* Section 2429.17 provides, in pertinent part:

After a final decision or order of the Authority has been issued, a party

to the proceeding before the Authority who can establish in its moving papers

extraordinary circumstances for so doing, may move for reconsideration

of such final decision or order. . . . A motion for reconsideration shall state

with particularity the extraordinary circumstances claimed and shall be sup-

ported by appropriate citations. . . .

APPENDIX B

§ U.S.C. 7103(a) provides:

$7103. Definitions; application

(a) For the purpose of this chapter—

(9) ‘‘grievance’’ 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 employee; or

cerning—

(i) the effect or interpretation, or a claim of breach,

of a collective bargaining agreement, or

(ii) any claimed violation, misinterpretation, or mis-

application of any law, rule, or regulation affecting condi-

tions of employment;

(14) ‘“‘conditions of employment’’ means personnel

policies, practices, and matters, whether established by

rule, regulation, or otherwise, affecting working conditions,

except that such term does not include policies, practices,

and matters—

(A) relating to political activities prohibited under sub-

chapter III of chapter 73 of this title;

(B) relating to the classification of any position; or

by Federal statute[.]

* * * * *

- | Sanh OLS Lh LU ~~ ora Sa” “SOO SS Oe 2s = = Fo]

§ U.S.C. 7106 provides:

§7106. Management rights

(a) Subject to subsection (b) of this section, nothing in this

chapter shall affect the authority of any management official

‘of any agency—

(1) to determine the mission, budget, organization, 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, remove, 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 determine the personnel by which

agency operations shall be conducted;

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 necessary to carry

out the agency mission during emergencies.

(b) Nothing in this section shall preclude any agency and

any labor organization from negotiating—

(1) at the election of the agency, on the numbers, types,

and grades of employees or positions assigned to any organi-

zational 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 authority under this section; or

(3) appropriate arrangements for employees adversely

affected by the exercise of any authority under this section by

such management officials.

§ U.S.C. 7117(a)(1) provides:

§7117. Duty to bargain in good faith; compelling need; duty to

consult

(a)(1) 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 regula-

tion, extend to matters which are the subject of any rule or

regulation only if the rule or regulation is not a Government-

wide rule or regulation.

* Ld ad * *

§ U.S.C. 7121(a)-(c) provides:

§7121. Grievance procedures

(a1) Except as provided in paragraph (2) of this subsection,

any collective bargaining agreement shall provide procedures

for the settlement of grievances, including questions of arbi-

trability. Except as provided in subsections (d) and (e) of this

section, the procedures shall be the exclusive procedures for

resolving grievances which fall within its coverage.

(2) Any collective bargaining agreement may exclude any

matter from the application of the grievance procedures which

are provided for in the agreement.

(b) Any negotiated grievance procedure referred to in sub-

section (a) of this section shall—

(1) be fair and simple,

(2) provide for expeditious processing, and

(3) include procedures that—

“Ot 2 Fe-

oe =e aS7 ve 7 6 A ses = =" i

(A) assure an exclusive representative the right, in its

own behalf or on behalf of any employee in the unit

represented by the exclusive representative, to present

and process grievances;

(B) assure such an employee the right to present a

grievance on the employee’s own behalf, and assure the

exclusive representative the right to be present during the

grievance proceeding; and

under the negotiated grievance procedure shall be subject

to binding arbitration which may be invoked by either the

exclusive representative or the agency.

with respect to any grievance concerning—

(1) any claimed violation of subchapter III of chapter 73

of this title (relating to prohibited political activities);

(2) retirement, life insurance, or health insurance;

(3) a suspension or removal under section 7532 of this

title;

(4) any examination, certification, or appointment; or

(5) the classification of any position which does not result

in the reduction in grade or pay of an employee.

* * * * *

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.