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 16 FLRA No. 56
 
 AMERICAN FEDERATION OF GOVERNMENT
 EMPLOYEES, LOCAL 1904, AFL-CIO
 Union
 
 and
 
 UNITED STATES ARMY COMMUNICATIONS
 AND ELECTRONICS MATERIEL READINESS
 COMMAND
 Activity
 
                                            Case No. O-AR-644
 
                                 DECISION
 
    This matter is before the Authority on exceptions to the award of
 Arbitrator Thomas F. Carey filed by the Agency under section 7122(a) of
 the Federal Service Labor-Management Relations Statute and part 2425 of
 the Authority's Rules and Regulations.  The Union filed an opposition.
 /1/
 
    The dispute in this matter concerns the grievance filed by the Union
 claiming that the Activity's decision to contract out certain support
 functions was violative of section 502 of P.L. 96-342, 10 U.S.C. 2304
 note (which relates to contracting out in the Department of Defense) and
 agency regulations and directives, specifically AR 235-1 and DOD
 4100.33-H (which also relate to contracting out).  The parties separated
 a threshold issue of arbitrability under the parties' collective
 bargaining agreement and submitted that issue to arbitration for
 decision.  The parties' collective bargaining agreement restated the
 definition of "grievance" from section 7103(a)(9) of the Statute, and
 the Arbitrator acknowledged in particular that the definition included
 any complaint concerning any claimed violation, misinterpretation, or
 misapplication of any law, rule, or regulation affecting conditions of
 employment.  Concluding that the Union's grievance was a complaint
 claiming such a violation, the Arbitrator as his award ruled that the
 grievance was arbitrable under the parties' collective bargaining
 agreement.
 
    In its exceptions the Agency essentially contends that the award is
 contrary to the management rights provisions of the Statute, primarily
 section 7106(a)(2)(B), /2/ by subjecting management's decision to
 contract out to arbitral review and that the award is inconsistent with
 procurement law and regulations, primarily OMB Circular A-76 (which
 prescribes general policies for contracting out), that assertedly
 preclude grievances over an agency's determination with respect to
 contracting out.  The Authority finds that the Agency's exceptions
 provide no basis for finding the award deficient.
 
    In American Federation of Government Employees, AFL-CIO, National
 Council of EEOC Locals and Equal Employment Opportunity Commission, 10
 FLRA 3 (1982) (proposal 1), enforced sub nom. EEOC v. FLRA, No. 82-2310
 (D.C. Cir. Sept. 21, 1984), the Authority expressly addressed whether
 the disputed proposal (that the agency would comply with OMB Circular
 A-76 and other applicable laws and regulations governing contracting
 out) was within the duty to bargain.  In terms of this case, contentions
 essentially identical to those made by the Agency in its exceptions to
 the Arbitrator's award were specifically rejected by the Authority and
 the court.  In National Council of EEOC Locals the Authority expressly
 held that the requirement for management to exercise its right to make
 contracting-out determinations in accordance with whatever applicable
 laws and regulations exist at the time of the determination is not
 inconsistent with section 7106(a)(2)(B).  Furthermore, in enforcing this
 decision of the Authority, the court in EEOC specifically rejected the
 contention that the proposal was contrary to section 7106(a)(2)(B)
 because the proposal would subject any contracting-out decision to
 grievance procedures and ultimately arbitral review.  In this respect
 the court first rejected the assumption that absent such a proposal, a
 complaint asserting that a contracting-out determination was not made in
 accordance with applicable laws, including the Circular, would not be
 grievable.  The court noted that under the expansive definition of
 grievance in section 7103(a)(9) and with no exclusion of 7121(c) of the
 Statute applicable to the subject of contracting out, a complaint that
 an agency failed to comply with the OMB Circular or with any other law
 or rule governing contracting out plainly is a matter within the
 coverage of the grievance procedure prescribed by the Statute.  Id. at
 12-13.  After determining that such a matter was subject to grievance
 and arbitration, the court further concluded that "a grievance asserting
 that management failed to comply with its statutory or regulatory
 parameters in making a contracting-out decision is not precluded by the
 management rights clause." Id. at 15.  As to the contention that OMB
 Circular A-76 bars grievances and arbitration over contracting-out
 determinations, the Authority specifically held that the Circular cannot
 limit the coverage of the grievance procedure prescribed by the Statute.
  Therefore, the Authority concludes that the Agency has not established
 that the Arbitrator's award, which essentially finds that the grievance
 in this case is arbitrable as a grievance permitted by the Statute and
 not excluded by the agreement, is contrary to section 7106(a) of the
 Statute or procurement laws and regulations.
 
    Accordingly, the exceptions are denied.
 
    Issued, Washington, D.C., October 31, 1984
                                       Henry B. Frazier III, Acting
                                       Chairman
                                       Ronald W. Haughton, Member
                                       FEDERAL LABOR RELATIONS AUTHORITY
 
 
 
 
 
 
 --------------- FOOTNOTES$ ---------------
 
 
    /1/ In its opposition the Union has objected to the Agency's
 exceptions on various procedural grounds.  The Authority however
 concludes that the exceptions are not procedurally deficient as alleged
 by the Union.
 
 
    /2/ Section 7106(a)(2)(B) pertinently provides:
 
          (a) Subject to subsection (b) of this section, nothing in this
       chapter shall affect the authority of any management official of
       any agency--
 
                                  * * * *
 
          (2) in accordance with applicable laws--
 
                                  * * * *
 
          (B) . . . to make determinations with respect to contracting
       out(.) 
 
 
 

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