Association of Civilian Technicians, Puerto Rico Army Chapter (Union) and United States, Department of Defense, National Guard Bureau, Puerto Rico National Guard, San Juan, Puerto Rico (Agency)

[ v60 p1000 ]

60 FLRA No. 180

ASSOCIATION OF CIVILIAN TECHNICIANS
PUERTO RICO ARMY CHAPTER
(Union)

and

UNITED STATES
DEPARTMENT OF DEFENSE
NATIONAL GUARD BUREAU
PUERTO RICO NATIONAL GUARD
SAN JUAN, PUERTO RICO
(Agency)

0-NG-2519
(56 FLRA 493 (2000))
(56 FLRA 807 (2000))
(58 FLRA 318 (2003))
(59 FLRA 2 (2003))

_____

DECISION
AND ORDER ON REMAND

May 31, 2005

_____

Before the Authority: Dale Cabaniss, Chairman, and
Carol Waller Pope and Tony Armendariz, Members

I.      Statement of the Case

      This case is before the Authority on remand from the U.S. Court of Appeals for the D.C. Circuit in ACT, Puerto Rico Army Chapter v. FLRA, 370 F.3d 1214 (D.C. Cir. 2004) (ACT v. FLRA II). The court vacated and remanded the Authority's decision in ACT, Puerto Rico Army Chapter, 58 FLRA 318 (2003) (Member Pope concurring) (Puerto Rico Nat'l Guard II), reconsideration denied, 59 FLRA 2 (2003), in which the Authority had upheld the agency head's disapproval of a collective bargaining agreement provision requiring the Agency to reimburse employees for personal expenses in certain circumstances.

      For the reasons set forth below, we find that the provision is contrary to law under § 7117(a)(1) of the Federal Service Labor-Management Relations Statute (Statute). Accordingly, we dismiss the Union's petition for review.

II.     The Provision

Once leave has be[en] approved and the employer has a compelling need to cancel the previously approved leave, the employer agrees not to subject the employee to a loss of funds expended in the planning of the leave (i.e., hotel reservations, airline tickets, etc). The employee will demonstrate the unavoida[bility] of the loss of funds.

III.     Background

A.     Puerto Rico Nat'l Guard II

      In Puerto Rico Nat'l Guard II, the Authority concluded that there was no express or implied authorization in the Statute or its legislative history for agencies to expend funds in the manner required by the provision. Also, the Authority found that Nat'l Treasury Employees Union, 26 FLRA 497 (1987) (BATF) and Nat'l Fed'n of Federal Employees, 24 FLRA 430 (1986) (GSA) were inapposite and did not establish the governing standard in this case, since the provision did not involve the Agency's exercise of its discretion in determining whether the expenditures required by the provision concerned official business.

      In addition, the Authority found nothing in the 2000 Department of Defense (DOD) Appropriations Act or its legislative history that indicated that Congress intended appropriated funds for general operations to be expended for the purpose of reimbursing employees for personal losses incurred in connection with the Agency's cancellation of previously approved leave. Also, without deciding whether the Comptroller General's "necessary expense doctrine" applied, the Authority found that the reimbursement of personal expenses for planned activities while employees expected to be on leave would not qualify as reasonably related expenditures in carrying out the Agency's operations under this doctrine.

      The Authority further found that the provision was contrary to 5 U.S.C. § 5536. Lastly, the Authority found it unnecessary to address the Union's claim that the provision constituted an appropriate arrangement, in light of the Authority's determination that the provision was contrary to law.

B.     ACT v. FLRA II

      In ACT v. FLRA II, the court noted that in ACT, Puerto Rico Army Chapter v. FLRA, 269 F.3d 1112 (D.C. Cir. 2001) (ACT v. FLRA I), it had previously remanded this case to the Authority to address whether there was implicit authorization for the reimbursements under the provision on two grounds: [ v60 p1001 ]

(1) through the `official business' test recognized by the Supreme Court in Bureau of Alcohol, Tobacco and Firearms [v. FLRA, 464 U.S. 89,] 107 n.17 (1983) (BATF v. FLRA), . . . and by FLRA in Nat'l Treasury Employees Union, 26 FLRA 497, 498 (1987) (BATF) and [Nat'l Fed'n of Fed. Employees], 24 FLRA 430, 432- 33 (1986) (GSA), because [the] [p]rovision reimbursements are sufficiently within the interest of the Agency to constitute `official business' and as such, such reimbursements are implicitly authorized under the 2000 Appropriations Act; or (2) through 5 U.S.C. § 7106(b)(3), because [the] [p]rovision is an `appropriate arrangement[] for employees adversely affected by the exercise of . . . [management's] authority' to cancel leave and `assign work' and as such, the reimbursements are implicitly authorized under the 2000 Appropriations Act.

370 F.3d at 1219.

      In ACT v. FLRA II, the court found that the Authority's decision in Puerto Rico Nat'l Guard II "failed to provide an adequate explanation of its decision on the first remanded issue" whether the reimbursements required by the provision were authorized by the official business test, and that the Authority "failed altogether to address the second remanded issue" whether the provision constitutes an appropriate arrangement for employees adversely affected by the exercise of management's right to cancel leave and assign work, and therefore is implicitly authorized under the 2000 Appropriations Act. ACT v. FLRA II, 370 F.3d at 1223.

      The court instructed the Authority, on remand, to evaluate or address the following issues with respect to the official business test:

  • "whether [the] [p]rovision . . . might or might not constitute `official business' within the meaning of the BATF [v. FLRA] footnote and its own precedent[;]"
     
  • whether "the Union's argument that the collective bargaining law, see 5 U.S.C. §§ 7106(b)(3), 7114, being itself sufficiently within the interest of the United States, see id. § 7101, creates `official business' that would not be `official business' in the absence of the law[;]"
     
  • "the implications of [the Authority's] previous rulings in [BATF] and GSA that the Agency could exercise its discretion to use appropriated funds for union-use of government telephones for labor-management relations[;]" and
     
  • "whether for reasons of adequate staffing, retention, recruitment, or morale, for example, such reimbursements might advance the Agency's interests or convenience."
     

ACT v. FLRA II, 370 F.3d at 1220.

      The court also directed the Authority on remand to determine whether the provision is an appropriate arrangement under § 7106(b)(3). In this respect, the court directed the Authority to address the following issues with respect to whether the provision constitutes an appropriate arrangement:

(1) whether employees have been adversely affected, (2) by a management decision, and if so, (3) whether reimbursement[s] of resulting monetary losses are likely to interfere excessively with management rights. To the extent that (1) and (2) are undisputed, inasmuch as Union members will, absent reimbursement, incur out-of-pocket losses as a result of management's recall decision pursuant to its right under 5 U.S.C. § 7106(a)(2)(B) to cancel leave and to `assign work,' the conclusion as to (3) may turn on a variety of considerations, including, for example, whether or not there is a cap on the amount of individual expenditures or a limited period of time for covered expenditures so as not to chill `excessively' management's exercise of its rights in response to the needs of the Guard. But if [the] [p]rovision's . . . out-of-pocket losses are directly caused by the Agency's exercise of its management rights, it is possible to view that reimbursement as not for purely personal expenses, but rather for an `appropriate arrangement[]' to compensate civilian technicians harmed by the exercise of management rights. The `appropriate arrangement[]' determination, moreover, will inform FLRA's analysis of whether [the] provision . . . reimbursements are for or related to `official business' if they advance the Agency's interests or convenience.

ACT v. FLRA II, 370 F.3d at 1221.

      Following the court's remand, we directed the parties to file supplemental submissions addressing the issues set forth above. Both parties filed supplemental submissions, which are summarized below. [ v60 p1002 ]

IV.     Positions of the Parties

A.     Union

1.     Reimbursements Are Authorized Under the Official Business Test

      The Union contends that the Statute creates "official business" for which general agency appropriations may be used. Union's Supplemental Statement at 1 (citing BATF v. FLRA, BATF, and GSA). The Union maintains that "[e]xpenditure[s] necessary to comply with an agreement establishing negotiable conditions of employment [are] reasonably related to the purpose of the [Statute], and therefore [reasonably related] to agency obligations for which general agency appropriations may be spent, since the [Statute] expressly authorizes agreements on [such negotiable] subjects." Id. at 2-3. In this respect, the Union asserts that where Congress generally has authorized an agency to expend appropriated funds for agency operations, the Statute authorizes expenditures to implement contract provisions that are not otherwise contrary to law.

      Further, the Union contends that the Agency has not "disputed that at all relevant times it has had appropriated funds available for general agency operations." Id. at 3. The Union maintains that the Authority should take official notice that the Agency "generally has been operating, and therefore has had appropriated funds available" for such operations. Id. Moreover, the Union argues that in BATF and GSA, the Authority presumed and did not require further evidence that appropriated funds were available for general agency operations. In this respect, the Union contends that the presumption of appropriated funds available for general agency operations is proper in light of provisions for operations in the applicable DOD Appropriation Acts.

      In addition, the Union maintains that the provision serves the Agency's interests and convenience because it "promotes employee morale conducive to high job performance by mitigating disappointment over the cancellation of leave . . . and helping to ensure that when leave is granted again, the employee will have resources to pay for experiences similar to those that the employee would have enjoyed if the cancellation had not occurred." Id. at 7. The Union contends that the provision further "serves the [A]gency's interests and convenience by making local managers less hesitant to cancel employee leave in order to accomplish agency missions." Id.

      Further, the Union asserts that the provision promotes good relations between managers and employees since the provision assuages the employees' personal financial loss, as well as any potential disappointment and resentment over the cancellation of leave. Lastly, the Union maintains that the Agency's need to cancel leave is relatively infrequent and, as a result, the adverse effects of such cancellation fall upon a few, rather than most, employees. In this connection, the Union contends that the provision serves the Agency's interests in adequate staffing, retention, and recruitment "[b]y eliminating [the] `roulette-wheel' infliction of personal financial loss [on a few employees] and promoting employee morale, job satisfaction, and good manager-employee relations[.]" Id.

2.     The Provision Constitutes an Appropriate Arrangement

      The Union maintains that the provision is an appropriate arrangement under § 7106(b)(3) of the Statute. The Union contends that in NAGE, Local R4-26, 40 FLRA 118, 119-23 (1991) (NAGE), the Authority found negotiable a similar proposal that required such reimbursements from nonappropriated funds. According to the Union, employees who suffer the losses described in the provision are adversely affected by the Agency's exercise of its right to cancel leave within the meaning of § 7106(b)(3). The Union argues that the provision is precisely tailored to redress the specific adverse effects caused by the cancellation as the reimbursements are for the precise amount of the employees' determined losses. Also, the Union contends that implementation of the provision does not affect the employees' performance of work that required the cancellation of their leave. The Union contends that the fact that the provision mitigates an adverse effect inflicted on employees due to no fault of their own supports the negotiability of the provision as an appropriate arrangement under § 7106(b)(3).

      Furthermore, the Union contends that the absence of a cap or limitation on the reimbursements does not compromise the appropriateness of the arrangement. The Union maintains that the provision is consistent with Authority precedent as it "mitigates the exact loss shown to have been inflicted, providing not a penny more nor a penny less." Union's Supplemental Statement at 8 (citations omitted). According to the Union, the amount of reimbursements required by the provision would be reasonably foreseeable based on the duration of the leave that was initially approved and the income level of the affected employees. [ v60 p1003 ]

B.     Agency

1.     The Provision Is Not Authorized Under the Official Business Test

      The Agency maintains that the provision does not involve "official business" within the meaning of BATF v. FLRA. The Agency maintains that BATF v. FLRA addressed the agency's "cost-analysis concerning additional payments (i.e., to union representatives) within a class of payments already authorized for the expenses of management negotiators." Agency's Supplemental Statement at 8. The Agency contends that the court's reliance in ACT v. FLRA II on BATF v. FLRA is "misplaced" as BATF v. FLRA "involved a class of related official time costs that were expressly authorized by Congress under the provision of official time for negotiations determined to be in the primary interest of the federal government." Id. at 9. The Agency maintains that, unlike BATF v. FLRA, the payment of employees' vacation and entertainment losses is in the primary interest of the employees and not the Federal government. The Agency also contends that rather than facilitating the accomplishment of the Agency's mission or business, the provision hinders its operations by increasing its costs. Id. at 10.

      The Agency further argues that the "official business" test is not the appropriate standard to use in determining whether expenses can be charged against appropriated funds. The Agency maintains that this test applies only after funds for a particular type of business action and related expenses have been appropriated or an agency has been otherwise authorized by law to accomplish a specific function. The Agency thus asserts that the "official business" test cannot function as an alternative standard or as a means to circumvent the threshold issue of whether the expenses in question have been authorized or permitted by Congress. According to the Agency, if the "official business" test is misapplied in this fashion, then "by implication, [it] could suck in every employee expense that could be remotely connected or tied through collective bargaining to the workplace." Id. at 12.

      In addition, the Agency maintains that reimbursement under the provision does not advance the Agency's interests or convenience in terms of adequate staffing, retention, recruitment or morale. The Agency contends that such claims are "highly speculative" and unlike the type of primary interest contemplated by the Supreme Court in BATF v. FLRA. Id. at 28.

2.     The Statute Does Not Provide Authorization for the Reimbursements Under the Provision

      The Agency maintains that, for a number of reasons, the Statute does not provide an independent basis for the use of appropriated funds in the manner required by the provision. First, the Agency contends that the Statute permits negotiations only on matters that are within an agency's discretion and that can be legally implemented under existing laws and regulations. Id. at 17-18. In this respect, the Agency maintains that there are no cases in which the Authority has held that the Statute provides an independent basis for the expenditure of appropriated funds not authorized by existing law. [n1] The Agency maintains that the Authority should, consistent with its precedent, adhere to the Comptroller General's findings that purely personal expenses, such as those covered by the provision for "forfeited hotel room deposits, dependents' travel costs, and increased costs for alternate flight reservations, . . . do not become a government obligation upon the cancellation of approved annual leave and may not be reimbursed." Id. at 14 (citation omitted).

      Second, the Agency maintains that the Statute does not authorize bargaining over the provision since the provision does not involve working conditions of unit employees. Id. at 19-20. The Agency maintains that the provision concerns personal expenses arising from the personal actions of employees without any input from management. Id. at 20. The Agency asserts that to view "the provision as [affecting] working condition[s] would be a substantial and unique extension" of the term to include losses that are fully within the discretion and the control of the employee and not management, and that management's cancellation of leave is "too tenuous and remote a link or connection with working conditions[.]" Id.

      Third, the Agency argues that the provision essentially constitutes an agreement to pay money damages for employees' losses that would illegally waive the Federal government's sovereign immunity. The Agency maintains that if the Union sought to enforce [ v60 p1004 ] the provision at arbitration, an award granting such monetary damages would be contrary to law. Id. at 23 (citation omitted). According to the Agency, the Authority does not have authority under the Statute to order a similar remedy against a federal agency by providing monetary damages to employees for consequential losses, in the absence of an express provision of law enacted by Congress. Id. at 24 (citing Dep't of the Army, United States Army Commissary, Fort Benjamin Harrison, 56 F.3d 273, 276-79 (D.C. Cir. 1995) (Fort Benjamin Harrison)).

      Fourth, the Agency claims that the Authority's rulings in BATF and GSA that an agency could exercise its discretion to use appropriated funds for the union's use of government telephones for labor-management relations do not provide a basis for finding the instant provision negotiable. The Agency maintains that unlike this case, in BATF and GSA there was express authorization for the expenditures, under 31 U.S.C. § 1348(b) and related regulatory provisions that required restricting the use of government telephones to official business, official government business, or officially approved activities. Id. at 26. Also, the Agency contends that unlike this case, in BATF and GSA there was "an undefined term such as `official business'" in § 1348(b) and the related regulatory provisions that "required the [a]gency to make a discretionary determination whether the activity was `sufficiently within the interest of the [Government].'" Id. at 27.

      Lastly, the Agency contends that the provision is not an appropriate arrangement under the analytical framework set forth in NAGE, Local R14-87, 21 FLRA 24, 32-35 (1986) (KANG). As to the nature and extent of the adverse impact on employees, the Agency maintains that the provision addresses an adverse impact that is speculative since the Union has never demonstrated that cancellation of approved leave is a recurring problem. Agency's Supplemental Statement at 32. Moreover, the Agency maintains that the adverse effects are fully within the employee's control since the employee can secure refundable, as opposed to nonrefundable, entertainment or airline tickets. Id. In this respect, the Agency contends that employees could purchase trip insurance, which would affect the scope of the "magnitude of the money damages the Agency will have to pay[.]" Id. Also, the Agency maintains that "the fact that it is the exercise of employees' economic discretion that creates the money liability tips the balance in favor of finding that the disputed provision excessively interferes with management's right to assign work while providing little benefit to the employees who can control these self-inflicted losses or damages." Id. at 33.

      The Agency asserts that the provision would have a substantial impact on its right to assign work and cancel leave since the provision requires that any cancellation of leave by management must be justified by a compelling need, which is undefined in the provision. Also, the Agency claims that there would be a disproportionately negative impact on management's rights by requiring management to pay employees for unlimited costs associated with such cancellation, since the provision might dissuade or chill management's right to cancel the leave of a best qualified employee if the reimbursement for the leave was substantial, e.g., a $10,000 family cruise. Id. at 34.

      Based on the foregoing, the Agency maintains that the provision would have a negative impact on effective and efficient government operations and would "create untold additional litigation, [that] . . . draw[s] employees away from their jobs and before arbitrators." Id. at 35.

V.     Analysis and Conclusions

      For the following reasons, we find that the provision is outside the duty to bargain.

      We address the issues in the order presented by the court.

A.     Whether the provision might or might not constitute "official business" within the meaning of the BATF v. FLRA footnote and Authority precedent.

      In response to the court's remand, and the Union's argument, we address whether the provision is within the duty to bargain on the ground that the reimbursements required by the provision are authorized by the "official business" standard in BATF v. FLRA and Authority precedent applying the "official business" standard.

      In BATF v. FLRA, the issue before the Supreme Court was whether the authorization for official time under § 7131(a) of the Statute also authorized union representatives to a per diem allowance and travel expenses. The Court reversed the Authority's holding that the Statute provided authorization for such expenses. However, the Court found that agencies could "mak[e] such payments upon a determination that they serve the convenience of the agency or are otherwise in the primary interest of the Government, as was the practice prior to the passage of the [Statute]." 464 U.S. 89, 107 n.17 (1983) (citing n.11). In this respect, the Court [ v60 p1005 ] noted that prior to the passage of the Statute, such per diem payments to employee negotiators were authorized pursuant to the Travel Expense Act, which expressly provides that a federal employee "traveling on official business away from [his or her] designated post of duty . . . is entitled to . . . a per diem allowance." 5 U.S.C. § 5702(a). The Court explained that under the Travel Expense Act, agencies may authorize per diem allowances for travel "upon a certification that the employees' travel served the convenience of the employing agency," or would be in the "primary interest of the [g]overnment[,]" so as to be regarded as "official business." Id. at 106, 101 n.11.

      Thus, in context, the Court's discussion clearly indicates that the Travel Expense Act provided authorization for travel expenses for union representatives only in certain circumstances -- where the agency had certified or determined that the expenses were in the "primary interest of the government," under the official business standard. Contrary to the Union's assertions, the Court in BATF v. FLRA did not establish a general, "official business" standard authorizing the expenses under the instant provision. Rather, the Court first found and relied on a statutory authorization (the Travel Expense Act) permitting the expenditure of funds for this purpose. Without the statutory authorization of the Travel Expense Act, there would have been no basis for the Court's application of the official business standard.

      Moreover, since the Travel Expense Act does not apply here, it cannot serve as a statutory basis for the application of the "official business" standard in this case. See ACT v. FLRA I, 269 F.3d at 1116-17 (court reversed Authority's finding that the Travel Expense Act governs the instant provision, noting that "no faithful reading of the Travel Expense Act, which establishes `entitled' reimbursement or allowance `when traveling on official business' is relevant to the disputed provision, which provides compensation for unavoidable expenses resulting from canceled leave"). The Court's application of that standard in BATF v. FLRA did not create a general "official business" standard that would substitute for statutory or regulatory provisions that expressly authorize expenditures for official business. Further, nothing in the 2000 DOD Appropriations Act authorizes the expenditure of funds for this purpose. Without a statutory authorization already in place that expressly authorizes the expenditures required by the provision, there is nothing against which to apply the "official business" standard.

      Our review of GSA and BATF reaffirms our conclusion that the "official business" standard cannot be generally applied in the absence of relevant statutory or regulatory provisions that expressly authorize certain expenditures for official business. In GSA, the Authority found that the agency had the discretion to pay for telephones used by unions under the applicable statutory and regulatory provisions, which expressly authorized expenditures for telephone service for "official business" that is necessary "in the interest of the [Government]." GSA, 24 FLRA at 432-33 (citing 31 U.S.C. § 1348(b), 41 C.F.R. § 201-38.007)). In so holding, the Authority relied on its holding in NTEU that bargaining over the payment of union travel expenses for collective bargaining was permissible because such payment was within the agency's discretion under the relevant statutory and regulatory provisions, which authorized expenditures for "official business" that "is necessary to accomplish the purposes of the Government[.]" NTEU, 21 FLRA at 10, 15, 18 (citing Travel Expense Act, 5 U.S.C. § 5702; Federal Travel Regulations § 1-1.4).

      Thus, GSA and BATF establish that the Authority applied the "official business" test in these cases because relevant statutory provisions explicitly allowed the use of government telephones for "official business." In contrast, there are no analogous statutory or regulatory provisions in this case that expressly grant agencies discretionary authority to make the reimbursements under the provision. In the absence of such applicable statutory and regulatory provisions, the "official business" test is not applicable in this case and, therefore, cannot serve as a basis to determine that the Agency has discretion to reimburse employees as required by the provision.

B.     Whether the Statute, see 5 U.S.C. §§ 7106(b)(3), § 7114, being itself sufficiently within the interest of the United States, see id. § 7101, creates `official business.'

      The Statute neither creates official business nor provides a statutory basis to apply the official business standard. Unlike the Travel Expense Act, nothing in the Statute warrants application of the "official business" standard to determine whether agencies have discretion to expend appropriated funds. Here again, BATF v. FLRA is highly instructive. The Court found that Congress' declaration in § 7101(a) that collective bargaining is in the public interest did not warrant the conclusion that employee negotiators are on "official business" of the Government under the Travel Expense Act so as to entitle them to travel expenses. The Court found nothing in the Statute or its legislative history to demonstrate that Congress intended union negotiators to be allowed per diem and travel expenses on the theory that they were engaged in Government business. 464 U.S. at 99. Indeed, the Court found that even as to those employees [ v60 p1006 ] acting in an "official capacity," Congress generally provides explicit authorization for such payments. Id. at 105 (citing Travel Expense Act, § 5702, § 5751(b), § 6322(b)).

      Likewise, nothing in the Statute or its legislative history indicates that Congress intended § 7106(b)(3) or § 7101(a) to constitute spending authorization for agencies to reimburse employees in the manner required by the provision as official business. [n2] Moreover, neither the Authority nor the courts have found the Statute to constitute an independent statutory basis for authorizing agencies to expend funds as required by the provision.

      Rather, long-standing Authority precedent reflects that "matters concerning conditions of employment are subject to collective bargaining when they are within the discretion of an agency and are not otherwise inconsistent with law[.]" Patent Office Professional Ass'n, 53 FLRA 625, 648 (1997); NTEU, 21 FLRA 6, 10 (1986) (NTEU), aff'd sub nom. Dep't of Treasury, United States Customs Service v. FLRA, 836 F.2d 1381 (D.C. Cir. 1988). The Authority found in NTEU, GSA and BATF that the Statute required the agencies to bargain over travel expenses for union negotiators and union use of government telephones since the agencies had discretion over such matters under law as discussed above and these matters were not otherwise contrary to law.

C.     The implications of the Authority's previous rulings in BATF and GSA that the Agency could exercise its discretion to use appropriated funds for union-use of government telephones for labor-management relations.

      As explained in detail above, BATF v. FLRA and the Authority's decisions establish the need for independent and express statutory authorization for the expenditure of funds separate and distinct from the duty to bargain imposed by the Statute. [n3] Contrary to the Union's assertions, these cases do not support the proposition that the Statute provides implicit spending authority for the agencies to pay union representatives for per diem allowances or travel expenses incurred in connection with collective bargaining in BATF v. FLRA, or that the Statute provides authorization for the union's use of government telephones. As discussed above, in BATF v. FLRA, GSA, and BATF, the respective statutory and/or regulatory provisions under the Travel Expense Act and 31 U.S.C. § 1348(b) and 41 C.F.R. § 201-38.007, not the Statute, granted the agencies discretion to determine whether the expenditures were in relation to "official business," and sufficiently within the interest of the United States to permit agencies to expend funds for those purposes.

D.     Whether for reasons of adequate staffing, retention, recruitment, or morale, for example, such reimbursements might advance the Agency's interests or convenience under the official business standard.

      We have found that the "official business" standard is not applicable in this case. Nonetheless, we are mindful of the court's instruction on remand to determine whether the provision constitutes "official business."

      The "official business" standard has been articulated in terms of whether the activity involved was sufficiently in the interest of the United States so as to be regarded as official business, served the convenience of the agency or was otherwise in the primary interest of the Government. NTEU, 21 FLRA at 10 (citing BATF v. FLRA, at 100-01 n.11 and 107 n.17, citing 46 Comp. Gen. 21 (1966)); GSA, 24 FLRA at 432-33; BATF, 26 FLRA at 498. To this end, we acknowledge that the provision might serve the Agency's interests by promoting employee morale and mitigating disappointment over the cancellation of leave and any incurred financial losses by employees. However, the Union has not established that the provision would serve the interests of the Agency in any of the other categories. [ v60 p1007 ]

      With respect to adequate staffing, regardless of the existence of this provision, the Agency has the right to cancel leave of employees in order to fulfill its objectives or mission in "provid[ing] `trained personnel' for `mobilization in times of war, national emergency or civil disruption." 60 FLRA at 347 (citing New York Council, Ass'n of Civil Tech. v. FLRA, 757 F.2d 502, 505 (2d Cir. 1985)). This provision does not enhance the Agency's ability to adequately deploy or mobilize personnel. We reject the Union's claims that the provision would necessarily make managers less reluctant to cancel leave and assign work, since the provision could deter the Agency from deploying or mobilizing certain employees on leave in light of the financial liability it may incur for the employees' personal losses.

      With respect to retention or recruitment, we similarly find that the Union has not demonstrated that the provision would advance the primary interests or convenience of the Agency. Although the provision might provide a possible boost in employee morale, it is nevertheless hard to quantify or assess the benefit to the Agency in terms of retention and recruitment. Nothing in the record suggests that retention and recruitment is a problem under current Agency policy and rules. Also, it is reasonable to conclude that employees, or those considering employment with the Guard, realize that the Agency may be compelled to cancel leave without much notice in order to deploy and mobilize personnel, especially under current circumstances. As such, it is hard to assess, what, if any, impact the provision would have on the Agency's retention and recruitment efforts.

      Thus, notwithstanding any improvement in employee morale, which is highly speculative at best, we find that the Union has not demonstrated that the provision would advance the Agency's interests in ensuring adequate staffing, retention and recruitment. As a result, we find that the provision is not sufficiently within the primary interest of the Agency so as to constitute official business.

E.     Whether the Provision Constitutes an Appropriate Arrangement

      As instructed by the court, we will address whether the provision constitutes an appropriate arrangement, and that determination will inform our analysis of whether the reimbursements are for, or related to, official business.

      In determining whether a provision is an appropriate arrangement, the Authority follows the analysis set forth in NAGE, Local R14-87, 21 FLRA 24 (1986) (KANG). Under this analysis, the Authority first determines whether the provision is intended to be an arrangement for employees adversely affected by the exercise of a management right. See KANG, 21 FLRA at 31; see also United States Dep't of the Treasury, Office of the Chief Counsel, IRS v. FLRA, 960 F.2d 1068, 1073 (D.C. Cir. 1992). The claimed arrangement must also be sufficiently tailored to compensate employees suffering adverse effects attributable to the exercise of management's rights. See, e.g., Customs Serv., 55 FLRA at 1187. If the provision is determined to be an arrangement, then the Authority determines whether it is appropriate, or whether it is inappropriate because it excessively interferes with the relevant management right(s). See KANG, 21 FLRA at 31-33. In doing so, the Authority weighs the benefits afforded to employees under the arrangement against the intrusion on the exercise of management's rights. See id.

      As applied here, even assuming that the provision constitutes an arrangement that is sufficiently tailored, we would find, in agreement with Member Pope's concurrence in Puerto Rico Nat'l Guard II, that it is not appropriate because it excessively interferes with the Agency's rights to assign work and assign employees. See AFGE, Local 1985, 55 FLRA 1145, 1148 (1999) (right to assign work under § 7106(a)(2)(B) of the Statute encompasses the right to determine the particular duties to be assigned, when work assignments will occur, and to whom or what positions the duties will be assigned). In this regard, the provision would require the Agency to reimburse employees not only for expenses necessary to return to work from cancelled leave, but also for unused theater, sports, and banquet tickets. The Agency's liability under the provision is so uncontrollable, so unforeseeable, and so unrelated to the Agency's exercise of its right to assign work as to be excessive. In this respect, the absence of any limit or cap on the Agency's potential economic liability would interfere with or hinder the Agency's decisions to cancel leave of employees in mobilizing and deploying employees for military missions.

      The provision would essentially impose a penalty on the Agency's exercise of its rights in mobilizing and deploying employees for missions if the Agency decides that it cannot afford to cancel an employee's leave because of the financial obligations it would incur. In this respect, the provision requires the Agency to consider the financial effects of assigning employees work as result of cancelling their leave. We find that imposing such financial considerations is at odds with the scope of the Agency's right to assign work. [n4] Moreover, by requiring the Agency to consider the cost of a financial penalty, which varies from employee to employee, in determining whether to recall employees, the provision [ v60 p1008 ] conflicts with the already noted mission of the Guard as "a military organization dedicated to a military mission that provides `trained personnel' for `mobilization in times of war, national emergency or civil disruption.'" 60 FLRA at 347.

      Further, we reject the Union's contentions that the absence of a cap on reimbursable expenses constitutes precise tailoring that renders the proposal appropriate and that the Agency can foresee the amount of the reimbursements based on the duration of the leave and the income level of the affected employees. These factors do not provide a reliable gauge of the Agency's liability, since employees could use credit to purchase vacations that are well beyond their income levels. Similarly, the adverse effects and incurred losses are subject to the employee's control since the employee can secure refundable, as opposed to non-refundable, reservations. Also, as the Agency notes, there are alternatives that employees can explore, such as trip insurance, that would minimize the employee's losses, and in turn, the Agency's liability. In addition, the Union's reliance on NAGE is misplaced since that proposal involved the use of nonappropriated funds that are not subject to the same statutory restrictions on the use of appropriated funds at issue here. AFGE, Local 1647, 59 FLRA 369 (2003).

      Accordingly, in balanc