FLRA.gov

U.S. Federal Labor Relations Authority

Search form

17:0429(69)NG - AFGE Local 1622 and The Directorate Facilities and Engineering Department of the Army, Fort George G. Meade, MD -- 1985 FLRAdec NG



[ v17 p429 ]
17:0429(69)NG
The decision of the Authority follows:


 17 FLRA No. 69
 
 AMERICAN FEDERATION OF GOVERNMENT 
 EMPLOYEES, AFL-CIO, LOCAL 1622
 Union 
 
 and 
 
 THE DIRECTORATE FACILITIES AND 
 ENGINEERING DEPARTMENT OF THE ARMY, 
 FORT GEORGE G. MEADE, MARYLAND 
 Agency
 
                                            Case No. 0-NG-853
 
                 DECISION AND ORDER ON NEGOTIABILITY ISSUE
 
    The petition for review in this case comes before the Authority
 pursuant to section 7105(a)(2)(E) of the Federal Service
 Labor-Management Relations Statute (the Statute) and concerns the
 negotiability of one Union proposal.  Upon careful consideration of the
 entire record, including the parties' contentions, the Authority makes
 the following determinations.
 
                              Union Proposal
 
          In the Cost Comparison Analysis of the Commercial Cost Study of
       any bargaining unit activity, the "fringe benefit" factors must be
       demonstrated to be fair and reasonable and will be derived from
       the Employer's actual local fringe benefit factors existing at the
       time of the cost study.
 
    This proposal conflicts with the Agency's right to "make
 determinations with respect to contracting out" pursuant to section
 7106(a)(2)(B) of the Statute.  In this regard, the Authority has
 previously determined that the right of management officials to make
 determinations with respect to contracting out encompasses not only the
 right to take such action but also the right to engage in preliminary
 discussion and deliberation concerning the relevant factors upon which
 such determinations will be made.  National Federation of Federal
 Employees, Local 1167 and Department of the Air Force, Headquarters,
 31st Combat Support Group (TAC), Homestead Air Force Base, Florida, 6
 FLRA 574 (1981) (Union Proposal 1), affirmed sub nom. National
 Federation of Federal Employees, Local 1167 v. Federal Labor Relations
 Authority, 681 F.2d 886 (D.C. Cir. 1982).  Thus, the Authority has found
 proposals which prescribe standards to be utilized by management to
 evaluate the factors upon which a decision to contract out could be
 based to be nonnegotiable because they interfere with the agency's
 deliberative process.  American Federation of Government Employees,
 AFL-CIO, Local 2736 and Department of the Air Force, Headquarters 379th
 Combat Support Group (SAC), Wurtsmith Air Force Base, Michigan, 14 FLRA
 302 (1984) (Proposals 1 and 2).  Therefore, based on the reasons stated
 in Wurtsmith Air Force Base and Homestead Air Force Base, the disputed
 proposal herein, which specifically prescribes the standards to be used
 to calculate fringe benefit factors for the cost comparison analysis,
 i.e., some of the factors upon which a decision to contract out could be
 based, is not within the duty to bargain.
 
    In addition, contrary to the Union's contentions, the proposal is
 inconsistent with OMB Circular No. A-76 (hereinafter "the Circular").
 Specifically, the proposal conflicts with Part 4, Chapter 2(D)(3)(g), of
 the 1983 Supplement of the Circular (hereinafter "the Supplement") which
 mandates that when making a cost comparison between in-house and
 potential contract performance an agency must use various formulas,
 called standard factors, which calculate the cost of various fringe
 benefits as a percentage of wages.  /1/ For certain of these benefits,
 i.e., Medicare and FICA, the percentage formula represents the actual
 cost to the agency of providing the benefits.  For others, most notably
 retirement contributions, the standards factors are only an estimate,
 based on Government-wide figures, of the cost of providing the benefit.
 The Union's proposal, however, would require the Agency to use actual
 costs in all cases to calculate fringe benefits rather than the standard
 factors mandated by the Circular.
 
    Since the proposal is inconsistent with the Circular and its
 Supplement, it would be outside the duty to bargain if the Circular
 constitutes a "Government-wide rule or regulation" within the meaning of
 section 7117(a)(1) of the Statute.  In this connection, the Circular and
 its Supplement apply to all executive agencies with only limited
 exceptions as set forth in the Circular and not here relevant.  /2/
 Consequently, the Circular and its Supplement are generally applicable
 to the Federal civilian work force so as to be "Government-wide" within
 the meaning of section 7117(a)(1) of the Statute.  See National Treasury
 Employees Union, Chapter 6 and Internal Revenue Service, New Orleans
 District, 3 FLRA 748 (1980).
 
    As to whether the provisions of the Circular and its Supplement
 constitute a "rule or regulation" within the meaning of section
 7117(a)(1), the Authority has previously concluded that Congress
 intended that term to include "official declarations of policy of an
 agency which are binding on officials and agencies to which they apply."
 See National Federation of Federal Employees, Local 1497 and Department
 of the Air Force, Lowry Air Force Base, Colorado, 9 FLRA 151 (1982), at
 154-55.
 
    The Circular and Supplement were promulgated pursuant to The Budget
 and Accounting Act of 1921, 31 U.S.C. 1 et seq. and the Office of
 Federal Procurement Policy Act Amendments of 1979, 41 U.S.C. 401 et seq.
  Paragraph 1 of the Circular states that its purpose is to establish
 "Federal Policy regarding the performance of commercial activities."
 Paragraph 7 of the Circular indicates that the Circular and Supplement
 are to "provide administrative direction to heads of executive
 agencies." Paragraph 9 of the Circular sets forth procedures to be
 followed to ensure that the provisions of the Circular and the
 Supplement are followed.
 
    Therefore, it must be concluded that the Circular and its Supplement
 establish official policy which is binding on agencies and officials in
 the executive branch of the Federal government and thus constitute a
 "rule or regulation" within the meaning of section 7117(a)(1).
 Consequently, since the proposal is inconsistent with provisions of a
 "Government-wide rule or regulation," it is outside the duty to bargain
 under section 7117(a)(1) of the Statute.
 
    Accordingly, pursuant to section 2424.10 of the Authority's Rules and
 Regulations, IT IS ORDERED that the Union's petition for review be, and
 it hereby is, dismissed.  Issued, Washington, D.C., April 9, 1985
                                       Henry B. Frazier III, Acting
                                       Chairman
                                       William J. McGinnis, Jr., Member
                                       FEDERAL LABOR RELATIONS AUTHORITY
 
 
 
 
 
 
 --------------- FOOTNOTES$ ---------------
 
 
    /1/ Part 4, Chapter 2(D)(3)(g) of the Supplement provides in relevant
 part:
 
          g.  Fringe Benefits or FICA - (Column G).
 
          (1) Multiply the following Government-wide standard factors by
       the appropriate basic pay (column F).
 
          (a) The Government cost factor to be used for Federal employee
       retirement benefits, based on a dynamic normal cost projection for
       the Civil Service Retirement Fund, is 20.4 percent.
 
          (b) The Government cost factor to be used for Federal employee
       insurance (life and health) benefits, based on actual cost, is 3.7
       percent, plus an additional 1.3 percent for Medicare up to annual
       salary limitations placed on employees covered under FICA.
 
          (c) The Government cost factor to be used for Federal employee
       workmen's compensation, bonuses and awards and unemployment
       programs is 1.9 percent.
 
          2.  The Federal Insurance Contributions Act (FICA) cost factor
       will be applied to applicable employees (normally intermittent
       employees).  Be careful to apply the FICA rate only to wages and
       salaries subject to the tax;  there is an annual salary limitation
       for FICA tax and new Federal employees will be affected by FICA
       taxes.
 
 
    /2/ See Paragraph 7 of the Circular.  Scope.