[ v17 p661 ]
17:0661(96)NG
The decision of the Authority follows:
17 FLRA No. 96
AMERICAN FEDERATION OF GOVERNMENT
EMPLOYEES, AFL-CIO, LOCAL 1923
Union
and
HEALTH CARE FINANCING ADMINISTRATION,
BALTIMORE, MARYLAND
Agency
Case No. 0-NG-895
DECISION AND ORDER ON NEGOTIABILITY ISSUES
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, /1/ the Authority
makes the following determinations.
Union Proposal
If the Administration makes a cost comparison to determine the
cost performance of work in-house versus performance by a
contractor, the following criteria will apply to the in-house cost
estimate:
(1) Basic Wages used will be the actual basic wages of affected
employees at the time of the cost study.
(2) Fringe benefit factors used shall be the actual fringe
benefit rates which pertain to the Administration's own true costs
for affected employees at the time of the cost study.
(3) Material and other costs shall be the actual costs to the
Administration for the affected activity.
(4) If any increases are computed in 1, 2, or 3 above to cover
inflation, expansion of function, change of mission, etc., such
increases shall be fair and reasonable.
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
in making various calculations 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, and contrary to the Union's assertions, the proposal
conflicts with those portions of OMB Circular No. A-76 (hereinafter "the
Circular"), which concern the development of the Performance Work
Statement (PWS) which provides a comprehensive estimate of the costs of
performing tasks through various courses of action and is the basis for
the cost comparison between in-house and potential contract performance.
Specifically, Section 1 of the Union proposal would require that the
Agency use "actual basic wages of affected employees at the time of the
cost study" in determining wage costs for the in-house estimate.
However, Part 4, Chapter 2(D)(2) of the 1983 Supplement to the Circular
(hereinafter "the Supplement") requires that the in-house staffing
estimate be based on "the most efficient and effective organization" /2/
necessary to accomplish the task and makes it clear that such a staffing
estimate might differ from the current staffing level of the Agency
employees at the time of the study. /3/
Further, Part 4, Chapter 2(D)(3)(d) of the Supplement requires the
Agency to use a Government-wide standard step rate (i.e., step 5 for GS
employees and step 4 for FWS employees) or an average step rate in
calculating the in-house wage cost rather than the actual step rates of
affected employees. /4/ Thus, pursuant to the requirements of the
Supplement, the wage figures used to develop the in-house portion of the
PWS do not necessarily correspond to the actual wage costs of agency
employees performing the work at the time of the study. Consequently,
Section 1 of the proposal, which would require the Agency to use actual
wage costs, is inconsistent with the Supplement.
Section 2 of the Union proposal conflicts with Part 4, Chapter
2(D)(3)(g) of 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. /5/ 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
standard factors are only an estimate, based on Government-wide figures,
of the cost of providing the benefit. Section 2 of 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 Supplement. See American Federation of Government
Employees, AFL-CIO, Local 1622 and The Directorate Facilities and
Engineering Department of the Army, Fort George G. Meade, Maryland, 17
FLRA No. 69 (1985).
Section 3 of the proposal conflicts with Part 4, Chapter 2(E)(3) of
the Supplement which requires that, when calculating the cost of
materials and supplies, an additional percentage is to be added to the
purchase price of materials acquired from other government agencies.
/6/ This additional percentage is intended to account for the amount
spent for acquisition and storage by the General Services Administration
which is not included in the cost of the items. Therefore, as Section 3
of the proposal would require that the cost figures used for these
materials be based solely on "actual costs" it is inconsistent with the
mandate of the Supplement.
Since Section 4 of the Union proposal is integrally related to
Sections 1, 2 and 3 and cannot be considered separately from them, it is
for all the reasons cited above, also inconsistent with the Supplement.
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. The Authority has previously
determined that the Circular and its Supplement are Government-wide
regulations within the meaning of the Statute. American Federation of
Government Employees, AFL-CIO, Local 1622 and The Directorate Facilities
and Engineering Department of the Army, Fort George G. Meade, Maryland,
17 FLRA No. 69 (1985); American Federation of Government Employees,
Local 225, AFL-CIO and Department of the Army, U.S. Army Armament
Research and Development Command, Dover, New Jersey, 17 FLRA No. 66
(1985) (Union Proposal 3). Consequently, the proposal 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 petition for review be, and it
hereby is, dismissed. Issued, Washington, D.C., April 23, 1985
Henry B. Frazier III, Acting
Chairman
William J. McGinnis, Jr., Member
FEDERAL LABOR RELATIONS AUTHORITY
--------------- FOOTNOTES$ ---------------
/1/ The Union claims that the Agency's statement of position was not
timely filed and should not be considered by the Authority. The Agency
states that the Union's petition for review was received on August 30,
1983. Pursuant to section 2424.6 of the Authority's Rules and
Regulations, the Agency had 30 days after the date of receipt to file
its statement of position. The Agency's statement, however, was not
filed with the Authority until October 4, 1983, more than 30 days after
receipt. Accordingly, the Agency's statement of position was untimely
filed, and the Authority has not considered it herein.
/2/ Part 4, Chapter 2(D)(2) of the Supplement provides, in relevant
part:
2. In-House Staffing Estimate. Development of the in-house
staffing estimate is a crucial step of the cost comparison
process. The staffing estimate describes the most efficient and
effective organization to accomplish requirements specified in the
PWS.
/3/ Part 4, Chapter 2(D)(2)(b) of the Supplement provides, in
relevant part:
b. (I)t is important that the estimated workload be based on
the PWS and not necessarily on the current workload, staffing or
work methods. If an existing manpower standard or staffing guide
is used, it may be necessary to make upward or downward
adjustments. The adjustments are necessary because existing
standards or guides may be based on work elements or performance
standards or describe work methods which may not be appropriate to
accomplish the workload described in the PWS. If current staffing
patterns are used, similar upward or downward adjustments may also
be needed.
/4/ Part 4, Chapter 2(D)(3)(d) of the Supplement provides, in
relevant part:
d. Annual Salary/Wages - (Column D). . . . Use current pay
rates based on the Government-wide representative rate of step 5
for GS and step 4 for FWS employees, or, if available and deemed
accurate, an organizationally determined average step within each
grade.
/5/ 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 employees
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.
/6/ Part 4, Chapter 2(E)(3) of the Supplement provides, in relevant
part:
3. Pricing Material From Other Government Agencies. Costs
associated with materials obtained from other agencies will also
be added as a material mark-up to the material and supply cost.
a. General Services Administration. In most instances, the
prices charged by GSA for material do not include all the costs of
the acquisition and storage functions performed by GSA. Since
inclusion of these costs in GSA prices is not authorized by law,
it will be necessary to adjust GSA prices for purposes of the cost
estimates. Following is a description of the material and supply
services provided by GSA together with mark-up rates to be applied
to GSA prices:
(1) Wholesale and Stores Direct Delivery. The wholesale
program involves the distribution of common-use, commercially
available items through a network of supply distribution
facilities located throughout the United States. Also included is
the Stores Direct Delivery Program. This program provides the
same type of items carried in stock which, because of volume
orders, are procured from the vendor for direct delivery to the
requisitioner in instances when delivery time is not critical.
Add 21 percent.
(2) Retail. The Retail Program provides high demand common-use
office and janitorial requirements from retail outlets located in
areas of concentrated Federal activity. Add 36 percent.
(3) Nonstores Direct Delivery and Competitive Federal Supply
Schedules. This program is concerned with obtaining customer
nonstock requirements through direct shipment from the vendor.
Presently, agencies are ordering directly from vendors using
schedules established by the GSA Federal Supply Service. Agencies
pay the vendors directly for goods and services obtained. Add 5
percent. (Emphasis in original.)