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 24 FLRA No. 6
 
 LEXINGTON-BLUE GRASS ARMY 
 DEPOT, LEXINGTON, KENTUCKY
 Activity
 
 and
 
 AMERICAN FEDERATION OF GOVERNMENT 
 EMPLOYEES, AFL-CIO, LOCAL 894
 Union
 
                                            Case No. 0-AR-1156
 
                                 DECISION
 
                         I.  STATEMENT OF THE CASE
 
    This case is before the Authority on an exception to the award of
 Arbitrator W. Scott Thomson filed on behalf of the Activity by the
 Department of the Army (Agency) under section 7122(a) of the Federal
 Service Labor-Management Relations Statute and part 2425 of the
 Authority's Rules and Regulations.
 
                  II.  BACKGROUND AND ARBITRATOR'S AWARD
 
    The dispute in this matter resulted from the partial closure of the
 Lexington-Blue Grass Army Depot (Activity) on July 5, 1985, in order to
 conserve energy.  All employees, except emergency employees and
 employees with personal hardships, were charged with either annual leave
 or leave without pay.  The Union filed a grievance requesting (1)
 restoration of annual leave for those employees who were on annual leave
 or leave without pay, and (2) holiday pay for those employees who had
 worked.  The grievance was denied on the basis that Agency regulations
 specifically authorized management to close installations and place
 employees in leave or leave without pay status as part of the overall
 right to manage its operation and its energy conservation program.
 
    The Arbitrator framed the issue to be resolved as whether the partial
 closure was in accordance with applicable rules and regulations.  The
 Arbitrator analyzed the pertinent provisions of the agreement and the
 regulations and determined that while closing an activity for managerial
 reasons is within the administrative authority of an agency, the
 authority is limited by applicable law and regulation.  He interpreted
 Agency regulations as prohibiting the closing of an activity for the
 purpose of creating a holiday and, in the case of a closure to conserve
 energy, as requiring management to consider implementation of flex-time
 schedules and any other means available to avoid the need for closure.
 He concluded that since the Activity in this case had not considered any
 means of conserving energy other than closure and its decision was based
 in part on anticipated excessive absenteeism, the Activity had unfairly
 and partially treated employees and had violated applicable rules and
 regulations.  Accordingly, as his award, the Arbitrator ordered that
 those employees on annual leave were to have their leave restored, and
 those employees on leave without pay were to receive 8 hours pay.  The
 Arbitrator did not order compensation for those employees who worked
 because they were not adversely affected by the closure.
 
                              III.  EXCEPTION
 
    The Agency contends that the award is contrary to Agency regulations
 for which there is a compelling need.  In support, the Agency cites the
 Authority's decision in National Association of Government Employees,
 Local R14-62 and U.S. Army Dugway Proving Ground, Dugway, Utah, 18 FLRA
 No. 38 (1985), petition for review filed sub nom. National Association
 of Government Employees, Local R14-62 v. FLRA, No. 85-2098 (10th Cir.,
 July 23, 1985) (Authority motion for remand filed Nov. 11, 1986).
 There, the Authority found a compelling need for the same Agency-wide
 regulations at issue in this case:  Army Civilian Personnel Regulation
 990-2 (C11), subchapter 610.S3, paragraph 3C, and Department of Defense
 Civilian Personnel Manual Supplement 990-2, Book 610, subchapter S3,
 paragraph 1(a).  These regulations require employees to take annual
 leave during periods when Agency facilities are partially closed.  The
 Agency contends that since the same regulations are involved, the
 Arbitrator's award, which essentially prohibits the Agency from
 requiring employees to take annual leave during the periods of partial
 closure, is deficient under section 7122(a) of the Statute.
 
                       IV.  ANALYSIS AND CONCLUSION
 
    The Agency's exception does not establish a basis for finding the
 award deficient.  In Aberdeen Proving Ground, Department of the Army, 21
 FLRA No. 100 (1986), petition for review filed sub nom. Department of
 the Army, Aberdeen Proving Ground v. FLRA, No. 86-2577 (4th Cir. June
 26, 1986), in the context of an unfair labor practice complaint, the
 Authority held that the Respondent, Department of the Army, had not
 established a compelling need for regulations which are to the same
 effect as those here, prohibiting administrative leave during periods of
 partial closure.  The Authority made this determination because
 operations were curtailed in order to conserve energy, and operations
 would be curtailed and energy conserved to the same extent whether the
 affected employees were on annual leave or administrative leave during
 the period of partial closure.  In this case, the dispute also resulted
 from a partial closure in order to conserve energy.  The Agency has
 failed to demonstrate how its regulations would be essential or even
 helpful in achieving its objective in curtailing operations.  Therefore,
 the Arbitrator's award does not interfere with an Agency-wide regulation
 for which there is a compelling need.
 
    As to its decision in Dugway Proving Ground, the Authority found that
 an agency's decision to shut down or curtail operations is an aspect of
 management's right to layoff under section 7106(a)(1) of the Statute.
 Thus, we note that on occasion, financial considerations will lead
 management to conclude that it must exercise its authority to layoff
 employees.  For example, if an agency is without appropriated funds, a
 decision to cease operations and furlough employees is clearly within
 management's authority to layoff employees.  Moreover, if an agency
 receives an appropriation which is below that required to maintain a
 workforce at its existing level, a decision to furlough employees or to
 conduct a reduction-in-force is within management's authority to layoff
 employees.  Here, the Agency does not claim, nor does it appear, that
 anything in the Arbitrator's award would prevent the Agency from
 deciding to shut down its facilities.
 
    The Agency relies on a different aspect of the Authority's Dugway
 decision.  In addition to the Authority's discussion of management's
 right to layoff, the Authority also found a compelling need for the
 Agency's regulations because the Agency had demonstrated, under section
 2424.11(a) of the Authority's Rules and Regulations, that its
 regulations were a critical component in its objective of saving money
 by curtailing operations so as to insure the Agency's performance of its
 mission in an effective and efficient manner.  We now reconsider and
 overrule the Authority's determination in Dugway Proving Ground that a
 demonstration of monetary savings alone is sufficient to establish that
 a regulation is essential, as distinguished from helpful and desirable,
 to the accomplishment of the mission or the execution of the functions
 of an agency in a manner which is consistent with the requirements of an
 efficient and effective Government.
 
    We do not believe that effectiveness and efficiency are to be
 measured solely in monetary terms.  Financial considerations, of course,
 can be relevant to a determination whether an agency regulation
 satisfies the compelling need criterior set forth in section 2424.11(a)
 of the Authority's regulations.  See National Treasury Employees Union,
 Chapter 207 and FDIC, Washington, D.C., 21 FLRA No. 36 (1986) (finding a
 compelling need under section 2424.11(a) for agency regulations
 establishing a uniform system for determining employee salaries).
 However, in determining whether an agency's regulation is essential, as
 distinguished from helpful or desirable to effective and efficient
 agency operations, other considerations are also pertinent.  Compare,
 for example, American Federation of Government Employees, AFL-CIO and
 Air Force Logistics Command, Wright-Patterson Air Force Base, Ohio, 2
 FLRA 604, 608 (1980), aff'd on other grounds, 659 F.2d 1140 (D.C. Cir.
 1981), cert. denied, 455 U.S. 945 (1982) ("Only where an agency makes a
 substantial demonstration that an increase in costs is significant and
 unavoidable and is not offset by compensating benefits can an otherwise
 negotiable proposal be found to violate the agency's right to determine
 its budget under section 7106(a) of the Statute.").
 
    The language and legislative history of the Statute supports our
 conclusion that a broad balancing of factors is appropriate in
 evaluating compelling need assertions such as the Agency makes here.  In
 enacting the Statute, Congress found that collective bargaining in the
 Federal sector is in the public interest because, among other things, it
 facilitates and improves employees' performance and the efficient
 accomplishment of the operations of the Government.  See section 7101(a)
 of the Statute.  Moreover, with respect to compelling need, it is clear
 from the legislative history of the Statute that Congress intended a
 regulation to bar negotiations only on narrow grounds.  In this regard,
 Congressman Ford, addressing this section of the Statute, stated:
 
       The compromise position in section 7117 was accepted with the
       understanding that the . . . compelling need test will be
       permitted to be raised in only a limited number of cases.  /*/
 
    Our conclusion is also consistent with a recent holding of the U.S.
 Court of Appeals for the District of Columbia Circuit, affirming a
 decision by the General Counsel in the context of an unfair labor
 practice case that an informal settlement agreement effectuated the
 purposes of the Statute.  The Court stated:
 
       (E)conomic hardship is a fact of life in employment, for the
       public sector as well as the private.  Such monetary
       considerations often necessitate substantial changes.  If an
       employer was released from its duty to bargain whenever it had
       suffered economic hardship, the employer's duty to bargain would
       practically be non-existent in a large proportion of cases.
 
    American Federation of Government Employees v. FLRA, 785 F.2d 333 at
 338 (D.C. Cir. 1986).
 
    To the extent that our decisions in Dugway Proving Ground, 18 FLRA
 No. 38 (1985), and National Association of Government Employees, Local
 R14-9 and U.S. Army Dugway Proving Ground, Dugway, Utah, 18 FLRA No. 45
 (1985), are inconsistent with our decision here, they will no longer be
 followed.  In this case, the Agency has failed to establish any facts
 concerning financial and other pertinent factors sufficient to provide a
 basis for finding a compelling need for its regulations under section
 2424.11(a) of the Authority's Rules.  Therefore, the Agency has failed
 to establish that the Arbitrator's award is contrary to section 7122(a)
 of the Statute as alleged.
 
                               V.  DECISION
 
    Accordingly, for the above reasons, the Agency's exception is denied.
 
    Issued, Washington, D.C., November 17, 1986.
                                       /s/ Jerry L. Calhoun, Chairman
                                       /s/ Henry B. Frazier III, Member
                                       /s/ Jean McKee, Member
                                       FEDERAL LABOR RELATIONS AUTHORITY
 
 
                ---------------  FOOTNOTES$ ---------------
 
 
 
    (1) 124 Cong. Rec. 29199 (1978) (statement of Rep. Ford), reprinted
 in Sub-comm. on Postal Personnel and Modernization of the House Comm. on
 Post Office and Civil Service, 96th Cong., 1st Sess., Legislative
 History of the Federal Service Labor-Management Relations Statute, Title
 VII of the Civil Service Reform Act of 1978, at 956 (Comm. print No.
 96-7). 
 
 
 

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