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 27 FLRA No. 56
 
 NATIONAL FEDERATION OF 
 FEDERAL EMPLOYEES, LOCAL 29
 Union
 
 and
 
 DEPARTMENT OF THE ARMY, 
 KANSAS CITY DISTRICT, 
 U.S. ARMY CORPS OF ENGINEERS, 
 KANSAS CITY, MISSOURI
 Agency
 
                                            Case No. 0-NG-731
                                              21 FLRA No. 32
 
                            DECISION ON REMAND
 
                         I.  Statement of the Case
 
    This case is before the Authority pursuant to a remand from the
 United States Court of Appeals for the District of Columbia Circuit.
 The question involved is whether two proposals interfere with the
 management right under section 7106(a)(1) to determine internal security
 practices.
 
                            II.  The Proposals
 
                                Proposal 1
 
          The Employer recognizes that all employees have a statutorily
       created right to their pay, retirement fund and annuities derived
       therefrom.  The Employer further recognizes that
       charges/allegations of pecuniary liability shall not be construed
       to be indebtedness or arrears to the United States until the
       affected employee has had the opportunity to fully exercise
       his/her rights of due process;  wherein due process shall provide
       equal protection to all employees and shall require a hearing
       before an unbiased, unprejudiced and impartial tribunal, free from
       any command pressure or influence.  All claims by the Government
       for pecuniary liability shall be capped at a maximum of $150.00.
       (Only the underlined portion is is in dispute.)
 
                                Proposal 2
 
          When the Employer determines it is necessary to hold an
       employee(s) liable for loss, damage, or destruction of property,
       the Employer may take appropriate disciplinary action or charge
       the employee pecuniarily liable, but not both.  Under either
       action, the Agency's allegation will only be sustained if the
       Agency proves its charge with a preponderance of evidence.  Any
       disciplinary ation taken will be in accordance with applicable
       laws and higher authority regulation and the negotiated Agreement.
        If the Employer will provide the employee a hearing before an
       arbitrator.  (Only the underlined portion is in dispute).
 
                      III.  Analysis and Conclusions
 
    1.  Background
 
    In the previous decision in this case, National Federation of Federal
 Employees, Local 29 and Department of the Army, Kansas City District,
 U.S. Army Corps of Engineers, Kansas City, Missouri, 21 FLRA No. 23
 (1986), the Authority held that both proposals were nonnegotiable:  the
 first because it directly interfered with the Agency's right to
 determine its internal security practices;  the second because it
 directly interfered with the Agency's right to take disciplinary action
 against employees.  The Authority rejected the Agency's argument that
 the second proposal was nonnegotiable for the additional reason that it
 also conflicted with management's right to determine its internal
 security practices.  On appeal, the court noted that the Authority's
 characterization of the Agency's internal security plan as encompassing
 pecuniary liability was "reasonable enough." National Federation of
 Federal Employees, Local 29 v. FLRA, No. 86-1308 (D.C. Cir. Mar. 6,
 1987).  It went on to state however that the application of that finding
 to the two proposals seemed inconsistent.  It remanded the decision to
 us to resolve the apparent conflict between the findings that Proposal 1
 conflicts with the right to determine internal security practices and
 that Proposal does not.
 
    2.  Both Proposals Interfere with the Right to Determine Internal
 Security Practices
 
    On reconsideration, we find that the determinations of when to hold
 employees pecuniarily liable as well as of the amount of such liability
 are both directly related to the Agency's adoption of pecuniary
 liability as an internal security practice.  They are substantive
 determinations as opposed to being merely procedural in nature.  The
 proposals to limit the extent of liability on the one hand, and to
 foreclose it under certain circumstances on the other, are inconsistent
 with the Agency's right under the Federal Service Labor-Management
 Relations Statute to determine the substance of its internal security
 practices, that is, whether and to what extent to impose pecuniary
 liability.
 
    Additionally, on reconsideration, we find that Proposal 2 interferes
 with the Agency's right to determine its internal security practices by
 conditioning the exercise of that right, that is, the imposition of
 pecuniary liability, on the relinquishment of its right to impose
 discipline.  As noted in our original decision in this case, a proposal
 which establishes a condition on the exercise of a management right
 interferes with the exercise of that right.
 
    3.  Conclusion
 
    We resolve the apparent inconsistency between the two holdings in 21
 FLRA No. 32 by finding that Proposal 2 interferes with the Agency's
 right to determine its internal security practices.  Since the previous
 decision held that Proposal 2 is nonnegotiable and dismissed the
 petition for review it is unnecessary to issue a further order in this
 case.
 
    Issued, Washington, D.C., June 11, 1987.
                                       /s/ Jerry L. Calhoun, Chairman
                                       /s/ Henry B. Frazier III, Member
                                       /s/ Jean McKee, Member
                                       FEDERAL LABOR RELATIONS AUTHORITY 
 
 
 

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