National Center for Toxicological Research and American Federation of Government Employees, Local 3393 (Authority decision, May 19, 1987)

Final FLRA decision. The Authority narrows an arbitration award requiring reconstruction of a procurement action but leaves that remedy in place for specific violations. Under 5 U.S.C. § 7123(a)(1), orders involving arbitral awards are generally excluded from judicial review unless they involve an unfair labor practice under 5 U.S.C. § 7116. This decision does not state that it involves one.

Plain-English summary

The National Center for Toxicological Research decided to contract out maintenance and operations work. An arbitrator found defects in the procurement process and ordered reconstruction. The Authority held that a remedy could rest on violations of mandatory, specific requirements for cost-comparison notice and timely appeals, but not merely on the “spirit and intent” of procurement rules. It modified the award to sustain the grievance only for the specific violations and directed reconstruction on that basis.

Decision snapshot

• Authority: Arbitration exceptions under 5 U.S.C. § 7122(a); cited Federal Acquisition Regulation and OMB Circular A-76 requirements.
• Outcome: Award modified; procurement reconstruction remains required for specific notice and appeal violations.
• Key point: A contracting-out grievance remedy must rest on mandatory procurement requirements that materially affected the decision and harmed employees.

Full text (FLRA public release)

[ v27 p40 ]

27:0040(10)AR

The decision of the Authority follows:

27 FLRA No. 10

NATIONAL CENTER FOR TOXICOLOGICAL
RESEARCH
Activity

and

AMERICAN FEDERATION OF GOVERNMENT
EMPLOYEES, LOCAL 3393
Union

Case No. 0-AR-1261

DECISION

I. Statement of the Case

This matter is before the Authority on exceptions to the award of Arbitrator Francis X. Quinn filed by the Department of Health and Human Services (the Agency) under section 7122(a) of the Federal Service Labor-Management Relations Statute (the Statute) and part 2425 of the Authority's Rules and Regulations.

II. Background and Arbitrator's Award

A grievance was filed and submitted to arbitration claiming that management's determination to contract out the Activity's maintenance and operation functions violated applicable procurement laws, rules and regulations. The Arbitrator first found that the grievance was grievable and arbitrable. On the merits the Arbitrator made the following findings. He found that the Activity "violated the intent and spirit of Federal Acquistion Regulation, Chapter 1, 7.304 which deals with integrity and confidentiality of cost estimates for government performance." The Arbitrator further found that the Activity's "failure to insert required notices of cost comparison in the solicitation when conducting by negotiation violated Federal Acquisition Regulation, Chapter 1, Subparts 7.305(b) and 52.207-2." He also found that, with respect to OMB Circular A-76 which directs that the in-house cost estimate be based on the most efficient and cost effective operation, the Activity's in-house cost estimate was "a glaring violation of the spirit and intent of OMB A-76." Regarding the Activity's failure to render a decision on the Union's appeal within 30 calendar days, the Arbitrator found that this was "more than a technical violation of OMB Circular A-76 (Supplement), Part 1, Chapter 2, Paragraph I.3." In conclusion, he found that "(a)ll these violations of applicable rules and regulations materially affected the the final procurement decision and brought harm to unit employees." Accordingly, as his award, the Arbitrator sustained the grievance and ordered that the procurement process be reconstructed.

III. First Exceptions

A. Contentions

The Agency contends that by finding the grievance to be arbitrable, the award is deficient as contrary to law and regulation.

B. Analysis and Conclusions

This exception provides no basis for finding the award deficient. We have consistently held that a grievance like the one in this case is within the grievance procedure prescribed by the Statute and is not precluded by law or regulation. For example, U.S. Army Engineer District, St. Louis and American Federation of Government Employees, Local No. 3838, 26 FLRA No. 49 (1987).

IV. Secon Exception

A. Contentions

The Agency contends that the Arbitrator's award ordering that the procurement process be reconstructed is contrary to the standards established by the Authority in Headquarters, 97th Combat Support Group (SAC), Blytheville Air Force Base, Arkansas and American Federation of Government Employees, AFL-CIO, Local 2840, 22 FLRA No. 72 (1986). Specifically, the Agency argues that under Blytheville AFB, the Arbitrator's finding as to the most efficient and cost effective operation cannot support the ordered reconstruction because it is based on the "spirit and intent" of Circular A-76 rather than a mandatory and nondiscretionary provision of the Circular. As to the other violations found by the Arbitrator, the Agency argues that the Arbitrator's determinations that these violations both materially affected the procurement decision and harmed unit employees cannot be supported.

B. Analysis and Conclusions

In Blytheville AFB we addressed for the first time the remedial authority of an arbitrator in resolving grievances disputing determinations by agencies to contract out agency work. We held that under the Statute and procurement law and regulation, arbitrators are authorized to sustain a grievance challenging a decision to contract out and direct an agency to reconstruct the action only on the basis that the agency failed to comply with mandatory and nondiscretionary provisions of applicable procurement law or regulation and that the noncompliance materially affected the final procurement decision and harmed unit employees. We advised that these provisions of law or regulation must be sufficiently specific to permit the arbitrator to decide whether there has been compliance with such provisions. Subsequently, in Naval Air Station, Whiting Field and American Federation of Government Employees, Local Union No. 1954, 22 FLRA No. 102 (1986), we found that an arbitrator was not authorized to sustain a grievance disputing a decision to contract out on the basis of an obligation that the arbitrator concluded was "intended" by, but not specifically provided by, applicable procurement law.

Applying those decisions in this case, we conclude that the Arbitrator was not authorized to sustain the grievance and order the procurement action reconstructed based on his findings of violations of the "spirit and intent" of the cited regulations. See Naval Air Station, Whiting Field, slip op. at 3. Specifically, he was not authorized to order reconstruction based on a violation of "the intent and spirit of Federal Acquisition Regulation, Chapter 1, 7.304" or based on a "violation of the spirit and intent of OMB A-76" as it relates to the most efficient and cost effective operation for in-house cost estimates. Consequently, the award is deficient to this extent and must be modified.

However, we disagree with the Agency that the Arbitrator was not authorized to sustain the grievance and to order reconstruction on the basis of the violation of Federal Acquisition Regulation, Chapter 1, Subparts 7.305(b) and 52.207-2, pertaining to the notice of cost comparison that is required to be inserted in requests for proposals, and on the basis of the violation of OMB Circular A-76 Supplement, Part 1, Chapter 2, Paragraph I.3, directing that appeals procedures will provide for a decision within 30 calendar days. The Agency's arguments with respect to these findings do not dispute that these provisions are mandatory and nondiscretionary. Instead, the Agency argues that the Arbitrator's findings that those violations materially affected the final procurement decision and harmed unit employees are unsupported. We conclude that these arguments constitute nothing more than disagreement with the Arbitrator's findings of fact in these respects, and we have uniformly held that such disagreement provides no basis for finding an arbitration award deficient. For example, U.S. Department of Labor and National Council of Field Labor Locals, American Federation of Government Employees, AFL-CIO, 19 FLRA 300 (1985). Accordingly, we will modify the award to sustain the grievance and direct reconstruction of the procurement action only to the extent of these violations.

V. Decision

For the above reasons, the Arbitrator's award is modified to provide as follows:

The grievance is sustained to the extent the Activity violated Federal Acquisition Regulation, Chapter 1, Subparts 7.305(b) and 52.207-2 and OMB Circular Supplement A-76, Part 1, Chapter 2, Paragraph I.3. The Activity is directed to reconstruct the disputed procurement action in accordance with those procurement regulations and, consistent with the decision of the Authority in Blytheville AFB, make a determination and take appropriate action based on the results of such reconstruction.

Issued, Washington, D.C., May 19, 1987.
/s/ Jerry L. Calhoun
Jerry L. Calhoun, Chairman
/s/ Henry B. Frazier III
Henry B. Frazier III, Member
/s/ Jean McKee
Jean McKee, Member
FEDERAL LABOR RELATIONS AUTHORITY