**National Performance Review and Reinvention:**

**Should It \"Reinvent\" Our Federal Labor­**

**Management Relations?**

MAJOR RICHARD K. JOHNSON, USAF /\*/

**I. INTRODUCTION**

No politician has ever lost an election for bashing the federal
bureaucracy. For many Americans, the last two decades have been a period
of uncontrolled government spending resulting in persistent budget
deficits and a perception that the government is out of control and
unresponsive to the public. So it is not surprising that over this same
time period, three \"outsider\" Presidents‑ Carter, Reagan, and Clinton,
were elected saying they were going to change the way the government
\"works.\" This article reviews the round of reform introduced by the
Clinton administration, known as \"reinvention\" or the National
Performance Review (NPR) and its impact on the Federal labor management
relationship. It will be argued that legislation governing our federal
labor relationship should not be amended based on proposals introduced
under NPR.

Since 1990, Congress has enacted several bills designed to improve the
management of the federal government. In 1993, President Clinton
initiated the National Performance Review (NPR) in order to \"reinvent\"
the government, so that it would \"work better and cost less.\"
Collectively, as the initiatives and enactments are implemented, they
are reshaping our federal labor relationship. Some advocates for NPR
argue that further significant changes are necessary to achieve the
\"entrepreneurial, customer‑oriented\" organization needed to take the
federal bureaucracy into the next century; but there are reasons to be
concerned about this headlong rush, especially as it seeks to reinvent
our federal labor relations. For several reasons, the changes being
urged by the National Partnership Council (NPC) and Office of Personnel
Management (OPM) could lead to a less efficient and less responsive
federal government. This article concludes that changes to our federal
labor relationship should be built on a solid consensus after careful
consideration of the direction being taken ‑ not as a result of
reinvention proposals derived from piecemeal reform, which are taken for
political expediency, or based on isolated antedotes of short‑term
success. Even though NPR has had a positive influence on labor
relations, this does not justify implementing or enacting the
recommendations of the NPC or the legislation proposed by the OPM.

The \"reinvention\" effort has suggested savings of billions of dollars
/1/ in

federal programs and better service to the American people. /2/ There is
no question that there has been real streamlining and productive gains
following NPR recommendations. Still, any tinkering of a government
program can result in savings of million of dollars, whether it is
through labor‑management partnership, an Inspector General\'s
investigation, /3/ or through a manager\'s personal involvement and
direction. Each method has different political and collateral
consequences. While, the dollar savings from reinvention. may sound
impressive, /4/ there are significant issues associated with the reform
in labor relations. To consider the consequences of NPR, this article
will focus on three areas where the impact of NPR can be seen ‑ expanded
bargaining rights for public employee unions, compensation, and
privatization.

Every reform effort has an underlying agenda, but it would be misleading
to picture the current process as a coordinated reform initiative. It
probably makes more sense to understand the process if it is seen as a
free‑for‑all for ideas and a give‑and‑take by various interest groups,
with uneven implementation of competing, sometimes contradictory,
management reforms. Despite the lack of coordination, the goal of NPR
reform is a strengthening of political authority over the bureaucracy
and a greater involvement of the public employee unions in
decision‑making, at least in the short run. There are also several long
term consequences which will be difficult to reverse, even if
\"reinventing government\" falls short during its twelve year course.
Some of these residual changes are positive and productive for the
future of labor

relations, while others have a negative repercussions. On the negative
side, because previously unconventional possibilities for reform have
been thrown open for consideration and there has been a slackening of
centralized control, when a contrary party succeeds the current
administration, there could be bureaucratic \"gridlock\" and greater
inefficiency in public service as the new party attempts to change the
direction or methods of reform and governance. On the positive side,
\"partnership\" has been accepted by many career managers and union
leaders; also, many managers have seen the positive change that
innovative management styles can bring to some public agencies, and
obsolete regulations and controls have been reexamined. Despite the
NPR\'s promotional literature, there are some problems with NPR reform.

The success of \"reinvention\" reform is uncertain. Vice‑President Gore
estimated it would take ten to twelve years. /5/ Meanwhile, our civil
service and labor relations will undoubtedly be shaped by other events
as the years and administrations pass. It is even possible that the
reinvention effort may be overcome by events, such as budget cuts, a
radical change in the administration, or an new wave of reform spirit
with a different name. Because local administrations and personnel
change, concepts we espouse today (such as partnership) will have an
uneven application in the federal government, and at times even the
parties who embrace the concept may agree not to use partnership
principles in negotiating certain issues. There is no question that in
the next decade significant changes will occur in our civil service and
labor- management relations. The predominant question for us should be,
Why are we making these changes? Regardless of consequences to NPR, the
seeds planted by the current reform will grow and they can never be
pruned back to their roots. We should insure that the reform efforts
truly lead to a more efficient and democratically responsive government.
This can be done by empowering the individual employees, allowing
management the flexibility to effectively lead the government agencies,
and recognizing that elected representatives must steer its course. But
this does not require us to codify the recommendations of the NPC or the
Administration\'s most recent proposal for labor relations reform.

**H. OVERVIEW OF THE NATIONAL PERFORMANCE REVIEW AND THE FEDERAL LABOR
MANAGEMENT RELATIONSHIP**

**A. The National Performance Review**

In an influential \"call to arms,\" *Reinventing Government, /6/* David
Osborne and Ted Gaebler preached \"decentralizing\" the, decision‑making
process in organizations as a means to increased productivity in
government operations. The way to decentralize decision‑making, they
wrote, is to encourage employee participation in the management of the
organization. Their book provided antedotes to show the success of
empowering employees, leading to two observations: (1) the public
employees unions are eager to help make changes, and (2) the most
serious obstacle to participatory management is middle management. One
of their conclusions is that middle management is superfluous once
employees are making decisions and solving problems. /7/ Their call for
decentralization was adopted wholeheartedly by the National Performance
Review (NPR). The one concession Osborne and Gaebler make to the unique
institution of government is that employees cannot simply be turned free
if they are to remain accountable to the citizens. /8/ This is solved by
imposing accountability for results and creating institutions where the
employees share the values and the missions of the organizations.

Decentralized organizations are advocated for four reasons. They are
more flexible and respond quicker to changes and customers\' needs; they
are more efficient because front‑line workers craft the solutions; they
are more innovative; and they generate higher morale, more commitment,
and greater productivity. /9/ Osborne and Gaebler argue that centralized
control only causes waste, which results in more micromanagement and
centralized control, saying \"\[t\]he waste is not being created by
inadequate controls. It is being created by removing the sense and fact
of control from the only people close enough to the problem to do
something about it.\" /10/

On September 23, 1993, Vice‑President Gore released a report for
\"reinventing\" the federal government. With the help of Osborne and
about 200 federal employees, the NPR team reviewed the federal
bureaucracy and entrepreneurial characteristics, and distilled four
essential principles that can be transferred to a public agency: (1) cut
red tape; (2) put the customers first; (3)

empower employees to get results; /11/ and (4) cut back to basics.
Vice‑President Gore said:

We will invent a government that puts people first, by: cutting
unnecessary spending; serving its customers; empowering its employees;
‑‑Helping communities solve their own problems; fostering excellence\...
Here\'s how. We will: create a clear sense of mission; steer more, row
less; delegate authority and responsibility; replace regulations with
incentives; develop budgets based on outcomes; expose federal operations
to competition; ‑‑search for market, not administrative solutions;
measure our success by customer satisfaction /12/

**B. Federal Labor Management Relations**

To put the recommended changes in context, it is necessary to digress
for a discussion of the short history of federal labor relations.
Federal sector employees began organizing among themselves in the 1800s,
/13/ and in 1912 Congress recognized their right to join labor
organizations. /14/ They were specifically excluded from the coverage of
the National Labor Relations Authority (NLRA) in 1935, and there was no
government‑wide policy concerning their bargaining power until 1962,
/15/ when President Kennedy issued Executive Order \[hereinafter E.O.\]
10988, /16/ acknowledging the right of unions to represent the employees
and negotiate agreements. /17/ One reason given for the new policy was a
determination that employee participation in the formulation and
implementation of policies and procedures affecting their conditions of
employment would lead to improved employee‑management relations within
the Federal service. /18/ Still, sections 6 and 7 of the E.O. limited
the ability of a union to bargain by reserving broad management rights.
In 1969, President Nixon rewrote federal management‑labor relations
through E.O. 11419. /19/ There were major changes under E.O. 11419, such
as binding arbitration of disputes and the creation of a third party to
oversee the relationship, but management retained its right to exclude
certain areas from bargaining.

From 1969 until 1979, labor‑management relations in the federal

government developed through amendments to E.O. 11419. /20/ Federal
labor

relations adopted the \"exclusive representation\" and adversarial
\"collective

bargaining\" relationship developed in the private sector, but with more

limitations on the scope of bargaining. Labor was dissatisfied with this
system.

As part of the Civil Service Reform Act of 1978 (CSRA), Congress enacted
the

Federal Service Labor‑Management Relations Statute (the Statute), also
known

as Title VII of the CSRA /21/ The Statute codified the labor‑management

relationship along the fines of the NLRA, supplemented with rights,
benefits,

and limitations previously determined in the executive orders.

The rights reserved to management in the executive orders were listed in

the statute at 5 U.S.C. Sec. 7106. /22/ During the late 1970s, as
hearings and debate

were held on labor relations reform, there was an effort to broaden the
scope of

bargaining and include a union security arrangement. But in the end,
while the

scope of bargaining may have been widened some, the statute retained a
scope

of bargaining which is narrower when compared to private sector
standards and

\"fair share\" was not included in the statute. /23/ The result was a
management

rights clause which listed categories of bargaining subjects. Those
listed in section 7106(a) were not subject to bargaining, while those
listed in section 7106(b)(1) were permissive subjects, /24/ which could
be bargained at the election of the agency.

**C. Recent Changes and Proposed Reform**

The NPR Report released in September 1993 contained hundreds of
recommendations to make the federal government \"work better and cost
less. \" /25/ There were 14 recommendations directed exclusively at
Human Resource Management, /26/ and in a 97‑page accompanying report,
/27/ the NPR expanded on these 14 recommendations with specific actions
to be taken to achieve the recommended reforms. There were also several
recommendations directed at leadership, management controls, and the
OPM. /28/

In making its recommendation to empower the employees, the NPR said,

No move to reorganize for quality can succeed without the full and equal
participation of workers and their unions. Indeed, a unionized workplace
can provide a leg up because forums already exist for labor and
management exchange. The primary barrier that unions and employers must
surmount is the adversarial relationship that binds them to
noncooperation. Based on mistrust, traditional union‑employer relations
are not well‑suited to handle a culture change that asks workers and
managers to think first about the customer and to work hand‑in‑hand to
improve quality. /29/

Based on a premise that federal labor‑management relations under the
statute is not working, the NPR recommended the creation of the National
Partnership Council (NPC) to champion the cause of \"partnership\" and
reform in federal labor relations. The NPR offered the NPC the following
guidance, \"Power won\'t decentralize of its own accord. It must be
pushed and pulled out of the hands of the people who have wielded it for
so long. It will be a struggle.\" /30/

The NPC was created on October 1, 1993, by E.0 12871. /31/ The NPC
released its first report /32/ in January 1994, which presented a range
of proposals to reform federal labor‑management relations. /33/

Some of the proposals were: /34/

1\. Permit consensual agreements between the parties involving any
management rights;

2\. Broaden the scope of bargaining;

3\. Allow bargaining on operational matters protected by Sec.
7106(a)(2);

4\. Eliminate agency review of the collective bargaining agreements;

5\. Submit negotiability issues to arbitration;

6\. Use consensus or ADR to establish agency rules that limit
negotiation; and,

7\. Rely more on alternate dispute resolution for a variety of disputes.
/35/ The standard of review recommended for resolving disputes was one
of \"good government /36/

If these proposals seem pro‑union, it should be understood that the NPC
was initially composed of 4 labor leaders, 4 labor relations or
personnel political appointees, and 3 executive agency political
appointees. In January 1996, a Senior Executive Service representative
and a Federal Managers Association representative were added to the NPC.
/37/ Besides creating the NPC, E.O. 12871 also expanded the scope of
bargaining between the federal agencies and the unions by directing
agency heads to negotiate the permissive subjects listed in Sec.
7106(b)(1). /38/

The Office of Personnel Management (OPM) became a natural place to begin
implementing the recommendations of the NPR and NPC. The OPM began a
process of decentralizing and destroying regulations, such as
\"sunsetting\" the 10,000 page Federal Personnel Manual. The move to
deregulate the bureaucracy had consequences in the labor‑management
relationship because the statute prevented negotiation of proposals when
it concerned a government‑wide regulation. /39/ By deleting a
government‑wide regulations, OPM removed a barrier to bargaining. /40/

The OPM delivered on the administration\'s promise to deliver
legislative reform to reinvent the civil service and labor relations. In
May 1995, the OPM floated draft legislation entitled the Federal Human
Resource Management Reinvention Act of 1995 \[hereinafter 1995 HRM
Reinvention Act\]. Hearings were held in September and October 1995
before the Committee on Government Reform and Oversight. The proposed
legislation, touted as \"the most significant change in civil service
law in a century," /41/ was criticized by both management and the
unions. On review, the proposed legislation was actually a rehash of the
NPR and NPC recommendations and not a vehicle for producing long‑term
labor relations reform.

Most of the 1995 HRM Reinvention Act addressed the personnel, system and
the decentralization of many personnel functions. The legislation would
codify proposals to decentralize the bureaucracy and insure union
participation in any change. For example, one section of the proposed
legislation gave the agencies the authority to design and implement
their own incentive award and performance management programs. However,
it also required the agencies to include represented and non‑represented
employees in the program design and operation. The agencies already had
received substantial freedom to design their own programs and most of
the proposed decentralization was already possible under current laws,
but legislation was required to insure collective bargaining in the
design of the programs. /42/

Significant reform in classification of personnel was also included. It
would allow \"broad banding\" classification and allow OPM to establish
the grade level criteria and salaries. The agencies could implement the
broad banding in part or all of their organizations, without prior
approval, so long as their plan conformed to the OPM criteria.

The 1995 HRM Reinvention Act adopted the recommendation of the NPC that
a \"Good Government\" standard be established in the bargaining
relationship. The Good Government standard requires all parties engaged
in substantive bargaining to pursue solutions that promote \"increased
quality and productivity, customer service, mission accomplishment,
efficiency, quality of work life, employee empowerment, organizational
performance, and, in the case of the Department of Defense, military
readiness; while considering the legitimate interest of both parties.\"
/43/

Finally, the 1995 HRM Reinvention Act codified the provisions of E.O.
12871 by providing statutory authority for the NPC, requiring the
establishment of labor‑management partnerships throughout the executive
branch and making the permissive subjects of bargaining listed in 5
U.S.C. Sec. 7106(b)(1) mandatory subjects of bargaining. The proposed
legislation would have inserted another layer in the federal bureaucracy
by authorizing agency level partnership councils to develop agency level
policies and regulations affecting conditions of employment that would
be binding on those components and bargaining units subordinate to the
council.

The 1995 FIRM Reinvention Act is essentially dead. The criticism from
labor and management and the unlikely prospect that it \'would be
enacted by Congress shelved the proposed legislation.

**III. IS THERE A NEED FOR THE REFORM PROPOSED UNDER REINVENTION\"?**

Recurring reform has been described as a necessary lubricant for our
constitutional system, /44/ alternatively emphasizing either popular
representation, neutral expertise, or executive leadership at various
times in American history. It is difficult to place the current reform
effort in such a clear pigeon‑hole because of its broad character and
scattered implementation.

At the time the NPR reinvention reform was initiated, federal labor
relations was already naturally evolving to employee empowerment and
partnership. Since the 1970s, federal agencies have experimented with
TQM, quality, and other innovative managerial practices. /45/ This was
occurring without the assistance of legislation or a demand for amending
the federal labor relations statute. In a recent report on the
\"reinvention laboratories\", which were instituted by the NPR, the
General Accounting Office (GAO) asked the laboratories when their
efforts actually began, regardless of when they were officially
designated as \"reinvention labs\". The lab start dates varied widely,
ranging from as early as 1984 to as recently as March 1995. /46/ Forty
percent of the responding labs said their reinvention efforts originated
in the agencies\' quality programs and were an outgrowth from efforts
begun in the late 1980s and early 1990s. /47/

One manager put the reinvention process in perspective when he

described the \"pony express\" strategy of reform. He saw NPR reform as
just

another \"flavor of the month\" following a long list of previous
management

reforms. He also saw each reform effort as another opportunity to
continue a

preconceived agenda, using each one much like a Pony Express rider would
use

a fresh horse. /48/

On February 14, 1996, Vice‑President Gore presented, for the first time,
four National Partnership Council awards. One of the recipients was the
Dept

of Army Red River Depot, where partnership between union and management
saved the depot from certain extinction. /49/ The Red River Depot was
highlighted in September 1994 in a NPR status/ progress report. /50/ The
NPR perused several success stories on employee empowerment, and said:

In *From Red Tape to Results,* NPR defined the \'basic ingredients of a
healthy, productive work environment\' as \'managers who innovate and
motivate, and workers who are free to improvise and make decisions.\'
And, as illustrated by Red River, a key step to finding those managers
and workers is transforming the labor‑management relationship from
adversarial to cooperative. /51/

But the NPR was not the catalyst to developing partnership at the Depot.
In 1992, the Red River Army Depot had a tradition of labor-management
strife. Prior to his arrival, the new commander went through plants like
the Saturn Corporation and other plants where labor‑management
cooperation was being tested. At the same time, like other unions, the
union at Red River depot recognized that down‑sizing was going to
proceed, with or without their cooperation. With a shift in attitude by
both parties, management and labor committed to labor‑management
cooperation. The Depot began working partnership principles and
developed a model, known as HEARTS (Honesty, Ethics, Accountability,
Respect, Trust, and Support). In 1993, they reorganized into
self‑managed work teams, agreed to share decision‑making, and adopted
gain‑sharing /52/ through incentive awards. Since the change,
productivity at the Depot has increased, costs are down, and there are
fewer complaints of unfair labor practices (ULPS), grievances, and
appeals to the Merit Systems Protection Board. But again that process
had begun before the NPR initiatives.

It is generally acknowledged by most observers and parties that employee
participation in the federal workplace is desirable and brings an
increase in productivity. Also, it has been generally accepted and shown
in studies /53/ that employee participation is more productive when an
independent representative for the employees, such as a union, is
present in the workplace. As the natural evolution already occurring in
the workplace indicates, employee empowerment does not require statutory
reform of the labor management relationship. The long standing labor
policy that employee participation be coordinated through the
\"exclusive representative\" for those employees represented by unions
naturally requires that the unions be recognized as prime players in any
managerial reorganization.

There is a natural contradiction inherent in partnership councils
between management and union. The partnership works only when management
and labor are headed in the same direction and there is trust between
the parties. It will not work if either party has an uncompromising or a
confrontational attitude in negotiations. At the Red River Depot, both
management and labor recognized that without partnership the depot
literally faced extinction. In another recent partnership success story
at Kelly AFB, Texas, it was reported that \$2 million in litigation
costs were saved between 1992 and 1994, with a reduction in grievances
from 47 to 12 and a reduction in ULPs from 192 to 1. /54/ But it should
be pointed out that Kelly AFB was on the short list of maintenance
depots being considered for closure. In both Red River and Kelly AFB,
management and labor had common uniting goals. It was their common
interest that brought them together, not reform legislation.

Another experiment which shows that it is the communication process that
improves labor relations and not regulatory or statutory changes, is
found in a pilot program introduced by the Federal Labor Relations
Authority (the Authority) to reduce grievances and ULPs. Under the
program, frequent filers of ULPs were targeted for special dispute
resolution. Under one part of the program, a judge unconnected with the
case would conduct settlement negotiations with the parties prior to
hearing. Since the project started, 76% of the cases in the program were
settled /55/ and a survey of the frequent filers showed that ULP filings
dropped nearly 35 percent at those agencies that were targeted. /56/

Trust is the essential ingredient to partnership and cooperation. /57/
Carol Ban put it simply when she listed \"credibility\" as one problem
facing union and management in establishing a nonadversarial
relationship. She said,

Credibility is an issue in two ways. First, both credibility and trust
are necessary for creation of genuine labor‑management partnerships.
Unions need to know that management\'s promises of cooperation are not
just lip service, and that they will not find themselves cut out of the
tough decisions, while management needs assurance that unions will use
their new power responsibly. /58/

The encouragement of partnership has been beneficial to federal labor
relations. However, the change is really only superficial in the overall
relationship. If the proposals envisioned by the NPC and 1995 HRM
Reinvention Act are enacted, labor will be established as a primary
player in the federal decision‑making process at the expense of
management and the elected representatives. A party which generally
favors a labor‑oriented, expansive government will be entrenched in the
decision‑making processes of the federal bureaucracy. This arrangement
can be effective as we struggle through our current downsizing. However,
in the long run, it will not lead to an efficient and effective
government without some way to insure continued cooperation and trust
between the parties.

This is not to say that NPR reform is irrelevant to bringing
long‑lasting reform to federal labor relations. NPR has encouraged
federal agencies to more quickly adopt productive programs which were
already naturally evolving. NPR cleared some of the obstacles and
legitimized the innovative methods of management. But it is important to
distinguish the evolution of federal labor relations and the NPR reform
for two reasons. First, NPR reform has some serious handicaps and the
evolution of federal labor management relations should not be tied to
the success or failure of NPR. Second, NPR is advocating changes in
management‑labor relations which raise legitimate opposition from
concerned stake‑holders, and which should not be imposed without a
detailed debate on the future of our labor‑management relationship.
While the NPR is trying to change the work culture in the Federal
Government, the future of federal labor relations should not be steered
by antidotes of selected success stones or visions of \"labor peace.\"
The facts show that employee participation, reinvention, and partnership
do not work everywhere. There has been a great deal of criticism of NPR
for its failure to obtain a consensus from the Congress, /59/ develop a
sustainable vision, /60/ reconcile its contrary themes, /61/ or
recognize the need to include democratic accountability in the reform
picture. /62/ The Federal Government can reform itself and adopt
innovative management styles which empower the employees without
amending the foundations of the current labor relationship as proposed
by NPC and the 1995 HRM Reinvention Act.

**IV. THE POLITICS OF REFORM**

\"Reorganization is nothing more than the continuation of politics by
other means." /63/ The ability to politicize the federal bureaucracy
through reform and reorganization has been reviewed by several writers.
/64/ Peri Arnold, a professor of government studies, has categorized the
current reform as the same political promise made by every outsider
president since 1970, a promise to transform the government into
something it is not‑ a down‑sized, customer friendly. service provider.
/65/ He points out that every reform indicts government as having failed
to serve the people, and every reform claims that repairing
administrative processes and organizations will transform the
government. He finds specific fault with NPR reform in its failure to
recognize or acknowledge its own political consequences. He says the
goals of NPR must be understood as being deeply political, touching on
government\'s fundamental aspects; and the apolitical facet presented by
the NPR shows a naive or disingenuous understanding of interest group
politics. The following is a simple attempt to identify the three
principal interest groups in labor management reform, the unions, the
Congress, and the executive branch, and what their interests might be in
NPR reform.

**A. The Union**

There are approximately 2,000,000 employees /66/ in the executive branch
of the Federal Government, excluding the 845,000 employees of the postal
service. More than 2,000 local bargaining units represent approximately
1,300,000 federal employees, with the locals of four national unions
representing 80% of the employees. /67/ It is unknown how many
represented employees are actually members of the unions, but two
relatively recent articles report union membership for the AFGE and NFFE
at about 25 per cent and 50 percent for the NTEU. /68/ The unions have
consistently pushed a number of themes since their recognition which can
be distilled down to (1) expanded bargaining rights with third party
arbitration and (2) \"fair share\" dues. Like any other interest group,
they had always lobbied for their membership with varying success. /69/
Recognizing they have entered an era when the Federal Government will
inevitably be reduced, the union leaders believe cooperation with a
amicable, like‑minded administration is essential to protecting their
members. /70/

While cooperation is the course taken by the union leaders, they have
their dissenters who criticize them for \"putting the AFGE label on the
\[employees\'\] pink slip.\" /71/

At first glance, the interests of the unions and the politics between
the unions and the Clinton administration appears obvious. Some
observers cynically attribute the administration\'s motive for generally
supporting the unions to a pay‑off for support during the election,
union silence during the NAFTA debate, or, looking specifically at the
public employee unions, as an inducement for not effectively resisting
the inevitable federal employee drawdown. This ignores an actual shift
in strategy by the labor leaders and the executive branch. Labor could
have fought downsizing through ULPs, grievances, and lobbying. The
executive branch could have bashed the unions as obstructionists.
Instead, both sides agreed to negotiate the inevitable downsizing, as
opposed to the customary posturing found in the adversarial
relationship. Regardless of whether it is due to politics or
common‑sense, the empowerment of the federal employee unions signals a
political change which goes beyond the short‑term objectives, of
protecting the employees during the current downsizing. The unions want
to be involved in management\'s decision-making process on \"how will
the government be run\"; and just as importantly, they want to be
involved in deciding, \"what the government will do\". They hope their
\"partnership\" with the White House will give them a voice and a hand
in directing which operations are farmed out to privatization. /72/

**B. The Congress**

The legislature is conspicuously absent from the NPR reform, even though
the NPR staff acknowledges that 173 of their 384 recommendations require
legislative action in order to be implemented. /73/ Legislative action
is particularly important in reforming the federal personnel system,
because it is covered by comprehensive statutes on pay, classification,
fringe benefits, and due process. Congress and the Presidency each
attempt to control the bureaucracy and impose their policies through the
agencies and the civil service. Congress exerts its control through
committee oversight, personnel or organizational legislation, or the
budgetary process. While Congress has been conspicuously absent from the
NPR process, there are several recent acts which were passed to rein in
and better manage the government. /74 Two of them, the Chief Financial
Officers Act of 1990 (CFOA) /75/ as amended /76/ by the Government
Management Reform Act of 1994 (CMRA), and the Government Performance and
Results Act of 1993 (GPRA), /77/ have the potential for significantly
enhancing the strength of Congress in its control over the agencies. The
CFOA imposes fiscal accountability, while the GPRA imposes performance
accountability.

A distinguished professor of public administration, David Rosenbloom,
says, \"Politically \[the GPRA\] is connected to the NPR, but
institutionally it is at odds with it. It is likely to last because it
will be in Congress\' interest to embrace GPRA\'s opportunities for
steering federal administrative activity (micromanagement).\" /78/ In
the NPR\'s view, and the view of the executive branch, Congress should
authorize and fund programs and then step back. If the Presidency and
the Congress remain divided and controlled by the current incumbents,
the GPRA is a tool for micromanagement and policy steering that is just
waiting for Congress.

While the change in the control of Congress in the 1994 elections may
have ended a run of reform legislation, it did not lessen the reform
spirit. /79/

Conflicting philosophies over the direction of the Federal Government
forced the political parties to divert their energies to budgetary
battles and grand changes in the organizational landscape. Distracted by
these broader efforts, Congress is currently paying little attention to
the CFOA or GPRA. However, depending on the outcome of the election,
these acts could assume a more prominent role in steering the federal
bureaucracy.

**C. The Executive Branch**

It is difficult to lay out the interests of the Clinton Administration
in labor relations reform. Politically, the Clinton Administration is
committed to reducing the federal workforce, reducing the budget
deficit, and maintaining the strength and services of the Federal
Government. Like every administration before it, strengthening the
Executive branch will be on its agenda, but there is also something
unique here that was not attempted by previous administrations. It is
conceivable that the current administration wants to \"burrow\" the
public employee unions into the decision‑making process of the
government in the same way every administration has burrowed its
like‑minded employees into the bureaucracy. At the same time, instead of
strengthening the executive office *per se,* it is actually
strengthening the control of the political appointees. /80/

Most every reform effort in this century has strengthened the executive
branch. Generally the executive branch is able to pursue its policies
through career bureaucrats, directed by a cadre of political appointees.
An accumulation of these appointees in the upper echelons of the
government began with the creation of the Schedule C employee under
President Eisenhower. /81/ It was followed by President Nixon, and
taught in the Malek Personnel Manual /82/ of that administration.
Political appointments were legitimized in the Civil Service Reform Act
of 1978 when President Carter established the Senior Executive Service,
10% of which could be political appointees. The process was masterfully
managed by President Reagan, who had a say in every appointment made in
his administration, /83/ and today partisan appointments continues
unabated.

When the call came to cut 272,900 full‑time equivalent employees, /84/
with special focus on the managers of the bureaucracy, Vice‑President
Gore and the NPR excepted the political appointees from these cuts,
concluding that the career middle managers were the problem in the
federal government. This has two impacts on the federal bureaucracy.
First, it shows a lack of confidence by the leadership in the middle
managers. These proposed cuts placed their jobs in jeopardy, with an
obvious demoralizing effect on them. An almost intuitively obvious
second result, is its further concentration of political appointments in
the bureaucracy as management positions are deleted. /85/ To date,
15,000 or 23% of all supervisory positions have been deleted. /86/

The executive branch also has significant interest in maintaining
control over the reform effort. Despite NPR\'s optimism, a knowledgeable
NPR observer, Donald Kettl, made the following observation,

The NPR report talked about the need for central management agencies to
divest themselves of many of their powers, to decentralize those powers
to the agencies, and thereby to empower the workers. Although this
tactic is a sensible beginning, it is no basis on which to build
long‑term success. Practical politics suggests that, when problems or
embarrassments arise from the behavior of empowered managers, as
inevitably they will, demands will surface that they be prevented from
ever occurring again. In the absence of stronger forces to the contrary,
someone at some central office will be charged, by the President or
Congress, with doing just that. Practical management also suggests that
it is unlikely that the accumulated decisions

of millions of empowered workers will be consistent with each other, the
law, or the public interest. /87/

Any embarrassment resulting from the reinvention effort would be a
setback for the Administration. There are several approaches available
to through the executive branch for maintaining control over the federal
bureaucracy. The executive branch maintains managerial control through
Office of Management and Budget (OMB), Office of Personnel Management
(OPM), two executive agencies, and the agency heads and other political
appointees. It has been said of OMB, that the \"M\" in OMB has generally
been subsumed by budgetary considerations, and its ability to provide
sustained management leadership, even after being reorganized under
\"OMB 2000\", is uncertain. /88/ OMB is responsible for overseeing the
CFOA and GPRA and providing guidance to several pilot programs and the
agencies. OMB has a formidable task turning these statutory programs
into functional management tools. Meanwhile OPM is becoming a shell of
its former self /89/ and under NPR, is pushing responsibility down to
the agency level. The National Partnership Council (NPC) and the
President\'s Management Council (PMC), are two advisory committees which
provide guidance on federal labor‑management relations and reforming the
executive branch\'s management systems, respectively. While they appear
to be paper tigers now, they are in place and can be strengthened and
\"empowered\" if needed. With no central control in the executive
branch, the future of NPR\'s reform falls to the political appointees,
the federal employees, and the Vice‑President. The unions become an
important factor in this equation.

President Clinton occupies a unique position. For political and
practical reasons he must maintain the support of the unions as the
administration pursues an agenda which adversely affects the unions. As
a Democratic president, he was able to maintain the trust and
cooperation of the public employee unions during the downsizing, despite
a number of set‑backs for the unions and their employees. One union
official said, the unions\' disputes with the administration are fought
underground because the administration is Democratic. Had the
Republicans proposed the same reforms, \"everything would have hit the
fan.\" /90/ As NPR enters its second phase, which looks at privatizing
or terminating governmental functions, Vice‑President Gore recently
announced the creation of Performance Based Organizations (PBO). OPM
revealed its use of contracting out to Employee Stock Ownership Plans
(ESOPs) to privatize its investigative function. These are alternatives
concepts which are more favorable to the protection of unions and their
employees than what might be considered under previous paths of
privatization. So while the unions might show increasing frustration
with the administration, the Clinton administration has been able to
continue to offer incentives for their continued cooperation.

**V. APPLICATION OF NPR REFORM TO LABOR MANAGEMENT**

**RELATIONS**

Having considered the players and the reform initiatives, it is time to
actually, consider some of the proposed changes and see how the
reinvention reform has or will affect federal labor relations. The
expansion of the scope of bargaining is a lightening rod whenever
management and labor discuss reform issues. This really might be \"much
ado about nothing\". If the parties truly espouse partnership in their
relationship there should be little difficulty discussing issues of
mutual concern, whether they are permissive or mandatory subjects of
bargaining. It is when the parties are working under an adversarial
arrangement that the issue is a real concern, or when management has a
concern, legitimate or not, that it is losing too much control over its
priorities and budget. But in these situations holding the managers
accountable, choosing agency heads who agree to the administration\'s
position, and allowing them the flexibility to bargain or not to bargain
should be the most productive scheme. The real issues that need to be
discussed are should we reclassify the subjects of bargaining to better
define what is or is not a management prerogative; and what is a
proposal\'s impact on the agency\'s budget and organizational
priorities.

Ignoring the expansion of bargaining topics under the management rights
section, NPR initiatives can have a significant effect in expanding the
scope of bargaining on pay and compensation issues. The case law was
already changing to allow negotiation on gainsharing and incentive pay
and OPM has revised the rules in this area, but NPR will allow further
negotiation on pay and compensation. Decentralization by OPM and
enactment of the 1995 HRM Reinvention Act proposals could potentially
allow negotiation of \"salaries\" among the agencies. There is a concern
as to the reach of the changes, and, real adjustment of the statute is
needed to address the impact of the changes if the NPR initiatives are
implemented. The official literature and proposals fail to even
acknowledge the difficulties ahead, much less address them.

The most significant impact of NPR and labor‑management partnership
could be in the area of privatization, which is at forefront of
innovative change. This is also the area that can be driven by policy,
although it is supposed to be driven by economic efficiency, and is the
least settled in law or proposed legislation and rules.

**A. Expanding the Scope of Bargaining**

Like the federal government, every state that has enacted legislation
covering public sector collective bargaining has elected to exclude some
topics from mandatory bargaining. When public sector labor legislation
is being considered the prevalent view is that \"the determination of
appropriation subjects of bargaining in the public sector involves
problems of the first magnitude. /91/ However, one recognized authority
in public labor relations, Donald Wollet, has said, \"the vast
literature concerning the scope of bargaining is much ado about nothing
and that pre‑occupation with the subject is mischievous as well as
mistaken \... .\" /92/

There are many different approaches to handling the scope of bargaining
but the reinvention literature provides no discussion on this issue.
Rather there is a top‑down direction to the agencies to discuss all
possible issues under a belief that partnership requires us to ignore
the long standing distinctions that once existed, and that only illegal
and mandatory subjects of bargaining should be recognized. Three months
after issuance of E.O. 12781, the NPC advocated extending the scope of
bargaining even beyond the permissive subjects listed in 5 U.S.C. Sec.
7106(b)(1) /93/ and allow bargaining over the agencies\' operational
matters such as their right to hire, assign, direct, layoff, and retain
employees, or to take disciplinary action against an employee; to assign
work, to make determinations whether to contract work out, to determine
the personnel who will conduct the agency\'s operations; and to fill
positions. /94/ After the 1994 election it became obvious this was not a
realistic tack to tanke. /95/ Also, there are two concepts the NPC
totally ignores in pushing its union agenda. First, partnership already
induces expanded bargaining without the need for legislation or
direction. Second, the Federal Labor Management Relations Statute /96/
was created as one whole cloth. Changing the scope of bargaining
requires reconsideration of the balance between the agency\'s priorities
and its control over its budget versus the union\'s right to have its
proposal negotiated and implemented. It is not a simple matter of
changing \"may\" to \"shall\".

When Wollett said that arguing over the scope of bargaining is \"much
ado about nothing\" he was taking a pragmatic view of the bargaining
process, one that fits well with our current partnership arrangement.
The parties should be allowed to discuss any subject they agree to
discuss because it is the process of communication that is important,
and the interchange of interests that matters. Under partnership, it can
be argued, that is what really happens now.

Some prominent practitioners and researchers have suggested that the
legal doctrine relating to scope of bargaining described briefly above
have been unduly emphasized. They point to many instances where the
legal doctrine rarely determined what was actually bargained. For these
pragmatists, there is little practical difference between a mandatory
and a permissive demand because bargaining depends upon bargaining power
and pressures and not upon technical legal distinctions. This does not
mean, however, that the law which defines scope is irrelevant to the
bargaining process. At the very least legal scope doctrines may be used
tactically by one or both parties during the bargaining process to
manipulate timing and secure delays.

The partnership councils and the relationships present at the various
worksites are essentially unregulated and there is no central repository
to record the subjects discussed by the principals in these
arrangements, /97/ but it is easy to understand that a collaborative
approach to solving problems can easily lead to a blurring of the
boundaries surrounding issues of negotiability. What unions and
management will find is that they can discuss permissive, and even
illegal subjects, if there is trust and an atmosphere of cooperation.
Whether or not these subjects will ever appear in a written agreement
can become irrelevant to the parties if there is sufficient trust. By
legislating the bargaining relationship suggested by the NPC, the
incentive for unions to engage in partnership is lost. There are union
leaders who still refuse to accept partnership or cooperation as a labor
strategy. As to encouraging agencies to expand their scope of
bargaining, executive orders, top‑down direction, and accountability for
results should persuade management to engage in partnership and discuss
permissive subjects of bargaining where it will lead to increased
efficiency and effectiveness of the mission. Another reason to maintain
permissive subjects of bargaining is found in one tenet behind the NPR
reform, that \"one size does not fit all agencies.\" Vice‑President
Gore, the NPR, and the NPC have repeatedly emphasized that flexibility
is essential to improving performance in the government. Mandating a
broader scope of bargaining, through legislation, may be
counter‑productive to a true \"partnership\" relationship and does not
insure an \"entrepreneurial\" organization. It also reduces the
flexibility of negotiations for the agencies.

The legislature must also consider what happens when the administration
changes. Partnership under E.O. 12871 will continue regardless of who
controls Congress or the Presidency, but broadening the scope of
bargaining will shift the tactical advantage in the labor relationship.
This could lead to a further infusion of politics into the appointment
of members on the Federal Labor Relations Authority and the Federal
Service Impasse Panel, and perhaps countervailing legislation. None of
this is necessary and a legislative expansion in the scope of bargaining
is not needed.

It also raises an issue that deserves discussion, but has received no
consideration. The NPR initiatives have been criticized for ignoring the
politics involved in its initiatives. It is somewhat easy to accept the
short‑sighted approach of NPR as it relates to improving employee
performance in better serving the customer, but the bargaining
relationship between the government agencies and their respective unions
is an eminently political issue. The balance found in the statute was
reached after lengthy debate and represents a compromise reached between
competing interest groups. To assume that the relationship can now be
adjusted by simply opening the scope of bargaining without recognizing
the compromises and concerns that inhered in the existing order is
irresponsible and blind to the underlying bases of our democratic
institutions.

**B. Executive Order 12871**

The real issue in dealing with permissive subjects of bargaining is not
whether to enter into negotiations, but what will happen when the
parties reach impasse; and if the matter goes to a third party what
standards will guide the third party in settling the impasse. E.O. 12871
directs the agencies to negotiate over the permissive subjects listed in
Sec. 7106(b)(1), but what does that mean? If an impasse exists, the
federal sector allows interest arbitration at the request of either
party, through the Federal Services Impasse Panel. /98/ However, the
federal sector also follows the private sector rule that it is an unfair
labor practice to force a party to negotiate to impasse over permissive
subjects of bargaining. /99/ This means there is no third party
arbitration of permissive subjects of bargaining, absent an agreement
from both management and labor to submit the issue to arbitration.

At this date, there is no decision which addresses E.O. 12871 directly,
but on October 1995, the Federal Labor Relations Authority (the
Authority) did change its analysis of proposals which fall within Sec.
7106(b)(1). Prior to that date the Authority\'s position was that Sec.
7106(a) limited the reach of proposals under Sec. 7106(b)(1); but in
NAGE *and Veterans Affairs Medical Center, Lexington, Kentucky,* /100/
the Authority changed its reasoning to bring it into accord with the
decision of the D.C. Circuit in *Association of Civilian Technicians,
Montana \'Air Chapter No. 29 v. FLRA\>* /101/ As a result, the Authority
held:

In view of the foregoing conclusion that matters encompassed by the
terms of section 7106(b)(1) constitute exceptions to the rights set
forth in section 7106(a), a determination that a proposal is negotiable
at the election, of the agency under section 7106(b)(1) obviates the
need to also analyze the proposal under section 7106(a). Therefore,
where, as in this case, parties disagree about which of these sections
govern the negotiability of a particular proposal, the Authority will
determine initially whether the proposal concerns matters within the
subjects set. forth in section 7106(b)(1). If it does, we will not
address contentions that those matters also affect, the exercise of
management\'s authorities under section 7106(a). Conversely, if we
conclude that a proposal does not concern matters within the subjects
set forth in section 7106(b)(1), we will then proceed to analyze it
under the appropriate subsection of section 7106(b). In determining
whether a proposal concerns a matter within the subjects set forth in
section 7106(b)(1), we will analyze whether the proposal falls within
one of the two categories stated in that section. The first category
relates to: i) the numbers, types, and grades; ii) of employees or
positions; iii) assigned to any organizational subdivision, work
project, or tour of duty. The second category relates to the technology,
methods, and means of performing work. The case now before the Authority
involves proposals asserted to be within the subjects in the first
category. Finally, section 2424. 10(b) of the Authority\'s Regulations
pertinently provides: if the Authority finds that the duty to bargain
extends to the matter proposed to be bargained only at the election of
the, agency, the Authority shall so state and issue an order dismissing
the petition for review of the negotiability issue. Consistent with this
regulation, we will dismiss the petition for review as to any proposal
that is found negotiable at the election of the Agency under section
7106(B)(1). (footnotes omitted)

Thereupon, the Authority dismissed the petition of the union and left

unanswered the consequences of E.O. 12871. /102/ Undoubtedly labor
lawyers and management counsel have already drafted legal briefs
outlining their respective arguments on the obligations imposed by
E.O.12871; but it appears to the author that nothing has changed the
long standing legal position that it is an unfair labor practice to
require bargaining to impasse on a permissive subject. Also, E.O. 12871
requires the agency to negotiate proposals covered by Sec. 7106(b)(1),
but nothing in the executive order requires the agency to enter into an
agreement. Another long standing rule in federal labor relations is that
even if management elects to negotiate a permissive subject, it may
cease negotiations any time before an agreement. The duty imposed under
the definition of \"collective bargaining\" does not compel either party
to agree to a proposal or to make a concession. /103/

When the benefits of partnership are reviewed, the opened lines of
communication have generally been cited by management and labor as the
stimulus for finding new ways to solving problems and improving the
relationship between the parties. When presented with a proposal which
may fall within Sec. 7106(b)(1), many practitioners immediately suggest
taking a hardline on the proposal; but Wollett suggests that management
first determine what interests are driving the union representatives to
present the proposal and see how the union expects the proposal to work.
/104/ This will give management three benefits: first, the union may
drop the proposal once its implications are understood; second,
management may learn about a problem that needs to be addressed, even if
it is not an appropriate subject for negotiation; or third, the union
may revise its proposal to express its real concern. This is the intent
of Executive Order 12781, to establish the practice of communicating and
negotiating when appropriate and to prevent shutting down the lines of
communication as an initial instinct.

In summary, it appears E.O. 12871 expands the scope of negotiability by
requiring the agencies to bargain over the permissive subjects listed in
Sec. 7106(b)(1), but it does not relinquish the right of management to
discontinue negotiating prior to impasse. Prior to the reinvention
initiative or E.O. 12871, federal agencies were experimenting with
partnership, customer satisfaction, and employee empowerment, following
examples found in the private sector. The NPC and the 1995 HRM
Reinvention Act propose legislation that would further expand, the
mandatory subjects of bargaining, mandate. the creation of partnership
councils at all levels of government, legislate alternative personnel
systems and require their negotiation by the agencies, and introduce a
new standard of review for labor negotiation. The proposals would shift
the balance in negotiating power in favor of the unions without giving
appropriate consideration to the long‑term consequences on budgets,
organizational priorities, or the future of labor relations. None of the
proposals need to be enacted to continue reform under NPR or to continue
improving the federal bureaucracy through normal processes. They would
add to uncertainty, could discourage partnership by the unions, and
encourage unreasonable proposals.

**C. Pay and Compensation**

Whether the union is in the public sector or private sector, the basic
issues of concern to the employees are still job enhancement, job
security, compensation, and fringe benefits. In the past, job
enhancement constituted a majority of the union\'s bargaining issues.
Job security was of little concern, since the CSRA insured significant
protection from arbitrary removals and provided a weighty and
comprehensive due process path for \"just cause\" removals. The Federal
unions were usually prevented from negotiating wages and fringe benefits
because these are established by law for most employees. /105/ To the
extent workplace issues are specifically provided for by Federal
statute, they are not included in the term, \"condition of employment\",
/106/ and thereby excluded from negotiation. /107/ Additionally, the
duty to bargain does not extend to matters subject to government‑wide
rules and regulations, such as GSA or OPM regulations and many of the
Federal Personnel Manual provisions. /108/ However, as OPM repeals the
FPM and slackens its regulatory control over the agencies under the
reinvention process, it thereby further expands the scope of bargaining
between the agencies and unions. Likewise, if changes are made to the
grade structure and performance appraisal system as proposed in the 1995
HRM Reinvention Act, the changes would allow bargaining over subjects
which will indirectly impact pay and compensation.

Incentive compensation is a high interest item in the reinvention of
government, especially profit‑sharing or gainsharing. The NPR made it
clear that it believes these incentives must be encouraged in public
agencies. /109/ While encouraging incentive programs, the NPR also
understood that pay for performance programs had produced mixed results
in both public and private sectors, and that there is insufficient
empirical evidence to show that pay for performance programs are
effective. /110/ Noting the difficulties with pay for performance
programs, it pointed to 18 gainsharing programs in DOD which reported
cost savings and indirect savings, such as less sick leave and overtime.
The gainsharing programs were called a \"promising but relatively
little‑used approach to linking awards with improved performance.\"
/111/

In the past, federal regulations made a distinction between performance
awards, covered in 5 C.F.R. Part 430, and incentive awards, covered in 5
C.F.R. Part 451. This distinction was removed by recent revisions, but
it is useful to remember the distinction to understand past union
proposals and the place for NPC recommendations. The NPC recommended the
establishment of incentive programs which rewarded employees who meet
performance expectations, as well as gainsharing programs. /112/ In the
past, unions often proposed that performance awards be granted on the
achievement of a particular performance rating, for example, a \"fully
successful\" employee would receive \$200. Nondiscretionary performance
awards have been generally found nonnegotiable by the Authority.

The regulations covering incentive and performance award plans was
decentralized in August 1995, as part of the \"reinvention\" process.
/113/ OPM deleted the 5 C.F.R. Part 430, Subparts D and E, /114/ dealing
with performance awards based on an employee\'s performance rating and
integrated these sections into the 5 C.F.R. Part 451. It decentralized
the rules and explicitly acknowledged gainsharing plans, /115/ giving
authority to the agencies to establish the plans and allow awards up to
\$10,000 per employee with approval at the agency level. The regulation
encourages negotiation of the plans with the affected employees. /116/

The case law regarding negotiation of performance and incentive plans
/117/ has been evolving since the 1980s to allow greater negotiation.
Initially finding the proposals non‑negotiable, the Federal Labor
Relations Authority (the Authority) has altered its position over time
and now generally finds these subjects negotiable, even in direct
defiance of the Fourth Circuit. At first, agencies argued that
performance and incentive awards were \"pay\" or otherwise provided for
by Federal statute and therefore not a \"condition of employment\" as
defined in Sec. 7103(a)(13)(C), or within its management, prerogative to
direct employees and assign work because the awards would set levels of
performance for the work assigned by the agency. /118/ The Authority
decided these issues in favor of negotiation in NTEU and IRS, /119/
after its contrary ruling was reversed by the D.C. Circuit. /120/

The agencies\' arguments then shifted to limitations imposed by
government‑wide regulations and the effect the proposals would have on
the agency\'s right to determine its budget. Prior to the 1995 revision
of the regulations, both Part 430 and Part 451 contained provisions
which required the awards to be reviewed and approved at a management
level higher than the level recommending the award. /121/ The Authority
relied on these \"review and approve\" provisions to find mandatory
performance awards nonnegotiable. /122/ Over time the refuge given to
the agencies by these arguments contracted as the D.C. Circuit rejected
the Authority\'s interpretation of OPM regulations /123/ and the
Authority restricted the reach of its own tests, refusing to follow the
Fourth Circuit. /124/ In NTEU v. FLRA, /125/ the D.C. Circuit disagreed
with the Authority\'s interpretation of the \"review and approve\"
regulations and found a union, proposal negotiable, even though it
proposed that all employees receiving \"fully successful\" in their
annual appraisals would get a \$250.00 award, at a minimum, with amounts
increasing to \$500 and \$1,000 for higher performance ratings. This
issue has been overcome by the new regulations which do not have the
\"review and approve\" restrictions.

Of more interest, and the one on which we should focus, is the issue of
management\'s control over its budget and its determination of the
agency\'s priorities. The Authority\'s decisions on the \"review and
approve\" regulations began with a Fourth Circuit decision, *Dept. of
the 4ir Force, Langley 4ir Force Base v. FLRA, /126/ which* reversed the
Authority\'s finding of negotiability concerning a union proposal which
mandated cash awards of varying salary percentages to employees
dependent on the employee\'s performance ratings in a five‑step
performance rating system. The Fourth Circuit found the proposal
violated a government‑wide regulation, /*127/* but for our purposes its
alternative, and first stated basis, for the reversal was the reasoning:

We think it clear that NAGE\'s proposed mandatory payments for
performance ratings bear on the right of the Air Force management to
determine its own budget\... . It is clear that management\'s reserved
right to establish its own budget is constrained by the separate
mandatory expenditures required by the performance rating bonuses. On
oral argument before this Court, counsel for the FLRA even agreed that
reallocation of sums budgeted to hardware, such as aircraft, might be
required in order to meet the mandatory bonus payments. For these
reasons the proposal would \"directly interfere\" with the Air Force\'s
determination of its budget a right reserved to it by Section 7106.1
/128/

In AFGE and 4FMC, Wright‑Patterson AFB, /129/ the Authority

developed a two‑prong test to determine whether a union proposal
directly

interfered with management\'s right to determine its budget. Under the
Wright‑Patterson test, to avoid negotiating a union proposal, the agency
must show the proposal either (1) results in a requirement that the
program or amount be included as a separate item in the agency\'s
budget; or, (2) it causes an increase in costs that is significant and
unavoidable and not offset by compensating benefits. The test was
revisited in NAGE Local R14‑52 and Dept of Army, Red River Depot, /130/
where the Authority plainly stated that it would refuse to follow the
Fourth Circuit\'s interpretation of the Wright‑Patterson test. The
Authority then restated the test so that the first prong would require
the proposal to directly require a specified amount in the agency\'s
plan to fund its programs and operations during a fiscal year. /131/ In
essence the first prong is written out of the test except for inartful
unions negotiators. The Authority said,

As an illustration of this distinction, a proposal requiring that an
agency pay a specified amount toward health benefits premiums for
bargaining unit employees would not be inconsistent with the first part
of the budget test. However, a proposal requiring that the agency place
a specified amount in its budget for the purpose of funding health
benefits premiums for bargaining unit employees would. /132/ (supporting
citations omitted and included in footnote).

In *Red River Depot,* the union proposed that labor savings over the
fiscal year be divided 50/50 between management and the employees. In
the first round, the agency argued that since it no longer has a
gainsharing program, the proposal would require its establishment and
therefore, directly interfere with the agency\'s right to determine its
budget. The Authority noted that while the proposal would require the
Agency to reestablish gainsharing as an administrative program, the
proposal did not, by its terms, mandate any budgetary action. On remand,
an issue arose over the establishment of the baseline because a baseline
which was not based on actual costs and adjusted each year could require
a separate accounting for the profit sharing. /133/ The Authority was
able to avoid having to decide this issue by finding that the Authority
had unilateral discretion to set the base‑line based on past performance
of the employees. \"As long as a proposal leaves the agency with the
discretion to determine how any necessary funding relating to an
administrative or operational program will be addressed in its budget,
that proposal is not inconsistent with the first part of the budget
test.\" /134/

It has to be remembered that the Fourth Circuit disagrees with a narrow
interpretation of the first prong, which reduces it to a legalistic
shield useful only against proposals submitted by unions who have
inartfully failed to correctly phrase their proposal. The dispute
between the Fourth Circuit and the Authority really relates to the
balancing reached by the two tribunals. Every observer has to
acknowledge that most proposals submitted by a union will impact the
agency\'s budget and draw funding from other programs or projects. The
Authority\'s view is that an expansive view of management\'s right to
determine its budget would sharply curtail the scope of collective
bargaining, while the Fourth Circuit believes the narrow test ignores
the practical economic realities of these proposals.

This is not unlike the problem faced by state legislatures which have
enacted an expansive scope of bargaining, State agencies will often
negotiate an obligation of funds, usually on pay raises or fringe
benefits, which later are not appropriated by the state legislatures.
There are several alternatives adopted among the states on how to handle
this problem; but there is no solution satisfactory to all parties,
especially when it is realized the solutions still, require distributing
the same limited tax receipts to several competing programs and
priorities, and someone\'s program or priority must lose. The NPR
initiatives totally ignore this dilemma when they urge expansion of
bargaining rights and slackening the control over the compensation of
employees to provide more market‑oriented incentives for performance.
The *Wright‑Patterson* test is not an adequate solution to settle the
disputes after expanding the scope of bargaining.

Whether or not the proposal requires a \"line item\" in the agency\'s
budget can become meaningless in making priority and allocation
determinations, and this is recognized by the second prong of the Wright
Patterson test, which makes a balancing determination. In NTEU and NRC,
/135/ the Authority acknowledged that the second‑prong requires an
examination of the merits of the proposals. /136/ The union had made an
argument that the second prong be \"jettisoned\" in its entirety; but
the Authority recognized some balancing test is needed and it responded
to the union\'s argument by concluding that the second prong \"continues
to offer a reasonable solution to the tension that exists between the
management rights provisions of the Statute and the promotion of genuine
collective bargaining over meaningful issues.\" Under the second prong,
the Authority weighs the cost to the agency against the compensating
benefits received in return, without considering those intangible
nonmonetary benefits, such as positive employee morale. The \"tangible\"
monetary benefits considered by the Authority in *NTEU and NRC,*
included a reduction in employee turnover, a lower number of grievances,
improved employee performance, and increases in productivity.

The second prong recognizes that some proposals have, costs
ramifications of such significance that they, in effect, determine the
agency\'s budget. /137/ What is missing in this equation are the
\"costs\" associated with shifting funds from a priority program to fund
the union proposal. If the Authority is going to allow jockeying of the
budget, then the parties should be required to determine where the funds
for the proposal exist and what programs Will have less funds and how
that will impact the mission of the agency. Realistically, this may be
impossible, but it would show not only how the proposals affect the
budget, but how it affects the mission of the agency and management\'s
ability to conduct its operations. The agency argued, in *NTEU and NRC*
that the pay proposal infringed on the agency\'s ability to determine
its mission. The Authority answered that the impact was not caused by
the union\'s proposal but by some future action:

As to the Agency\'s concerns that the FSIP may issue decisions that
infringe on its management right to determine its mission, we note that
if, as a consequence of future negotiations, the FSIP issues a decision
that imposes a provision that the Agency believes is inconsistent with
its management right to determine its mission, there are avenues
available for challenging such action. /138/

However, this also reduces the balancing test to a arbitrary exercise if
all the Authority does is calculate the cost of the proposal as a
percentage of the agency budget, without making a realistic assessment
of the proposal\'s true impact on the agency. Attempting realistic
assessments may inmesh the Authority in the affairs of the agencies, but
it is too late to withdraw from that responsibility which began when it
introduced the Wright‑Patterson test.

There are other problems associated with profit‑sharing, besides their
negotiability. A few considerations the parties must address in their
negotiations are: the effect incentive pay will have on base rates for
overtime calculations, the baselines that will be used and how these
baselines can be manipulated; the employees who will be covered; whether
the top performers deserve more than the worker who just did his or her
job; when the entitlement will be determined; what percentage must be
allowed to account for returned work or other risks; and what programs
and priorities will not be funded. The agencies and unions will need
training to develop the expertise. In times of tight budgets, this may
easily be ignored as a \"nice to have\", when in reality this training
is essential. These issues should not be proposed and negotiated
causally.

Determining the employees who will be covered by the proposal becomes
significant following the Authority\'s decision in AFGE and OPM. /139/
In AFGE and OPM, the Authority found that a union proposal is outside
the duty to bargain if it does not concern conditions of employment of
bargaining unit employees. The Authority considered three types of
bargaining proposals: (1) those that directly implicated unrepresented
employees and nonemployees; (2) those that directly implicated employees
in other bargaining units; and (3) those that directly implicated
supervisory personnel. In the first category, the Authority has applied
the \"vitally affects\" test. With regard to proposals directly
implicating employees in other bargaining units or supervisory
personnel, the Authority concluded that the \"vitally affects\" test
does not apply and, accordingly, that such proposals are outside the
duty to bargain. The Authority also decided, in reviewing the
inconsistent proposals, it would no longer rely on what the union seeks
to accomplish, rather than, what the proposal would in fact accomplish,
in determining whether a proposal concerns a condition of employment of
non‑unit employees. This raises some issues concerning a profit‑sharing
plan which covered all employees in the organization, such as the one
considered in Red River Depot. But limiting the proposal solely to the
bargaining unit members ignores the \"me too\" attitude of unions and
employees and the foreseeable probability that an incentive pay proposal
will be expanded to all the employees in the affected unit. Currently
the \"me too\" argument is not persuasive with the Authority.

The issues discussed above show that Federal labor relations was
evolving on its own to expand the negotiability of topics through the
adoption of innovative management practices, as shown by the 18 DoD
incentive award programs or the change at Red River Depot when the new
commander arrived at his station impressed with private sector
innovations. NPR made the risk taking acceptable and actually encouraged
it, but it is legitimate to wonder whether the NPC\'s proposals are
needed. The OPM has revised its regulations on awards and incentive pay
to encourage these programs. /140/ All of this diverts our attention to
encouraging the agencies to negotiate incentive pay programs with the
unions, before addressing the underlying issue, what are management\'s
rights in determining its budget and setting its priorities, which
ultimately determine the mission of the agency.

There are other areas of compensation which remain closed to union
negotiation and it is only through the reinvention initiatives that
these areas may be opened. /141/ The Federal employee unions have always
lobbied for pay comparability, and achieved some success through the
years with enactment of corrective legislation, such as the Federal
Employee Pay Comparability Act of 1990 (FEPCA). The FEPCA required the
government to close the Federal/nonFederal pay gap within a certain time
period and institute locality pay for high labor cost areas. It also
allowed special recruitment and retention bonuses. /142/ However, there
has never however been agreement on comparable rates. This has resulted
in a constant upward pressure on other determinatives of pay as the
employees and the unions seek what they believe is a comparable rate.

One phenomena has been grade inflation. Ronald Johnson and Gary Libecap,
contend there is a prevalent practice in the civil service for
supervisors to inflate the grade levels of their employees in respond to
pressure from the employees to compensate for departures from pay
comparisons in the local area. /143/ They cite studies by OPM and
Congressional Budget Office (CBO) which acknowledge the problem of grade
inflation and other data which shows a creep of the average GS level for
federal employees from an average GS grade of 8.16 in 1980, to 8.39 in
1984, to an average grade of 8.69 in 1989. /144/ While, some of the
grade creep for the period can be attributed to the growing professional
layer in the Federal Government which generally groups in the higher GS
levels; Paul Light gathered raw data for the GS I 1‑10 employees, and it
showed a grade creep from 8.06 to 8.53 to 8.91 for the period from 1983
to 1989 to 1992, respectively. /145/ The contention that grade inflation
exists is further supported by a recent GAO study which was conducted to
determine if women and other minorities were being classified at lower
grades than the general workforce for the same work. The study found
some discriminatory differences, /146/ but it also found that generally
everyone\'s grade, including minorities and women, was overrated,

The implementation of the FEPCA also shows the same upward pressures. To
retain specially qualified employees, the FEPCA authorized the agencies
to pay retention allowances to these employees. The retention allowance
was intended to be used only to retain highly skilled employees who
would otherwise resign to take a higher paying job in the private
sector. Since 1990 five agencies have used the benefit, with increasing
numbers each year. In 1991 four employees in the entire Federal
government received the retention allowance; by 1994, 374 employees were
receiving it. /147/ This would be a minuscule number and unremarkable
except for the situation found at the Export‑Import Bank (Ex‑Im Bank).
From 1990 to 1993, Ex‑Irn Bank did not use the allowance; then in 1994,
it provided the allowance to 100 employees and by August 1995, 200
employees or 45% of the bank\'s employees were receiving the allowance.
In doing further research, OPM found Ex‑Im Bank not only improperly paid
the retention allowances, but also failed to properly handle its cash
awards, pay raises, and recruitment. bonuses. /148/ As a result the
Ex‑Im Bank hired an outside expert to correct the problem. There is
nothing wrong paying 45% of the employees a retention allowance, if it
is justified; /149/ but over time there will be an upward pressure to
grant pay raises through FEPCA allowances. And the situation is not an
isolated one. Recently President Clinton ordered greater oversight of
bonuses awarded to executives of federal corporations after learning of
plans to award hundreds of thousands of dollars to its top executives.
/150/

As the administration attempts to regulate the pay of its top employees,
it is also controlling the raises normally due to the employees. In the
1997 budget, President Clinton provided the federal employees a pay
raise of 3%, well below the 7 to 8 % which would have been required by
the FEPCA. Administration officials argued that \"it makes no sense, in
tight budget times, to strictly follow the law when the government is
downsizing and the pool of applicants for federal jobs is plentiful."
/151/ The administration is now considering a new total compensation
approach when comparing federal pay with private pay, because the
current approach only looks at salaries, and ignores the favorable
fringe benefits given the federal employee, such as the retirement plan.
/152/ A GAO study noted that academic studies have found that pay levels
for the federal employees are higher than those for employees in the
private sector with comparable characteristics, such as education and
work experience, and the government\'s methodology is generally
criticized as being defective. /153/ One academic study focusing on
locality pay showed that private sector pay had little effect on entry
levels, promotion grades or current grades of the federal employees, and
that there was little empirical evidence to show a significant
connection between locality pay and recruiting or retaining employees.

The bottom line after reviewing studies on grade inflation and pay
comparability is that employees are attracted or deterred from federal
service for reasons other than the salary, as shown by the pay
comparability studies; however, promotions and salary increases are used
by supervisors as an incentive to possibly motivate their employees or
out of peer pressure. What does this mean for federal labor relations?
There is an NPR initiative to allow agencies to utilize broad‑banding of
the GS classifications. A potential classification system allowing
agency‑specific broad banding is outlined in the 1995 HRM Reinvention
Act. Under that proposal, the GS grade classification system established
by statute would be abolished, but the present pay structure would be
retained. OPM would have authority to establish grade level criteria by
regulation. A new subchapter would also be inserted in Title 5 to
authorize OPM to establish government‑wide broad‑banding criteria. OPM
would then have the authority to approve broad banding programs
submitted by the agencies for all or part of their organizations,
provided they met the government‑wide criteria.

Extrapolating from past experience with grade inflation and pay
comparability, there are some legitimate questions regarding the
benefits of broad‑banding. The general consensus is that the employees
will begin to congregate at the top of their pay bands relatively
quickly, unless there is some external control or internal discipline.
GAO\'s review of past broad‑banding experiences has caused concern about
the implementation of broad‑banding government‑wide. /154/ The GAO was
concerned because salary costs tended to be higher under a broad‑banded
system; the tests were too limited to, lead to a conclusion that
broad‑banding is appropriate government‑wide; and no controls had been
adopted to insure that federal employees doing the same work in the same
local area will receive essentially the same pay, regardless of the
agency at which they work.

Legislation to allow broad‑banding was proposed in the past, but never
enacted. While NPR raised several faults arising from the rigidity of
the current classification system; NPR also recognized that
broad‑banding does not appear to be the panacea for every organization.
\"\[Broad‑banding\] carries its own set of challenges and may not be a
good fit for every organization or every occupational group.\" /155/ The
NPR acknowledged that the concerns of GAO are real. Broad‑banding can
lead to increased salary costs unless the organization has managers
skilled at managing employee\'s pay, an effective performance management
system, and budget controls. But obtaining classification and pay
flexibility can be a tremendous temptation for an agency, which believes
it can discipline its managers in managing the pay and control the
salary creep, especially if it is being pressured by the unions and
innovative political appointees to adopt the new system. Whether
Congress will trust this classification system to the agencies remains
to be seen. Our focus now is what are the consequences to our labor
relations.

E.O. 12871 directs the agencies to negotiate the numbers, types, and
grades of employees or positions assigned to any organizational
subdivision, work projects, or tour of duty. The Authority has yet to
define the union\'s ability to determine the \"numbers, types, and
grades of employees\" under Sec. 7106(b)(1). Although there are cases
defining the terms, these cases generally determined the boundary
protecting management\'s rights from interference, not how far the
union\'s negotiating rights extend. /156/ These two lines are not the
necessarily the same.

A additional complication in this area is found in the definition of
\"condition of employment" which excludes any policy, practice, and
matter relating to the classification of any position. Peter Broida in
his treatise on Federal Labor Relations indicates:

Congress intended to remove from the scope of bargaining threshold
determinations of what duties and responsibilities constitute a given
position and the characterization of that position for purposes of
personnel and pay administration. The bargaining exclusion was intended
to ensure uniformity of position classification throughout the federal
service. For that reason, bargaining proposals directly relating to the
classification of positions do not concern \"conditions of employment\"
and they are not within the duty to bargain. /157/

If broad‑banding is introduced, it remains to be seen how this exclusion
from bargaining will be addressed. The government‑wide criteria for the
classifications will be made at the OPM, with the agencies permitted to
develop their own broad‑banding programs, presumably allowing some
flexibility to create bands appropriate for their organizations.
Generally, agency level rules and regulations are bargainable; unless
the agency cart show a compelling need for the rule or regulation. /158/
This is an elevated standard which is infrequently met by the agencies.
If the agency relies on the exclusion under Sec. 7103(a)(.14) for
matters related to classifications, it is uncertain how this issue will
be decided.

Once broad‑band classification becomes optional, unions who believe it
is advantageous to their employees will want to negotiate its
implementation. When all of the consequences are considered, federal
employee unions may soon be negotiating the employees\' salaries with
the agencies. If the recommendations of the 1995 HRM Reinvention Act are
enacted, the unions will be able to negotiate manning and staffing,
incentive pay, performance standards, and a broad‑band classification
system. While these components do not legally constitute \"pay\", they
do set salaries indirectly. It remains to be seen at what level
bargaining over these issues will occur, but the majority of the
agencies and the unions have no experience in either creating these
programs or bargaining over issues related to them. As the GAO and the
NPR acknowledge, there are a number of difficulties here.

The piecemeal and politically‑driven approach of the reinvention
initiatives to labor relations reform is injurious to long term
stability in labor relations. The case law identifies the real tensions
developing in labor relations; one of which is the ability of the
agencies to prioritize funding and determine their budgets versus the
unions\' ability to negotiate proposals which necessarily impact the
agency\'s budgetary decisions. This is especially important as funding
for the operations of some agencies becomes more scarce each year.
Merely opening the subjects listed in Sec. 7106(b)(1), such as manning
and staffing, for mandatory negotiation does not address these tensions
or introduce efficiency in government operations. It may appease the
unions for a short time during this period of downsizing, but it shows
no fore‑thought to the long‑term consequences.

The boundaries meant to protect management from negotiating proposals to
impasse should not translate into the same boundaries which show the
breadth of the union\'s ability to negotiate issues. If the bargaining
boundaries in federal labor relations are going to be adjusted, then
Sec. 7106 should be reviewed in its entirety, not in a piece‑meal
approach; and perhaps the entire Statute should be reviewed. Efficiency
in the government is advanced by certainty in the rights of the parties.
Unsettled definitions of the parties\' rights will breed litigation, or
lead to extreme bargaining positions hoping for a compromise in the
uncertain areas of the law.

**A Downsizing ‑ Privatization, Contracting‑Out, and Other Options**

A great deal has been written about the \"shadow government\" which his
been created to provide federal government services. Mark Goldstein put
it simply when he said, \"both Republican and Democratic presidents have
become adept at political sleights of hand: They have provided programs
demanded by voters while holding federal employment steady so that no
one might accuse them of making government bigger. Shadow Government is
the sorcery that allows administrations to manage this feat.\" /159/ The
\"sleight of hand\" is performed through privatizing and
contracting‑out, which are often jumbled ‑together as privatization.
Fredrick Mosher estimated that only 5 to 7 percent of all federal
spending was spent on activities that the federal government performed
itself, after excluding funds allotted to the armed forces. /160/ John
Sturdivant, National Vice‑President of the AFGE, estimated the shadow
employee workforce to be equal in size to the two million federal
employee workforce. /161/

In December 1994, the administration announced the beginning of NPR
Phase 2, bringing the focus to cutting the government back to its
essential services. To have influence on which services are retained
within the government or spun out is a valuable privilege for the
unions. When Robert Tobias, National President of the NTEU, was
confronted regarding the union\'s continued cooperation with the
administration, he responded that the employee cuts were inevitable and
it better to be inside, helping to steer and brake the train, rather
than outside standing in front of it. /162/ He understood another
administration would not give the unions the same access or influence
that they are given today. This access is extremely valuable when one
stated objective of the current administration, and the purpose behind
NPR Phase 2, is cutting programs. Employee involvement has also been
found to be a major factor in the eventual success of privatization.
\"If the employees believe that management is at least considering their
interests, then they will \'buy in\' to the process to a greater extent
which in turn ensures that the privatization has a greater chance for
success.\" /163/

Basically there are five ways to downsize the federal government. /164/
These basic ways are: Service Termination; /165/ Privatization; /166/
Quasi-Government Corporations; /167/ Public/Private Partnerships; /168/
and Competition/Contracting‑out. /169/ One out of several unique
features of the reinvention effort is the breadth of the innovative
ideas being considered in the efforts to reorganize and consolidate the
bureaucracy, such as Franchising, Performance Based Organizations (PBOs)
and Employee Stock Ownership Plans (ESOPs). The first two do not involve
the termination of federal involvement, except perhaps as an initial
step to privatization. The third is a method for privatizing or
contracting‑out a government commercial service.

It is understandable why unions feel they need to get involved in the
reinvention process. Although there are persuasive arguments and studies
showing a lack of return or benefits in some instances of privatization;
/170/ the political realities are that the trend to privatize or
reorganize government\'s functions will not slacken over the next few
years. This section will focus on the various options and NPR\'s effect
on the labor relationship. Adding to the volumes written over the years
regarding privatization and contracting‑out; hearings on the subject
were held in March 1995 before the Committee on Government Reform and
Oversight. /171/ While the unions blamed poor management and arbitrary
personnel levels (among other restrictions) as a hindrance to employee
productivity eventually leading to wasteful privatization;
pro‑privatizing speakers criticized minimum manning levels and
protection for core governmental functions as barriers to more efficient
contracting‑out. These arguments will continue to rage because each side
has the facts to support its case; but what are the alternatives and how
do they involve our labor relations?

\"Contracting‑out\" is listed at 5 U.S.C. Sec. 7106(a)(2)(B) as one of
management\'s operational rights not subject to negotiation. The NPC has
recommended three options to expand bargaining over union proposals, two
of which affect this right. /172/ Under Option 1, E.O. 12871 would be
codified and bargaining would be required on any union proposal unless
the agency can show the proposal \"substantially interfered\" with its
remaining managerial rights. /173/ Option 2 would add a gradual
three‑phased implementation of mandatory bargaining over the operational
subjects found in Sec. 7106(a)(2), such as contracting‑out. There would
be a \"no‑fault\" period allowing cancellation of agreements for a
limited time as the parties experiment with the new rights of
bargaining, but in the end the operational subjects would be fully
negotiable.

Option 3 would immediately expand bargaining rights to include the
operational subjects. None of these options was included in its entirety
in the 1995 OPM Reform Act.

The courts have held that the federal unions do not have standing to
challenge decisions made under Circular A‑76 to contract out work that
was or could have been performed by the employees represented by the
unions. /174/ The history of negotiability of union proposals dealing
with contracting‑out shows the uncertainty in law that can exist in
federal relations. Again, we see another instance when the Authority
decided its cases contrary to decisions issued by the appellate courts.
The disagreements intensified following a remand from the Supreme Court
/175/ until 1993 when the Authority finally, accepted the reasoning of
the appellate courts. /176/

The Authority was always concerned with the consequences that
contracting‑out had on the employees and their inability to address
these effects up‑front in the decision‑making process. Therefore, it
ruled several proposals regarding the contracting‑out process to be
negotiable. However, 5 U.S.C. Sec. 7117(a)(1) excludes bargaining over
proposals which are inconsistent with a government‑wide rule or
regulation. OMB Circular A‑76, /177/ which regulates the contracting‑out
process, is a government‑wide rule or regulation and the circuit courts
have limited the negotiability of union proposals on that basis;
holding, generally, that Circular A‑76 has established procedures for
resolving any disputes regarding its implementation and forbids
negotiation and arbitration over its processes or decisions. /178/
Allowing collective bargaining, which could eventually lead to
arbitration, over the implementation of A‑76 and its decisions would be
inconsistent with OMB Circular A‑76. In AFGE Local *1345 and Dept. of
Army, Ft. Carson,* the Authority finally agreed, holding, \"We adopt the
Court\'s conclusion that Circular A‑76 is a government­ wide regulation
and that proposals subjecting disputes over compliance with the Circular
to resolution under a negotiated grievance procedure are nonnegotiable.
Previous decisions to the contrary will no longer be followed.\" /179/

It is interesting to consider that even if option 2 or 3 as proposed by
the NPC were enacted, the reasoning of the case law is that OMB Circular
A‑76 is a government‑wide regulation and proposals which could subject
disputes over compliance with the Circular to a negotiated grievance
procedure are nonnegotiable because Circular A‑76 provides for an
exclusive route of appeal. Even though Circular A‑76 was recently
revised the provisions dealing with the exclusivity of appeals were not
changed. Circular A‑76 still states:

This Circular and its Supplement shall not establish and shall not be
construed to create any substantive or procedural basis for anyone to
challenge any agency action or inaction on the basis that such action or
inaction was not in accordance with this Circular, except as
specifically set forth in Part 1, Chapter 2, paragraph I of the
Supplement, \"Appeals of Cost Comparison Decisions.\" /180/

Although the appeals procedures have been moved to another section, they
still state: \"The procedure does not authorize an appeal outside the
agency or judicial review, nor does it authorize sequential appeals. /
181/

\"Unfortunately, the NPC proposal to expand the scope of bargaining to
include the operational functions, such as contracting‑out, would create
sufficient uncertainty so as to encourage litigation to delay. a
proposed contracting‑out decision. If the administration wanted to allow
negotiation over this subject, it could do this now by revising Circular
A‑76 to address the case law. Since that hasn\'t happened, it can be
reasoned that an expansion of the subjects of bargaining was not meant
to change the existing case law on this issue. Also, if the unions
proposed bargaining over the contracting‑out decision, but waived its
right to appeal to an arbitrator or outside party, would that proposal
be negotiable under the case law. After all, it is the communication
process which produces the results, even if the union cannot force an
agreement. This ability may become more important when the agency has
different contracting‑out options to consider, and can choose to award
the contract without competition. /182/

On a related issue, on March 18, 1996, AFGE filed suit /183/ to prevent
the contracting‑out of aircraft maintenance and other functions at three
Air Force

bases, McClellan AFB, California; Kelly AFB, Texas; and Newark AFB,
Ohio. /184/ The complaint alleges that the Department of Defense
violated federal statutes which require (1) 60% of the \"core\"
maintenance be performed by federal employees /185/ and (2) bidding for
non‑core work to include other depots and DOD facilities, not just
private sector contractors. The Department of Defense (DoD) have been
advocating greater privatization of the maintenance depots /186/ and the
Administration, for its own political reasons, /187/ supports the repeal
of the statutes inhibiting privatization. Aligned with the AFGE are
those legislators who want the workload to flow to the surviving depots
in their states.

In April 1996, DoD released a memorandum where Deputy Secretary of
Defense John White directed the agencies to make outsourcing and
privatization a priority to acheive crucial savings. /188/ Secretary
White explained that DoD must increase procurement funding in the future
to maintain it technological superiority, but the current fiscal climate
is such that DoD cannot expect any increased funding. The solution is
found by savings created through procurement reform, base closures, and
outsourcing and privatization where competition can show savings.

This is not a labor management problem, it is a political issue.
According to DoD between 13 and 15 billion dollars is spent annually on
depot maintenance, which provides employment for 89,000 federal
employees at 30 depots and also 1,300 private firms. As Secretary White
explained these \"budget\" issues directly impact mission priorities,
and it is not unrealistic to see the link between \"technological
superiority\" and \"competitive outsourcing and privatizing\". Should
issues such as this really be determined by local area bargaining?

This matter will eventually depend on the lobbying power of the unions,
their power of access, and the ability of the unions to negotiate in the
political arena. If the statutes and law are on their side, then their
negotiating position improves. On March 28, 1996, the Administration
announced a grant of 14.5 million dollars to assist 6,000 ‑maintenance
workers at Kelly AFB who will lose their job, /189/ and a bill has been
introduced in Congress to allow the employees taking jobs with the
private contractor to also take their retirement plans. The AFGE
expressed approval of the job training grant, but also said it will not
affect their suit to stop the drive towards privatization. Although this
matter involves fundamental labor‑management employment issues, and the
basic issues might be subject to negotiation under a expanded scope of
bargaining, such as proposed by the NPC, it is obvious these issues go
beyond labor-management bargaining at a local level, and the solution is
a political one which will be resolved without involving the Federal
Service Labor‑Management Relations statute.

As part of \"reinvention\", the Supplemental Handbook to Circular A‑76
was revised on I April, 1996 to make it more user friendly for the
agencies. /190/ Among several changes, the revised Handbook to Circular
A‑76 modifies or eliminates some cost comparison requirements, provides
for enhanced employee participation; eases the transition requirements
to facilitate employee placement, and expands the scope of appeals
available to affected parties. It also seeks to improve accountability
and oversight to ensure that the most cost effective decision is
implemented. The flexibility provided to the agencies can inhibit or
encourage contracting‑out depending on the predilection of the agency.

Regarding the philosophy behind Circular A‑76 and the Revision, OMB
said,

Industry and trade group commentators, generally, sought a
\'reinvigorated\' policy statement of strict reliance on the private
sector. In their view, the

Revision should require or, at a minimum, permit the direct conversion
of

all commercial activities to contract performance, without cost
comparison.

Objections were made to the proposal to permit agencies to continue
their

existing interservice support agreements for commercial activities,
without

cost comparison. OMB is not, at this time, considering changes to the

Circular A‑76 itself. The Circular requires reliance on the private
sector

when shown to be economically justified. It does not require, the

conversion of in‑house work to contract, as a matter of policy, unless a
cost

comparison, conducted in accordance with its Supplement, demonstrates it

to be in the best interests of the taxpayer. /191/

Some of the more interesting revisions are that it: a) expands the list
of functions exempted from cost comparison and gives the agencies
greater leeway to determine core activities; /192/ b) encourages
agencies to consult with the employees and involve them at the earliest
possible stages of the competition process, subject to the restrictions
of the procurement process and conflict of interest statutes; c)
authorizes conversion of functions involving 11 or more FTE to contract
performance, without cost comparison, if fair and reasonable prices can
be obtained from qualified commercial sources and all directly affected
Federal employees serving on permanent appointments are reassigned to
other comparable Federal positions for which they are qualified; /193/
and d) expands the appeal process to permit appeals not only. of costing
questions, as permitted under the 1983 Supplemental Handbook., but also
general compliance issues, such as appeals based on factual information
contained in agency waiver justifications, information denials, and
instances of clear A‑76 policy violations. /194/

The revisions have been in existence for less than a month at the time
this article is being written, and it remains to be seen how the changes
will affect labor management relations. It is obvious OMB tried to
accommodate the interests of the employee and unions while also giving
the agencies expanded flexibility. The unions must still process the
appeals through the agency, and although still denied the right to
negotiate or arbitrate its disputes through the grievance process, the
expanded appeal rights are still a significant empowerment for the
unions.

Another interesting development in this area is the possibly of shiffing
governmental functions over to an Employee Stock Ownership Plan (ESOP).
In April 1996, OPM announced the first ESOP privatization initiative to
be tried by the federal government, which occurred when OPM\'s Office of
Investigative Services (OIS) closed in July 1996. /195/ The functions of
OIS is contracted to a new company called U.S. Investigative Services,
Inc., an ESOP. Under the ESOP service contract, employees of OIS perform
their same jobs‑‑but as employees of a private contractor, not as
federal employees.

An ESOP is a voluntary association of the employees who band together to
control the corporation for which they work. They obtain a loan to
purchase a controlling interest of the stock of the corporation, which
will be held in trust for the employees, Additional purchases can be
made until the corporation is 100% employee‑owned. The employees who
accept employment with the ESOP will maintain their same salary, switch
to a 401(k)‑type savings plan, and receive stock in the company.
Eventually 100% of the company will be owned by the employees. There are
incentives for the employees to immediately join the ESOP and its is
expected that 90 to 95% of OIS employees will switch. The contract was
awarded without competition and government offices, furniture,
computers, and vehicles will be furnished to the ESOP as part of the
contract; otherwise, it appears the ESOP was privately financed.

The ESOP\'s CEO said, \"the government would save money because it would
avoid future pension payments to workers. The company steadily will
lower the price of its work to the government by reducing the number of
vacation and sick days granted employees, by using a smaller management
team and by acquiring new business from state and local governments."
/196/

Roger Neece, President of ESOP Advisors, Inc. and an investment banker
familiar with ESOPs, conducted feasibility studies for OPM/OIS, as well
as the Army Management Engineering College, the Air Force Guidance and
Meteorology Center, and other DoD operations. /197/ Neece says
employee-owned businesses tend to have higher revenues, less
absenteeism, and less turnover than other private companies because of
the economic incentives and psychological differences associated with
employee ownership.

The current expectation is that after the initial contract period the
function or service being performed will be opened for competitive bid
and it is hoped the ESOP will be sufficiently diversified and
financially viable to branch into the private sector, if necessary. It
is unknown how these arrangements will impact future labor‑management
relations, but certainly given a choice between contracting‑out as has
occurred in the past and contracting‑out to a ESOP, it appears the
employees and the unions would want to bargain for the latter. As
discussed above in Contracting‑out, the unions have limited ability to
negotiate the contracting‑out decisions. /198/ Here is one area the
union may desire to bargain with the agency over the possible options.
It appears that ESOPs will receive favorable treatment in many ways and
will be assured an initial contract. Once the, case law prohibitions are
addressed, proposals requiring that the agency award the contract to an
ESOP may be negotiable if the managerial right of contracting‑out
becomes a mandatory subject of bargaining. This could be an amazing
opportunity for the unions, if the function is going to be contracted
out in any event and the union foresees itself becoming the exclusive
representative in the eventual ESOP. It could also be a tar patch of
litigation for all of the parties concerned. One issue that may be of
interest in the future is the duty of the union regarding ESOP
privatization, when they are not assured of continued representational
status. That issue will probably have to be addressed at some later
date.

The administration is also experimenting with various entrepreneurial
organizations, which will remain federal entities but operate under
unique personnel and acquisition rules. /199/ Several examples abound,
such as: a) the FAA legislation (HR 2276/S1239) which overhauls the
personnel and procurement rules of the FAA, as it makes it an
independent agency; b) the conversion of the Patent and Trademark Office
to a government corporation (S1458), giving the Commissioner sole and
exclusive discretion over the system for job qualifications and
procedures, as well as for compensation based on performance, but also
allowing bargaining over the issues; c) performance Based Organizations,
which are federal organizations using existing administrative
flexibilities and the demonstration project authority in 5 U.S.C.
Chapter 47, allowing changes to its personnel and compensation systems.
On

April 1, 1996, OPM released a template for PBOS. /200/

All of these organizations have some common characteristics. They hold
the manager accountable; they encourage employee participation and
partnership with the unions; and they relax the rules on personnel
systems and methods of compensation with an emphasis on providing
flexibilities and incentives. The new organizations will bargain over
subjects not previously considered in the federal sector. Along with the
reinvention laboratories, these entrepreneurial organizations are
prototypes and experiments, perhaps eventually transferring their
successful practices government‑wide. One concern will be NPR\'s
announcement of success before a true test has been made, and its
embrace of successes which cannot be transferred government‑wide. Still,
these innovations will continue to be in the news and presented as
models for future organizations and changes in the federal government,
and at a minimum will provide case studies for further federal
innovations.

**VI. THE REINVENTION PROCESS IS NOT THE APPROPRIATE**

**VEHICLE FOR REFORMING FEDERAL LABOR RELATIONS**

The purpose of this article has been to show that the reinvention
process, as proposed by NPC and the 1995 HRM Reinvention Act, does not
provide an appropriate vehicle for reforming our federal labor
management relationship, and there are a number of reasons for this.

First, the NPR, has a number of problems. The NPR has no fundamental
concept holding it together and instead builds on short‑term successes.
It does not provide a deliberative reform process, especially when it
comes to labor relations. NPR has also been criticized on other grounds,
such as its default in addressing the tension between necessary control
and employee empowerment, its questionable sustainability, and its
failure to involve Congress or the middle managers. NPR\'s focus on
customer service, employee empowerment, and downsizing; results in labor
relations being the afterthought. This is not the way we should reform
our federal labor relations.

Second, NPR detracts the parties from perceiving labor reform as an
evolutionary process, to be taken in steps after an exchange of ideas
and viewpoints. It should be built with an eye to lasting reform and it
should instill certainty that can last through administrations. So long
as there are positive changes occurring under NPR, it is easy to dismiss
the faults; but by setting the agenda, NPR prevents reform that would
naturally evolve but which doesn\'t pass the NPR test. In addition, if
NPR should fail or be overcome by the next administration\'s
initiatives, its associated reform could be jettisoned. Labor relations
should not amended based on the latest fad in public administration.

Third, other mechanisms exist to encourage positive changes in the
federal bureaucracy. The Chief Financial Officers Act (CFOA) and
Government Performance and Results Act (GPRA) are significant
legislative tools which can be used to steer the bureaucracy. Any labor
reform should be integrated into the development of these two acts.

In the end, the Federal Labor Management Relation statute involves
questions

of fundamental power at the political level; and at the local level, it
determines the balance of power at the workplace. Changes to the statute
should not rest on changing definitions, such as customer satisfaction,
which may not be a legitimate goal of the government in all cases
anyway. NPR simply should not be the vehicle used to reform our federal
labor relations.

Four critical problems with NPR were identified by Donald Kettl in his
contribution to *Inside the Reinvention Machine. /201/* He identifies
the four problems as: built‑in tensions or conflicts, a potential lack
of capacity or resources to do the job, the absence of a central idea or
philosophy, and the failure to identify the glue that will hold the
empowered bureaucracy together, but he believes each of these problems
can be overcome.

Other public administration scholars have raised more basic criticisms
of NPR. The increasing use of best management practices to reform public
agencies, such as NPR\'s reinvention process, has led to a
classification in management development known as \"Best Practice
Research\" (BPR). A simple definition for BPR would be that a management
researcher studies the practices of several successful organizations to
find the common thread in their success. The common thread becomes a
principle of success and is then applied to all organizations seeking
similar success.

Two scholars, Overman and Boyd, have criticized BPR for creating the
delusion of learning from experience. \"Actually, BPR has a bias toward
very short term experiences only and does not look at the longer term
and unintended consequences of reform efforts identified as best
practices." /202/ An example of this practice is NPR\'s belief that
employee empowerment and customer service are essential principles which
must be embraced by every federal organization. Likewise every
organization must establish engage in partnership with its union. This
ignores several consequences which may be peculiar to some federal
organizations. First, in some government organizations, identifying the
customer or determining the priority that a customer will receive may be
a political decision that should be made from the top‑down, not the
bottom‑up. The mission or direction of the organization cannot be
determined through employee empowerment and customer service. Second,
not every union leader is receptive to partnership and cooperation.
Removing the tactical advantage associated with permissive bargaining
could hinder a peculiar manager\'s ability to achieve results in the
organization. That flexibility would be lost because NPR found a common
thread in \"partnership\".

Also, NPR reform works in many places because there is trust between
management and the unions. Partnership and bargaining over permissive
subjects when both sides have common interests does not draw out the
antagonism that may occur with a change in administrations. That is why
focusing on the short‑term success stories of partnership at Red River
Depot or Kelly AFB may not be productive in the long run. If current
efforts continue, the unions will become more enmeshed in the
decision‑making process of the federal agencies, having more and more
impact on the budget and organizational priorities. The short term
objective may have been political, as suggested by Donald Kettl; /203/
or a practical understanding by the parties of the evitable, but the
long term consequence may be more litigation and less efficiency with
the next administration. /204/ In fact, the lawsuit by AFGE regarding
the privatization at Kelly AFB shows partnership will not resolve all of
the problems, and it may only take one contentious problem to destroy
the trust and common interest needed for partnership.

Another delusion of BPR identified by Overman and Boyd is that it
supposedly treats all managers similarly, but actually BPR reacts to
only a select group of managers. This causes two problems. One,
competent managers are banished because they do not embrace the latest
management theory, and two, it distorts the research. Those who embrace
the new management theory and advocate innovative practices receive more
money, training, and attention, and the organizational success is as
much a consequence of this increased attention as the change in
management practices. This is seen in the establishment of pilot
programs, which receive attention, training, and resources which are not
otherwise available to other organizations.

BPR is also criticized for its propensity to avoid probing and critical
analysis of its case studies and avoiding scientific validation of its
successes. Demonstration of this fault is found in recent articles
covering past BPR territory. In Entrepreneurial Government, Rob Gurwitt
/205/ reported on the disestablishment of entrepreneurial government in
Vitalia, California, which, while under the management of Gaebler, had
been labeled \"the most entrepreneurial city in America.\" The
empowerment of the city\'s employees and their ability to try innovative
ideas led to an unintended investment of 20 million dollars by the city
in a hotel project, and subsequently to a shift in the political winds
and the election of a conservative city council that demanded tighter
control over the city\'s budget. Gurwitt also wrote of shifting
political fortunes in Minnesota, where the state\'s STEP program, an
award winning program which seeded management‑reform projects throughout
the state, was discontinued, without a word of dissent, by the new
Republican administration because it was distracting government from its
responsibilities. /206/ The demise of

the entrepreneurial programs in Minnesota was also noted by Paul Light,
who said:

Of the 35 Minnesota Programs lauded in *Reinventing Government,* 8 are

now dead, including two that barely got off the ground in the first
place.

Another two are no longer fully in the public sector, spun‑off into the
non­

profit, quasi‑government world. Another three are so close to death, so

imperiled by political circumstance and controversy, that it may be time
to

put in a call to Dr.Jack Kevorkian. \... Statewide, then, Minnesota\'s

reinvention projects have a survival rate of about three in five.
That\'s not

bad ‑ private sector innovation efforts go belly up roughly half the
time ‑ but

it may be intolerable all the same. /207/

Politics also figured prominently in an article by Barton Wechsler which
examined Florida\'s civil service reform, which like NPR, was based on
the BPR of Osborne and Gaebler\'s Reinventing Government. /208/ Weschler
concludes Florida\'s reform effort foundered on a misunderstanding of
the problems and the proper remedies, and the failure to reconcile basic
philosophical differences between the executive branch, the agencies,
and the legislature.

Each. of these articles provided insights into reform efforts based on
the BPR of Osborne and Gaebler which deserve repeating because they are
relevant to the NPR reinvention initiative. Regarding legislative
cooperative, Wechsler says, \"The Legislature, not surprisingly, was not
eager to give up budget authority or to cede large amounts of management
discretion and control to agencies.\" /209/

Light focuses on the possibility that political appointees would
introduce real reform, especially considering the high turnover rates at
the top of the federal hierarchy. He believes political appointees have
short‑term agendas because they enter their jobs expecting to leave once
they build their resume. Light sees our reliance on political appointees
to manage bureaucratic reform to be counterproductive. This view is
shared by James Sundquist, who sees the establishment of chief operating
officers (COO) at each agency as potentially one of the most important
and constructive recommendations of the NPR, but for the fact that the
COO is a political appointee. /210/ He says the COO should be a career
executive who can bring competence and continuity to the position. Each
had a different, but similar, perspective of the political control of
the bureaucracy, which is strengthened by NPR. There is also another
practical consideration, that has not been raised. Certainly,
strengthening the political control of the executive branch over the
bureaucracy is nothing new. However, the Clinton Administration is also
attempting to include the unions in the decision‑making process of the
agencies, even if their achievements are not yet substantial. A question
that should be considered is, what will happen when the political
appointees from a future administration have an agenda which is contrary
to the interests of the unions? The NPR proposals set the stage for this
confrontation, by enmeshing the unions in the bureaucracy and
strengthening the political control over the bureaucracy. This is a
potent mixture for future administrations.

Somewhat related to these issues is a quote included in Gurwitt\'s
article, \"The purpose of government is to serve the needs of the
community and to provide a forum for resolving community disputes as
well as providing the public services that the community needs, and
those aren\'t the primary purposes of entrepreneurial activity as it\'s
generally understood in our society." /211/ The same sentiment is
eloquently repeated by James Carroll:

The primary purpose of the federal government stated in the Preamble to
the Constitution is not to provide services. The primary purpose is to
establish and maintain a legal and institutional framework for
reconciling differences among individuals and groups in the pursuit of
national values and objectives, such as a more perfect union, the common
defense, justice, domestic tranquillity, liberty, and the general
welfare. /212/

The two themes examined above, the need for technical competence in the
management of the government; and, the purpose of government is
politics, to reconcile differences of the interest groups, are each
accurate. Managerial competence should be a prerequisite for the
appointment of the senior manager or administrator of any agency, not
political affiliation or connections. At. the same time, it is politics,
not professional competence, that turns the gears of government and
steers its course. Labor relations is also determined by politics, as a
reconciliation of competing interest groups. It was not constructed to
necessarily deliver the most efficient workforce, but to resolve
legitimate competing interests. It should not be amended to support
management theories based on \"threads\" found in short‑lived successes
or to achieve professional competence at the expense of democratic
control. Labor relations addresses central core issues of governance
which require political consensus, such as budgets, organizational
priorities, as well as equity, fairness, and due process. If it is
inefficient in some respects, it is because these values and rights must
protected, even if it requires a cost in efficiency.

It would be useful to return to an observation of Donald Kettl, who
said,

\[t\]he NPR largely ignored fundamental differences between public and
private management as well as centuries‑old thinking about how to hold
bureaucratic power democratically accountable. In particular, the NPR
dealt poorly with both the political and the constitutional roles of
Congress, in American bureaucracy. Finally, the critics struck a telling
blow in pointing to the fundamental political causes at the root of many
administrative problems. /213/

Kettl then counters the same critics by essentially saying the
reinventers would have little need to introduce reform if the old
theories continued to work and the pragmatic approach of the reinventers
has simply outpaced the theory in the field of public management. These
are the two views.

Evolutionary change in federal labor relations is stifled by channeling
reform through the reinvention process. Federal labor relations is
flexible enough to incorporate changes to encourage employee empowerment
and partnership, without requiring the blessing of \"reinvention\" The
federal agencies were already studying the private sector\'s experience
with employee participation and several agencies had proceeded down the
quality path prior to NPR. Like the commander of the Red River Depot in
1992, managers were considering different methods of management and
considering, or engaged in, partnership with the union, although they
may not have realized it.

But the real problem that needs to be addressed when we discuss the
scope of bargaining is not whether the subjects listed in Sec.
7106(b)(1) or Sec. 7106(a)(2) should be mandatory subjects of
bargaining, but whether the entire section needs to be rethought. The
focus should not be on Sec. 7106, but on management\'s right to
determine its budget and set its organizational priorities. The
difficulty in finding the appropriate line will become more difficult as
agencies experiment with performance standards, incentives, and
alternate classification schedules. Considering the current status of
the law, what is needed is more certainty for the agencies and unions.
Certainty in responsibilities and obligations will result in less
litigation, and is as essential to a productive federal bureaucracy as
partnership.

Following a separate course of reform would allow consideration of
alternatives not directly associated with NPR. What are \"appropriate
levels of bargaining\" can receive diversified attention following a
different route of reform. For example, there is no provision for
multi‑union bargaining over common issues, although NPR might consider
agency level partnership councils as a substitute. As personnel issues
are pushed down to the agencies, the question will be whether
agency‑wide regulations will be greater deference or the agencies can
reach an agreement with different unions on an agency‑wide level. The
1995 OPM Reform Act proposed to legislate multi‑union bargaining by
allowing the agency‑level partnership council to reach agreements which
would bind all subordinate units. The problem with this approach is that
it introduces another level of bureaucracy in the federal government, a
political evel. Of more concern is the removal of negotiations from the
employees to an agency bargaining unit created as a political
concession. It is the beginning of a union‑management bureaucracy that
will eventually result in employee alienation as decisions affecting
their working conditions are made between the unions, and the agencies
at levels beyond their reach. NPR limits the ability to consider other
approaches or consider the practical advantages of allowing the agency
to implement its proposals after consultation with the employees.

At the other extreme in a consideration of the \"appropriation level of
bargaining\" is the potential for unions to empower their individual
members to bargain over conditions at their individual worksites. Like
the NLRA, the statute recognizes exclusive representation for
appropriate bargaining units and prohibits the by‑pass of the unions in
dealing with employees. /214/ However, the federal agencies are burdened
with one other handicap‑ the requirement to give the union an
opportunity, to be present at formal discussions between the agency and
any employee. This, rule was created in E.O. 11491, Section 10(e) /215/
and\' was incorporated into the statute at Sec. 7114(a)(2)(A).
Understandably, NPR reform would never consider deleting this section
but it should receive reconsideration under a true reform effort.

Since its inception, the definition. of \"formal discussion" has been
expanded so that the rule now goes far beyond a union shield to prevent
\"bypass\" of the unions, and it has become a snare for the supervisor
who fails to know its wide ranging application. /216/ It applies to
quality circles /217/ and similar organized meetings which involve any
discussion of the conditions of employment. In a Memorandum addressed to
the Regional Directors, the General Counsel (GC) of the Authority
explained his views on the rights of agencies and unions in establishing
and implementing employee participation plans (EPP), such as quality
circles. /218/ One practical observation was that when the union and the
agency are working cooperatively and collaboratively under partnership
principles there are usually no disputes, because \"the parties are
intent on obtaining the best solutions and not focusing on rights and
obligations under the statute." /219/

While the rules in this area are clear, the difficulty is in the
practice. Consider a supervisor enthused with employee empowerment who
holds frequent meetings with his employees to discuss working conditions
and include his employees in all the decisions, but doesn\'t understand
his duty to invite the union to the meetings. The easy answer is that
the agency needs to educate the supervisor, but maybe it really raises a
more fundamental question. If union and management agreed to a
implementing a quality program, why can\'t the supervisor deal directly
with his employees to discuss working conditions which are peculiar to
them, without inviting the union representative? This would be employee
empowerment by the unions. If the union did not agree to the quality
program then the supervisor\'s practice can be prohibited as an ULP for
bypassing the union. While the parties can negotiate over the
application of the \"formal discussion\" requirements as they implement
the quality program, that doesn\'t address the fundamental question, why
is it still needed in the era of employee empowerment. The \"formal
discussion\" rule remains to ensnare unwary managers, and counsel, and
remains an additional obstacle between the employee and management. It
is highly unlikely under NPR that the formal discussion rule will ever
be reconsidered, even if it is contrary to the theme of employee
empowerment. Practically speaking, if the parties are engaged in
partnership, it is unlikely the union would ever raise the issue, but
one real indication that the statute is truly being reformed is that
Sec. 7114(a)(2)(A) is actually reconsidered, otherwise the \"reform\" is
really only a shift in negotiating power.

Again, so long as there were positive changes occurring under NPR, it is
easy to dismiss the faults of NPR. The one effect that is overlooked is
that this deference to NPP, allows NPR to set the agenda and hinder
reform that might naturally evolve except that it doesn\'t pass the NPR
test or is not within the field of focus of the NPR eyeglass.

A third reason to avoid using NPR as the guide in reforming federal
labor management relations is the recognition that Congress has decided
to manage the bureaucracy through recent legislation, specifically the
Chief Financial Officers Act (CFOA), as amended by the Government
Management Reform Act of 1994 (GMRA), and Government Performance and
Results Act (GPRA). Any reform of labor relations should be integrated
with these acts as they are developed and used to steer the government.
This is not necessarily contrary to the NPR, but the emphasis under the
two is different.

The NPR called for annual financial reports of the federal government
and a focus on results. While the CFOA and GPRA support and implement
many of the recommendations of the NPR, the determination whether a
particular proposal should be enacted should not depend on its
relationship to the NPR report or its HRM or management‑labor relation
recommendations, but rather on the unifying, long‑term vision for
managing the federal government that will occur through the CFOA and
GPRA. The prescription underlying the NPR, that the government must
focus on performance and accountability is already structured within the
legislative framework of the CFOA and GPRA. If labor relations reform is
not needed to further the goals of these acts, then it should not be
enacted simply because it is recommended by NPR, NPC, or contained in
the OPM proposed legislation. The CFOA and GPRA were not products of the
NPR. They were legislative attempts to obtain control over the federal
government and they obstentibly strengthen Congressional oversight,
potentially interfering with NPR\'s broad theme of bottom‑up management
and strengthening the executive branch.

The CFOA and GPRA impose accountability on the agencies and require them
to account for their financial management and the performance of their
agencies. It is top‑down management. The CFOA, as amended, requires the
24 major executive agencies /220/ to produce an entity‑wide annual
financial statements by

1 March 1997. /221/ By March 31, 1998, the executive branch will submit
a consolidated financial audit which will be audited by the Comptroller
General. /222/ It may sound surprising but before passage of the CFOA
there was no requirement for an agency‑wide standardized audit.

While the CFOA concerns financial management, the GPRA manages agency
performance and results. The GPRA requires the agencies, to submit
strategic plans to OMB and to Congress by September 30, 1997. In the
strategic plan, an agency will state its mission and objectives and
explain how it intends to achieve these objectives with a description of
the operational processes, skills and technology, and the human,
capital, information, and other resources the agency will need to meet
its objectives. Beginning the next year, the agency will also submit an
annual performance plan, setting out specific performance goals for the
agency. OMB will consolidate the performance goals and analyze the
government‑wide performance plan in conjunction with the President\'s
budget to determine its, feasibility. This report will be sent to
Congress beginning in February 1998. Beginning in FY 1999, the agencies
must compare their actual performance with the goals that they set in
their plans.

The GPRA also included a provision for pilot programs. In these programs
the managers are allowed greater flexibility through the waiver of
regulatory constraints in return for accountability for the performance
of their programs and operations. Although the law required only 10
pilot programs, over one hundred program sites have been identified. The
NPR highlighted these pilot programs as one of the cornerstones of new
accountability in federal government. /223/ A survey was conducted by
the Washington Public Affairs Center of U.S.C. to assess some early
results from the programs and found the greatest difficulty for the
participants was selecting performance indicators. /224/ Another
frequent observation was the reluctant of program managers to move
towards outcome‑oriented performance measures because these factors were
thought to exceed their direct control or because they would limit
program flexibility. The survey was a sounding board for respondents
engaged in the pilot program, and one point come out loud and clear, the
respondents wanted more information, training, and guidance on
performance measures and how to link them to the strategic plan and the
budget. This hearkens back to the GAO study of the reinvention
laboratories /225/ which had the ability to seek waivers of workplace
regulations but did so in only forty percent of the cases and then less
than one‑third of the waiver requests involved personnel rules. If the
program managers are still dealing with the basics of performance
measurements and process improvements, why is it necessary to force a
change in their human resource management relationships during this
transition, unless they want it to happen?

Together the CFOA and GPRA are intended to prod the bureaucracy to tie
the budget to performance and become accountable for the results. As the
managers learn the new programs and develop indicators for performance,
they will demand innovations in human resource management, but it is not
the managers who are demanding changes in labor relations. For now the
focus should be on implementing the CFOA and GPRA. This is still
consistent with NPR. A focus on outcomes led the Coast Guard and OSHA to
totally refocus their attitude and operations with impressive results in
safety statistics. There is a great deal of training and a dramatic
change in the work culture that still needs to take place to
successfully implement the CFOA and GPRA in the federal government. Any
reform of the labor relationship in the federal government should be
related to these acts which are meant to provide long range strategic
plans tied to the agency\'s budgets and performance.

Radical changes in human resource management are not necessary to shift
our focus to outcome performance, and innovative management programs
currently being introduced do not require dramatic alterations in our
labor management relationship. Forcing these changes on the agencies now
will only distract them from where their focus should be. It could also
inhibit their request for a different approach on human resource issues
because now their ideas are complicated or overcome by events as a
result of legislated labor reform.

**VII. CONCLUSION**

The recommendations of the NPR on labor management relations should not
drive our reform of federal labor relations. There is no doubt
whatsoever that NPR has had a positive effect on improving governmental
services and streamlining the bureaucracy. While reform may be needed as
a constitutional lubricant, or it may simply be politics under another
name; it is also true that reform is necessary to shake out embedded
deadwood and reinvigorate complacent organizations. NPR has been
instrumental in doing this. However, NPR should not be the basis on
which we reform our federal labor relationship.

In their 1994 Status Report, NPR had the following quote, \"It doesn\'t
make sense when two people are sitting in a boat for one of them to
point a finger accusingly at the other and say, \'Your end of the boat
is sinking.'" The Report then added, \"As labor and management
increasingly realize, they, are in the same boat, needing one another to
survive and prosper." /226/ There will be dramatic and exciting changes
over the next decade as the federal government goes through the upheaval
of downsizing and retooling its information and management systems. But
success in keeping the boat afloat will not be determined by legislative
changes in the scope of bargaining or broad‑banding classification; it
is going to be determined by the trust that is built between the
employees, represented by their unions, and management. It is going to
be determined by how openly they can communicate and whether they can
express and acknowledge their respective interests.

Trust can be destroyed by either side. There are a number of examples
given by unions, where partnership and trust was beginning to change an
adversarial relationship, but then the bottom dropped out when the
company was sold or the administration changed. But management can have
the same problem with unions. This might be the case when management
agrees to retain certain employees rather than contract out the jobs at
a moneydraining site, and then the union begins a campaign demanding
more and better benefits for these same employees. Any reform of the
labor relationship must recognize that the unions are not united in
their acceptance of partnership and cooperation and that the
personalities of the representatives is sometimes more important than
any government statute or program. The labor relations system we
developed in the United States and in the Federal Government is an
adversarial system by its nature. Labor and management will often have
different interests when bargaining over the budget and organizational
priorities. No proposed integration of partnership councils into the
Federal bureaucracy is going to change that fact. This leaves us with
having to decide how to resolve these inevitable disputes.

Perhaps the entire system does need to be rethought. Limiting ourselves
to the language of Sec. 7106(b)(1) and arguing over whether these
subjects should be permissive or mandatory subjects of bargaining does
not seem to make for a productive reform process. As discussed above, it
is short‑sighted and ignores the long‑term consequences. The real
question is should management be allowed to preserve its determination
of the budget and organizational priorities, and if so how should this
be done? The same question can be asked of any other management right
listed in Sec. 7106, but the budget and the mission priorities involve
the issue of \"public interest\" and implicate those reasons for the
very being of the public organization.

These questions are not easily answered by looking at customer
satisfaction surveys or antedotes about taking the timeclocks out of the
workplace. The satisfaction of the customer being surveyed usually has
no rational relationship to the taxpayers\' satisfaction with the
agency, and neither may have anything to do with why the agency was
established in the first place. And as for timeclocks, they may be
coming out of the Dept of Labor, they are being put in at Congress
because the employees want to be sure they are paid for their overtime.

Considering the current political climate it is unlikely that the 1994
recommendations of the NPC will be enacted, but the administration will
propose a less ambitious reform using the same ideas. The problem with
enacting E.O. 12871 into law is that it does shift the advantage in
negotiations without understanding the reasons underlying §7106, or
understanding the consequences on the various agencies who would rather
have the flexibility to continue partnership dialogue, but now find they
are forced to negotiate issues they are not prepared to address with a
union who no longer believes partnership is necessary. If broad‑banding
classification is enacted, the agencies must be protected from having to
negotiate the implementation of this classification system. The evidence
concerning the system is mixed at best, and it does show increased
salary costs and difficult implementation. Proposals concerning
incentive pay programs need rethinking about their impact on the budget
and mission priorities, and also the employees\' incentive to perpetuate
the incentives programs or manipulate budgets and baseline figures. In
private industry, sharing the profits is something that can hopefully be
anticipated each year; but in public agencies, last year\'s profit means
just that much less in the budget next year, especially when budgets are
being cut all around.

The Federal labor‑management relationship can use some reform. The
Authority\'s innovative intervention program to target frequent filers
of ULP is productive and should be applauded, but it doesn\'t change any
fundamental relationships. While trust may be the determinative factor
in keeping the boat afloat, certainty in their relationship and in their
rights and obligations will also prevent them from accusing each other
for not doing their part. The proposals of the NPR, NPC, and OPM
legislation will not instill certainty, in federal labor relations. In
fact, they bring uncertainty, which will be further exasperated by
caselaw and policies that either shift or do not address the real
issues. Introducing the \"good government\" standard adds nothing to the
statute but an opportunity for argument and confusion. Maintaining the
agency\'s right to determine organization and manning as a core
management function, but then require interest arbitration over the
number, types, and grades of employees or positions assigned to any
organizational subdivision is absurd.

If there is any reform of the Federal Service Labor‑Management statute
it should be an independent project, separate from the NPR, or its
creations and recommendations. There are real problems existing in the
federal government. We should be more concerned with the shadow
government we are creating as we continue to downsize, and the waste and
fraud existing in that behemoth which gobbles the vast majority of the
federal budget. No politician ever lost an election for bashing the
federal bureaucracy. That\'s unfortunate because it forces the
incumbents to indict the system, whether it deserves the blame or not,
and to institute reform programs with great fanfare for political
reasons. The truth is the bureaucracy evolves over time. The Federal
government was changing before NPR was instituted, trying to use private
sector innovations, like TQM and partnership. NPR has speeded up the
process in many ways, but the headlong rush to reform should not propel
us to change our federal labor relations based on NPR.

\* Major Johnson (B.S., U.S. Merchant Marine Academy; J.D., Florida
State University College of Law; L.L.M, Georgetown University Law
Center) is assigned to Headquarters Air Force Space Command, Peterson
AFB, Colorado. He is a member of the Virginia Bar.

1\. The NPR said its recommendations would save \$108 billion over
fiscal years 1994 to 1999. Personnel reductions were to account for
\$40.4 billion, program and organizational changes for \$36.4 billion,
and procurement reform would save \$22.5 billion. NPR, FROM RED TAPE TO
RESULTS: CREATING A GOVERNMENT THAT WORKS BETTER AND COSTS LESS, Preface
(Sept. 1993). In their 1994 Status Report, NPR said \$46.9 billion in
proposed savings was already enacted. NPR, CREATING A GOVERNMENT THAT
WORKS BETTER AND COSTS LESS: STATUS REPORT, 7 (Sept. 1994). NPR
documents can be downloaded from http://www.npr.gov/npr or
http:Hsunsite.unc.edu/npr/nptoc.html.

2\. Voter focus on the the budget deficit and NPR\'s promise of billion
dollar savings allowed budget‑cutting and downsizing to take preeminence
as the guiding objectives in the reinvention. of government. DONALD
KETTL, Building Lasting Reform: Enduring Questions, Missing Answers,
INSIDE THE REINVENTION MACHINE, 15 (1995); JAMES D. CARROLL, The
Rhetoric of Reform and Political Reality in the National Performance
Review, PUB. ADMIN. REV., 302, 304 (May/Jun 1995).

3\. The NPR criticized Inspector General investigations into fraud,
waste, and abuse for inhibiting creative innovation in the government.

4\. Comparing the \$1.5 trillion federal budget to an individual making
\$50,000 means a savings worth a dime to the individual translate to
about 3 million dollars to the government. A savings or cost of 2
million dollars can be news to the taxpayer, but in comparison to the
overall budget, we are talking nickels and dimes.

5\. VICE‑PRESIDENT GORE, supra, note 1.

6\. DAVID OSBORNE AND TED GAEBLER, REINVENTING GOVERNMENT: HOW THE
ENTREPRENEURIAL SPIRIT is TRANSFORMING THE PUBLIC SECTOR (1992). Ten
principles are posited as essential to a successful entrepreneurial
public organization: (1) steer rather than row; (2) empower communities;
(3) encourage competition; (4) focus on mission, not on rules; (5) fund
outcomes, not inputs; (6) serve the customer; (7) concentrate on
earnings, not spending; (8) invest in prevention, not cures; (9)
decentralize authority; (10) solve problems through the marketplace.

7\. Id. at 265. Osborne and Gaebler say the best way to secure union
cooperation is to insure job security with comparable pay. \"No one
wants to innovate themselves out of a job. But when they know they have
job security, their attitude toward innovation changes dramatically.\"
Id. They also argue that today\'s managers can manage wider scopes of
control because of today\'s computerized systems. \"Hence participatory
organizations find that they must eliminate layers and flatten their
hierarchies.\" Id.

8\. Id. at 254.

9\. Id. at 253. One recent study raises doubts concerning the
effectiveness of decentralized federal organizations versus the
centralized organizations under Title 5. MESCH, PERRY, WISE,
Bureaucratic and Strategic Human Resource Management. An Empirical
Comparison in the Federal Government, 5 JOUR.PUB. ADM. RESEARCH AND
THEORY, 385 (Oct. 1995).

10\. OSBORNE & GAEBLER, supra, note 6, at 254. Quoting Grifford Pinchot
Ill. (Emphasis removed).

11\. Chapter 3 of the Report dealt solely with employee empowerment
outlining six steps to get results‑Step 1: Decentralize Decisionmaking
Power; Step 2: Hold All Federal Employees Accountable For Results; Step
3: Give Federal Workers The Tolls They Need To Do Their Jobs; Step 4:
Enhance The Quality Of Worklife; Step 5: Form A Labor‑Management
Partnership; Step 6: Exert Leadership.

12\. NPR, supra, note 1.

13\. Two helpful articles on the early formation of federal labor
relations are Lt.Col Richard T. Dawson and Lt.Col W. Kirk Underwood,
Overview of Labor Management Relations in the Air Force, 35 A.F.L.Rev. 1
(1991) and Michael R. McMillian, Collective Bargaining in the Federal
Sector.‑ Has the Congressional Intent Been Futfilled? 127 Mil.L.Rev 169
(1990). See also COUTURIER, infra, note 15.

14\. In 1912, the Lloyd‑LaFollette Act gave federal employees the right
to join labor organizations.

15\. See, e.g., JEAN J. COUTURIER, PUBLIC SECTOR BARGAINING: CIVIL
SERVICE, POLITICS, AND THE RULE OF LAW: THE EVOLVING PROCESS‑COLLECTIVE
NEGOTIATIONS IN PU13LIC EMPLOYMENT (1985). The National Federation of
Federal Employees (NFFE) was organized in 1913. The American Federation
of Government Employees (AFGE) was formed by 32 members of the NFFE
which it broke from the AFL in 1932. See We Stand Unite& A History of
the AFGE 6 (No Date).

16\. Executive Order 10988, 27 Fed. Reg. 551 (1962).

17\. Id. at Section 6.

18\. Id. at Preface.

19\. Executive Order 11491, 34 Fed. Reg. 17605 (1969).

20\. List of Executive Orders ‑ E.O. 12107, 44 Fed. Reg. 1055, December
28, 1978 (Relating to the Civil Service Commission and Labor‑Management
in the Federal Service); E.O. 12027, 42 Fed. Reg. 61851, December 5,
1977 (Relating to the Transfer of Certain Executive Development and
Other Personnel Functions); E.O.11901, 41 Fed. Reg. 4807, January 30,
1976 (Relating to Labor‑Management Relations in the Federal Service);
E.O. 11838, 40 Fed. Reg. 5743, February 6, 1975 (Relating to
Labor‑Management Relations in the Federal Service); E.O. 11787, 39 Fed.
Reg. 20675, June 11, 1914 (Revoking E.O. 10987, Relating to Agency
Systems for Appeals From Adverse Actions; E.O. 11616,,36 Fed. Reg.
17319, August 26, 1971 (Amending E.O. 1149 1).

21\. Codified at Chapter 71 of Title 5 of the U.S. Code, 5 U.S.C. 7100
et seq. (1978).

22\. Management reserved the right to 1) determine the mission, budget,
organization, number of employees, and internal security practices of
the agency; and 2a) to hire, assign, direct, layoff, and retain
employees in the agency, or to suspend, remove, reduce in grade or pay,
or take other disciplinary action against the employees; b) to assign
work, to make determinations with respect to contracting out, and to
determine the personnel by which agency operations shall be conducted;
c) with respect to filling positions, to make selections from
appointments from among properly ranked and certified candidates for
promotion; or any other appropriate source; and 3) to take whatever
actions may be necessary to carry out the agency mission during
emergencies. 5 U. S.C. Sec. 7106 (1978).

23\. The legislative history is informative on the conflict between the
House bill, which would broaden the scope of bargaining, and the Senate
bill, which was closer to the Administration\'s desires and the
executive orders. See also DONALD F. PARKER, SUSAN J. SCHURMAN, AND B.
RUTH MONTGOMERY, Labor‑Management Relations Under CSRA: Provisions and
Effects in LEGISLATING BUREAUCRATIC CHANGE: THE CIVIL SERVICE REFORM ACT
OF 1978,161 (1984).

24\. Permissive bargaining subjects include 1) numbers, types, and
grades of employees or positions assigned to any organizational
subdivision, work project or tour of duty, or on the technology,
methods, and means of performing work; 2) procedures which management
officials of the agency will observe in exercising any authority under
this section of the statute; or 3) appropriate arrangements for
employees adversely affected by the exercise of any authority under this
section of the statute. 5 U.S.C. Sec. 7106 (1978).

25\. NPR, supra, note 1.

26\. The fourteen recommendations are HRM01‑ Create a Flexible and
Responsive Hiring System; ERM02 ‑ Reform the General Schedule
Classification and Basic Pay System; IIRM03 ‑ Authorize Agencies to
Develop Programs for Improvement of Individual and Organizational
Performance; HRM04 ‑Authorize Agencies to Develop Incentive Awards and
Bonus Systems to Improve Individual and Organizational Performance;
HRM05 ‑ Strengthen Systems to Support Management in Dealing with Poor
Performers; HRM06 ‑ Clearly Define the Objective of Training as the
Improvement of Individual and Organizational Performance; Make Training
More Market‑Driven; HRM07 ‑Enhance Programs to Provide Family Friendly
Workplaces; HRM08 ‑ Improve Processes and Procedures Established to
Provide Workplace Due Process for Employees; HRM09 ‑ Improve
Accountability for Equal Employment Opportunity Goals and
Accomplishments; ERM10 ‑ Improve Interagency Collaboration and
Cross‑Training of Human Resource Professionals; HRM11 ‑ Strengthen the
Senior Executive Service So That It Becomes a Key Element in the
Government wide Culture Change Effort; HRM12 ‑ Eliminate Excessive Red
Tape and Automate Functions and Information; HRM13 ‑ Form
Labor‑Management Partnerships for Success; HRM14 ‑ Provide Incentives to
Encourage Voluntary Separations.

27\. NPR, REINVENTING HUMAN RESOURCE MANAGEMENT, ACCOMPANYING REPORT OF
NATIONAL PERFORMANCE REVIEW, FROM RED TAPE TO RESULTS: CREATING A
GOVERNMENT THAT WORKS BETTER & COSTS LESS (Sept. 1993).

28\. Id.

29\. NPR, supra, note 1, Chapter 3 (1993).

30\. Id.

31\. E.O. 12871, 58 Fed. Reg. 52201 (1993). Its original 2 year term was
extended to 1997 by E.O. 12974, 60 Fed. Reg. 51875 (1995). Its
membership was amended by E.O. 12983, 60 Fed. Reg. 66855 (1995).

32\. NPC, A REPORT TO THE PRESIDENT ON IMPLEMENTING RECOMMENDATIONS OF
THE NATIONAL PERFORMANCE REVIEW (Jan. 1994).

33\. For further insight on the debate occuring in the NPC during this
time, See, CAROL BAN, Unions, Management, and the NPR, in INSIDE THE
REINVENTION MACHINE, 131, 138‑141 (1995).

34\. NPC, supra, note 32, at pp. ii, iii, 12‑23.

35\. Some other interesting proposals were institution of a \"fair share
dues\" security agreement; implement routine use access to the union for
otherwise exempt information; allow voluntary recognition by an agency
of an exclusive bargaining representative; and amend the definition of
supervisor. Id. at pp. iv‑v, 12‑23.

36\. Id. at p. 11.

37\. The NPC was originally composed of 11 representatives, one each
from the three largest unions (AFGE, NTEU, NFFE), one from the AFL‑CIO
Public Employee Dept., and seven representatives from federal agencies,
(1) Director of the Office of Personnel Management (OPM); (2) Deputy
Secretary of Labor; (3) Deputy Director for Management, Office of
Management and Budget; (4) Chair, Federal Labor Relations Authority; (5)
Federal Mediation and Conciliation Director; (6 & 7) A deputy Secretary
or other officer with department‑ or agency‑wide authority from two
executive departments or agencies (hereafter collectively \"agency\"),
not otherwise represented on the Council. The membership was enlarged to
include management representatives by E.O. 12983, 60 Fed. Reg. 66855
(1995), which amended E.O. 12871 by adding one elected office holder
each from both the Senior Executives Association and the Federal
Managers Association.

38\. E.O. 12871 at Section 2. \"Section 2. Implementation of
Labor‑Management Partnerships Throughout the Executive Branch. The head
of each agency subject to the provisions of chapter 71 of Title 5,
United States Code shall: \... (d) negotiate over the subjects set forth
in 5 U.S. C. 7106(b)(1), and instruct subordinate officials to do the
same: \... \... Id.

39\. 5 U.S.C. Sec. 7117(a)(1) (1995). There is no such deference to
agency‑wide regulations. The agencies must show a compelling need for
the regulation to exclude bargaining.

40\. The sunset of the Federal Personnel Manual provisions has arisen in
a number of ways. Note that in GSA and NFFE below the OPM guidance was
resurrected. FAA, Little Rock and NATCA, 51 FLRA No. 86 (1996) (Although
the FPM was abolished in Dec. 31, 1993, later guidance affecting this
case was provisionally retained through Dec. 31, 1994); FAA, Little
Rock, and NATCA, 51 FLRA 216, 51 FLRA No. 24 (1995); GSA and NFFE, 50
FLRA 136, 50 FLRA No. 28 (1995)(Authority accepts OPM\'s position that
the rescinded OPM guidance on hybrid work schedules is still persuasive
for interpreting and administering the Work Schedules Act); NFFE and
Dept of the Army, Rock Island Arsenal Rock Island, 49 FLRA 151, 49 FLRA
No. 21, (1994)(Authority did not apply provisions of FPM chapter Which
had been abolished, but applied FPM provisions that have been
provisionally retained).

41\. ALLAN HOLMES, Reform Trickles In, GOVERNMENT EXECUTIVE, 46, 47
(Oct. 1995).

42\. 5 CFR Parts 430 and 45 1, as amended by 60 Fed. Reg. 43936 (1995).

43\. The language is verbatim from the recommendations of the NPC. NPC,
supra, note 32, at p. 11.

44\. J. L. GARNETT, Operationalizing the Constitution Via Administrative
Reorganizations: Oilcans, Trends, and Proverbs, THE AMERICAN
CONSTITUTION AND THE ADMINISTRATIVE STATE: CONSTITUTIONALISM IN THE LATE
20TH CENTURY 83, 86 (1989).

45\. Under E.O. 11491, the Asst. Secy. of Labor reviewed an employee
participation committee created in June 1977. Veterans Admin. Hosp.,
Muskogee, Oklahoma, A/SLMR No. 301, 3A/SLMR 491 (1978). The Asst. Sec.
found management violated the E.O. by establishing the committee and
dealing directly with employees over conditions of employment. The ALJ
in Dept of the Navy, Pearl Harbor Navy Shipyard, 29 FLRA No. 96, 29 FLRA
1236 (1987) briefly describes the import of quality programs during the
1970s. Id. at 1241.

46\. GAO, MANAGEMENT REFORM ‑ STATUS OF AGENCY REINVENTION LAB EFFORTS
p. 26 (March 1996)(GAO/GGD‑96‑69). Thirteen percent of the respondents
said they were told to initiate the effort by their agency officials.

47\. Id.

48\. RONALD SANDERS AND JAMES THOMPSON, The Reinvention Revolution, Gov.
EXEC., Reinvention Insert, p. 6A (March 1996).

49\. BNA, 34 GERR 243 (Feb. 19, 1996).

50\. NPR, CREATING A GOVERNMENT THAT WORKS BETTER & COSTS LESS: STATUS
REPORT (Sept. 1994).

51\. Id. at p. 38.

52\. A dispute regarding a gain‑sharing proposal was reviewed in Dept.
of Army, Red River Depot v. FLRA, 977 F.2d 1490 (D.C. Cir. 1992), on
remand, NAGE Local R14‑52 and Dept of Army, Red River Depot, 48 FLRA
1198 (1993).

53\. See e.g., LINDA THORNBURG, Can Employee Participation Really Work?,
HR MAGAZINE, 48 (Nov 1993); ROBERT W. MILLER AND FREDRICK N. PRICHARD,
Factors Associated with Workers\' Inclination to Participate in an
Employee Involvement Program, GROUP AND ORGANIZATION MANAGEMENT, 414
(Dec 1992); WILLIAM COOKE, Product Quality Improvement Through Employee
Participation: The Effects of Unionization and Joint UnionManagement
Administration, INDUSTRIAL AND LABOR RELATIONS REVIEW, 119 (Oct 1992);

BENNETT HARRISON, The Failure of Worker Participation, TECHNOLOGY REVIEW
74 (Jan. 1991).

54\. DAVID HORNESTAY, Partnership Pays, GOVERNMENT EXEC., Feb. 1996 at
43. It would be interesting to see a real cost study, but the variables,
such as productivity increases versus costs of negotiated union
proposals, may make this too complicated. In any event the cost of
\"labor peace\" and \"better working conditions\" in the federal
workplace may be worth the cost without any other return.

55\. Id.

56\. BNA, Targeting Frequent Filers Reduced Unfair Practice Charges,
FLRA Says, 34 GERR 242 (Feb 19, 1996).

57\. CAROL BAN, Unions, Management, and the NPR in INSIDE THE
REINVENTION MACHINE, 131, 150‑151 (1995).

58\. The second part of the problem is establishing credibility with
career civil servants and managers, those most threatened by cut‑backs
and downsizing.

59\. GAO, MANAGEMENT REFORM, IMPLEMENTATION OF THE NATIONAL PERFORMANCE
REVIEW\'s RECOMMENDATIONS, 6,7 (Dec 1994); CHRISTOPHER FOREMAN, JR.,
Reinventing Politics? The NPR Meets Congress in INSIDE THE REINVENTION
MACHINE, 152 (1995); CHRISTOPHER FOREMAN, JR., Reinventing Capital
Hill?, THE BROOKINGS REVIEW, 35 (Winter 1995).

60\. See e.g., JAMES THOMPSON AND VERNON JONES, Reinventing the Federal
Government. The Role of Theory in Reform Implementation, 25 AMER. REV.
PUB. ADMIN. 183 (June 1995); DONALD KETTL, Building Lasting Reform:
Enduring. Questions, Missing Answers, INSIDE

THE REINVENTION MACHINE, 31 (1995); PERI E. ARNOLD, Reform\'s Changing
Role, PUB. ADMIN. REV., 407 (Sep/Oct 1995).

61\. See e.g., DONALD KETTL, supra, note 60, at p. 14; JAMES D. CARROLL,
The Rhetoric of Reform and Political Reality in the National Performance
Review, PUB. ADMIN. REV. 302 (May/Jun 1995).

62\. See e.g., RONALD C. MOE, The \'Reinventing Government\' Exercise:
Misinterpreting the Problem, Misjudging the Consequences, PUB. ADMIN.
REV. I I I (Mar/Apr 1994).

63 J.L. GARNETT, Operationalizing the Constitution Via Administrative
Reorganization: Oilcans, Trends, and Proverbs in THE AMERICAN
CONSTITUTION AND THE ADMINISTRATIVE STATE: CONSTITUTIONALISM IN THE LATE
20TH CENTURY 83, 98 (1987).

64\. PAUL C. LIGHT, THICKENING GOVERNMENT: FEDERAL HIERARCHY AND THE
DIFFUSION OF ACCOUNTABILITY (1995); R.N. JOHNSON & G.D. LIBECAP, THE
FEDERAL CIVIL SERVICE SYSTEM AND THE PROBLEM OF BUREAUCRACY, 160, 162
(1994); MARK L. GOLDSTEIN, AMERICA\'S HOLLOW GOVERNMENT : How WASH. HAS
FAILED THE PEOPLE (1992); CHESTER NEWLAND, Public Executives. Imperium,
Sacerdotium, Collegium? Bicentennial Leadership Challenges, in THE
AMERICAN CONSTITUTION AND THE ADMINISTRATIVE STATE: CONSTITUTIONALISM IN
THE LATE 20TH CENTURY 83, 98 (1987).

65\. PERI E. ARNOLD, supra, note 60.

66\. In September 1995, there were 2,010,921 employees in the executive
branch (excluding 845,393 Postal Service employees). OFFICE OF PERSONNEL
MANAGEMENT, FEDERAL CIVILIAN WORKFORCE STATISTICS: EMPLOYMENT AND TRENDS
AS OF SEPTEMBER 1995. By law the Full Time Equivalent (FTE) federal
workforce (excluding the Postal Service) is limited to 2,003,300 during
FY 1996; 1,963,300 during FY 1997; 1,922,300 during FY 1998; and
1,882,300 during FY 1999. Approximately 830,000 are employed by the Dept
of Defense. Independent agencies, such as the EPA, NASA, or GSA,
employed approximately 1,073, 521 and the other significant executive
agencies employed the following ‑ Veterans Affairs 263,904; Treasury
155,951; Agriculture ‑ 113,321; Justice 103,262; Transportation 63,552;
Health and Human Services ‑ 59,788. Id.

67\. The four unions are the American Federation of Government Employees
(AFGE)(600,000), National Treasury Employees Union (NTEU)(150,000),
National Federation of Federal Employees (NFFE)(150,000), and the
National Association of Government Employees (NAGE). NPC, NATIONAL
PARTNERSHIP COUNCIL1994 ASSESSMENT OF PARTNERSHIP ACTIVITIES (Feb. 13,
1995) and NPC, supra, note 29.

68\. MARICK F. MASTERS AND ROBERTS. ATKIN, Bargaining, Financial, and
Political Bases of Federal Sector Unions, REV. OF PUB. PERS. ADM. 5,
12‑14 (Winter 1995); CAROLYN BAN, supra, note 57, at 134 (Citing a 1990
article concerned with union funds). This percentage can be somewhat
misleading because there is no union security arrangement in the federal
sector, and the unions have consistently vocalized their concern about
\"free‑riders\".

69\. See R. JOHNSON AND G. LIBECAP, THE FEDERAL CIVIL SERVICE SYSTEM AND
THE PROBLEM OF BUREAUCRACY: THE ECONOMICS AND POLITICS OF INSTITUTIONAL
CHANGE (1994). See also BRIAN J. COOK, Book Review, AMER. POL SCIEN.
REV. 763 (Sep 1995)(\"But in trying to explain the political success of
the unions, \[R. Johnson and G. Libecap\] also reveal the limits of
rational choice analysis of interest group power. All they essentially
conclude is that the unions are powerful by virtue of a little voting
power, big political action committee sums strategically spent, and
lobbying power. \... None of this is much of a revelation.\") Id.

70\. Even the unions supporting partnership find there is a limit to
their cooperation as shown by two recent law suits, AFGE v. Clinton,
DC‑S Ohio, Eastern Div, No. C2 96‑0283, 3/18/96, (discussed infra at
footnote 190), reported in Privatization: AFGE Suit Alleges That
Privatization of Air Force Base Functions is Illegal, 34 GERR 420 (March
25, 1996) and

NTEU v. U.S., DC DC, No. 96‑624, filed Apr. 9, 1996, (discussed in
footnote 209), reported in BNA, NTEU Suit Challenges Constitutionality
of Recently Signed Line‑Item Veto Bill, 34 GERR 544 (Apr. 15, 1996).

71\. MIKE PARKER AND JANE SLAUGHTER, Labor‑Management Partnerships Are
Harmful in WORK: OPPOSING VIEWPOINTS, 146, 152, (1993). See also CAROL
BAN, supra, note 57, at 144. (\"several observers, \..., expressed the
concern that union leaders are too far out in front of their
members.\"); MIKE CAUSEY, A Suit That Doesn\'t Fit?, THE WASH. POST,
Feb. 5, 1996, at B‑2. (\"Some union members, apparently a minority, are
uneasy with their leaders sitting on \"partnership\" councils\... \...
); NUKE CAUSEY, They Know Where You Live, THE WASH. POST, Apr. 24, 1996,
at D‑2. (OPM releases names and addresses of bargaining unit members to
unions. \"In return for their cooperation on downsizing and
reengineering of government, union leaders have been given active roles
in partnership councils with top career and political officials.\").

72\. MIKE CAUSEY, Private Pleasures, THE WASH. POST, Mar. 3, 1996, at
B‑2. (quoting union officials).

73\. GAO, supra, note 59, at 6.

74\. These acts include the CHIEF FINANCIAL OFFICERS ACT OF 1990,
FEDERAL ACQUISITION STREAMLINING ACT, The INSPECTOR GENERAL ACT, the
FEDERAL EMPLOYEE PAY COMPARABILITY ACT OF 1990, The GOVERNMENT
PERFORMANCE AND RESULTS ACT OF19930 the GOVERNMENT MANAGEMENT REFORMACT
OF 1994.

75\. CHIEF FINANCIAL OFFICERS ACT OF 1990, Pub. L. 101‑576, 104 Stat
2838, Nov. 15, 1990.

76\. The CFOA was amended by the SOCIAL SECURITY INDEPENDENCE AND
PROGRAM IMPROVEMENT ACT OF 1994, Pub. L. 103‑296 §1080)(1), 108 Stat
1464, Aug, 15, 1994 and the GOVERNMENT MANAGEMENT REFORM ACT OF 1994,
Pub.L. 103‑356, 108 Stat 3410, Oct. 13,1994.

77\. GOVERNMENT PERFORMANCE AND RESULTS ACT Of 1993, Pub.L. 103‑62, 107
Stat 285, Aug. 3, 1993.

78\. DAVID H. ROSENBLOOM, The Context of Management Reform, THE PUBLIC

MANAGER, 3, 5 (Spring 1995).

79\. Carol Ban notes union disappointment at the scope of proposed labor
relations reform. CAROL BAN, supra, note 57, at 149. (\"Union leaders
were reported to feeling \'estranged\' because the administration
dropped labor law reform from the draft civil service reform bill.\").
In hearings on Civil Service Reform before the Subcommittee on Civil
Service of the House Committee on Government Reform and Oversight,
Donald Devine highlights what he considers to be unacceptable proposals
the Clinton Administration withdrew from proposed legislation for
political reasons. He then vigorously attacks the remaining provisions
of the Act. See Testimony of Donald C. Devine, given Oct. 12, 1995 and
memorandum, Making Government Work. How Congress Can Really Reinvent
Government (Aug. 24, 1995). \"Contrary to the Administration\'s own
staff recommendations, which were overruled personally by Vice President
Al Gore, the White House decided to give the unions equal power with
management in \'labor‑management councils\' that would make the major
management decisions in agencies of the federal government. In addition,
it was proposed originally that the unions be given an involuntary dues
checkoff from federal employees‑without even a requirement for
representation elections. While the White House was forced to retreat
from the second proposal, the first was codified in E.O. 12871, issued
in 1993, making the unions \"full partners\" with management in the
assignment and classification of work and creating labor‑management
committees to enforce this throughout the government. A presidential
\'partnership council\' of union and Administration officials was
created to make furhter recommendations, including the proposal for
involuntary dues collection and union representation by card submission
rather than by secret ballot.\" Id.

80\. Consider the following, \"The entire \[1993 NPR\] Report
implicitedly argues that greater faith should be placed in the abilities
and motivations of the politically appointed leadership in the
departments and agencies.\" MOE, supra, note 62, at 116.

81\. See, CONGRESSIONAL RESEARCH SERVICE LIBRARY OF CONGRESS TO THE
JOINT COMM. ON THE ORGANIZATION OF THE CONGRESS, 103D CONG., 1ST SESS.,
CONGRESSIONAL REORGANIZATION: OPTIONS FOR CHANGE (Joint Committee Print
1993) at 166‑170. (The Balance Between Career Executives and Political
Appointees) (Criticizing the increase in political appointees).

82\. The Malek Manual was a 113 page manual which detailed how to create
networks, layering, or parallel paths of political personnel who would
be used to by‑pass or control incumbent career bureaucrats. Paul Light
provides an example of one of the techniques explained in the manual.

83\. See LIGHT, supra, note 64, at 56; GOLDSTEIN, supra, note 64, at
116‑119. Light reports that Reagan\'s approval was based on two
criteria, the appointee must have voted in the 1980 election and given
some level of support to the Reagan/Bush campaign or a supporter of
Reagan/Bush.

84\. Under the FEDERAL WORKFORCE RESTRUCTURING ACT OF 1994, the total
number of fulltime positions in the federal government may not exceed
1,882,3000 during Fiscal Year 1999 , a reduction of 272,900 positions
from a 1993 baseline. How the number 272,900 was determined is explained
in LIGHT, supra, note 64, at 30‑36. The justification purportedly relies
on an appropriate span of control of 1:15 as opposed to the current
ratio of 1:7, but Light shows that the appropriate span of control was
determined by the numbers needed to down‑size the government rather than
the other way around.

85\. J. CARROLL, supra, note 61, at 302. Mr. Carroll believes this
concentration will be reinforced by the devolution of personnel matters
from the OPM to the agencies, without furhter oversight of the merit
system principles; but this is based on the unlikely assumption that
agencies cannot responsibly manage their personnel systems.

86\. Speech of Vice‑President Gore to the Nat. ASSO. of Newspaper
Writers on Apr. 19, 1996.

87\. DONALD KETTL, supra, note 6 1.

88\. In a recent report, GAO, OFFICE OF MANAGEMENT AND BUDGET ‑ CHANGES
RESULTING FROM THE OMB 2000 REORGANIZATION (Dec 1995), Report at p.
2‑3., While initial efforts under OMB 2000, appear favorable, GAO said
it remains to be seen whether the initial positive results can be
sustained over the long term. GAO noted that OMB has failed in the past
to coordinate its management and budget functions effectively and has
not established a stable management capacity. GAO reports can be
downloaded at http://www.gao.gov.

89\. OPM has suffered the largest percentage decrease in personnel of
any agency during the restructuring. Some of the loss is due to
\"privatizing\" its training function, which was transferred to a NAFI
in the Dept of Agriculture. Its investigative functions will be spun off
in the future to an ESOP.

90\. MIKE CAUSEY, The Pension Pit, THE WASH. POST, Mar. 1, 1996, at C‑2,
col. 1.

91\. SMITH State and Local Advisory Reports On Public Sector Employment
Labor Legislation: A Comparative Analysis, 67 MICH. L. REV. 891 (1969).

92\. DONALD WOLLETT, The Bargaining Process In The Public Sector: What
Is Bargainable?, 51 OR. L. REV. 177 (1977).

93\. See NPC, supra, note 32, pp. 14‑16. The permissive subjects are the
numbers, types, and grades of employees or positions assigned to any
divisional subdivision, work project, or tour of duty, or on the
technology, methods, and means of performing work.

94\. 5 U.S.C. Sec. 7106(a)(2) (1978).

95\. The 1995 HRM Reinvention Act would have legislated the scope of
bargaining found in E.O. 12781.

96\. Title VII of the Civil Service Reform Act of 1978, (codified at
Title 5, Chapter 71, 5 U.S.C. Sec. 7100 et seq. (1978)).

97\. One current study of labor‑management partnerships is found in
CATHIE M. LANE, Bittersweet Partnerships, GOV\'T EXECUTIVE p. 41 (Feb
1996).

98\. 5 U.S.C. 7119 (1995).

99\. FDIC and NTEU, 18 FLRA 768 (1985).

100\. 51 FLRA 386, 51 FLRA No. 36, FLRA Rep. No. 871 (1995).

101\. 22 F.3d 1150, 1155 (D.C. Cir. 1994).

102\. Id.

103\. 5 U.S.C. Sec. 7103(a)(12) (1995).

104\. WOLLETT, GRON AND WEISBERGER, Collective Bargaining In The Public
Sector, p. 186‑87 (4th ed. 1993).

105\. See 5 U.S.C. Chap. 53.

106\. 5 U.S.C. Sec. 7103(a)(14)(C) (1995).

107\. There are however, several groups of employees whose salary or
fringe benefits are not established by law. See generally PETER BROIDA,
A GUIDE To FEDERAL LABOR RELATIONS AUTHORITY LAW AND PRACTICE, Chap. 4,
(1995). Even here the Authority recently found previously prohibited
\"pay\" proposals are now appropriate for bargaining. See IAMAW and U.S.
Dept. of Treasury, 50 FLRA 677, 50 FLRA No. 87 (1995), on remand from,
U.S. Department of the Treasury, Bureau of Engraving and Printing v.
FLRA, 995 F.2d 301 (D.C. Cir.1993).

108\. 5 U.S.C. Sec. 7117 (1978). See supra, note 40 and cases cited
there. This does not mean the regulations are easily interpreted. In
NTEU v. FLRA, 30 F.3d 1510 (D.C. Cir. 1994), the D.C. Circuit disagreed
with the Authority\'s interpretation of OPM regulations which had been
used to deny the negotiability of several performance award proposals.
However, even the D.C. Cicuit was uncertain of the meaning of the
regulation and stated, \"If OPM were to issue an authoritative (and
reasonable) interpretation of Sec. 430.504(d), and if the union\'s
proposal conflicted with that interpretation of the regulation, we do
not think that our decision would oblige the FLRA to order the parties
to bargain over the proposal.\" Id. at 1516.

109\. Its human resource recommendations included HRM04 ‑ Authorize
Agencies to Develop Incentive Awards and Bonus Systems to Improve
Individual and Organizational Performance. NPR, REINVENTING HUMAN
RESOURCE MANAGEMENT ‑ ACCOMPANYING REPORT To FROM RED TAPE To RESULTS:
CREATING A GOVERNMENT THAT WORKS BETTER AND COSTS LESS ‑ (Sept. 1993).

110\. Id. at p. 37, referring to GAO and MSPB observations. Consider a
recent study, DENNIS DALEY, Pay‑for‑Performance and the Senior Executive
Service: Attitudes About the Success of Civil Service Reform, Am. REV.
PUB. ADMIN. 3 55 (Dec 1, 1995). (No relationship found).

111\. Id. at p. 36.

112\. NPC, supra, note 32, at p. 37.

113\. Amendment of parts 430, 432, 451, and 531 of Title 5, Code of
Federal Regulations, 60 FR 43936, August 23, 1995, effective September
22, 1995.

114\. 5 C.F.R. Secs. 430.501 through 430.506 (1994).

115\. 5 C.F.R. Sec. 451.104(a)(1) provides: An agency may grant a cash,
honorary, or informal recognition award, or grant time‑off without
charge to leave or loss of pay consistent with chapter 45 of title 5,
United States Code, and this part to an employee, as an individual or
member of a group, on the basis of a suggestion, invention, superior
accomplishment, productivity gain, or other personal effort that
contributes to the efficiency, economy, or other improvement of
Government operations.

116\. Agencies are encouraged to involve employees in developing such
programs. When agencies involve employees, the method of involvement
shall be in accordance with law. 5 CYR Sec. 451.103(b) (1994), 60 Fed.
Reg. 43936, August 23, 1995.

117\. Incentive pay arrangments discussed will include the
profit‑sharing and gainsharing arrangements allowed under 5 U. S.C.
Chapter 45 and 5 CYR Part 45 1.

118\. The agencies also argued that these awards were a means or method
of performing work. That argument was rejected as well; but since that
subject is a permissive subject of bargaining making the argument in
face of E.O. 12871 it loses even more of its utility as a shield to
negotiation.

119\. 27 FLRA 132 (1987).

120\. NTEU v. FLRA, 793 F.2d 371 (D.C. Cir 1986), reversing, NTEU and
IRS, 14 FLRA 463(1984).

121\. 5 C.F.R. Sec. 430.504(D) (1994); 5 C.F.R. Sec. 451.104(e)(3)
(1994).

122\. NFFE and USDA, FCIC, 48 FLRA 552, 48 FLRA No. 54 (1993). See
National Federation of Federal Employees, Local 1482 and U.S. Department
of Defense,, Defense Mapping Agency, Hydrographic/Topographic Center,
Louisville Office, Louisville, Kentucky, 45 FLRA 1346, 1350 (1992)
(Proposals that mandate the granting of cash performance awards are
inconsistent with 5 C.F.R. Sec. 430.504(D) because they prevent an
agency from reviewing and approving those awards). Id. at 13 5 1. See
also NFFE and Defense Mapping Agency, 45 FLRA 1346, 1350 (1992); NAGE
and Dept of Navy, Newport News, 43 FLRA 47, 43 FLRA No. 3 (1991).

123\. See supra, note 108.

124\. See Social Security Admin. v. FLRA, 983 F.2d 578 (4th Cir. 1992),
reversing in part, 41 FLRA 224 (1991); NAGE Local R14‑52 and Dept of
Army, Red River Depot, 48 FLRA 1198 (1993). The Authority has restricted
the breadth of the first prong of its two‑prong Wright‑Patterson test,
which is used to determine whether a proposal impermissibly infringes an
the agency\'s right to determine its own budget.

125\. 30 F.3d 1510 (D.C. Cir. 1994).

126\. 878 F.2d 1430 (Table, Case No. 88‑2171), 146 L.R.R.M. (BNA) 3088,
1989 WL 74869 (1989). (Because this is an unpublished decision, Fourth
Circuit rules do not allow it to be cited as precedence).

127\. Specifically, the Fourth Circuit found it Violated the regulatory
prohibition on considering factors other than merit and the requirement
for administering awards within existing funds, not a \"review and
approve\" provision.

128\. Langley Air Force Base, supra note 124, at p.2.

129\. 2 FLRA 604 (1980).

130\. 48 FLRA 1198 (1993).

131\. 48 FLRA at 1206‑07.

132\. Id. Citations omitted above are: \"Compare Air Logistics Center,
Sacramento, (proposal that agency would bear the entire burden of an
increase in health benefits premiums and reimburse employees who had
paid the increased premiums was not inconsistent with the first part of
the budget test) with National Association of Government Employees,
Local R1‑44 Federal Union of Scientists and Engineers and U.S.
Department of the Navy, Naval Underwater Systems Center, Newport, Rhode
Island, 38 FLRA 456, 477‑80 (1990), remanded as to other matters without
decision, No. 91‑1045 (D.C. Cir. July 23, 1991) (proposal requiring that
1.5 percent of base aggregate payroll be allocated in the budget for
awards directly interfered with management\'s right to determine its
budget based on the first part of the budget test) and Norfolk Naval
Shipyard, 38 FLRA at 1594‑96 (proposal prescribing the maximum amount
that could be included in the budget to fund performance awards directly
interfered with management\'s right to determine its budget). In sum,
under this part of the test, a proposal that directly prescribes the
items or amounts that will be specified in an agency\'s plan to fund its
programs and operations during a fiscal year interferes with the
agency\'s right to determine its budget.\"

133\. \"More Specifically, the \[Circuit Court\] stated that a
conclusion with regard to whether the proposal requires the inclusion in
the budget of a particular program or amount might be dependent upon
whether or not the Agency retained the ability to adjust the baseline
productivity level each year to reflect prior productivity gains.\" Id

134\. Red River Depot, 48 FLRA at 1209.

135\. 47 FLRA 080 (1993).

136\. 47 FLRA at P. 998.

137\. 47 FLRA at p. 998.

138\. Id. at p. 994

139\. 51 FLRA 491, 51 FLRA No. 42 (1995)

140\. It is interesting that the revised regulations deleted the
prohibition that the awards program not be used as a substitute for pay.
See C.F.R. Sec. 104 (d) (1995)("An award under this part shall not be
used as a substitute for other personnel actions, or as a substitute for
pay.")

141\. The analysis of \"pay established by statute\" was recently
revised under IAMAW and U.S. Dept. of Treasury, 50 FLRA 677, 50 FLRA No.
87 (1995), on remand from, U.S. Department of the Treasury, Bureau of
Engraving and Printing v. FLRA, 995 F.2d 301 (D.C.Cir. 1993), to allow
for expanded negotiation.

142\. Federal law actually states that it is the policy of Congress in
setting pay for Federal employees that Federal pay rates will be
comparable with non‑Federal pay rates for the same level of work within
the same local pay area and any existing pay disparities between Federal
and non‑Federal employee should be completely eliminated. 5 U.S.C. Sec.
5301 (1990).

143\. RONALD N. JOHNSON AND GARY D. LIBECAP, THE FEDERAL CIVIL SERVICE
SYSTEM AND THE PROBLEM OF BUREAUCRACY, p. 139 (1994).

144\. Id. See also GREGORY B. LEWIS AND SAMANTHA L. DURST, Will Locality
Pay Solve Recruitment and Retention Problems in the Federal Civil
Service, PUB. ADMIN. REV., pp.371, 372 (Jul/Aug 1995)(citing studies
demonstrating grade inflation in civil service),

145\. PAUL C. LIGHT, THICKENING GOVERNMENT: FEDERAL HIERARCHY AND THE
DIFFUSION OF ACCOUNTABILITY, p. 75, Table 3‑2, Number of Government
Employees and the Ratio of Supervisors to Subordinates, 1983, 1989, and
1992 (1995). In this particular table, Paul Light was concerned with the
span of control. His raw data showed the workforce of GS 1‑10 declined
during this period, while the greatest increase in Federal personnel
occurred in the GS 11‑15 compartment. Paul Light attributed the change
to a new occupational mix in the workforce and a hollowing out
phenomenon. Id at p. 75.

146\. GAO, FEDERAL JOB CLASSIFICATION: COMPARISON OF JOB CONTENT WITH
GRADES ASSIGNED IN SELECTED OCCUPATIONS (Letter Report, 10/95).
Regarding discriminatory practices, the study found that the likelihood
of a position being overgraded increased as the incumbents\' GS grades
increased, occupations with high female representation were more likely
to be undergraded than those occupations with medium or low female
representation; and occupations with high minority representation were
more likely to be overgraded than those occupations with medium or low
minority representation. Id.

147\. GAO, RETENTION ALLOWANCES: USAGE AND COMPLIANCE VARY AMONG FEDERAL
AGENCIES (Dec 95).

148\. STEPHEN BARR, Export‑Import Bank Overpaid Salaries, THE WASH.
POST, Feb. 1, 1996, A‑19, Col.4.

149\. A private study apparently found that the bank\'s specialists
could earn 35 to 95 percentage more in private industry. MIKE CAUSEY,
Special Pay Packages, THE WASH. POST, Mu. 29, 1996, B‑2, Col. 1.

150\. Clinton Limits Executive Bonuses, GOV\'T EXECUTIVE, p. 6 (Dec.
1995).

151\. STEPHEN BARR, Clinton Plan To Set 3% Pay Raise, THE WASH. POST,
Feb. 3, 1996, pp.A‑1, A‑4, col. 1.

152\. THE WASH. POST, March 31, 1996, p. B‑2, col. 1.

153\. GAO, FEDERAL PERSONNEL: FEDERAL/PRIVATE SECTOR PAY COMPARISONS
(Chapter Report, 12/14/94).

154\. GAO, MANAGEMENT REFORM: IMPLEMENTATION OF THE NATIONAL PERFORMANCE
REVIEWS RECOMMENDATIONS, p. 419 (December 1994); GAO, MANAGEMENT REFORM:
GAO\'s COMMENTS ON THE NATIONAL PERFORMANCE REVIEW\'S RECOMMENDATIONS p.
220 (Dec 1993).

155\. NPR supra, note 110, at p. 23.

156\. See PETER BROIDA, A GUIDE To FEDERAL LABOR RELATIONS AUTHORITY LAW
& PRACTICE, (1995). In NAGE Local RI‑109 and VAMC, Newington, 38 FLRA
211 (1990). (The Authority said, although it has not expressly defined
\"types\" of employees, it has in many cases discussed, in general,
management\'s right to determine numbers, types, and grades of
employees, and in particular, the right to determine types of
employees).

157\. Id., citing, March AFB, Riverside, CA and AFGE Local 1953, 13 FLRA
255 (1983).

158\. 5 U.S.C. Sec. 7117(a)(2) (1995); 5 C.F.R. §2424.11 (1995).

159\. MARK L. GOLDSTEIN, AMERICA\'S HOLLOW GOVERNMENT, P. 146 (1992).

160\. NEWLAND, supra, note 64, at p. 112, quoting FREDERICK C. MOSHER,
The Changing Responsibilities and Tactics of the Federal Government,
PUB. ADMIN. REV., pp. 541‑548 (Nov/Dec 1980).

161\. Testimony of John Sturdivant, The Federal Role in Privatization,
Hearings Before the Subcommittee on Government Management, Information,
and Technology of the Comm. on Government Reform and Oversight, 104th
Cong. 1st Sess., p. 96 (1995).

162\. MIKE CAUSEY, supra, note 72.

163\. Prepared Statement of Andrew Jones, Worldwide Privatization
Coordinator, Arthur Anderson in COMMITTEE REPORT, supra, note 163, at p.
24 (1995).

164\. NPR and OMB, PRIVATIZATION RESOURCE GUIDE AND STATUS REPORT, (Feb.
13, 1995).

165\. This approach reflects a government review of the existing
commercial, State or local government service market and a decision that
a service need not be provided by the federal government. This option
includes many federalism concepts. Electrical power generation and
distribution (rural electrification), and helium production and sales
are also examples of services that fit into this category. Id.

166\. Privatization implies that the government is currently providing
the service, but no longer sees the need to be in direct control of its
provision, operations or maintenance. Privatization reflects the sale of
assets and related service requirements (rights) by the government.
However, it also includes assumptions that services are I necessary and
must be provided in the future. It is rarely simple divestiture, as
outlined above. The sale agreements themselves establish and refer to
the regulatory and oversight environment that will continue to exist to
assure that public and/or agency access and service requirements are
maintained. This may or may not include agreed‑upon user fees or rate
commission (utility) oversight. Privatization can include sale to or
forgiveness of debt from other public authorities or to private sector
investors. Simple examples include waste water treatment plants,
airports, ports, bridges, parks, and recreation facilities Government
exerts control through regulatory and sale covenants. Id.

167\. This approach recognizes that there is a definite public need for
a service at the federal level. Generally it is a service that can
readily be provided by the private sector, but there is no commercial
service market able or willing to take on the responsibility. In effect,
instead of providing the service directly as a public (in‑house) good,
the government opts to create a corporation and a market where there is
none today. Fannie Mae, Connie Mack, etc. are examples. Another example
is Conrail, where there was a public need and no private sector interest
in providing the financial or operating assets necessary‑the risks were
simply too high relative to expected returns. Amtrak is currently
considered a part of this category. Government exerts control through a
combination of limited operational and management controls, (board
member, owner of preferential stock, budget review authority,
appropriations, etc.) and regulatory controls. Id.

168\. This approach reflects a joint public and private sector
investment relationship. The government may share in the ownership of
assets and may share in operational responsibilities. Many hub airports
facilities and regional transportation authorities (e.g., the Port
Authority of New York) fall into this category. Id.

169\. This is the \"outsourcing\" or \"contracting‑out\" alternative
(FAR recompetitions and OMB Circular A‑76 make/buy decisions). It
reflects a decision by the government to remain fully responsible for
the provision of all services and management decisions. The question is
whether the service can be more effectively procured through in‑house or
contract sources. Id.

170\. There are many books and articles discussing the pros and cons of
privatization. Two that provided the authors some unique insights are
BRENDAN MARTIN, IN THE PUBLIC INTEREST?: PRIVATIZATION AND PUBLIC SECTOR
REFORM (1993) and S. ARONOWITZ & W. DIFAZIO, THE JOBLESS FUTURE (1994).

171\. The Federal Role in Privatization, Hearings Before the
Subcommittee on Government Management, Information, and Technology of
the Comm. on Government Reform and Oversight, 104th Cong., 1st Sess.
(1995)(ISBN 0‑16‑047296‑2).

172\. NPC, supra, note 32.

173\. The Current Standard for reviewing, impact and implementation\"
proposals regarding their interference with management\'s rights is
\"directly interferes,\" not \"substantially interferes.\"

174\. PETER BROIDA, supra, note 157, citing NFFE v. Cheney, 883 F.2d
1038 (D.C. Cir. 1989).

175\. Dept. of Treasury, IRS v. FLRA, 110 S.Ct. 1623 (1990).

176\. AFGE Local 1345 and Dept. of Army, Ft. Carson, 48 FLRA 168 (1993).

177\. OMB Circular No. A‑76, \"Performance of Commercial Activities.\"
(Aug 4, 1983), published at Federal Register 37110‑37116. (Aug. 16,
1983). OMB documents can be downloaded at
<http://www.whitehouse.gov/WH/EOP/OMB>.

178\. IRS v. FLRA, 996 F.2d 1246, 1248 (D.C. Cir 1993)(\"The Circular
states that, except for the agency\'s own internal appeal system,
\'\[t\]his Circular and its Supplement shall not \... establish and
shall not be construed to create any substantive or procedural basis for
anyone to challenge any agency action or inaction on the basis that such
action or inaction was not in accordance with this Circular.\' A
Supplement to the Circular adds that a decision in the internal review
process should not be subject to appeal outside the agency.\").

179\. 48 FLRA at p. 206. Still, the Circular does provide an appeal
process through the agency, and actions eventually taken to implement
the decisions can be negotiable under the \"impact and implementation\"
provisions of Sec. 7106(b)(2) and (3).

180\. OMB Circular No. A‑76 (Revised), Part 1, Chapter 1, Section A,
para. (7)(c)(8) (Aug 4,1983).

181\. The appeals procedures are now located at Part 1, Chapter 3,
Section K, para. 7.

182\. Infra, notes 195‑198 and accompanying text.

183\. American Federation of Government Employees v. Clinton, DC‑S Ohio,
Eastern Div, No. C2 96‑0283, 3/18/96. Reported in Privatization: AFGE
Suit Alleges That Privatization of Air Force Base Functions is Illegal,
34 GERR 420 (March 25, 1996).

184\. Kelly AFB was recognized for its partnership initiatives which
supposably saved the Federal government over two million dollars in
litigation costs. This just show that there are some issues that cannot
be agreed to under the umbrella of partnership.

185\. 10 U.S.C. Sec. 2464 requires DoD to maintain a core capability
sufficient to ensure technical competence and resources necessary for an
effective and timely, response to a mobilization or other national
defense emergency. This requires sufficient depot maintenance to support
the JCS contingency scenarios. However, 10 U.S.C. Sec. 2464 also allows
DoD to contract out core logistical functions under Circular A‑76.
Still, under 10 U.S.C. Sec. 2466, no more than 40% of DoD\'s maintenance
and repair work can go to private firms.

186\. DoD released a report on April 4, 1996, urging elimination of the
60/40 split. DOD Asks Congress To Eliminate Split In Depot Level
Maintenance, 34 GOVERNMENT EMPLOYEE RELATIONS REPORT 513 (April 8,
1996).

187\. The Administration has an vested interest in this matter because,
in a political move, it promised to privatize the maintenance work at
McClellan AFB and Kelly AFB so as to retain the employment in the local
community, Without the correcting legislation, it may be impossible to
fulfill the promise and close the bases.

188\. The memorandum entitled, Improving the Combat Edge Through
Outsourcing, was reported as one of three reports issued on 4 April
1996. BNA, DOD Directs Military Services to Pursue Outsourcing,
Privatization Opportunities, 34 GERR 543 (Apr. 15, 1996).

189\. Administration Awards \$14.5 Million For Displaced Workers At
Kelly Air Base, 34 GOVERNMENT EMPLOYEE RELATIONS REPORT 513 (April 8,
1996). This also helps the Administration as it preaches \"corporate
citizenship.\"

190\. Revised Supplemental Handbook, Performance of Commercial
Activities, OMB Circular No. A‑76, 61 Fed. Reg. 14338, (April 1, 1996).
The provisions of the Revised Supplemental Handbook are effective March
27, 1996 and apply to all cost comparisons in progress that have not yet
undergone bid opening or where the in‑house bid has not yet otherwise
been revealed.

191\. 61 Fed. Reg. at p. 16340 (April 1, 1996).

192\. The draft Revision had proposed a cap on the agency\'s
determination of \"core activities\" to 10 percent of the agency\'s
total FTEs. Core activities are excluded from A‑76 requirements because
they represent an essential commercial service. The final Revision
removed the proposed 10 per cent limitation to provide maximum\'
flexibility to the agencies to identify functions as \"core\" and exempt
them from cost comparison. In place of the 10 percent core limit, one
commenter had requested the right to appeal agency determinations of
their core requirements and their decision to convert from in‑house to
contract performance on the basis of a core designation. This change was
not incorporated. OMB has decided that the determination of a \"core\"
function is, fundamentally, a management decision.

193\. \"There was strong support and strong opposition to this
provision. One commenter suggested that no conversions should be
authorized without a cost comparison ‑‑ even if all Federal employees
are placed in other comparable Federal positions. \... In contrast,
another commenter objected to the idea that failure to place a single
employee could require a cost comparison or otherwise delay a direct
conversion to contract. The provision has been modified to clarify that
in addition to assuring placement in \"comparable Federal positions,\"
the conversion to contract with placement and without cost comparison is
limited to competitive awards. These direct conversions to contract must
retain the benefits of full and open competition. In the absence of
adverse actions to Federal employees and similar to the policy of
reliance on the private sector for new starts and expansions, Federal
managers should be permitted to rely on the competitive dynamics of the
private sector.\" Announcement of Revised Supplemental Handbook, supra,
note 180.

194\. OMB did not permit appeals of basic organizational decisions,
saying, the A‑76 appeal process is not a surrogate to resolve
management‑union complaints.

195\. The first notice of the ESOP conversion was printed in The
Washington Post on April 14, 1996. STEPHEN BARR, OPM, in a First, Acts
to Convert an Operation Into Private Firm, THE WASH. POST, p. A‑4 (April
14, 1996).

196\. STEPHEN BARR, supra, note 195.

197\. KATHERINE M. PETERS, The Hard Sell, GOVERNMENT EXECUTIVE 20, 24
(Feb. 1996).

198\. Supra, notes 171‑181 and accompanying text.

199\. A recent article suggesting reform of federal corporations in
light of expected increased use under NPR Phase 2 is, A. MICHAEL
FROOMKIN, Reinventing The Government Corporation, 1995 U.ILL.L.REV. 543
(1995).

200\. OPM Issues Template To Help Agencies Convert To Performance‑Based
Systems, 34 GERR 513 (April 8, 1996).

201\. DONALD KETTL, Building Lasting Reform: Enduring Questions, Missing
Answers in INSIDE THE REINVENTION MACHINE, P. 83 (Eds. DiIulio and
Kettl) (1995).

202\. E. SAM OVERMAN AND KATHY J. BOYD, Best Practice Research and
Postbureaucractic Reform, JOUR. PUB. ADMIN. RESEARCH AND THEORY 67, 77
(Jan 1994).

203\. D. KETTL, supra, note 201, at p. 24. \"The NPR avoided a quick
counterattack by the unions and in fact won their endorsement for the
report.\"

204\. Even the unions understand that the next Administration may be
hostile to the objectives of the public employee unions. NTEU filed a
suit (NTEU v. U.S., DC DC, No. 96‑624, filed Apr. 9, 1996) challenging
the constitutionality of the line‑item veto because the line‑item veto
would make it more difficult to push through legislation improving
wages, benefits, and working conditions if a president is hostile to
these issues. BNA, NTEU Suit Challenges Constitutionality of Recently
Signed Line‑Item Veto Bill, 34 GERR 544 (Apr. 15, 1996)(Reporting
remarks of Robert Tobias, National Prersident of NTEU).

205\. ROB GURWITT, Entrepreneurial Government: The Morning After,
GOVERNING 34 (May 1994).

206\. This sounds remarkably similar to an observation in Gurwitt\'s
article, where a city official says, \"There were meetings and meetings
and meetings. \... There were team‑building meetings, training sessions,
personality profiling exercises, and lots of brainstorming sessions.\"
Gurwitt, supra, note 205, at p. 40.

207 PAUL LIGHT, Surviving Reinvention, GOV\'T. EXEC. 55 (Jun 1994).

208\. BARToN WECHSLER, Reinventing Florida\'s Civil Service System: The
Failure of Reform, REV. PUB. PER. ADMIN. 64 (Spring 1994).

209\. Id. at p. 75.

210\. JAMES L. SUNDQUIST, The Concept of Governmental Management: Or,
What\'s Missing in the Gore Report, PUB. ADMIN. REV., p. 398 (Jul/Aug
1995).

184 ‑ The Air Force Law ReyiewI1996

211\. GURWITT, supra, note 205, at p.38, quoting Gordon Whitaker, a
professor of public administration at the University of North Carolina.

212 JAMES D. CARROLL, The Rhetoric of Reform and Political Reality in
the National Performance Review, PUB. ADMIN. REV., p. 302‑312 (May/Jun
1995).

213\. D.KETTL, supra, note 203, at p. 49.

214\. 5 U.S.C. §7111 (a) and Sec. 7116(a)(5) (1995).

215\. E.O. 11491, Section 10(e) provided: \"When a labor organization
has been accorded exclusive recognition, it is the exclusive
representative of employees in the unit and is entitled to act for and
to negotiate agreements covering all employees in the unit. It is
responsible for representing the interests of all employees in the unit
without discrimination and without regard to membership. The labor
organization shall be given the opportunity to be represented at formal
discussions between management and employees or employee representatives
concerning grievances, personnel policies and practices, or other
matters affecting general working conditions of employees in the unit.\"

216\. In Dept. of Veterans Affairs v. FLRA, 3 F.3d 1386 (10th Cir.
1993), it was held interviews of employees conducted by an agency\'s
staff attorney in preparation for a hearing constituted formal
discussions in connection with a grievance so that agency committed
unfair labor practice in failing to give union advance notice and
opportunity to be, represented, even if Brooks/Johnny Poultry rights are
given. In a special concurrence Judge Moore said, it is an illogical
result, but because the law required this absurdity, he must concur,
although he does not like doing so.

217\. Defense Logistics Agency, Defense Depot, Tracy, California And
Laborers\' International Union Of North America, Local 1276, AFL‑CIO,
FLRA ALJ Dec. Rep. No. 25, 1982 WL 23451 (Dec. 28, 1982).

218\. Memorandum to FLRA Regional Directors (Aug. 8, 1995). The
memorandum is available by faxing a request to the Office of the General
Counsel at 202‑482‑6608. The views of the GC are: An agency commits an
unfair labor practice if it deals directly with unit employees over
negotiable terms and conditions of employment. Air Force Accounting and
Finance Center, Lowry AFB, Denver Colorado, 42 FLRA No. 85, 42 FLRA 1226
(1991). Therefore if a supervisor‑employee group is going to discuss
issues appropriate for negotiation with the exclusive representative,
the group cannot be established without the consent of the union.
Department Of The Navy, Pearl Harbor Naval Shipyard, Pearl Harbor,
Hawaii, 29 FLRA No. 96, 29 F.L.R.A. 1236 (1987). The union is under no
obligation to negotiate the agency\'s proposal to establish an
labor‑management group that will discuss negotiable conditions of
employment.

219\. Memorandum, supra, note 218, at p. 2.

220\. The official literature covering the CFOA often refers to 23
executive agencies. The Social Security Administration was added as the
24th agency by the Social Security Independence and Program Improvement
Act of 1994, Pub. L. 103‑296 Sec. 1080)(1), Aug, 15, 1994. In 1994 the
24 executive agencies accounted for \$1,566,150,000 in budget outlays
and 98.8% of the federal budget.

221\. 31 U.S.C. Sec. 3515(a), Pub. L. 103‑356, Title IV, Sec. 405(a).

222\. 31 U.S.C. Sec. 331, Pub.L. 103‑356, Title IV, Sec. 405(b).

223\. NATIONAL PERFORMANCE REVIEW, CREATING A GOVERNMENT THAT WORKS
BETTER & COSTS LESS: STATUS REPORT, p. 41 (1994).

224\. VICTOR J. KIMM, GPRA: Early Implementation, THE PUBLIC MANAGER, P.
11‑12 (Spring 1995).

225\. GAO, MANAGEMENT REFORM ‑ STATUS OF AGENCY REINVENTION LAB EFFORTS
pp. 35‑41 (March 1996).

226\. NPR, supra, note 223, at p. 40.