Source: https://www.flra.gov/decisions/v32/32-015.html
Timestamp: 2016-09-28 02:00:54
Document Index: 389981682

Matched Legal Cases: ['§ 4503', '§ 4503', '§ 5301', '§ 5332', '§ 4503', '§ 4503', '§ 4503', '§ 4503', '§ 4503', '§ 4503', '§ 4503', '§ 4503']

You are hereHome [Decision Number] 32:0102(15)NG - - FEMT Union Council of Charleston and Navy, Charleston Naval Shipyard, Charleston, SC - - 1988 FLRAdec NG - - v32 p102
[ v32 p102 ] 32:0102(15)NG
The decision of the Authority follows: 32 FLRA No. 15 UNITED STATES OF AMERICA
UNION COUNCIL OF CHARLESTON
Union and DEPARTMENT OF THE NAVY
Agency Case No. 0-NG-1459 DECISION AND ORDER ON NEGOTIABILITY
of three proposals involving the Agency's implementation of a "profit sharing"
plan. The threshold question raised in this dispute is whether our review of
the proposals is barred by the doctrine of sovereign immunity. The
negotiability of the proposals depends on whether they concern "conditions of
employment" as defined in the Statute and whether the proposals are consistent
with applicable law. We find that review of the proposals is not barred by the
sovereign immunity doctrine. We also conclude that the proposals are negotiable
because they concern "conditions of employment" and are not inconsistent with
law, including management rights under section 7106 of the Statute. II. Background This dispute arose at a Department of Defense
industrially funded activity. According to the Agency, "the [activity], rather
than receiving the bulk of its funding as a direct budget allocation, obtains
most of that funding through reimbursements from military 'customers.'"
Statement of Position at 1. Overhead, materials, direct labor costs and other
related charges are determined "in accordance with regulations." Consequently,
according to the Agency's undisputed statement, the installation's budget
consists principally of estimates based on a balance between anticipated costs
and income from charges to "customers." Id. In an effort to enhance efficiency and cost effectiveness
in overhauling Navy submarines, the Secretary of the Navy has ordered that such
work be carried out by the successful bidder in competition between Government
and commercial shipyards. These negotiations arose after the installation was
awarded a contract to overhaul two submarines. As an incentive to complete the
projects at a lower cost than that contained in the successful bid, management
implemented a profit sharing plan. The plan allocated any profit realized among
investment in plant, facilities and equipment and incentive payments to
employees who participated in the projects. Under the Agency's plan, 50 percent of the realized
profits was to be returned to employees in the form of incentive payments. The
Union's proposals concern the amount of the profit to be paid to employees and
the eligibility of certain employees for such payments. III. Proposals 1 and 2 Proposal 1 Sharing Rate: The sharing between the shipyard and its
employees for this plan shall not be determined until the 90 day guarantees
[sic] period is complete and all the overhaul project costs have been
reconciled. The share rate shall be: 1) 10% shipyard's plants and equipment. 2)
10% employee development. 3) 80% employees. Proposal 2 [According to the Union, Proposal 2 was made to assure
that the Agency's instruction concerning profit sharing would be revised to
reflect the results of negotiations over Proposal 1. The Agency agrees that a
decision on Proposal 1 will determine the disposition of Proposal 2. Statement
of Position at 4.] A. Positions of the Parties The Agency asserts that because major fiscal and/or
national defense policy decisions are involved, the doctrine of sovereign
immunity bars Authority jurisdiction over these proposals. The Agency reasons
that since Congress has not specifically authorized unions to bargain over
proposals involving claims against the Treasury, the Union here has no right to
assert such claims and the Authority has no power to review them. The Agency
also contends that the proposals are nonnegotiable because they: (1) are
inconsistent with law; (2) do not concern conditions of employment; (3)
directly determine the conditions of employment of nonunit employees; (4)
conflict with the rights under section 7106(a) of the Statute to determine the
Agency's budget, to direct employees and to assign work; and (5) interfere with
the right under section 7106(b)(1) to determine the methods and means of
performing work. The Union contends that the Agency cannot seek protection
under the sovereign immunity doctrine. It points out that the governing law, 5
U.S.C. § 4503, establishes "flexibility" in the amount of incentive awards
and that the proposals simply seek bargaining over the manner in which the
statutory "flexibility" is exercised. The Union notes that 5 U.S.C. § 4503
imposes a $10,000 ceiling on individual incentive award payouts and argues that
the proposals do not require the Agency to disburse any amount of money above
the statutory ceiling. The Union denies that the proposals interfere with the
Agency's budget formulation process, emphasizing that no specific amount of
money is earmarked for profit sharing nor would any decrease in allocations to
other programs result from the proposals. The Union asserts that the proposals
are not in violation of law. Rather, in the Union's view, the proposals merely
require the Agency to exercise the discretion, granted it by law, in a certain
way. The Union asserts that the proposals' effect on nonunit
employees would be minimal. It uses an arithmetic example to demonstrate that
its proposed distribution of funds within the unit would not diminish the
incentive payments to nonunit employees where the Agency's payment plan--50
percent of the profit to be used for incentive payments--would apply. The Union
notes that the proposals do not establish any particular level of performance
which would make an employee eligible for incentive payments. That determination would be made by the Agency. It also
denies that the proposals interfere with the Agency's right to determine the
methods and means of performing work. B. Analysis and Conclusion 1. Sovereign Immunity Does Not Apply The Agency asserts that we have no authority to determine
the negotiability of these two proposals under the doctrine of sovereign
immunity. We conclude that we do have jurisdiction to resolve the negotiability
of these proposals and that the doctrine of sovereign immunity is
inapplicable. The doctrine of sovereign immunity precludes suits
against the sovereign without its express consent. United States v.
Testan, 424 U.S. 392, 399 (1976) The doctrine of sovereign immunity applies
to litigation against the United States in all courts. United States v.
Sherwood, 312 U.S. 584, 586 (1941). This matter is not pending in a court,
nor does it involve a suit against the United States. Instead of a suit against the United States, the matter
before us is whether, under the Statute, these two proposals are or are not
within the Agency's duty to bargain. Thus, this case requires us to discharge
precisely the responsibility assigned to us by Congress in section
7105(a)(2)(E). The role and responsibility of the Authority under that section
is to "resolve issues relating to the duty to bargain in good faith under
7117(c) of [the Statute.]" The Agency's sovereign immunity claim is based on the
fact that money will be expended if Proposals 1 and 2 are found to be
negotiable. However, the fact that implementation of the Union proposals may
require the outlay of Agency funds does not deprive the Authority of
jurisdiction to determine the negotiability of the proposal nor does that fact
render the proposal nonnegotiable. The objective of the Statute is to establish and foster a
viable collective bargaining system within the Federal Government. The
Authority and the courts have recognized that the collective bargaining system
will frequently involve the expenditure of funds. In American
Command, Wright-Patterson Air Force Base, Ohio, 2 FLRA 604, 607 (1980),
(Air Force Logistics Command), aff'd as to other matters sub
nom. Department of Defense v. FLRA, 659 F.2d 1140 (D.C. Cir. 1981),
cert. denied sub nom. AFGE v. FLRA, 455 U.S. 945 (1982) we
observed: The underlying assumption of this position appears to
be that a proposal is inconsistent with the authority of the agency to
determine its budget within the meaning of section 7106(a)(1) if it imposes a
cost upon the agency which requires the expenditure of appropriated agency
funds. Such a construction of the Statute, however, could preclude negotiation
on virtually all otherwise negotiable proposals, since, to one extent or
another, most proposals would have the effect of imposing costs upon the agency
which would require the expenditure of appropriated agency funds. Nothing in
the relevant legislative history indicates that Congress intended the right of
management to determine its budget to be so inclusive as to negate in this
manner the obligation to bargain. In like manner, the courts have recognized that the
collective bargaining scheme established by the Statute must inevitably
implicate the expenditure of funds and that such requirement did not invalidate
the scheme. In American Federation of Government Employees v.
FLRA, 785 F.2d 333, 338 (D.C. Cir. 1986), the court stated: But economic hardship is a fact of life in employment
for the public sector as well as the private. Such monetary considerations
often necessitate substantial changes. If an employer was released from its
duty to bargain whenever it had suffered economic hardship, the employer's duty
to bargain would practically be non-existent in a large proportion of cases.
Congress has not established a collective bargaining system in which the duty
to bargain exists only at the agency's convenience or desire, or only when the
employer is affluent. The Agency here argues that we are not authorized to
resolve a negotiability dispute where the resolution of that dispute
potentially may require the Agency to expend funds. In agreement with the Court
of Appeals for the District of Columbia Circuit, we reaffirm and conclude that
Congress did not intend the Statute to apply only in circumstances involving no
cost to the Government. Consequently, we find the Agency's sovereign immunity
argument to be without merit and will proceed to determine the negotiability of
the proposals, which is our responsibility under the Statute. 2. Proposals 1 and 2 Concern a Negotiable Condition of
Employment and Do Not Concern a Matter Specifically Provided For by
Federal Statute a. Introduction Section 7103(a)(14) of the Statute contains the following
definition of "conditions of employment": "Conditions of employment" means personnel policies,
affecting working conditions, except that such term does not include policies,
practices, and matters-- (A) relating to political activities prohibited under
provided for by Federal statute[.] In Antilles Consolidated Education Association and
Antilles Consolidated School System, 22 FLRA 235, 236-37 (1986)
(Antilles), the Authority set forth the test for determining whether a
proposal involves a condition of employment of bargaining unit employees under
section 7103(a)(14). The test contains two factors: 1. Whether the matter proposed to be bargained pertains
to bargaining unit employees; and 2. The nature and extent of the effect of the matter
proposed to be bargained on working conditions of those employees.
(Emphasis in original.) For the following reasons, we conclude that Proposals 1
and 2 satisfy both prongs of the Antilles test and are not otherwise
excepted from the definition of "conditions of employment" under section
7103(a)(14). b. The Proposals Pertain to Bargaining Unit
Employees In Antilles, 22 FLRA at 237, we stated the
following about the first prong of the test to determine whether a proposal
involves conditions of employment of unit employees: For example, as to the first factor, the question of
whether the proposal pertains to bargaining unit employees, a proposal which is
principally focused on nonbargaining unit positions or employees does not
directly affect the work situation or employment relationship of bargaining
unit employees. But, a proposal which is principally focused on bargaining unit
positions or employees and which is otherwise consistent with applicable laws
and regulations is not rendered nonnegotiable merely because it would have some
impact on employees outside the bargaining unit. (Citations
omitted.) In determining whether a proposal's impact on nonunit
employees is sufficient to make the proposal nonnegotiable, the Authority
balances the union's right to negotiate over conditions of employment of unit
employees against the agency's right to determine the conditions of employment
of nonunit employees. American Federation of Government Employees,
Local 32, AFL-CIO and Office of Personnel Management, 22 FLRA 478
(1986) (OPM), petition for review filed sub nom.
American Federation of Government Employees v. FLRA, No. 86-1447
(D.C. Cir. Aug. ll, 1986). A proposal which has only an indirect effect on the
working conditions of nonunit employees is negotiable. Federal Union of
Scientists and Engineers, National Association of Government
Employees, Local R1-144 and Naval Underwater Systems Center, Newport,
Rhode Island, 28 FLRA 352, 352 (1987) (Proposal 1). A proposal which has a
direct and significant effect on vital interests of nonunit employees is
nonnegotiable. American Federation of Government Employees, Local 12,
AFL-CIO and Department of Labor, 25 FLRA 979 (1987) (Member Frazier
dissenting). Proposals 1 and 2 are intended to establish the
percentage of profits realized from the overhaul projects which will be paid to
unit employees. It is clear that the proposals are principally focused on unit
employees. The Agency does not dispute that the proposals are
intended to apply to unit employees. However, the Agency maintains that the
proposals are nonnegotiable because they "directly affect the 'vital interests'
of non-unit employees[.]" Statement of Position at 37. The Agency
states: The union's proposals pertain to a specific, limited
profit from specific ship overhaul work. Manifestly, each portion of that
profit made available for profit sharing with unit employees becomes
unavailable for sharing with non-unit employees. Statement of Position at 35. We agree, of course, that the amount of profits, if any,
to be distributed will be finite. As such, any distribution of profits to one
source--here unit employees-- will affect the amount available for distribution
to other sources, including nonunit employees. The fact that the amount of
profits will be finite, however, does not mean that Proposals 1 and 2 are
nonnegotiable. See Overseas Education Association, Inc. and
Department of Defense, Office of Dependents Schools, 27 FLRA 492,
495 (1987), petition for review filed sub nom. Overseas Education
Association v. FLRA, No. 87-1279 (D.C. Cir. June 25, 1987) ("Much of
collective bargaining entails the distribution of finite resources. The
Agency's argument seems to presume that Congress intended to establish a system
in which the duty to bargain arises only where infinite resources are available
to it."). Rather, it is necessary to evaluate the nature of the effect on
nonunit employees and the nature of the interests affected. We conclude that Proposals 1 and 2 would not have direct
and significant effects on vital interests of nonunit employees. First, nothing
in the proposals or the record before us indicates that the Union seeks to
establish the payments to be made to nonunit employees. Although the
proposals will affect the amount of the profits which are available for
payments to nonunit employees, that effect results simply from negotiations
over the distribution of finite resources. Second, nonunit employees have no statutory right or
entitlement to receive a share of the profits. Unlike the proposal in
OPM, which concerned whether and in what positions nonunit employees
would be retained following a reduction-in-force, Proposals 1 and 2 do not
affect such matters as continued employment or entitlements to pay for work
performed. Finally, the profit, if any, to be realized from the
projects involved in this case, are yet to be determined. Therefore, there can
be no concrete expectation on the part of any employee as to the amount of
profits to be shared. At most, the proposals could diminish nonunit employees'
level of expectation. In sum, we find that Proposals 1 and 2 satisfy the first
prong of the Antilles test. The proposals are principally focused on
bargaining unit employees and do not have a sufficient impact on nonunit
employees to make them nonnegotiable. c. The Proposals Directly Affect the Working
Conditions of Unit Employees In evaluating the nature and extent of effect of the
proposals on unit employees' working conditions, it is necessary to determine
whether there is a "direct connection between the proposal and the work
situation or employment relationship of bargaining unit employees."
Antilles, 22 FLRA at 237. The purposes of both the profit sharing plan and the
Union's proposals are to increase and reward productivity on the two work
projects to which unit employees are assigned. As the Agency states, the
decision to establish the plan "was based on the premise that employees are an
integral part of the Shipyard's effort to accomplish its mission in the most
effective and efficient matter[,]" and the allocation of a portion of the
profits to employees was designed to "help motivate the highest level of effort
and initiative from each individual employee[.]" Statement of Position at 3.
There is a clear relationship between the proposals and
unit employees' work situations. Accordingly, the proposals satisfy the second
prong of the Antilles test. d. The Proposals Do Not Concern a Matter Specifically
Provided For By Federal Statute Proposals which satisfy the requirements of the
Antilles test may nevertheless be excepted from the definition of
"conditions of employment" under section 7103(a)(14) if they concern a matter
which is specifically provided for by Federal statute. In National Treasury Employees Union and Internal
Revenue Service, 27 FLRA 132, 132 (1987) (Proposal 5) (IRS), we
considered a proposal which established the rate of incentive pay to be awarded
to unit employees. We noted that "the rate at which incentive award money is
payable to employees under the Agency's productivity plan concerns those
employees' conditions of employment within the meaning of section 7103(a)(14)."
Id. at 135. Similarly, we found that a proposal which established a
range of percentages of salary to be used to calculate cash awards for
outstanding and superior performance concerned unit employees' conditions of
employment in American Federation of Government Employees, AFL-CIO,
Local 3477 and Commodity Futures Trading Commission, 27 FLRA 440,
440 (1987) (Proposal 1). We found that the proposal in IRS did not concern
a matter specifically provided for by law and, as such, was not excluded from
the definition of "conditions of employment" by section 7103(a)(14) of the
Statute. We noted that incentive award payments were not wages or salary
authorized by 5 U.S.C. §§ 5301 et seq. and, more
particularly, by 5 U.S.C. § 5332. Rather, consistent with the decision in
National Treasury Employees Union v. FLRA, 793 F.2d 371 (D.C. Cir.
1986), we found that incentive payments were authorized by 5 U.S.C. § 4503. Except for the imposition of a $10,000 ceiling on
individual payments, 5 U.S.C. § 4503 does not specify the dollar amounts
to be paid as incentive awards. Because the amounts of the awards are within an
agency's discretion, we concluded that the amounts or rates to be paid were not
matters specifically provided for by Federal statute. Accordingly, we found
that the proposal in IRS was negotiable. Accord Commodity
Futures Trading Commission, 27 FLRA at 442-43. See also
National Federation of Federal Employees, Local 1256 and Department
of the Air Force, K.I. Sawyer Air Force Base, Michigan, 31 FLRA No.
107 (1988) (K.I. Sawyer Air Force Base), slip op. at 3, (a proposal
concerning quality step increases, a matter provided for in the "basic pay"
provisions of law, was found not to concern a matter specifically provided for
by Federal statute because such increases "are substantively equivalent to
incentive awards"). The Agency here acknowledges that the profit sharing plan
is authorized by section 4503: "Statutory authority for the Shipyard's profit
sharing program is found at 5 U.S.C. § 4503." Statement of Position at 3.
In fact, the Agency characterizes employees' portions of the profit
distribution as "incentive compensation[.]" Statement of Position at 2-3. We
conclude, therefore, that Proposals 1 and 2 concern incentive
awards. Because the Agency's profit sharing plan is established
under 5 U.S.C. § 4503 and concerns incentive awards, our decisions in
IRS and Commodity Futures Trading Commission are relevant.
As in those cases, the Agency here has discretion to fix the amounts of
incentive awards. The Agency does not contend and the record does not otherwise
indicate that the proposed payments would exceed the statutory ceiling in
section 4503. Accordingly, consistent with our decisions in IRS and
Commodity Futures Trading Commission, we conclude that Proposals
1 and 2 do not concern matters which are specifically provided for by Federal
statute. Proposals 1 and 2 satisfy both prongs of the
Antilles test and do not concern a matter which is specifically provided
for by Federal statute. Therefore, Proposals 1 and 2 concern "conditions of
employment" within the meaning of section 7103(a)(14) of the
Statute. 3. Proposals 1 and 2 Do Not Interfere with
Management Rights to Assign Work and Direct Employees The question of whether a proposal which would establish
levels of incentive payments interfered with management's rights to assign work
and to direct employees was examined by the court in National Treasury
Employees Union v. FLRA. There, the court held that "the level of incentive
pay awarded for the performance of agency work, even work that has been
'assigned' or 'directed,' [did] not come within the nonbargainable management
rights to assign work and direct employees." 793 F.2d at 375. In so holding,
the court further examined the scope of the right to direct employees and to
assign work, stating: . . . while the assignment of work includes, as we have
said earlier, designation of the category of duties an employee is to perform,
it also includes (if the agency chooses to be so specific) designation of the
Id. We adopted the court's position in Internal
Revenue Service, 27 FLRA at 135, stating, "a proposal such as the
disputed proposal determining the level of incentive award for the performance
of agency work does not constitute an exercise of management's right to direct
employees and assign work under section 7106(a)(2)(A) and (B) of the Statute."
Likewise, we adopted the court's holding in Commodity Futures Trading
Commission, 27 FLRA at 442. There, the proposal sought to determine the
level of incentive pay for above-normal performance of assigned
work. The court's holding is also applicable to the dispute
here. The proposals seek to establish the percentage of profit to be paid to
unit employees in recognition of above-average performance in overhauling the
two submarines. They do not prescribe the type of work unit employees will
perform nor do they establish the performance level necessary to avoid
v. FLRA, and our decisions in Internal Revenue Service and
Commodity Futures Trading Commission, the proposals do not
section 7106(a)(2)(A) and (B). 4. Proposals 1 and 2 Do Not Interfere with the
Agency's Right to Determine its Budget A proposal is inconsistent with an agency's right to
determine its budget under section 7106(a)(1) if the proposal, by its terms,
prescribes a particular program or amount of funds to be included in the
agency's budget. In addition, even if the proposal does not prescribe a
particular program or amount to be included in the agency's budget, the
proposal may be found to be nonnegotiable if the agency can make a substantial
showing that the proposal would cause a significant and unavoidable increase in
costs which could not be offset by compensating benefits. Air Force
Logistics Command, 2 FLRA 604. The Agency contends that although the proposals are made
in percentage terms, they become specific dollar amounts as soon as a definite
amount of profit is realized by the Agency. Thus, the Agency concludes, because
the proposals will require the Agency to set aside a specific amount of money
to fund plant and equipment, employee development and incentive pay, the
proposals prescribe a particular program or amount to be included in the
Agency's budget in violation of section 7106(a)(1). We disagree. As we stated at III.B.1 of this decision,
the Authority and the courts have recognized that the collective bargaining
system will frequently involve the expenditure of funds. The Statute was not
intended to apply only in circumstances involving no cost to the Government.
Consequently, these proposals are not nonnegotiable merely because they
contemplate that the Agency may be required to expend funds on items such as
employee development and incentive awards. Moreover, these proposals do not
require the Agency to establish in its budget any particular program or
specified level of funding. These proposals only concern the distribution of
any profit realized from shipyard overhaul projects. The Agency also claims that the proposals interfere with
the budget formulation process as follows: In its planning for the fiscal year in which the overhaul
profit was to be realized, the Shipyard based its budget submission on the
premise that part of the funds to be allocated for capitalization of industrial
plant, facilities and equipment would come from profit on the overhaul work.
Accordingly, Shipyard management allocated a portion of that profit to employee
profit sharing and a portion to plant, facilities and equipment. Consequently,
its budget request for plant, facilities and equipment was less than it
otherwise would have been. [Statement of Position at 11]. In our view, the Agency's financial estimates are based
on speculation on the amount of profit to be realized from the overhaul
projects. Nothing in Proposals 1 and 2 prescribe the amount of funds to be
included in the Agency's budget for plant, facilities and equipment. Rather, as
we stated above, these proposals concern only the distribution of any profit
realized from shipyard overhaul projects. Thus, we find that the proposals do
not interfere with the Agency's right to determine its budget merely because
they specify the programs or the percent of funds to be distributed from
profits derived from the overhaul projects. The Agency also argues that the proposals interfere with
its right to determine its budget because they would result in significant,
unavoidable increased costs without offsetting benefits. However, the Agency's
position is advanced without knowledge of the amount of profit to be realized
from the projects, if any, or the amounts that would be expended for the items
specified in the proposals. In addition, the Agency does not address the
possibility that the larger employee share proposed in the Union's scheme might
induce a higher level of performance resulting in a greater profit than
otherwise might have been attainable. Furthermore, we note the proposals
pertain to profits and not operating costs of the projects. Accordingly, we find that the Agency has not
substantiated its claim that Proposals 1 and 2 would prescribe a particular
program or amount of funds to be included in the Agency budget or would result
in significant, unavoidable increased costs which are not offset by
compensating benefits. Consequently, we conclude that the proposals do not
7106(a)(1) of the Statute. 5. Proposals 1 and 2 Do Not Affect the Methods and
Means of Performing Work The Agency points out that it introduced profit sharing
"to motivate improvements in quality and productivity directly contributing to
accomplishment of the agency's mission." Statement of Position at 46. Proposals
1 and 2 do not conflict with the Agency's objective in introducing profit
sharing. They concern only the percentage of profit to be shared with unit
employees. Because the proposals do not conflict with the Agency's stated
objective, they do not affect the management right to determine the methods and
Naturalization Service and National Border Patrol Council, Local
1613, AFGE, 18 FLRA 29 (1985). The Agency also argues that the proposals interfere with
its right to determine the methods and means of performing work on another
basis. The Agency asserts that the proposals would reduce the amount of profits
the Agency had earmarked for capital improvements, thereby hampering the
ability to introduce new and improved equipment and techniques. Therefore,
according to the Agency, the proposals would interfere with its right to
determine its methods and means by reducing the ability to acquire new
equipment. The difficulty with the Agency's position is that the
amount of money available for capital improvements under either the Agency's or
the Union's scheme cannot be ascertained until the 90-day guarantee periods
have expired and a full accounting has been performed. Therefore, neither we
nor the Agency can say accurately that the Union's proposed distribution will
not produce sufficient funds to make needed improvements. Nor can the Agency
establish that the Agency's scheme will produce enough money to meet
management's requirements. Consequently, we find the Agency's argument in this
regard to be unpersuasive. For the above reasons, we find Proposals 1 and 2 to be
negotiable. IV. Proposal 3 Retirees who leave before the end of the 90 day
guarantee period shall be prorated on the days they were in the shipyard in
accordance with eligibility for the plan. A. Positions of the Parties The Agency does not specifically address the
negotiability of Proposal 3. Therefore, we will assume that its arguments
concerning the first two proposals are considered by the Agency also to be
applicable to this proposal. Those arguments are as follows: (1) the doctrine
of sovereign immunity bars Authority jurisdiction over the proposals; (2) the
proposals are inconsistent with law; (3) the proposals do not concern
conditions of employment; (4) the proposals directly determine the conditions
of employment of nonunit employees; (5) the proposals conflict with the rights
under section 7106(a) of the Statute to determine the Agency's budget, to
direct employees and to assign work; and (6) the proposals interfere with the
right under section 7106(b)(1) to determine the methods and means of performing
work. The Union also does not address any specific arguments to
the negotiability of Proposal 3. It only notes that the proposal "merely
concerns itself with the retirement of employees who have served the shipyard
loyally for many years, especially when those employees can no longer remain
employed, for whatever reason." Reply Brief at 2-3. B. Analysis and Conclusion Like Proposals 1 and 2, Proposal 3 arose when management
announced that it would institute a profit sharing plan for overhaul projects
of two submarines. The record indicates that the overhaul projects were either
to begin or were partly underway when negotiations were initiated; the parties
both acknowledged that the amount of profits, if any, from the overhaul
projects had not yet been ascertained. As previously stated, neither party specifically
addressed Proposal 3. Nevertheless, the record establishes that under the
profit sharing plan developed by the Agency, employees would be eligible for
profit sharing if they had been employed by the activity for 270 continuous
days ending at the end of the 90-day guarantee period for the overhaul
projects. See Statement of Position at Attachment 2, Employee
Eligibility. Proposal 3, however, provides that retirees who leave before the
end of the 90-day guarantee period will be permitted to participate in the
profit sharing plan on a prorated basis. We conclude that Proposal 3 is
intended to establish that members of the bargaining unit who had worked on the
overhaul projects but who retire before the overhaul projects are completed and
a profit, if any, is identified, would be eligible to participate in the profit
sharing plan. Although the Agency made no specific claims concerning
Proposal 3, we have assumed that the arguments raised as to Proposals 1 and 2
are applicable here. To reiterate those arguments, the Agency claimed the
following: (1) the doctrine of sovereign immunity bars Authority jurisdiction
over the proposals; (2) the proposals are inconsistent with law; (3) the
proposals do not concern conditions of employment; (4) the proposals directly
determine the conditions of employment of nonunit employees; (5) the proposals
Agency's budget, to direct employees and to assign work; and (6) the proposals
interfere with the right under section 7106(b)(1) to determine the methods and
means of performing work. In section III.B.1. of this decision, we rejected the
Agency's claim that the doctrine of sovereign immunity barred Authority
jurisdiction over Proposals 1 and 2. For the reasons more fully set forth in
section III.B.1. of this decision, we find that the doctrine of sovereign
immunity is also inapplicable to the dispute concerning Proposal 3 and, thus,
we have jurisdiction to resolve the negotiability of Proposal 3. In section III.B.2. of this decision we concluded that it
was clear that Proposals 1 and 2, which established the percentage of profit
realized from overhaul projects to be paid to bargaining unit employees, were
principally focused on and directly affects the working conditions of
bargaining unit employees. Proposal 3 merely concerns which current bargaining
unit employees will remain eligible to participate in the profit sharing plan
even if they retire before the profit sharing plan can be implemented. Thus, we
find that Proposal 3, like Proposals 1 and 2, is also principally focused on
and directly affects the working conditions of bargaining unit
employees. The Agency argued, however, that Proposals 1 and 2 were
nonnegotiable because they directly affected the vital interests of nonunit
employees. In support, the Agency stated that "each portion of that profit made
available for profit sharing with unit employees becomes unavailable for
sharing with nonunit employees." Statement of Position at 35. In section
III.B.2 of this decision, we rejected the Agency's claim. We concluded that
Proposals 1 and 2 would not have direct and significant effects on vital
interests of nonunit employees. Therefore, we found that the proposals
satisfied the first prong of the Antilles test. Proposal 3 would allocate a portion of the profits to
former bargaining unit employees. Thus, the Agency's argument concerning the
effect of Proposals 1 and 2 on the working conditions of nonunit employees is
equally applicable to Proposal 3. Consistent with our determination in section
III.B.2. of this decision, we find that Proposal 3 would not have direct and
significant effects on vital interests of nonunit employees. Thus, Proposal 3
is not nonnegotiable because of its effect on working conditions outside the
unit. Like Proposals 1 and 2, Proposal 3 satisfies both prongs of the
Antilles test. We also concluded in section III.B.2. of this decision
that Proposals 1 and 2 were not excluded from the definition of "conditions of
employment" because they concerned a matter specifically provided for by
Federal statute. We noted that the Agency had acknowledged that the profit
sharing plan was authorized by 5 U.S.C. § 4503. We found that because 5
U.S.C. § 4503 did not specify the dollar amounts to be paid as awards, the
proposals did not concern a matter specifically provided for by law and, thus,
the proposals were not excluded from the definition of "conditions of
employment" by section 7103(a)(14)(C) of the Statute. We found further, that
since nothing in Proposals 1 and 2 required the payment of awards in amounts
exceeding the maximum permitted by 5 U.S.C. § 4503, the proposals did not
violate law. As noted above, Proposal 3 merely concerns which current
bargaining unit employees will remain eligible to participate in profit sharing
even if they retire before the profit sharing plan is implemented. Thus, like
Proposals 1 and 2, nothing in Proposal 3 specifies the amount to be paid to
employees as incentive awards or requires the payment of an incentive award in
excess of maximum permitted by 5 U.S.C. § 4503. Consequently, for the
reasons more fully set forth in section III.B.2. of this decision we conclude
that Proposal 3 also is not inconsistent with Federal statute. We concluded in section III.B.3. of this decision that
Proposals 1 and 2 did not interfere with management's rights under section
7106(a) to assign work and to direct employees because the proposals did not
prescribe the type of work employees will perform or establish the performance
level necessary to avoid discipline. Similarly, nothing in Proposal 3
prescribes the type of work employees will perform or establishes the
performance level necessary to avoid discipline. Thus, for the reasons more
fully set out in section III.B.3. of this decision, Proposal 3 does not
interfere with management's rights under section 7106(a)(2)(A) and (B) to
assign work and to direct employees. In section III.B.4. of this decision we concluded that
Proposals 1 and 2 did not interfere with the Agency's right to determine its
budget under section 7106(a)(1). We found that the Agency had not sustained its
claim that the proposals prescribed a particular program or amount of funds to
be included in its budget or would result in significant, unavoidable increased
costs which are not offset by compensating benefits. Similarly, there is
nothing in Proposal 3 which prescribes a particular program or amount to be
included in the Agency's budget. In addition, no claim was made that Proposal 3
would result in significant, unavoidable increased costs not offset by
compensating benefits. Thus, for the reasons set out in section III.B.4. of
this decision, we find that Proposal 3 also does not interfere with the
Agency's right to determine its budget under section 7106(a)(1). We also rejected the Agency's final claim concerning
Proposals 1 and 2 that the proposals affected the methods and means of
performing work under section 7106(b)(1). We found in section III.B.5. of this
decision that the proposals did not conflict with the Agency's stated objective
in establishing profit sharing "to motivate improvements in quality and
productivity." We also found that the Agency had not sustained its additional
claim that the proposals interfered with its right to determine its methods and
means by reducing its ability to acquire new and improved equipment as a result
of reducing the amount of profits the Agency had earmarked for that purpose.
Thus, based on the reasons more fully set out in section III.B.5. of this
decision, we find that Proposal 3 also does not interfere with the Agency's
right to determine its methods and means under section 7106(b)(1). In our view, Proposal 3 is similar to the one presented
in K. I. Sawyer Air Force Base, 31 FLRA No. 107. The proposal in that
case sought, among other things, to define the pool of employees who could be
considered for quality step increases. We found the proposal's effect in
defining the pool of employees eligible to be considered for quality step
increases was "wholly procedural in nature." Therefore, that aspect of the
proposal did not conflict with matters provided for by law. Similarly, Proposal
3's limited objective is to establish the criterion for eligibility to receive
incentive pay and to establish the extent to which those employees might share
in such payments. Based on K. I. Sawyer Air Force Base, we
likewise find that Proposal 3 is "wholly procedural in nature" and thus, within
the duty to bargain. V. Order The Agency must upon request, or as otherwise agreed to
by the parties, bargain on the proposals.(*) Issued, Washington, D.C., ___________________________ Jerry L. Calhoun, Chairman
have footnotes.) */ In finding the disputed proposals to be negotiable, we
make no judgment concerning their merits. The Union's request for a stay of the
disputed 50 percent of the profits was prompted by its view that the Agency
engaged in bad faith bargaining. Whether or not the Agency engaged in such
conduct is appropriate for resolution in an unfair labor practice proceeding
where factual issues surrounding the Agency's conduct can be ascertained and
evaluated. Thus, we deny the Union's request for a stay. Federal Labor Relations Authority