National Mediation Board: Strengthening Planning and Controls Could Better Facilitate Rail and Air Labor Relations
Published: 2013-12-03T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: A small federal agency, NMB facilitates labor relations in two key transportation sectors--railroads and airlines-- through mediation and arbitration of labor disputes and overseeing union elections. Established under the Railway Labor Act, NMB's primary responsibility is to prevent work stoppages in these critical industries. The FAA Modernization and Reform Act of 2012 required GAO to evaluate NMB programs and activities. GAO examined NMB's (1) strategic planning and performance measurement practices; (2) controls for key management areas; and (3) challenges, if any, in overseeing elections. GAO assessed NMB's management practices using internal control standards and other GAO criteria; interviewed NMB officials, current and former board members, and key stakeholders from rail and air labor and management groups; and reviewed relevant federal laws, regulations, and NMB policies.
section_title: What GAO Found
paragraphs: The National Mediation Board (NMB) recently updated its strategic plan but is not meeting some federal strategic planning and performance measurement requirements. NMB missed deadlines for updating its strategic plan and lacks performance measures to assess its progress in meeting its goals, even though an agency's strategic plan should form the basis for everything an agency does.
NMB also lacks some controls in key management areas that could risk its resources and its success:
Financial accountability: NMB contracts for annual financial statement audits and internal control reviews. However, it lacks a formal process for addressing identified deficiencies, a key internal control.
Information technology: NMB recently transitioned to new information technology systems but is missing key management and security controls, including an information security program that fully implements federal requirements.
Human capital: NMB has taken steps to improve its human capital program but improvements are still needed. Although all NMB senior managers are eligible for retirement, NMB has not engaged in formal workforce planning to identify gaps in staff skills, and strategies, such as training, to address them.
Procurement: NMB has established some key procurement policies and controls but weaknesses remain. For example, in a recent purchase of tablet computers for some staff, NMB did not follow its own procedures to assess the need for the devices or solicit competition.
Other management issues: NMB does not have an Inspector General (IG), and oversight by other federal agencies is limited. NMB also has a significant number of pending rail arbitration cases, and it lacks complete data on the types of cases filed to help it address the backlog and the costs.
NMB has adapted to challenges presented by large union elections resulting from airline mergers and has implemented improvements such as online voting. In 2010, NMB changed its rules for determining a majority in union elections. While this process caused disagreement among some stakeholders, NMB data suggest that the percentage of elections in which a union was certified has, thus far, remained relatively constant in the years before and after the rule change.
section_title: What GAO Recommends
paragraphs: Congress should consider authorizing an appropriate federal agency's IG to provide oversight of NMB. NMB should implement a formal strategic planning process and develop performance goals and measures to meet federal requirements, develop a process to address audit findings, implement key components of an information security and privacy program, and engage in strategic workforce planning. NMB should also collect and analyze data on the types of rail grievances filed to help improve efficiency in its arbitration process. In commenting on a draft of this report, NMB said it would address our recommendations and described actions it plans to take.

section_title: Letter
paragraphs: Railroads and airlines are two key transportation sectors, and disruptions  to these industries can be costly for passengers, workers, consumers,  and businesses. For example, as a result of an 89-day pilot strike in  spring 2001 at Comair, a regional carrier for Delta Air Lines, the carrier  did not operate its 815 daily flights for an estimated 25,000 passengers.  The airline’s 1,350 striking pilots lost an estimated $14 million in salaries,  and the airline reported laying off an additional 1,600 nonstriking workers.  Recognizing the significant consequences of work stoppages as a result  of disputes between labor and management, in 1926, Congress enacted  the Railway Labor Act (RLA) to provide a framework for ensuring  harmonious labor relations in the railroad industry. A 1934 amendment to  the RLA created the National Mediation Board (NMB), an independent  federal agency that provides mediation and other services to help resolve  labor disputes over issues such as working conditions and rates of pay. In  addition, NMB is responsible for resolving disputes over union  representation and the interpretation of collective bargaining agreements.  A 1936 amendment to the RLA expanded coverage to the airline industry.  The FAA Modernization and Reform Act of 2012 further amended the  RLA and mandated GAO to evaluate NMB’s programs and management  practices. Specifically, this report examines:  1.  the extent to which the National Mediation Board follows federal  strategic planning requirements and leading practices,  2.  the extent to which the National Mediation Board has key  management controls in place—for financial management; information  management, security, and privacy; human capital and workforce  development; and procurement—to fulfill its mission, and  3.  how the National Mediation Board addresses challenges, if any, in its  process for overseeing employee representation elections.
To address these objectives, we reviewed relevant federal laws and  regulations and interviewed NMB officials, current board members, and  all board members who served from 2000 through 2012. We also  interviewed key stakeholders, including representatives from rail and air  labor and management groups. We reviewed key NMB documents,  including its most recent 5-year strategic plan, its annual Performance  and Accountability Report, and congressional budget justification  documents, and compared NMB’s performance planning and reporting  practices with requirements in the Government Performance and Results  Act of 1993 (GPRA) as updated by the GPRA Modernization Act of 2010  (GPRAMA) and related leading practices identified in our previous work.  We also reviewed NMB’s financial statement audits for fiscal years 2004  through 2012 and the most recent cycle of internal control reviews of  program and management areas, and interviewed NMB’s independent  auditors about identified internal control weaknesses. We did not  independently assess the findings in these financial audits and program  reviews. We also reviewed NMB policies and procedures for  representation, mediation, and arbitration, including the NMB  Representation Manual, board member briefing book, sample ballots, and  rulemaking procedures.
In addition, we assessed NMB’s plans, policies, and practices in financial  management; information management, security, and privacy; human  capital; and procurement using GAO’s Standards for Internal Control in  the Federal Government, the Federal Information Security Management  Act of 2002, Privacy Act of 1974, E-Government Act of 2002, guidelines  developed by the Office of Management and Budget (OMB) and the  National Institute of Standards and Technology, and criteria developed by  GAO in prior work. We identified key practices from these criteria and  assessed whether NMB is following these practices (NMB is taking  appropriate actions and has a formal plan, policy, or other document),  partially following (NMB is taking some actions but does not have a formal  plan or policy and/or some additional steps are needed to consider this  practice implemented), or minimally following (NMB is taking little or no  action to address this practice). We also tested the security settings on  NMB information technology devices, such as laptops, smartphones, and  tablets.
We interviewed officials at OMB and the Office of Personnel Management  (OPM) to determine how these agencies provide oversight and guidance  to NMB. We assessed the reliability of data from OPM’s annual human  capital survey of NMB staff, and data provided by NMB on representation  election outcomes, and determined that these data were sufficiently  reliable for our purposes. See appendix I for a detailed description of our  scope and methodology.
We conducted this performance audit from September 2012 through  December 2013 in accordance with generally accepted government  auditing standards. Those standards require that we plan and perform the  audit to obtain sufficient, appropriate evidence to provide a reasonable  basis for our findings and conclusions based on our audit objectives. We  believe that the evidence obtained provides a reasonable basis for our  findings and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: The RLA was passed in 1926, in part to establish a legal framework for  avoiding disruptions in rail service and interstate commerce. The RLA  was later amended to extend its provisions to the airline industry, and  also to establish NMB as a federal agency to administer the law.  According to NMB, the original bill was drafted jointly by rail management  and labor representatives and was enacted by Congress without  amendment. The RLA establishes several key principles. For example:  It requires parties (rail and air carriers and their employees’  representatives) to “exert every reasonable effort” to settle disputes to  avoid interruption to commerce or to the operation of any railroad or  airline.  It gives participants the right to designate their representatives under  the Act without interference from the other party and assures  employees the right to determine a collective bargaining  representative without interference from their employers.  It establishes procedures for resolving disputes over pay, rules, or  working conditions during collective bargaining, as well as disputes  resulting from the interpretation or application of existing collective  bargaining agreements.
subsections: section_title: NMB’s Organization and Resources
paragraphs: NMB is headed by a three-member board, with each member appointed  by the President and confirmed by the Senate for a term of 3 years. No  more than two members of the board can be from the same political  party. In August 2013, a third board member was confirmed by the  Senate, filling a board position that had been vacant since June 2012.  The board members typically designate a chairman annually. The board  members provide overall leadership and strategic direction for NMB, and  retain responsibility for key functions such as releasing the parties from  the mediation of major disputes if no agreement can be reached. The  board has delegated day-to-day administration and oversight to NMB’s  Chief of Staff and General Counsel (see fig. 1). As of August 2013, NMB  had 49 employees, including the 3 board members. NMB also contracts  with approximately 430 arbitrators. In fiscal year 2013, NMB had an  operating budget of $12.7 million.
NMB has sole jurisdiction to certify employee unions in the rail and air  industries. Under the RLA, employees have a right to select a union free  from influence, interference, or coercion from their employer. Eligible  employees in a craft or class at a given carrier—those who perform the  same duties and functions, such as locomotive engineers or pilots— select a union representative on a systemwide basis. For example, the  pilots at an airline must be represented by the same union regardless of  where they are located geographically. Unions are selected through  secret-ballot elections conducted by NMB.
If there is a question concerning representation of a craft or class, NMB is  charged with resolving the representation dispute through its Office of  Legal Affairs. For an election to occur, at least 50 percent of the eligible  employees in the craft or class must submit signed authorization cards  indicating their interest in being represented by a union. An NMB  investigator compares signatures on those cards to signature samples for  all eligible voters in the craft or class provided by the carrier to assess  their authenticity and determine if there is a sufficient percentage to hold  an election. The investigator also addresses any challenges to the  eligibility of individual voters. Votes are cast by phone or via the Internet,  in an election overseen by NMB. If a union receives a majority of the  votes, NMB certifies the union as the employee representative.  Additionally, NMB protects against “interference, influence, or coercion by  either party” during this process, and it can order a new election or  shorten the time before another union may apply to represent the  employees if it determines any of these have occurred.
In 2010, NMB changed its rules for certifying a union. Previously, a  union had to receive votes from a majority of all employees in a craft or  class who were eligible to vote in order to be certified, or approved, as the  employee representative. This meant that employees who did not vote  were, in effect, counted as voting against union representation. Under the  rule change, an employee who chooses not to vote is no longer counted  because union representation is now determined by a majority of votes  cast. Numerous stakeholders, including union and carrier groups and  members of Congress, submitted comments for and against the change.  In addition, one NMB board member at the time wrote a dissenting  opinion in the proposed and final rules published in the Federal Register.
section_title: Resolution of “Major Disputes” in Collective Bargaining
paragraphs: Once a union has been certified to represent a group of employees, the  carrier is required to negotiate with—and only with—that union in a  process known as collective bargaining. When the parties cannot reach  agreement on the terms of a new or revised collective bargaining  agreement—such as working conditions or rates of pay—it is classified as  a “major dispute.” Either party can apply for NMB’s mediation services  to resolve their differences or NMB may impose mediation if it finds that  resolving the dispute is in the public’s interest. In general, mediation is a  process through which disputing parties, with assistance from a neutral  third party (known as a mediator), seek ways to settle their dispute. In  fiscal year 2012, NMB provided mediation services in 144 cases, 46 of  which were closed and 98 of which were pending at the end of that year.  Mediation continues until the parties reach agreement or NMB determines  that further mediation will not be effective and offers the parties the option  of interest arbitration, in which case a neutral arbitrator would determine  what provisions to include in the new or modified collective bargaining  agreement. Either party may, however, refuse arbitration. If either party  refuses, a 30-day cooling off period is triggered before the parties can  exercise what is known as self help. Self help includes actions such as  the union going on strike or the carrier denying employment or refusing to  admit union employees onto the property in a lockout. To prevent this  work stoppage, the President may create a Presidential Emergency  Board to help settle the dispute. In fiscal year 2012, there was one  Presidential Emergency Board created in a dispute involving the five  largest U.S. railroads and numerous short-line and regional railroads.  (See fig. 2 for a description of the process for resolving major disputes  under the RLA.)
In addition to mediation and arbitration, NMB provides voluntary  alternative dispute resolution (ADR) services, such as facilitation and  training, to help unions and carriers learn to resolve disputes using less  confrontational methods.
section_title: Resolution of “Minor Disputes” under Collective Bargaining Agreements
paragraphs: The RLA also offers another type of arbitration—grievance arbitration—to  help resolve “minor disputes.” As opposed to major disputes, which  involve the establishment or modification of a collective bargaining  agreement, minor disputes are disagreements over how to interpret and  apply existing agreements. For example, an employee may file a  grievance if he or she believes they were wrongfully fired or disciplined. If  the carrier and employee cannot resolve their dispute, the RLA permits a  party to refer the dispute to arbitration before an adjustment board  created by the rail or air industry. The adjustment board consists of a  carrier representative, a union representative, and a neutral arbitrator. In  most instances, the neutral is selected by the two representatives. If they  are unable to agree on an individual, they may request that NMB appoint  a neutral. Grievances that the parties have been unable to resolve  themselves are submitted to this board for resolution. In this capacity, the  neutral is called upon to break a tie. Unlike major disputes, minor disputes  cannot trigger self-help actions such as strikes or lockouts.
NMB does not directly provide arbitration services through its own staff,  but rather maintains a list of registered arbitrators from which the parties  can select someone to review and decide their case. In the airline  industry, the parties pay the costs of arbitration. In the railroad industry,  however, consistent with the requirements of the RLA, NMB pays the fee  (currently $300 per day) and travel expenses of the arbitrator. In fiscal  year 2012, NMB’s arbitrators closed 3,869 rail grievance arbitration cases  and 2,084 were pending at year’s end. In that year, NMB’s arbitration  budget was $2 million, not including NMB staff salaries.
section_title: Other Federal Labor Relations Agencies
paragraphs: NMB differs in several key ways from the other three labor relations  agencies in the United States: the National Labor Relations Board  (NLRB), Federal Mediation & Conciliation Service (FMCS), and Federal  Labor Relations Authority (FLRA) (see table 1).
OMB and OPM have key oversight responsibilities for all federal  agencies, including NMB. Among other things, OMB is responsible for  providing oversight of agencies’ management, including information  technology and procurement. OMB is also responsible for preparing and  implementing the President’s annual budget and for providing guidance to  agencies on how to comply with the GPRA Modernization Act of 2010  (GPRAMA). OPM is the central personnel management agency of the  federal government charged with administering and enforcing federal civil  service laws, regulations, and rules. OPM also maintains a personnel  management oversight program to ensure that agencies comply with  merit system principles and standards set by the office. As part of this  program, OPM conducts audits of agencies’ human capital programs. In  addition, OPM administers a survey of federal employees to measure  employees’ perceptions of whether, and to what extent, conditions  characterizing successful organizations are present in their agencies.
section_title: Federal Performance Planning and Reporting Requirements under GPRA and GPRAMA
paragraphs: In 1993, Congress passed GPRA, which established strategic planning,  performance planning, and performance reporting as a framework for  agencies to communicate progress in achieving their missions. GPRAMA,  enacted in 2011, established some important changes to existing  requirements by placing a heightened emphasis on priority-setting, cross- organizational collaboration to achieve shared goals, and the use and  analysis of goals and measurements to improve outcomes. GPRAMA  enhanced agency-level planning and reporting requirements and requires  agencies to have additional leadership involvement and accountability.
section_title: NMB Is Missing Key Elements of Successful Performance Planning and Reporting
subsections: section_title: NMB Lacks a Robust Strategic Planning Process for Meeting Federal Requirements
paragraphs: NMB lacks a robust strategic planning process, with formal mechanisms  for gathering congressional and stakeholder input, and as a result, the  agency has not met some federal requirements for performance planning.  For example, NMB updated its previous strategic plan, which covered  fiscal years 2005 to 2010, in November 2012, 7 years after it was  issued. NMB also missed a February 2012 deadline set by GPRAMA for  agencies to update their existing strategic plans to be consistent with new  requirements. NMB officials said they engage in strategic planning but  have not made the development of a strategic planning document a high  priority. The agency had delayed the start of the strategic planning  process until the completion of changes in the agency’s information  technology systems. The sequencing of NMB’s strategic plan  development—after the roll-out of other initiatives—runs counter to our  previous findings on leading results-oriented organizations. Strategic  planning should provide the basis for everything an organization does.  For example, all decisions, including those involving resources such as  information technology systems and human capital investments, should  flow from an agency’s strategic plan. Developing a strategic plan can help  clarify organizational priorities and unify an agency’s staff in the pursuit of  shared goals.
Agencies are also required to issue a new strategic plan in February  2014, and every 4 years thereafter, concurrent with the President’s  budget (issued no later than the first Monday in February). (See sidebar  for key strategic planning requirements.) In August 2013, NMB officials  said they intend to complete a new strategic plan by December 2013,  before the February 2014 deadline.
NMB lacks a systematic way of involving congressional and other  stakeholders in its strategic planning process. As noted earlier, agencies  should consult with Congress and other stakeholders for input when  developing and adjusting their strategic plans. NMB officials told us they  do not have a routine process for gathering input from congressional  stakeholders during the strategic planning process, a key focus of  GPRAMA. Consultations with Congress are intended, in part, to ensure  that agency performance information is useful for congressional oversight  and decision making. As we have previously reported, having pertinent  and reliable performance information available is necessary for Congress  to adequately assess agencies’ progress in making performance and  management improvements and ensure accountability for results.
In addition, many stakeholders in the rail and air industries, both in labor  and management, told us NMB does not seek out and incorporate  stakeholder input in its strategic planning efforts, and NMB officials  confirmed that they do not have a formal mechanism for involving  stakeholders in this process. NMB officials told us that the agency instead  receives input from stakeholders in informal ways, such as getting  feedback from parties during the course of mediation, or from members of  two joint labor-management groups: the Dunlop II Committee, which has  reviewed NMB’s mediation function, and the Section 3 Subcommittee,  which has reviewed NMB’s rail arbitration function. However, when we  interviewed officials from both groups, they reported that NMB hasn’t  always involved them in planning. Stakeholder involvement is important to  help agencies ensure their efforts and resources are being targeted to the  highest priorities.
section_title: NMB’s Performance Plan Lacks Objective and Quantifiable Goals and Measures for Reporting on Results
paragraphs: Without a robust strategic planning process as a guide, NMB is also not  meeting federal requirements for annual performance planning and  reporting. Federal agencies are required to develop annual performance  plans. These plans use performance measurement to reinforce the  connection between the long-term strategic goals outlined in an agency’s  strategic plan and the day-to-day activities of its managers and staff.
Annual performance plans are to include performance goals which cover  each agency’s program activities as listed in the budget, a description of  the necessary resources and strategies to achieve these goals, a  balanced set of performance measures for each goal, and a discussion of  how the measures will be verified. (See sidebar for key performance  planning requirements.)
An agency’s performance goals establish desired performance levels,  and performance measures are used to assess progress toward  achieving those goals. Yet the goals and sub-goals listed in NMB’s fiscal  year 2014 budget submission do not consistently meet the basic  GPRAMA requirements of being objective, measurable, and  quantifiable. For example, NMB states that it has a goal to “better track  the history of cases” within its mediation and ADR programs. However,  this goal does not contain a target number of mediation cases to be  tracked (quantifiable), what would be considered “better” (objective), a  performance indicator to gauge progress (measurable), or a time period  in which to accomplish this goal (see fig. 3). Without measurable targets  or timeframes, these goals do not establish intended performance or  allow NMB and the public to assess progress.
Since NMB has not developed objective, measurable, or quantifiable  goals, it is not well positioned to develop performance measures to use in  reporting progress or results in any program area. NMB’s fiscal year  2011-2016 strategic plan stated that the agency plans to formulate  performance measures for its strategic goals and each of the related  performance goals in its annual budget submission. However, the  performance goals in NMB’s fiscal year 2014 budget submission did not  contain indicators or measures that could be used to gauge agency  performance. NMB officials said they are currently working to develop  more quantifiable, time-based performance measures for NMB program  areas in its next strategic plan. Our previous work on results-oriented  organizations shows that many agencies need years to develop a sound  set of performance measures. NMB officials told us they internally track  measurable targets, such as the number of days NMB mediators meet  with parties before reaching resolution on a specific collective bargaining  agreement, but the agency does not report these metrics publicly.  Without objective, measurable, and quantifiable performance goals made  available to the public, Congress and stakeholders lack information on the  extent to which NMB is making annual progress toward its strategic goals  and how NMB is planning to use its resources.
section_title: NMB Lacks Some Key Management Controls
subsections: section_title: NMB Has Most Key Controls for Financial Accountability but Lacks a Formal Mechanism to Address Deficiencies
paragraphs: NMB is following most key practices for financial accountability and  control, an integral part of an organization’s management that should  reach throughout all departments and programs as well as financial  management and reporting functions. There are two key practices,  however, that NMB is following only partially or minimally (see table 2).
NMB routinely prepares comprehensive, agencywide financial statements  and contracts for independent audits of those financial statements. The  agency has reported that it received 15 years of unqualified financial audit  opinions. As part of these audits, the auditors also provide NMB with a  report on internal controls over financial reporting. In those reports, the  auditors identified a material weakness in two of the years audited (2010  and 2011). The material weakness in both years was related to the  untimely recording of obligations related to NMB’s arbitration services.  This issue was downgraded to a significant deficiency in fiscal year 2012  after NMB took steps to address the issue. According to a senior NMB  official, the agency expects to address all recommendations related to the  2012 significant deficiency with full implementation of its Arbitrator  Workspace, a web-based information system that replaces multiple  electronic forms used by NMB to track arbitrator activity and financial  obligations to contracted arbitrators.
In addition to annual financial statement audits, NMB contracts with the  same independent auditors to review its internal controls over one key  program area (mediation, arbitration, representation, and ADR) or  management area (procurement and personnel/payroll) annually. The  law commonly known as the Federal Managers’ Financial Integrity Act of  1982 and its implementing guidance from OMB require federal  agencies to develop and implement appropriate and cost-effective  internal controls for results-oriented management, assess the adequacy  of those internal controls, identify needed areas of improvement, take  corresponding corrective action, and provide an annual statement of  assurance regarding internal controls and financial systems.
However, NMB does not have a mechanism for ensuring prompt  resolution of findings, a key internal control. When asked how the agency  monitors the status of recommendations or findings in its internal control  reviews, NMB officials said it is assumed, based on management’s  written response in the reports, that any weaknesses will be addressed  and resolved by the date of the next review of that topic. However, that  review may not occur for as many as 8 years. For example, the  representation function was last reviewed in fiscal year 2005, and  auditors began their next review of that topic in June 2013. In addition,  NMB has not consistently provided management responses, which are  written descriptions of the actions the agency plans to take to address  deficiencies. For example, in the 2009-2010 report on internal controls  over arbitration, NMB did not submit a management response to the five  findings and recommendations in the report. In addition, NMB did not  submit responses to findings and recommendations in the auditors’  management letters that accompanied NMB’s financial statement reports  in fiscal years 2011 and 2012.
It is also not clear that top NMB management officials are monitoring the  resolution of findings and recommendations made by independent  auditors. Within NMB, department heads are responsible for  implementing the auditors’ recommendations. The Chief of Staff and the  board do not assume operational responsibility for addressing the findings  of independent auditors. In addition, it is not clear that NMB’s board  members are given routine, formal reports on the status of findings or  how they are resolved. While some NMB officials told us board members  are briefed or given reports on the status of resolving findings, officials  could not provide documentation, such as minutes of meetings in which  audit findings or internal control reviews and their resolution were  discussed. Officials told us that it is the agency’s policy not to keep  minutes of board meetings. Furthermore, NMB’s auditors do not follow up  on the status of recommendations in the internal control reviews until the  date of the next review unless the recommendation is related to NMB’s  annual financial statement audit. As a result, some recommendations  made by auditors to improve internal controls or NMB operations may not  be addressed. In the 2008-2009 report on NMB’s personnel and payroll,  auditors found the same deficiency they identified in their fiscal year 2003  review on the same topic. In addition, auditors made the same  recommendation to NMB in their management letters for fiscal years  2008, 2010, 2011, and 2012.
section_title: NMB Has Not Fully Implemented Key Information Security and Privacy Controls
paragraphs: NMB relies on information technology to carry out its mission. The agency  uses computer systems and networks to host applications, files, email  services, and web access, and to manage its records and financial  information. During fiscal year 2013, NMB switched its network  infrastructure, including its email, files, web access, and other  applications, to a commercial vendor. Further, in May 2013, it switched its  financial management system to the Bureau of the Public Debt’s  Administrative Resource Center. NMB also plans to bring its records  management system into its cloud computing environment in fiscal year  2014.
Federal laws and policies require federal agencies to implement key  practices to effectively manage and secure their information systems and  information, and protect the privacy of personal information they collect  and use. For example, the Federal Information Security Management Act  of 2002 (FISMA) requires federal agencies to develop, document, and  implement an agencywide information security program to provide  security for the information and information systems that support the  operations and assets of the agency, including those operated on behalf  of the agency by a contractor or another agency. Such a program  includes eight key practices. To improve information security and reduce  overall information technology operating costs for agencies, OMB also  issued a memorandum instructing the heads of departments and  agencies to implement common security settings for computers running  Windows operating systems. In addition, the Privacy Act of 1974 and E- Government Act of 2002 describe, among other things, agency  responsibilities with regard to protecting personally identifiable  information.
NMB has not fully implemented key information security and privacy  practices (see table 3).
According to agency officials, key practices were not followed because  NMB has been in the process of transitioning its information technology  network and systems. NMB plans to update and finalize all of its  information security policies and procedures to reflect its new information  technology environment. It also plans to conduct a test and evaluation of  its information security controls to ensure that they are appropriately  designed and operating effectively. However, the agency has not  established timeframes or milestones for completing these actions. Until  NMB fully develops, documents, and implements an agencywide  information security program, increased risk exists that the confidentiality,  integrity, and availability of its information will be compromised.
Finally, although NMB officials stated that the agency has taken steps to  provide privacy protections for personal information accessed or held by  NMB, they did not provide supporting documents to demonstrate how the  agency plans to ensure the privacy of personal information that may be  contained in its new computer environments. Until it establishes privacy  policies, NMB will have limited assurance that the personal information it  collects and uses is adequately protected.
section_title: NMB Has Taken Steps to Improve Its Human Capital Program but Does Not Follow Key Planning Practices
paragraphs: NMB has taken steps to improve its human capital program, such as  increasing oversight of mediators and providing additional training  opportunities to its staff. For example, in 1997, in response to  recommendations made by the rail and air labor-management  committees, NMB relocated all its mediators from the field to its  headquarters in Washington, D.C. In 2000, NMB established individual  development plans to improve staff training, and, in 2010, began  providing free or low cost training to its staff through partnerships with two  universities and other efforts. More specifically, NMB officials teach  classes at those universities, or the agency provides office space for the  universities to hold training sessions for labor relations practitioners in  exchange for several NMB staff attending the training sessions at no  charge.
Despite these improvements, NMB’s actions are not guided by a strategic  workforce plan, which is essential for every federal agency in that it  addresses two critical needs: (1) aligning an organization’s human capital  program with its current and emerging mission and programmatic goals;  and (2) developing long-term strategies for acquiring, developing, and  retaining staff to achieve programmatic goals. Workforce planning is a  key internal control, as agency management should ensure that skill  needs are continually assessed and that the organization is able to obtain  and maintain a workforce with the skills necessary to achieve  organizational goals. Although agencies may take a variety of  approaches to workforce planning, GAO has identified some principles  that agencies should follow, including determining critical skills and  competencies, and developing strategies for closing any gaps.
NMB has not developed a strategic workforce plan that incorporates  these key practices (see table 4). Although the agency indicated in 2009  that it would develop one as part of its last human capital plan, it has yet  to do so. NMB’s lack of strategic workforce planning was also identified  by OPM in its last evaluation of the agency’s human capital program in  2007.
NMB has not determined the skills and competencies it needs to achieve  current and future program results, nor has it systematically identified  gaps or strategies to fill them. Instead, senior NMB officials said they  identify needed skills and competencies on a case-by-case basis, such as  when hiring to fill a specific vacancy. Officials added that NMB does not  have difficulty hiring staff. However, some stakeholders identified, and  NMB officials acknowledged, possible gaps in skills and competencies  among NMB mediators, an occupation NMB has identified as critical to its  mission. For example, several NMB officials and most of the labor and  management stakeholders we interviewed said NMB staff, particularly  mediators, lack rail industry experience. NMB officials confirmed that 10  of its 13 mediators come from the airline industry, 2 come from the  railroad industry, and 1 does not have a background in either industry.  NMB officials said it is difficult to recruit mediators from the rail industry  because there are few rail employees willing to leave their railroad jobs,  particularly because industry salaries and benefits are greater than what  NMB can offer. NMB officials described a few strategies they have used  to recruit more staff with rail experience through networking at industry  conferences, but they do not have a formal recruiting strategy. In addition,  NMB officials said they cross-train staff in both the rail and air industries  and, in 2013, took mediators on a tour of a rail property to learn more  about the rail industry. Similarly, an NMB official and some carrier officials  we interviewed said most NMB mediators come from labor union, rather  than management, backgrounds. NMB officials confirmed that 8 of its 13  mediators formerly held union labor relations positions while 4 held labor  relations positions with carriers. (One mediator did not have a labor  relations background with either a union or carrier.) NMB officials told us  the agency values professional experience in rail or air labor relations  over mediation experience because they have found that mediators need  to understand the industries in order to be effective. However, two airline  management officials said that having more mediators with union  backgrounds than with management backgrounds could create the  perception that the agency is not completely neutral in collective  bargaining.
Further, NMB has not employed strategies, such as succession planning  or leadership development, to help close gaps in critical skills and  competencies. Succession planning and leadership development were  also identified as problems by OPM in its 2007 evaluation of NMB. NMB  officials identified succession planning as the agency’s greatest human  capital challenge: All senior managers are eligible to retire and all of the  mediators are in their second careers and eligible to retire. However,  NMB has not revised its succession plan since it was first drafted in 2006,  even though it has since made organizational changes, such as  reinstituting the Chief of Staff position in 2010. The Director of the Office  of Administration said NMB’s small size and limited budget make it  difficult to hire additional staff to succeed retirement-eligible senior staff.  The director also told us the agency is taking some steps, such as  establishing agreements with other agencies to provide administrative  services and free up NMB staff time for developmental opportunities.
Training also can be an important strategy to address gaps in skills or  competencies, and NMB has taken steps to improve its training program.  In July 2013, NMB revised its training policy, which establishes a process  through which the agency identifies training priorities and needs.  Specifically, the policy states that training for new staff or to correct  performance deficiencies takes priority over training to improve  satisfactory performance or to prepare employees for career  advancement. Each department prepares an annual training plan that  identifies training needs, in line with agency training priorities. Then each  employee and his or her supervisor develop an individual development  plan that identifies specific training opportunities to meet that employee’s  needs. These individual development plans are approved by the  department director. Employees are required to fill out evaluations after  completing courses. Officials said training opportunities usually consist of  industry conferences, on-the-job training, or training developed through  partnerships with individual carriers, unions, or universities. However,  NMB has not established minimum training requirements for all staff  beyond training required of all government employees, such as  information security training, or training required to maintain professional  certifications, such as continuing legal education courses. OPM made  several recommendations to NMB regarding training in its 2007  evaluation. According to OPM’s fiscal year 2012 Federal Employee  Viewpoint Survey, 85 percent of NMB staff said the agency’s workforce  has the job-relevant knowledge and skills necessary to accomplish  organizational goals, but only 50 percent were satisfied with the training  they received for their present job. Thirty-six percent of NMB employees  were unsatisfied, compared with 24 percent at all small agencies  combined.
Although NMB officials said that mediators arrive at the agency with  significant industry experience, stakeholders identified a need for  improved training. Most of the stakeholders we interviewed said that the  quality of NMB mediators varies. Most said mediators need to continually  update their training to stay abreast of industry trends and effective  mediation techniques. Similarly, the April 2010 report by a joint rail and air  labor-management committee, the Dunlop II Committee, found that the  level of initial and continuing training for mediators was inadequate, and  that mediators would benefit from more standardized, comprehensive,  and regular training, particularly in mediation skills. The committee noted  that most mediators were formerly advocates, not neutral parties, and  needed training in mediation skills. NMB has taken some steps to  address concerns about mediator training. For example, two stakeholders  we interviewed said mediators could use training to interpret and evaluate  cost estimates provided by the parties as part of collective bargaining,  and in July 2013, NMB officials told us that they brought in two experts to  provide training on evaluating cost estimates. In addition, NMB officials  said that the agency is developing a core curriculum for new mediators  consisting of two courses on mediation and negotiation skills. The first 5- day course, on mediation, is now available, and officials said the  negotiation skills course will be available starting in spring 2014.
Finally, because NMB has not established a strategic workforce plan, the  agency has not monitored and evaluated the results of its workforce  planning efforts, including whether they contribute to accomplishing the  agency’s strategic goals. While NMB set human capital goals and  objectives in its 2009 human capital plan, it has not tracked or evaluated  its progress in meeting them and has not taken many of the actions  detailed in the plan. For example, under a goal to “guide human capital  decisions by using a data-driven, results-oriented planning and  accountability system,” NMB had a strategic objective to “develop an  NMB accountability program based on OPM’s accountability system.”  However, as of April 2013—4 years later—a senior official reported that  NMB has not developed such an accountability system, citing other  pressing priorities. In its 2007 evaluation, OPM also noted that NMB did  not have an accountability system that met OPM requirements.
section_title: NMB Follows Some Key Procurement Practices but Weaknesses Remain
paragraphs: NMB is partially following key practices we have identified as critical for  agencies to manage their procurement functions, but we found some  shortcomings (see table 5). NMB is following a key practice of  appropriately placing the procurement function within the organization:  The procurement function is at an equal organizational level as other key  mission offices, such as the Offices of Arbitration and Mediation, the  primary internal customers for whom goods and services are acquired.  Further, as Director of the Office of Administration, the senior  procurement official also oversees the financial and information  technology functions, thereby providing direct insight into other key  internal functions involved in the procurement process. The placement of  the office facilitates proper management support and visibility within the  organization to help the agency meet its overall mission and needs—key  principles that we previously identified. In addition, NMB involves its  internal stakeholders in the procurement process. For example, NMB’s  procurement procedures call for a multidisciplinary approach in that  relevant NMB departments and subject matter experts are to be involved  in making purchase requests, identifying requirements, and reviewing  vendors’ proposals.
While NMB has established policies and procedures to oversee the  procurement process, we and others have identified some weaknesses in  following procedures and maintaining appropriate documentation. NMB’s  independent auditors reviewed the internal controls over NMB’s  procurement activities in fiscal year 2011 and identified some  weaknesses. For example, auditors recommended that NMB improve its  process for organizing and maintaining records because it found that  NMB was unable to provide certain documents for about 25 percent of its  purchases under $3,000. NMB officials said they have made changes to  the agency’s processes to maintain greater control over documents that  support its procurement decisions.
We found that NMB did not follow its own policies and procedures in  purchasing laptops and iPads. NMB spent about $110,000 to purchase  55 laptop computers for its staff in September 2012. Before making the  purchase, NMB solicited quotations from three vendors and received  quotations from two of the vendors for the laptops. However, NMB chose  a quotation representing different technical specifications than the  specifications originally provided to vendors. When we asked for the  business case for purchasing these laptops, an NMB official drafted a  memo, dated March 2013, stating that the agency chose the more  expensive laptops because of features such as durability, touch-screen  capability, and a design that switches easily between laptop and tablet.  This official further stated that the laptops NMB did not select were largely  viewed as inferior to the laptops NMB selected. However, when  requesting quotations, NMB did not include these criteria—touch-screen  capability and a convertible laptop and tablet design—in its technical  specifications. Rather, the specifications it provided to vendors were that  of a more traditional laptop. The vendor whose quotation NMB selected  submitted two quotations at NMB’s request—one meeting NMB’s original  specifications and one for the convertible laptop and tablet NMB  ultimately selected. There was no documentation that NMB notified the  other vendors of its revised specifications and provided these vendors  with an opportunity to submit additional quotations.
NMB also purchased iPads in October 2012 for half its staff over the  written objection of the individual who serves as Chief Financial Officer,  senior procurement official, and Chief Information Officer. However,  according to federal information technology management policy and  internal NMB documents, the Chief Information Officer should have direct  authority over developing and implementing information technology  policy, including information technology investments. In a memo, this  official said the purchase of the iPads, in addition to new laptops that also  function as tablet computers, and new smartphones, was not in keeping  with a November 2011 Executive Order to limit the number of devices  provided to employees. Instead of NMB purchasing the iPads, this  official recommended that employees make use of NMB’s policy allowing  employees to use their own information technology devices. In total, NMB  spent more than $130,000 to purchase 25 iPads and 55 laptops, and to  upgrade 22 smartphones for agency staff. The devices have many  common features, calling into question the necessity for having all three  (see fig. 4). We calculated that, as of July 2013, NMB had issued all three  devices to 19 staff members, including the 2 board members—about 40  percent of NMB’s workforce.
NMB also did not follow its own procurement procedures in purchasing  the iPads. Based on the documents NMB provided us, the agency did not  follow procedures to identify the requirements before purchasing the  iPads, as required. There was no statement of requirements prepared,  in accordance with NMB procedures, and a senior NMB official told us the  purchase was made without outlining specific requirements or assessing  whether the iPad, or a tablet device by another manufacturer, would meet  those requirements. After we requested documentation of the agency’s  business case, the Chief of Staff, who approved the purchase request for  the iPads submitted by a board member in September 2012, drafted a  memo dated March 2013 stating that the agency’s move to a cloud  computing environment and the functionality of the iPads, in addition to  their light weight and relatively low cost, makes them ideal for use at the  bargaining table and in training. The memo also stated that, prior to the  purchase, many mediators were using their own iPads.
In addition, NMB did not seek competition in making the iPad purchase.  NMB’s procurement procedures call for full and open competition if the  agency does not use the General Services Administration Federal Supply  Schedules to select vendors in making purchases. However, NMB did  not take steps to consult the General Services Administration schedule or  use full and open competition. NMB officials explained that they initially  wanted to use the government’s primary telecommunications provider to  obtain these devices but they learned that they could not purchase the  devices without also purchasing the data plan offered by that provider.  Officials then contacted the iPad’s manufacturer, who referred them to a  federal reseller but did not provide a list of additional resellers. NMB also  did not maintain documentation for this purchase that explained the  absence of competition, as called for in the Federal Acquisition  Regulation for procurements under $150,000.
At the time NMB purchased the laptops, iPads, and smartphones, it  lacked a mechanism for ensuring that its procurement procedures were  consistently adhered to, such as a checklist for taking required steps in  the procurement process or maintaining proper documentation. Internal  control standards specify that agencies should implement mechanisms  that enforce management’s directives. This would include, for example,  the process of adhering to procedures and requirements for procuring  goods and services. Such actions are integral to ensuring effective  stewardship of government resources and obtaining the best possible  value for the government. In July 2013, NMB officials told us they had  recently created such a checklist, as part of its transition to a new  procurement system. This checklist includes required steps, such as  conducting market research and checking the General Services  Administration schedule for available equipment and vendors, and  requires staff to include documentation of such steps in the contract file.  The checklist also requires staff to list three vendors and, if the vendor  with the lowest bid is not selected, provide a rationale and additional  documentation on the decisions made.
section_title: NMB Faces Additional Management Issues
paragraphs: Although our review focused on internal controls in specific management  areas at NMB, we identified several broader management issues as well.
OMB and OPM provide limited budgetary and human capital oversight of  NMB. OMB reviews NMB’s budget request and strategic plans, among  other documents, but it has not focused on NMB management issues.  According to OMB officials, OMB does not provide the same level of  oversight for organizations with small budgets and staff as it does for  larger organizations. The same is true for OPM. Until 2012, OPM annually  reviewed and provided feedback on NMB’s human capital management  report. However, beginning in 2013, OPM officials told us that OPM no  longer requires small agencies to submit their human capital  management reports for review. OPM last audited NMB’s human capital  program in 2007. OPM followed up with NMB and, as of 2008, considered  that evaluation closed. It has no plans for future evaluations. However,  OPM surveys NMB’s employees as part of its Federal Employee  Viewpoint Survey of federal agencies, which captures NMB employees’  views of the agency’s strengths and challenges.
Although NMB contracts for annual financial statement audits and rotating  internal control reviews of program and management areas, the agency  does not have continual, internal mechanisms in place to monitor and  review its operations and programs, such as an audit committee or  internal audit function as recommended by internal control standards. In  addition, top NMB management officials do not take operational  responsibility for addressing the findings of the independent auditors. As  a result, problems identified in those auditors’ reviews of program and  management areas may not be revisited for 5 or more years, when that  topic again comes up for review.
NMB does not have a statutory Inspector General (IG) to fill this oversight  role. In comparison, two other federal agencies with similar missions,  the National Labor Relations Board (NLRB) and the Federal Labor  Relations Authority (FLRA), have statutory IGs. NMB’s independent  auditors said they can only perform the reviews NMB hires them to do. In  contrast, an IG can target any area of an agency’s operations for an audit,  inspection, or investigation. The House version of the FAA Modernization  and Reform Act of 2012, H.R. 658, contained a provision that would have  authorized the IG of the Department of Transportation to review NMB  operations, issue findings and recommendations to address any identified  problems, and keep the chairman of the NMB Board and Congress  informed on agency efforts to address them. The bill also would have  authorized $125,000 in Department of Transportation appropriations for  each of fiscal years 2011 through 2014 to cover these services. However,  these provisions were removed from the bill during conference and  therefore were not enacted.
NMB has long struggled with a large volume of railroad grievance  arbitration cases related to minor disputes. At the beginning of fiscal year  2000, there were 11,237 pending arbitration cases. More recently, NMB  has taken steps to reduce the number of pending cases. For example, it  now performs annual checks to identify cases the parties no longer want  heard and remove them from the list of pending work. In addition, NMB  has been exploring using alternatives to arbitration to resolve minor  disputes, such as grievance mediation. In fiscal years 2008, 2009, and  2010, Congress provided NMB with supplemental appropriations  ($657,000, $560,000, and $29,000, respectively) to reduce the arbitration  backlog. By the beginning of fiscal year 2013, NMB had reduced the  number of pending cases to 2,084. However, rail carriers and unions filed  more than 3,500 new cases in fiscal year 2012.
While stakeholders told us NMB has done a good job reducing the  number of these pending rail cases, several also said they are unable to  get an arbitrator assigned in a timely manner. Grievance arbitration cases  in the rail industry can involve a wide range of grievances, such as  wrongful dismissals, unfair labor practices, and rights to additional pay.  For example, we reviewed several arbitration decisions issued in 2012,  including a “time claim” case that involved a group of employees  requesting a day’s pay because their employer had violated a term of  their collective bargaining agreement. Another case involved an  employee who believed she was wrongfully suspended because of an  alleged violation of the employer’s code of conduct policy. Although NMB  has some information from the parties on the types of claims filed,  officials said they do not track or analyze these data, nor prioritize cases  by type of case or level of urgency. NMB assigns arbitrators to cases in  the order the requests are received. Since NMB apportions its annual  funding for arbitrators into 12 monthly allocations, once NMB officials  have obligated all funds for a month, they will not fulfill requests to assign  arbitrators to additional cases. As a result, according to rail union and  carrier officials we interviewed, some disputes are not heard in a timely  manner. For example, they said cases involving a dispute over whether a  rail employee was improperly fired are sometimes delayed because an  arbitrator is not assigned immediately.
Several former board members and a senior NMB official told us that the  large number of rail grievance arbitration cases submitted to NMB occurs  because the parties do not bear any of these costs and so lack a financial  incentive to only file claims with merit. Unique among labor relations  agencies in the federal government, NMB uses federal funding to pay the  fees and travel expenses for an arbitrator to resolve minor disputes  between a specific employer and a union, in accordance with the  requirements of the RLA. In the airline industry, as with all other private  sector industries and the federal government, the parties pay for the  arbitrator and all other arbitration expenses.
In 2004, to encourage more efficient use of its resources and citing its  authority under the RLA, NMB issued a notice of proposed rulemaking to,  among other things, establish application fees for certain grievance  arbitration services, including, for example, a $50 fee for certification of an  arbitrator to a board. The preamble to the proposed rule noted that  these fees, which represented only a small portion of the actual costs of  providing the respective services, would help reduce the large numbers of  pending cases by encouraging parties to only file and proceed with those  with merit and to consolidate as many grievances as possible. However,  NMB did not cite any data on the numbers and types of rail arbitration  cases that compose the backlog as justification for its proposal. In  January 2005, at an NMB hearing on the proposed rule, an organization  representing rail carriers expressed support for fees, stating that the  current system imposes few restraints on the pursuit of any grievance,  regardless of its merit. The organization said that requiring parties in the  rail industry, like those in all other industries, to internalize the costs of  arbitration would result in a more effective and efficient system. However,  numerous union stakeholders voiced opposition to fees, asserting that  NMB is required by the RLA to cover these costs and NMB does not have  authority under the Act to charge fees. Union representatives also said  that when the parties jointly crafted the RLA, the unions gave up their  right to strike over minor grievances in exchange for government-financed  arbitration. Among other concerns, opponents said fees would discourage  unions and individual employees from pursuing valid arbitration of minor  disputes because costs are more difficult for them to bear than they are  for carriers. In addition, more than 125 members of Congress signed a  letter urging NMB to reconsider the proposed rule. NMB did not issue a  final rule regarding fees.
Although NMB did not finalize its proposed rule to establish fees, the  agency has taken other actions to manage its grievance arbitration  workload. In a memo issued June 10, 2013, during the course of our  review, NMB’s Chief of Staff discussed month-to-month delays for rail  arbitration cases and said cases that are not assigned an arbitrator in a  given month for lack of funds no longer have to be re-filed the following  month. Instead, those cases will now go to the top of a wait list for the  next month. The memorandum stated that this change, assuming the  parties do not flood the system with requests, should mean that no case  will go more than 2 months without being assigned to an arbitrator.
section_title: NMB Has Responded to Industry Changes and Stakeholder Disagreements in Conducting Elections
subsections: section_title: NMB Has Addressed Challenges in Conducting Representation Elections
paragraphs: Both NMB officials and stakeholders said the agency has addressed  challenges presented by railroad and airline industry changes, such as  mergers, in conducting its representation work. Because union  representation of rail and air employees is based on their inclusion in a  craft or class systemwide and not by worksite, some recent elections  overseen by NMB have involved tens of thousands of employees in  multiple locations. For example, a 2010 merger of United and Continental  airlines prompted an election in 2011 involving 24,000 eligible flight  attendants. In comparison, elections at NLRB typically involve a single  worksite and substantially smaller numbers of voters. In fiscal year 2012,  more than 88,000 rail and air employees were involved in NMB  representation elections. NMB officials said mergers and bankruptcies in  recent years, primarily in the airline industry, have taxed agency  resources. While NMB can set longer timeframes for large elections,  officials said they must meet those deadlines with the same number of  NMB staff. Senior officials in NMB’s Office of Legal Affairs said they  borrow other NMB employees, such as mediators, to assist with large  elections. At least one union official expressed concern that when  mediators are drafted to assist with representation, their work in  mediating collective bargaining agreements can be delayed. While the  size of elections may have increased, the number of representation cases  handled annually by NMB’s Office of Legal Affairs has remained constant  at about 45 cases for each of the last 10 years.
NMB has also made changes in its representation work as a result of  evolving technology, but some key steps remain labor intensive. Moving  to online voting in 2007 was a challenge to implement, NMB officials said,  but stakeholders were supportive. NMB instituted online voting after  several years of planning. NMB also implemented e-filing for election  applications and other required documents in September 2009. However,  authorization cards submitted by unions to demonstrate sufficient interest  to hold an election are still authenticated by NMB staff by hand. They  must compare the signature on the authorization card to a signature  sample provided by the carrier. One NMB attorney told us she has had  instances when she checked more than 4,000 cards, and NMB officials  said all NMB staff check cards when necessary.
NMB has also faced challenges in its investigations of alleged  interference, influence, or coercion as communications about elections  increasingly occur via the Internet. The use of social media, hyperlinks to  online voting websites, and other evolving communication tools have  expanded the agency’s investigative responsibilities. An NMB attorney  said one investigation occurred after airline employees posted photos of  themselves holding confidential voting materials on Facebook. Another  case required an investigation of potential coercion when employees  hosted voting parties that were shared on YouTube. Sharing voting  materials and voting in groups violates federal law, NMB officials said. In  February 2008, NMB issued a policy prohibiting hyperlinks to an online  voting site from any website other than its own. For example, in 2011,  while investigating an allegation of interference after an airline merger  election, NMB found that posting a hyperlink on a union website to the  voting website might constitute interference because, while it did not  compromise the voting process, it had the potential to reveal a voter’s  identity through his or her Internet identification. As a result, the union’s  win in the election stood but NMB shortened the timeframe for holding  another election from 2 years to 18 months.
section_title: Disagreement during Past Rulemaking on Union Elections Created Challenges
paragraphs: NMB in 2010 changed its rules for certifying a union in an election, and  several stakeholders told us and a former NMB board member wrote at  the time that this process harmed the perception of NMB as a nonpartisan  arbiter and caused disagreement. Prior to the change, which was  effective July 1, 2010, employees who did not vote in an election were  counted as having cast a vote against certifying the union under NMB  regulations. After the change, only votes cast are counted in determining  whether a union has achieved the majority needed to be certified as the  employee representative.
Several stakeholders said NMB was hasty and lacked input in making a  change that overturned 75 years of precedent. NMB received almost  25,000 comments in response to its notice of proposed rulemaking.  NMB held a public hearing on December 7, 2009, on the proposed rule.  While a union official said that NMB used a deliberative process for  making the rule change, one management stakeholder said NMB should  have alerted them that such a change was being considered far in  advance of a hearing. In addition, an airline carrier official said that  because the change was suggested in a letter to NMB from one large  union, and this union’s involvement was not initially disclosed by NMB  officials, some stakeholders were suspicious about NMB’s motives for  changing the rule. In the past, according to another official from a regional  air carrier, NMB involved stakeholders before making significant changes.  For example, the official said NMB consulted with stakeholders over  several years before moving to online voting. A railroad official said the  process was very damaging to NMB’s reputation for neutrality. However,  another railroad official said trust in NMB remains intact.
Despite concerns, NMB officials reported that the percentage of elections  resulting in certification of a union has remained relatively constant in the  years before and after NMB’s 2010 rulemaking. NMB data for the 11  fiscal years (2000 to 2010) before the rule change show that, on average,  about 61 percent of all elections resulted in certification of a union. NMB  data for the 3 fiscal years after the change (2011 to 2013) show that, on  average, about 62 percent of all elections resulted in certification of a  union. At the time of our report, figures for fiscal year 2013 were  incomplete. In addition, these percentages are not weighted to account  for the size of the elections, nor controlled for other factors that can affect  the outcome of an election, for example, job market conditions.
Some stakeholders also wanted NMB, as part of the 2010 rulemaking, to  clarify the process for decertifying, or removing, a union representative.  The RLA does not specify a decertification process, and NMB offers  minimal guidance on its website on steps to remove an employee  representative. In its preamble to the 2010 rule, NMB noted that, while not  as direct as some commenters might like, the existing election  procedures allow employees to “rid themselves of a representative,” and  that the 2010 change further gives these employees the opportunity to  affirmatively cast a ballot for no representation. However, an airline carrier  official and a former board member said the process in place remains  ineffective and highly confusing. For example, a ballot currently may  contain two options that are each a vote for no representation: “no  representative,” and an applicant who is on the ballot as a “straw man”  who intends, if elected, to step down so as to remove representation for  the craft or class. This applicant seeking removal of representation has to  collect sufficient authorization cards to prompt an election in order for the  craft or class to make this change. A former NMB board member said  there is the potential for votes opposed to union representation to be split  by votes for “no representative” and for a straw man. The result is that  these vote counts will not be consolidated in favor of decertification, which  can then happen only if either the “no representative” or straw man  receives a majority of the votes cast. When asked whether NMB has  developed written guidance to walk parties through the process should  they wish to drop union representation, attorneys in the Office of Legal  Affairs said adequate guidance is available on NMB’s website and in the  NMB Representation Manual.
According to stakeholders we interviewed, NMB improved its outreach  when issuing a more recent rule in 2012. The final rule, published in  December 2012, made some changes to NMB’s representation process  to conform with requirements in the FAA Modernization and Reform Act  of 2012. For example, the Act amended the RLA to require that an  application as part of a merger and requesting an organization or  individual be certified for representation must be supported by not less  than 50 percent of the employees in a the craft or class. Previously, the  NMB Representation Manual required a 35-percent showing when a  group of employees not already represented by a union wished to have  an election. In its notice of proposed rulemaking, NMB explicitly sought  comments on whether the 50-percent requirement applied to mergers.  One stakeholder we interviewed said NMB did a better job of reaching out  to stakeholders in the most recent rulemaking, and an airline carrier  official characterized this as a positive “returning to form” for NMB.
section_title: Conclusions
paragraphs: The National Mediation Board is a small agency with a vital role in  facilitating labor relations and helping avoid work stoppages in two key  transportation sectors: the railroads and airlines. To better fulfill this role,  NMB has in recent years instituted organizational changes, technology  upgrades, and several new management practices. However, its  initiatives are not guided by a robust strategic planning process, which—if  done well—provides the basis for everything an organization does.  Without such a process that includes mechanisms for obtaining  stakeholder and congressional input, NMB lacks assurance that its limited  resources are effectively targeted toward the highest priorities. Further,  without performance goals needed to gauge agency progress, NMB,  Congress, and stakeholders lack the information needed to improve  management practices and better link resources to results at the agency.
Implementing cost-effective and appropriate internal controls can help an  agency achieve results and minimize operational problems. While NMB  has controls in key management areas, such as financial management,  there are challenges. For example, without a formal mechanism to track  and promptly resolve deficiencies identified in reviews of its program and  management areas, NMB misses opportunities to improve performance  and mitigate risks. NMB’s failure to follow federal requirements for recent  upgrades of its information technology systems and equipment means  NMB cannot ensure the best use of its limited resources or the protection  of sensitive information. A lack of strategic workforce planning means  NMB does not have assurance that its staff will continue to possess the  skills necessary to the agency’s mission and receive the training they  require, particularly to meet challenges presented by the impending  retirements of senior staff.
NMB faces additional management issues. There is minimal internal  programmatic oversight of its activities, for example, by an Inspector  General, to identify management challenges and to hold it accountable to  Congress and the public. NMB also struggles to efficiently manage  grievance cases in the rail industry, partly because the parties do not pay  for the arbitrator and thus lack an incentive to only file and progress cases  with merit. NMB has considered ways to increase efficiency, such as  charging application fees for its arbitration services, and has undertaken  other efforts, such as conducting reviews of pending cases. However, it  lacks data on the types of grievances that are filed to inform its  deliberations on how to more efficiently manage the process. If NMB does  not address this demand on its limited resources, it may again face a  growing and unmanageable backlog of arbitration cases.
section_title: Matter for Congressional Consideration
paragraphs: To provide for independent audit and investigative oversight of NMB,  Congress should consider authorizing an appropriate federal agency’s  Office of Inspector General to provide such oversight.
section_title: Recommendations for Executive Action
paragraphs: In order to improve NMB’s planning and make the most effective use of  its limited resources, we recommend that the Chairman of the National  Mediation Board take the following seven actions:  1. Develop a formal strategic planning process to fully implement key  required elements of strategic planning, including a formal process to  obtain congressional and stakeholder input.  2. Develop, and include in its performance plan, performance goals and  measures that contain required elements to demonstrate results.  3. Develop and implement a formal mechanism to ensure the prompt  resolution of findings and recommendations by independent auditors,  including clearly assigning responsibility for this follow-up to agency  management.  4. Develop and fully implement key components of an information security  program in accordance with FISMA.  5. Establish a privacy program that includes conducting privacy impact  assessments and issuing system of record notices for systems that  contain personally identifiable information.  6. Develop a strategic workforce plan that (1) involves input from top  management, employees, and other stakeholders; (2) identifies critical  skills and competencies needed by NMB; (3) identifies strategies, such as  training, to address any gaps; and (4) provides for cost-effective  evaluations of these strategic workforce planning efforts. This plan should  also address succession for the significant proportion of NMB staff and  senior managers who are eligible to retire in the next few years.  7. In order to better inform its decisions about managing the rail grievance  arbitration process, including addressing the backlog of cases, NMB  should collect and analyze data on the types of grievances filed, and their  disposition. NMB should use these data to improve the efficiency of the  arbitration process and consider, as part of this effort, whether to  establish fees for arbitration services. If NMB determines that the  establishment of fees would improve the efficiency of the arbitration  process, it should impose such fees or seek legislative authority to do so,  as necessary.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this product to the National Mediation Board  (NMB) for comment. We also shared a draft with the Office of  Management and Budget (OMB) and Office of Personnel Management  (OPM). OMB and OPM had no comments. In its written comments,  reproduced in appendix II, NMB noted that it will review and address all of  the recommendations and discussed ways that the agency plans to  address them. NMB also provided technical comments that were  incorporated, as appropriate.
Although our matter for congressional consideration was not directed to  NMB, the agency suggested that having another federal agency’s Office  of Inspector General provide oversight of NMB would be redundant with  GAO’s biennial audits and evaluations, which were mandated by the FAA  Modernization and Reform Act of 2012. As we have previously reported,  GAO and agency Inspectors General (IGs) have complementary, rather  than duplicative, roles. The IGs have been on the front line of combating  fraud, waste, and abuse within their respective agencies, and their work  has generally concentrated on audits and investigations of specific  program-related issues of immediate concern. We continue to believe  that, in addition to the periodic oversight provided by GAO and the annual  audits of NMB’s financial statements by independent public accountants,  an IG office assigned with the responsibility of providing ongoing audits  and investigations of NMB and its operations would result in more  effective oversight.
Regarding our first recommendation to establish a formal strategic  planning process, including a formal process to obtain congressional and  stakeholder input, NMB noted that it would replace its current strategic  plan by February 2014 using guidelines we outlined in this report. These  guidelines include soliciting comments on a draft strategic plan from  Congress and stakeholders. In its comments, NMB asserted it currently  has formal avenues to obtain stakeholder input and listed several  stakeholder groups and industry conferences. While we acknowledge in  our report that NMB consults with such groups, representatives of key  groups told us they are not currently involved in NMB’s strategic planning  process. Formally involving stakeholders and Congress in the strategic  planning process is critical for ensuring that NMB’s efforts and resources  are targeted to the highest priorities. Moreover, such consultations should  occur during the development of a strategic plan, not after it is developed.  We have long noted the importance of the executive branch considering  Congress a partner in shaping goals at the outset. If an agency waits to  consult with relevant congressional stakeholders until a strategic plan has  been substantially drafted and fully vetted, it foregoes important  opportunities to learn about and address early on specific concerns that  could be critical to successful implementation of the plan.
NMB noted, with respect to our second recommendation to develop  performance goals and measures, that it will include such goals and  measures in its new February 2014 strategic plan. It is also important for  NMB to include these goals and measures in its annual performance  plans, as required by law, which can be consolidated with the agency’s  congressional budget submissions or annual performance reports, per  OMB guidance. These documents are updated on an annual basis—while  strategic plans are updated every 4 years—and allow for greater  transparency in reporting NMB’s progress toward meeting its goals. NMB  also indicated it will soon develop and publish a plan to address our third  recommendation to establish a mechanism to ensure prompt resolution of  findings and recommendations by independent auditors and clearly  assign responsibility for follow-up to agency management.
Regarding recommendation four to develop and fully implement  components of an information security program, NMB stated that it was  meeting its information security requirements through the Federal Risk  and Authorization Management Program (FedRAMP) and that the  program is compliant with the Federal Information Security Management  Act of 2002 and based on National Institute of Standards and Technology  guidelines. NMB further discussed its plans to create standards for  security and that they plan to be fully FedRAMP compliant by June 2014.  We acknowledge in our report some of the actions NMB has taken to  comply with federal information security program requirements but also  noted weaknesses with the implementation of these requirements. While  the FedRAMP assessment process is compliant with federal information  security program requirements, for those FedRAMP services NMB is  using, that does not diminish NMB’s responsibility with regard to the  development and implementation of its information security program,  including the development of its own requirements. For example, NMB  should ensure that it completes its draft policies and procedures, provides  information security training to its users and contractors, and updates its  disaster recovery and continuity of operations plans and procedures. We  continue to believe that our recommendation to develop and fully  implement components of an information security program is still valid.
In response to recommendation five regarding the establishment of a  privacy program, NMB stated that it holds very little personally identifiable  information and that it has or is in the process of contracting with other  agencies to ensure that they handle virtually all of NMB’s personally  identifiable information. However, as we noted in our report, NMB has not  developed policies or procedures that discuss privacy protections for the  personally identifiable information it currently holds, and does not comply  with federal requirements to conduct privacy impact assessments and  issue system of records notices if deemed necessary. Thus we believe  our recommendation is still valid.
In commenting, NMB did not identify any specific actions it plans to take  to address our sixth recommendation to develop a strategic workforce  plan. NMB stated that the board and Chief of Staff regularly review  staffing and personnel issues and plan for succession, but the agency’s  relatively small workforce means NMB is less able to use workforce  planning. NMB also discussed its training process, which we describe in  detail in the report, and said no request for training has been refused in  the past 3 fiscal years. We continue to believe a strategic workforce plan  is essential for every federal agency, regardless of its size. Such a plan  helps ensure an organization’s human capital program is aligned with its  mission and programmatic goals, and that it has long-term strategies for  acquiring, developing, and retaining staff to achieve those goals.
Finally, in commenting on recommendation seven to analyze data on the  types and disposition of rail grievance arbitration cases to better inform its  management of those processes, NMB officials stated that they plan to  collect additional data on the types of cases they receive from all  arbitration boards and make the information available on the agency’s  website. We reiterate the importance of analyzing this information in order  to better manage this process. NMB also cited its efforts to reduce the  backlog, noting that the number of arbitration cases pending at the end of  fiscal year 2012 was the lowest in 5 years. However, as we note in the  report, there were 2,084 claims pending at the beginning of fiscal year  2013, which is still significant, and more than 3,500 new claims were filed  in fiscal year 2012. We encourage NMB to maintain its focus on  managing the arbitration process and continue to consider options, such  as a fee structure, for achieving a more efficient use of resources.
We are sending copies of this report to the Chairman of NMB and  appropriate congressional committees. In addition, the report is available  at no charge on the GAO website at http://www.gao.gov.
If you or your staff have any questions about this report, please contact  me at (202) 512-7215 or moranr@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix III.
section_title: Appendix I: Scope and Methodology
subsections: section_title: Overall Approach
paragraphs: To conduct our work, we assessed how the National Mediation Board  (NMB) carried out selected key management functions—strategic  planning and performance measurement, financial management,  information technology, human capital, and procurement—we have found  are critical to creating and sustaining high-performing organizations. We  also assessed how NMB is addressing challenges in one of its three  program areas—oversight of union representation elections. Most of  these areas were specifically identified in the FAA Modernization and  Reform Act of 2012 as required subjects of our review. We also selected  strategic planning and performance measurement for our review because  we have found that an agency’s strategic planning effort is the most  important element in results-oriented management.
To perform our work, we reviewed relevant federal laws and regulations  and key NMB documents, such as the agency’s most recent strategic  plan and annual report, policies and procedures for NMB’s three program  areas (mediation, arbitration, and representation), board member briefing  book, and delegation orders for duties of board and staff for fiscal years  1990 through 2013. We also assessed NMB’s management plans,  policies, and practices in financial management, information management  and security, human capital, and procurement using GAO’s Standards for  Internal Control in the Federal Government and other criteria developed  by GAO in prior work for these management areas, as described later in  this appendix. We identified key practices from these criteria and  assessed whether NMB is following these practices (NMB is taking  appropriate actions and has a formal plan, policy, or other document),  partially following (is taking some actions but does not have a formal plan  or policy and/or some additional steps must be taken to consider this  practice implemented), or minimally following (NMB is taking little or no  action to address this particular practice).
We also interviewed officials at the Office of Management and Budget  (OMB) and the Office of Personnel Management (OPM) to determine how  these agencies provide oversight and guidance to NMB, as well as to  obtain officials’ perspectives on NMB’s management strengths and  challenges. In cases where other entities had conducted recent work in  any of the management functions we reviewed—such as financial  management—we did not duplicate that work. For example, we obtained  the most recent nine financial statement reports NMB provided to us, but  we did not independently assess the findings in the audits. In addition, we  reviewed but did not duplicate the work performed by NMB’s independent  auditors in the six most recently issued internal control reviews of NMB  program areas:
Report on Review of Internal Controls Over Representation Functions  (fiscal year 2005)
Report on Review of Internal Controls Over Alternative Dispute  Resolution (ADR) Services (fiscal year 2006)
Report on Review of Internal Controls Over Mediation Services  (October 2006-September 2007)
Report on Review of Internal Controls Over Personnel/Payroll (April  2008-March 2009)
Report on Review of Internal Controls Over Arbitration Services  Functions (April 2009-March 2010)
Report on Review of Internal Controls Over Procurement (October  2010-September 2011)
To gain additional perspectives on NMB’s program and management  functions, we interviewed officials at the two primary federal labor  relations agencies that cover labor relations in the private sector. We  interviewed senior officials from the Federal Mediation & Conciliation  Service to obtain information on its strategic planning and performance  measurement efforts, human capital and training practices, and its role in  mediation and arbitration. We also interviewed senior officials from the  National Labor Relations Board to obtain information on strategic  planning and performance measurement, human capital practices, and its  role in overseeing union representation elections. We interviewed the  chairman of a third labor relations agency—the Federal Labor Relations  Authority, which covers labor relations in the federal government—but the  primary purpose of the interview was to obtain this individual’s  perspective as a former NMB board member.
In addition, we conducted in-depth interviews with current and former  NMB officials, including all senior managers (Chief of Staff, General  Counsel, and the directors of the Office of Administration, Arbitration  Services, and Mediation and ADR Services); current board members; and  all former board members who served from 2000 to 2012. We interviewed  several rail and air industry experts, identified by issue area experts within  GAO and from our literature review. We also interviewed representatives  from key rail and air labor and management groups, including Airlines for  America, Regional Airline Association, National Railway Labor  Conference, AFL-CIO Transportation Trades Department and affiliated  rail and air unions, and the International Brotherhood of Teamsters. In  addition, we interviewed representatives from the National Association of  Railroad Referees, an association representing railroad arbitrators. We  also interviewed members of NMB informal advisory groups, including the  Dunlop II Committee and Section 3 Subcommittee, which made  recommendations to NMB on mediation and arbitration issues,  respectively. Finally, to gain a better understanding of the types of rail  grievance arbitration cases that NMB funds, we reviewed a judgmental  sample of several arbitration cases available on NMB’s website that were  decided by arbitration boards in calendar year 2012.
We conducted this performance audit from September 2012 through  December 2013 in accordance with generally accepted government  auditing standards. Those standards require that we plan and perform the  audit to obtain sufficient, appropriate evidence to provide a reasonable  basis for our findings and conclusions based on our audit objectives. We  believe that the evidence obtained provides a reasonable basis for our  findings and conclusions based on our audit objectives.
section_title: Strategic Planning and Performance Reporting
paragraphs: We reviewed NMB’s most recent 5-year strategic plan (fiscal years 2011- 2016), its most recent annual Performance and Accountability Report  (fiscal year 2012), and fiscal year 2014 congressional budget justification  documents. We also compared NMB’s strategic planning and  performance planning and reporting practices with key requirements in  the Government Performance and Results Act of 1993 (GPRA), the  GPRA Modernization Act of 2010 (GPRAMA), and OMB performance  guidance for federal agencies. In addition to these federal requirements,  we assessed NMB’s plans and practices against leading practices  identified in prior GAO work.
section_title: Financial Management
paragraphs: We also obtained NMB’s financial statement audits for fiscal years 2004  to 2012, auditors’ management letters to NMB for fiscal years 2008, 2010,  2011, and 2012, and the six most recently issued internal control reviews  of NMB program and management areas, as discussed earlier. We also  interviewed NMB’s independent auditors about their processes, findings,  and recommendations for NMB. We did not independently assess the  findings in these financial statement audits and internal control reviews.
section_title: Information Technology
paragraphs: We interviewed NMB officials responsible for the overall planning and  management of NMB’s information management, security, and privacy.  We collected and assessed information on NMB’s information systems,  including its plans, policies, and practices using the Federal Information  Security Management Act, guidelines developed by OMB, guidelines  developed by the National Institute of Standards and Technology, the  Privacy Act and the E-Government Act. We also randomly selected and  tested NMB user workstations for compliance with U.S. Government  Configuration Baseline settings, randomly selected and reviewed NMB- issued smartphones and tablets for mobile device security settings, and  reviewed NMB cloud computing security settings within its new cloud  environment.
section_title: Human Capital
paragraphs: We reviewed NMB’s most recent human capital plans, policies, and key  documents, including NMB’s 2011 human capital management report to  OPM, its 2009 human capital plan, and its 2006 succession plan. We also  obtained information on the training NMB staff received in fiscal years  2011 and 2012. We reviewed OPM’s fiscal year 2007 audit of NMB’s  human capital program, its most recent assessment (2011) of NMB’s  human capital management report, and the results of its 2012 Federal  Employee Viewpoint Survey of NMB employees. We also reviewed data  regarding NMB’s human capital strengths (defined by OPM as the 10  survey items with the highest percent of positive responses) and  challenges (the 10 survey items with the highest percent of negative  responses). On the basis of our interview with knowledgeable OPM  officials and review of prior GAO work concerning survey design,  administration, and processing, we determined that the data were  sufficiently reliable for the purpose of our review.
We assessed NMB’s strategic workforce planning efforts against  government internal control standards and key practices identified in prior  GAO work. We focused on workforce planning in this review because it  is a critical, foundational element of an agency’s human capital program  in that it helps ensure that agencies are making sound investments in the  human capital issues that most affect their ability to achieve mission  results.
section_title: Procurement
paragraphs: We reviewed NMB’s procurement contracting cycle procedures as of  March 2012 and NMB’s independent auditors’ most recent report on  internal controls over the procurement function. We reviewed key  documents, such as purchase requests and purchase orders, for the  agency’s recent acquisition of information technology equipment,  including tablet computers, laptops, and smartphones. We assessed  NMB’s policies and practices against federal internal control standards  and standards outlined in the Federal Acquisition Regulation and GAO’s  Framework for Assessing the Acquisition Function at Federal Agencies.
section_title: Union Representation Elections
paragraphs: To describe NMB’s process for overseeing employee representation  elections and any challenges related to this process, we reviewed  relevant federal laws and regulations and records related to NMB  rulemakings on this subject, including proposed and final rules issued in  2010 and 2012. We also reviewed key documents, such as the National  Mediation Board Representation Manual (effective March 25, 2013),  notices and memorandums on revisions to phone and Internet voting  instructions, electronic filing procedures for elections and challenges,  frequently asked questions (revised 2013), and sample ballots. We  obtained NMB officials’ and stakeholders’ perspectives on the challenges  the agency faces in this process, as well as steps it has taken to address  any challenges. For example, we reviewed select opinions issued by  attorneys in the Office of Legal Affairs in fiscal years 2000 to 2013 to  resolve challenges to voter eligibility and to allegations of election  interference, influence, and coercion. We also reviewed and assessed the  reliability of NMB data on the number and outcomes of union  representation elections by fiscal year before and after implementation of  the 2010 rule change. We compared NMB’s figures to our own  calculations of the annual number of and outcomes for representation  elections for fiscal years 2000 to 2013 (before and after the 2010 rule  change), and the percentages of total elections that resulted in  certification of a union representative, using data for each fiscal year  posted on NMB’s website. In addition, we interviewed knowledgeable  NMB officials responsible for compiling and reviewing these data. We  determined the data were sufficiently reliable for the purpose of our  review.
section_title: Appendix II: Comments from the National Mediation Board
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Gretta Goodwin (Assistant  Director), Rachael Chamberlin, Susan Aschoff, Alison Grantham, Shirley  Abel, Alexander Galuten, Anjalique Lawrence, James Rebbe, Shaunyce  Wallace, and Candice Wright made significant contributions to this report.  In addition, key support was provided by Edward Alexander, Jr.; Elizabeth  Curda; Benjamin Licht; Steven Lozano; and Walter Vance.