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complaints will ensure a more equitable and expeditious handling of cases.

Subsection 7169(b)

Subsection 7169(b) defines the duty to bargain in good faith, but makes no specific reference to cooperating with impasse procedures. In the absence of the right to strike, it may be advisable to specifically include the obligation to cooperate with the impasse proceures set forth in section 7173.

Subsection 7169(d) and 7170(b)

These subsections define the permissible and prohibited subjects of bargaining in the management rights area. Subsection 7169(e) incorporates exisiting procedures for resolution of negotiability disputes. The only major change from present Executive Order provisions is that mission, budget, organization, and internal security practices of the agency, which are presently considered permissible subjects of bargaining, are transfered to the listing of prohibited subjects.

Agencies have had a number of years of experience in applying the management rights provisions under the Order and the Federal Labor Relations Council has grappled with interpreting and applying these terms in many of its negotiability determinations. We feel that some of the terms themselves are ambiguous and are difficult to apply in specific bargaining situations in a rational and consistent manner. Because of this, the question of what management rights should be excluded from bargaining needs to be carefully reexamined. We do not have a position on which of the management rights delineated in Title VII (and the Executive Order) are or are not necessary. However, we think that a better approach might be to have both management rights and negotiability procedures set out in the Authority's regulations rather than in the legislation. This may give the authority more flexibility in making necessary modifications based on its own experience. We have recently undertaken a survey of this area to determine what the parties have actually done in applying the Order's management rights provisions. However, the work will not be completed until late 1978.

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Section 7171

This section provides a statutory basis for binding arbitration in the Federal sector and substantially expands the permissible scope of arbitration. It authorizes use of arbitration for adverse actions and removals or demotions for unacceptable performance, and is intended to authorize arbitration for all matters now covered exclusively by statutory appeals procedures except examination, certification and appointment, suitability, classification, political activities, retirement, life and health insurance, national security, and the Fair Labor Standards Act (FLSA).

We favor use of binding arbitration in the Federal sector and support its use in adverse actions, and removals or demotions for unacceptable performance. These issues are largely evidentiary or factual, and are well suited to arbitration proceedings. In this regard, we recently recommended in a report entitled "Grievance Systems Should Provide all Federal Employees an Equal Opportunity for Redress," (FPCD-77-67/ June 13, 1978) that the CSC take necessary steps to expand the scope of negotiated grievance procedures to permit inclusion of matters now covered by statutory appeal procedures, except those for which a separate procedure can be justified.

We do believe, however, that subsection (d), which permits the use of a negotiated grievance procedure for "any matter within the authority of an agency" should be clarified. Those statutory appeal matters not specifically included or excluded from coverage under the negotiated grievance procedure under subsections (d) and (e) may or may not be "a matter within the authority of an agency". We suggest that to avoid confusion and litigation, the Committee should consider identifying the specific statutory issues intended to be included in the scope of arbitration. For example, is the intent of subsection (d) to permit arbitration of EEO issues now considered under Part 713 of CSC regulations; or reductionin-force issues now considered under Part 351 of the CSC regulations.

Also, we note that while subsection (e) permits the employee to elect either the negotiated grievance procedure or the Merit System Protection Board procedure for appeals of

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adverse actions and removals or demotions for unacceptable performance, no such choice is permitted for other statutory appeal matters which may come under the negotiated grievance procedure. Accordingly the Committee in clarifying the terminology of subsection (d) should also consider whether a similar choice should be provided for other statutory appeal procedures.

We also believe the exemption of FLSA claims under subsection (d) should be deleted, and arbitration of FLSA issues authorized. Overtime claims under title 5 U.S.C. have long been arbitrated in the Federal sector and we see no reason to permit arbitration of title 5 overtime claims, but exclude FLSA claims. Overtime claims in the Federal sector often require the interpretation and application of both title 5 and the FLSA. Federal employees have been covered by the overtime provisions in title 5 and the FLSA since 1974. The implementing regulations to the FLSA provide that employees covered by both statutes should receive payment under the statute which gives them the greater benefit. The FLSA issues, are therefore, often mixed issues. Accordingly, we recommend that arbitration of overtime claims based upon the FLSA be permitted.

Under subsection (k) arbitration decisions on matters covered under sections 4303 and 7512 (adverse actions and removals or demotions for unacceptable performance) may be appealed directly to the courts. This contrasts with arbitration awards, in other matters which, under subsection (j) may be appealed to the Authority. We recommend that an administrative level of review be provided for appeal of an arbitration award either to the Authority or the MSPB, rather than the direct review by the courts provided in subsection (k).

Since many of the arbitration awards will likely go beyond the boundaries of the collective bargaining agreements and involve interpretation of laws and regulations, an administrative review appears warranted. Precise grounds for reveiw of arbitration awards could be established by regulation.

Subsection 7174(e) provides that where questions arise as to whether an issue can properly be raised under unfair labor

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practice procedures, or must be raised under an appeals procedure, those questions should be referred to the agency which administers the related appeals procedure. A similar provision appears at subsection 7771(g) regarding coverage under the negotiated grievance procedure. We recommend that such questions be referred instead to the Authority, which in turn can seek an opinion from the agency with appropriate jurisdiction. Considering the number and complexity of overlapping appeals procedures in the Federal sector, we believe the burden of finding the right agency or office is best placed on the Authority, rather than on the individual employee. Moreover, referral of such issues to the Authority will insure uniform precedent and ready access to published decisions.

Section 7176

Section 7176 authorizes dues withholding agreements and incorporates many of the specific provisions now contained in the Subpart C, Part 550 of the regulations of the CSC. We believe a general provision authorizing dues withholding is sufficient, and the specific conditions governing dues withholding are best prescribed by regulation. Accordingly, we recommend that subsection (b) be omitted, and subsection (a) be revised to provide for dues withholding pursuant to regulations issued by the OPM.

Chairman RIBICOFF. Mr. Carlson and Mr. Thompson.

TESTIMONY OF JACK CARLSON, VICE PRESIDENT AND CHIEF ECONOMIST FOR THE CHAMBER OF COMMERCE OF THE UNITED STATES, ACCOMPANIED BY ROBERT T. THOMPSON OF THOMPSON, MANN, AND HUTSON OF GREENVILLE, S.C., AND ATLANTA, GA.

Chairman RIBICOFF. We welcome you gentlemen here today. I am trying to figure out with you which would be the best way for us to proceed. We expect a vote momentarily and there are a number of questions we would like to ask.

I am particularly interested in what we opened up with Mr. Staats, because I think the chamber of commerce has a very important function to play here. The aspect of productivity as a factor in inflation is important, however, you weren't asked to come here to talk about that and the President's inflation program.

Would you be interested in talking about that?

Mr. CARLSON. Certainly we would be pleased to, Mr. Chairman. The statistics are replete with the fact that investment in plant and equipment has been at zero growth for the last half of decade in real terms, after you take out the inflation factor.

That coincides almost perfectly to the decline in productivity. It is half the rate we saw in the postwar period up to about 5 years ago. So one of the major things you can do is to make it attractive to invest in plant and equipment. That will produce productivity. In terms of the public sector, we do think that the provision in the bill would support measurement in Government and performance appraisal should be tied into the productivity measures of those individuals and groups of individuals.

The appraisal system now or the output measures that Elmer Staats talked about are not tied in, in a way to provide an incentive for productivity in the public sector.

Chairman RIBICOFF. Would there be any objection on your part to ask you the questions that are bothering us and have your testimony go in the record as if read, so you won't be cut off by the vote and the bell?

Mr. CARLSON. I would be pleased to do that if we could just make a few comments.

Chairman RIBICOFF. Go right ahead. Make the points you would like to make.

Mr. CARLSON. The GAO's testimony is not too different than ours. We would support a single-headed office of personnel management, support the three-headed Merit Systems Protection Board but with a staggered term which is not called for now.

We do not support the reorganization authority for the Federal labor relations authority until we know the substance of changes in labor relations that might be forthcoming in the bill.

So we would oppose merging that with the reorganization efforts associated with the splitting out of the two major functions of the Civil Service Commission itself. We would also make one very important point, that something that is missing here in this bill, and that it is time-I speak from having been one who was one of the originators of the pay comparability principle back in the 1960's in the Defense Department and in the rest of the Govern

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