Maintenance Subcontracting

Investigating Maintenance Subcontracting

The postal service has a contractual obligation to notify the union, at the local level, when the decision to subcontract has been made at the field level. Some local unions have existing past practices or local agreements that require notification and discussion prior to the postal service making the decision to subcontract. Once the union receives this notification, it is imperative that information requests are submitted to determine whether or not the subcontracting was done in compliance with the national agreement.

Often times, the postal service fails to notify the local union when the decision to subcontract is made (which is a violation and must be grieved). As such, local unions should submit information requests at regular intervals to discover whether the postal service subcontracted work under the radar and without notification. Information requests will be largely based on local fact circumstance, but all maintenance subcontracting investigations must, at minimum, submit information requests for the following:

• Copy of the actual contract
• Copy of the scope of work document
• Copy of the Article 32 Due Consideration Summary
• Copy of the cost-comparison analysis (fair comparison of all reasonable costs)
• Copy of the notification to the union
• Identify which postal official made the decision to subcontract
• Copies of all FSSP problem / call worksheets (if applicable)

It is important to understand the difference between national contracts and national initiatives. Just because the postal service, at the area or headquarter level, push for projects to be completed across the country, that does not automatically make it a national subcontract. Local investigations must flush out who made the decision to subcontract and who completed the due consideration requirement. These two pieces of key information will help determine whether it is a national contract or not. Don’t hesitate to contact your National Business Agent if you are unsure or need clarification. Just because management claims it is a national contract, doesn’t make it so… investigate and rebut, if necessary.

Challenging Subcontracting & Relevant Contract Language

There are a number of contract provisions that can potentially apply to maintenance subcontracting and should be cited in any maintenance subcontracting grievances if there is a violation. Your National Business Agents can also provide you with maintenance subcontracting training guides to assist your investigations and grievances.

Article 32.1.A
“The Employer will give due consideration to public interest, cost, efficiency, availability of equipment, and qualification of employees when evaluating the need to subcontract.”

The key to arguing non-compliance with 32.1.A is twofold; (1) we must argue that the consideration that was given (if any) falls short of “due” consideration as defined in multiple national level arbitration decisions, and (2) that the consideration occurred after the decision to subcontract was made, not prior to making the decision to subcontract, as required. Review the language from various national arbitration decisions below for clarification on what constitutes due consideration.

Article 32.1.C
“When a decision has been made at the Field Level to subcontract bargaining unit work, the Union at the Local Level will be given notification.”

Arguing failure to notify the local union when the decision to subcontract was made is self-explanatory. For clarification on 32.1.C, review the language from the National Das Award - Q06C-4Q-C 08228294 (August 13, 2013) below.

Article 19: Administrative Support Manual Section 535
535 Maintenance Service Contracts

535.1 General

535.11 Use

535.111 Postal Equipment (*ASM v8).
Maintenance of postal equipment should be performed by USPS personnel, whenever possible. Exceptions:
a. Where capable personnel are not available, or

b. When a piece of equipment is a prototype or experimental model or unusually complex, so that

a commercial firm is the only practical source of required maintenance expertise.

535.112 Facility and Plant Equipment.
Contract service is encouraged for USPS-operated facility and plant equipment maintenance, when economically advantageous.

MOU Re: Contracting or Insourcing of Contracted Service
“It is understood that if the service can be performed at a cost equal to or less than that of contract service, when a fair comparison is made of all reasonable costs, the work will be performed in-house.”

This MOU reinforces that a legitimate cost-comparison analysis must be conducted prior to making the decision to subcontract because, if the work can be done equal to or less expensive than a subcontractor, the work must remain in-house and be assigned to the bargaining unit. For clarification on the Insourcing / Contracting MOU, review the language from the National Goldberg Award - Q10V-4Q-C 12324573 (March 4, 2013) below.

National Mittenthal Awards - A8-NA-C 0481 (April 2, 1981) and H8C-NA-C 25 (November 9, 1981)
“…It agreed in Paragraph A that, in determining which of these alternatives to follow, it would give ”due consideration to public interest, cost, efficiency, availability of equipment, and qualification of employees.” These factors are not weighted. Article XXXII, Section 4 does not say, for example, that “cost” is more important than ”efficiency” or vice—versa. It simply requires that these factors be given “due consideration.”

“Unfortunately, the words due consideration are not defined in the National Agreement. Their significance, however, seems clear. They mean that the Postal Service must take into account the five factors mentioned in paragraph A in determining whether or not to contract out surface transportation work.”

“To ignore these factors or to examine them in a cursory fashion in making its decision would be improper [footnote: ignoring all factors would involve a lack of due consideration and examining them in a cursory fashion might constitute consideration, but certainly not due consideration contemplated by paragraph A].”

“To consider other factors, not found in paragraph A, would be equally improper. The Postal Service must, in short, make a good faith attempt to evaluate the need for contracting out in terms of the contractual factors. Anything less would fall short of due consideration.”

“Thus, the Postal Service’s obligation relates more to the process by which it arrives at a decision than to the decision itself. An incorrect decision does not necessarily mean a violation of paragraph A. Incorrectness does suggest, to some extent at least, a lack of due consideration. But this implication may be overcome by a Management showing that it did in fact give due consideration to the several factors in reaching its decision. The greater the incorrectness, however, the stronger the implication that Management did not meet the due consideration test.”

National Bloch Award - H4C-NA C 39 (October 20, 1987)
“The current labor agreement between the parties contains no prohibition, per se, on subcontracting of work. However, Article 32 sets forth certain procedural constraints concerning notification, meeting and discussion of the matter with the Union as well as the employer’s obligation to give due consideration to a variety of factors, including costs and efficiency, among other things.”

“Assuming good faith compliance with the procedural requirements of Article 32, the Postal Service is otherwise unimpeded in the subcontracting process. Those requirements are not to be taken lightly. If they are not satisfied, no final decision on whether or not such work will be contracted out may be made.”

National Goldberg Award - Q10V-4Q-C 12324573 (March 4, 2013)
“Conversely, I reject the argument which I understand the Postal Service to be making, that the Contracting MOU leaves untouched the decisions of Arbitrator’s Snow and Mittenthal cited in note 7 to the extent those decisions held that the sole contractual obligation of the Postal Service, when deciding whether or not to contract out highway transport work, is to give due consideration to the five factors set out in Articles 32.1 or 32.2 (depending on whether the contract would have a significant impact on bargaining unit work), and that if the Postal Service has done so it may contract out even if the cost of doing so is greater than the cost of keeping the work in house. While those decisions may have been contractually sound at the time they were rendered, they do not survive the Contracting MOU.”

“It is undisputed, as Mr. Tabbita testified, that a central goal of the Union in proposing the Contracting MOU was to overrule “… the decisions we’ve had in the past that even if we were cheaper, we didn’t get the work”, an unquestioned reference to Snow and Mittenthal decisions to that effect. To be sure, the Contracting Out MOU is not clear on when the cost comparison is to be made, but what is clear from both the bargaining history and the text of the Contracting MOU is that if all other Article 32.1 or 32.2 factors are equal, and it is less costly to keep work in house, the Postal Service must do so. Indeed, the Contracting MOU states:”

“It is understood that if the service can be performed at a cost equal to or less than that of contract service, when a fair comparison is made of all reasonable costs, the work will be performed in-house. Hence, the Postal Service can no longer justify contracting out work that would be less expensive to keep in house on the ground that it has given due consideration to cost as well as the other Article 32.1 or 32.2 factors. To be sure, each of those factors must be considered, but if the factors other than cost do not rule out keeping work in house, and the cost of keeping work in house would be less than contracting out, both the text and bargaining history of the Contracting MOU require that the work be kept in house.”

National Das Award - Q06C-4Q-C 08228294 (August 13, 2013)
“The record in this case includes Article 32 Due Consideration Worksheets routinely completed at the local level when a decision is made at that level to contract out what the Postal Service characterizes as "run of the mill" work. Therefore, even taking the SIAG guidelines into account, the evidence does not support the Postal Service's argument that the Union had reason to know of the interpretation the Postal Service asserts it attached to the term "Field level" in Article 32.1.C during the 2006 negotiations, and, objectively, it must be concluded that the term "Field level" as used in that provision includes local, as well as district and area decision making.  Accordingly, the Union's position in this case that Article 32.1.C requires notification to the local union of decisions to subcontract bargaining unit work at local installations made at the local, as well as district or area, level is sustained...