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the level fixed by the TWA-IAMAW agreement. On April 1, 1971, when Boeing took over the operation, it drastically reduced the existing wages and fringe benefits. It effectuated this undercutting unilaterally, without notification or opportunity to negotiate, and presented it to the IAMAW as a fact accompli. There can be no more elemental abridgment of the obligation to bargain collectively than to unilaterally undercut existing employment terms arrived at by collective bargaining
"I'nilateral action by an employer without prior discussion with the union does amount to a refusal to negotiate about the affected conditions of employment . . ., and must of necessity obstruct bargaining, contrary to the congressional policy." V.L.R.B. v. Katz, 369 U.S. 736, 747 (1962). "Employer action to bring about changes in wage scales without consultation and negotiation with the certified representative of its employees" infringes an essential principle of collective bargaining. May Department Stores Co. v. N.L.R.B., 326 U.S. 376, 384 (1945). The obligation to refrain from unilateral action is as binding upon the successor employer as upon the predecessor as the Board explained in William J. Burns Detective Agency, 182 NLRB No. 50, sl. op. p. 6 (1970):
Binding the successor-employer to his predecessor's bargaining obligation furthers the policy of protecting the employees' exercise of the right to engage in collective bargaining through representatives of their own choosing. Requiring the successor-employer to negotiate proposed changes in existing terms and conditions of employment with the employees' bargaining representative promotes stability in the employing enterprise's labor relations and furthers the interest of industrial peace. The obligation to bargain imposed on a successor-employer includes the negative injunction to refrain from unilaterally changing wages and other benefits established by a prior collective-bargaining agreement even though that agreement has expired. In this respect, the successor-employer's obligations are the same as those imposed upon employers generally during the period between collec
tive-bargaining agreements. It of course makes no difference that Boeing's contract to provide base support services is with a federal agency rather than with a private enterprise. The obligation to refrain from unilateral action is the same regardless of the entity with which the employer has contracted to provide the services. As the Board held in Emerald Maintenance, 188 NLRB No. 139 (1971), where the offending employer's contract to provide services was with Laredo Air Force Base, the successor employer's "unilateral changes of the terms and conditions of employ. ment in effect prior to March (3]1 were ... violative of Section 8(a) (5)" (sl. op. p. 3, n. 1). The Board ordered "restitution of any benefits which may have been lost because of any unilateral changes made in the terms and conditions of employment” (sl. op. p. 8). Its order requires that the employer "Make whole all of the employees in the bargaining unit for economic benefits withheld from them”, with restitution to be "computed with interest thereon at the rate of 6 percent per annum" (sl. op. pp. 9-10). See also, Maintenance, Inc., 148 NLRB 1299 (1946) (offending employer contracted with NASA to provide services) ; Tri State Maintenance Corp., 167 NLRB 933 (1967) enforced as modified, 408 F.2d 171 (C.A.D.C. 1968) (offending employer contracted with General Services Administration to provide services) ; ABC Food Service, 176 NLRB No. 55, 1969 CCH NLRB Dec. 120,900 (1969) (offending employer contracted with Alameda Naval Air Station to provide services).
Boeing defends upon the ground that it merely applied the Boeing-IAMAW agreement to the employees performing the base support services work, and that this application is permissible on the ground that these employees are an accretion to the Atlantic Missile Test Section Unit of that agreement either (1) by its terms, and/or (2) by operation of law. We turn to this claim.
1. No accretion by contract: The Boeing-IAMAW agreement defines the Atlantic Missile Test Section Unit to embrace "Those employees in the collective bargaining unit that was involved in National Labor Relations Board Case No. 10-RC3299 and now consisting of . . . All production and maintenance employees in Brevard County in the State of Florida, employed by the Company ..." (supra, p. 5). Boeing would argue that the base support service employees are production and maintenance employees in Brevard County in the State of Florida, employed by the Company”, and therefore by agreement they are part of the unit covered by the Boeing-IAMAW agreement. The argument is simplistic.
The base support service employees were of course never "involved in National Labor Relations Board Case No. 10-RC-3299. ..." They came into being in
1964; have had a separate existence from the Boeing unit since then; and their employment terms have always been governed by a separate agreement with another employer. The generality of the language of the Boeing agreement cannot therefore be reasonably read to embrace a historically separate operation covered by a separate agreement with another employer. And this is especially so because the consequence of comprehending the base support service employees within the Boeing unit would be to reduce their existing wages and fringe benefits, a result which the IAMAW could hardly be thought to have assented to when it entered into the Boeing agreement. As the IAMAW president stated in his wire of March 1, 1971 to the Comptroller General, NASA, Boeing, and TWA (supra, p. 14):
... [T]he IAMAW has no agreement, much less a firm agreement, with Boeing providing coverage for the work proposed to be performed by Boeing for NASA at the Kennedy Space Center. The only agreement between Boeing and the IAMAW covers units other than the one presently at issue. The unit presently at issue is covered by an agreement between Trans World Airlines and IAMAW not due to expire until December 31, 1971. The IAMAW could not, and did not, enter into an agreement with Boeing covering a unit which
it had under contract with another employer. There is, accordingly, no tenable basis for a claim that the base support employees became, by contract, part of the unit defined by the Boeing-IAMAW agreement. The IAMAW surely did not enter into an agreement with Boeing to cover at lower terms employees already embraced under an existing agreement with another employer.
2. No accretion by operation of law: Nor can there be an accretion by application of the criteria utilized by the Board to fuse one group into another.
(a) The base support service employees covered by the TWA-IAMWA agreement and the launch support service employees covered by the Boeing-IAMWA agreement are within historically separate operations having separate existence with separate representation under separate agreements. The termination of TWA as the employer of the base support service employees does not terminate their existence as a separate group. "... [T]he Board's policy is to find no accretion when the group in question had a separate and distinct existence at the time the represented group's contract was executed and there is no evidence that the contract was intended to cover them." N.L.R.B. v. Horn & Hardart Co., 76 LRRM 2443, 2449 (C.A. 2, 1971).
(b) There are about 1,100 base support service employees, in contrast with about 340 launch support service employees (supra, pp. 34). There can be no such thing as the "accretion" of 1,100 employees to 340, In determining accretion, the Board has. "established the additional consideration that the accreted unit should not numerically overshadow the pre-existing unit." Spartans Industries v. N.L.R.B., 406 F.2d 1002, 1005 (C.A. 5); see also, Pullman Industries, 159 NLRB 580, 582 (1966). When the ratio is almost 3 to 1, it is possible to accrete the 340 employees into the unit of 1,100 employees, but it is impossible to run it the other way. .
(c) To permit an accretion is to bring 1,100 employees within the coverage of a contract which drastically reduces their existing wages and fringe benefits. It would be manifestly unfair to sanction an accretion which works to the immediate and substantial economic disadvantage of the accreted group. And we know of no situation in which the Board has allowed it.
(d) The base support service employees and the launch support service employees perform different work under contracts between Boeing and NASA which are separate. The essential separateness of the work must be maintained if for no other reason than that the cost must be separately allocated under the different cost-plus contracts to which the separate services appertain.
In sum, the 1,100 base support service employees do not "accrete" to the 340 launch support service employees either by contract or operation of law. Boeing's unilateral action, therefore, lacks any justification.
1 It of course makes no difference that the base support service employees were part of a system-wide unit under the TWA-IAMAW agreement, for under the Railway Labor Act the National Mediation Board recognizes only a system-wide unit, and the KSC operation would willy-nilly have to be part of the system-wide unit. Switchmen's Union V. National Mediation Board, 320 U.S. 297, 299, 308-309 (dissent). Nevertheless, the base support service work at KSC has always been, and is now, a functionally separate operation, and was so treated under the TWA-IAMAW agreement.
III. REFUSAL TO OBSERVE AND ADOPT THE APPROPRIATE TERMS OF THE TWA-IAMAW
We shall show that Boeing's refusal to observe and adopt the appropriate terms of the TWA-IAMAW agreement (1) conflicts with the principle established by the Board in William J. Burns Detective Agency, 182 NLRB No. 50, (2) is not permitted by the Board's later decision in Emerald Maintenance, 188 NLRB No. 139, but rather the Burns principle retains full viability in the present situation, and (3) is not allowed by Boeing's other reasons said to avoid observance of the TWA-IAMAW agreement. A. The Applicability Of Burns
The Board's decision in Burns is the paradigm for the present situation. In Burns, the Lockheed Aircraft Service Company secured plant protection services for its operations at an airport by contracting with independent guard companies to provide the service. At the beginning, one Wackenhut performed these plant protection services for Lockheed; Wackenhut's plant protection employees were represented in collective bargaining by a union; and their wages, hours, and working conditions were established by a collective bargaining agreement between Wackenhut and that union. During the term of that collective bargaining agreement, Lockheed replaced Wackenhut with one Burns to provide the plant protection services. However, Burns refused to recognize the union as the representative of the plant protection employees or to honor the existing collective bargaining agreement. The Board held that Burns, as the successor to Wackenhut, was required to recognize the union and to observe the terms of the collective bargaining agreement entered into by its predecessor. The NLRB explained in part that (sl. op pp. 7-8) :
The impressive policy considerations favoring the maintenance and adherence to existing collective-bargaining agreements are not wholly overborne by the fact that Burns had not signed the contract here in issue. Nor can a holding that Burns is obligated to honor and adhere to the express terms of the contract readily be equated with compelling Burns to agree to a bargaining proposal or make a concession it is unwilling to make. Indisputably, there is a contract. That contract covers the employees of the employing industry which Burns took over; it was negotiated on behalf of the employing enterprise by Wackenhut, Burns' predecssor. That contract is reasonably related to Burns through its takeover of Wackenhut's Lockheed service functions and its hiring of Wackenhut employees. We find, therefore, that Burns is bound to that contract as if it were a signatory thereto, and that its failure to maintain the contract in effect is violative of Sections 8(d) and 8(a) (5) of the Act.
In the normal case, we perceive no real inequity in requiring a “successoremployer" to take over his predecessor's collective bargaining agreement, for he stands in the shoes of his predecessor. He can make whatever adjustments the acceptance of such obligation may dictate in his negotiations concerning the takeover of the business. Normally, employees cannot make a comparable adjustment. Their basic security is the collective-bargaining agreement negotiated on their behalf. In the instant case this is certainly so. They work in an industry in which the identity of their employer is subject to annual bidding for the right to perform the services they are engaged in furnishing. The contract involved herein was negotiated for a term of 3 years, but had been in existence for only 2 months at the time of Burns' takeover. Burns had knowledge of the agreement when it bid for the Lockheed service contract. It hired employees on whose behalf the agreement was negotiated. Accordingly, in order to fully protect the employees' exercise of the right to bargain collectively and to promote the maintenance of stable bargaining relationships and concommitantly industrial peace in this industry, we conclude that Respondent Burns must be held bound to its predeces
sor's contract. The Burns case is this case. NASA obtains basé support services by contracting with a third party to furnish them. Since March 1964, TWA has provided NASA with these services; the IAMAW is the representative of the nonsupervisory work force employed by TWA to perform the services; and the wages, hours, and working conditions of the employees are established by a collective bargaining agreement between TWA and IAMAW. NASA replaced TWA with Boeing to perform the base support services for it. Boeing is therefore, TVA's successor. Accordingly, as the successor, Boeing is bound to obeserve the wages, hours, and working conditions established by the existing collective bargaining agreement.
B. The Inapplicability of Emerald Maintenance
The Board's decision in Emerald Maintenance, 188 NLRB No. 139, does not detract from the applicability of Burns in the present situation. The specific holding in Emerald was that a successor employer was not bound by its predecessor's agreement, insofar as that agreement provided for a wage increase to become effective subsequent to the successor's accession, where the successor's service contract with the Laredo Air Force Base was a contract for a one-year period at a fixed cost awarded to the successor as the low bidder among the competitors responding by sealed bids to the invitaition to bid. Accordingly, Emerald is inapplicable to the present situation because (1) the method of procurement utilized in Emerald is decisively different from that utilized here, and the difference renders the reasoning in Emerald inapplicable to the present situation, and (2) even were Emerald otherwise applicable, it frees the successor only from future increases in benefits provided by the predecessor's agreement. but does not free him from continuing obeservance of the presently existing benefits established by that agreement.
1. The Armed Services Procurement Act, applicable to NASA (10 U.S.C. $ 2303 (a)). provides for procurement by two methods : (a) by negotiation, and (b) by formal advertising. 10 U.S.C. $ 2301 ; 41 C.F.R. $81-1.301-2, 1-1.301-3. Negotiation is to be utilized where formal advertising "is not feasible and practibale. ..." 41 C.F.R. § 1-1.301-3; 10 U.S.C. 8 2304 (a).
In formal advertising, (a) “the advertisement shall be made a sufficient time before the purchase or contract"; (b) the "specifications in invitations for bids must contain the necessary language and attachments, and must be sufficienty description in language and attachments, to permit full and free competition: and (c) “Bids shall be opened publicly at the time and place stated in the advertisement. Awards shall be made with reasonable promptness by giving reasonable notice to the responsible bidder whose bid conforms to the invitation and will be the most advantageous to the United States, price and other factors considered," 10 U.S.C. $ 2305; 41 C.F.R. 1-2.101 et seq.
In negotiated procurements, “in which rates or services are not fixed by law or regulation and in which time of delivery will permit, proposals, including price, shall be solicited from the maximum number of qualified sources consistent with the nature and requirements of the supplies or services to be procured, and written or oral discussions shall be conducted with all responsible offerors who submit proposals within a competitive range, price, and other factors considered. ..." 10 U.S.C. $ 2304(g). In a negotiated procurement, in "selecting the contractor for a cost-reimbursement type contract, ... the primary consideration in determining to whom the award shall be made is: which contractor can perform the contract in a manner most advantageous to the Government." 41 C.F.R. $ 1-3.805–2.
In Emerald, the procurement was by formal advertising. As described by the Board, the contract "was consummated without negotiations. The Air Force issued a descriptive invitation for bids in early January 1970. The Re. spondent and others submitted sealed bids in mid-January and, shortly before April 1, 1970, the ensuing year's work was awarded ... to the low bidder ... for a fixed sum ..." (sl. op. p. 3).
In contrast, in the present situation, the procurement was by negotiation. On June 30, 1970, NASA issued a Request for Proposal (Ex. 5, p. 2). NASA solicited proposals from 42 firms, and 17 additional firms asked for and were furnished copies of the Request (Ex. 5. p. 41). NASA provided a tour of KSC on July 21, 1970, and conducted a preproposal conference on July 22, 1970
(Ex. 5, p. 3). Proposals were received from seven firms (Ex. 5, p. 3). On September 14, 1970, NASA eliminated two offerors as not within the competitive range (Ex. 5, pp. 5, 42). NASA conducted oral and written discussions with the five remaining offerors on their proposals between September 28 and October 1. 1970 (Ex. 5, pp. 5-6, 42). All offerors revised their proposals following the discussions (Ex. 5, pp. 6, 43). On November 23, 1970, NASA announced that it “has selected ... Boeing . . . for negotiations leading to an award to provide installation and technical report services at” KSC (supra, pp. 8-9).
The difference between the negotiated procurement in the present situation, and the procurement by formal advertising in Emerald, removes the applicability of the Emerald rationale to the instant matter. It cannot be said here, as it was in Emerald, that the "service contracts are not subject to refinement through negotiation” (sl. op. p. 6). The procurement here was negotiated, and the terms
of the contract are determined by bargaining; a negotiated procurement means that the terms are “subject to refinement through negotiation.” Nor can it be said bere, as it was in Emerald, that "the contracting parties have no device through which they can by agreement allocate between themselves the sudden cost changes resulting from changed employment terms" (sl. op. p. 6), NASA and its contractor in this situation, no less than Lockheed and its contractor in Burns, were utterly free to take into account existing labor cost and future changes in labor cost in reaching a contract. Indeed, labor cost was in the forefront oť the contract between NASA and Boeing ; Boeing was selected because of its representation of lower labor cost; both NASA and Boeing took a knowing and calculated risk that they could carry off a reduction in existing labor cost; and like all others who make a business bet, they are required to pay when they lose. Furthermore, in this case the contract is a cost-reimbursement type contract, as distinguished from the firm fixed-price contract in Emerald. In this case, therefore, the successor bears no loss from applying the predecessor's agreement, and hence does not jeopardize “its economic viability and the jobs ol its employees” (sl. op. p. 7), unlike the successor in Emcrald. Finally, it cannot be said here, as it was in Emerald, that "annual rebidding normally produces anual changes in contractor identity” (si. op. p. 8). TWA was the incumbent contractor since March 1964, with no resolicitation until 1970. The contract with Bueing is "for one year" beginning April 1, 1971, but with a "firm option for the second year's performance and three additional one-year extensions to the contract if the parties agree on such extensions" (Ex 5, p. 41). As with TWA, so nový with Boeing, a long-term relationship is contemplated.
Accordingly, nothing prevents the applicability of the Burns principle to the negotiated procurement in the present situation. Emerald teaches that the Board abjures a "mechanistic application of Burns" (sl. op. p. 6), and it equally implies abjuration of a "mechanistic application" of exceptions to it. The ultimate reach or Burns requires "litigating elucidation" (1.A.N. v. Gonzales, 356 U.S. 617, 619), and the difference between a negotiated procurement and a procurement by formal advertising compels its presentation to the Bord for its determination of the legal significance of the distinction.
2. Even if there were no difference between a negotiated procurement and a procurement by formal advertising, Emerald would have limited applicability in the present situation. For, stripping Emerald to its essence, the only provision of the predecessor's collective bargaining agreement in issue in Emerald was the provision "for the substantial increase of employee benefits effective April 1, 1970" (sl. op. p. 4), the day after the expiration of the predecessor's contract with the Air Force. It was not suggested, and the Board surely did not decide, that the predecessor's agreement was not binding on the successor at least to require it to honor existing, as distinguished from future, benefits established by the agreement. On the contrary, the Board in Emerald required the successor to make whole the employees for benefits lost as a result of unilateral alteration of the existing terms, and that means the terms fixed by the previous agreement with the predecessor. Accordingly, in the present situation, giving it its broadest reach, Emerald would free Boeing only from granting the future wage increase provided by the TWA-IAMAW agreement effective May 1, 1971 (Ex. 1, p. 193). But Emerald does not hold, and nothing in its rationale suggests, that the successor is not at least bound to observe the existing terms established by the predecessor's agreement which were in being when the successor took over. In the present situation, however, Boeing disa vows not only future increases, but undercuts existing terms. This is surely a new and different situation which commands the Board's attention. C. The Untenability of Boeing's Other Reasons
We turn to Boeing's other reasons for disa rowing the obligation to observe and adopt the appropriate terms of the TWA-IAMAW agreement.
1. Boeing says that the TWA-IAMAW agreement is the product of the statutory duty to bargain imposed by the Railway Labor Act, and is therefore not binding on Boeing as an employer subject to the National Labor Relations Act. The contention is frivolous. The relevant obligation to bargain is identical under both statutes, and the ensuing agreement under either statute equally implicates the "objectives of national labor policy, reflected in established principles ol federal law, (which] require ... some protection to the employees from a sudden change in the employment relationship." John Wiley & Sons v. Livingston, 376 U.S. 543, 549.