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alter existing wage rates. This unilateral disregard of seniority was in derogation of the Union's representative status. By such action, :. Acme

violated Section 8(a) (5) of the Act. In a word, the employees "were entitled to be represented by their Union in the selection process" (id. at 907). The incumbents "are not necessarily to be equated with strange applicants for employment in the new enterprise." Leventhal, J., concurring in 1.A.M., District Lodge 94 v. N.L.R.B., 414 F.2d 1135, 1140 (C.A.D.C.).

In this case, by disregarding the Union in the recruitment process and by treating the incumbents as mere applicants for employment, Boeing violated sections 8(a) (1) and (5) of the Act, and its ensuing refusal to employ the incumbents requires that Boeing be ordered to engage them and to make them whole. This is true even if, as claimed by Boeing, the Boeing-IAMAW agreement applies to its base support services operation, for that agreement does not cover the subject of transfer of the incumbent work force; that subject must be negotiated with the IAMAW; and the incumbents are not to be treated as mere strangers without seniority status. Boeing committed unfair labor practices, therefore, regardless of its motive.

9. Even were Boeing's motivation relevant, it is not fair to seek. It stated in its letter of March 19, 1971, that, since "at least 625 of the approximately 1,000 employees ... will be nonincumbent, Boeing is of the opinion for these and other reasons that it cannot be a successor to the TWA-IAM collective bargaining agreement" (Ex. 13, p. 3). Boeing decimated the incumbent work force in order to be sure, in its view, that it would not be required to observe the TWAIAMAW agreement. And that is a crude unfair labor practice in the conventional sense. For Boeing cannot rid itself of a work force in order to rid itself of an agreement which is the product of protected collective bargaining and concerted activity.

But the requirement of observance of the predecessor's agreement should "not turn on the fact that a majority of the new employees were not members of the old bargaining unit; if the composition of the unit were the controlling factor in determining successorship, a purchaser might well seek to avoid application of the successorship principle by refusing to hire the seller's employees." I.A.M. District Lodge 94 v. N.L.R.B., 414 F.2d 1135, 1138 (C.A.D.C.). That would tempt violation of the law and intrude an ungovernable factor into the reasonable ordering of a successor relationship. Accordingly, “the acid test of 'successorship' is [not] whether the work force of the old enterprise is carried over to the new company. While that fact may be significant for certain situations, it ignores the substantial interest of employees in 'protection ... from a sudden change in the employment relationship.' ... [F]ull successorship ... would require some retention of employees and a continuity of business purpose between the old and the new enterprise." Leventhal, J., concurring in I.A.M. District Lodge 94 v. N.L.R.B., 414 F.2d 1135, 1140 (C.A.D.C.) (emphasis supplied). But it would require no more. Furthermore, if a carryover of a majority of the incumbents were to be required for full successorship, it should be required only when the hiring of less than a majority is “due to legitimate and substantial business justifications.' ... The burden of proving justification is on the employer." N.L.R.B. v. Fleetucood Trailer Co., 389 U.S. 375, 378. In this case. Boeing obviously has no legitimate and substantial business justification. It should therefore be required to employ the incumbents, make them whole for loss of earnings, and observe the appropriate terms of the TWA-IAMAW agreement.

CONCLUSION The issues raised by the charge clearly require issuance of a complaint. Of course it is not the function of the General Counsel to decide the merits of the issue in determining whether to issue a complaint. He is to determine only whether the issues merit the Board's consideration. And the issues in this case are surely complaint-worthy. Respectfully submitted,


Attorneys for International Association of Machinists and Aerospace

Workers, AFL-CIO.

(Exhibit 2, copies of Boeing-IAMAW agreement, available for inspection in

the Subcommittee's files)

Exhibit 3

United States of America
National Labor Relations Board

Case No. 10-HC-3299


CERTIFICATION OF REPRESENTATIVES An election having been conducted in the above matter by the undersigned Regional Director of the National Labor Relations Board in accordance with the Rules and Regulations of the Board; and it appearing from the Tally of Ballots that a collective bargaining representative has been selected; and no objections having filed to the Tally of Ballots furnished to the parties, or to the conduct of the election, within the time provided therefor;

Pursuant to authority vested in the undersigned by the National Labor Relations Board,

It is Hereby Certified that International Associations of Machinists, AFL has been designated and selected by a majority of the employees of the abovenamed Employer, in the unit herein involved, as their representative for the purposes of collective bargaining, and that, pursuant to Section 9(a) of the Act as amended, the said organization is the exclusive representative of all the employees in such unit for the purposes of collective bargaining with respect to rates of pay, wages, hours of employment, and other conditions of employment.

Signed at Atlanta, Georgia, on the 25th day of November 19.5.).
On behalf of


Acting Regional Director for National Labor Relations Board.

Exhibit 4 Released at Kennedy Space Center, November 23, 1970 Kennedy Space Center support services contract. The National Aeronautics Space Administration has selected the Boeing Company, Seattle, Washington, for negotiations leading to an award of a contract to provide installation and technical support services at John F. Kennedy Space Center, Florida.

The cost plus award fee contract is estimated at $20 million for the first year. The contract will extend from April 1, 1971 through March 31, 1972 with provisions for four one-year extensions.

The Boeing Company will provide test support management, plant engineering and maintenance, legistics operations, documentation support, fire preventionprotection and rescue serivces, quality assurance and security services, and operation safety training.

The new contract is expected to achieve savings by combining work previously performed under three separate contracts. Seven firms submitted proposals for this work.

The Kennedy Space Center conducts the launch of manned Apollo lunar expedition from complex 39 at the space port and unmanned launches from facilities at Cape Kennedy and the western test range in California.

Exhibit 5

Washington, D.C., January 6, 1971.
Comptroller General of the United States,
Washington, D.C.

DEAR MR. STAATS: By letter of November 30, 1970, B-171391, your General Counsel, Mr. Paul G. Dembling, forwarded a telegram dated November 25, 1970 from Trans World Airlines, Incorporated, protesting this Agency's selection of

The Boeing Company under Request for Proposals No. 2-370-0 to perform installation support services at Kennedy Space Center for a one year period beginning on February 1, 1971, with four one-year extensions available at the Government's discretion under the contract options. This letter, together with its attachments, constitutes the documented report on the matter you requested.

TWA's objections to this selection have been restated and supplemented by its telegram of November 25 and letter of December 11, 1970 to your office. Additionally, Pan American World Airways, Incorporated, by its telegram of December 11 and letter of December 14, 1970 to your office has entered its protest in the matter.

Under the circumstances of this procurement, which contemplates the award of a cost plus award fee type contract for support services, the labor costs to be incurred will compose a preponderance of the total cost. For this reason, the credibility of the offeror's proposed labor costs and management plans affecting those costs were major considerations in establishing the credibility of the offeror's total contract (ost. And, in view of the fact that three offerors were found to be well qualified technically to perform the contract effort, the proposed labor costs and the factors, such as proposed union representation, which influenced the credibility of those costs, became significant factors in the selection determination. For this reason, we believe that a restatement of the facts of this procurement which focuses on these issues is in order.

Additional statements of the facts of this procurement are found in the December 8 report from the Director, KSC (TAB A); the Source Evaluation Board (SEB) report dated October 22, which contains a chronology on page 9; and the Administrator's Selection Statement dated December 28 (TAB B).

For purposes of this discussion, the procurement commenced with the first meeting of the Source Evaluation Board on May 20, 1970. As reported on page 5 of the SEB Report, the Board appointed a Technical Committee and a Business Comnaittee to assist it in its evaluations. The Board approved criteria for use by the Committees in their evaluation and established a scoring system for use in conjunction with these criteria. However, the Board's predetermined adjustment weightings assigned to these scorings to be used after the Committees had submitted their reports were not disclosed to the Committees. The criteria associated with labor costs are set forth on page 58 of the SEB's Chairman's Memorandum of August 7 (Vol. IV, SEB Proceedings).

The Board then reviewed and approved the proposed solicitation, which was issued as Request for Proposal No. 2-370-0 on June 30. This RFP, on page 21, paragraph 11, apprised prosepctive contractors of the criteria which the Government would use for evaluation of proposals submitted in response thereto. In particular, Item "b" advised offerors that "Reasonableness of Cost and Fee" would be considered as a factor in evaluation. While the precise weight assigned this factor by the Government was not disclosed to offerors, the paragraph provided information on the relative importance of these factors indicating that cost considerations would account for somewhat less than one-third of the entire weighting. This language rather closely reflected the 30 per cent weight actually assigned cost factors by the Board. Thus, prospective contractors had notice that the reasonableness of proposed cost would be a significant element in the Government's evaluation process.

Additionally, Item "e" of the evaluation factor listed on page 21 appraised offerors of the fact that “Management Structure” would also be a factor in evaluation. With respect to the question of Management Structure, Item 2, page 54, of the solicitation as amended by Amendment No. 1 asked offerors to provide information on a number of aspects of their proposed methods for dealing with labor problems at KSC. In particular, subpart "c" of this instruction asked offerors to explain their understanding of the labor situation and their plan to handle the matter, as follows:

"Explain your understanding of the impact, if any, that the collective bargaining agreements covering incumbent employees will have on your assuming the contract responsibilities. Discuss which of your employees, if any, will be covered by collective bargaining agreements and indicate which, if any, súpervisory personnel are included."

In order to clarify the Government's needs, the Board provided a tour of the Kennedy Space Center facilities which would be involved in the support operations, and a preproposal conference for which prospective offerors were invited to sulmit written questions regarding the contract work. These events were conducted on July 21 and 22 respectively. A synopsis of the questions discussed during the preproposal conference, Question 56 of which has become the subject of contention, was distributed under a letter dated July 31 to all interest parties. On the preestablished date of August 19, proposals were received from seven firms, including an alternate from Boeing, or a total of eight proposals.

In accordance with paragraph 2, page 19 of the solicitation, each firm submitted separate Cost and Fee Proposals and General Business Proposals, which were referred to the Business Committee for initial evaluation. Copies of the General Business Proposals were also forwarded to the Technical Committee. along with the Technical Proposals, for concurrent evaluation,

Boeing's Cost and Fee Business Proposal offered composite labor rates which, in many cases, were lower than the labor rates proposed by the incumbent, TWA, whose rates for mechanical and clerical workers were premised upon continuing in effect its present labor agreement with Local Lodge 773 of District Lodge 142 of the International Association of Machinists and Aerospace Workers (IAM). To achieve its proposed reduction in KSC labor rates, Boeing stated that the labor force it employed would be represented under its company-wide labor agreement with the IAM presently in effect in the KSC area with IAM Local Lodge 2061 of District Lodge 156 for employees working under another Boeing contract at KSC. However, because Boeing proposed to continue in effect the existing labor agreements covering janitorial, guard and fire services at KSC, these types of employees, who comprise a relatively small portion of the total labor force under the installation support contract, would continue to be repre sented by the same union as before. See page 3–31 of the Boeing General Business Proposal for its discussion of proposed union arrangements at KSC.

Pan American's proposal also offered a lower wage structure in many instances, which it proposed to achieve by new labor agreements with the Transportation Workers Union, in the case of mechanical workers, and with the International Brotherhood of Teamsters, in the case of clerical workers. Additionally, Pan American's proposal contemplates new labor agreements with the Transportation Workers Union covering the fire and janitorial services, and a new labor agreement with the United Plant Guard Workers of America. See page 36 of Pan American's General Business Proposal for its statement on this matter, and pages 218 through 226 for its view of the applicable labor law.

Of the other four offerors, three, Mason-Rust, Chromalloy, and KDI, proposed, in effect, to assume the existing TWA labor agreements with the KSO workers, while the fourth, Dow Chemical, proposed to bring the mechanical and clerical workers in under a labor agreement with Local 690 of the IAM, covering a small group of Bendix employees whose functions were made a part of this contract work, See SEB Chart 27R for a summary statement of the proposed labor agreements offered for consideration by the five firms remaining in competition at the time of the Board's report to the Administrator.

In way of explanation, Boeing's labor rates in its agreement with Local 2061 of the IAM are structured to reflect varying degrees of skill levels within particular categories of work, as is the practice with air frame manufacturer labor agreements. TWA's labor agreement with Local 773 of the IAM, which is in accord with District 142 airlines system-wide agreement with that union, on the other hand, is drafted to reflect the need of air carrier operations and does not admit to varying skill levels within a given labor category. In this respect, see the attached memorandum from the Kennedy Space Center Deputy Procurement Officer to NASA Headquarters (TAB C) for a more detailed explanation of the matter. This memorandum was prepared in response to a Headquarters request for information on November 24, but the information it contains was known generally at the time of the Business Committee deliberations through its discussions with its labor consultant.

Because of the difficulty experienced by the Business Committee in comparing these proposed labor agreements, the Committee requested the KSC labor specialist, acting as a consultant, to provide an analysis of these proposals. This report (page 12, SEB Proceedings, Vol. III) discusses in detail each proposer's potential for achieving its stated labor goals, and concludes that while Boeing's proposed arrangement was reasonably possible of attainment in that it utilized an existing Boeing agreement already applicable locally with the same international union; Pan American's approach was much less likely to succeed and held much greater risk of precipitating labor unrest.

The Business Committee ranked Pan American higher than Boeing with respect to the realism of its proposed costs based on the predetermined criteria. In this respect, see the “Summary Ranking" chart in the front of the Business Committee's Report (SEB Proceedings, Vol. III).

On analysis after the fact, it appears that the Business Committee relied in part on the verification of the reasonableness of proposed labor rates by the Defense Contract Audit Agency and in part on Pan American's signed labor agreement. From an audit point of view, DCAA was able to verify that rates comparable to the varying rates proposed by each of the firms involved were being paid in the area. However, this theoretical realism of the varying rates is not considered within the context of KSC's labor environment or with respect to applying the successorship doctrine to the existing TWA labor agreements at KSC. Of course, this consideration is primarily the responsibility of the procuring activity and not necessarily an audit function.

The Business Committee submitted its report to the Board on September 14, and, as noted in the Board minutes for the following date (SEB Proceedings, Vol. V), the Board members were made aware of the fact that the labor consultant's report had only a minor impact upon the Business Committee's scoring due to the constraints of the pre-established criteria and because the Committee felt the labor question warranted further study by the Board.

The Technical Committee also submitted its report to the Board on September 14, and, in accordance with its pre-established criteria, ranked TWA's proposal highest, Pan American's proposal a close second highest, and Boeing's proposal as third highest. The Board then commenced its own formal review of the proposals and the Committee reports. The two lowest ranked proposals were eliminated from the competitive range at this stage of evaluation, and they were so advised by letters dated September 18. See pages 25 and 31 of the SEB Report for a summary explanation of this event. In connection with this review, a series of 25 general questions dealing with all proposals and a varying number of questions tailored to the specifics of each proposal was prepared and furnished to the offerors concerned for clarification and explanation during their oral dis. cussions with the Government. General question No. 18 (SEB Proceedings, Vol. IV) asked each offeror to explain its proposed union arrangements in the following words:

"To what extent will labor agreements be applicable to employees performing on this contract? Please explain types of units and unions involved in your proposal."

While there was little need to clarify TWA's proposal to retain its present union agreements, the Board felt that further details clarifying Boeing's and Pan American's proposed labor arrangements were required. Accordingly, specific questions 45, 46, and 47 for Boeing focused on this issue, as did questions 16 through 22 for Pan American. Pan American supplemented its oral discussions on this question with its written submission of October 8, where, beginning on page 42, Pan American's labor prospects were further discussed.

The five offerors remaining in contention at this time were invited to oral discussions on their proposals, with attention to be focused on the questions described above. These discussions were conducted on September 28 through October 1, and each offeror was given an additional week thereafter to further revise or clarify its proposals in light of these discussions. A common cut-off date of October 19 was established for all offerors, and no further revisions were received after that date. No changes were made in any offeror's proposed union structure in response to these questions by the Government.

Upon completion of its evaluation process, the Board ranked TWA's and Pan American's proposals as essentially equivalent technically, while Boeing's proposal was rated third highest technically. Thus, although the Board made a number of adjustments in the technical scorings as a result of its discussions and otherwise, these changes, in their cumulative effect, were relatively minor so far as the technical evaluation of the top three contenders was concerned.

However, as to the business aspects of the evaluation, the minutes of the Board's proceedings show that as the members became more conversant with the labor relations aspects of this procurement, they applied their own judgment resulting in a departure from the Business Committee's scorings. In this respect, we refer you to the SEB minutes for September 15, where it was assumed for the purpose of initial Board rankings that all proposed labor arrangements were equally valid; for September 30, where NASA Headquarters labor specialist acted as consultant; and for October 1 and 12, where KSC's labor specialist acted as consultant.

The Board's final conclusions of the question regarding the validity of the proposed labor rates are reflected primarily in the scores it assigned to the “Realism of Cost and Fee" factor in its report to the Administrator and to a lesser degree

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