The decision, issued by a panel of judges for the U.S. Court of Appeals for the District of Columbia, holds that Defense has the authority under a 2004 law to limit the collective bargaining rights of its civilian employees through November 2009. But following that date, Defense must ensure collective bargaining consistent with the 1978 Civil Service Reform Act, unless Congress votes to extend the changes.
The decision reverses a district court ruling issued last year that found that the National Security Personnel System infringed on employees' rights to bargain collectively, receive an independent third-party review of labor-management disputes and have access to a fair process to resolve appeals of adverse management actions.
Congress granted the department authority to create a new human resources system as part of the 2004 Defense authorization act, based on the notion that the current system was too rigid and outdated to allow the department to respond with agility to modern threats of terrorism.
Pentagon officials have said that the law allows them to override collective bargaining agreements after they are reached and gives them the ability to narrow the items subject to bargaining as much as they want.
The appeals decision was agreed to by the two Republican judges on the panel -- Brett Kavanaugh, who President Bush appointed in May 2006, and Stephen Williams, a Reagan appointee who became a senior judge in 2001. Clinton-appointed Judge David Tatel dissented, arguing that the law does not give the Defense secretary the power to completely abolish collective bargaining, adding that doing so is "a position with which even the secretary disagrees."
But Kavanaugh and Williams upheld the Pentagon's argument that the authorization bill regulations "curtail the scope" of collective bargaining, permitting Defense to put out "implementing issuances" that allow the agency to abolish any provision of an existing collective bargaining agreement or effectively take any topic off the table for future bargaining purposes.
Kavanaugh further wrote that the law's regulations also broaden the scope of management rights to take action necessary to the department's mission without collective bargaining.
The Office of Personnel Management praised the court's decision Friday, arguing that it "confirms the [Defense Department's] direction with important personnel reforms in support of our critical national security mission."
But the American Federation of Government Employees, one of the 10 federal labor unions to file the lawsuit, said Friday that the fight over the labor relations rules is "far from over," adding that because of the strong dissent and previous court rulings, a full court review seems appropriate.
Gregory J. Junemann, president of the International Federation of Professional and Technical Engineers, another of the parties to the lawsuit, said "we will continue to work to put NSPS to rest, no matter how long that takes."
The unions could appeal the decision to the full appeals court, the Supreme Court or both.
In the meantime, however, unions can continue to back a legislative resolution to the collective bargaining dispute. A provision in the version of the 2008 Defense authorization bill approved by the House Thursday would overhaul the Pentagon's implementation of the system, restoring employees' collective bargaining and appeal rights and requiring the department to bargain with unions before implementing pay for performance.
Several unions on Friday urged the Senate to pass a similar bill that would overhaul the system, despite a veto threat from the White House. "We commend the House for repairing the damage inflicted by the department's misguided personnel system and are confident the Senate will do the same," said AFGE President John Gage.
NSPS spokeswoman Joyce Frank said Friday that the Pentagon will evaluate the court's ruling prior to making any decisions on the labor relations rules.