During collective-bargaining negotiations, respondent National Treasury Employees Union (NTEU) proposed that contractual grievance and arbitration provisions be designated as the "internal appeals procedure" required for employee complaints by an Office of Management and Budget (OMB) Circular relating to the "contracting out" of work. Petitioner Internal Revenue Service (IRS) refused to bargain over the proposal, claiming that its subject matter was nonnegotiable under Title VII of the Civil Service Reform Act of 1978 (Act), 5 U.S.C. 7101 et seq. The Federal Labor Relations Authority (FLRA), which is charged with administering the Act, held that the IRS was required to negotiate over the NTEU proposal by 7114, which requires agency management and employee unions to bargain in good faith to reach an agreement, and by 7121, which specifies that such agreements must contain grievance-settlement procedures.

Held:

The FLRA erred in holding that the Act requires the IRS to bargain over the NTEU proposal. Pp. 926-934.

(a) The plain text of 7106(a)(2)(B) - which provides that " nothing in this [Act] shall affect the authority of [agency management officials] in accordance with applicable laws . . . to make [contracting-out] determinations" (emphasis added) - demonstrates that the section supersedes 7121. P. 928.

(b) The arguments presented by the FLRA to overcome 7106(a) (2)(B)s plain meaning lack merit. First, 7121(c), which exempts certain appointment, suspension, and removal decisions from the grievance requirements, is not rendered superfluous if such decisions are already insulated from those requirements by 7106(a), subsection (2)(A) of which refers to those same decisions as protected management rights. Although the two provisions sometimes overlap, each also has a distinct effect on such decisions: 7121(c) removes them from the coverage of only the grievance provisions regardless of whether they are made in accordance with applicable laws, while 7106 removes them from the coverage of the entire Act, but only if they are made in accordance with such laws. Second, agency management cannot be subjected to grievance procedures over the exercise of reserved rights on the theory that 7121 [494 U.S. 922, 923] is among the "applicable laws" referred to in 7106(a)(2), since that phrase clearly refers to laws outside the Act. Third, 7106(a) is applicable even though the NTEU proposal would not establish any substantive limitation on managements contracting-out decisions, but would only provide for the enforcement of "external limitations" on those decisions contained in the OMB Circulars mandatory and nondiscretionary provisions. Insofar as union rights are concerned, it is entirely up to the IRS whether it will comply at all with the Circulars requirements, except to the extent that such compliance is required by an "applicable law." Fourth, it is not reasonable to interpret the latter phrase as being synonymous with the term "any law, rule, or regulation" in 7103(a)(9) (C)(ii), which defines "grievance" as a claimed "violation, misinterpretation, or misapplication of any law, rule, or regulation affecting conditions of employment." (Emphasis added.) Thus, it cannot be said that all agency contracting decisions that violate rules or regulations are, by definition, "not in accordance with applicable laws." Pp. 928-932.

(c) This Court will not decide in the first instance whether the OMB Circular is an "applicable law" under 7106(a)(2). Pp. 932-933.

(d) The question whether 7117(a) - which provides that the "duty to bargain . . . shall, to the extent not inconsistent with . . . any Government-wide rule or regulation, extend to matters which are the subject of any [non-Government-wide] rule or regulation" (emphasis added) - renders the FLRA proposal nonnegotiable as inconsistent with "no arbitration" language in th