ARTICLE 42
CONTRACTING OUT

SECTION 1 - GENERAL

The Agency agrees to meet and confer with the Union
regarding any study of a function considered for contracting out
which affects employees within the bargaining unit. We agree to
comply with all provisions of this Agreement and all applicable
laws, rules, and regulations concerning contracting out.

SECTION 2 - NOTIFICATION

The Agency agrees to inform the Union President after
notification to Congress when contemplating the possibility of
contracting out work being done by bargaining unit employees.
Further, the Agency will keep the Union apprised of the
development of the consideration to contract out.

SECTION 3 - COMMERCIAL ACTIVITIES STUDY

The Union will be kept informed on the progress of
commercial activities studies of bargaining unit positions.
Activities conducting such studies will meet and confer, as
frequently as necessary, with the Union while studies are on-going.
Briefings will be held with affected bargaining unit
employees for the purpose of providing information on contracting
out as well as encouraging their input on how to streamline
operations. The Union will be given an opportunity to attend
such briefings. The Union will also be asked to take part in
post-announcement management improvement actions to include
improving the in-house organization and recommending information
for inclusion in the Performance Work Statement.

SECTION 4 - SITE VISITS

The Agency will notify the Union when a site visit will be
conducted for potential bidders of any function undergoing a
commercial activities study which contains bargaining unit
employees. A Union representative may attend the "walk through"
held for potential bidders.

SECTION 5 - INFORMATION

The Agency agrees to provide to the Union, upon request,
information not prohibited by laws, rules, or regulations
concerning commercial activities studies. After the completion
of studies, periodic briefings will be held between the Agency
and the Union to provide the Union with appropriate information
on decisions affecting unit employees. This includes information
on decisions to keep the function in-house or to contract it out.
The findings and recommendations of the "most efficient
organization" management study will be discussed with the Union
and affected employees as soon as the information can be
released.

SECTION 6 -IF THEDECISION IS TO CONTRACT OUT

A. We will meet and confer to assess the impact on
bargaining unit employees and to minimize any adverse impacts.
If unit employees are displaced, the Agency will make every
reasonable effort to minimize the impact on employees. Maximum
retention of career employees shall be achieved by considering
attrition patterns and restricting new hires if needed.

B. Employees who are adversely affected by the decision to
contract out will be advised of their rights pertaining to the
right of first refusal, Reduction-in-Force, and severance pay.

C. The Agency will retrain affected career employees, if
necessary, when they are reassigned as a result of contracting
out.

SECTION 7 - RIGHT OF FIRST REFUSAL

We recognize the "right of first refusal" which provides
that the contractor will grant applicable DFAS employees,
displaced by direct result of contracting out, the right of first
refusal of employment openings created by the contractor.
Refusing the right of first refusal, because of displacement due
to contracting out, shall not deny a bargaining unit employee of
any rights he or she might otherwise have under applicable
Reduction-in-Force procedures; however, such refusal might affect
the employee's entitlement to severance pay.