[Federal Register: April 11, 2006 (Volume 71, Number 69)]
[Notices]
[Page 18355-18357]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11ap06-124]
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DEPARTMENT OF LABOR
Employment and Training Administration
[TA-W-50,486]
Electronic Data Systems Corporation, I Solutions Center,
Fairborn, Ohio; Notice of Revised Determination on Remand
The United States Court of International Trade (USCIT) remanded to
the Secretary of Labor for further investigation the case of Former
Employees of Electronic Data Systems Corporation v. U.S. Secretary of
Labor (Court No. 03-00373).
On January 15, 2003, the Department of Labor (Department) issued a
negative determination regarding the eligibility of workers at
Electronic Data Systems (EDS) Corporation, I Solutions Center,
Fairborn, Ohio to apply for Trade Adjustment Assistance (TAA). The
determination was based on the Department's finding that the workers at
the subject facility performed information technology services, and did
not produce or support the production of an article. Therefore, the
workers did not satisfy the eligibility criteria of section 222 of the
Trade Act of 1974. 19 U.S.C. 2272. On February 6, 2003, the Notice of
Negative Determination Regarding Eligibility to Apply for Worker
Adjustment Assistance for Electronic Data Systems Corporation, I
Solutions Center, Fairborn, Ohio was published in the Federal Register
(68 FR 6211).
In a letter dated March 4, 2003, the petitioner requested
administrative reconsideration of the Department's
[[Page 18356]]
negative determination, and included additional information indicating
that all usage and copyrights of the computer programs, job control
language, documentation, etc. produced at the Fairborn facility were
transferred to the client upon sale. The Department determined that the
information submitted did not constitute an adequate basis for
reconsideration and affirmed its finding that the workers of Electronic
Data Systems Corporation, I Solutions Center, Fairborn, Ohio were not
eligible to apply for TAA, because they did not produce an article
within the meaning of Section 222 of the Trade Act. Accordingly, the
Department issued a Notice of Negative Determination Regarding
Application for Reconsideration on April 15, 2003. The Notice was
published in the Federal Register on April 24, 2003 (68 FR 20180).
After the petitioner sought review by the USCIT, the Court remanded
the case to the Department. On January 31, 2005, the Department issued
a Negative Determination on Remand based on the finding that workers of
the subject facility did not produce an article, nor did they support,
either directly or through an appropriate subdivision of EDS, the
production of an article within the meaning of the Trade Act. The
investigation revealed that the products designed and/or developed at
the Fairborn facility were not mass-replicated to any physical carrier
medium.
After another review, on November 14, 2005, the USCIT remanded the
case to the Department, giving rise to the current investigation and
determination.
Since the publication of the last remand determination, the
Department has revised its policy to acknowledge that, at least in the
context of this case, there are tangible and intangible articles and to
clarify that the production of intangible articles can be distinguished
from the provision of services. Software and similar intangible goods
that would have been considered articles for the purposes of the Trade
Act if embodied in a physical medium will now be considered to be
articles regardless of their method of transfer.
The Department stresses that it will continue to implement the
longstanding precedent that firms must produce an article to be
certified under the Act. This determination is not altered by the fact
the provision of a service may result in the incidental creation of an
article. For example, accountants provide services for the purposes of
the Act even though, in the course of providing those services, they
may produce audit reports or similar financial documents that may be
articles on the Harmonized Tariff Schedule of the United States.
Because the new policy may have ramifications beyond this case of which
the Department is not fully cognizant, the new policy will be further
developed in rulemaking.
Because it is the Department's practice to apply current policy
instead of the policy which existed during the investigative period if
doing so is favorable to the workers, the Department conducted the
second remand investigation under the new policy.
The second remand investigation revealed that the financial
applications software work performed at the subject facility was
divided into three categories: maintenance, enhancements, and service
agreements.
Maintenance comprised approximately [business confidential] percent
of the work performed at the subject facility and, as the term
``maintenance'' implies, was a service-oriented activity. The
maintenance services performed at the subject facility generally
involved ``minor updates to tables, defect fixes to programs or data,
monitoring operating performance, and other activities that do not
materially affect the original functional specifications for existing
software.''
Software enhancements accounted for approximately [business
confidential] percent of the subject facility's total work load, and
generally involved ``modifications to (usually small) portions of a
program or system that is meant to incorporate new functional
specifications but does not significantly alter the fundamental intent,
architecture, or structure of the application.'' These modifications
involved both modifying existing code and writing new code modules to
be added to the program's existing code.
Some enhancements, particularly those that make very minor
alterations to existing code, do appear to be services. However, a
significant portion of the enhancements developed at the subject
facility involves the development of new code that adds new
functionality and represents the essence of what constitutes software.
Therefore, the Department has determined that a significant portion of
the software enhancements developed by the subject worker group are
articles for the purposes of the Trade Act.
This does not mean that any activity which added functionality to
an article would be considered production of an article. For example,
the installation of a car radio is clearly a service, even though the
radio is clearly an article. In the case at hand, the subject firm
performs a service by installing software enhancements, but they also
produce an article in that they write the code for (produce) the
significant enhancements themselves.
While most software maintenance and enhancement activities were
provided for under the general contract between EDS and General Motors
Acceptance Corporation (GMAC), the development of wholly new software
(the most clear cut production activity taking place at the subject
facility) only took place as the result of ``Service Agreements'' or
supplementary contracts between EDS and GMAC. Service agreements
covered all three categories of work (maintenance, enhancements, and
new software), and comprised the remaining percent of work performed at
the subject facility. EDS estimates that somewhere between [business
confidential] percent of the service agreements carried out at the
subject facility involved the development of completely new software,
thus [business confidential] percent of the total work performed at the
subject facility involved the development of completely new software.
Based on findings that the former employees spent a considerable
amount of their work time on the development of significant
enhancements that include new code, and the development of totally new
software, the Department has determined that a significant portion of
the workers of the subject facility were engaged in the production of
an article (financial applications software). Given that those workers
were not differentiated as to whether they worked on maintenance,
enhancement or new software, the Department will consider all workers
within the facility as a part of the petitioning worker group.
The second remand investigation revealed that a significant portion
of the production of software enhancements was shifted to Mexico during
the period under investigation. Moreover, while no production of wholly
new software occurred in Mexico during the period under investigation,
the Mexican workers were being trained in the production of new
software during the relevant period and the production of such software
now occurs in Mexico. Thus, a shift of new software production to
Mexico was also already underway. Based on a review of the record
developed on remand, the Department determines that the software
produced in Mexico is like or directly competitive to that produced at
the subject facility. Moreover, previous investigation established that
the requisite declines in
[[Page 18357]]
employment occurred at the subject facility during the relevant period.
Conclusion
After careful review of the facts generated through the remand
investigation, I determine that a shift in production of financial
applications software like or directly competitive to that produced at
the subject facility to Mexico contributed importantly to the total or
partial separation of a significant number of workers at the subject
facility. In accordance with the provisions of the Act, I make the
following certification:
``All workers of Electronic Data Systems Corporation, I
Solutions Center, Fairborn, Ohio, who became totally or partially
separated from employment on or after December 27, 2001, through two
years from the issuance of this revised determination, are eligible
to apply for Trade Adjustment Assistance under Section 223 of the
Trade Act of 1974.''
Signed at Washington, DC this 24th day of March 2006.
Elliott S. Kushner,
Certifying Officer, Division of Trade Adjustment Assistance.
[FR Doc. E6-5279 Filed 4-10-06; 8:45 am]
BILLING CODE 4510-30-P