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
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
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, D.C. this 24th day of March 2006.
/s/ Elliott S. Kushner
_____________________
ELLIOTT S. KUSHNER
Certifying Officer,
Division of Trade
Adjustment Assistance


DEPARTMENT OF LABOR

Employment and Training Administration
TA-W-50,486

ELECTRONIC DATA SYSTEMS CORPORATION
I SOLUTIONS CENTER
FAIRBORN, OHIO

Negative Determination Regarding Eligibility
To Apply For Worker Adjustment Assistance

In accordance with Section 223 of the Trade Act of 1974,
as amended (19 USC 2273), the Department of Labor herein
presents the results of an investigation regarding
certification of eligibility to apply for worker adjustment
assistance.
The investigation was initiated in response to a petition
received on January 6, 2003 and filed on behalf of workers at
Electronic Data Systems Corporation, I Solutions Center,
Fairborn, Ohio. Workers at the subject company perform
information technology services.
The investigation revealed that the petitioning workers
of these firms or subdivision do not produce an article within
the meaning of Section 222(c)(3) of the Act. The Department
of Labor has consistently determined that the performance of
services does not constitute production of an article, as
required by Section 222 of the Trade Act of 1974, and this
determination has been upheld in the U.S. Court of Appeals.
Workers at the firm or subdivision may be certified only
if their separation was caused importantly by a reduced demand
for their services from a parent firm, a firm otherwise
related to their firm by ownership, or a firm related by
control. Additionally, the reduction in demand for services
must originate at a production facility whose workers
independently meet the statutory criteria for certification,
and the reduction must directly relate to the product impacted
by imports. These conditions have not been met for workers at
this firm.
A prior Trade Adjustment Assistance petition filed on
behalf of the same worker group at the subject company was
denied based upon the finding that the workers did not produce
an article (TA-W-42,036; signed on October 1, 2002).
Conclusion
After careful review, I determine that all workers of
Electronic Data Systems Corporation, I Solutions Center,
Fairborn, Ohio covered by the petition filed on December 27,
2002 are denied eligibility to apply for adjustment assistance
under Section 223 of the Trade Act of 1974, as amended.
Signed in Washington, D. C. this 15th day of January 2003


/s/Richard Church_____
RICHARD CHURCH
Certifying Officer, Division
of Trade Adjustment Assistance

Can we add significant here?