outsourcing the State redux

[Ian Murray <seamus2001@xxxxxxxxx>]

OMB Details 'Outsourcing' Revisions
Unions Denounce New Rules Aimed At Competition

By Edward Walsh
Washington Post Staff Writer
Friday, May 30, 2003; Page A21


The Bush administration announced yesterday a long-awaited policy to speed
up a process to open up 425,000 federal jobs to competition from private
companies to do the work that federal employees now perform.

Office of Management and Budget Director Mitchell E. Daniels Jr. and
Angela Styles, administrator of OMB's office of federal procurement
policy, unveiled the revised policy, which they said was designed to
shorten and streamline the process to require competition for government
work and eventually save taxpayers' money.

But officials of federal employees labor unions denounced the changes,
saying they granted far too much discretion to government managers and
would be aggressively used by the administration to pursue President
Bush's agenda to "outsource" as much government work as possible to
private contractors.

"Given this tremendous discretion, they will exercise this discretion in a
way that favors contractors and pushes the work right out the [government
agency] door," said Jacqueline Simon, public policy director for the
American Federation of Government Employees.

Administration officials denied that Bush's goal was to farm out
government workers' jobs to private companies. They said that Bush's goal
is to encourage competition and that federal workers could very well win
the contests and keep their jobs.

"We are indifferent as to who wins the competition" for government work,
Daniels said at a news conference. "It need not result in any changes in
federal employment. We'll just have to see what a more wide-open system
brings."

Yesterday's announcement concerned the final revisions of what is known as
Circular A-76, a regulation that was promulgated in 1966 and governs the
"outsourcing" of government work. The details of the final revisions were
the subject of lengthy study and intense debate within the administration
and among private contractors who are interested in doing more government
work and federal employees unions that want to preserve their members'
jobs.

The administration has said that 850,000 federal jobs -- out of a total
civilian federal workforce of 1.8 million -- are essentially "commercial"
in nature and could be performed by nongovernment workers. It has set an
ultimate goal of opening half of those jobs, or 425,000, to competition
from private contractors. The administration's immediate goal, which
Styles said will be met by a handful of agencies, is for 15 percent of the
850,000 jobs to be subject to private competition by the end of the
current fiscal year.

The administration has not specified what work would most likely be opened
to competition, but it appears to include property maintenance, computer
work, security guards and other work routinely done in the private sector.

According to Daniels, under the old system, competitions to decide whether
a particular government task could best be done by federal employees or a
private contractor sometimes stretched for three or four years. He said
the time required and the cost and complexity of the system discouraged
many private companies from competing to perform government tasks.

Under the revised process announced yesterday, these competitions will
have to be completed in one year, although that deadline could be
routinely extended by six months. The new process also creates a
"streamlined" competition involving 65 or fewer federal jobs that has a
90-day deadline for completion that could be extended to 135 days.

The new process also eliminates what was known as "direct conversions"
under which 10 or fewer jobs at an agency were turned over to a private
contractor without federal employees being given a chance to compete to
keep the jobs. But under the streamlined competition, federal employees
will lose a built-in 10 percent cost advantage that effectively required
private contractors to propose doing a job for at least 10 percent less
than the cost of keeping the jobs in a government agency.

Simon said the revised one-year, standard competition includes a new "best
value" criterion that makes the cost of performing a task 50 percent of
the factors used to decide who should do it. "It's tremendous discretion
to award contracts on the basis of subjective factors," she said. "This is
very difficult to challenge. Up to 50 percent of the factors in deciding
on an award can be subjective."

Simon also complained that under the streamlined competition rules, it is
up to agency managers to decide whether to give their employees a chance
to develop plans for more efficient operations as an alternative to
proposals to do the same work by outside contractors. She said she
suspected many agency managers will not give their employees that chance.

"All of this is taking place in the context of an administration that is
blatantly pro-contractor and wants to privatize as much as they can,"
Simon said.

Adding to the union criticism, Colleen M. Kelley, president of the
National Treasury Employees Union, said, "These rules open the door to
millions more taxpayer dollars being handed over to private contractors
without any evidence that they can perform the work better and cheaper for
the taxpayers than federal employees can."

Styles replied that a wide-open "best value" criterion with no cost
component is already widely used in making government purchases. And, she
said, agency heads are being encouraged to allow their employees to
develop plans to compete with private contractors seeking their jobs.

"I feel we went above and beyond in taking into consideration [the
unions'] concerns," she said. "The agencies are screaming at me because
I'm not giving them enough flexibility. They do have valid concerns about
subjectivity, and we tried hard to address those concerns, and I think we
did."

Stephen Sorett, a former administrator of the government contract program
at George Washington University Law School, said he understood the
apprehension of federal employees. But he said that the new process should
be an improvement and that there is no guarantee that private contractors
would always win competitions with federal workers.

"I think the private sector has as much to worry about as the public
sector on these things," he said.