Federal Outsourcing Battle Heats Up

Revised rules that would increase the amount of government work that can be outsourced have put the Bush administration at odds with Congressional Democrats and union leaders
It's the classic political divide right out of a government textbook. On one side are members of the Republican Bush administration and its backers in business, heaping praise on new rules that would encourage more government work to be outsourced to the private sector--a move they say potentially could save taxpayers billions of dollars. On the other side are Congressional Democrats and labor union chieftains, who see revisions in the rules, known as OMB Circular A-76, as a way to displace thousands of federal workers, including IT employees.

A-76--issued last month by the White House Office of Management and Budget--provides for teams of government employees and private-sector companies to compete for government IT and other services work not deemed inherently governmental. But the rule changes are no simple matter.

For the most part, backers of the revised rules see them as an enhancement of the existing regulations. For instance, the revisions require that a decision on who should receive a contract be made within 12 months; under the incumbent regs, such a decision could take more than two years, a span that resulted in relatively few businesses seeking work under A-76. "The revisions represent an improvement in the competitive sourcing process and should increase private-sector competition for government services, which is good for taxpayers," Donald Dilks, president of DDD Co., a provider of logistical services to government and business, testified Thursday at a House Government Reform Committee hearing on A-76.

But opponents of the revisions see a more sinister motive emanating from the White House. "The new A-76 circular is designed to give OMB one more tool to contract out as many federal employee jobs as quickly as possible," Colleen Kelley, president of the National Treasury Employees Union, said in her testimony. The ranking Democrat on the panel, Rep. Henry Waxman, D-Calif., characterized the new rules as a declaration of war on federal workers. Waxman said he doesn't oppose hiring private companies if they work more efficiently at lower costs. "But," he said, "I am opposed to the privatize-at-any-cost ideology that seems to drive the administration."

Democrats accused the administration of setting quotas for the number of positions to be filled by outsourcers. The administration has set a goal that as much as half of government work not deemed "inherently governmental" can be outsourced. "How do you justify quotas for privatization?" delegate Eleanor Holmes Norton, D-D.C., pointedly asked Angela Styles, OMB's administrator for federal procurement policy. Styles shot back: "We don't have privatization quotas--we're agnostic on who wins."

Despite the political battling, changing the rules to encourage competition for federal work doesn't mean it will easily happen. Competitive sourcing poses a major change in the way government agencies operate, said comptroller general David Walker, the head of the General Accounting Office and chairman of a panel that recommended many of the revisions OMB adopted in A-76. "While the new circular provides an improved foundation for competitive sourcing decisions," Walker said, "implementing this initiative will undoubtedly be a significant challenge for many federal agencies."