Congress Clamps a Lid on Outsourcing of Government Work

By Stephen Barr
Tuesday, December 20, 2005

Congress, in an effort to protect federal jobs, has placed restrictions on the Bush administration's program that uses cost-comparison studies to determine whether "commercial" activities performed by the government should be turned over to contractors.

One of the more significant curbs was contained in the fiscal 2006 spending bill for the departments of Transportation, Treasury and Housing and Urban Development. The provision applies across the government -- except for the Defense Department and the Transportation Security Administration's airport screener operation -- and became law Nov. 30.

The fiscal 2006 defense spending bill, approved by the House yesterday and sent to the Senate, would place a similar limit on the Defense Department's conversion of federal jobs to contractor jobs.

The president's "competitive sourcing" initiative calls for studies to determine whether certain types of work performed by federal employees can be done by the private sector at less cost. In policy statements, the White House has pointed out that job competitions conducted in fiscal 2003 and 2004 are projected to produce five-year savings totaling $2.5 billion. Federal employees have won 90 percent of the job competitions, officials also point out.

But federal unions have lobbied against the job competitions, arguing that the rules are tilted against employees and that estimates of cost savings are overstated or cannot be proved. Industry groups contend that agencies should be able to outsource work if it helps them manage their budgets or better accomplish their goals.

The new law will allow 10 or more federal employees to set up a "most efficient organization" to bid against contractors for the government work. Previously, only groups representing at least 65 federal employees could compete.

The law also prohibits agencies from contracting out activities involving 10 or more federal jobs unless the contractor's bid comes in $10 million or 10 percent lower.

Although President Bush 's senior advisers had warned of a possible veto if the restrictions on outsourcing were adopted, a spokesman at the Office of Management and Budget said the administration "determined that these provisions do not significantly erode the president's management agenda."

Alex Conant , the OMB spokesman, said officials "will monitor the impact" of the limits on competitive sourcing and, if found too restrictive, will work with Congress "to fix them." Conant said OMB officials are drafting additional guidelines for agencies "to help them successfully compete work."

The spending bill for the Defense Department carries provisions similar to the Transportation-Treasury law. It goes a step further, however, by including a section that would not permit contractors to gain an advantage in their bids if they offer less generous health insurance benefits than those paid by the Defense Department on behalf of its civil service employees.

Third Appointee to Join MSPB

The Senate has confirmed Mary M. Rose as a member of the Merit Systems Protection Board, a quasi-judicial agency that hears appeals from federal employees who face dismissal, demotion or other disciplinary action.

Her nomination by the president was approved Saturday. She was appointed to a seven-year term, expiring March 1, 2011.

Rose has served as vice chairman of the Federal Salary Council, which advises the president on locality pay adjustments, and as chairman of the Federal Prevailing Rate Advisory Committee, which helps set policy on blue-collar pay in the government. She helped recruit political appointees for the Bush administration in 2001.

She is a former deputy undersecretary of management at the Education Department. She graduated from the Bon Secours School of Nursing.

The board operates with three members. Neil A.G. McPhie is the chairman, and his term ends in March 2009. The other board member is Barbara J. Sapin , and her term expires in March 2007.


Chris Early , manager of the policy management division of the Federal Aviation Administration's office of human resource management, will retire Dec. 31 after 26 years of federal service. He played a key role in the development of the FAA's Core Compensation System.

Don Rider , counsel for labor and employment law at the Federal Deposit Insurance Corp., will retire Dec. 31 after more than 30 years of federal service. He began his career at the National Labor Relations Board and included a stint at the Federal Labor Relations Authority.

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