The Bush administration appears to be losing traction on two key policies -- federal pay and contracting out.

The House approved a fiscal 2005 spending bill yesterday that would provide a 3.5 percent pay raise for federal employees next year and would require the Bush administration to rewrite rules that permit private-sector bids for certain types of federal jobs.

The administration, in contrast, has called for a 1.5 percent pay raise for civil service employees, saying that would be ample to protect the purchasing power of nearly 1.8 million government workers as federal agencies seek to more rigorously link pay raises to job performance.

The administration also has repeatedly warned of a possible veto if Congress placed curbs on the president's "competitive sourcing" initiative, which officials contend is starting to show progress and, over time, could save billions of taxpayer dollars.

The Bush administration, however, lost ground on both issues over three days of debate on the nearly $90 billion spending bill for the departments of Transportation and Treasury and other agencies.

A bipartisan group of Washington area House members, led by Reps. Thomas M. Davis III (R-Va.), Steny H. Hoyer (D-Md.), James P. Moran Jr. (D-Va.) and Frank R. Wolf (R-Va.), had rounded up support to continue a 20-year tradition of pay parity raises between the civil service and the military. House opponents passed up a chance on Monday to strike the pay raise from the spending bill by invoking a parliamentary point of order.

Republicans also joined Democrats to set aside the contracting rules, known as A-76, that determine whether commercial activities are kept in-house or turned over to the private sector. On Tuesday, Rep. Chris Van Hollen (D-Md.) sponsored an amendment, approved 210 to 187, to return the government to the A-76 rules that were in effect before May 2003.

Lobbyists speculated that House members -- in an election year in which there is uncertainty about the direction of the economy -- were reluctant to support efforts that might reduce well-paying federal jobs in their districts.

John Gage, president of the American Federation of Government Employees, which lobbied for Van Hollen's amendment, said that that may have been the case for some members, but, he added, "I think the logic of our argument is wearing them down." Gage contended that the job competition rules are tilted toward contractors and do not give federal employees a fair shake.

On the House floor, Van Hollen portrayed the A-76 rules as "a broken process" and reminded the House that Congress had recently changed the rules for some agencies, including the Defense Department, where the bulk of federal job competitions are run.

"We now have four different sets of rules in different appropriations bills, and we keep changing the rules year to year," Van Hollen said during the House debate. "The result is we have a patchwork of different rules that apply to different agencies. It is unfair to federal employees. It is unfair to the private contractors. We should address this issue in a uniform, comprehensive manner."

Sen. Barbara A. Mikulski (D-Md.) also has won bipartisan backing for an A-76 rollback, although it has not been taken up on the Senate floor.

House opponents, led by Rep. Ernest J. Istook Jr. (R-Okla.), argued that job competitions allow the government to find ways to do federal work better and cheaper. Van Hollen's amendment "is just trying to stop government efficiency because we have some federal employee unions and others that insist that the people that do the work have to be members of their unions," Istook said.

Chris Jahn, president of the Contract Services Association, said federal unions "want the entire process simply shut down." Stan Soloway, president of the Professional Services Council, said he hoped Congress "will delete the amendment . . . before the bill is sent to President Bush."

Last year, House and Senate negotiators scaled back Van Hollen's amendment before sending it to the White House.

Gage predicted that Republican leaders will take aim again. "We're not counting this as a win until it is firmly in the hopper," he said.

But federal employees probably can bank on getting a 3.5 percent raise next year. Federal employees "are one step closer to receiving a fair pay adjustment," Hoyer said yesterday.

Hoyer and Davis said that many employees play critical roles in fighting terrorism and providing vital services. "The federal government's most important asset is our people," Davis said.

E-mail: barrs@washpost.com.