Although the House and Senate last week voted to give the Defense Department almost all the new weapons it wanted, there was at least one small area in which they succeeded in handcuffing the Pentagon.
Both chambers passed versions of the DOD authorization bill with an amendment that would bar the Pentagon from hiring new private firms to provide security and firefighting services at military installations for the next two years.
The decision is a defeat for the U.S. Chamber of Commerce, which contends that the federal government could save up to $50 million a year if it shifted more of its jobs to the private sector. But the bill marked a victory for federal employe unions, which claim that hundreds of specially trained federal employes would have lost their jobs had the amendment not gone through.
The dispute is the latest in a series of battles between business and labor groups over the government's attempt to reduce its costs and the size of its work force by giving the private sector a bigger slice of the federal pie.
In 1979, the Office of Management and Budget issued Circular A-76, which requires federal agencies to review all tasks except those that are "inherently governmental" to see if private firms could do them more more cheaply. If a cost-comparison study showed that a private business could do the job--say, for instance, maintenance or key-punching--for at least 10 percent less than what it costs the government, the agency is supposed to contract out the job. All of these so-called A-76 reviews are supposed to be completed by October, 1984.
OMB figures taxpayers could save up to $1 billion a year if the functions were shifted to the private sector. In a separate study, it estimated that approximately 400,000 employes, most of them at DOD, perform about 11,000 tasks that private firms could handle.
But achieving that switch has not been easy.
Last year, for instance, the General Services Administration announced that it was going to hire several private firms to provide maintenance and security services at 30 federal office buildings in the Philadelphia area, cutting those costs in half. But Rep. Bob Edgar (D-Pa.), nixed the plan with an amendment to a continuing resolution for fiscal 1983. Edgar opposed the transfer because he said it would have cost the jobs of a number of veterans.
Previously, Congress also has moved to block DOD, where most of the contracting could occur. In the past three years, DOD has held 400 competitions for firms vying to provide commercial services, according to a Pentagon spokesman, and is conducting cost-comparison studies that could affect the jobs of 10,000 federal workers in fiscal 1984. So far, private firms have won six cost-comparison studies out of every 10.
Last year, Congress barred DOD from beginning any new cost comparisons and placed a one-year moratorium on hiring private firefighters and security firms at military bases. Currently, private companies perform those services at more than 30 bases.
But several members of Congress, including Rep. Earl Hutto (D-Fla.), who sponsored the House amendment extending the prohibition, said the firefighting and security jobs are too important to turn over to private companies. Several members expressed concern about the disrupting effect of workers' strikes and possible national security considerations.
Neither chamber voted this year to bar DOD from starting new cost-comparison studies, however.
The OMB, meanwhile, is expected to publish revisions to Circular A-76 in final form within a few weeks. The OMB originally had planned to publish new contracting guidelines in April, 1982, but after some of the proposed changes were leaked federal employe groups protested, and the proposal was delayed until last January.
The changes are designed to make it easier for agencies to turn over jobs to the private sector. For example, tasks that involve no more than 10 employes are supposed to be shifted to a private contractor without waiting for a cost-comparison study--unless the cost of the private services turns out to be unreasonable. An agency also could waive a cost-comparison study if it decides its workers don't stand a chance of coming out on top.
Washington attorney James S. Hostetler, a member of the chamber's Small Business Council, described most of the changes as positive, but said "the administration didn't go far enough."
But W. Harry Muller, an attorney for the American Federation of Government Employes, said the government was proceeding without any proof that contracting out is a good idea. Muller contended that the government never has conducted any comprehensive follow-up studies to determine if private contractors make good on their cost-cutting promises or if they later charge the government for cost overruns.
OMB officials wouldn't discuss the specifics of the revised policy, but an OMB procurement official said the new version contains several "significant changes" to ensure that the rules "are not weighted on one side or the other."
For instance, the final version is expected to require agencies to perform a management study to determine the most efficient way to provide a service before they conduct a cost-comparison study, the OMB official said. Federal employe unions had argued that agencies would be able to compete with private companies more effectively if they were managed better.
The proposed changes issued in January also said agencies should try to consolidate tasks and award them to one contractor. Small businesses objected, though, and that provision has since been dropped, the spokesman said.