Federal employee unions have won new limits on President Bush's "competitive sourcing" initiative in recent months by maneuvering to get key restrictions inserted into annual federal spending bills. But the White House, which has registered a few legislative victories of its own, still has time to undo some of the damage.
The Bush administration and the unions have been at odds over the controversial management practice ever since Bush took office in 2001. The president has made competitive sourcing a pillar of his management agenda. He says that requiring hundreds of thousands of federal employees to prove they can do their jobs better and more cheaply than private contractors promotes government efficiency, even if the jobs ultimately stay in-house.
Union leaders have derided the initiative as little more than an effort to reward Bush's business allies with lucrative contracts.
Over the past two years, the struggle over the policy has played out in the annual appropriations process in Congress. Unions and their allies -- mainly, but not exclusively, Democrats -- have tried to slip anti-competitive sourcing measures into spending bills. Meanwhile, the White House has worked with Republican congressional leaders to head off new legislative restrictions on public-private job competitions in agencies, occasionally threatening presidential vetoes of entire funding measures over the issue.
"The unions are trying to slow everything down, and they are working very hard at it," said Clay Johnson III, deputy director of the Office of Management and Budget, which oversees competitive sourcing government-wide.
John Gage, president of the American Federation of Government Employees, said many union-backed provisions have passed with bipartisan support. That has not deterred the White House from working to remove them from final bills late in the process, he said.
"The administration's strong-arm tactics showed once and for all that its only objective is to replace federal employees with contractor cronies -- taxpayers and the public interest be damned," Gage said in a statement.
Fiscal 2005 began Oct. 1, but Congress is still sorting out how much money agencies will have to spend. Only four of 14 annual spending bills have been finally passed by the House and Senate, and Congress, when it returns after the elections, appears headed for a third consecutive year of combining unfinished legislation into one massive spending package.
Even so, a number of important battles over competitive sourcing have already taken place. Here is a look at key developments:
* In the Homeland Security appropriations bill, a union-backed measure prohibits the Department of Homeland Security from spending money to determine whether more than 1,300 immigration services jobs should be done by private contractors. House-Senate negotiators kept the provision despite a written appeal from DHS Secretary Tom Ridge, who warned of a possible veto by Bush. When lawmakers would not budge, the department canceled the job competition.
* In the Defense Department appropriations bill, unions successfully recycled language from the previous year's legislation that guarantees Defense employees the right to restructure their work units as "most efficient organizations" -- with fewer workers, say, or better technology -- when 10 or more jobs are at stake in competition against contractors. OMB Circular A-76, the federal rules that govern such competitions, ordinarily permits agencies to conduct 90-day "streamlined" competitions for existing agency functions that involve 65 positions or fewer.
Another provision continued from last year requires that a contractor's winning bid offer savings of at least 10 percent or $10 million, whichever is less.
New this year is a requirement that health care costs be excluded from a competition when a contractor pays less toward health care for employees than the Defense Department does. OMB officials say such cost comparisons will be difficult to calculate. Bush signed the bill into law in August.
* In the Defense authorization bill, unions suffered several defeats. The administration rebuffed attempts to include in the legislation the same competitive sourcing restrictions that are in the Defense appropriations bill. Doing so would have made the restrictions permanent. Under the Defense appropriations bill, they are in effect for only one year. Unions also were unhappy with a provision that allows federal employees to appeal job competition results to the Government Accountability Office, but only through a designated government manager. The unions wanted to allow employees to elect their own representative to pursue such protests.
* The Transportation-Treasury appropriations bill is the biggest remaining battleground over competitive sourcing. For the second consecutive year, Rep. Chris Van Hollen (D-Md.) added an amendment on the House floor that would require the OMB to abandon newly revised A-76 rules designed to speed up job competitions government-wide.
Sen. Barbara A. Mikulski (D-Md.) got the same provision through a committee, but the full Senate has not voted on it.
Proponents of the measure say the new rules favor contractors and should be rewritten. Critics deny that and say the real goal is to halt competitive sourcing by creating chaos in the system. OMB officials scrambled last year to quash the measure in a House-Senate conference, even though negotiators had already agreed to include it. The White House, which has threatened a veto, hopes to kill the provision again this year.
The House version of the bill also contains an amendment by Rep. Shelley Moore Capito (R-W.Va.) that would block the Internal Revenue Service from spending money to hire private contractors to collect taxes. Proponents cite privacy concerns, but the administration opposes the restriction. No similar provision exists in the Senate bill. Its fate is uncertain.
The entire appropriations bill may be rolled into an omnibus spending measure rather than standing on its own.
* In the Interior Department appropriations bill, both the House and Senate would cap funding for job competitions at Interior, the Forest Service and parts of the Energy Department funded by the legislation. The House version, which was finally passed in June, would impose caps of $2.5 million at Interior, $2 million at the Forest Service and $500,000 at Energy.
The Senate version, which has cleared committee but not the full Senate, has the same caps with the exception of a $3.25 million ceiling at Interior. OMB officials are unhappy with the caps, but say they will not try to overturn them.
Colleen M. Kelley, president of the National Treasury Employees Union, said the appropriations season has "been a pretty good one" for union efforts.
"We really did see more bipartisan support on this issue," Kelley said.
Chris Jahn, president of the Contract Services Association of America, a contractor group, said efforts to turn back union initiatives "are going reasonably well given that it's an election year."
"Industry has been working this very hard, the administration has been working it hard, and we've had some good results lately," Jahn said, adding that the unions "are not looking to make this system work better. They're looking to shut this system down."
Johnson, the OMB official, said he does not want to go through an annual appropriations duel with unions. "We just need to do a better job . . . of educating and bringing Congress along in terms of what the value of this is so that we're not always playing defense at this time of year," he said.