Playing Defense

o hear federal union leaders talk about it, the Bush administration's pet term, "competitive sourcing," is simply a fancy phrase for downsizing government, rewarding fat-cat campaign-contributing contractors, bashing bureaucrats, wasting money and busting public unions.

Even before the Bush administration two years ago launched its competitive sourcing drive-ordering agencies to force thousands of federal workers to prove they can do their jobs more effectively and more cheaply than contractors could-federal unions have been on the warpath against contracting out.

The leaders of the two largest unions, Bobby Harnage of the American Federation of Government Employees and Colleen Kelley of the National Treasury Employees Union, have been the most visible and vocal leaders of the effort. They testify before Congress, lead protests, sit on advisory panels, push legislative limits on outsourcing, hold press conferences and run anti-privatization advertising campaigns. Their union local leaders, sprinkled across the country, also stage protests, file administrative appeals and educate the rank-and-file about the outsourcing process.

Unions must have members to survive. They must have lots of members to thrive. The fight against outsourcing members' and potential members' jobs is a life-or-death battle. But under federal law, government unions can't strike and they can't force management to bargain over the number of jobs or the method or means of work. So to fight outsourcing, federal unions make a lot of noise. In the process, they've actually scored some concessions.

WEAKENING THE UNIONS

Union leaders are quick to say that they are not opposed to the competitive part of competitive sourcing. "If a private contractor can do it faster or better, then they should do it," says Ron Coe, an AFGE local president in Indianapolis. "But if the government can do it better, then we should do it."

Even if federal employees win a competition, unions can lose. Under the competitive sourcing process, agencies almost always cut jobs, even if the work stays with federal employees. To compete with contractors, federal managers draw up plans for a so-called "most efficient organization," detailing ways that the in-house workforce can do its job more efficiently-that is, with fewer employees. If the plan rules the day, some workers lose their jobs. Of course, that's better for the unions than if contractors' bids rule the day, in which case all the jobs go away.

The uncertainty of competitive sourcing is nerve-wracking for employees, but union rhetoric often makes it sound like employees wind up on the street, which actually occurs infrequently. When their jobs are cut, employees retire, find jobs elsewhere in government or take jobs with contractors. In a small percentage of cases, employees are laid off. Still, unless employees get new jobs in the same organization, the local union loses them.

The unions at Wright-Patterson Air Force Base in Ohio have been competitive sourcing losers and winners over the past few years. In 1998, the base contracted out support activities, including laboratory support by engineering technicians, after a public-private competition. Such competitions are conducted under rules laid out in Office of Management and Budget Circular A-76. More than 400 civilians lost their jobs. Two years later, an in-house team won a competition for buildings and grounds maintenance. Three hundred forty-five civilians kept their jobs but 83 lost their jobs. "It's weakening the unions," says Tom Robinson, an AFGE official at Wright-Patterson.

Two unions represented the workers in those competitions: American Federation of Government Employees Local 1138 and International Association of Machinists and Aerospace Workers Local 2333. According to reports filed with the Labor Department, both lost members from 1998 to 2001-AFGE down from 365 to 336 and IAMAW down from 377 to 306.

But they fought hard to keep their members' jobs in-house. On the morning of March 14, 2000, members of the two unions picketed at an entrance to the base. Their signs said, "A-76 is a Travesty," "Your Job Could Be Next," "Jobs Lost On Purpose," and "Another Blow to the Veterans." They also picketed in 1997. Union officials appeared in the local newspaper and on television to drum up public support for the workers.

AFGE filed an internal appeal with the Air Force to prevent the engineering technicians' jobs from being outsourced. The appeal was denied. Unlike contractors, which could further appeal contracting decisions to the independent comptroller general and to the courts, the unions had no other options. So the jobs went, and with them went many union members.

'IT'S ABOUT ACCOUNTABILITY'

One of the most potent weapons at the disposal of the unions is anecdotal information about failed contracting efforts. The unions after Sept. 11, for example, played up airport security contractors' failings to help win congressional approval of a federalized security screener workforce.

The Treasury employees union's Kelley battles recurring efforts to outsource Internal Revenue Service operations by pointing to contracting missteps, most resulting from a combination of poor contractor performance and weak agency oversight. Congress has been considering legislation this year to contract out some work collecting delinquent taxes to the private sector.

In 1996, the IRS tested using private debt collectors but canceled the test a year later. Many of the problems with the test were of the IRS' making. According to a General Accounting Office review, the IRS collected $3.1 million due to the efforts of the private contractors, but also spent $3.1 million on the effort and $17 million worth of IRS employees' time, which could have been spent collecting taxes.

In 2001, a contractor hired to process tax returns couldn't keep up with the workload, so the firm's employees shredded or threw out more than 40,000 tax returns worth more than $1 billion. "Because of very little government oversight of contractors, when a contractor is not performing or when the contract costs escalate, it is often too late to fix the problem," Kelley told the Senate Governmental Affairs Committee last year.

Union officials have been demanding more accountability from contractors for years. They argue that once work is outsourced, agencies don't track costs to make sure savings actually materialize. Union leaders say contractors lowball bids to win jobs and later boost their prices once an agency becomes dependent on them. There is no process for returning work to government employees, so agencies are stuck with contractors. "The big problem with outsourcing is we never save any money," says Robinson.

AFGE has been pushing legislation to increase contractor oversight and cost monitoring, and to encourage agencies to in-source work that contractors bungle. Rep. Albert Wynn, D-Md., introduced AFGE's legislation, the Truthfulness, Responsibility and Accountability in Contracting (TRAC) Act, in the last two congressional terms. The bill garnered dozens of Democratic supporters but has little chance of success in the Republican-controlled House or Senate.

"Vital public services should not be turned over to big corporations whose first priority is their bottom line, not the public interest," Harnage said at a 2000 rally promoting the legislation. "This is about accountability," he said.

At least two studies indicate that some A-76 competitions have resulted in savings. A GAO study issued in December 2000 (GAO-01-20) found that competitive sourcing was generating savings for the Defense Department, though auditors couldn't verify the department's figure of $290 million in savings in 1999. Similarly, a February 2001 Center for Naval Analyses review of 16 competitive sourcing projects showed that they saved money and produced satisfactory performance. "Our analysis indicates that the savings achieved from competition are sustained over time," the review said.

But the center had to drop reviews of 33 other competitions because of a lack of data to evaluate their long-term savings or performance results. In-house teams had won 22 of those competitions.

FAIR OPPORTUNITIES

In the mid-1990s, the unions struck a deal with the Clinton administration over downsizing. The Clinton administration wanted to cut the federal workforce by several hundred thousand positions. Union leaders agreed not to raise strong objections to the effort in part because Clinton officials agreed to give them more say at the bargaining table by requiring federal executives and managers to negotiate on more issues.

One of the Bush administration's first actions was to pull back that agreement. The administration has gone on to oppose unionization for the 50,000 screeners at the Transportation Security Administration and revoke bargaining rights, on national security grounds, for several hundred Justice Department employees and a thousand employees at the National Imagery and Mapping Agency. The president has made appointments to key labor relations positions despite opposition by the unions. And the administration has urged managers to monitor union officials to make sure they aren't abusing their right to conduct union business on the clock.

These actions have led unions to distrust the Bush administration on competitive sourcing, even though administration officials have said they don't care which side wins outsourcing battles. In fact, the Bush administration has made concessions to unions on several key policies, starting with the federal government's stated philosophy on outsourcing.

Since 1966, OMB Circular A-76 has included the following statement: "In the process of governing, the government should not compete with its citizens. The competitive enterprise system, characterized by individual freedom and initiative, is the primary source of national economic strength. In recognition of this principle, it has been and continues to be the general policy of the government to rely on commercial sources to supply the products and services the government needs." The Bush administration's revision of A-76, which was issued May 29, rewrites this section to emphasize competition over privatization: "Commercial activities should be subject to the forces of competition," the Bush administration's revision says.

The administration also agreed-over contractor objections-to ban so-called "direct conversions," in which jobs are outsourced without competition. "We've eliminated direct conversions altogether," Bush's competitive sourcing chief, Angela Styles, told Government Executive in late April. "Direct conversion implies an outcome, it implies the private sector can do it better and cheaper."

That change could have a major impact on the fates of federal employees, and their unions. When competitions take place, in-house workers win them more often than not. Since 1994, in-house workers have won 66 percent of public-private competitions. Contractors have won 34 percent.

But in-house workers don't have a chance to win when no competition is held at all. The Defense Department held 320 competitions from 1995 to 2001, but also directly converted 411 work units. When the direct conversion cases are factored in, in-house wins fall to 44 percent and contractor wins rise to 56 percent. Direct conversions, however, generally are permitted only for competitions involving small groups of employees. Thus, the number of jobs lost to contractors is still less than the number of jobs affected by in-house wins.

In place of direct conversions, the administration created a "streamlined" competition process intended to take no longer than 90 days. Union officials say the new process still favors contractors, making it just as bad as direct conversions.

In a further concession to unions, the administration has changed the A-76 rules to allow employees who lose a competition to contest the loss through a representative of their choosing before an internal appeals board and perhaps to the comptroller general. Until now, employees have had not been able to appeal losses to an outside party. Contractors have been able to appeal to the comptroller general. The comptroller general, who heads the General Accounting Office, will have the final say on whether to accept union appeals. And in streamlined competitions, which would be used for units with 65 or fewer workers, employees would still have no appeal rights.

Despite the A-76 revisions, union leaders say the Bush administration is encouraging agencies to contract out work by setting numerical goals for jobs to be considered for outsourcing and by imposing limits on how much time agencies have to make outsourcing decisions.

Other changes the Bush administration has proposed favor contractors, union officials say. For example, a change to the competitive sourcing process allows agencies to award work to contractors even if their bids are higher than those of in-house workers. The change allows agencies to contract out on the basis of "best value," rather than just lowest cost.

Officials also could decide that in-house teams would provide the best value, but unions view the change as a way for the administration to push more jobs into the private sector. "Contractors are not happy about losing almost three-fifths of the public-private competitions conducted under OMB Circular A-76," AFGE public policy director Jacqueline Simon told the House Armed Services Subcommittee on Readiness in March. "Rather than cut their costs and provide taxpayers with a better deal, contractors want to junk the existing ultimately cost-based process and replace it with a pro-contractor best-value process."

BATTLING ON

Despite the Bush administration's concessions, unions continue to launch rhetorical strikes. In May, representatives of AFGE, NTEU, the National Federation of Federal Employees, the International Association of Machinists and Aerospace Workers, and the American Federation of State, County and Municipal Employees, joined the NAACP Federal Sector Task Force in an anti-outsourcing rally at Washington's Freedom Plaza.

"This administration thought privatization would turn union against union," AFGE National Secretary-Treasurer Jim Davis said at the rally. "Once again, this current administration has underestimated the house of labor."

The unions said 110,000 federal jobs in the Washington area alone could be lost to the competitive sourcing effort. Several federal workers affected by outsourcing spoke, including the Agriculture Department's Martha Harvin.

Earlier this year, after 21 years of federal service, Harvin was told her job in a correspondence branch of the Rural Development Agency was slated for direct conversion to a contractor position. In January, she received notice that she had to find a new job by the end of March. The agency later gave her until the end of the year.

"I'm standing here fighting for my career," Harvin said at the rally. "We were not allowed to compete for our jobs."

Harvin said her union representative has been a great resource for her and the other workers in her unit who are losing jobs, helping them appeal to members of Congress to intervene on their behalf.

Union leaders fear that even if employees were allowed to compete, a wide-scale competition program would erode their membership base. Unions' overall membership numbers have held steady over the past five years, despite the long-standing outsourcing and competitive sourcing drive at the Defense Department and the recent start of competitions at civilian agencies. Unions have used the threat of job losses as a way to attract new members and to galvanize their existing members.

Local bargaining units are likely to suffer the most if the federal ranks are depleted by the competitive sourcing process. Many locals will no doubt struggle to stay afloat, and some will likely disappear. After all, the net result of competitive sourcing is a reduction in the number of federal jobs. Unions have made it clear they will not let jobs go without a fight.