Legislators ask Defense agency to rethink public-private competition

Lawmakers on Friday asked Defense Secretary Robert Gates to reconsider a plan to allow companies to bid on nearly 280 federal jobs at three Defense Logistics Agency worksites.

Eight senators and 12 House members sent Gates a letter urging him to weigh a proposal to reduce costs through internal restructuring, rather than a public-private job competition under Office of Management and Budget Circular A-76.

"Upon reviewing the recent concerns raised by the [Government] Accountability Office regarding the level of savings achieved under Circular A-76, and the information provided to our offices regarding DLA's alternate approach, it appears the latter offers a viable alternative that would result in savings more quickly," the lawmakers wrote. "Given our mutual interest in ensuring the … mission is accomplished in an efficient and cost-effective manner, we respectfully request the department to give all due consideration to the internal re-engineering effort developed by DLA."

According to a 2007 preliminary planning report, the competition would encompass 278 positions in management and engineering support, transportation services, facilities and equipment maintenance, utility systems, roads and grounds, mail room, warehousing and special events. The jobs are at supply centers managed by DLA Enterprise Support in Columbus, Ohio; Philadelphia; and Richmond, Va. Most of the letter's signatories represent areas that would be affected.

DLA has said it anticipated releasing the solicitation no later than early April.

The American Federation of Government Employees -- the union that represents the affected workers -- has sought to head off the competition by proposing alternative ways to cut costs. In May 2008, the union recommended a "managed reductions" approach as part of a broader reorganization proposal. Such a tactic would allow DLA to reduce overhead costs through employee buyouts, early retirements and diminished work schedules. A handful of DLA sites have taken similar measures in recent years.

Managed reductions would achieve savings of at least 20 percent over current operating costs, according to James Voiro, executive vice president of AFGE Local 1992, which represents employees at the Richmond depot. That level of savings is at least as high as what could be achieved through an A-76 study, he said.

"This is so unfair," said Voiro, who is a painter at the Richmond facility. "Every one of these guys are blue-collar workers that are veterans that served their country. We have been decimated by this A-76 study. The morale has been low but the bottom line is that these guys know that the mission comes first."

According to documents and internal e-mails supplied to Government Executive, agency managers supported the union's managed reductions proposal, but competitive sourcing officials in the Office of the Secretary of Defense later decided against it.

In May 2008, DES Acting Director Tanya Lee told union officials that the agency was "strongly considering" the alternative approach because the plan "is in the interest of the taxpayer and has a less negative impact on our mission and employees." Col. Thomas Laffey, who became DES director in June 2008, and Army Lt. Gen. Robert Dail, who retired as DLA director in November 2008, later approved AFGE's plan, the documents indicated.

Internal e-mails showed that Laffey and Dail pitched the proposal to competitive sourcing officials at the Office of the Secretary of Defense in November 2008, but it was rejected.

Joe Sikes, the Defense Department's competitive sourcing director, on Thursday said he disagreed with the union on the savings potential of the managed reduction proposal. He noted that after reviewing the plan, he concluded it would lead to savings of 12 percent; DLA had projected that an A-76 study would produce savings of at least 18 percent.

"We concluded that the managed reduction initiative would have a lower savings rate, so it did not make sense to stop the competition," Sikes said.

DLA stated that the "competition is ongoing," but declined to comment further.

The threat of an A-76 competition already has had an effect on DLA's workforce, union officials said. In Columbus, at least 10 workers have accepted $25,000 early voluntary retirement packages.

"I urged them to hang on, but [the agency] offered incentives," said George Parks, council president of AFGE Local 1148, which includes workers at the Columbus depot. "So even if we win and do it in-house … we probably won't have to lose too many guys because a lot of guys ran."

Results of past DLA Enterprise Support public-private competitions have been mixed. Federal teams have won a handful of contests by proposing workforce cuts and restructuring efforts. But other competitions won by contractors -- including one for logistics work at the Defense Distribution Depot in Richmond -- have been more controversial. Union officials said the winning contractor low-balled staffing estimates in that contest, leading to a decrease in the projected savings. But according to the contractor, GENCO Infrastructure Solutions, the increase in staff is only temporary.

President Obama has not expressed an opinion about the future of public-private competitions -- known as competitive sourcing throughout much of the Bush administration. But many procurement analysts suspect the practice will tail off early in the new administration.

"We could be the last guys with A-76," Voiro said. "It's like right now they're talking peace and we're still out there fighting a war and we're still in harm's way."

According to a December report by the Defense Department inspector general, the Pentagon had 39 ongoing job competitions as of October 2008 for about 9,000 positions, two-thirds of which were with the Navy. In total, Defense and all of its sub-agencies are expected to hold contests for 10,798 jobs through 2014.