Union: Privatization will increase waste, abuse

The American Federation of Government Employees turned up the heat Tuesday in its battle against pro-outsourcing bills on the Hill by alleging that the country's 25 largest federal contractors waste and abuse federal tax dollars.

Passage of legislation that advocates contracting out will "open the door to more and more punishment of the taxpayers," AFGE President Bobby Harnage said at a press conference to release the union's report, "Throwing Good Money After Bad: What Federal Contractors Don't Want You to Know."

Under the Fair Competition Act, which is slated to be considered by the Senate Governmental Affairs Committee today, agencies and private contractors would compete for the right to perform any activity deemed not "inherently governmental." Harnage said the bill will make the government more susceptible to contract abuses.

"This is not about saving federal employee's jobs," he said. "This is about good government."

AFGE's report found that each of the largest federal contractors has been "the subject of official legal action or criticism for their performance in carrying out their contractual obligations."

For example, in 1997, the number two federal contractor, McDonnell Douglas, agreed to pay the government $2 million to settle allegations that the company, now owned by Boeing, overcharged the government under a contract to repair equipment used to manufacture C-17 aircraft. The report lists similar lawsuits and settlements for each contractor.

AFGE argues that the contractors are able to continue doing business with the federal government because of their substantial political contributions. The Campaign for Responsive Politics found that in the 1995-96 and 1997-98 election cycles the top 25 contractors contributed more than $21 million to various candidates.

AFGE also reported that contractor whistleblower cases are on the rise. In fiscal 1997, 530 such cases were filed, compared to 131 in fiscal 1993. Since the 1986 enactment of the False Claims Act that shields whistleblowers, more than 2,000 such cases have been filed and more than $1.8 billion returned to the U.S. Treasury.

At congressional hearings in March, industry representatives supported the proposal to increase privatization, as did Steven Kelman, former head of the Office of Federal Procurement Policy at the Office of Management and Budget.

"It's time to lower the level of rhetoric of outsourcing and contracting out," Kelman said. "It's not a question of big government/small government, nor is it a question of do you or don't you like the federal workforce. It is a good management principle to stick to your core competency."