The Army's decision to directly outsource the logistics system without a public-private competition under Office of Management and Budget Circular A-76 is causing an exodus of employees with expertise in running the complicated programs that manage the service's inventories of equipment, parts and supplies, the General Accounting Office concludes in a new report.
"The Army faces uncertainties regarding the number of employees who may be willing to accept employment with the private sector to maintain the existing system while a new system is being developed," GAO said in "DoD Competitive Sourcing: Plan Needed to Mitigate Risks in Army Logistics Modernization Program" (NSIAD-00-19). "Limited system documentation of the existing system increases the importance of existing employees to continue maintenance of the legacy system while a new system is being developed."
Up to 500 employees at Army logistics systems support centers in St. Louis, Mo., and Chambersburg, Pa., could lose their jobs when the Army awards a contract for the system in December. The Army is requiring the contractor who wins the system to offer jobs to the centers' employees.
But a lot of employees aren't waiting around. Many of them are nearing retirement age and don't want to give up their federal retirement benefits, GAO found. So they're taking jobs in other federal agencies, said John Morris, president of Local 1763 of the National Federation of Federal Employees in St. Louis.
Few people outside the Army have the skills and experience necessary to run the legacy computer systems that control the Army's logistics, Morris said.
In a statement, the Army's Communications and Electronics Command, which oversees the two centers, said, "We're maintaining software readiness for users of the Army's Wholesale Logistics Legacy Automation Systems principally through the use of support contractors."
Morris said most of those contractors are former employees of the centers.
"Ninety percent of the contractors used to work here," Morris said.
Employees throughout the Defense Department have been keeping an eye on the Army's plan, which included the service's first waiver of Circular A-76, which requires public-private competitions. Local 1763 and individual employees appealed the waiver, but earlier this month Army Secretary Louis Caldera rejected the appeals.
"The OMB Circular A-76 process is intended to apply to recurring commercial activities," Caldera said in a Sept. 30 memorandum. "The circular is not intended to constrain federal agencies in the adoption of better business management practices or the termination of obsolete services. ... Acccordingly, I deny all of the appeals on the wholly independent ground that the A-76 process is not applicable."
Morris has vowed to take the matter to court, while the Army's plan also faces an age discrimination complaint from St. Louis workers and a Small Business Administration allegation of contract bundling-the placing of requirements that could be broken into individual contracts into a single contract, limiting small businesses' chances at winning.
In addition, GAO said the Army has not done enough project management planning to ensure that the modernization effort stays within the service's target cost of $40 million a year, the same amount it currently costs to run the legacy systems.
The Army agreed with GAO that it needed to do a better job of developing a transition plan for ensuring that the logistics system continues to function throughout the modernization, which is expected to take five years.
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