Bush administration signs off on VA job competition strategy

The Department of Veterans Affairs has developed a process that should allow it to meet a Bush administration target for competitive sourcing-potentially forcing more than 27,000 VA employees to compete for their jobs with private companies.

The method, which has been approved by the Office of Management and Budget, retains many features of the normal public-private competition process. In-house employees would form a competitive team and create a bid to meet certain performance requirements.

But instead of seeking private sector firms to square off against VA employees, the VA would conduct market research to see if a function could be performed more efficiently in the private sector. If it could, the department would issue a request for proposals from private firms.

VA officials believe they could hold job competitions in as little as nine months under this streamlined approach, placing less strain on their workforce than using traditional competitions, which can take two years or more.

VA will need to use the technique to have any chance to meet the administration's competitive sourcing goal, according to officials at the department and at OMB. The administration expects agencies to hold competitions on 15 percent of jobs considered commercial in nature by October 2003-a tall order for VA, which had nearly 190,000 "commercial" jobs in fiscal 2001.

Federal outsourcing rules and laws also make it difficult for VA to hold public-private competitions. OMB Circular A-76, which governs traditional federal job competitions, has an exemption for jobs that involve direct patient care, which in practice has protected many jobs at the Veterans Health Administration, which contains 97 percent of the department's commercial jobs, from outsourcing.

A provision under Title 38 of the U.S. Code further prohibits VA from conducting traditional competitions for VHA jobs unless Congress provides explicit funding for such competitions. Since OMB has not budgeted any funds for its competitive sourcing initiative, the law effectively blocks VA from competing any VHA jobs, according to Gary Steinberg, the VA's deputy assistant secretary for planning and evaluation.

"We're not like any other agency. We could not do A-76 because of those items," he said. "But we wanted to come up with a process that would provide an opportunity for public-private competition."

OMB signed off on the process on April 4 after extensive discussions between Steinberg and other VA officials and top OMB brass, including Office of Federal Procurement Policy Administrator Angela Styles. Even though legal curbs restrict only competitions at the VHA, OMB is allowing the department to use the process to review jobs in VA's other two bureaus, the Veterans Benefits Administration and National Cemetery Administration, according to Steinberg.

The episode shows that OMB is giving agencies some leeway on how they hold job competitions in exchange for pledges to meet the competitive sourcing target, which is said to be one of President Bush's top management priorities. OMB would consider letting other agencies use VA's approach, according to Jack Kalavritinos, associate administrator of the Office of Federal Procurement Policy.

"It's especially relevant to agencies like VA who have commercially exempt [jobs]," he said on Thursday. "If another agency has a bureau that is under similar constraints [to the VA], we would be very happy to talk to them."

Agencies can also use an alternative to direct conversions developed by the Interior Department to gain credit toward the OMB goals.

An official with the largest federal employees' union said the VA's approach would likely help the agency circumvent OMB job competition targets. "It's clear that the VA is seeking a way to get out of the contracting-out quotas that are an irrational approach to providing veterans with health care and other services," said Linda Bennett, a lobbyist for the American Federation of Government Employees.

But Curt Marshall, director of the VA's strategic planning service, said the new method is "not intended to circumvent the quotas. We think it's a more effective way of doing competitive sourcing, and that's really what we're trying to do."

Gary Engebretson, the president of the Contract Services Association, a trade group representing federal contractors, said VA's process could still drag on for years and adds "burdensome" analysis to the competitive process. "We believe that the VA plan just adds more time to the [public-private competition] process," said Engebretson.