Defense opposes union-backed changes to job competition process

The Defense Department opposes a provision in the Senate-passed Defense Appropriations bill that could make it easier for Defense's civilian workforce to win public-private job competitions.

Almost two months after the Bush administration issued new rules for allowing private firms to bid on federal jobs, the provision, sponsored by Sen. Edward M. Kennedy, D-Mass., would change some of these rules as they apply to Defense. Kennedy successfully attached the measure to the Defense Appropriations bill, which was approved by the Senate late last week. The measure drew support from the American Federation of Government Employees, the largest federal employee union.

Kennedy's provision would give teams of employees at Defense a cost advantage in most competitive sourcing studies, and allow them to restructure to be more competitive. Defense officials believe these measures would tie the hands of Defense managers who are running competitive sourcing studies.

"We are opposed to it because it limits the flexibility that the new [Office of Management and Budget] Circular A-76 provides," said Joe Sikes, director of Defense's office of competitive sourcing and privatization. "Generally speaking, it just puts constraints on our competitive sourcing program."

The provision would give civil servants a 10 percent cost advantage in job competitions involving 10 or more federal employees. The Bush administration limited this advantage to "standard" competitions, which generally involve 65 or more employees, in its revision of circular A-76.

The 10 percent cost advantage actually goes to whatever entity is currently performing the work-be it federal or contractor-because the process of changing service providers creates costs for the government. In practice, the advantage almost always goes to teams of federal employees, since agencies rarely subject contractor-held jobs to public-private competition. Administration officials have said the cost advantage restricts agency flexibility to stage smaller competitive sourcing studies, which can use a variety of "streamlined" methods under the new circular.

With the cost advantage in place, in-house teams at the Defense Department won 49 of 50-or 98 percent-of all streamlined competitions held between 1997 and 2001. But Defense officials have said the advantage was not the deciding factor in most of these competitions. If the advantage is reinstated, it could make competitive sourcing less cost effective for Defense, according to an official with the American Council of Engineering Companies, an industry group that opposes Kennedy's provision.

"Restoring the 10 percent cost differential for streamlined competitions would restrict Defense's ability to achieve the maximum savings that result from public-private competitions," said Camille Fleenor, director of federal procurement policy with the council.

In another break with administration's policy, the legislation would require Defense to let employee teams restructure themselves into "most efficient organizations" in all competitions involving 10 or more workers. The new circular makes such restructuring optional if a competition includes less than 65 civil servants.

Defense generally has not created most efficient organizations-which can take months to develop-for smaller competitions. But doing so would save taxpayer money, according to John Threlkeld, a lobbyist with AFGE.

"Allowing Defense civilian employees opportunities to submit their best bids through most efficient organization plans ensures healthy competitions, which benefit taxpayers and warfighters," he said.

The provision also would prohibit contractors from offering "less beneficial" health benefits to their employees as a tactic to underbid employee teams. Sikes said this provision would be extremely difficult to implement, because it would force Defense to compare the benefits of different health care plans during the A-76 process. "It clearly complicates the process," he said.

But Threlkeld said Defense could perform the comparison. "The provision lays down an important principle while leaving Defense considerable discretion for implementation," he said.

Defense will make its views on these measures known during the House-Senate conference on the Defense spending bill, according to Sikes. Kennedy's provision is not part of the House bill.