VA competitive sourcing program derailed by Congress

A plan to let contractors bid on 55,000 Veterans Affairs Department jobs will remain on hold because VA officials did not receive authority to restart their competitive sourcing program in the $328 billion catch-all federal spending bill crafted last month.

Despite winning other concessions on competitive sourcing policy, Bush administration officials apparently failed to convince Congress to let the VA tap up to $50 million in health care funds for conducting job competitions in the Veterans Health Administration. Under federal law, VA cannot hold outsourcing studies on VHA jobs unless Congress funds the studies.

"We did not get the legislative relief we sought," said Dennis Duffy, VA's principal deputy assistant secretary for policy and planning. "At this point we wait and see if we can't have the same issue addressed in the next session of the Congress."

The VA halted most job competitions in May, after the department's general counsel determined that VHA employees were legally barred from working on job competitions without congressional funding. The department continued a few competitions at laundry facilities before stopping those in August.

VA officials considered holding a competition on its canteen service, a unit outside the VHA that provides cafeteria services to outpatients, but Duffy said legal concerns would likely prevent this competition as well. "The statute really hamstrings us in terms of what we can and cannot do," said Duffy.

In July, the Office of Management and Budget asked Congress to fund competitions at the VA, but appropriators refused to add the request to the House or Senate version of the VA funding bill. The provision was also left out of the omnibus spending bill packaged by congressional negotiators last month.

The decision means that the VA, the largest civilian agency in government, will not be able to participate in the Bush administration's competitive sourcing initiative in fiscal 2004, barring future congressional action. Duffy said the VA would continue to work with OMB and Congress to provide funding for the studies or revise the statute, so competitive sourcing could go forward.

"If we could sit down with them and find some accommodation that is suitable to all sides, it is at least theoretically possible that we could get back into the business of doing studies in fiscal year 2004," he said.

But it won't be easy. Rep. Lane Evans, D-Ill., ranking member on the House Veterans Affairs Committee, would likely resist VA attempts to divert health care funds to pay for competitive sourcing, said Len Sistek, Democratic staff director of the House Veterans Affairs Subcommittee on Oversight and Investigations. Evans has asked the General Accounting Office to review VA spending on competitive sourcing before the general counsel decision was issued last spring.

Richard Ekfelt, president and CEO of the Textile Rental Services Association, an association of 200 commercial laundry firms based in Alexandria, Va., expressed hope that Congress would restart VA job competitions in 2004.

"We believe that once Congress members have adequate time to focus on the issue, they will see fit to allow competitions to resume," he said.

In the meantime, the VA will review its business practices and consider restructuring some of the administrative jobs it had targeted for competitive sourcing, according to Duffy. The VA still has a competitive sourcing office in its Washington headquarters, but this office is now looking into business process reengineering studies, where units restructure themselves without facing private sector competition.

"We've been engaging in an awful lot of discussions as to whether that is a feasible interim step if we cannot do full-blown cost comparison studies," said Duffy.

The VHA also has abundant authorities to contract for scarce medical services and other needs, which means the department will continue to outsource. Federal employee unions are keeping close tabs on the VA's Capital Asset Realignment for Enhanced Services (CARES) process, an overhaul of VHA's health care resources, to see if it generates more outsourcing.

"CARES is our primary concern right now," said Cathie Mcquiston, a labor relations specialist with the American Federation of Government Employees. But Mcquiston also lauded Congress' decision to resist competitive sourcing at the VA, calling it "a victory" for VA workers.

OMB spokesman J.T. Young had no comment on the VA's competitive sourcing situation.