Congress drops measure limiting offshore outsourcing

The corporate tax bill cleared on Monday for President Bush's signature would allow federal agencies to continue awarding contracts to companies working offshore.

A preliminary Senate version of the legislation contained a measure that would have barred most agencies from outsourcing jobs to companies planning to move the work outside the United States. The language also would have prohibited agencies from buying goods or services produced offshore, with a few exceptions.

But congressional negotiators, led by Rep. William Thomas, R-Calif., removed the provision from the compromise version of the tax bill (H.R. 4520). That version, passed by the House last week and the Senate on Monday, awaits the president's signature.

Sen. Christopher Dodd, D-Conn., proposed the ban on offshore contracting as part of an effort to keep jobs in the United States. But critics of the Dodd measure have said there is little concrete evidence that federal workers are losing jobs to contractors working overseas.

The provision also would have severely restricted federal agencies' procurement options, opponents said.

Harris Miller, president of the Arlington, Va.-based Information Technology Association of America, praised lawmakers for deleting Dodd's language from the final version of the corporate tax bill. The measure "would have significantly complicated government procurement across the country," he said.

Last year's omnibus appropriations law also included restrictions on moving government work offshore, though the language wasn't as expansive. The fiscal 2004 spending package required contractors winning public-private job competitions to work within the United States unless federal employees previously performed the jobs overseas.

The omnibus provision applied only to job contests run using fiscal 2004 funds. Congress has yet to complete fiscal 2005 appropriations bills, but preliminary versions don't include the ban on offshore outsourcing.