IRS employees win competitive sourcing study, cut jobs

A team of Internal Revenue Service employees on Friday prevailed in a public-private competition for document-handling work, but at a cost of 166 jobs.

The in-house team plans to reduce the number of employees filing, maintaining, transporting and disposing of paper tax documents from 843 to 677. The work will also be performed from six rather than eight locations, and more of it will be completed by intermittent workers.

Colleen Kelley, president of the National Treasury Employees Union, said the win comes at too high a cost. "There is a much better way [to improve service delivery] than pitting one group of workers against another," she said. "The better course . . . is for agencies to work with their employees on continuous improvement of work processes."

But Raymona Stickell, director of the IRS' Office of Competitive Sourcing, said the agency reviewed a variety of options and decided that a competition had the potential to deliver substantial improvements in efficiency. The agency is providing career counseling to help the 166 affected employees find jobs either within government or in the private sector, she said.

Affected workers also will be offered early outs and buyouts, and will be granted severance pay if they are involuntarily separated, Stickell said. IRS officials plan to cut the affected employees from the agency's payroll in June 2006.

As of June, the document handling work will continue at all eight current locations, Stickell said. But the agency does eventually plan to eliminate this type of work entirely at the Philadelphia and Andover, Mass., campuses, she said. Filing activity will end at these locations in 2007 and 2009, respectively.

In-house employees have won all three of the public-private job competitions the IRS has completed under the Bush administration's competitive sourcing program, though the other two wins-one for publications distribution work and the other for information technology jobs--also came at the expense of several hundred jobs.

The federal employee teams have such a high success rate because of how the IRS approaches contests, Stickell said. "We don't constrain [the in-house team]," she said. "We want to make sure that the employees have resources available."

In-house team members attend training sessions and are able to research best-practices from the private sector, Stickell said. The IRS also hires consultants to help them form their proposal.

The in-house wins are not for lack of competition, Stickell noted, adding that she took care to inform relevant industry associations of the contests in case companies missed the announcement on the Federal Business Opportunities Web site. Two companies bid on the documents-handling work, she said.

The IRS also completes an exhaustive research process before soliciting bids in a public-private competition. For example, agency officials analyze groups of jobs classified as commercial in nature on Federal Activities Inventory Reform Act lists to ensure that a job contest could bring about significant "transformational" change, rather than incremental improvements in efficiency, Stickell said.

The documents work had that potential in part because more and more taxpayers are filing online, Stickell said. She declined to say how much money she expects the competition to save because the period in which the two other competitors can file legal challenges has not ended.

Kelley of NTEU noted that the in-house plan also involves replacing full-time workers with intermittent employees who "have no fixed work schedule and generally are not eligible for sick or annual leave, health or life insurance benefits, or Thrift Savings Plan participation."

Of the 843 employees currently performing the work, 82 are intermittent. Under the in-house team's plan, more than two thirds of the 677 documents processing jobs-or 455 spots-will go to intermittent workers.

"It is clear that federal employees have their backs against the wall and feel a great deal of pressure to give up critical benefits in order to hold on to a small measure of their employment," Kelley said.

But Stickell said the plan simply allows for a more flexible workforce capable of meeting fluctuations in demand.