Congress backs 3.1 percent raise, competitive sourcing measures

A compromise version of the fiscal 2006 Transportation-Treasury bill approved by the House Friday includes language designed to help federal employees whose jobs are placed up for competition with private firms under the Bush administration's competitive sourcing initiative.

On Thursday night, House-Senate negotiators adopted union-backed competitive sourcing provisions almost identical to those approved by the Senate in mid-October.

The competitive sourcing language, advanced by Kit Bond, R-Mo., and Barbara Mikulski, D-Md., would require agencies to let in-house employees form a team and defend their jobs against outside bidders any time more than 10 positions are at stake. In those contests, federal employee teams would be granted a cost advantage amounting to either 10 percent of personnel-related costs or $10 million--whichever is lower.

The conference committee also passed a 3.1 percent pay raise for federal white collar employees in 2006. That was the number included in both the Senate and House bills, providing pay parity between civilians and military service members. The Bush administration had proposed a 2.3 percent increase, but has not threatened to veto the bill over this issue.

In recent years, the White House has succeeded in last-minute attempts to alter conference committee language considered detrimental to the competitive sourcing effort. However, the House approved this year's conference report Friday by a vote of 392-31, leaving little time for adjustments.

Once the Senate approves the conference version, the bill (H.R. 3058) will head to President Bush's desk for his signature.

The Bush administration cited the Bond-Mikulski competitive sourcing language and threatened to veto the Transportation-Treasury bill if the final version were to "significantly erode" the President's Management Agenda. Competitive sourcing is one of five main items on that agenda.

But Office of Management and Budget spokesman Alex Conant said that "in further discussions with Congress," the administration has determined that the provisions don't "significantly erode" its agenda. "We will, however, continue to monitor their impact over the coming year and, if they are found to limit the benefit the taxpayers get from the PMA, we will work with Congress to fix them," Conant said in an e-mail statement.

The conference negotiators did differ from Bond and Mikulski by exempting the Defense Department and parts of the Transportation Security Administration from the competitive sourcing requirements for contests involving 10 or more jobs. The Pentagon, however, is likely to face competitive sourcing restrictions in its own appropriations bill, which has not emerged from negotiations. Union officials and Democrats on both the House and Senate side applauded the Transportation-Treasury conference report.

"This is a huge victory for federal employees and is the culmination of a battle Sen. Mikulski and I have waged for the last three years," said Rep. Chris Van Hollen, D-Md., in a statement.

The House version of the bill contained a provision introduced by Van Hollen that would have required the Office of Management and Budget to revise the current rules on public-private job competitions, contained in the May 2003 version of Circular A-76.

The Bond-Mikulski language is preferable to the Van Hollen measure, said Stan Soloway, president of the Professional Services Council, an Arlington, Va.-based group representing federal contractors. But the language adopted by conferees would "not make life any easier," he said.

"There's a continuing irony where Congress wants to generate better management but continues to make even modest changes that make it harder to get competition," Soloway said. The language would not completely eliminate "best value" competitions, in which agencies can select a winner based on technical expertise and factors besides a pure cost-comparison, but would restrict the practice, he said.

But union officials said the Bond-Mikulski language is necessary to place federal employees on a level playing field with outside bidders. "Inclusion of the . . . reform provisions is a big first step toward eliminating waste in the OMB Circular A-76 privatization process," said John Gage, president of the American Federation of Government Employees.

Gage noted that Van Hollen and Mikulski have three times tried to get similar language passed.

Last year, language that would have placed restrictions on competitive sourcing was dropped from the conference version of an omnibus appropriations bill that included Transportation-Treasury funding, at the last minute. Two years ago, the administration also made late changes to a conference report, weakening competitive sourcing provisions in that round of appropriations and creating complex sets of job contest rules that varied even across agencies covered under the omnibus bill.

Karen Rutzick contributed to this report.