Defense spending bill renews job competition restrictions

The Senate late Wednesday approved the fiscal 2006 Defense spending bill, which once again contains requirements to protect federal employees in formal competitive sourcing studies run using rules in Office of Management and Budget Circular A-76.

The Senate stripped the bill (H.R. 2863) of language allowing oil drilling in the Arctic National Wildlife Refuge and returned it to the House, which is expected to pass it before the holiday recess. It includes two major provisions that affect agency efforts to put federal jobs up for competition with contractors.

In language first introduced in last year's spending bill, the legislation would bar the Pentagon from allowing contractors to gain a cost advantage by proposing to contribute less toward employee health benefits than the share paid by the Defense Department for federal employees' benefits.

When the health-care provisions were first included in last year's appropriations bill, Congress requested a GAO study on the impact of the requirements. That study, released earlier this month, found that there was no significant effect on Defense competition outcomes and that the requirements presented no undue burden.

The bill also 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 are to be granted a cost advantage amounting to either 10 percent of personnel-related costs or $10 million--whichever is lower.

These requirements for competitions with more than 10 employees align with ones placed on most other federal agencies under the fiscal 2006 Transportation-Treasury appropriations bill, which President Bush signed on Nov. 30. Unless the Defense language is changed before the bill is signed into law, the Transportation Security Administration's screening programs will retain one of the few exemptions to these rules.

The American Federation of Government Employees, the largest federal employee union, commended inclusion of the health measures in the final Defense bill, noting in a statement that amendments had been proposed earlier in the year to strike them.

"Because DoD contracts out by far the most federal work to private companies, it is especially critical that these provisions be applied to DoD," said Colleen Kelley, president of the National Treasury Employees Union.

According to Defense, the A-76 provisions included in the legislation don't present a problem. "We've been requiring MEOs [most efficient organizations, or in-house teams] to convert from government to contractor if you have more than 10 employees for a long time," said Annie Andrews, assistant director for DoD competitive sourcing. "I'm not aware of anything that's going to create any problems for DoD."

But Chris Jahn, president of the Contract Services Association of America, a group representing government contractors, said such language hurts the competitive sourcing initiative. "Congressional micromanagement of the outsourcing system has really brought it to a halt, which was really the goal of public employees and their allies in Congress," he said.

Jahn cited figures indicating that governmentwide, federal employees win public-private competitions more than 90 percent of the time, as evidence that the competitive sourcing effort "has come to a screeching halt."