House votes to block Walter Reed outsourcing; Army moves forward

Foes of a controversial public-private job competition at the Walter Reed Army Medical Center scored a victory this week when the House approved language to strip funding for a contractor to take over base operations at the facility, complicating Army plans for a transition slated to begin in August.

Rep. Eleanor Holmes Norton, D-D.C., offered an amendment to the fiscal 2007 Defense appropriations bill that would block the Army from using funds to enter into a contract stemming from the Walter Reed competition. That competition, which was initiated in June 2000, affects about 350 federal employees at the Washington facility.

A Norton press release said that while "neither Republicans nor Democrats want anti-privatization amendments on the DoD appropriation," the legislator had made the case that "the Walter Reed contracting out was so grotesque that it was the right vehicle to make DoD abide by its own regulations," a reference to rules limiting the duration of such competitions.

The wording of the amendment would not preclude the Defense Department from scrapping the controversial competition and undertaking a new one, or from implementing other competitive sourcing plans. Walter Reed was selected to be shut down during the Army's base realignment and closure process last year.

The House action Tuesday took Walter Reed officials by surprise, according to a Friday article in Stripe, a weekly newspaper published by the medical center. "Basically, [the amendment] says, 'Stop all funding for the A-76,' " Garrison Commander Col. Peter Garibaldi is quoted as saying, noting, "There is a problem with that."

The article described a June 14 briefing for Walter Reed officials by representatives of Cape Canaveral, Fla.-based IAP Worldwide Services, which was awarded the contract in January. IAP outlined plans for a transition period to take over the work, beginning Aug. 19 and concluding Nov. 19, according to the article.

The Stripe reported that 30 employees will take early retirement on June 30, and another 70 to 80 may be approved to leave early over the next three months. Garibaldi said the legislation put the medical center in a difficult position because it would be unable to hire people back from voluntary separation and retirement if the legislation ultimately becomes law, but it will not be able to meet deadlines in the transition plan if measures under way are suspended until the appropriations bill works its way through Congress.

"It appears we are in a Catch-22 situation," he is quoted as saying.

Asked Friday how the transition plan would proceed in the face of the legislative challenge, a Walter Reed spokeswoman was unable to provide an immediate response.

Stripe reported that at the direction of the Army Medical Command, Walter Reed officials will continue to move forward with the transition plan as scheduled, including proceeding with a reduction in force.

Doxie McCoy, Norton's communications director, said she believed the move to block funding has strong support in the Senate, noting that Democratic Sens. Barbara Mikulski and Paul Sarbanes of Maryland signed a letter to Army Secretary Francis Harvey urging that a contract not be signed.

In a June 7 letter to Sarbanes, William Armbruster, deputy assistant secretary of the Army for privatization and partnerships, estimated that the competition will cost $7.07 million. An additional $5.72 million expected to be incurred in transition costs, including incentives for voluntary separation and retirement, severance pay, and administrative costs.

"The contractor's cost proposal for the five-year term was almost $17.5 million less than the government workforce's cost proposal," Armbruster said. "Even with the extraordinary expenses of this competition, the resultant savings are significant." Based on Armbruster's figures, the savings would total $4.71 million.

John Threlkeld, a lobbyist for the American Federation of Government Employees, wrote in an analysis of the competition that the Army's cost estimate is "demonstrably flawed." It fails, he said, to take into account the $10 million "minimum cost differential" that federal rules require must be applied to contractor bids to account for costs associated with disruption and loss of productivity related to the competition process.

AFGE President John Gage applauded the House action. "Rep. Norton has been tireless in leading the opposition to the Walter Reed A-76 privatization review," he said.

The Professional Services Council, an Arlington-based industry group, condemned the legislative move. Norton "slipped the amendment through -- there was no real debate or discussion ... It was a very clever, but outrageous move on her part," President Stan Soloway said. "I think it's outrageous that a delegate to Congress thinks it's appropriate to push through legislation to overturn a procurement award."