The Defense Department opposes a provision in the Senate-passed
Defense Appropriations bill that could make it easier for
Defense's civilian workforce to win public-private job
Almost two months after the Bush administration issued new
rules for allowing private firms to bid on federal jobs, the
provision, sponsored by Sen. Edward M. Kennedy, D-Mass., would
change some of these rules as they apply to Defense. Kennedy
successfully attached the measure to the Defense Appropriations
bill, which was approved by the Senate late last week. The measure
drew support from the American Federation of Government Employees,
the largest federal employee union.
Kennedy's provision would give teams of employees at Defense a
cost advantage in most competitive sourcing studies, and allow
them to restructure to be more competitive. Defense officials
believe these measures would tie the hands of Defense managers who
are running competitive sourcing studies.
“We are opposed to it because it limits the flexibility that
the new [Office of Management and Budget] Circular A-76 provides,”
said Joe Sikes, director of Defense's office of competitive
sourcing and privatization. “Generally speaking, it just puts
constraints on our competitive sourcing program.”
The provision would give civil servants a 10 percent cost
advantage in job competitions involving 10 or more federal
employees. The Bush administration limited this advantage to
"standard" competitions, which generally involve 65 or more
employees, in its revision of circular A-76.
The 10 percent cost advantage actually goes to whatever entity
is currently performing the work—be it federal or
contractor—because the process of changing service providers
creates costs for the government. In practice, the advantage
almost always goes to teams of federal employees, since agencies
rarely subject contractor-held jobs to public-private competition.
Administration officials have said the cost advantage restricts
agency flexibility to stage smaller competitive sourcing studies,
which can use a variety of “streamlined” methods under the new
With the cost advantage in place, in-house teams at the Defense
Department won 49 of 50—or 98 percent—of all streamlined
competitions held between 1997 and 2001. But Defense officials
have said the advantage was not
the deciding factor in most of these competitions. If the
advantage is reinstated, it could make competitive sourcing less
cost effective for Defense, according to an official with the
American Council of Engineering Companies, an industry group that
opposes Kennedy's provision.
“Restoring the 10 percent cost differential for streamlined
competitions would restrict Defense's ability to achieve the
maximum savings that result from public-private competitions,”
said Camille Fleenor, director of federal procurement policy with
In another break with administration's policy, the legislation
would require Defense to let employee teams restructure themselves
into “most efficient organizations” in all competitions involving
10 or more workers. The new circular makes such restructuring
optional if a competition includes less than 65 civil servants.
Defense generally has not created most efficient
organizations—which can take months to develop—for smaller
competitions. But doing so would save taxpayer money, according to
John Threlkeld, a lobbyist with AFGE.
“Allowing Defense civilian employees opportunities to submit
their best bids through most efficient organization plans ensures
healthy competitions, which benefit taxpayers and warfighters,” he
The provision also would prohibit contractors from offering
“less beneficial” health benefits to their employees as a tactic
to underbid employee teams. Sikes said this provision would be
extremely difficult to implement, because it would force Defense
to compare the benefits of different health care plans during the
A-76 process. “It clearly complicates the process,” he said.
But Threlkeld said Defense could perform the comparison. “The
provision lays down an important principle while leaving Defense
considerable discretion for implementation,” he said.
Defense will make its views on these measures known during the
House-Senate conference on the Defense spending bill, according to
Sikes. Kennedy's provision is not part of the House bill.