Three agencies recently violated Office of Management and Budget rules by deciding to outsource government jobs without giving federal employees a chance to compete for the work, union officials say.

President John Gage said in a series of letters to Clay Johnson, OMB's deputy director for management.

OMB's May 2003 revisions to Circular A-76, the competitive sourcing rule book, prohibit direct conversions, where agencies transfer work to a contractor without holding a contest. Agencies can ask the White House for waivers. But DFAS, Homeland Security and the EEOC in March planned direct conversions without OMB's permission, Gage charged.

In turn, agency officials argued that they are bringing in contractors to fill new positions, rather than to replace federal workers. Consequently, hiring private companies does not count as a direct conversion, the officials said.

DFAS officials in mid-March announced a final decision to outsource roughly 130 technology support jobs. In a March 16 memorandum, Audrey Davis, director of information and technology, and William Head, director of technology services organization, explained that a "business case analysis" completed by June 2003 predicted that the agency would save money by outsourcing the jobs. Subsequent market research supported that prediction, they noted.

By hiring a contractor, DFAS also hopes to "modernize, standardize and enhance" technology support services, Claudia Bogard, the agency's director of corporate communications, wrote in a March 16 e-mail to DFAS employees. Agency officials decided to order the services from an existing, utility-style contract administered by the General Services Administration. Under this arrangement, the agency would pay only for services actually used.

DFAS will place a high priority on "minimizing the disruption on [agency] business operations and mitigating the impact on the employees whose positions may be affected by the transition," Davis and Head stated in the March 16 memorandum. This summer, agency officials will begin the outsourcing project by transferring technology support work to contractors at three pilot locations: Arlington, Va.; Pensacola, Fla.; and Denver.

No federal workers at these locations will lose jobs as a result of the transition, Bogard pledged in her e-mail. "Personnel performing the computer support functions at those sites are primarily already contractors," said Bryan Hubbard, a spokesman for DFAS, on Friday. "Remaining personnel would be retained in an oversight function or [in] other information technology roles."

Agency officials gave federal technology support workers ample time to prepare for the switch to contractors, Hubbard added. Since DFAS started considering the work for outsourcing in June 2002, the agency has regularly updated workers on the decision-making process. "This has been a long time coming," he noted.

But to Kelley Dull, president of AFGE Council 171 and head of the union local representing the DFAS technology workers, these communications are not adequate. "They've talked about the study . . . and they've given updates," she said, but the agency has yet to share details on the planned transition. The DFAS technology support staff is "sitting on pins and needles," she added.

The fact that DFAS officials felt the need to reassure workers that they would not lose their jobs as a result of the outsourcing indicates that contractors are filling existing positions and not starting new work, Gage wrote in his letter to Johnson. The agency also included the technology support jobs on 1998 Federal Activities Inventory Reform Act lists.

Consequently, the technology support work does not fit the definition of a "new requirement" specified by OMB's May 2003 Circular A-76, and therefore DFAS must hold a competition or seek a waiver before outsourcing the positions, Gage said.

"An activity that is performed by the agency and is reengineered, reorganized, modernized, upgraded, expanded, or changed to become more efficient, but still essentially provides the same service, is not considered a new requirement," the May 2003 circular states. "New ways of performing existing work are not new requirements."

Hubbard declined to comment on Gage's criticisms because AFGE has filed a case protesting the outsourcing decision at the General Accounting Office. The union also has filed objections to outsourcing decisions at Homeland Security and the EEOC.

Citizenship and Immigration Services, a bureau within Homeland Security, is violating OMB policy by planning to transfer roughly 65 investigative positions to the private sector, Gage charged. The jobs in question involve searching "highly classified" immigration databases, he said, and should qualify as "inherently governmental," but the work is not listed at all on the agency's FAIR Act inventory.

In a March 22, 2004, fact sheet on the outsourcing decision, CIS officials explained that the background investigations work is a "new requirement caused by the tragic events of Sept. 11, 2001, and as such, is not subject to the competition requirements of the OMB Circular A-76." Investigative assistants "hired for temporary purposes and under term appointments" will be the only federal employees possibly affected by the outsourcing decision, and the agency has not settled on a start date for contractors, the fact sheet stated.

By adding information about federal workers adversely affected, CIS officials acknowledged that the investigations work is not actually new work, Gage argued. "It is the height of irony that CIS management sent a notice to the investigative assistants who currently perform this function, and only this function, to let them know that they will be losing their jobs because the work that they do is, in fact, new work not performed by them, and this new work will be performed by private contractors," he wrote in a March 30 letter to OMB.

The EEOC also failed to abide by OMB rules by publishing a March 8 notice on FedBizOpps, the official register of all government procurements, requesting proposals from private companies interesting in establishing and running a pilot contact center. The center would serve as a clearinghouse for public inquiries currently handled at the agency's field offices, providing "timely and consistent information about EEOC programs, products and services," the announcement explained.

According to EEOC officials, the contract center involves new work, and no federal employees will lose jobs as a result of outsourcing the project. The EEOC staff has "more than enough to do" without worrying about working at the contact center, said Cynthia Pierre, director of field management programs at the EEOC. Pierre headed a work group responsible for advising agency officials on the feasibility and benefits of setting up the customer service center.

But Gage, and representatives of the AFGE National Council of EEOC Locals No. 216, contend that the EEOC employs federal workers who fill similar jobs and would be better trained to staff the call center than private sector workers. "The decision by the EEOC's management to establish a privatized call center seems driven entirely by a self-imposed in-house personnel ceiling," Gage wrote in his letter to OMB.

As of Monday afternoon, OMB officials had not seen Gage's letters regarding DFAS and the Homeland Security Department, dated March 26 and March 30 respectively. "But we stand by our move to eliminate direct conversions," said an administration official who asked to remain anonymous. "Any agency seeking to directly convert positions would indeed need to obtain a waiver from OFPP."

The DFAS outsourcing decision attracted OMB's attention nearly two years ago.

In August 2002, Angela Styles, then the head of procurement at OMB, questioned DFAS' decision to complete a business case analysis of the work in place of a public-private competition. "Since 130 DFAS civilians . . . are involved, we would expect that [a "most efficient organization" - a team of in-house workers] will specify how this activity will be carried out in the future," she wrote in an Aug. 19, 2002, memorandum to Defense officials.

OMB officials have looked over AFGE's criticisms of the EEOC's decision to outsource the national customer service center, and are in the process of learning more about the project. The administration will decide how to proceed after hearing more about the proposed contact center.