Washington, D.C. - The United States House of Representatives today passed an amendment to the Treasury-Transportation Appropriations Bill, offered by Representative Chris Van Hollen (D-MD) that would overturn the Office of Management and Budget’s (OMB) decision to rewrite the privatization process (OMB Circular A-76). The Van Hollen amendment would allow OMB to use the previous version of A-76 until the process could be more satisfactorily revised, giving the Administration a second chance to rewrite the privatization process in a way that truly promotes the interests of taxpayers and customers and more equitably balances the interests of federal employees and contractors. The legislation passed on a vote of 210 to 187.
The Van Hollen Amendment passed the House last year as an amendment to the FY04 Treasury-Transportation Appropriations Bill with bipartisan support (Roll Call 487).
“This is a big win for the dedicated men and women of our federal government and for the American taxpayer,” said Van Hollen. “This legislation will help ensure that we have an even playing field when the federal government decides to hold a competition to contract out federal jobs and services to private contractors. I am not opposed to competitive sourcing but we must put a stop to the Administration’s ideologically driven agenda to benefit private contractors over federal employees and taxpayers.”
The Van Hollen Amendment would not require the use of the A-76 process that was in use prior to the 2003 rewrite. Rather, it would allow the 2003 process to be revised in order to make the improvements that have been recommended by Congressional lawmakers and the Government Accountability Office’s Comptroller General. Those improvements include:
1. Protecting Taxpayer Interests
The costs and quality of work performed by contractors in all agencies must be reliably and comprehensively tracked, using the system already endorsed by the House in the Defense Authorization Bill. Independent third parties, such as Inspectors General, should determine whether all agencies have sufficient staff and systems in place to conduct privatization reviews and oversee any resulting service contracts, as was already required for DoD in the Defense Authorization Bill.
2. Ensuring Fair Competition
Prevent work performed by federal employees from being contracted out without conducting public-private competitions, to allow federal employees to submit their most competitive bids (Most Efficient Organization plans, MEOs), require contractors to at least promise savings sufficient to offset the cost of conducting competitions ("10% Rule"), and prevent contractors from slashing health care benefits in order to submit lower bids. Congress and OMB have already made all of this law for DoD through the Defense Appropriations Bill. Moreover federal employees should also be allowed opportunities to perform new work and contractor work, using the process included in the Defense Authorization Bill.
3. Establishing One Set of Rules
Currently contractors can appeal agencies' contracting-out decisions to the Government Accountability Office (GAO) and the Court of Federal Claims, but federal employees can't. Federal employees, but not contractors, are confined to five-year performance periods. Federal employees, but not contractors, are automatically recompeted when their performance periods end. Federal employees, but not contractors, are required to compete in order to acquire new work or when their work changes in scope. Federal employees are automatically sanctioned when they default, but not contractors.
The new rules for the privatization process are unfair for four reasons:
1. Does not allow employees to submit their own best bids. While contractors are able to submit their best bids, federal employees are forced to compete based on the status quo without the opportunity to come up with a cost-saving bid of their own.
2. Does not require contractors to show significant savings. The old rules required contractors to show that they would save the government significant money (at least $10 million or 10%, whichever is less). The new rules no longer include this requirement. This means federal workers could lose their jobs to contractor bids that don’t even save the government enough money to cover the cost of the competition.
3. Privatization process is destabilizing. The new rules force federal workers to re-compete for their jobs every five years. Contractors are not held to these same standards. This will make it extremely difficult for the government to attract – and keep – the best and brightest workers if their jobs are at risk every five years.
4. Unfair advantage to contractors who provide inferior benefits. Contractors who save money by providing inferior pay and benefits have an unfair advantage. Federal workers will not be able to compete for their own jobs simply because they have adequate health care.