TSA taps California agency for HR services

CPS Human Resource Services

In an unusual twist on federal outsourcing, the Transportation Security Administration last month awarded a $554 million contract for personnel recruitment and hiring to a California government agency.

CPS Human Resource Services will provide fully automated staffing functions that include processing applications online, completing assessments and recommending salaries, according to a TSA official. The agreement, announced Jan. 13, covers all staff members, excluding Senior Executive Service employees, and has a one-year base with four one-year options to renew, the official said.

Based in Sacramento, Calif., CPS has served many public agencies at home, but also boasts 1,200 clients in 48 states and six Canadian provinces. The agency recently opened an office in Washington, D.C., and is working with the National Institutes of Health. That and a past job with the Labor Department are its only federal experience, sources said.

Created in 1935 as a state agency, CPS now operates as a joint powers authority, run by a nine-member board with representatives from state and local government. Its selection by TSA surprised procurement experts who noted that federal agencies regularly contract with one another, but few have turned to state and local governments for solutions.

"It's a rare bird," said Warren Suss, president of Suss Consulting Inc. "The federal government is kind of arrogant about the uniqueness of federal requirements over state and local requirements. That's not to say the states don't have good ideas."

Much of TSA's workforce joined under a contract with NCS Pearson Inc. that expired last month. The agency, established in November 2001, has grown from a 13-person operation to a team of thousands, including 158 federal security directors and some 56,000 security screeners. The Bush administration's budget request for fiscal 2003 estimates 67,000 total employees for TSA, but that number may be reduced, sources said.

Since its creation in the wake of the Sept. 11, 2001, terrorist attacks, TSA has earned a reputation for innovation. Faced with building an organization from scratch, officials awarded a billion-dollar contract for core information systems in August 2002 to Unisys Corp., emphasizing managed services, a strategy in which an agency pays a company for technology solutions that help solve a problem.

That approach — coupled with the short turnaround time — had industry insiders talking. Now, it seems, TSA has created a buzz again.

"It's an interesting and innovative strategy," Suss said of the CPS award.

Others expressed doubt. "With the administration's emphasis on [Circular] A-76 on the federal level, why turn over a big contract to a public-sector entity?" asked Larry Allen, executive vice president of the Coalition for Government Procurement. "It just doesn't seem consistent."

The Office of Management and Budget's Circular A-76 outlines how the public and private sectors compete for government services. Proposed changes would increase competition between the two entities, a priority of the Bush administration.

Last month, TSA awarded a $214 million contract to Accenture for day-to-day HR services. The company will maintain the official personnel files on the agency's workers, centrally managing systems for such tasks as payroll and benefits counseling.

The CPS deal, meanwhile, could serve a larger audience: the new Homeland Security Department — a consolidation of 22 agencies, including TSA, and 170,000 people that officially launched Jan. 24. That deal has the flexibility to include the department's headquarters, an agency official said.

Experts don't see the agreement as part of a governmentwide trend. "This may be a one-shot deal," Allen said. But it does reflect a movement in federal circles toward outsourcing HR, sources said.

"It seems to be a trend, and we have serious concerns about how it's going to work," said Diane Witiak, a spokeswoman for the American Federation of Government Employees.

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Teaming up

The Transportation Security Administration last month tapped CPS Human Resource Services to handle its recruiting and hiring.

CPS brings the following partners to the project, each with its own expertise:

* FPMI Communications Inc., a provider of federal recruitment services.

* Hogan Assessment Systems Inc., a test designer and provider of assessment products.

* Performance Assessment Network Inc., a provider of Web-based testing solutions.

* Recruitsoft Inc., a provider of staffing management solutions.