Union backers fight bill outsourcing IT

Supporters of federal unions squared off against industry representatives last week at a congressional hearing on proposed legislation that may require the government to hand over certain information technology functions— such as data-center operations and software development— to the private sector.

The legislation, which is working its way through both houses of Congress, would require agencies to sift through the activities they perform and determine which ones are not "inherently governmental." Agencies then would have to allow private firms— as well as other government agencies— to compete to provide those services. Federal proposals to perform the services would be evaluated under the same terms used to evaluate proposals from industry.

The legislation contains softer language than the Freedom from Government Competition Act, which failed in the past two years to gain enough support for passage. The bill, written in response to a $250 million contract for data processing services the Federal Aviation Administration awarded to the Agriculture Department in May 1997, called for agencies to outsource all their operations deemed "nongovernmental." Congressional leaders said they want to pass the new bills— the House's Competition in Commercial Activities Act and the Senate's Fair Competition Act— by the end of the year.

At issue are billions of dollars in services that might be handled by the private sector. The federal government already contracts for more than $100 billion in services each year, ranging from food service to systems integration. If the legislation becomes law, billions more dollars would be made available for outsourcing.

"Whatever law and resultant policy that comes out of this process...would materially impact the degree to which the federal government outsources functions like IT," said Bert Conck-lin, president of the Professional Services Council, which is an industry group with a large contingent of IT firms that contract with the government.

But the bills are opposed by federal unions and the Clinton administration. Before a joint hearing last week of the House Subcommittee on Government, Management, Information and Technology and the Senate Subcommittee on Oversight of Government Management, Restructuring and the District of Columbia, Robert Tobias, president of the National Treasury Employees Union, testified, "When contractors are running America's public service programs, where will that accountability lie?

"In light of the very well-documented examples of waste and fraud that have occurred in federal contracting, and are yet to be corrected, Congress' interest in abandoning its oversight responsibility at this particular juncture is peculiar at best."

Edward DeSeve, deputy director of the Office of Management and Budget, opposes the bills because he said they might slow down the pace of reforms enacted by the Government Performance and Results Act and the Clinger-Cohen Act. "[A federal manager] would have less time to spend on other re-engineering that we believe has already yielded savings," he said.

DeSeve, however, said he was open to working with Congress to change the legislation. For example, he opposed the bills' provisions that allow vendors to go to court to challenge contracts that are awarded to federal agencies.

Steven Kelman, a Harvard University professor and former administrator of the Office of Federal Procurement Policy, also opposed those provisions. But Kelman generally supports the new legislation, saying it opens many IT functions— such as data centers and software development— to competition.

With outsourcing and increased competition, "we can get government to be more effective [and] more efficient, and [we can] turn around the reputation of government in the minds of the American people," Kelman said.

Rep. Dennis Kucinich, a Democrat who represents a heavily unionized district in Ohio, echoed the same concerns. "When we start contracting out services wholesale, it's illusory to think that we're suddenly going to see an increase in services at reduced costs," he said "We cannot look to the corporate world to practice democratic values."

Sen. Sam Brownback (R-Kan.), chairman of the Senate subcommittee, countered that the bills do not focus on the role of government but rather with defining which government activities should be handled by whom.

Industry representatives also supported the bills. "The legislation being considered creates an environment that promotes efficiency and encourages cost savings," said Larry Trammell, corporate vice president for Science Applications International Corp., testifying on behalf of the Contract Services Association of America. "Most importantly, however, it frees agencies to focus on their core missions rather than ancillary support activities."