Senate curbs outsourcing bill

Bowing to pressure from labor unions, a Senate committee last week watered down a bill that would have forced agencies to put large portions of federal work, including information technology services, up for competition between government and the private sector.

The Senate Governmental Affairs Committee rejected versions of a bill that would have required agencies to identify and compete all functions that agencies had identified as "inherently nongovernmental." Industry, eyeing billions of dollars that agencies spend on items ranging from janitorial services to payroll processing services, had supported those versions of the bill, while federal unions viewed them as a threat to 1.4 million federal jobs.

Instead, the committee passed the Federal Activities Inventory Reform Act, which would only require each agency to list every year in the Federal Register all services that are "not inherently nongovernmental" and would let agencies determine which of those functions to contract out.

Furthermore, the bill would allow industry to lodge formal protests with agencies to challenge the lists, but it would not permit a company to take its complaints to court if an agency did not allow the company to compete for federal business, as did previous versions of the bill.

The bill, S. 314, also would not prohibit agencies from contracting with one another to provide services such as data processing. Earlier bills had included such provisions in a move to block such contracts as the Federal Aviation Administration's May 1997 award of a $250 million data processing contract to the Agriculture Department. Industry and members of Congress criticized the award as unfair and wasteful.

Despite the compromise that has been struck, neither the unions nor industry is viewing the bill as a hands-down victory.

Some industry groups had pushed for a bill that would have required the automatic outsourcing of all activities that were not inherently governmental.

But groups supporting language that would have forced agencies to outsource many functions view the inventory review bill as a springboard for future procurement reform.

"We're excited that the ball's getting moved forward, and this is a constructive step," said Rob Raasch, a labor policy specialist with the U.S. Chamber of Commerce, which is one of the organizations that led the charge for the previous bills. Raasch said the list of activities would give congressional oversight committees a baseline for asking agencies why they are not contracting out specific functions that are more commercial than governmental.

Brian DeWyngaert, executive assistant to the president at the American Federation of Government Employees, characterized the new version of the bill as neither a defeat nor a victory for AFGE. He said his union is "neutral" on the bill but is "not happy that there's contracting-out legislation going forward" that does not include tighter oversight of contractors and mechanisms to control escalating contractor costs.

DeWyngaert said AFGE will not oppose the bill "because it's really just a codification of the current policy and regulation that already exists." Currently, the Office of Management and Budget, through its Circular A-76, directs agencies to inventory their activities and to seek firms to perform commercial activities.

Ellen Brown, a staff member at the Senate committee, said S. 314 would go beyond the directive power of A-76 to statutorily require agencies to list what is a commercial function.

Robert Tobias, president of the National Treasury Employees Union, also said his organization will not oppose the inventory review bill because it does not require agencies to contract out activities on the list and leaves the courts out of protest procedures.