Army clears 'log' jam

The Army has approved a waiver that makes it possible to privatize two government software development centers - putting 500 government jobs at risk - without competing the work between the public and private sectors, the Army Materiel Command confirmed last week.

The Army released last week the official request for proposals for outsourcing the St. Louis and Chambersburg, Pa., software centers just three days after notifying congressional leaders of its decision. In addition to the 500 government positions, the move also would displace as many as 100 private-contractor positions currently supporting both facilities.

The St. Louis and Chambersburg facilities are primarily responsible for writing code and maintaining many of the Army's legacy logistics applications, which need to be upgraded, sources said. The two main systems maintained by these facilities are the Commodity Command Standard System and the Standard Depot System.

The waiver signed by the Army removes the requirement of having to conduct a cost study - called for under the Office of Management and Budget's Circular A-76, which allows federal organizations and employees to compete against private industry for government contracts, thereby allowing them to retain their jobs if they can offer a lower bid.

The action also marks the latest step in the Army's plan to move forward with its Wholesale Logistics Modernization Program, a $1 billion effort aimed at modernizing the Army's logistics operations. The Army plans to use WLMP to modernize systems that help manage an inventory valued at $9 billion and to rely on just-in-time delivery practices to supply troops with equipment ranging from helmets to helicopters. AMC wants to use WLMP to upgrade those systems by privatizing logistics software support functions.

Sources familiar with the effort said that because of the waiver, the RFP will cover the privatization of jobs and computer systems at the two centers, and its release is expected to set off a politically charged round of legal maneuvering on the part of Congress and local union representatives to save the 600 jobs that could be lost under the plan.

In a letter to House Minority Leader Richard Gephardt (D-Mo.), an outspoken critic of the Army's outsourcing plans, undersecretary of the Army Bernard Rostker said the Army approved the waiver because the service needs "to better capture the private sector's innovations in logistics management" in order "to leverage the large investments made by the private sector...and to develop and maintain best business practices for the future."

Rostker also assured Gephardt that the Army's process for privatizing the St. Louis and Chambersburg facilities will "ensure that the selected contractor will provide jobs to all displaced federal workers with a one-year employment guarantee within the same geographic area" and also guarantee those employees salaries and benefits "comparable in value" to their government compensation.

John Morris, union president of the National Federation of Federal Employees (NFFE) Local 1763, which represents government employees at Chambersburg, characterized the situation as "another example of where private industry is taking over the Department of Defense." Morris said the union does not believe it can get a fair appeal from the Army because the Army issued the RFP before the appeal process was allowed to take place. "We find that kind of curious," Morris said. "This is going to come out as a big readiness issue and will probably end up in federal court."

Olga Grkavac, executive vice president of the Information Technology Association of America's Enterprise Solutions Division, called the RFP "very innovative" and added that the Army's logistics systems are "in great need of replacement." In addition, the resulting contract likely will "produce a system that is state-of-the-art [and] will be an incredible benefit for the Department of the Army," Grkavac said. "We sincerely believe this."

The WLMP procurement is managed by the Army Communications-Electronics Command at Fort Monmouth, N.J., the subordinate command of the Army Materiel Command. AMC has 60,000 employees scattered at depots nationwide, many of which are in small communities where AMC is the largest employer. AMC plans to award a long-term contract to a single vendor that will operate the wholesale logistics software system, re-engineer the wholesale logistics business processes, and develop and operate a customized commercial off-the-shelf software system, according to a recent report by the General Accounting Office.