A-76 in the cross hairs

The House passed a provision last week that would effectively block implementation of the Bush administration's competitive sourcing proposals, potentially setting the stage for a battle between Congress and the administration that could delay passage of budget bills.

The House approved an amendment to the fiscal 2004 Treasury-Transportation Appropriations bill that prohibits the Office of Management and Budget from using funds to implement revisions to Circular A-76. Those revisions codify the administration's plan to open agency tasks deemed not inherently governmental to competition from commercial firms.

Earlier this month, officials had threatened that President Bush would veto any bill that hindered his administration's competitive sourcing initiative, one of the cornerstones of the President's Management Agenda.

Proponents of the changes argue that competition between federal employees and commercial firms leads to better deals for taxpayers no matter who gets the work. Opponents, however, warn that the changes will put hundreds of thousands of federal jobs at risk.

Opponents of the A-76 revisions cheered the House's action. But those cheers could be premature, observers say.

The Senate's spending bill has no corresponding version of the House measure.

"It has to be passed in the Senate, and the administration has threatened to veto it," said Steve Kelman, professor of public management at Harvard University's Kennedy School and former administrator of the Office of Federal Procurement Policy. "It's hard to imagine at the end of the day that the amendment in the form it was passed will become law."

The amendment, sponsored by Rep. Chris Van Hollen (D-Md.), allows OMB to continue using the older version of A-76. However, the agency had sought to revise the circular because it is difficult to use and allows competitions to drag on for years, according to Bush administration officials.

"The House said it wanted to return to the old-fashioned competitive sourcing process that's slow and burdensome, where there's no accountability for a fair, balanced process, where there's no guarantee that a competition will result in better value for the taxpayer and where direct conversions are allowed," said Clay Johnson, OMB's deputy director for management. "We are committed to the revised competitive sourcing process that ensures [that] taxpayers receive best value and federal employees are treated fairly."

Van Hollen called the passage of his amendment a huge victory for federal employees and taxpayers.

Backers of the revised A-76 say the competitive sourcing process gives the government better value. Private firms may offer lower costs or federal employees may find ways to do their work more efficiently, they argue, and the taxpayers win either way.

"We feel it is a definite attack on the competitive sourcing plan and it was intended to shut down the program," said Cathy Garman, vice president of the Contract Services Association of America (CSA) and a leader of the Outsourcing Coalition, a group of 40-plus industry organizations. "We can't stress enough how unhappy we are."

No one liked the old A-76, she added. Agencies avoided using it, and private companies often simply walked away rather than get involved in a study or bid.

Garman said she expects a similar measure to come up for debate in the Senate. Several members have already put forward amendments that the Bush administration has opposed, but CSA and coalition officials still hope the differences can be worked out by the conference committee. "We would hope that the light bulb would go off over people's heads," she said.

The 220-198 passage of Van Hollen's measure brought praise from federal unions.

"The revision to A-76 would result in federal employees winning as little as 10 percent of competitions," said Randy Erwin, assistant to the president at the National Federation of Federal Employees. "That is blatant privatization any way you look at it, not fair competition as the administration claims. The real challenge now is to make sure that the amendment gets put into law."

Colleen Kelley, president of the National Treasury Employees Union, also praised the amendment. "NTEU applauds the House on its vote [Sept. 9] to essentially revoke these unfair changes," she said.

However, Larry Allen, executive vice president of the Coalition for Government Procurement and an A-76 supporter, said he believes Van Hollen's measure won't make it to the end of the process.

"I don't think its chances of staying in are very good," he said. "It's a sweeping pronouncement and acts as if A-76 is something new to government. It's not. It's been around for years. It's been a good tool."

Diane Frank contributed to this story.