Law freezes competitive sourcing

The fiscal 2009 spending law President Barack Obama signed March 11 prevents federal agencies from engaging in new competitive sourcing projects.

Under an initiative by the Bush administration, federal employees have competed against private companies to perform government work. But the spending law puts a governmentwide moratorium on new public/private job competitions for federal work until Sept. 30, 2009. During that time, agencies cannot begin any new studies on converting federal work to contractors. Those competitions are defined by Office of Management and Budget Circular A-76.

The law also requires federal agencies to establish guidelines for bringing back government work currently being performed by private contractors.

Federal employee unions approved of the change, but a business group warned that the provisions would result in less flexibility and efficiency for agencies.

"These are two very positive steps for taxpayers,” said Colleen Kelley, president of the National Treasury Employees Union, in a statement released today. “This administration intends to stop contracting out government services that should be performed by federal employees.”

John Gage, president of the American Federation of Government Employees, said, “We hope this is the end of the era of privatization during which agencies were forced to contract out regardless of cost or quality and at the expense of integrity and accountability of federal programs.”

The U.S. Chamber of Commerce opposes the moratorium. "The Chamber opposes this provision, which would arbitrarily halt a successful program," the group said Feb. 25. "Agencies across the government must have the flexibility to move forward with competitions in order to get the best value for the taxpayer, regardless of whether the government- or private sector-led team wins."

The law provides funding for most federal departments and the legislative branch, which have been operating under a continuing resolution that expires this month.