Law limits offshoring of A-76 work

The catchall spending bill President Bush signed Jan. 23 bars companies that win competitions to perform work done by federal employees from shifting the work to other countries.

Under Budget Circular A-76, federal agencies must bid against companies for work performed by federal employees. But according to Section 647(d) of the Consolidated Appropriations Act of 2004, "An activity or function of an executive agency that is converted to contractor performance under Office of Management and Budget Circular A-76 may not be performed by the contractor at a location outside the United States except to the extent that such activity or function was previously performed by government employees outside the United States."

The provision is known as the Thomas-Voinovich amendment, after its two Republican sponsors, Sen. Craig Thomas of Wyoming and Sen. George Voinovich of Ohio.

The measure has become law amid a backlash in Congress and in state legislatures against offshore sourcing of government IT work.

According to the National Foundation for American Policy of Arlington, Va., the Thomas-Voinovich amendment is one of numerous proposals to restrict offshore procurement of IT services and other products as well as limit the use of special visas for foreign workers. The foundation opposes limits on offshore procurement of federal goods and services.

The National Conference of State Legislatures has identified bills in 14 states that would limit state governments' use of offshore call centers and otherwise restrict purchases from foreign sources.

In a curious twist, the same appropriations law exempts some IT goods and services from the Buy American Act, which is intended to promote domestic purchases by federal agencies.

The Congressional Research Service issued a memorandum last year to members of Congress stating that it had not been able to find "any publicly available statistics that have been collected on a regular basis over a period of time" on the scale of offshore IT operations. CRS reported that IT companies increasingly rely on offshore production sites in India, China and other countries.

Industry sources said many government contractors rely on offshore IT services as part of their global supply chain, and that purchasing such services at a lower cost than domestic employees can match drives down the cost of government systems.