IT Industry Gears Up to Fight Anti-Outsourcing Bill

IT Industry Gears Up to Fight Anti-Outsourcing Bill

Charles Robb

By Kerry Gildea, Contributing Writer

Unexpected support on Capitol Hill for a bill that would slow or even halt government outsourcing of information technology work has caught industry officials off guard and forced them to rethink how to stop the proposal from gaining any more momentum in this Congress or the next.

The Truthfulness, Responsibility and Accountability in Contracting (TRAC) Act was introduced in the House in February, but it hasn't been until recent weeks that IT industry officials have become concerned, when the number of sponsors of the bill crept up to 193 by late August. The Senate bill, introduced July 11 by Sen. Charles Robb, D-Va., also has attracted an unexpectedly large number of Democratic supporters. Moreover, the legislation is backed by the 600,000-member American Federation of Government Employees, the largest federal employee union.

The TRAC bill would place an immediate moratorium on all government outsourcing and require lengthy cost-benefit analysis of each potential IT outsourcing project before work moves forward. It also would subject all future contracts to public/private competition, a move that could add up to 18 months to a contract process, according to opponents in the IT industry.

"Here we are in the time of Internet-speed, warp-speed, dog years, and we're adding 18 months to every contracting-out decision," said Olga Grkavac, executive vice president of the Information Technology Association of America's Enterprise Solutions Division.

ITAA in late July sent letters to the House and Senate stating its opposition to the bill. The issue also was addressed Aug. 14 at ITAA's monthly meeting on outsourcing.

"We are very concerned about the bill. ? When the bill was first introduced, many of us thought it was so flawed, we really couldn't believe anyone would support it," Grkavac said.

Industry's immediate concern is not that Congress will pass the bill in the next two months, but that increased support could signal a resurrection of the bill under a new administration.

Meanwhile, the AFGE will continue its push, maintaining the bill would save the government time and money. In a July 11 statement, AFGE National President Bobby L. Harnage said the bill not only will allow the government to track costs and savings from outsourcing, but it will also abolish arbitrary personnel ceilings that prevent agencies from taking on work even when federal employees can perform the job more efficiently.

"The public has a right to reliable and accountable public services," Harnage said. "The TRAC Act will help ensure that America's taxpayers get just that. This bill simply holds contractors accountable to the same standards as federal employees. No one who truly believes in effective and cost-efficient government should be opposed to this legislation."

However, Grkavac and others in industry warn TRAC will instead bring the government to a standstill.

"The government has a shortage of IT professionals. They have an aging work force," she said. "The majority of the government IT workers will be eligible for retirement in the next three years, and they have been unable because of job freezes and salaries to attract new IT workers. They have trouble retaining IT workers. Our question is 'Who is going to do the work?' "

IT officials also disagree with AFGE assertions that TRAC will save the government dollars in the long run.

"To frame the argument on cost savings is misleading because the government doesn't know what its savings are," said Albert Nekimken, director of research for Web-based IT research and marketing firm Input Inc. of Chantilly, Va., and an ITAA member. "You can cast government figures any way you want. ? It does not operate on a profit basis."

AFGE is pushing this bill because its membership is on the decline, he added.

"It seems as outsourcing picks up steam in the federal sector, more and more federal civil servants are transferring off the federal payroll and onto the payrolls of the vendors," Nekimken said. "AFGE is not happy because they see their union membership being reduced. So from that point of view, it's a pretty straightforward turf war with competition for union membership."

The Office of Management and Budget does not want to see the bill passed because it could disrupt current contracts and result in penalty fees, industry officials said. For example, if a case were made to review an existing contract for IT work and bring it back in-house, it is likely penalty fees would have to be paid to the IT supplier that would get kicked off the contract.

"Vendors seem to believe OMB knows better than anyone that you can't just cancel contracts. There is a penalty," Nekimken said.

But Rep. Al Wynn, D-Md., who introduced the bill in the House Feb. 29, said that under the bill, OMB may grant a waiver for any critically important work that federal employees aren't able to assume. Any "genuinely important services provided by contractors" would not be disrupted, Wynn said.

Wynn said TRAC also puts more pressure on federal agencies to track costs and savings.

"Right now, agencies are assuming that promised savings from contractors are actually realized," Wynn said when he introduced the bill. "However, as [the General Accounting Office] has reported, costs have a way of increasing over the course of contracts. GAO has also reported that agencies don't have systems in place to track costs. This information could be used to encourage contractors to do better work or bring work back in-house when it could be performed more efficiently by federal employees. Either way, the taxpayers benefit."

Members of the IT industry speculate that election-year politics are playing a role in rallying support of the bill. The House Republican leadership has told Grkavac and others that the Republican Congress will never pass the bill in its current form. Democrats may be supporting the bill now as a show of support for AFGE during an election year, when they know very well the bill cannot pass this Congress, Nekimken said. However, that could change if there is a shift in the political climate, he added.

"If a Democratic administration comes in and this whole process becomes politicized, the unions will come back and ask for their payoff: 'We supported you and now we want ours,' " he said. "So then these congressmen will be under great pressure to reintroduce the bill and pass it. And, the industry will be under intense pressure to try to introduce amendments to try to shape it up."

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