Bill threatens Bush's sourcing strategy

White House, industry face tough fight to overturn legislation<@VM>White House to drop controversial provision from DOD rule

"The goal is to get the best value for the taxpayer, and when you put arbitrary quotas, they aren't going to get the best deal for the taxpayer. I'm not opposed to what [OFPP is] doing, I am opposed to attaching numbers to it." ? Rep. Tom Davis, R-Va.

(Washington Technology photo by Henrik G. de Gyor)

"Outsourcing and competitive sourcing are two different things. The President's Management Agenda commits to competitive sourcing," said EDS' Booth Jameson.

(Washington Technology photo by Olivier Douliery)

The Bush administration's effort to increase the number of public-private competitions could be derailed under legislation recently passed by the House.

House lawmakers July 24 approved by a 261-166 vote an amendment to the Treasury-Postal appropriations bill that would prohibit spending to establish, apply or enforce any numerical goal, target or quota for subjecting jobs to public-private competition or converting jobs to the private sector.

The legislation is aimed at the "competitive sourcing" goals established by the President's Management Agenda. The administration wants agencies in 2002 to compete or directly convert 5 percent of their jobs deemed commercial in nature, and in 2003 to compete or convert 10 percent of their commercial jobs. Some 850,000 federal jobs are commercial in nature but have never been subject to competition, according to the administration.

The administration and some industry groups strongly oppose the House measure. The White House said the amendment would "effectively shut down the administration's competitive sourcing initiative." The White House has threatened that President Bush will veto the final bill if it contains such a provision.

The amendment is "a clear attempt to blindside the efforts of the administration and to bring the current contracting process to a halt," said Gary Engebretson, president of the Contract Services Association in Arlington, Va. The association represents private-sector firms providing services, including high tech, to federal, state and local governments.

The Senate will take up its own Treasury-Postal bill, which contains a similar provision, after the August congressional recess, according to a Senate Appropriations Committee staff member. Administration and industry opponents said they will lobby to have lawmakers remove the measure during the House and Senate conference to resolve differences between the two versions of the Treasury-Postal bills.

If the amendment succeeds, "we won't be able to sit down with agencies and design a plan for how they move forward on one of the key President's Management Agenda initiatives," said Angela Styles, administrator of the Office of Management and Budget's Office of Federal Procurement Policy. "It's as close as you can get to telling the administration, 'You can't make policy.'"

But the amendment, which was introduced by Reps. Jim Moran, D-Va., Connie Morella, R-Md., and Frank Wolf, R-Va., has received broad support. Even some business-friendly legislators voted for the provision.

"A lot of members' votes are consistently seen as pro-contractor. [But] they realize we can't run roughshod over federal employee groups," said Rep. Tom Davis, R-Va., chairman of the House Government Reform subcommittee on technology and procurement policy, who voted for the amendment.

"The goal is to get the best value for the taxpayer, and when you put arbitrary quotas, they aren't going to get the best deal for the taxpayer. I'm not opposed to what [OFPP is] doing, I am opposed to attaching numbers to it," Davis said. However, he added, "we are going to work with the administration to make sure they can set some goals."

The House amendment comes after the administration's midyear report card showed steady agency progress on its competitive sourcing initiative. The report card assesses the progress of 26 major agencies on the five President's Management Agenda initiatives, which also include e-government and financial management. The report card, which uses a stoplight scoring system with green being best and red worst, showed that only four of 26 agencies got a red score in their progress toward meeting the president's competitive sourcing goals.

Proponents of the president's policy contend that its primary goal is to promote efficient government, not to outsource government jobs to the private sector. Competing the jobs will result in better service to taxpayers at lower cost, regardless of whether the winner is the public sector or private sector, Styles said.

But some members of Congress, such as Rep. Henry Waxman, D-Calif., said the numerical targets are unfair to federal workers and will lead agencies to directly convert jobs to the private sector, avoiding time-consuming public-private competitions in order to meet the goals of the President's Management Agenda.

Booth Jameson, director of global government affairs for the federal unit of Electronic Data Systems Corp. of Plano, Texas, disagreed with this reasoning. "Outsourcing and competitive sourcing are two different things," he said. "The President's Management Agenda commits to competitive sourcing."

Some industry representatives said they believe lawmakers will be persuaded to remove the Moran amendment during the House and Senate conference on the Treasury-Postal bills.

"I suspect a number of House Republicans went along with this to score a political point and try to wake the administration up on other issues not necessarily related to this," said Larry Allen, executive vice president of the Coalition for Government Procurement in Washington.

In conference, Allen said, "There will not be the fervor for it and there will be significant pressure from the administration" to nix it.The controversial rule implementing Section 803 of the 2002 Defense authorization act will likely be stripped from a provision that would have limited purchases on the General Services Administration to firm, fixed-price contracts.

"I think we will ultimately strip references to pricing in the rule that goes out," Angela Styles, administrator of the Office of Federal Procurement Policy, said recently.

That's good news, said Larry Allen, executive vice president of the Coalition for Government Procurement. The coalition and other industry groups had fought the provision, saying it would severely hinder the Defense Department's ability to contract for services quickly. It would especially hurt small businesses, they said, because agency procurement personnel would be driven to other contracting vehicles that are largely held by big businesses.

The OFPP provision would have curtailed the use of time-and-materials and labor-hour contracts. OFPP said agencies could still use the popular contract types, they just couldn't use them with streamlined acquisition procedures that GSA had allowed on its schedules.
Styles said the issue will likely be resolved in a separate rulemaking.

"We will work it out soon, in a way that makes sense, protects [the government] and doesn't obliterate [industry's] ability to enter into time-and-materials contracts," she said.

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