Public Comments on the Presidential Memorandum on Government Contracting

July 15, 2009

The American Federation of Government Employees, AFL-CIO (AFGE), which represents more than 600,000 federal employees throughout the United States and overseas, welcomes the opportunity to provide comments to the Obama administration and the Office of Management and Budget (OMB) about the President’s efforts to establish a framework for improving the federal acquisition system and managing the federal workforce.  Our full statement will be available on our website, www.afge.org, and at www.regulations.gov.

AFGE supports President Obama’s pledge to restore the American people’s faith in the public sector and curb the drive to privatize government services.  Our members understand that cleaning up the federal contracting problems left behind by the Bush administration will take a significant amount of work.  That’s why AFGE is pushing on a number of fronts to reform the contracting system and begin the process of returning certain functions to the federal government.  

APOLITICAL PROCUREMENT

The time has come when action can finally be taken to improve the lives of federal contractor employees.  However, it is imperative in doing so that we don’t politicize the procurement process.  Significant or repeat violators of workplace laws should not receive federal contracts, and federal contractors generally should be required to meet clear standards for pay, health care, and retirement benefits for their employees.  If such standards are applied across the board, then there is no need to use preferences or set-asides to steer contracts to contractors who have better labor records but who are also more expensive. 

It may be tempting to look at small business preferences as a precedent for giving a new preference to federal contractors with better labor records. However, such an explicitly political preference, although well-intentioned, would be the first of its kind and would open up the procurement process to additional political preferences which would undermine the integrity of the procurement process.  

We are still cleaning up the mess left behind by the previous Administration which used the procurement process as a tool to reward friends, thus becoming ensnared in scandal after scandal.  Even with noble intentions, it is imperative that we don’t repeat those mistakes by trying to use the procurement process to reward a different set of friends. 

OMB CIRCULAR A-76   

Impose an A-76 Moratorium
AFGE is asking the Obama administration to suspend the use of the A-76 process until much-needed reforms have been implemented and cancel ongoing A-76 studies.  A 2006 DoD Inspector General report and two 2008 Government Accountability Office (GAO) reports detail how poor guidance from the Bush Administration OMB on the A-76 process resulted in systematically overstated savings and understated costs as well as a disproportionately adverse impact on older, female, and African-American civil servants.

Reform the A-76 Process
AFGE urges the Obama Administration to work with representatives of federal employees to reform the A-76 circular to make the process more accountable to taxpayers and fairer to federal employees.  See specific recommendations in our full statement.

Alternatives to the A-76 Process.
Agencies should be encouraged to use Business Process Reengineering (BPR) in lieu of OMB Circular A-76 privatization reviews to achieve improvements in the delivery of services.  Given the success of federal employees in OMB Circular A-76 privatization reviews, agencies should avoid incurring the costs and controversies of A-76 studies.  

INHERENTLY GOVERNMENTAL FUNCTIONS 

Due to federal hiring restrictions, increasing requirements, and the indiscriminate privatization of the Bush Administration, the federal government has contracted out to the private sector functions that are inherently governmental, closely related to inherently government functions, or mission-essential and should never have been performed by the private sector.   

Overriding Concerns

  • Technical Expertise/Institutional Memory.  Agencies must develop and retain the technical expertise and institutional memory needed to manage and provide all functions necessary to meet their missions, now and in the future. 
  • Risk.  No function should be contracted out if it poses too great a risk of creating a contractor monopoly or interfering with an agency’s ability to perform its mission. 
  • Transparency and Accountability.  No function should be contracted out if contractor performance could cause confusion to the public about whether or not the government is acting.  In order to determine what the government is doing, the public must be able to discern when the government is or is not acting.
  • Decision-making.  Agencies must maintain sufficient in-house capability to be thoroughly in control of the policy and management of the agency.  For too long, important functions performed by rank-and-file federal employees have been considered to be commercial because their work is ultimately signed off on by a federal employee manager, even though that federal employee manager spot-checks only a small number of the judgments and recommendations made by rank-and-file federal employees. 
  • Development and Maintenance of the Federal Workforce.
  • Human resources must be treated as a critical business function, not just an administrative process to be bundled and outsourced.  Agencies must place great importance on acquiring, developing, and retaining employees with the knowledge, skills, abilities, and experience needed to meet agencies’ missions.
  • Personnel ceilings must be removed in order to develop and maintain an adequate federal workforce.
  • The prohibition on personal services contracts should be enforced.
  • Any government function that must be performed for long or indefinite periods of time should be performed by federal employees.
  • Contractor Oversight.  Agencies must ensure that they have the ability to oversee contracts, including the ability to specify the work assignments, products, tasks, and responsibilities of the contractor; monitor the work of the contractor; and evaluate the work of the contractor.  In addition, agencies must maintain an in-house workforce in every function in case of contractor failure and to provide a useful benchmark for evaluating contractor performance.
  • Integration with Inherently Governmental Functions.  Some functions, while perhaps considered to be commercial in the abstract, are so integrated with inherently governmental functions that they cannot be separated.
  • Specific Training/Experience/Expertise Needed.  Many functions needed by the government require unique training, experience and/or expertise that can only be acquired by performing the function. 
  • Particular Circumstances.  No function should be contracted out until the agency examines the particular circumstances in which the function is performed and whether segregating that function will negatively impact agency flexibility and efficiency. 

Recommendations
In order to encourage agencies to re-establish the boundary between functions that are commercial and functions that are inherently governmental or closely associated with inherently governmental functions, AFGE recommends the following:

  • Stop compiling directories of inherently governmental jobs.
  • Do commercial inventories over – but without OMB pressures.
  • Use inventories to find in-house staffing shortages.

Functions in need of Particular Attention
See our full statement for a list of some specific functions currently performed by contractors (or deemed appropriate for contractor performance) that we find particularly troubling. 

DIRECT CONVERSIONS 

AFGE urges the Obama administration to enforce the prohibitions against giving work last performed by federal employees to contractors without first conducting a full and fair public-private competition.  Despite the extensive use of the A-76 privatization process and the resulting proof of the superiority of in-house workforces, much work is contracted out without any public-private competition, i.e., without any proof that giving work to contractors is better for taxpayers or better serves those Americans who depend on the federal government for important work. 

Federal employees represented by AFGE have experienced several direct conversions in recent years. In some of these situations, contracts have been awarded by an agency during a “surge” with the understanding that they would be short-term. But over time the contracts have expanded, with agencies bringing in contract employees to work side by side with government workers, without even an attempt at a public-private competition to determine if the contracting is more efficient for the agency and for taxpayers.   Congress, on a bipartisan basis, has, repeatedly, prohibited agencies from perpetrating such conversions.

INSOURCING 

AFGE is pleased that Congress and the Obama administration have approved and implemented laws to encourage federal agencies to bring contracted work back into government.  We believe that the public interest is best served when functions that are inherently governmental, closely related to inherently governmental functions, or mission-essential are performed by government employees within a defined chain of command and subject to vigorous oversight. To properly insource federal jobs, AFGE recommends that the Obama administration continue the practice of creating a reliable and systematic inventory of federal tasks and reviewing it regularly.  Insourcing simply cannot occur without a true inventory of jobs, along the lines already laid down by the Department of the Army, being performed in federal agencies by federal employees and contractors. The government must provide federal employees with full and fair opportunities to compete for new work as well as outsourced work. 

CONCLUSION

AFGE is ready to assist the Obama administration and OMB in establishing a new framework for improving the federal acquisition system and managing – and nurturing - the federal workforce.  The first step towards meaningful reform should be passage and enactment of The CLEAN UP (Correction of Longstanding Errors in Agencies Unsustainable Procurements) Act (S. 924, H.R. 2736), legislation introduced recently by Senator Barbara Mikulski (D-MD) and Representative John Sarbanes (D-MD). 
As AFGE National President John Gage declared, “The CLEAN UP Act is vital to any serious effort to save taxpayer dollars and restore integrity to the federal sourcing process." 

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