Such competitions, encouraged by the Bush administration, are governed by the Office of Management and Budget's Circular A-76.
Bob Cohen, a spokesman for the Information Technology Association of America, said the rule reverses the momentum for converting the federal procurement process into a business-like operation.
“It marches us backward,” he said. “This is a clear disincentive for companies to compete.”
Cohen added that taxpayers might not be getting the best value under the new mandate. The language appears in Congress' approved Transportation, Treasury, the Judiciary, and Housing and Urban Development 2006 appropriations bill.
But lawmakers who feel the guidelines favor contractors over federal employees drafted the provision to discourage agencies from outsourcing unless the savings are demonstrably significant.
Senators backing the measure say that agencies too often contract out federal jobs without continuously monitoring whether savings result.
"Civilian federal employees are making remarkable contributions to our country," said Sen. Paul Sarbanes (D-Md.) “We should not be privatizing government work without giving federal employees a fair chance to defend their jobs, nor should we show a preference to contract employees over our dedicated public workforce.”