September 25, 2007
Emily Ryan
(202) 639-6421

AFGE Applauds Lawmakers for Expressing Concern About Human Resources Line of Business

(WASHINGTON)—The American Federation of Government Employees today thanked Sen. Barbara Mikulski (D-Md.) and her colleagues for the objections they raised in a Sept. 21 letter to the Office of Management and Budget’s Deputy Director for Management about the Human Resources Line of Business initiative.

“Under HRLOB, an agency that wants more money to perform human resources functions will be expected by OMB to transfer at least core functions to a handful of federal and contractor shared service centers,” AFGE National President John Gage said. “The assumption of HRLOB is that agencies don’t really have any unique human resources needs and that savings are possible through consolidation.

“HRLOB's 'competitive framework' repudiates OMB's own May 2003 rewrite of its Circular A-76 privatization process. Contrary to OMB’s expectations, federal employees historically have won more than 80 percent of the competitions conducted under the revised A-76 circular. By encouraging agencies to opt out of A-76 for OMB-required reviews of human resources functions, OMB appears to be using the HRLOB to give to contractors work that they probably would not win under A-76.”

Among the most objectionable features of the HRLOB’s competitive framework:

  • Work can be contracted out without any public-private competition as an “exception.”
  • A blanket waiver is given for all human resources functions performed by 10 or fewer employees. It is so unlikely that an agency would allow an in-house workforce of 10 or fewer employees to compete under A-76 that OMB would have to be consulted with first.
  • OMB recognized that the A-76 process was vulnerable to abuse and tried to include safeguards in the revised May 2003 A-76 by introducing the controversial “best value” (i.e., greatly increased subjectivity in making awards). HRLOB seems to eliminate all of those safeguards for human resources functions performed by 10 or fewer employees.
  • HRLOB does not anticipate that any human resources functions performed by more than 10 employees will be “migrated” under this initiative, despite the considerable work expected to be performed by contractor shared service centers and that this work is currently performed by 10s of thousands of federal employees.
  • It is not explained why OMB is repudiating its own A-76 rewrite. The usual A-76 process, revised by this same OMB four years ago, already has been used on human resources functions. Since competitions involving more than 10 employees are not anticipated and A-76 competitions involving in-house workforces of 10 or fewer employees would be so rare as to require consultation with OMB, conceivably, no human resources functions would be competed under the A-76 before conversion to contractor performance.
  • By effectively eliminating the A-76 circular, agencies could use HRLOB to directly convert to contractor performance human resources functions currently performed by federal employees. By pretending that no human resources function consisting of more than 10 employees would be shifted under HRLOB, agencies can avoid the statutory competition requirement that first was enacted in the FY06 Transportation-Treasury-HUD Appropriations Bill. This provision prohibits the use of “best value”, requires that the in-house workforce be given an opportunity to submit its most competitive bid, and requires contractors to be marginally more efficient to offset the non-quantifiable costs of conducting privatization reviews—but only for functions performed by more than 10 employees.

“AFGE applauds Sen. Mikulski,” said Gage, “and thanks the other signatories of the letter—Sens. Richard Durbin (D-Ill.) and Ted Kennedy (D-Mass.), the Senate’s two other leaders on anti-privatization issues; House Education and Labor Chairman George Miller, (D-Calif.); House Armed Services Chairman Ike Skelton (D-Mo.); House Government Oversight and Reform Chairman Henry Waxman (D-Calif.); House Civil Service Subcommittee Chairman Danny Davis (D-Ill.); House Majority Leader Steny Hoyer (D-Md.) and Democratic Congressional Campaign Committee Chairman Chris Van Hollen (D-Md.), who have led the opposition to privatization in that chamber; and House Financial Services Appropriations Subcommittee Chairman Rep. Jose Serrano (D-N.Y.). Durbin and Serrano chair the funding subcommittees that have jurisdiction over OMB and the Office of Personnel Management, the two agencies responsible for the increasingly controversial HRLOB initiative.”

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