April 28, 2006
Enid Doggett
(202) 639-6419

AFGE Strongly Opposes OMB's Plan to Bring Back "Direct Conversions"

Washington—The American Federation of Government Employees (AFGE) today declared its strong opposition to the Office of Management and Budget’s (OMB) plan to significantly scrap a safeguard against giving work performed by federal employees to contractors without first conducting a public-private competition, a practice known as a direct conversion. The plan is part of OMB’s controversial Financial Management Line of Business Initiative.

In response to questions for the record submitted by Representative Todd Platts, the Chair of the House Government Reform Subcommittee on Government Management, Finance, and Accountability, OMB acknowledged that it would encourage agencies to give work performed in all agencies by 10 or fewer federal employees to contractors without any public-private competition.

Former Office of Federal Procurement Policy (OFPP) Administrator Angela Styles, in rewriting the OMB Circular A-76 privatization process in 2003, eliminated the anti-taxpayer, anti-federal employee practice of giving work to contractors without a public-private competition. According to a January 14, 2005, article in, Styles said “her decision to prohibit the practice made sense at the time because it helped avoid `wholesale movement to the private sector without thought.’ Agencies generally used direct conversions for outsourcing fewer than 10 full-time positions. But OFPP didn't have a good grasp on how frequently agencies performed direct conversions, and couldn't make agencies prove they saved money through the practice,” Styles said. “Concerns arose that agencies were breaking tasks performed by 50 or 60 people apart into smaller chunks so that they could complete direct conversions,” she added.

“OMB is encouraging a practice that simply does not meet agency needs or save taxpayer dollars,” declared AFGE National President John Gage. He added, “OMB officials should stop enriching contractor cronies with direct conversions. If OMB officials really believed in public-private competition, they would stop insisting that the Congress scrap strong public-private competition requirements included last year in the Defense Authorization, Defense Appropriations, and Transportation-Treasury HUD Appropriations Bills, in favor of their `best value' scheme, which would allow contractors to take work from federal employees even when federal employees submit more responsive, less expensive bids.”

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