November 23, 2008
Christina Erling

GAO Report Says DoL A-76 Effort Overcounted Savings and Undercounted Costs

WASHINGTON – The American Federation of Government Employees (AFGE) thanks Senator Tom Harkin (D-IA) and Representative David Obey (D-WI), the chairs of the Senate and House Labor-HHS-Education Appropriations Subcommittees, for halting privatization reviews in the Department of Labor (DoL) until two months after receipt of a report from the Government Accountability Office (GAO). The GAO report analyzes the department’s effort to implement the Bush Administration’s “competitive sourcing” policy. Senator Barbara Mikulski (D-MD) led the fight to suspend the use of the OMB Circular A-76 privatization process in DoL. GAO submitted its report today.

“The report’s findings are consistent with concerns raised by AFGE,” declared AFGE National President John Gage. “The A-76 process consistently overstates savings and underestimates costs. DoL cannot be singled out as an isolated offender. Indeed, DoL officials only carried out OMB’s direction. In fact, all agencies’ ‘competitive sourcing’ programs suffer from the same fatal flaws. Moreover, this is not the first time these serious problems have been identified. GAO reported earlier this year that the Forest Service’s costs for carrying out privatization studies far exceeded the savings. (GAO-08-195) Why won’t OMB change its flawed methodology? Because pro-privatization officials would have to acknowledge that the A-76 process is, ultimately, a burden on taxpayers. Encouraging agencies to reengineer internally, as OMB has belatedly attempted to do in changing the name of its ‘competitive sourcing’ effort to ‘commercial management’, would lead to real savings but without generating the same costs as the A-76 program.”

“The report did not look at several issues we considered worthy of review, including work inappropriate for contractor performance being studied for privatization, work being contracted out without competition, the failure to consider insourcing and internal reengineering alternatives to the costly and controversial A-76 process, and management’s use of numerical privatization quotas to direct the ‘competitive sourcing’ effort. However, GAO is to be commended,” continued Gage, “for painstakingly reconstructing the records necessary to determine the impact of ‘competitive sourcing’ on the DoL civil service workforce. The disproportionate impact of A-76 on female employees, older employees, and African-American employees is absolutely unconscionable.”

“The A-76 process has wasted taxpayer dollars, diverted dedicated federal employees from their important work, and contributed towards a resegregation of the civil service,” concluded Gage. “That’s why AFGE will continue to lead the fight to shut it down.”

According to GAO, in Department of Labor: Better Cost Assessments and Departmentwide Performance Tracking Are Needed to Effectively Manage Competitive Sourcing Program (GAO-09-14): “Without a better system to assess performance and comprehensively track all the costs associated with competitive sourcing, DoL cannot reliably assess whether competitive sourcing truly provides the best deal for the taxpayer…DoL’s savings reports…exclude many of the costs associated with competitive sourcing and are unreliable…DoL excluded a number of substantial items, including the time in-house staff spent on competition activities, precompetition planning, certain transition costs, and postcompetition review activities…”

“(O)ur analysis shows that these costs can be substantial and that excluding them overstates savings…DoL competition savings reports are unreliable and do not provide an accurate measure of competitive sourcing savings. All three of the competitions that we randomly selected and analyzed had inaccuracies…Among those 314 workers who experienced a personnel action of some type, 47 percent were African-American (including all those who were either demoted or laid off), 60 percent were women, and 89 percent were 40 years or older—significantly higher proportions than their representation in the general DoL workforce.”

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