May 04, 2007
Enid Doggett
(202) 639-6419

New OMB PLAN Costly to Taxpayers, AFGE Says

“That scraping sound you hear is Office of Management and Budget (OMB) officials shifting the deck chairs around on the public policy Titanic known to them as `competitive sourcing’, but to everyone else as `wholesale privatization’,” declared AFGE National President John Gage. “Each Spring brings forth a new OMB marketing campaign for its `wholesale privatization’ effort. And while this hardy perennial is hardly pleasing to the eye, we can all agree that it is the product of a lot of fertilizer.”

Savings: OMB officials continue to make grandiose claims for savings through the controversial Circular A-76 process. However, the Comptroller General has said repeatedly that agencies lack financial accounting systems necessary to make such claims. OMB credits 70% of its “actual savings” to the Department of Defense (DoD)—but the Inspector General says that DoD cannot document such claims because it has no systems in place to track costs and savings. OMB officials talk excitedly about perhaps “validating” agencies’ A-76 experiences—in September 2008. In other words, the earliest OMB officials will be able to document their claims will be just before they are forced to leave office!

Costs: OMB officials acknowledge, in the fine print, that it arbitrarily excludes certain significant costs agencies incur from carrying out privatization reviews, ranging from the costs of in-house personnel staffing privatization reviews to the costs of agencies’ privatization bureaucracies to the costs of transitioning displaced staff. Needless to say, OMB never attempts to quantify the significant costs of workforce disruption and lost productivity caused by privatization reviews. As then Senate Energy and Water Appropriations Subcommittee Chairman Pete Domenici wrote last year in cutting off all funding for privatization reviews, “The Committee fails to see any evidence of cost savings or increased efficiency by undergoing these expensive competitions.”

“Although OMB officials--the same people who unleashed on America the unholy trinity of contracting out scandals—Iraq, Katrina, and Walter Reed—can’t stop shilling for private interests at the expense of public services,” continued Gage, “this OMB report is more interesting for its failure to answer the questions that are on the minds of so many federal employees.”

If `competitive sourcing’ is such a hit with agencies, why must they be held by OMB to numerical privatization quotas and threatened with budget cuts for failures to comply? The use of quotas by big agencies like the Department of the Army and small agencies like the Department of the Interior is obvious. It is preposterous that a handful of political appointees in OMB should be overruling career officials and telling them how many employees to review for privatization, which employees to review for privatization, and when to do so.

That OMB’s role as an advocate for use of the A-76 process has completely corrupted its role as an impartial enforcer of the process is well-documented. However, it has also kept OMB from adequately supervising the process. For example, the runaway privatization reviews at Walter Reed Army Medical Center, begun in 2000 and ended in 2006, and Keesler Air Force Base, begun in 1999 and ended in 2007, are the inevitable result of inadequate OMB supervision. In both cases, OMB ordered DoD to finish or cancel the privatization reviews in 2004—only to fail to enforce its deadline.

Why is OMB allowing the Department of Labor to review work for privatization that is clearly inherently governmental? An AFGE investigation has shown a significant number of employees who make policies and draft regulations are being reviewed for privatization. Despite mounting Congressional concern, OMB remains strangely silent.

If OMB prizes competition, why does OMB allow agencies to give work performed by civilian employees to contractors without any public-private competition? At the Department of Veterans Affairs, work performed by federal employees, who themselves are often veterans, is being directly converted to contractor performance without competition—from laundry workers to cemetery staff to information technology personnel.

Given OMB’s acknowledgement that federal employees are more competitive than contractors, why won’t OMB permit federal employees to compete for new work and outsourced work, especially given that most contractors acquire and retain their work without ever having to compete against federal employees and infrequently against one another?

“Taxpayers, federal employees, and all Americans who depend on the federal government for important services can be assured,” concluded Gage, “that AFGE will continue to lead the fight for important structural reforms to the privatization process as well as to shut it down when it is being used irresponsibly.”

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