July 25, 2003
Diane Witiak
(202) 639-6419

OMB'S Privatization Quota is Still Very Much Alive

(Washington, D.C.)-"OMB's privatization quota has been pronounced dead before," said AFGE National President Bobby L. Harnage, Sr. "But I won't believe it's dead until I'm at the funeral and I can look into the casket to be sure."

Office of Management and Budget (OMB) officials announced yesterday with much fanfare that the Bush Administration is dropping its discredited government-wide numerical privatization quotas. Rather than rely on numerical privatization quotas, OMB contends that such quotas should be agency-specific-based on the needs and conditions unique to each agency.

This is not new or newsworthy.

In an article on in November 2002, it was noted that OMB would likely not set government-wide quotas for competitive sourcing in fiscal 2004. Similarly, at a March 2002 hearing held by a Senate Governmental Affairs Subcommittee, OMB's Angela Styles told concerned lawmakers, "It is not appropriate for some agencies to be considering for public-private competition 15 percent of their commercial workforce. So we are sitting down with each department and agency, working through a plan that is appropriate for each of those agencies."

The report provided by Styles at yesterday's House hearing, combined with her remarks to the media, indicate that the 50 percent goal is, unfortunately, alive and well. The report identifies 416,000 federal employee jobs as targets for privatization; and Styles insists, "We still expect agencies to compete everything open to competition."

Congress' bipartisan concern about the privatization quotas has always been less about numbers and more about OMB political appointees in Washington, D.C., dictating to agency management precisely how many and which jobs to review for privatization. Under the criteria announced yesterday by Styles, "An agency can only "receive a 'yellow' status if they have an OMB approved 'yellow' competition plan…."

"OMB officials can still impose their will on agencies behind closed doors, using the budget process as leverage, and keep the privatization quotas in place," Harnage explained. "And its new OMB Circular A-76 significantly narrows the definition of 'inherently governmental,' providing them with even more leverage to overrule the decisions of agency managers about which jobs are too important to be given to contractors."

"The president demands 'management flexibility' for himself, as in his rhetoric regarding the Department of Homeland Security (DHS). But when agency managers ask for the flexibility to decide for themselves which jobs require the special skills of government employees, they've instead been given privatization quotas to fulfill," Harnage said. "Apparently, when the president said management flexibility was necessary in government agencies, he failed to finish the sentence-the part that says 'for my appointees and me.'"

The administration's latest privatization criteria also fail to show any evidence of the research and analysis required by a law passed almost six months ago, as Senator Joseph Lieberman (D-Conn.) points out in a July 24 letter to OMB Director Joshua Bolten, that the privatization quotas, whether government-wide or agency-specific, are, in fact, illegal.

"Absent any inventory of work performed by contractors that tracks the cost and quality of work already performed by contractors, agencies are incapable of undertaking any serious research and analysis about whether additional work should be privatized," Harnage added.

"OMB's established goals are all about conducting arbitrary numbers of competitions within arbitrary periods of time," Harnage noted. "And despite much talk about the elimination of obstacles that prevent federal employees from competing for work they are not currently performing, no goals have been established for ensuring that federal employees finally receive opportunities to compete for new work and contractor work."

"Yesterday's announcement is only the latest effort by Bush Administration officials to put a new, fresh face on an old, discredited policy," Harnage concluded. "Public relations ploys are no substitute for real and genuine reform. AFGE looks forward to continue working with Republican and Democratic lawmakers to bring about that much-needed reform."

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