March 12, 2007
Tiana Allen
(202) 737-8700 x92019

Privatization Costs Exceed Value of Care

The American Federation of Government Employees (AFGE), whose veteran membership is over 40 percent, today called for a full evaluation of the privatization process that has created a debacle at Department of Defense (DoD) medical facilities across the country.

The recent inquiries into care at Walter Reed Army Medical Center highlight the fractures in service privatization has created at DoD facilities while inducing an exodus of highly trained government employees and the egregious mistreatment of those needing care.

“Troops returning from war, who have risked both life and limb, deserve the best treatment possible but instead are being victimized by the waste, fraud and abuse of power of the current administration,” said John Gage, president AFGE.

AFGE’s review of Walter Reed’s privatization records reveals a botched system whose costs have far exceeded the savings it was to produce. Stemming from a June 2000 solicitation which was legally bound not to exceed 48 months, Walter Reed’s contractor, IAP, was not named until January 2006, 68 months after the initial solicitation. Following 16 amendments to the original solicitation and 1,500 changes to the final version, the Army requested the Pentagon to end the process but was later refused.

The Army acknowledged that the cost of carrying out the privatization effort and eliminating the workforce was at least $12.7 million, well in excess of the $7.4 million in savings promised by the contractor even if there aren’t any cost overruns.

"The Army carried out this illegal and wasteful privatization process because, like all other agencies, it is under extreme pressure by the Office of Management and Budget (OMB) to review for privatization large numbers of federal employees every year. Left to its own devices, the Army would likely have suspended this botched privatization effort. However, the political pressure from OMB left Army officials with no choice but to go forward, even if that resulted in unsatisfactory care to the nation's veterans,” said Gage.

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