May 29, 2003
Diane Witiak
John Irvine
(202) 639-6419

Statement of AFGE National President Bobby L. Harnage on New Circular A-76

(WASHINGTON, D.C.)—“Today is a sad day for American taxpayers. The new Circular A-76 released by the Office of Management and Budget (OMB) will lead to greater costs to the federal government. These changes are merely an act to give lucrative government work to contractors without any accountability to the taxpayer.

“It’s also ironic that the new circular is coming out at the same time a NASA commission is examining whether too much of its work may have been contracted out, in turn severely hindering its mission.

“OMB will no doubt make much of the fact that it has eliminated the use of direct conversions because of how that authority had been abused, as acknowledged by its own senior procurement official. However, direct conversions have been replaced by a completely second-rate competition process that wouldn’t even pass muster with the openly pro-contractor Commercial Activities Panel. Moreover, with the introduction of the unprecedented and highly controversial ‘best value’ public/private competition process, OMB is allowing contractors to submit less responsive and more expensive bids than federal employees and still take work from federal employees.

“Despite much talk about using public/private competition to generate savings for taxpayers, OMB continues to give shrift to tracking the cost of the billions and billions of dollars worth of work that agencies are being pressured to give to contractors. In fact, OMB provides no new funding or resources to bolster agencies’ capacities to administer service contracts. Moreover, the new circular contains no specific assurances that taxpayers will finally be able to benefit from federal employee competition for new work and work already performed by contractors. Despite the fact that contractors, even according to OMB, acquire and retain almost all of their work without ever having to compete against federal employees, only work performed by federal employees is competed under the Administration’s privatization quotas.

“Among the many concerns left unaddressed in the new A-76: only contractors are allowed legal standing to contest agencies’ decisions before the General Accounting Office and the Court of Federal Claims; the 12 percent overhead charge applied reflexively to all in-house bids was left in place despite the Department of Defense Inspector General’s report that it would render “the results of future competition questionable”; how A-76 continues to give contractors incentives to undercut federal employees on pay and benefits; and the failure to encourage agencies to use worthy alternatives to privatization to generate efficiencies.

“We have tried to work patiently with the Bush Administration to reform A-76 so that it finally takes into account the interests of taxpayers, customers, and federal employees, instead of just contractors. And we appreciate the access provided by Office of Federal Procurement Policy Administrator Angela Styles. But we now have no choice but to work with the friends of taxpayers in the House of Representatives and the Senate to relaunch AFGE’s Truthfulness, Responsibility, and Accountability in Contracting (TRAC) Act—the seminal privatization reform legislation which garnered the support of almost 225 lawmakers during the last Congress—and offer TRAC-like amendments to relevant legislation. The principles which represent TRAC—ensuring that taxpayer dollars are well-spent and that public/private competitions are fair and equitable, constitute a vision that is far superior to the narrow, special interest politics that permeate the new A-76.”

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