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Defense Authorization Bill Letter to Congress

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June 30, 2008

April 7, 2008

The Honorable Ike Skelton
Chairman, House Armed Services Committee
2120 Rayburn House Office Building
Washington, DC 20515

The Honorable Carl Levin
Chairman, Senate Armed Services Committee
228 Russell Senate Office Building
Washington, DC 20510

Dear Chairmen:

The undersigned unions are profoundly grateful for your leadership in the fight against the Bush Administration’s wholesale privatization effort. The provisions you put in the FY08 Defense Authorization Bill constituted dramatic and unprecedented reforms of a privatization process that, historically, has been as unfair to federal employees as it has been unaccountable to taxpayers. We are eager to follow up on the brilliant FY08 successes with related reforms that would ensure compliance with two of last year’s reforms (including the most important of all the reforms), close a loophole in a key reform from an earlier year, extend reforms from last year that were Department of Defense (DoD)-specific to all agencies, and build on last year’s reforms in order to take into account a recent change in tactics by the Office of Management and Budget (OMB).

1. Ensure compliance with last year’s reforms, including the most important of all:

Section 325 represented a much-needed effort to free DoD from meddling and interference by OMB political appointees with the department’s A-76 decision-making. Under Section 325, OMB was forbidden from directing DoD to undertake A-76 studies and DoD was forbidden from following that direction. No guidance has been issued to implement Section 325, A-76 quotas established by OMB have not been repudiated, and requests from senior managers for relief from “competitive sourcing” schedules have neither been solicited nor acted upon. In fact, there have been no changes in DoD’s “competitive sourcing” schedule after enactment of Section 325.

OMB Director Jim Nussle first told the House Financial Services Appropriations Subcommittee, on March 6, 2008, that he thought OMB was already in compliance with Section 739(d) of the FY08 Financial Services Appropriations Bill, an almost identical, government-wide prohibition against OMB A-76-related direction. Then Director Nussle said he thought the guidance OMB issued on February 20, 2008, covered Section 739(d). However, a cursory review of that guidance, which dealt with several “competitive sourcing”-related provisions in the FY08 Financial Services Appropriations Bill, reveals no mention of Section 739(d). Finally, Director Nussle promised to submit something in writing to the subcommittee.

Section 325 is the most important of the reforms enacted in the FY08 Defense Authorization Bill. House Financial Services Appropriations Subcommittee Chairman Serrano said it best at the hearing with Director Nussle: If the Administration has not complied, “is it reasonable to expect that the Congress will allow the administration to pursue its A-76 agenda if OMB can’t follow the law? Should A-76 activity, as of the date of enactment of 739(d), be suspended administratively or legislatively until the provision is satisfactorily implemented?” With respect to both Section 325, in the FY08 Defense Authorization Bill, and Section 739(d), in the FY08 Financial Services Appropriations Bill, we believe the answer to the first question is a vigorous no and the answer to the second question is an emphatic yes.

Sadly, no guidance has been issued to implement Section 323, which was intended to eliminate automatic recompetitions. Chairman Levin said it best last year about the A-76 automatic recompetition requirement: “This rule is fundamentally unfair. It also undermines the morale of Federal civilian employees by contributing to the view of civil servants as second-class citizens. At a time when the Department of Defense should be recruiting thousands of new civilian employees to address a human capital crisis, the rule is clearly contrary to the Department’s own interests.” We urge you to fix this provision by establishing a strong presumption that an in-house workforce should not be recompeted, absent a timely declaration by the installation’s senior official that the federal employees involved did not work up to the standards established in the performance decision.

2. Close a loophole in a key reform from an earlier year:

DoD continues to engage in direct conversions, giving work performed by federal employees to contractors, without public-private competition, which is contrary to the interests of taxpayers as well as federal employees. 10 U.S.C. 2461 requires public-private competitions for functions performed by ten or more federal employees. DoD is directly converting smaller functions and breaking up larger functions in order to get under this threshold. The threshold should be reduced to zero. DoD also lets federal employees retire and then replaces them with contractors, again without competition. Whether genuinely commercial functions should be contracted out should be decided by a fair competition process, not by whether the federal employees currently performing the work are of retirement age.

3. Extend certain reforms that were DoD-specific last year to all agencies:

The FY08 Defense Authorization Bill included several meritorious DoD-specific provisions that should be extended to all agencies, including a fixed prohibition against automatic recompetition (Section 323), a requirement to allow federal employees to perform new work (Section 324), and a requirement to develop a contractor inventory (Section 807).

4. Build on last year’s reforms in order to take into account OMB’s recent change in tactics:

OMB is requiring agencies that can’t or won’t conduct A-76 privatization reviews to instead hit their federal employee quotas with High Performing Organization (HPO) studies. HPO’s are increasingly becoming known to rank-and-file federal employees as the new A-76. Because HPO’s, as internal reorganization efforts, can involve all employees—both commercial and inherently governmental—they are usually larger and more extensive than A-76 studies and thus can have far more wide-ranging consequences for the delivery of services. One agency’s HPO’s take 18 months to develop and five years to implement—these are not mere reorganizations.

Nevertheless, there is no paper trail or Congressional reporting requirement for committees or affected federal employees to follow. An agency official acknowledged that the HPO guidance received from OMB could fit on one regular-sized piece of paper. The Homeland Security Appropriations Subcommittees has specifically cancelled one HPO because of excessive downsizing. The Energy and Water Appropriations Subcommittees included a provision in last year’s funding measure that prevents implementation of all HPO’s by the Corps of Engineers after one was used to strip employees of their collective bargaining rights.

We urge the inclusion of a provision that would allow DoD to develop HPO’s but prevent them from being implemented without specific and explicit approval in subsequent legislation so that these ambitious but often mysterious schemes can be examined before they are put in place. If an HPO has merit and can withstand scrutiny, then surely it will be swiftly approved.

Thank you again for your leadership in the fight against wholesale privatization and your consideration of our proposals for the FY09 Defense Authorization Bill.

Sincerely,

AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO

AMERICAN FEDERATION OF STATE, COUNTY AND MUNICIPAL EMPLOYEES, AFL-CIO

AMERICAN FEDERATION OF TEACHERS, AFL-CIO

ASSOCIATION OF CIVILIAN TECHNICIANS

DEPARTMENT FOR PROFESSIONAL EMPLOYEES, AFL-CIO

FEDERAL EDUCATION ASSOCIATION

NATIONAL EDUCATION ASSOCIATION

INTERNATIONAL ASSOCIATION OF FIRE FIGHTERS, AFL-CIO

INTERNATIONAL ASSOCIATION OF MACHINISTS, AFL-CIO

INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, AFL-CIO

INTERNATIONAL FEDERATION OF PROFESSIONAL AND TECHNICAL ENGINEERS, AFL-CIO