FEDERAL TRIANGLE: Public-Private Competition

Competition is a premier economic driver of our national economy. The Bush Administration has made it clear that competition is required in federal contracting, and it has reaffirmed long-standing policy, articulated by Office of Management and Budget (OMB) Circular A-76, that government will not compete with citizens for supply of goods and services. However, the American Federation of Government Employees (AFGE) union has other ideas and has again launched attack on taxpayers, this time via the Abercrombie (D-HI) amendment to the Defense Authorization bill (H.R. 2586), which has a practical effect of erecting barriers to private sector conduct of business with government. Due to an aging federal workforce and lack of membership growth, AFGE has diligently worked to require federal agencies to perform cost comparisons between private versus public execution of work in accordance with A-76 as modified to prefer insourcing. While it appears to save money and promote competition, it is a sham; most assessments have the worth of playing cards with a stacked deck. This is what is happening and why it is important.

It is past time to make A-76 policy into law, but to avoid political manipulations such as AGFE intends. The Abercrombie amendment lost 221-197 on 25 September, but will reappear in the next Congress. Today the Department of Defense (DOD), for example, is required to evaluate 2% of all eligible contracts to determine whether more than of 10% of costs would be saved by outsourcing. If more than 10% saving are estimated, the goods or services must be contracted to the private sector. Would you believe that about 50% of all candidate contracts stay insourced with government? Why? The accounting rules applied are not consistent with what the private sector must use, and the analyses are performed by (you guessed it) AFGE members. The Bush Administration wants OMB to increase evaluations from 2% to 5% of the total and study all new contract functions for outsourcing. There are 22,000 to 42,500 jobs at DOD for privatization consideration this year, and there are between 850,000 and 1,000,000+ DOD jobs total, solely commercial in nature. Counting the fact that government employees (local, state and federal) do not pay income tax, only recycle taxes derived from and already infused by the private, profit-making sector, there are billions of added, potential tax revenues from outsourcing, performing jobs not inherently governmental in nature. There is nothing "governmental" about food and health services, vehicle maintenance and industrial shops operation. Government regularly competes with the business readers of this journal, eliminates revenue stream, does not pay taxes and forces all in the private sector to accommodate and pay the difference.