Battle breaks out over FAIR Act regulations

Leaders of some of the biggest federal employee unions have joined forces to warn lawmakers against including regulations they say would favor contractors in implementing the Federal Activities Inventory Reform (FAIR) Act.

In a letter sent last week to Jacob Lew, director of the Office of Management and Budget, four union leaders argued that the FAIR act simply codifies an existing detail in OMB Circular A-76 that requires agencies to submit annual inventories of jobs that could be outsourced to the private sector.

"It would be wholly inappropriate for the FAIR Act regulations to go any further and any attempt to do so will be strongly opposed by the public sector community," said the letter, which was signed by American Federation of Government Employees President Bobby L. Harnage, American Federation of State, County, and Municipal Employees President Gerald McEntee, Service Employees International Union President Andrew Stern and National Treasury Employees Union President Robert Tobias.

In the March 1 Federal Register, OMB proposed regulations for implementing the FAIR act. During the subsequent comment period, contractors have urged OMB to make agencies include more overhead costs in the estimates of how much it would cost for them to keep work in-house. That would drive up agencies' in-house cost estimates in comparison to the cost of outsourcing work.

Contractors also got a helping hand from House Republicans. In a March 8 letter to OMB, about 40 GOP lawmakers asked OMB to make it clear that agencies can directly outsource work without conducting public-private competitions. Unions oppose such instructions, arguing that federal employees have the right to defend their jobs against outsourcing.

The U.S. Chamber of Commerce, which is lobbying OMB on behalf of private contractors, hopes that regulations in the FAIR Act will specify which costs must be included in A-76 comparisons, such as the costs of quality assurance, liability insurance, employee retirement, disability benefits and other overhead costs.

"Many of our members believe that when A-76 cost comparisons are utilized, they do not accurately reflect the government's cost of doing business, and give the federal agencies an unfair advantage," the Chamber's comments on draft implementation of the FAIR Act said.

The union leaders' "comments are unfortunate," said Andrew Fortin, manager of privatization policy at the Chamber of Commerce. "OMB put out some good draft guidance and left the door open for industry and labor to come forward with constructive recommendations. That is just what the Chamber has done."

The scales aren't tipped in favor of contractors, he added. The FAIR Act mandates that agencies submit comprehensive inventories of activities that could be outsourced, that those activities be competed within a reasonable amount of time and that overhead costs be included in the private/federal comparison. Considering that contractors substantially compromised to approve these mandates, "it's ironic that this bill is still cause for alarm for" the unions, he said.

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