Ban on outsourcing targets may not apply to Defense

Legislation that would prevent agencies from setting numerical targets for outsourcing federal jobs may not apply to the Defense Department, a Defense official said Monday.

Both the House and Senate versions of the Treasury-Postal Appropriations bill contain language that would block the Office of Management and Budget from using numerical targets to make federal agencies hold public-private job competitions. OMB has told agencies to compete or outsource 15 percent of their commercial jobs by October 2003, although it has acknowledged that some agencies may fall short of this target.

But the Defense Department could still set job competition targets because the department receives no funding from the Treasury-Postal bill, meaning it is exempt from the legislative ban, according to Joe Sikes, director of competitive sourcing and privatization at the Pentagon.

"The restriction is not to spend any money in Treasury appropriations [to meet job competition targets]," he said. "We don't get any funds from the Treasury bill, so I don't see how it affects what we are doing."

The Treasury-Postal bill also includes funds for general governmental appropriations, such as the annual federal pay raise. For this reason, banning targets in the bill would prohibit any agency-including Defense-from setting numerical outsourcing targets, according to John Threlkeld, a lobbyist with the American Federation of Government Employees, which supports the ban.

"There are governmentwide provisions in Treasury-Postal," he said. "Besides, OMB wouldn't be issuing such apocalyptic rhetoric if the ban didn't apply all over."

OMB has said the provision would effectively shut down the administration's competitive sourcing initiative. In July, OMB Director Mitch Daniels and Federal Procurement Policy Director Angela Styles said officials would recommend that President Bush veto the Treasury-Postal bill if it limits competitive sourcing.

Sikes said the legislative ban is poorly conceived because it prohibits agencies from setting competitive sourcing targets of any kind, which keeps them from making basic management decisions. "If we don't like [OMB's] specific target that's one thing, but to say you can't have any goals or targets is ridiculous."

Comptroller General David Walker echoed that sentiment in an Aug. 9 letter to Sen. George Voinovich, R-Ohio, that was released Monday.

"The [legislative] provision could be construed to prohibit use of goals or targets that may be based on considered research and sound analysis of past activities and current and emerging market trends," said Walker. But Walker also criticized OMB's competitive sourcing initiative for using "arbitrary" targets that were not based on research.

Threlkeld disputed the idea that the provision outlaws all job competition targets. Agencies could still set targets for competitive sourcing by function, he said. For example, if performance was lagging in a certain functional area, an agency could decide to let private firms bid on that function. The legislative ban only applies to numerical targets, he said.

The full text of the provision is as follows:

"None of the funds made available in this act may be used by an executive agency to establish, apply, or enforce any numerical goal, target, or quota for subjecting the employees of the agency to public-private competitions or converting such employees to private contractor performance under Office of Management and Budget Circular A-76 or any other administrative regulation, directive, or policy."