Defense seeks repeal of limits on outsourcing depot work

The Defense Department plans to ask Congress for broad new authority to manage its military depots, including a repeal of limits on how much depot work can be outsourced to the private sector.

The far-reaching proposal, outlined in draft legislation obtained by Government Executive, would eliminate seven different statutes that restrict how Defense manages its depots. The measure would repeal the so-called 50-50 rule, which prohibits depots from outsourcing more than half of their work, and make depot workers subject to the government's outsourcing process, contained in Office of Management and Budget Circular A-76. Depot employees are currently exempt from A-76.

Defense needs new flexibility to better manage its industrial base, according to the legislation. "These provisions … restrict the ability to effectively manage the public depot workforce, and impede the ability to reassign workload currently performed at a public depot," the document states.

Officially, Defense would not comment on the measure, which it said was not final. "The proposal has not even left the building for OMB yet, so it would be inappropriate to comment on it," said spokesman Navy Lt. Commander Donald Sewell.

The proposal would exempt Defense from requirements that have proved increasingly difficult to meet. The Air Force in particular has struggled to meet the 50-50 restriction, and the General Accounting Office has questioned whether any of the military services are actually complying with the outsourcing rule.

But it would also receive certain opposition in Congress, where members with depots in their districts have long fought to protect the depot workforce from outsourcing. "You can certainly count on Mr. Ortiz to oppose it," said a spokeswoman for Rep. Solomon Ortiz, D-Texas, ranking member on the Readiness Subcommittee of the House Armed Services Committee. Bobby Harnage, president of the American Federation of Government Employees, said his union would fight the proposal. "AFGE is in total opposition to this provision," he said.

Industry sources worried that the broad nature of Defense's proposal-which would wipe the slate clean of virtually all restrictions on how the department runs its depots-could trigger a congressional backlash. "I really am concerned that the approach DoD has taken will cause such a reaction that Congress may try to legislate protections that would further protect the Defense Department workload," said Pete Steffes, vice president for government affairs at the National Defense Industry Association, who added that he believes Defense needs more flexibility than current rules provide.

It is unclear whether the House Depot Caucus, a group of members who have strenuously fought outsourcing measures in the past, will wield much influence in the new Congress. "We're operating in an environment where [House Speaker] Dennis Hastert [R-Ill.] and [House Majority Leader] Tom Delay [R-Texas], are pushing very hard for discipline," said a congressional staffer.

Besides repealing the 50-50 rule and making depot workers subject to Circular A-76, the provision would also scrap the following provisions:

• A rule allowing depots to compete for maintenance work at other federal agencies.
  
• A provision that requires Defense to let depot workers compete for maintenance projects worth more than $3 million before they are outsourced.
  
• A provision that prohibits Defense from setting personnel ceilings for depots.
  

The measure is intended to be part of the Pentagon's fiscal 2004 budget request, according to Defense sources.