Defense has much at stake in job competition push
Frank Sowa, the Navy's director of "strategic sourcing," furrows his brow and pauses a while when asked for examples of civilian jobs the service has successfully opened to private-sector competition. He starts to reply, then stops himself. Sowa says he doesn't want to answer because no matter what he says it will only lead to more questions and countercharges- from unions, defense contractors, and Congress. "Both sides are already crying foul. Both sides always can find fault," says Sowa, shrugging his shoulders and never answering.
Indeed, not even at the Defense Department-where tens of thousands of federal jobs have been outsourced in recent years, saving billions of dollars-is the Bush administration's plan for opening hundreds of thousands additional government jobs to commercial competition expected to go over easily.
The Defense Department has more at stake in competitive sourcing than does any other part of the government. Civilians who work for the Army, Navy, Marine Corps, Air Force, or an independent Defense agency now perform more than half of the 425,000 jobs the Bush administration views as commercial and plans to open for private-sector competition by the end of 2009.
Holding those competitions will cost the Pentagon hundreds of millions of dollars, but the savings, which are expected to reach the billions of dollars, will be crucial in paying for the military's ongoing transformation efforts.
Philip Grone, principal assistant deputy secretary of Defense for installations and environment, said the competitive-sourcing program has been wrongly portrayed as an effort to save money by cutting federal jobs. Grone described the competitions as a "market-based approach" to government and said the Pentagon has no preference for whether the work is done by federal employees or private contractors. "At the end of the day, this is about getting the most efficient service at a reasonable cost to taxpayers," he said.
Rep. Solomon Ortiz, D-Texas, whose district includes thousands of civilian federal workers at four military bases in south Texas, doesn't believe the administration is interested in the best service. "The policy of this administration is to contract out as many jobs as they can. They have really gone wild on contracting out," said Ortiz, who warns that turning over so much work to private contractors is risky not only because they lack the experience of federal employees, but because they could go on strike at anytime. (Federal employees are prohibited by law from striking.)
Ortiz, the third-ranking Democrat on the House Armed Services Committee, plans to push for limits on outsourcing when Senate and House lawmakers confer on the 2004 Defense authorization bill later this year. If that effort fails, Ortiz said, he could propose an amendment to the authorization bill that would limit outsourcing until more troops return from Iraq.
Meanwhile, the military services are developing specifics for how they will open a combined 226,000 jobs to commercial competition. Unlike other federal departments, which held no job competitions during the Clinton administration, Defense will draw on extensive experience in weighing whether to outsource federal work. According to Grone, Defense has saved $5.5 billion since 2000 by opening about 72,000 jobs to commercial competition (most of those competitions began during the Clinton administration).
Jacques Gansler, who served as the Pentagon's acquisition chief during the latter half of the Clinton administration, said Defense officials were eager to open more jobs to competition in the late 1990s but ran into opposition from the White House, particularly from Vice President Gore, who did not want to lose the support of federal unions. "One of the differences is that Bush is now pushing this from the top down," according to Gansler, now a professor at the University of Maryland and the author of a new report on competitive sourcing.
Citing several previous assessments, Gansler's report found that, on average, competitive sourcing cut the cost of doing Defense work by 33 percent and, in limited cases where performance could be tracked, it improved performance by 109 percent.
Detailed plans for the number of competitions to be held annually, the jobs to be included, and the anticipated costs and savings will be unveiled in the Bush administration's 2005 Defense budget. Grone said the Office of the Secretary of Defense will not run the competitions but will play a far greater role than it has in the past in ensuring that new rules are properly implemented and competitions are managed to meet the 2009 deadline. "The first few competitions are key. They need to be well run, and there must be good training," he said.
Vince Gasaway, the Air Force's deputy chief of competitive sourcing and privatization, says the Air Force expects to open about 51,000 jobs to competition by the end of 2009. Those jobs will fall into several categories, including base-operations support, civil engineering, computer networking, and some aircraft maintenance work. Gasaway expects to achieve billions of dollars in savings, which will be devoted to adding military personnel in career areas with shortages, including security, intelligence, and forward air-combat controllers.
Since 2000, the Air Force has opened 30,000 jobs to competition. The service's largest competition, involving 1,459 mainly military maintenance and support positions for the 55th Air Wing at Offutt Air Force Base, Neb., was won by the base's military and civilian workers, who beat out a contractor team by cutting manpower by 58 percent and proposing an annual savings of $46 million.
Other Air Force competitions went awry. At Lackland Air Force Base in Texas, private contractors initially won out over federal workers for a five-year $352 million contract to run base-support and maintenance operations. Employees protested that decision, and the Air Force overturned it. But the contractors then appealed that reversal to the General Accounting Office, which said that the service should stick with its original decision. Ultimately, after two Pentagon investigations, several additional appeals, and pressure from the Texas congressional delegation, the Air Force canceled the competition, and the work remained in house. At Maxwell Air Force Base in Alabama, a five-year $198 million award to employees to perform base operations was overturned and the contract was given to DynCorp after the GAO found that cost comparisons made during the competition had been slanted toward base employees.
Gasaway said that revised rules "clear up a lot of ambiguity," and that future competitions will run more smoothly. Under the new rules, for example, the same team will evaluate both in-house and contractor proposals rather than having separate teams do the evaluations. Nonetheless, he conceded, no matter what, competitions will "never be easy" because employees' livelihoods are on the line.
Like Air Force officials, Navy competitive-sourcing managers repeatedly emphasize that they are not looking to trim federal payrolls. "We don't call it outsourcing because that would suggest folks are going to lose their jobs," Sowa said, adding that about 48,000 Navy civilian and military jobs would be opened to bid by 2009. Any savings from the competition will go toward modernizing the naval fleet, he added.
Since 1997, the Navy has been the most aggressive supporter of outsourcing among the military services, opening more than 40,000 jobs to competition and generating about $3 billion in savings. Most of those positions were in building maintenance, supply operations, or base support. Sowa cautioned that it may be more difficult to find commercial jobs that can be opened for competition as 2009 approaches. "The low-hanging fruit is gone," Sowa admitted.
Nor will the Navy be able to avoid competition through an alternative to outsourcing, known as strategic sourcing, that it pioneered in the late 1990s by eliminating obsolete business practices, consolidating jobs, restructuring organizations, and adopting commercial business practices.
The Clinton administration allowed the Navy, and eventually the other services, to count money saved from strategic sourcing toward their savings targets. That allowed the services to eventually cancel outsourcing competitions for tens of thousands of jobs. Not surprisingly, federal unions backed the arrangement, while contractors saw it is an attempt by Defense to avoid outsourcing jobs. The Bush administration has told the services to examine options such as strategic sourcing for saving money, but not in lieu of holding their required 226,000 job competitions.
Last fall, the Army announced a bold plan for opening nearly two-thirds (154,910) of its civilian jobs to competition. "The Army must focus its energies and talents on our core competencies-functions we perform better than anyone else-and seek to obtain other needed products or services from the private sector where it makes sense," wrote former Army Secretary Thomas White in an October memorandum that outlined what's became known as "The Third Wave" outsourcing effort.
Since then, however, the Army appears to have scaled back its plan. Army installations have flooded the Pentagon with a host of requests for exemptions that will leave the service well short of its initial outsourcing goal of 154,910 jobs. For example, the Army's health care jobs are considered commercial in nature, but the service has decided it would be too risky to outsource wartime medical support for soldiers. Army officials declined repeated requests to discuss their outsourcing plans.
Meanwhile, the Defense Department may open up additional jobs to private-sector bidding. Defense Secretary Donald Rumsfeld told the Senate Governmental Affairs Committee in June that he was considered shifting 320,000 mainly support jobs out of the military to free up slots for jobs the military is short on, such as civil affairs and intelligence. "To have 320,000 military personnel doing jobs that are not military tasks is not a good thing," Rumsfeld said. David Chu, undersecretary of personnel and readiness, says many of those military jobs will be transferred to civilian slots at Defense, but some will also likely go to the private sector.
The Pentagon has also repeatedly pushed Congress to allow more outsourcing of work at military depots. The Defense Department's in-house repair centers employ tens of thousands of civilian workers across the country and annually spend billions of dollars overhauling equipment ranging from radios to tanks. Federal law allows no more than half of all depot work to be performed by private contractors and exempts the depot workforces from private competitions. Defense has backed legislation that would repeal the so-called 50-50 rule and allow more private-sector competition at depots. So far though, lawmakers have shown little interest in putting thousands of additional jobs out to bid.