The Senate late last month passed legislation that would allow a limited reintroduction of public-private job competitions at the Veterans Affairs Department, which effectively stopped running such contests in early 2003.
The language is more restrictive than that in earlier versions of the bill, and federal employee union officials hailed it as a victory.
Proponents of the Bush administration's competitive sourcing program had successfully inserted a provision into a preliminary version of the 2005 Veterans Health Care Act (S. 1182) that would have allowed full resumption of job competitions at VA.
It would have accomplished this by repealing a 1981 law, which the VA general counsel in April 2003 interpreted to mean that the Veterans Health Administration could only fund competitive sourcing studies with money appropriated by Congress explicitly for that purpose. The counsel's finding effectively halted the VA's competitive sourcing program.
Democrats on the Senate Veterans Affairs Committee, as well as federal employee unions and veterans groups, fought the full repeal of the 1981 law, arguing that a continuation of job competitions would divert funds from veterans' health care and exacerbate budget shortfalls at VA facilities.
But Sen. Larry Craig, R-Idaho, chairman of the VA committee and a proponent of continuing competitive sourcing at the department, argued that the savings achieved through studies could reach $1.3 billion over five years.
The Senate ultimately voted to allow only limited competitions, setting a $15 million cap on VA spending for studies. Senators also approved restrictions on studies consistent with those imposed on the Defense Department.
Like the Pentagon, VA would be barred from granting a cost advantage to contractors that contribute less toward employee health benefits than the government. The provisions would have a September 2007 sunset date.
The American Federation of Government Employees praised the Senate bill, claiming in a statement that full repeal of the competitive sourcing ban would have led to at least $300 million in spending on studies. "AFGE has led the fight to ensure that federal employees in all agencies get chances to fairly compete with contractors for work performed in-house as well as contracted out work," said AFGE President John Gage in a statement.
Meanwhile, contractors stand to benefit from even this limited re-introduction of competitive sourcing after a more than two years hiatus.
"I would have preferred that the language would have stayed in. However, this is a small first step forward," said Chris Jahn, president of the Contract Services Association. "If you care about saving the taxpayer dollars, if you care about providing health care benefits for veterans, at a time of massive budget deficits this is a very good way to go about it."
The Bush administration has expressed dissatisfaction with VA's failure to use competitive sourcing, repeatedly giving the agency the lowest "red" rating for both accomplishments and progress in that area on quarterly management agenda report cards.
Following the Senate's passage, the Veterans Health Care Act was referred to the House Veterans' Affairs Committee.