Union asks IRS to bring contracted work back in-house

A federal employees union this week called on the Internal Revenue Service to re-compete contractor work that has shown poor results, but the agency says it has no plans to do so.

The National Treasury Employees Union sent a letter to IRS Commissioner Mark Everson urging him to reconsider work currently being performed by contractors, in light of language in the fiscal 2006 Transportation-Treasury bill (H.R. 3058).

The bill states that nothing in the Office of Management and Budget Circular A-76 provisions that govern job competitions -- typically aimed at considering whether to outsource federal work that is classified as commercial in nature -- should prevent agency heads from "evaluat[ing] the benefits of converting work from contract performance to performance by federal employees in appropriate instances."

NTEU said the language, which applies to all agencies except the Transportation Security Administration, provides opportunity for agencies to reassess the decision to contract work out in cases where contractors' performance has raised serious quality concerns.

More than half of NTEU's members are employed by the IRS, and union president Colleen Kelley recommended three programs for contracting in competitions: a commercial bank "lockbox" program that has raised questions on the security of taxpayer receipts and information; an information technology modernization program that has been cited for high vendor costs; and mailroom functions that the union claims have drawn complaints from employees for poor service.

IRS spokesman John Lipold said the agency does not generally respond to public statements like the one released by NTEU, adding the agency has achieved significant savings through work competitions, including those that resulted in in-house teams retaining the competed work.

"I am not aware of any IRS efforts planned or under way to move work under contract to in-house performance," Lipold said.

Corresponding language in the 2006 Defense Authorization bill (H.R. 1815) establishes criteria for giving special consideration to contracts that "have been determined by a contracting officer to be poorly performed due to excessive costs or inferior quality."

The Senate-approved version of the 2005 Veterans Health Care Act (S. 1182) goes further, stating that of the $15 million the department would be allowed to spend running public-private job competitions, half would have to go toward studies of work already being performed by contractors. That bill has not yet been brought before the House for a vote.

Federal employee unions have vigorously fought the Bush administration's competitive sourcing program, which encourages agencies to let contractors bid on thousands of federal jobs, and the new language in the Transportation-Treasury bill and Defense authorization and veterans bills could indicate a new front in the ongoing battle.

"We will be identifying projects, as we did at the IRS, where the presence of contractors is resulting in higher costs, poor quality service, or privacy concerns for taxpayers," NTEU's Kelley said.

John Gage, president of the American Federation of Government Employees, which backed the language in the bills, said in December, "Contractors acquire and retain almost all of their work without ever competing against federal employees and all too infrequently against other contractors. Taxpayers would benefit significantly if federal employees received opportunities to compete against contractors who have become accustomed to big sole-source contracts."

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