Defense could get A-76 credit without competition under bill

The Defense Department would earn competitive sourcing credit for directly outsourcing federal jobs to select contractors-a practice discouraged by the Bush administration-under a provision in the Senate fiscal 2004 Defense Appropriations bill.

The measure, backed by Sens. Ted Stevens, R-Alaska, and Daniel Inouye, D-Hawaii, would mandate that the Pentagon receive competitive sourcing credit for "direct conversions" to select contractors, including firms owned by Native American tribes, Native Hawaiian organizations, and nonprofits that administer the 1971 Javits-Wagner-O'Day Act. Current law allows Defense to directly convert work to these firms, but does not require the Bush administration to count such outsourcing toward its competitive sourcing goals.

"This allows those conversions to count," said Mike Yuen, a spokesman for Inouye. "Sen. Stevens and Sen. Inouye have always encouraged the Department of Defense to contract directly with Native Americans to help out the tribes." The provision is Section 8014 in the Defense bill, which was debated on the Senate floor Tuesday.

The measure is seemingly at odds with Bush administration policy, reflected in the revised Office of Management and Budget Circular A-76, which bans direct conversions, and generally requires federal agencies to hold some type of public-private competition to earn competitive sourcing credit. OMB eliminated direct conversions in the new A-76, but some agencies-including Defense and the Bureau of Indian Affairs in the Interior Department-retain statutory authority to directly outsource federal jobs. The provision in the Senate bill marks the first attempt by Congress to alter the criteria for success in the administration's management agenda, which has been set by OMB up to now.

When asked for its position on Section 8014 Tuesday, OMB had no comment. The provision was not mentioned in the administration's statement of administration policy on the Defense bill, issued Monday.

An official with the American Federation of Government Employees, the largest federal employee union, called on OMB to oppose the measure. "The Alaska set-aside is a thoroughly discredited example of crony contracting whereby work performed by federal employees is given to certain well-connected contractors without any competition," said John Threlkeld, a lobbyist with AFGE. "Given Ms. [Angela] Styles' professed commitment for public-private competition, we look forward to OMB's strong opposition to this provision."

If passed by Congress and signed into law by President Bush, the measure could be a shot in the arm for tribally owned firms, including some Native Alaskan-owned corporations that already do considerable Defense contracting. These firms asked that the competitive sourcing language be added to the Defense bill, according to Yuen. "It was added at the behest of the Native Alaskan corporations," he said.

Robert Bowe, chief executive officer of Chenega Technology Services Corp., a Native Alaskan corporation based in Anchorage, said he hopes the language becomes law. He added that earlier versions of Section 8014 helped Chenega win a multi-year pact with the National Imagery and Mapping Agency to provide information technology support, which resulted in the elimination of 600 federal jobs.

"The language was important to NIMA because the [direct conversion] was such a political issue," Bowe said. After the contract award in December 2001, some of the displaced workers took higher-paying jobs with the contractor, a joint venture of Chenega Technology Services and Arctic Slope Regional Communications, according to Bowe. Chenega and the joint venture plan to do $70 million worth of federal business this year, he said.

Chugach Alaska Corp., another Native Alaskan corporation, received $300 million in new contract awards from the Defense Department in fiscal 2002, according to data compiled by Eagle Eye Publishers, a firm based in Fairfax, Va.

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