April 15, 2009
The American Federation of Government Employees is challenging the Army's recent decision to outsource more than 300 public works jobs at West Point Military Academy in New York state.
The Army in March announced that federal employees won an A-76 competition for custodial services, but lost their bid for the public works jobs. AFGE and some New York lawmakers are claiming the Army made it "impossible" to directly compare the cost of having federal employees perform the work to the cost of hiring contractors.
"The West Point privatization review was plagued with problems from the beginning," AFGE said in an April 15 statement.
In an April 3 letter to Army Secretary Pete Geren, New York Democratic Sens. Charles Schumer and Kirsten Gillibrand argued that the A-76 study compared the full cost of federal employees performing the work with cost-plus bids from private contractors. Under a cost-plus contract, contractors are paid a fixed fee and also compensated for any costs incurred. Cost-plus contracts do not provide a strong incentive for contractors to keep costs down.
"The process compares different price structures, making it impossible to evaluate accurately which is the lower cost," said the letter.
The union and the lawmakers also criticized the Army for separating mid-review the custodial services and public works elements of the contract. AFGE said dividing the work prevented the federal employees from achieving economies of scale that would have strengthened their bid.
"This artificial division greatly disadvantaged the federal employees (and taxpayers)," AFGE National President John Gage said in a statement.
The Army began preliminary planning to conduct the public-private competition under Circular A-76 in 2002, and announced the review of the public works and custodial jobs at West Point in 2006.
Upon announcing the decision to outsource public works positions, Col. Daniel Bruno, West Point's garrison commander, said, "The most efficient organization team put together an aggressive proposal, and I'd like to commend them for their innovative approach and critical look at streamlining opportunities."
Bruno said he was committed to ensuring a smooth transition and providing the most support possible to displaced federal employees.
In March 2008, West Point sent a letter to the Army's Competitive Sourcing Branch of the Northeast Region Installation Management Command requesting permission to cancel the A-76 studies and reorganize internally, saying it would be less disruptive and yield efficiency and cost savings. Wilfred Plumley Jr., deputy to the West Point garrison commander, wrote canceling the privatization review would be "a win-win for West Point and the West Point community," but the competition continued.
Spokesman Dave Foster said Army headquarters has not received any correspondence from the academy requesting cancellation of its A-76 competition and all cancellation requests must be routed through Army headquarters for endorsement before being approved by the Defense secretary. The service is in the process of drafting a response to Schumer and Gillibrand.
Discussing the West Point privatization initiative at a town hall meeting recently, Gage called the privatization reviews "the worst examples of government waste I've seen since Walter Reed. This process is broken and it needs to stop right here and right now." AFGE said the Army has violated federal law, which limits A-76 studies to no more than 30 months, and working under the threat of privatization since 2002 has adversely affected employee morale in the competing units.
"Employee morale has been devastated and workplace uncertainty is high," Gage said. "Depleted staff levels have increased the burden on military personnel, leaving war-fighters undersupported."
Schumer and Gillibrand, along with Democratic Reps. Maurice Hinchey and John Hall -- who represent the New York congressional districts surrounding West Point -- said they plan to sponsor an amendment to the fiscal 2010 Defense appropriations bill that would prevent the outsourcing from occurring. The lawmakers noted not only were there concerns about this particular A-76 competition, but in general, the tide was turning against public-private competitions.
A provision in the 2009 omnibus appropriations act passed in March halted privatization reviews or competitions for the remainder of fiscal 2009. During the past few years, Congress has taken steps to try to level the playing field for federal employees, passing legislation excluding health care and retirement benefits from the cost comparison process and establishing protest rights for federal teams on the losing end of competitions. Lawmakers even have halted new competitions at nine agencies.
"Congress and the president have expressed deep reservations with this process, and we encourage you to place an immediate hold on implementation of this and any other privatization studies until the process can be improved or replaced," Schumer and Gillibrand wrote in their letter.
April 15, 2009