GAO gives thumbs down to West Point outsourcing
The Government Accountability Office ruled on Monday that there were serious flaws in the process the Army used to compare a bid from the 394 federal employees performing the work to one from the company that in March won a public-private competition for the jobs. The decision came in response to a protest filed by the American Federation of Government Employees, the union that represents the West Point workers.
GAO found errors in the Army's conclusion that Peachtree City, Ga., The Ginn Group's bid of $58.2 million over five years was reasonable and surpassed the government's offer of $68.3 million. The watchdog found that The Ginn Group based its bid on unrealistically low retirement benefit and supply costs and was unlikely to meet a 10 percent efficiency assumption.
"In our view, the errors identified above call into question the savings that the Army calculated would be achieved by awarding a contract for public works services to Ginn," GAO stated in the ruling.
GAO typically would recommend that the Army take the appropriate steps to re-evaluate Ginn's costs and to correct the competition. But, a provision in the 2009 Defense authorization act prevents agencies from spending federal funds to start public-private competitions under the Office of Management and Budget's Circular A-76. The 2010 Defense authorization bill would continue that ban for another year.
Consequently, GAO recommended that the Army cancel its request for proposals and not proceed with the contract award to Ginn.
The decision was cheered by lawmakers who opposed the outsourcing efforts at West Point.
"The GAO ruling shows that the A-76 study that led to the privatization of West Point jobs was inherently flawed, skewed and discriminatory since its inception," said Rep. John Hall, D-N.Y. "Privatization reviews were commissioned by the Bush administration as part of an ideological effort to outsource government jobs to private companies. Congress has since rightfully outlawed these privatization reviews."
"The U.S. Army is studying the GAO's decision regarding the West Point A-76 competition to determine the course of action that will most benefit taxpayers and the Army," spokesman Dave Foster said. The service is not legally obligated to heed GAO's recommendation, but agencies typically accept the watchdog's decisions.
The Ginn Group has the option to appeal GAO's decision. Company officials said they are waiting to see if Congress makes the issue a moot point.
Hall and Rep. Maurice Hinchey, D-N.Y., have co-authored a provision in the House's version of the 2010 Defense appropriations bill that would prevent the Pentagon from moving forward with at least 15 ongoing A-76 efforts, encompassing 6,000 civilian and military jobs. The language did not make it into the Senate's version of the bill, but the provision could be added to the final legislation during House-Senate conference negotiations. The provision has the support of Sen. Chuck Schumer, D-N.Y.
"The effort to privatize jobs at West Point and other military installations across the country was ideological in nature and ignored basic facts that indicated doing so would be a big mistake," Hinchey said. "The GAO's ruling bolsters our argument that Congress should give final approval to a measure I helped author that would effectively block the Pentagon from carrying out its privatization plans at West Point or anywhere else."
During the past several years, Congress has taken several steps to try to level the playing field for federal employees in public-private job contests, passing legislation that excludes health care and retirement benefits from the cost comparison process and establishing protest rights for federal teams on the losing end of competitions. Lawmakers also have halted new competitions at nine agencies.
AFGE said the turning tide against public-private competitions has prompted most other federal agencies to cancel their A-76 studies or to convert them to internal reengineering efforts. Thus far, the Defense Department has resisted that trend.
The Army began preliminary planning for its A-76 competition at West Point in 2002, and announced the review of the public works and custodial jobs four years later. The federal team won the competition for the custodial work.