IRS announces new round of layoffs

The Bush administration's competitive sourcing program again took a toll on Internal Revenue Service employees, with 218 slated to lose jobs as a result of a public-private contest for information technology work.

Employees from the tax agency's Modernization and Information Technology Services branch competed against contractors for 278 technology positions at 10 offices across the country and prevailed. But to maintain an edge over private-sector bidders, the in-house workers proposed cuts of 218 jobs, IRS officials announced Thursday.

The employees with jobs on the line help produce and distribute information to aid processing of tax returns. Currently 19 to 36 of the technology employees work at each of the 10 "campuses."

Under the in-house team's plan, the IRS will reduce the IT workforce to five per location. The other 10 employees staying on board will work on quality control and program management. Agency officials plan to implement proposal by June 1, 2005.

Terry Lutes, associate chief information officer for the IRS's Information Technology Services branch, declined to say how many contractors submitted bids in the public-private competition, initiated 18 months ago and conducted using the Office of Management and Budget's May 2003 revised job contest rules. After a 10-day appeal period has ended, he said he would share more details about the contest, including an estimate of the savings the A-76 study is expected to generate.

The in-house team developed a "very creative" proposal, Lutes said. Rather than simply cutting jobs to save money, the team "actually redesigned the work" and found additional opportunities for automating tasks, he said, adding: "It was one of those moments I was proud to be a government employee."

But Colleen Kelley, president of the National Treasury Employees Union, said that tax agency officials could have used alternative means, including attrition and retraining, to realign the workforce. NTEU represents 98,000 IRS employees. IRS held a job contest to satisfy OMB officials, Kelley argued. Competitive sourcing, an effort to let contractors bid on thousands of federal jobs considered commercial in nature, is part of President Bush's management agenda.

Kelley acknowledged that OMB has dropped governmentwide goals for the contracting out of federal jobs. However, pressure from the administration and "unstated" competitive sourcing "quota[s]" still played into the IRS decision to hold the public-private contest for technology work, she said.

But Lutes said the contest resulted from a need to improve efficiency. "We've got a modernization [effort] that we're rolling out that we've got to support," he said. "We're not going to get additional resources to do it. It's forced us to look at things that are pretty tough."

The agency has been open with employees about resource constraints and the need to save money, Lutes said. Further, IRS officials are leaving "no stone unturned" in looking at ways to help out the employees slated to lose jobs. The agency will look at options including early retirements, he said, and will work with the union to arrive at a satisfactory plan.

Agency officials have a "major interest" in working alongside NTEU and making the transition as painless as possible, Lutes said. "I'm a government employee too. This could be me . . . It's very personal stuff."

The announcement of the technology worker layoffs comes on the heels of Wednesday's notice that the tax agency plans to close distribution centers in Virginia and California and lay off employees at a third warehouse in Illinois. Employees at the centers maintain stocks of IRS publications and fill orders, but agency officials say their workload is declining at a rate of 6 percent a year as more services move online.

The cutbacks announced this week and major layoffs announced in January are part of an agency effort to make the IRS more efficient and effective in the face of financial constraints.

"I think on an intellectual level there's understanding," Lutes said. "But obviously this is a very emotional time for the organization."

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