IRS wins A-76 bid, cuts 218 jobs

Internal Revenue Service employees won a public/private competition for tax-processing work, yet last week, they cut jobs. As the result of a

competitive-sourcing study that highlighted technological solutions to reduce costs, IRS officials decided to restructure the agency's information technology operations at 10 sites with the loss of 218 jobs.

Proponents of the Bush administration's competitive-sourcing initiative said the actions show that competition improves overall agency efficiency. Critics, however, said the layoffs are proof of the policy's failures.

The job cuts, which are slated to occur June 1, 2005, will remove all but 60 employees from the agency's printing operation. Five civil servants will remain at each location and at a quality control center.

"Instead of having to print the reports and distribute them within the campuses, they are now able to move 80 percent of work electronically to the desktops," said Raymona Stickell, the IRS' director of competitive sourcing.

Combined with an earlier wave of consolidation in mainframe and printing operations, "we have more employees than we have work in this particular operation," Stickell said.

Jobs targeted for dismissal include tape librarians, computer operator technicians, secretaries and managers, according to IRS officials.

Competitive sourcing is governed by Office of Management and Budget Circular A-76, which allows federal employees to develop a "most efficient organization" strategy to compete with private-sector proposals in situations in which more than 10 jobs are at stake.

Colleen Kelley, president of the National Treasury Employees Union (NTEU), described the cuts as an effort by IRS officials to meet an unstated Bush administration quota for outsourcing a certain percentage of federal jobs.

"There definitely are some jobs that are technologically obsolete," Kelley said. "I wouldn't argue that there are 218 of them." The cuts will likely have a "detrimental impact on service to the public," she said.

But job losses are proof that competitive sourcing is having its intended streamlining effect, according to Carl DeMaio, president

of the Performance Institute.

"When you do competitions, you find that there are cost savings and there are reductions in force that are made," he said, referencing an OMB study that said competitive sourcing is expected to save the federal government more than $1 billion during the next five years.

Stan Soloway, president of the Professional Services Council and a member of the Commercial Activities Panel, which put together the revised version of A-76, which was released last August, criticized the union officials' reactions.

NTEU officials have "consistently said, 'We support competition. we just want a fair competition.' Now here you have a case where they have won a competition, and they are the ones who are most loudly complaining."

But Kelley said the ideal scenario would have been to train the laid-off employees to occupy jobs in areas where the IRS is lacking.

About the Author

David Perera is a special contributor to Defense Systems.

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