Outsourcing pitfalls

Under the Office of Management and Budget's Circular A-76, agencies must compare the costs of performing certain jobs in-house with outsourcing the work to a vendor. But a recent case involving the Defense Finance and Accounting Service showed the pitfalls of the process.

After conducting an A-76 study, DFAS officials decided in June 2002 that they would award the agency's retired and annuitant pay function to an outside contractor.

Immediately, Rep. Dennis Kucinich (D-Ohio) along with Rep. Steven LaTourette (R-Ohio) expressed concern for DFAS employees' welfare and support for any employee challenging the decision. Soon after, the union that represents the federal employees filed an appeal of the outsourcing decision — a move that Kucinich, LaTourette, Rep. Stephanie Tubbs Jones (D-Ohio) and Rep. Sherrod Brown (D-Ohio) supported.

Although the appeal was denied, on Aug. 15, 2002, Kucinich, again joined by the Cleveland-area representatives, asked DFAS Director Thomas Bloom to reconsider the appeal of its outsourcing decision. The representatives also sent letters to the head of the General Accounting Office and the Defense Department's inspector general urging an investigation of DFAS' actions. These letters included a point-by-point critique of how DFAS carried out its cost comparison study and considered the appeal of its decision.

In March, DOD's IG concluded that "a $31.8 million error by a DFAS consultant in the public/private competition resulted in the award of a contract with a potential value of $346 million to the contractor rather than the lower in-house bid."

Kucinich, who wants DFAS to facilitate an organized transition of the work back in-house, has a good record of accomplishment when it comes to helping feds who are in his congressional district. Because outsourcing tends to reduce accountability to the taxpayer; substitute a less experienced set of workers for seasoned, capable government employees; and deflate wages, Kucinich has consistently opposed outsourcing federal services.

In 1998, he fought against passage of the Federal Activities Inventory Reform Act, which requires agencies to identify the functions that are not inherently governmental and therefore a potential outsourcing target. In the current Congress, Kucinich called for a study of the wages and benefits paid by government vendors who receive federal contracts.

If we had more people like Kucinich in office, feds would not have to worry about harebrained schemes to eliminate their jobs!

Zall is a retired federal employee who since 1987 has written the Bureaucratus column for Federal Computer Week. He can be reached at [email protected]


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