Outsourcing anarchy

A court in Ohio recently issued an interesting new decision on whether government employees may challenge the outsourcing of commercially available services, such as information technology support.

In general, most government outsourcing decisions are made by comparing the cost of performing the work in-house through a hypothetical most efficient organization (MEO) of government workers with the cost of an outside contractor. This process is known as an A-76 competition, after Office of Management and Budget Circular No. A-76, which sets the rules for such procurements.

When an agency completes the required cost comparison, it announces a tentative decision. A disappointed offeror or other "eligible appellant" may challenge the decision in an administrative appeal within the agency. An eligible appellant in this context may include "federal employees (or their representatives)...who would be affected by a tentative decision" to outsource. After completion of any administrative appeal, the agency announces its final decision. If the agency decides to retain the work in-house, the disappointed private offeror may file a bid protest at the General Accounting Office or in the Court of Federal Claims.

However, when the decision is made to outsource the work, federal employees have no avenue for further review because one must be an "actual or prospective bidder or offeror" to file a bid protest with GAO or in court. Neither individual government employees nor their representatives (e.g., labor unions) fit this category.

After the Defense Finance and Accounting Service decided to contract out IT support services at its Ohio and Colorado regional data centers, Rep. Dennis Kucinich (D-Ohio) attempted to circumvent this by filing suit on behalf of the government employees who were in his constituency. The court quickly dismissed the case as a transparent attempt to file an unauthorized bid protest on behalf of persons who could not file one themselves.

In dismissing the case, however, the court voiced some sympathy for the view that government employees should be given the right to file such bid protests. That view assumes that all affected employees have the same interests, and that their primary interest is in defeating any decision to outsource the work. This is clearly wrong.

In fact, when an activity is outsourced, most of the government employees typically go to work for the successful company. Some government employees may lose their jobs, but that is also true when the MEO is successful. For these reasons, what may be in the best interests of some employees is often not in the best interests of others.

Any change in the law that enables affected government employees to challenge outsourcing decisions would lead inevitably to chaos. The inefficiency and anarchy this would introduce into the process would benefit no one.

Peckinpaugh is corporate counsel for DynCorp in Reston, Va. This column represents his personal views.