Date: 2003-09-09
Speaker: VAN HOLLEN (democrat)
Chamber: H

Mr. Chairman. I yield myself 8 minutes. Mr. Chairman. this amendment is designed to ensure that we have an even playing field when the Federal Government decides to hold a competition to contract out Federal jobs and services to private contractors. It has been the longstanding policy of our government to allow for publicprivate competitions for those services that can be appropriately performed in the private sector. and that process is known as competitive sourcing and it is a good process. But as part of an ideologicallyrun agenda to contract out more and more Federal Government jobs. the Office of Management and Budget. on May 29. issued a new circular. a new ruling. and they rewrote the rules to tilt the playing field in favor of private contractors at the expense of Federal employees. Now. Federal employees are happy to submit to competition. I have thousands of Federal employees in my congressional district and they are willing to compete with the private sector. But it is unfair to ask them to compete with one hand tied behind their back. and that is what the most recent OMB rewrite of the circular does. it stacks the decks against our public employees. There are going to be 416.000 Federal employees that will have to submit to the new privatization process. Now. under the current system. about 60 percent of the times when we have these privatepublic c..mpetitions. about 60 percent of the time. the Federal employees have won the bid. But according to the Private Contractors Association. the association that represents those who would be receiving the private contracts. according to them in their own written statements. if the rules are rewritten. the number of times the Federal employees could win would drop from about 60 percent to 10 percent of the time. Now. how can we predict that in advance if we have a fair process? Well. the reason we can predict it in advance is it is not a fair process. It rigs the process against Federal employees. and it is a bad deal for taxpayers. because as taxpayers. what we want is the best deal for all of us. and to get the best deal. we want an even playing field. And if we rig the process in one way. it is not just unfair to Federal employees. it is unfair to taxpayers around this country. because they are not getting the best bang for their buck. So what does this amendment do? What this amendment does is it gives the OMB. officials at the Office of Management and Budget. another chance to rewrite the rules. It would keel) in place the A76 rules that have governed the process right up to May 29 of this year. So it does not get rid of privatepublic competitions. it just says let us have a time out and tqke another look at these rules to make sure that they are fair. In fact. it does not go as far as we have gone in this House earlier this year. In the Interior Appropriatioil. there was an amendment added that got. through this House that actually prohibits the Department of the Interior from new contracting.out in this coming year. to do new reviews in this year. This amei)dment does not go this far. This does not say no new contracting out. It just says let us play by the rules that we have been playing with up until May 29 until we. have an opportunity to visit the flaws. revisit the flaws and look at the flaws in the new process. What are some of those problems? Number 1. the new OMB circular does not even allow the Federal employees to submit their best bid. You have a streamlined. fasttrack process. Now. the procontractor commercial activities panel have themselves said that Federal employees should have the right to submit their best bids because of the socalled most efficient organization process. the process by which Federal employees can also organize themselves flexibly so that they can compete on an even playing field. that that is designed to achieve efficiencies and promote higher levels of performance. Well. if the new A76 proces0 is about performance and efficiencies and more competition. why is it designed so it does not allow Federal employees the ability to organize themselves to submit their best bids in the competition? Another problem: The new circular does not require contractors to at least show as part of their bids that there are going to be appreciable savings. It would not require the contractors as part of the bidding process to at least promise the taxpayers some financial benefit. and that Is a change. Up until May 29 of this year. we required that the private cojtractor submitting that bid show that they are going to achieve at least a 10 percent savings. or $10 million. whichever is less. over what is being done by the Federal employees. These contractingout processes. these competitions cost us a fair amount of money and time and resources to organize it. We should. at the end of the day. at least be able to show the taxpayers that we are going to get a better deal than at the beginning of tie (lay. That is what the old OMB circular did. The new one does not do that. Another problem: It artificially inflates the cost of the Federal employces bids. So right off the bat. if you are the Federal employees group. you are at a disadvantage because it arbitrarily assumes about a 12 percent overhead as part of your bid. Now. the Inspector General of the Department of Defense has said that the 12 percent overcharge arbitrarily slapped on In all the inhouse bids is insul)portable. and that either a new overhead rate must be established or an alternative methodology must be devised to allow overhead to be calculated on a competitionspecific basis. In fact. there has been an egregious case recently showing how Federal employees. that their bid would have saved the taxpayers millions of dollars over a private sector bid. and the private sector company got the award. but it turned out that because they had miscalculated the overhead for the Federal employees. the taxpayers got burned. So if the new A76 process is being written to promote fair public competition. why does it so dramatically inflate the overhead cost for the inhouse bids by Federal employees? Another problem: It discourages the private sector from providing adequate health care benefits to its employees. In other words. in order to get the contract. the bid from the Federal Government. you in the private sector. in order to get yourself a better deal. you submit a package as part of your bid. it does not contain adequate health care benefits for your employees. Obviously. that saves you money. It essentially allows the jobs to be shipped out to somebody else who does not provide adequate benefits. If that is not the intention. we in this body should do exactly what the Senate did on a bipartisan basis earlier this year in the Senate Defense Appropriations bill. where they said that if you are the private sector company and you are offering a bid that does not have adequate health care benefits. then the cost of health care benefits should not be considered as part of either bid. In other words. it should not be factored Into the Federal employees bid. and it should not be factored into the private contractor bid. That way. the private contractor would not achieve an unfair advantage by providing little or no health benefits to its employees. So those are just some of the problems. Mr. Chairman. As I said. all we need to do Is take a time out. let us play by the rules that were in effect up until May 29 of this year. and provide a little time to do the rest. Mr. Chairman. I reserve the balance of my time.