108th Congress

A-76/Competitive Sourcing Legislation

H.R. 4200 (P.L. 108-375), S. 2483, H.R. 5120 (H.J. Res. 2/P.L. 108-7), H.R. 1837, H.R. 2673, H.R. 5025/S. 2806, H.R. 3426, H.R. 3820/S. 2094, H.R. 4028, H.R. 5276

Background

The ability of the Federal Government to subject its employees to public-private competitions has been in place for decades. Office of Management and Budget (OMB) Circular A-76 outlines procedures by which competitions for positions determined to be “commercial” occur. In 2001, the President placed greater emphasis on competitive sourcing and included it as a part of his management agenda. As a result of this renewed emphasis, several congressional hearings were held, and legislation was introduced.

In May 2003, OMB revised Circular A-76 and released it to the public. Several Members of Congress expressed concern that the revised guidelines place Federal employees at a disadvantage, specifically in the area of streamlined competitions. Under the streamlined procedures, a competition for activities performed by 65 or fewer people can take place within 90 days, as opposed to the 12-month timeframe used for standard competitions. Concerns cited include the shortened timeframe, lack of a Most Efficient Organization (MEO) requirement (where employees form an in-house team to submit a bid), lack of a cost differential requirement (10 percent or $10 million more efficient than the Federal Government), and lack of a mechanism to contest a competition. Although not required, the revised circular encourages agencies to develop an MEO for streamlined competitions. There are also procedures for time extensions and conversion to a standard competition in the event that a streamlined competition cannot be completed within 90 days. However, the revised circular does not include language on the issue of the cost differential for streamlined competitions and does not allow Federal employees or the private sector to contest streamlined competition decisions.

Provisions of the Legislation/Impact on NIH

Bid Protest Rights: P.L. 108-375/H.R. 4200, the National Defense Authorization Act for Fiscal Year 2005, provides authority for the formal representatives of Federal in-house teams, known as “agency tender officials,” to appeal to the Government Accountability Office (GAO) in the event that the Federal in-house team loses a standard competition. Prior to enactment of this law, agency tender officials could only contest at the agency level, and if the ruling was not in their favor, they could not appeal to GAO because the office concluded that it lacked the authority. A similar bill, S. 2438, which was not passed by Congress, would have allowed not only agency tender officials to appeal to GAO, but others elected by the Federal in-house team.

Prohibition of OMB Quotas: OMB initially set quotas for the number of positions for which Federal agencies were required to hold competitions. The legislation below was introduced as a result of concern by some Members of Congress that these quotas were arbitrary. At a July 24, 2003, hearing before the Senate Governmental Affairs Subcommittee on Oversight of Government Management, the Federal Workforce and the District of Columbia, Ms. Angela Styles, the Administrator of OMB’s Office of Procurement Policy at the time, announced that OMB eliminated the use of government-wide numerical targets.

• P.L. 108-7/H.J. Res. 2, the fiscal year (FY) 2003 Treasury and General Government Appropriations Act (H.R. 5120), prohibited OMB from enforcing any numerical goal, target, or quota for subjecting Federal employees to competitions and prohibited agencies from directly converting positions or work to a private contractor under the “old” OMB Circular A-76. This provision is in effect for only 1 fiscal year since it is an appropriations bill.
• H.R. 1837, the Services Acquisitions Reform Act, would have made permanent the prohibition of OMB goals, targets, or quotas related to competitive sourcing competitions.

Reporting Requirements: P.L. 108-199/H.R. 2673, the FY 2004 Transportation, Treasury, and Independent Agencies Appropriations Act, 2004 (H.R. 2989), contains provisions requiring executive agencies to provide an annual report to Congress on competitive sourcing efforts for the prior fiscal year. Other provisions, which apply only to FY 2004, include providing agencies with authority to monitor functions that were subject to a competition, prohibiting contractors that won a competition from sending the work overseas (unless the function was already being performed outside the country), and not requiring agencies to conduct competitions every 5 years.

Prohibition of Conducting Competitions Under the Revised A-76 Circular: H.R. 5025 and S. 2806, the FY 2005 Transportation, Treasury, and Independent Agencies Appropriations Act, authored by Representative Chris Van Hollen, Jr. (D-MD) and Senator Barbara A. Mikulski (D-MD), respectively, contained a provision that would have prohibited agencies from conducting public-private competitions under the revised A-76 circular. However, the provision was removed from the bill because of a veto threat.

Oversight: H.R. 3426, the Truthfulness, Responsibility, and Accountability in Contracting Act, would have imposed a number of requirements on Federal agencies that conduct public-private competitions. Provisions included: 1) the establishment of a centralized system so that an agency could generate periodic reports on its contracting efforts, 2) stipulations that competitions must compare cost (which must include comparable pay, health insurance, and retirement benefits), employ the MEO process, consider factors other than cost when making a decision, and determine that the contract performance would be less costly over the term of the contract than Federal employees over the same period, and 3) a requirement that an agency conduct a new public-private competition if the contractor exceeded its cost estimate.

Outsourcing Overseas: H.R. 3820/S. 2094, the United States Worker Protection Act, contained a provision that would have prohibited a private contractor who won a competition under OMB Circular A-76 from sending the jobs overseas, unless the jobs were already being performed outside the United States. P.L. 108-199 contains a similar provision.

Requiring Contractors To Include the Cost of Health Benefits: H.R. 4028 would have prohibited private contractors from lowering the cost of their bids as a result of not providing health benefits or offering inferior health benefits. H.R. 3426, as described above, would have required contractors to include comparable health and retirement benefit costs as well as pay in their estimates.

Protections for the Disabled: H.R. 5276, the Disabled Federal Employees Protection Act, would have prohibited agencies from firing Federal employees with significant physical or developmental disabilities who were part of a Federal in-house team that lost a competition. This legislation was introduced to respond to a case at the National Naval Medical Center in Bethesda, MD, where the kitchen and cafeteria staff were slated to undergo a public-private competition. After congressional and media attention, the positions did not undergo a competition.

Status and Outlook

H.R. 4200 was introduced on April 22, 2004, and referred to the House Committee on Armed Forces. On May 14, the bill was reported out of the committee; it was passed by the House by a vote of 391 to 34 on May 20. On June 23, the bill was passed by the Senate by unanimous consent. On October 2, the House agreed to the conference report by a vote of 359 to 14; the Senate agreed to the conference report by unanimous consent on October 9. On October 28, the President signed the bill, which became P.L. 108-375.

H.R. 5120 was reported out of the House Appropriations Committee on July 15, 2002, and was passed by the House on July 24. The Senate did not act on the bill, and H.R. 5120 was incorporated into H.J. Res. 2, a Joint Resolution making consolidated appropriations for the fiscal year ending September 30, 2003. It became P.L. 108-7 on February 20, 2003.

H.R. 1837 was introduced on April 29, 2003, and was jointly referred to the House Committees on Government Reform and on Armed Services. On May 19, the House Committee on Government Reform reported out the bill as amended (H. Rept. 108-117, Part I). On July 25, the bill was discharged from the House Committee on Armed Services. On May 19, the bill was referred to the House Committee on the Judiciary and was reported out on September 3 (H. Rept. 108-117, Part II). No further action occurred on this legislation during the 108th Congress.

H.R. 2989 was reported out of the House Appropriations Committee on July 30, 2003, and was passed by the House by a vote of 381 to 39 on September 9. The bill passed the Senate by unanimous consent on October 23, 2003, and was incorporated into H.R. 2673, an omnibus appropriations measure, which became P.L. 108-199 on January 23, 2004.

H.R. 5025 was reported out of the House Appropriations Committee on September 8, 2004, and passed the House by a vote of 397 to 12 on September 22. It was incorporated into H.R. 4818, an omnibus appropriations measure, which became P.L. 108-447.

S. 2806 was reported out of the Senate Appropriations Committee on September 15. No further action occurred on this legislation during the 108th Congress.

H.R. 3426 was introduced by Representative Albert Wynn (D-MD) on October 30, 2003, and was referred to the House Committee on Government Reform. No further action occurred on this legislation during the 108th Congress.

H.R. 3820 was introduced by Representative Rosa DeLauro (D-CT) on February 24, 2004, and was referred to the House Committee on Government Reform. No further action occurred on this legislation during the 108th Congress.

S. 2094 was introduced by Senator Christopher J. Dodd (D-CT) on February 12, 2004, and was referred to the Senate Committee on Governmental Affairs. No further action occurred on this legislation during the 108th Congress.

H.R. 4028 was introduced by Representative Wynn on March 24, 2004, and was referred to the House Committee on Government Reform. No further action occurred on this legislation during the 108th Congress.

H.R. 5276 was introduced by Representative Van Hollen on October 7, 2004, and was referred to the House Committee on Government Reform. No further action occurred on this legislation during the 108th Congress.