White House Wins on Competitive Sourcing Under pressure from the White House, congressional appropriators abandoned efforts to restrict President Bush’s competitive sourcing initiative. After weeks of negotiations, the appropriators dropped a provision that would have allowed federal employees or their unions to protest the outcome of job competitions. Also dropped was a requirement that contractors must beat the government employees’ bid by at least 10% in order to win a competition. Contractor groups said the protest rights would have delayed competitions and deterred some companies from bidding. Stan Soloway, president of the Professional Services Council, said the protest provision could be “the death knell of competitive sourcing.” Union officials, however, said it only leveled the playing field, giving employees the same protest rights as contractors. The sourcing provisions are part of the $820 billion omnibus appropriations bill. Details of the bill were released late Nov. 25, after both houses of Congress adjourned for the Thanksgiving holiday. According to a summary of the bill by the House Appropriations Committee, the result is that different agencies will conduct sourcing competitions under different rules. The omnibus appropriation applies to most civilian agencies. However, the 2004 defense appropriations bill gives DOD employees a 10% cost advantage in all competitions. “The impact will be that small, minority and women-owned business won’t have much of a chance to compete for and win competitive sourcing contracts,” said Gary Engebretson, president of the Contract Services Association of America. The 10% cost advantage also applies to small competitions in the Interior and Energy departments and the Agriculture Department’s Forest Service under a provision of the Interior and Related Agencies Appropriations Act, H.R. 2691, which was passed in October. Employees in small units in those agencies would be permitted to reorganize their work and create a “most efficient organization” before the competition begins. In all other agencies, a most efficient organization is formed only for competitions involving more than 65 workers. For all agencies, in competitions involving more than 65 employees, a contractor must beat the employees’ bid by 10%. Contractor groups were unhappy that the same rules won’t apply governmentwide. The omnibus appropriations bill is not yet a done deal. Appropriators also agreed to a White House demand a provision demanded to increase the number of television stations that a broadcast network can own. Both houses had approved limitations on broadcast ownership, and some members were threatening to oppose the omnibus bill over that issue. The House is due to return Dec. 8 and the Senate reconvenes the next day. If both houses don’t pass the omnibus bill, it would have to wait until January. That would leave many agencies operating under continuing resolutions, freezing their spending at last year’s level and delaying any new projects planned for fiscal 2004. The decision to drop outsourcing restrictions capped a yearlong effort by opponents to rein in the administration’s competitive sourcing initiative, a key element of the president’s management agenda. At least half a dozen anti-outsourcing amendments were adopted by various committees. The House voted to kill the revised OMB Circular A-76, which sets the rules for sourcing competitions, but a similar amendment in the Senate failed by a single vote. The fight is not over; two federal employee unions have filed lawsuits aimed at blocking the revised Circular A-87. .