TRUTHFULNESS, RESPONSIBILITY AND ACCOUNTABILITYIN CONTRACTING OUT ACT (H.R. 721)

NATCA POSITION

The National Air Traffic Controllers Association supports the Truthfulness, Responsibility and Accountability in Contracting Out (TRAC) Act which would simply correct several longstanding problems and inequities in the contracting out process.  Specifically, H.R. 721 would temporarily suspend new federal service contracting until agencies: establish reliable reporting systems to track costs and savings from contracting out; prevent contracting without public-private competitions; and subject contractor work to public-private competition. 

BACKGROUND AND ANALYSIS

Privatization and outsourcing have become a worldwide trend gaining popularity over the years.  We have witnessed all levels of government, seeking to reduce costs, turning over general public services to the private sector.  Proponents argue that competition in the private sector allows companies to provide services more efficiently while reducing costs.  However, studies show no clear evidence with respect to the costs and benefits of privatization.  Nevertheless, public perception, budget constraints and pressure for improved government operations will keep privatization on the agenda.

Under the Federal Activities Inventory Reform Act, agencies are required to submit annual lists of jobs that are commercial in nature and therefore eligible for contracting. With implementation of such legislation, the problems associated with contracting out are likely to get worse.  President Bush supports contracting 450,000 federal jobs to the private sector and mandating A-76 competitions for half of the positions listed on the FAIR inventories.  In March 2001, the Office of Management and Budget ordered agencies to open up at least five percent of their FAIR list jobs to contractor competition.

Under the FAIR Act, approximately one million federal jobs have been identified as commercial in nature.  Yet, there is little information about the size of the contractor workforce or how contractors treat their employees.  Currently, there are approximately 1.8 million federal employees.  Some estimate the contractor workforce to be about 4 million employees. 

While proponents of contracting assert substantial cost savings, it is generally accepted that any reported cost savings from contracting are at the expense of employee salaries, benefits, training, working conditions and equipment.  And, what appears to be cost savings is often illusionary because of the direct and indirect costs that are not taken into consideration. 

Provisions of  the TRAC Act:

• Reporting Requirements:  The bill would require agencies to track costs and savings from contracting.  In addition, agencies must submit annual reports to Congress on the number of federal employee positions and the number of non-federal employee positions held under a contract that has been subject to public-private competition. 
  
• Public-Private Competition:  The bill requires that all contracting out decisions and contract renewals be based on public-private competition.  Currently, only work performed by federal employees is subject to public-private competition.  Private contractors should be subject to the same level of competition and scrutiny.
  
• Contractor Performance Review:  The bill would convert functions back to performance by federal employees or require the agency complete a new public-private competition if the costs of outsourcing exceeded anticipated costs for two consecutive years, or fail to meet quality control standards. 
  
• Wages and Benefits:  Since contractor savings are often derived at the expense of employee salaries and benefits, the bill directs the Secretary of Labor to conduct a survey of wages and benefits provided by contractors during the past two fiscal years.
  
• Temporary Suspension of Contracting:  The bill would temporarily suspend new service contracts until the problems associated with indiscriminate contracting are fixed.  The bill does allow for waivers from the suspension for national security, patient care, and avoidance of economic harm.  However, these waiver decisions would not be subject to review or appeal.

STATUS

H.R. 721 was introduced on February 14, 2001 by Congressman Albert Wynn (D-MD) and referred to the House Government Reform Committee where no further action has been taken.  The bill has 138 cosponsors. 

  May 2001