Case Overview, Government Outsourcing Reform

This document provides background information and summarizes the debate over Government Outsourcing Reform. The links to the left will lead you to public documents that we have found.

           A strong trend over the past quarter of a century is the outsourcing of government jobs. For example, jobs in a government building cafeteria filled by employees of that agency can be put up for bid. Private companies will put in a bid and the government unit operating the cafeteria may put up a bid as well. The low bidder meeting all requirements of the job will gain the contract for a specified period of time, after which another round of bids will be scheduled. This movement has its roots in the philosophy of privatization. Conservative advocates have pushed free market principles, asking government to behave more like a business. By letting companies compete for government work, the government will get the lowest price for the tasks they need completed. Advocates also claim the work is likely to be done more effectively as a company knowing it is in a competitive position and runs the risk of losing the contract if its work falls below standards, will have the incentive to do the best job possible.
          Outsourcing extends far beyond cafeteria workers and other blue collar tasks to an entire range of government work. For example, contract workers were sent to Iraq in 2003 to work with the military on various elements of the occupation and rebuilding of Iraq. For government at all levels outsourcing offers benefits beyond cost cutting. If jobs are outsourced, government appears on the surface to be smaller. That is, the head count of workers is smaller and incumbents running for re-election can demonstrate to constituents that they are working hard to shrink the government. It is, of course, a shell game, because employees of a private sector or nonprofit being paid from a government grant or contract may not technically be employees of the government, but they are doing government's work and being paid by the taxpayer.
          The Truthfulness, Responsibility, and Accountability in Contracting Act (or TRAC Act for short) represents a counterattack by those sympathetic to government workers and organized labor. This effort gained some urgency after President Bush took office and announced plans to privatize 850,000 government jobs. TRAC supporters believed that Bush was not only interested in trying to save money for government, but was interested in weakening labor as well. As manufacturing jobs have declined and labor union jobs disappeared in those industries, unions have stepped up their organizing of government workers. The administration has little sympathy for unions and knows that labor will have difficulty organizing employees in the private sector firms that compete for government jobs.
          TRAC was strongly supported by Democrats and if the law were passed it would surely slow down the trend toward outsourcing. The law calls for current government service contracts to be discontinued within six months of enactment. Government workers would be rehired while the Office of Management Budget reviewed the performance of the contractors. So far the legislation has not passed the Congress and its prospects are dim with Republicans in control of both the Congress and the White House.