President George W. Bush's effort to
improve government services and reduce costs by requiring
competitive contracting for commercial-type jobs in the federal
bureaucracy has been actively opposed by many civil servants, their
unions, and Members of Congress who want to protect select
employees from private-sector competition.
Under the Federal Activities Inventory
Reform Act signed by President Bill Clinton in 1998, federal
agencies are required to identify those positions that are
commercial in nature, as opposed to those that are "inherently
governmental." This year, the federal government identified 850,000
such commercial jobs, and the Bush Administration is requiring
agencies to open a portion of them each year to competition from
the private sector to determine who can do the best work at the
least cost. The U.S. Department of Defense (DOD) has used this
process for several decades and has realized average savings of 30
percent when positions are exposed to formal competition. Although
many opponents misrepresent this policy as an anti-federal worker
outsourcing program, the existing government work force wins about
half the competitions by improving operations and lowering
costs.
Blocking
Competition
Despite the success of competitive contracting at the
federal, state, and local levels, opposition to it is formidable.
So far this year, Members of Congress have introduced several bills
to protect influential groups of workers. In June 2003, the House
and Senate passed reauthorization legislation for the Federal
Aviation Administration (FAA), and both versions include provisions
shielding controllers (the Senate version also shields flight
service station personnel) in the FAA's air traffic control system
from competitive competition. The legislation would do this by
reclassifying these FAA jobs as inherently governmental, thereby
prohibiting any competitive contracting for them.
The
congressional declaration that these jobs are inherently
governmental would surprise the hundreds of private-sector
controllers working in the 218 U.S. control towers already
contracted out to private business. It would also surprise the
thousands of controllers working in the privatized and/or
commercialized air traffic control systems in the United Kingdom,
Canada, Switzerland, Australia, Germany, and more than a dozen
other countries.
An
April 2000 study by the Office of the Inspector General at the U.S.
Department of Transportation confirmed that the 187 Level 1 towers
that FAA had contracted out to private operators (as of 1999) saved
the agency $250,000 per tower per year. The report also estimated
that extending the contracting program to 71 additional FAA-staffed
Visual Flight Rule towers could yield an even greater annual
savings of $881,000 per tower because of a new FAA pay system for
government controllers. Significantly, the study found that there
was "little difference in the quality or safety of services
provided at Level 1 towers whether they were operated by the FAA or
by contractors." The contracted towers were slightly more
error-free (0.05 errors per 100,000 operations) than comparable FAA
towers (0.06 errors per 100,000 operations).
Prejudice vs.
the Facts
Behind the prejudice exhibited by some Members of Congress
against private companies and their workers is the misperception
that they will not perform as well as government workers and that
any federal competitive contracting--if allowed at all--should be
limited to simple, unskilled tasks. In contrast to these
congressional prejudices, the DOD has aggressively embraced
competitive contracting for a variety of vital services and has
been doing so for several decades. Money saved on contracted
services can be redirected to defense needs, and competitive
contracting frees highly trained uniform personnel for more vital
tasks. From 1995 to 2000, the DOD conducted 286 separate
competitions under the guidelines of Office of Management and
Budget (OMB) Circular A-76 with an estimated annual savings of $290
million. Examples of contracted national security services range
from the simple to the highly sophisticated and include housing,
tank repair, communications, supply management, and aircraft
maintenance, including the B-2 stealth bomber. As is evident from
the military's recent swift successes in Afghanistan and Iraq,
DOD's aggressive use of competitive contracting does not seem to
have undermined military performance.
However much proponents of unionized
controllers argue that the proposed FAA prohibition reflects a
special situation, it is in fact just another legislative effort to
preserve the status quo and shelter government workers from the
competitive forces with which most Americans comfortably exist. One
notable example is last year's effort to preserve the Government
Printing Office's printing monopoly; yet, when OMB opened the
contract to print the federal budget to competition, the cost
dropped by 24 percent from the previous year.
Another example is the effort by Senator
Edward Kennedy (D-MA) to prevent competitive contracting at the
National Park Service, where much of the work force is involved in
routine maintenance, lawn care, and janitorial work. Despite DOD's
proven contracting success with sophisticated services, Senator
Kennedy contends that contracting will "put many of our great
national treasures in the hands of private contractors who may put
their profits above national interests." Similar efforts include
attempts to derail the Army's ambitious effort to open 200,000 jobs
to competition and an amendment sponsored by Senator Barbara
Mikulski (D-MD) that forbids the White House from spending any
money to manage its competitive contracting program. These attempts
have not yet succeeded, although an earlier effort in the Senate to
protect the U.S. Army Corps of Engineers from complying with the
program was successful.
Conclusion
In response to House and Senate passage of FAA bills that
protect government workers from competition, the White House has
issued a Statement of Policy threatening to veto any bill that
includes such prohibitions on the President's ability to manage the
federal work force effectively on behalf of the taxpayers and
service users. The White House is to be commended for this stand,
and President Bush should carry out that threat if Congress fails
to remove the offending prohibitions in conference.
Ronald D. Utt,
Ph.D., is Herbert and Joyce Morgan Senior Research Fellow
in the Thomas A. Roe Institute for Economic Policy Studies at The
Heritage Foundation.