SPEAKERS CONTENTS INSERTS
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[H.A.S.C. No. 10731]
NATIONAL DEFENSE AUTHORIZATION ACT
FOR FISCAL YEAR 2003H.R. 4546
OVERSIGHT OF PREVIOUSLY AUTHORIZED PROGRAMS
COMMITTEE ON ARMED SERVICES
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
Page 2 PREV PAGE TOP OF DOCMILITARY READINESS SUBCOMMITTEE HEARINGS
TITLE IIIOPERATION AND MAINTENANCE
MARCH 7, 8, 13, and 14, 2002
MILITARY READINESS SUBCOMMITTEE
JOEL HEFLEY, Colorado, Chairman
CURT, WELDON, Pennsylvania
SAXBY CHAMBLISS, Georgia
WALTER B. JONES, North Carolina
BOB RILEY, Alabama
DUNCAN HUNTER, California
JAMES V. HANSEN, Utah
J.C. WATTS, Jr., Oklahoma
VAN HILLEARY, Tennessee
JIM GIBBONS, Nevada
HEATHER WILSON, New Mexico
ROB SIMMONS, Connecticut
Page 3 PREV PAGE TOP OF DOCMARK STEVEN KIRK, Illinois
SOLOMON P. ORTIZ, Texas, Ranking Democrat
LANE EVANS, Illinois
ROBERT A. UNDERWOOD, Guam
JAMES H. MALONEY, Connecticut
MIKE McINTYRE, North Carolina
CIRO D. RODRIGUEZ, Texas
ROBERT A. BRADY, Pennsylvania
BARON P. HILL, Indiana
SUSAN A. DAVIS, California
RICK LARSEN, Washington
Mary Ellen Fraser, Counsel
Diane W. Bowman, Staff Assistant
C O N T E N T S
CHRONOLOGICAL LIST OF HEARINGS
Wednesday, March 13, 2002, Fiscal Year 2003 National Defense Authorization ActCompetitive Sourcing/Outsourcing/A76, and Strategic Sourcing
Page 4 PREV PAGE TOP OF DOCAPPENDIXES:
Wednesday, March 13, 2002
WEDNESDAY, MARCH 13, 2002
FISCAL YEAR 2003 NATIONAL DEFENSE AUTHORIZATION ACTCOMPETITIVE SOURCING/OUTSOURCING/A76, AND STRATEGIC SOURCING
STATEMENTS PRESENTED BY MEMBERS OF CONGRESS
Hefley, Hon. Joel, a Representative from Colorado, Chairman, Military Readiness Subcommittee
Dominguez, Michael, Assistant Secretary of the Air Force (Manpower and Reserve Affairs), Department of the Air Force
Fiori, Mario P., Assistant Secretary of the Army for Installations and Environment, Department of the Army
Johnson, H.T., Assistant Secretary of the Navy, Installations and Environment, Department of the Navy
Styles, Angela B., Administrator, Federal Procurement Policy, Office of Management and Budget
Wynne, Michael M., Principal Deputy Under Secretary of Defense (Acquisition, Technology, Logistics), Department of Defense
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Fiori, Mario P.
Styles, Angela B.
Wynne, Michael M.
DOCUMENTS SUBMITTED FOR THE RECORD:
[There were no Documents submitted for the Record.]
QUESTIONS AND ANSWERS SUBMITTED FOR THE RECORD:
[There were no Questions and Answers submitted for the Record.]
COMPETITIVE SOURCING/OUTSOURCING/A76, AND STRATEGIC SOURCING
House of Representatives,
Committee on Armed Services,
Military Readiness Subcommittee,
Washington, DC, Wednesday, March 13, 2002.
The subcommittee met, pursuant to call, at 2:00 p.m. in room 2118, Rayburn House Office Building, Hon. Joel Hefley (chairman of the subcommittee) presiding.
Page 6 PREV PAGE TOP OF DOCOPENING STATEMENT OF HON. JOEL HEFLEY, A REPRESENTATIVE FROM COLORADO, CHAIRMAN, MILITARY READINESS SUBCOMMITTEE
Mr. HEFLEY. Meeting will come to order. Good afternoon and welcome to the hearing today. Before I get into the formal part of it, let me deal with some administrative business. We asked most of you, maybe all of you, on February 4 to testify at this hearing and to be prepared with your statements. We asked that you get your statements to us two days in advance of the hearing and that would be March 11. I think every statement came in last night about seven o'clock. And we didn't make those deadlines arbitrarily or casually. We made them because we needed the time in order to prepare properly for this hearing so that you and we can get the most out of the hearing. And I would like to encourage you in the future when there is a deadline to get in your statements, get your statements in. Otherwise, we are unable to do the job we would like to do.
Now with that, let me say it seems that we have a hearing nearly every year on this difficult and controversial issue of outsourcing and strategic sourcing. Because outsourcing has the potential to seriously affect the accomplishment and cost of readiness, we are again investigating this important issue.
In 1996, the Department of Defense endorsed outsourcing of its commercial functions as a means to fund modernization. At that time DOD adopted the procedures contained in OMB Circular A76 to accomplish this task. For those of you who may not know, the A76 process is intended to reduce the cost of government functions by conducting a competition between the public and private sectors. DOD claims that no matter who won these competitions, there would be substantial savings. In fact, DOD was so confident of the savings that $11.3 billion was removed from the fiscal years 1999 to 2004 defense agencies and military services operation and maintenance accounts and placed into the modernization accounts.
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In 1999, the Department recognized that the anticipated savings could not be achieved from the A76 process alone, so the Department turned to something called strategic sourcing as a means to make up the shortfall. We were informed that strategic sourcing encompasses consolidation, restructuring, privatization and the outright termination of existing services. We would like to hear from our witnesses this afternoon a further explanation of strategic sourcing and for them to give us some examples of strategic sources actions taken thus far.
The fiscal year 2003 budget request for the Army, Navy and the Air Force assumes $1.3 billion in savings from A76 studies and $861 million in savings associated with non-A76 studies or strategic sourcing. The committee is concerned this year as we have in previous years about what happens if these assumed projected savings are not achieved. The committee is also concerned about long-term savings, not just the amounts that are shown at the beginning of the process.
This subcommittee, and indeed the Congress, has been hearing concerns with the A76 process for many years. In 2001, in the National Defense Authorization Act, we asked a panel of experts from various federal agencies and the General Accounting Office to meet and to identify governmentwide recommendations for solutions and fixes to the A76 process. Unfortunately, the panel will not complete its work and report to Congress until May 1 of this year. This afternoon, we would like to hear where the Administration and the Department of Defense and the military services are going from here.
We are receiving mixed messages from the Administration and DOD on this issue. In the last several weeks, DOD has testified that A76 program is unfair, cumbersome and broken. On the other hand, the Administration, through the Office of Management and Budget, wants to move forward with more A76 studies and to force DOD to follow a process that it now disavows. We are fortunate this afternoon to have representatives from the Department of Defense, the military departments and the representatives from the Office of Management and Budget to provide us with their opinions on this issue. Before we get into the hearings from our panel we would like to yield to the Honorable Solomon Ortiz, the Ranking Democrat on the Readiness Subcommittee, for any statement he would like to make.
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Mr. ORTIZ. Thank you, Mr. Chairman. I join with Chairman Hefley in welcoming all of you to this Readiness Subcommittee hearing today. It provides an opportunity for us to hear your views on one of the Department's savings initiatives that continues to create a tremendous amount of anxiety over here on the Hill. After last year's legislative dialogue regarding the A76 process that was led by my good friend and colleague Mr. Abercrombie of Hawaii, I had hoped that we would also be able to receive feedback from the ongoing GAO Commercial Activities Panel that was mandated by the Congress.
Unfortunately, their progress to date precludes their making a presentation to us at this time. First, Mr. Chairman, I need to mention that my position is perfectly understood. I am not against privatization. I am for privatization when it makes sense and when we follow the rules. In deciding what should or should not be privatized, the bottom line should be national security.
I always thought most of the Department's organization is a relic of the Cold War. The Cold War era may not be relevant today in the present configuration, but by any measure you choose to use, the organization and dedicated civilian employees have served this great country well. I also recognize that the national security environment is changing in ways none of us anticipated even a year ago.
That means some changes are in order and I accept that. The Department has many options for making those changes. As some of the prepared statements remind us, outsourcing or privatization are functions being performed in-house represent just one of the options.
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Mr. Chairman, I believe that the process in invoking a change must allow the needed change to take place in a disciplined, orderly and efficient manner where the rules are clearly understood and followed, where we understand to the best of our ability the cost and benefits to be achieved, where the cost data is perceived to be the best available and credible, and where implications for national security is a dominant metric. When this is not the case, we all lose, the Nation, the taxpayer and the military readiness, now and in the future.
What I am specifically concerned about at this hearing is about the A76 process that has been widely used in the Department to make those changes. For whatever reason, DOD has been in the forefront of federal agencies in using the A76 process in recent years. Since 1995, DOD has made the process a priority so as to reduce cost and free funds for other priorities. It clearly violates most of the primary concerns I just mentioned that I believe that are very, very important. They take too long, cost too much and we never know what the real savings are.
I clearly understand the Department's desire to improve performance while reducing cost. I also understand the need to fund dollars for other high priority needs within the Department. So far, the correct record of savings for anticipated changes has been very, very spotty. And yet, I notice that each of the service budget requests contains anticipated savings resulting from outsourcing or privatization initiatives.
I do not believe that we can afford to support a process that appears to be budget driven with considerations only for near-term impact. At some point during this testimony, I would be interested in hearing each of you address your perception of the longer term implications of continuing the application of the current outsourcing initiatives on cost, responsiveness and force readiness. Eventually, I would like to understand more about anticipated changes to the A76 process as well as the other outsourcing areas that the Department uses; and I appreciate having you this afternoon and I really am looking forward to listening to your testimony, and I thank you, Mr. Chairman.
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Mr. HEFLEY. Thank you, Mr. Ortiz. Our witnesses this afternoon are the Honorable Angela B. Styles, Administrator of Federal Procurement Policy, Office of Management and Budget; the Honorable Michael Wynne, Principal Deputy Under Secretary of Defense for Acquisition, Technology and Logistics; the Honorable Mario Fiori, Assistant Secretary of the Army for Installations and Environment; the Honorable H. T. Johnson, Assistant Secretary of the Navy for Installations and Environment; and the Honorable Michael Dominguez, Assistant Secretary of the Air Force for Manpower and Reserve Affairs.
I will remind you that we are going to be operating under the five-minute rule today so if you could summarize your statement in five minutes. You will see the little lights in front of you. Green will go on and when the red one goes on, that means you need to wind up. We will, however, without objection, put your entire statements in the record. And so if you take five minutes to summarize for us then we can get to the questions.
Let us start with the Honorable Angela Styles, and we will work down the line there.
STATEMENT OF ANGELA B. STYLES, ADMINISTRATOR, FEDERAL PROCUREMENT POLICY, OFFICE OF MANAGEMENT AND BUDGET
Ms. STYLES. Thank you, Mr. Chairman and members of the committee. I am pleased to be here today to discuss the Administration's Competitiveness Sourcing Initiative.
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I had the rare opportunity last week to speak before the American Society of Government Employees (ASGE) legislative conference. As I told that conference and I will tell you now, free and open and robust dialogue on these issues is essential. We may not always agree, but that does not mean we should be afraid to discuss these issues. I am often surprised by the fact that once this dialogue gets underway, people with opposing views often have much in common. For that reason I am pleased to have the opportunity today to discuss the Administration's Competitive Sourcing Initiative.
There are two points I want to clearly communicate. First is this Administration's commitment to competition. Competition is fundamental to our economy and our system of procurement. It is competition that drives better value, innovation, performance and, importantly, significant cost savings.
Second is the President's commitment to results. He wants to see some fundamental improvements in the way we manage the federal government. To use his own words, we are not here to mark time, but to make progress, to achieve results and leave a record of excellence.
The competitive sourcing initiative fulfills both of these commitments. By exposing thousands of commercial jobs to the rigors of competition, we will reduce cost, improve performance and infuse the federal government with the innovation of the private sector.
Competitive sourcing is a government-wide initiative to encourage competition for the performance of government activities that are commercial in nature. Using OMB Circular A76, departments and agencies have been asked to determine whether commercial activities should be performed under contract with commercial sources or in-house using government facilities and personnel.
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Competitive sourcing is a means to an end, with the means being competition, generally public-private competition, and the end being better management of our government and better service for our citizens.
There has, however, been a tremendous amount of confusion surrounding this initiative. I usually clarify this confusion by explaining what competitive sourcing is not about. Competitive sourcing is not an outsourcing initiative. Competitive sourcing is not about reducing the federal workforce. Competitive sourcing is a commitment to better management and is a commitment to competition. No one in this Administration cares who wins the competition. What we care about is competition and provision of government service by those best able to do so, be that the private sector or the government itself. What we care about is cost, quality and the availability of service and not who provides it.
Competitive sourcing is also a commitment, a commitment from this Administration that federal employees will have an opportunity to compete for their jobs. All this talk about competitive sourcing, however, does not mean we do not recognize the need to improve the process. Conducting a public-private competition is not easy, and the current process has its share of detractors. We at OMB are the first to acknowledge frustration with the fact that public-private competition takes too long.
DOD estimates an average duration of a single function A76 competition at 24 months and 32 months for multi-function cost comparisons. A three-year competition to determine who should provide commercial services hurts everyone involved.
Page 13 PREV PAGE TOP OF DOC We are also the first to acknowledge that OMB Circular A76 needs an overhaul. Since I was confirmed in May I have spent a tremendous amount of time studying the alternatives and potential process improvements. While achieving consensus among the key stakeholders remains a challenge, the Administration is committed to working with federal employees, federal employee unions and the private sector to make significant and lasting process improvements. While maintaining equity fairness and transparency, we must do a better and faster job of making sourcing decisions.
Finally, I would be remiss if I did not mention what I believe is a key element to effective management, timely and accurate information about who helps our departments and agencies perform their mission. Some recent events have only highlighted for me the lack of information the departments and agencies have available to manage the work that contractors do for the federal government. This is not a criticism of contractors. It is a recognition that the federal government needs to do a better job of collecting information about our contracts through the private sector and managing those contracts.
My office is working to create a Web-based contract management tool to be known as the Federal Acquisition Management Information System (FAMIS). Our goal is to take advantage of current technology to provide timely, relevant and reliable information to support agency decision making. While we believe that FAMIS will significantly help OMB and agency managers understand and manage private sector contracts, an agency simply can't manage well unless they know how the private sector is helping them to meet their mission needs.
Thank you for having me here today, Mr. Chairman. That concludes my statement and I would be pleased to answer any questions.
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[The prepared statement of Ms. Styles can be found in the Appendix on page ?.]
Mr. HEFLEY. Thank you very much. Mr. Wynne?
STATEMENT OF MICHAEL M. WYNNE, PRINCIPAL DEPUTY UNDER SECRETARY OF DEFENSE (ACQUISITION, TECHNOLOGY, LOGISTICS), DEPARTMENT OF DEFENSE
Mr. WYNNE. Mr. Chairman, Congressman Ortiz and distinguished members of the subcommittee, I am pleased to have this opportunity to appear before you today to discuss the status of the Department's competitive sourcing program.
Mr. Chairman, with your permission, I would like to introduce some Defense Acquisition University students from the senior contracting class from all services and all areas of the country that are here with us today. I didn't think the members of the committee would want to know that I packed the audience.
Mr. HEFLEY. If we could have that class stand up so we can recognize them. We are delighted to have you here. Wonderful. I hope this will be a learning process for you as well.
Mr. WYNNE. I think their pencils are going to be at the ready.
Page 15 PREV PAGE TOP OF DOC The Department must continue to do business better, faster and at a reduced cost to maintain our focus on readiness. However, while we must continue to focus on what we do best; in other words, core activities, we must also recognize we can be more efficient in support services. Under competition our workforce, as dedicated as they are as well as other groups, can and do provide support services at not only a lower cost but with greater speed and proficiency that we need to get the job done. This is the best of American culture and is why we work to preserve competition in all of our procurement activity.
While the Department is pursuing a number of A76 studies, we believe the Department and taxpayers are best served by employing a wide range of business tools designed to make our operations more efficient. A76 competitive sourcing is one of these tools. Other tools we are considering include reengineering, divestiture, privatization and public-private partnering. Our preferred approach, as identified in the Quadrennial Defense Review, involves a divestiture of noncore missions regardless of who is performing them. Resulting cost avoidance relieves the pressure on our topline budget, allowing investments and higher priority programs within the Department.
Secretary Rumsfeld has established the Senior Executive Council (SEC) to provide him with recommendations on where sound business practice can be more effectively applied within the Department. This senior council is composed of the Secretary, Under Secretary of Acquisition and Logistics, and the Secretaries of the Army, Navy and Air Force. Supporting the SEC is the Business Initiative Council. The Business Initiative Council is charged with changing our business process to improve mission effectiveness and reduce our cost of performance.
We have long been the leader in performing A76 cost comparisons. Historically these competitions have identified which entities can produce cost effective outcomes. In some cases, the cost comparisons have identified the government as being more cost effective. In other cases, the private sector is chosen as the service provider.
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From fiscal year 1997 through 2001 we have completed over 784 A76 initiatives affecting over 46,000 positions, and we currently have in front of us initiatives comprising an additional 45,000 positions. These additional initiatives are scheduled for completion at fiscal year 2003. The 784 cost comparisons will have generated over $5 billion in cost avoidance or savings from forecasted baselines when the performance periods, normally five years, are completed. This highlights the power of competition, and we expect to duplicate these savings when the remainder of our in-progress A76 competitions are completed.
The A76 competitive process is lengthy, complex and frustrating for all involved. It is a process that has evolved over time to ensure that a level playing field exists for all participants. At the current time, the A76 guidelines for competing commercial activities are being reviewed by a Congressionally-mandated panel of government and private experts. As the A76 process is considered defective, we are optimistic that at a minimum, the panel will identify and provide a corrective action plan for the A76 deficiencies.
Contracting performed as a result of A76 is estimated to comprise less than two percent of all DOD service contracts. While competitive sourcing is a very small part of the DOD procurement, it generates significant results in both performance efficiencies and reduced costs. Nevertheless, even though private sector contracts awarded the A76 constitute a small part of DOD services, A76 competition attracts a lot of attention and controversy. When disputes arise, adequate conflict resolution processes are in place to highlight and resolve these problems.
Page 17 PREV PAGE TOP OF DOC Since fiscal year 1995, out of the 784 cost comparisons, 30 were disputed and only six decisions were reversed. In addition, of all contracts awarded via A76, 79 percent were awarded to small business.
We are aware of your concern for the government workforce. I assure you we are also concerned. We could not accomplish our mission without the exceptional efforts of these dedicated and capable civil servants. However, the Department has a responsibility to perform its function in the most efficient and effective manner. That having been said, 784 completed A76 competitions, 57 percent favored government performance, 43 percent contractor performance. Competition identifies inefficiencies, drives operational improvements regardless of which workforce is selected.
Numerous independent evaluations attest to the effectiveness of these public-private competitions. These studies uniformly found public-private competition generates real and substantial cost avoidance. That having been said, we constantly seek improvement in the process and are eager for positive results from the commercial activities panel.
Thank you for the opportunity to share the status of this important program with will committee, and thank you, Mr. Chairman, for allowing me the introduction.
[The prepared statement of Mr. Wynne can be found in the Appendix on page ?.]
Mr. HEFLEY. Thank you, Mr. Wynne. Mr. Fiori.
Page 18 PREV PAGE TOP OF DOCSTATEMENT OF MARIO P. FIORI, ASSISTANT SECRETARY OF THE ARMY FOR INSTALLATIONS AND ENVIRONMENT, DEPARTMENT OF THE ARMY
Mr. FIORI. Mr. Chairman and members of the committee, I am pleased to appear before you to discuss the Army's competitive sourcing and privatization programs. I have provided a detailed statement and will summarize it now.
The objective of the Army's competitive sourcing program is to achieve efficiency and free resources for critical requirements. The foundation of our program is competition, the principle that market forces breed efficiency. We are looking for better value, not simply contracting out or reengineering the in-house workforce.
I would like to discuss two aspects of our competitive sourcing program, our results since the beginning of fiscal 1997, and the impact of competition on our civilian workforce.
The Army has substantial experience and success in conducting A76 course competitions over the last three decades. In the last 5 1/2 years, we initiated competitions in functions performed by almost 32,000 personnel and completed studies of almost 15,000 personnel. Of those completed studies, 39 percent resulted in conversion to contract and 61 percent remained in-house in the most efficient organization, or MEO.
The savings from these studies, comparing prestudy course to the winning contractor in-house bid, have averaged 35 percent. The estimated savings from these completed studies over the life of those contracts, normally five years, is about $660 million.
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We believe in a fully competitive process and are committed to making that process work as fairly as possible. We are also very concerned about the impact of the competitions on our dedicated workforce. Although the A76 process is laborious and intimidating to our workforce, most affected employees wind up on their feet. For example, when the Director of Logistics at Fort Carson in Colorado was converted to a contract a year ago, none of the 254 affected civilian employees were involuntarily separated. All were either reassigned to government jobs, took voluntary early retirement or voluntary separation incentive pay or went to work for the contractor. The Army has done well and will continue to do well in caring for our people.
I would like now to discuss our family housing and utilities privatization efforts.
We are now on target to eliminate inadequate family housing through construction or privatization by year 2007. Our budget includes 180 million for the Residential Communities Initiative (RCI), to continue acquisition and transition of the 11 installations currently underway and seven new installations for a total of 50,000 housing units. RCI is a great success story. I visited Fort Carson on February 25, and I am delighted to report they are three months ahead of schedule and now have 338 new units occupied and 500 units renovated; and we will meet our goal of having satisfactory housing at Fort Carson by year 2004.
The combination of privatization and new construction will meet our goal of fixing family housing by 2007 vice fiscal year 2010, as reported last year.
Page 20 PREV PAGE TOP OF DOC In 1998, the Secretary of Defense, Secretary Cohen, set a goal to privatize whenever economical all utility systems on military installations by September 30, 2003. We are fully committed to utilities privatization and to date the Army has privatized a total of 25 systems. For fiscal 2002, we have proposals for 109 systems under procurement and we expect to complete privatization actions for 35 systems by the end of this fiscal year.
President Bush, in the competitive sourcing chapter of his Management Agenda, has reemphasized the need for increased competition. The Army is committed to achieving efficiencies in our competitive sourcing program and in privatization. We believe we have done it well and the process works. We will do where it makes sense and we will do with a careful eye on all readiness implications.
The Army continues to support the ongoing Business Initiatives Council process of the Secretary of Defense. In addition, I recently brought in a Deputy for Privatization in my office to ensure that the Army actively pursues those goals of the President and the Secretary of Defense.
Mr. Chairman, thank you for allowing me to present the Army position. I welcome any question the committee may have. Thank you, sir.
[The prepared statement of Mr. Fiori can be found in the Appendix on page ?.]
Mr. HEFLEY. Thank you, Mr. Fiori.
Page 21 PREV PAGE TOP OF DOC Mr. Johnson.
STATEMENT OF H. T. JOHNSON, ASSISTANT SECRETARY OF THE NAVY, INSTALLATIONS AND ENVIRONMENT, DEPARTMENT OF THE NAVY
Mr. JOHNSON. Mr. Chairman, members of the committee, I am very proud to represent the Department of the Navy here, talking about the competitive sourcing, privatization and A76 programs. We believe that sailors, Marines, civilians in our services and the American taxpayers are entitled to management that ensures the best and most cost effective warfighting capabilities and support operations.
The Department has enjoyed success in reducing the cost of operation using A76. We continue to perform a number of A76 cost comparisons in search of savings. We budgeted 5,600 positions for cost comparison this year and will continue to support the President's Management Agenda.
We strongly endorse the idea that the government should not compete with its citizens, and a competitive enterprise system is a primary source of national economic strength. We believe that the government should rely on commercial sources of supply and products and services. A76 is not an outsourcing tool. Within our Department, the in-house organizations are selected the majority of the time.
Therefore, I believe that A76 should not be the only tool we use to determine the source of supply or services. In some cases, we know we will continue to perform functions where the expertise has moved from the Department of Navy to the commercial sector, such as logistics support for general operating supplies and other activities that are well handled in the commercial sector.
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At the same time, we have to be careful not to rely too heavily on the commercial sector in such areas as legacy information technology (IT) systems. The commercial sector cannot supply that support, and there are other areas where we need to make sure that we keep the capability in-house.
We believe that reinventing our business operations requires the tools that facilitate the analysis of all functions in our business operations and provides information on which we can have informed decisions. We need to go beyond A76 to use management tools that address the entire organization and work towards developing the most cost effective workforce. Our focus should be on department-wide efficiencies and effectiveness in all of our activities and not just on a single base or just on a particular commercial activity.
We need the committee's support for the President's Freedom to Manage Initiative so we can more efficiently and effectively execute the programs that you have entrusted to us.
Today, more than ever, our managers recognize the need for timely decision making based on sound data. They are frustrated by being told to operate like the private sector counterparts, and at the same time recognize they lack the discretionary authority given to their counterparts to do the work that it takes to get the job done.
Our managers are ready to assist in the reduction of cost and willing to be held accountable to measurable performance standards. Today with your support, we have the real opportunity to make a difference in the way our Department manages.
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I would also like the committee to avoid imposition of legislative restrictions on outsourcing for specific skills or services. These restrict our ability to develop a cohesive and efficient long-term workforce.
I would be pleased to answer questions during the question period, sir.
[The prepared statement of Mr. Johnson can be found in the Appendix on page ?.]
Mr. HEFLEY. Thank you, Mr. Johnson.
STATEMENT OF MICHAEL DOMINGUEZ, MICHAEL DOMINGUEZ, ASSISTANT SECRETARY OF THE AIR FORCE (MANPOWER & RESERVE AFFAIRS), DEPARTMENT OF THE AIR FORCE
Mr. DOMINGUEZ. Thank you, Mr. Chairman and members of the committee.
First, I want to apologize for the lateness of my prepared testimony, and I will certainly work on that if I appear before you in the future.
I want to say that the Air Force has been using A76 fairly aggressively since the 1960s, and we have got a couple lessons from that. The first is that it is painful. The second lesson, though, is that there are real, sustained, tangible rewards; and we have been able to take those rewards and reinvest them in things of interest to this committee in support of the national security, like modernizing our aircraft, like buying spares. More directly, we have been able to shift military billets out of support operations and into things closer to the combat forces to start trying to deal with the stress in our career fields and to try to get down the personnel tempo, which then improves our retention, which then improves our readiness.
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We have, as you know, shortfalls in all of these areas. There is just more to do in every one of those areas, so we feel like we have an obligation to continue to try and drive costs down in our support structure and try to get manpower out of our force structure so we can put more tooth and less teeth into the tail. So we will keep using A76 where it is the best tool for the job.
But I have heard you, Congressman Ortiz, and I want to assure you that national security, the ability to acquire the support and provide that support to the combat Air Force when it needs it and the time it needs it with the reliability that we need is a dominant consideration, and it will continue to be a dominant consideration for us as we go through these decisions.
Our second challenge, though, is what you have heard from all of the panelists, is to try and find a way to do this better, to get better A76s but also to try to find other ways to reap the benefits that are out there in becoming a more efficient service provider; and it is my objective to try to find a win-win in there for everybody.
And with that, I look forward to your questions.
[The prepared statement of Mr. Dominguez can be found in the Appendix ?.]
Mr. HEFLEY. Well, thank you very much, and thank all of you for your testimony. What I heard from your testimony is that it saves money, that it encourages efficiency, that it shifts military out of some of these roles, which is a good thing; let them do more what they are supposed to be doing. But we also hear it is a pain in the neck, that it takes too long, that it is difficult; and I didn't hear much about how to solve it.
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What could we do this year in the Congress to make this A76 process work better? I take it from what you said none of you want to do away with the process. So can you comment? Do you have any ideas about how to make it work better and faster? It is ridiculous for the process to take two years, for instance, two to four years to define a job depending on how many functions are involved. So we are talking about years to get through a process, it seems like. So how do we make it work better?
Ms. STYLES. If I could start, Mr. Chairman. The longest part of the process is the front end, actually developing the performance work statement. It is part of the process that is defining what you do, what you are actually performing in the federal government. And we need to do a better job of managing that, of really having the incentives in place for the people who are running an A76 competition, who also may be losing their jobs or their people may be losing their jobs, to have an incentive to actually want to run it well and to run it quickly.
One of the main things we can also do to improve the process, (the reason that we have A76 in the first place is because the federal government does not account for its cost through the budget and appropriation process in a way that we can readily compare the cost of a particular function to the private sector; that is really the original purpose of A76), is for us to be able to make a cost comparison between what the government does and what the private sector does. Until we make significant steps towards full cost budgeting, we are never going to be able to get there.
We introduced legislation earlier this year to make some initial steps in that direction and we are also working on legislation to move even further in that direction to ultimately eliminate the need for a cost comparison so we can know exactly what it costs for us, cost the taxpayer for us to perform a particular function in the federal government.
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Mr. WYNNE. Mr. Chairman, I would respectfully say that this commercial activity panel is diligently working. Secretary Aldridge is our representative on that committee, and I would ask this committee to take a careful reading of that report when it comes out. And I am, as I mentioned, very hopeful that it will have some suggested corrected deficiencies in the current process.
Mr. HEFLEY. You think, then, that we would be wise to wait until after May 1 when that report comes out?
Mr. WYNNE. Sir, I only think that would be prudent for you to do, yes, sir.
Ms. STYLES. If I could follow up, I am actually a member of that panel and I am very hopeful that we will have some significant and meaningful recommendations for Congress.
Mr. HEFLEY. Anyone else want to comment on that?
Mr. JOHNSON. I agree, Mr. Chairman. The current method, we ask our workforce to do something they are not well prepared to do, and as we go forward we need to help them. Again, it has to be the most efficient organization and so forth. But it is something they have done all their lives, and we ask them to do it and we also tell them it affects their future. So we have to find better ways working both sides of the bids, if you will.
Page 27 PREV PAGE TOP OF DOC Mr. HEFLEY. Anyone else?
Mr. DOMINGUEZ. I want to endorse what Angela said about the cost accounting; and, as this Administration makes progress on performance budgeting, too, and their managing for results, because I think those two pieces will come together quite nicely. So I am very optimistic about that.
Now there are steps we can take within our agencies to improve things. And we learned a lot from this recent experience at Lackland. We are now providing training for the people who are involved. We are now making sure that we now have multi-disciplinary teams on these panels that are preparing the statements of work and the performance documents so that we have got all the right skills right there. We are developing a center of expertise up here at the Headquarters of the United States Air Force so they can support all of the people in the field actually doing this work, and we have brought in our Air Force audit agency and they do periodic checks at critical stages in the process to make sure that everything is okay, that the playing field is level, that the work has been done properly.
So inside that mechanism, we can try to improve it to make it run a little more smoother and faster; and a lot of it has to do with incentivizing our people, but also preparing them for this challenge that they have not experienced before.
Mr. HEFLEY. Thank you very much. Let me ask a specific question. Title X prohibits DOD from outsourcing security guards and I guess, Ms. Styles, this would be for you. We are told that because we can't outsource security guards, we are pulling a lot of people off other jobs since we need more security right now and making them guard the front gate and so forth.
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Would the Administration support repeal of the statutory prohibition
against outsourcing of security guards?
Ms. STYLES. Absolutely. It should really be left to the agency to determine if a security guard is an inherent governmental position. You can have a security guard that is carrying a weapon, using force and protecting the life of people that you may define as inherently governmental. You have other security guards that may not be inherently governmental. That should be left to the agency to make that decision and not be made by statute.
Mr. HEFLEY. How, if we do that, do we guard against gettingwhat is their name? Argenbright or whatever their name isthat has done the wonderful security at the airports that just makes you nuts when you read those reports? How do we prevent them from guarding Fort Carson or Norfolk or somewhere else?
Ms. STYLES. I think it is the matter of the contracts that you enter with them and being willing to pay enough and require enough as in the opening solicitation of your contract saying we must have X type of individual who is paid X amount of money who has these skills. That way you ensure that your contractor has the right kind of person in place to be a security guard.
Mr. HEFLEY. Anyone else?
Mr. WYNNE. I would only say, sir, that we have a database, usually on our contractors, that indicates past performance; and I would hope that that would be one of the devices we would use. My colleagues, however, are closer to the problem and closer to the action and I would turn to them.
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Mr. FIORI. I would like to comment on that. When I first was honored to take this job, the first question I asked is why aren't we using private contractors because I came from DOE in last life and I ran Savannah River site, where we took care of plutonium and tritium, which were high important items to protect. And we used the contractor not to beonly to be my guard force. Had a separate police force and a separate SWAT team. And the SWAT team allowed me to reduce the number of people that I needed for the entire 320 square miles because I had quick response teams. My point is we used a contractor who is well qualified to do all three missions. And I thought it was so obvious that we should be doing this; I was surprised when I found that I wasn't allowed to do it. I am certainly an endorser of it and we have provided legislation in the past to get this privatized and it was turned down last year, as you know.
Mr. HEFLEY. Maybe we ought to. Mr. Johnson, you want to comment?
Mr. JOHNSON. We in the Department of Navy support having the option on all jobs. But then we have to be accountable for ensuring that the people we hire meet the standards that we need and don't have the situation you described earlier. If you monitor and demand the performance, you will get the performance.
Mr. DOMINGUEZ. Yes, sir. I want to echo that as well. We do support that. We would like the option. We have to be very careful, again if it is a national security question first. I do want to point out, though, that Arnold Air Force Base is guarded by a contract workforce and that in the Air Force we still do operational readiness inspections so the security forces are part of that, so we can test them to see that they are meeting their performance standards and we will have to do that kind of creative work, you know, if we go in this direction. Thank you.
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Mr. HEFLEY. Again, Ms. Styles, I am not picking on you, but you are familiar with the TRAC Act?
Ms. STYLES. Yes.
Mr. HEFLEY. Would OMB recommend that the President veto the defense authorization bill if that language were placed in the bill?
Ms. STYLES. Senior advisors would make that recommendation, yes.
Mr. HEFLEY. Mr. Ortiz?
Mr. ORTIZ. Going back on contracting out on security work, what happens when they strike?
Mr. FIORI. I would like to give that a chance because obviously I have had that opportunity on several occasions; and at the Savannah River site, we had a workforce that was not unionized. We are a right-to-work state. But we had other groups in the Department of Energy in different states where the laws were different and people did strike. And the one that comes to mind is the one in Rocky Flats. What we did as an agency at that point is get people from all our other facilities that were not on strike to contribute people, and obviously you have to go through the process to get them over there because we had in Rocky Flats a large, large inventory of plutonium.
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So I would say the same thing for one of our facilities right now with chemical or munitions that I am protecting. Right now I am using 130 to 150 National Guard soldiers at several of my facilities to protect these places. I think I would be a heck of a lot better off if I could use good civilian forces to do it. I mean there is a thing of quality and you have to hire quality people. But we were able to work through the unionization and the strike issues very well.
Mr. ORTIZ. Because we have had experiences before where we have had bases where we had pilot training and then they went on strike for three, four months. And this is a source that irritates usat least this Member. And I think that when you federalize security guards to take care of airports because it is a serious business, it is also a serious business to be able to protect those workers that work in military facilities who have families who might be living inside these facilities.
So I take this very, very serious, Mr. Chairman, as far as contracting out. And maybe because I was in law enforcement beforeI used to be a sheriff and you have to be very careful who you place in these positions.
Mr. FIORI. Absolutely. In my community, for example, our local communities have tried to use, I would say, much of my training from my police force because my police force was licensed to be in the five counties around me. And we did provide services to our communities and we were the envy of the community instead of vice versa. So it can work both ways.
Page 32 PREV PAGE TOP OF DOC Mr. ORTIZ. Thank you. I have a question for OMB. We hear a lot about contracting out, but not much about in contracting. By that I mean allowing the government workers to compete for work. If I understand correctly, throughout the years we spent millions and millions and millions of dollars one waycontracting out. How manyand this is for all of youhow many jobs have we brought in or how much money have we spent to try to do the same thing, instead of contracting out, contracting in?
Ms. STYLES. As you probably know, the current A76 Circular allows for us to have public-private competition to bring work back in. There are a few barriers to that and we fully intend to remove those barriers. What we really want to see is the best sector providing this service without regard to whether it is the public sector or the private sector. We want to see true competition. And this is really a fundamental shift in the way other administrations have taken a look at A76 and taken a look at outsourcing. We want to provide the encouragement where appropriate for public sector entities to be able to compete for work even if it has already been contracted out, work that is in-house and new work.
That is a fundamental shift in looking at this. We have always assumed in the past that the private sector can perform commercial jobs better. That is not actually our belief. This Administration believes that oftentimes the public sector can perform the work better and cheaper. That is not to say we have had a lot of them so far. Our problem, the Department of Defense, I think, is a matter of encouraging where it is appropriate because they have the infrastructure there to compete already. At the civilian agencies it is matter of having the infrastructure in place to have public-private competition on a regular basis. We simply don't have that right now.
Page 33 PREV PAGE TOP OF DOC Mr. ORTIZ. Mr. Wynne.
Mr. WYNNE. What I would say, sir, since fiscal year 1997, the Department had announced 18 A76 competitions which at the start of the initiatives were, in fact, contractor work performance. Of the 18 A76 competitions, four have been completed in that they have reached final decision, two are in progress, 12 of these were cancelled at the request of the organization; and of the four completed initiatives, two remained under contract performance and two returned to government performance. So there have been over time instances where we, in fact, did return this to government work from contract performance where it was deemed that they could do it.
I will also add to you that we took from last year the accuracy issue and what we found from the Naval analysis finding was that we hadn't required the most efficient organizations to maintain cost records as we had the contract standards. And so I think we canwe will have a better comparison other thanbecause we will now have track of actuals. We started this under the Commercial Activity Management Information System. And as time goes on, I think we can meet more of this committee's standards, if you will, in identifying the true go forward costs.
Mr. ORTIZ. But what does this do to morale when you have this cloud hanging all over employees that you are starting to see whether they are going to lose their jobs. This is a big morale factor on those employees.
Mr. WYNNE. Yes, sir. I accept that and it is no different than if you were on a long-term strike and then you were coming back; you would have mixed feelings about your current employer and your employment. That is one of the reasons I fully endorsed what Angela indicated. These things need to be done at a much faster pace. I think the stretch out, if you will, of this, you essentially lose the enthusiasm that you have as an employee building the Performance Work Statement (PWS) and making your MEO, if you will, most efficient and then the drag out of the activity is somewhat demoralizing. It is not the action itself because many of these have in fact been won by the MEOs and they are performing very well. But what I would like to see, as everyone would, is the A76 process move a lot quicker.
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Mr. FIORI. I don't have anything else to add to that, sir.
Mr. JOHNSON. No, sir.
Mr. ORTIZ. Good to see you. Would you like to add anything?
Mr. JOHNSON. No, sir. He has covered it well.
Mr. DOMINGUEZ. No, thank you, Congressman.
Mr. ORTIZ. I have got some more questions and I will ask them later.
Mr. HEFLEY. Mr. Chambliss.
Mr. CHAMBLISS. Thank you, Mr. Chairman. Just following up quickly on Mr. Ortiz's inquiry about this kind of reverse A76, is the way I look at it, frankly this is an issue that has been of great concern to this committee for a number of years. And Ms. Styles and Mr. Wynne, I am hearing what you are saying and you are going to have an opportunity to prove that what you are saying is 100 percent correct.
But I want to tell you we are going to be doing direct oversight on this particular issue, and I would venture to say that virtually every member of this subcommittee is extremely concerned about this A76 issue from the standpoint that the previous Administration had a clear vision of moving every single thing out of every depot out to the private sector, and that is wrong. It not only reduces morale of the civilian workforce, but it significantly reduces the morale of the warfighter out there.
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Now I hope this Administration really reverses that attitude that exists at DOD. And if I am hearing you correctly, that is what I am hearing. But I want you to know we are going to be looking over your shoulder on this, and we are going to be looking very, very closely.
I noticed on a memo that went from DOD to OMB recently there was a reference to divestiture versus doing A76.
What does that mean? What are we talking about there?
Mr. WYNNE. That divestiture means that you transfer assets to the private sector and actually they absorb the assets in line and the employees as well, which is different, if you will, than competitive outsourcing where you only compete the positions. You might just want to transfer the assets and so essentially convert that activity to the private sector.
Mr. CHAMBLISS. Well, is this a way to simply avoid A76 or what is it? Why are we doing it that way?
Mr. WYNNE. Actually the lead was taken in the commercial industries, especially in the information technology sector where the companies disposed, if you will, because they had no career path for IT professionals; and so we outsourced two computer science corporation, other IT specialists, so our employees would have a better career path. So there are different reasons for doing it; but dominantly we felt like in the commercial sector, they could perform it better, cheaper. It was not our core business, and frankly, it isn't now.
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Mr. CHAMBLISS. In the Floyd Spence Defense Authorization Bill last year, we put a provision in requiring a study of A76 and some comparison numbers out there. In spite of that study ongoing, which I think it is not due until sometime maybe early next year, Ms. Styles, OMB is mandating that five percent of all functions be studied in 2002; and it is increased to 15 percent in 2003. How, why are we doing that with that study ongoing, and how were these percentages arrived at?
Ms. STYLES. I am actually a member of that panel, and I am working actively with it. The report should be ready May 1 of this year. When we sat down and took a look at the different tools that we had available for management, we realized the DODwhen A76 is used correctly at the Department of Defense, we are achieving significant cost savings, performance improvements, and we are able to infuse the public sector with innovation of the private sector. Granted, the Department of Defense has already undergone significant A76 studies, and what we wanted to do was to take what they have learned and use that at the civilian agencies which frankly haven't been conducting any A76 studies with the exception of the Department of Veterans Affairs and GSA about 15 years ago.
We wanted to take the value of that initiative and encourage the civilian departments and agencies to use it, to use A76, to compete the positions that are commercial in nature, to build an infrastructure to perform those competitions. We think at the Department of Defense, 15 percent over two years, is what we need to maintain the infrastructure to run public/private competitions.
Mr. CHAMBLISS. How about the private sector? Have you also mandated five percent and 15 percent of the contracts that have been outsourced on competitive bid over the next two years?
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Ms. STYLES. We have not mandated anything to be studied that has already gone out to the private sector. We are encouraging departments and agencies to take a look at that. In fact, at individual departments, we think it is not even appropriate for them to meet the 15 percent. Housing and Urban Development is one of the best examples I have. They probably sent too much work out the door over the past 10 years and they severely cut their full-time equivalents (FTEs). We are encouraging them to take a look at bringing things back in, and we actually have a lower standard for them. So our 15 percent isn't arbitrary and enforced at every department and agency. We are taking a look at each department and agency about what is appropriate for their mission, for their requirements and what they actually need.
Mr. CHAMBLISS. So the five and 15 percent just applies to DOD?
Ms. STYLES. No. It applies government-wide. It is an aggregate goal government-wide that we have set. We think it is appropriate at most departments and agencies, from an infrastructure perspective, to build the infrastructure for public/private competition; and 15 percent of the Department of Defense is appropriate to maintain the infrastructure for public/private competition.
Mr. CHAMBLISS. Okay. I didn't understand that part. But there is no mandate to review previously outsourced contracts in a like manner?
Ms. STYLES. No. But where it is appropriate we are absolutely encouraging that, and we intend to remove any barriers that are currently in the circular that would prohibit that.
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Mr. CHAMBLISS. I guess that's what I don't understand about this. You tell us in one sentence that you are trying to make this fair and equitable and you are going to look at contracts that have been outsourced, that you are going to do a better job of that, and yet you are mandating that five percent this year, 15 percent next year at every agency be A76; but on the other hand, you are saying even though we want to be fair and equitable, we are not going to look at contracts on the outside and see if they ought to be brought back in. I don't how that's fair and equitable, and how you can say that you are going to do it and you are moving in that direction and you turn right around and say no, we are not really doing that.
Ms. STYLES. Well, the jobs in the federal government that are commercial in nature, we have 850,000 that are commercial in nature from hanging drywall to food service that have never, ever been subject to the pressures of competition. The work in the private sector is competed on recurring basis every three to five years generally. That is the main distinction.
Mr. CHAMBLISS. Well, I just know that we have had a number of programs at facilities in my district, and outside of my district in my state that have been subject to A76. They have gone to the private contractor, and that is okay if that is the way the program is supposed to work. But I know also that there are a number of programs where the private sector is doing the work that could be done better in-house; and it appears that we are making no effort, and again, I am not picking on you all because you all are basically still the new kids on the block, but we have been hammering this for the eight years that I have been in Congress, and there doesn't seem to be any movement in the direction of reviewing contracts that have already been outsourced.
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And if we are going to mandate that five percent of contracts that are in-house be reviewed, we ought to mandate that five percent of the contracts that have been outsourced on a competitive bid be reviewed also; and if we are not going to do that, then we are going to be back here at this next hearing in the next several months talking about the same issue again, and we are going to be asking the same questions. So I just hope you all will review your mandated requirements to all of these contracts and reconsider the possibility of maybe looking more at mandating some of the outsourced contracts for review also. Thank you, Mr. Chairman.
Mr. HEFLEY. Mr. Rodriguez.
Mr. RODRIGUEZ. Thank you, Mr. Chairman. Let me follow up a little bit on that because I knowyou say they are out for competition all the time. We contracted out on Medicare because we wanted to bring down the cost of Medicare for our seniors. We went to the HMOs. Right now the HMOs are costingif you are under HMO and under Medicare, you are costing us more than someone who is under straight Medicare. So there is a point in time there that we lose out.
So there is a need for us to kind of look at both sides. I just thought I would make that comment because there is an area there, for example, that it has cost us more. Let me ask you, in the written testimony, there was some discussion that the Department of Defense recently reached an agreement with OMB regarding the long-term goals for the Department of Defense and especially with the President's Management Reform Agenda.
That is based on the written both from the Department of Defense and OMB. What is that agreement and does it have any direct implication to the A76 or does it call for any percentage of items that are going to be delved under A76?
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Ms. STYLES. I can answer, and then I think you can fill in. The Department of Defense has agreed with us to meet the 15 percent goal, to compete 15 percent of the current commercial inventory under A76 for the next two years like the other civilian departments and agencies have committed. The President has set a government-wide goal of 50 percent. We have not set a time line for that because we want to assess how we are in building the infrastructure for the first two years. We agreed with the Department of Defense as we go forward and look at the additional 35 percent that we will sit down and discuss that, and there will be appropriate elements of competition for the next 35 percent.
Mr. WYNNE. Congressman, I basically endorse that. I would see what we did was assess the A76's that were in process and we determined that we believed we could meet the 15 percent goal. We realized though that the stretch goal we were being requested would require some other means and methods to achieve, and so we opened essentially a portfolio of business opportunities rather than just focus on A76, and that is the agreement that Ms. Styles was referring to.
Mr. RODRIGUEZ. Let me also ask you, and I apologize, I had to walk out for a little bit and I didn't hear all the testimony, but based on some of the written testimony that I got, there weren't any recommendations that told us how do we improve the competition or how do we improve the outsourcing; and did I hear you were going to be submitting that later on?
Ms. STYLES. I am a participant in the Commercial Activities Panel that is being run by GAO, and David Walker has requested that until that report comes out, that we do not comment on specific recommendations that the panel will make.
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Mr. RODRIGUEZ. Okay. Thank you.
Mr. WYNNE. I believe we all felt, sir, that we should help the management at the centers that are affected to do a better job of especially writing the PWS so that it isn't discussed and debated for a number years, and perhaps look for ways to speed up the process; but I also believe that this committee should await the Commercial Activity Panel'sI know they have worked hard on it and Angela is a member of it, Secretary Aldridge is a member of it, and I am hoping at a minimum that we can improve the A76 process; and I am also hoping for promising look-forwards on any other process that we could do the same kind of thing with.
Mr. RODRIGUEZ. In those same lines, I think there was a consulting firm that you talked about replacing the A76 process with what they called a bid-to-go process; and I was wondering whether either the Department of Defense or OMB had looked at that and looked at the value of that recommendation.
Ms. STYLES. We certainly have discussed it as part of the Commercial Activities Panel. We have taken a look at it. We have encouraged departments and agencies to come to us with innovative ideas to consider. That is as much as we have taken a look at it so far though. You may have more.
Mr. WYNNE. No, sir, I can't add to that. I think they were participants or they testified before that committee, and I think that is where we are on that.
Page 42 PREV PAGE TOP OF DOC Mr. RODRIGUEZ. I just want to make some last comments because the A76, especially my experience with it at Lackland has been just devastating to the workers there, first being told you don't have the job, then being told you do have the job and then being told again right before Christmas you don't have the job; and so some of that kind of stuff is not healthy. I don't care whether you are a private company or a public company. It is just not good for morale. And then when the numbers are extremelyI think there was, I don't recall, $10 or $11 million difference out of 200-something million, to change all that around and the differences on that. I know it has been extremely devastating to the entire community as a whole, and hopefully we can come to better grips, but I also know that the process helped the existing workers mainstream and get their ship in tighter order to make some good things happen; and because of the fact that the pressure was there, that they might have lost their jobs and I realize that in terms of the benefits of that. I don't know, Mr. Dominguez, if you want to make any comments on that. I was referring to the Lackland.
Mr. DOMINGUEZ. Right, thank you. And I first want to say that I am the Assistant Secretary for Manpower and Reserve Affairs. Most of my compatriots up here are from the installations and logistics portfolio. Secretary Roche and I very, very keenly see the morale challenge and the workforce challenge that A76 presents, and that is why it is in my portfolio and not Nelson Gibb's. It is a people issue to us. So we feel that very, very strongly and the Lackland experience is one that Secretary Roche has taken to heart; and his initiatives, as I mentioned beforeI think you may have been out, sir. We have put some things in place so that we do that better. We train the people so that they are capable of doing that. We have got centers of expertise to help them. We have got our Air Force audit agency to intervene in the process to make sure things are going right and that the playing field is level and they have done the proper work.
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So we put in places things to help improve that. But there is plenty more work to be done. I do also want to say, though, that on these studies without specifically giving data on Lackland, which was not awarded and which was sent back to the drawing board, while the differences between the government MEO's bid and the contractor bids are very frequently very close, both of those are generally 25 percent cheaper or more than the status quo ante.
So as you pointed out, Congressman, they really did in building the MEO, the people at Lackland really, really did streamline their organization, wring costs out of that operation; and they need to be commended for that effort.
Mr. RODRIGUEZ. Thank you. Thank you, Mr. Chairman.
Mr. HEFLEY. Thank you very much. We have three votes, and by that time, we are going to be out of time for the hearing, so if Mr. Underwood and Mr. Riley could be very quick, we will try to get you in quickly, or else submit your questions for the record.
Mr. UNDERWOOD. Very good. Thank you, Mr. Chairman. And just for the record I want to also indicate my strong concerns about the entire A76 process. It creates an enormous amount of consternation in various communities. I just went to Colorado springs this past weekend. I talked to an individual who has gone fromthe A76 has followed him around from Naval Station to Anderson Air Force base to the Air Force Academy, and now he has gone to Fort Lewis. So this is the kind of process that through priority placement, his family, even when he is able to take advantage of these things, they are very tortuous.
Page 44 PREV PAGE TOP OF DOC I also want to indicate my strong concern and endorse what Mr. Ortiz has said about the security guard situation. I guess fundamentally, we are at a point whereand I am so very grateful for your testimony, Ms. Styles, because I think it outlined a kind of a philosophy about why we are doing this; and if you don't agree with the philosophy, then nothing else follows and I am very concerned.
I don't understand why we can't get better management by doing better management. I don't understand why we have to insert this very debilitating competitive process into it and that that is the way to get better, more efficiency and more savings out of or government employees. I don't accept that, but I see that it is clearly outlined here, and it is clearly outlined in a way that could be seen as compelling, but I don't see it as compelling frankly, but I appreciate that testimony.
I know that the Secretary of the Navy has indicated recently, or has kind of hinted that there is a kind of moratorium on A76 studies in the Navy, and I just want to get confirmation from Mr. Johnson if that is, in fact, true, and also get from the other services whether they are going to follow the leadership of the Navy on that.
Mr. JOHNSON. Sir, our secretary is as frustrated as each of you are with the difficulties of A76. He has seen it in private industry and now in the Navy. He will abide by the direction of the Secretary of Defense, and we will continue to do A76's that we have planned and obviously, if we get issued new requirements, we will do that. We are looking very, very hard at other ways of accomplishing the same thing, but we will support the President in his program and the Secretary of Defense, and the Secretary of the Navy certainly will do that..
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Mr. UNDERWOOD. So the moratorium was slightly exaggerated?
Mr. JOHNSON. Well, what he said was we are not going to do any more than we already have on the plan, but if we get issued more, we will do more.
Mr. UNDERWOOD. And for the record, just it is not clear in your statement, Ms. Styles, but I know you can submit it for the record. When you say 57 percent of the decisions favor the in-house and 40 percent favor the outside offerer, I want to know how many of positions each of those numbers represent; and second, you also mentioned that 79 percent of all contracts were awarded to small businesses. I want to know the dollar value of the 79 percent versus the dollar value of the 21 percent.
Ms. STYLES. Those are fair questions.
Mr. HEFLEY. Give those answers to Mr. Underwood.
Mr. RILEY. Thank you, Mr. Chairman. Mr. Chairman, I do have some real problems with A76 process. I have got several questions here I would like to submit and get written responses in each one of the panel, if I could. But while I have this opportunity, Dr. Fiori, let me ask you about the Anniston DEMIL facilities being built today. As you know, Secretary of Defense put Secretary Aldridge in charge of this program. We had an agreement, an additional $40 million to go to the Chairman of the JCS-sponsored exercise (CSEP) program in Anniston. Since that time, FEMA has decided not to participate in that. Since it is your money that is being spent, how are we going to rectify this?
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Mr. FIORI. I am glad you asked the question, sir. I think I am actually coming to visit you to discuss the subject, but the facts remain I found $40 million within a week of Secretary Aldridge telling the Army to do it, and by Congressional law, FEMA is our agent to spend that money and FEMA has very steadfastly, very openly refused to spend that $15 million for reasons that they feel are very serious.
So it does put us in an interesting situation where we have passed the money to them as required, and as we agreed to, but FEMA is the agent by law to spend that money.
Mr. RILEY. So do we need to do our negotiations with FEMA rather than DOD and with the Secretary of Defense, who is in charge of the ultimate program? I think it is absolutely remarkable that we have bureaucrats in FEMA overriding a decision made at the Secretary of Defense level.
Mr. FIORI. I don't think Mr. Allbaugh could be considered a bureaucrat necessarily, but he is a gentleman that.
Mr. HEFLEY. Mr. Fiori, I hate to cut you off, I hate to cut Mr. Riley off, but we are down to three minutes now and we have to get to the vote. So thank you for.
Mr. FIORI. Yes, sir.
Mr. HEFLEY. The committee stands adjourned.
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[Whereupon, at 3:19 p.m., the subcommittee was adjourned.]