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Schumer And Gillibrand Introduce Legislation With Senate Colleagues To End So-Called "Efficiency" Studies That Have Been So Inaccurate They Were Ordered Halted By President

West Point Study Is Prime Example Of Flawed Study; Army Changed The Requirements For Current Workers Halfway Through

Schumer, Gillibrand: Legislation Will Put Final Nail In The Coffin Of Ineffective And Counterproductive A-76 Studies

Today U .S . Senators Charles E. Schumer and Kirstin Gillibrand announced the introduction of "The Clean Up Act" to end the use of a deeply flawed type of study used by the Office of Management and Budget (OMB) to examine the cost and benefits of privatizing employees in certain government installations.  Schumer and Gillibrand noted that while reducing costs is important, the type of study current used to compare the use of private versus public employees (referred to as an A76 study) yields overwhelmingly unreliable results and therefore puts jobs and families at risk while accruing no proven benefits to the taxpayer.  Because of the flawed nature of A76 studies, cost could actually increase, leaving taxpayers on the hook.  Schumer and Gillibrand are original cosponsors of legislation introduced today by Senator Mikulski to reform the outsourcing and insourcing process and ensure that federal employees and outside contractors compete on a level playing field and remove the current biases. 
Earlier this year, after a series of congressional investigations by the Government Accountability Office highlighted the significant flaws inherent in the current A76 process, Congress took action and inserted language in FY09 Omnibus Appropriation bill that prevented any new A76 studies from beginning for the next year. President Obama signed the provision into law and issued a recent memorandum expressing serious concerns with the practice of contracting out government work.
"To follow the recommendations of a review process considered so inherently flawed that it was suspended by Congress is the height of foolishness," said Schumer.  "The legislation introduced today will prevent these types of studies from continuing and throwing lives into turmoil in difficult economic times with no proven gain to the tax payers.  The recent A76 study at West Point is a prime example of what is wrong with the process it forces current workers to compete on an unlevel playing field  and I will work to overturn the resulting decision, while preventing such studies from going forward in the future."
"During these tough economic times, the last thing we need to do is rely on a flawed study that eliminates good paying jobs in our communities," said Senator Gillibrand. "The study at West Point was so obviously unfair, and New Yorkers have their jobs in jeopardy. I will work with Senator Schumer to end these studies and keep our jobs here at West Point."

The legislation comes on the heels of an A76 study that, if unchecked, will privatize hundreds of operations and maintenance jobs at West Point Military Academy and leave over a hundred more custodial positions in jeopardy. The decision, announced by the Department of Defense earlier this month, will transfer operational control of almost 400 operations and maintenance jobs to The Ginn Group, headquartered in Peachtree, GA if left unchecked.  Unfortunately, A76 studies that were currently underway were not affected by congressional action. Schumer and Gillibrand will be introducing an amendment to the upcoming Defense appropriations bill to prevent the implementation of this study.  They are introducing "The Clean Up Act" to prevent any future study from endangering the jobs of hard working federal employees while providing no benefits to the tax payers. 

The A76 study just completed at West Point is a prime example of what is wrong with the A76 process. For one, it measured two employment structures that cannot be accurately compared. The study estimates the total cost to the Army of continuing to use federal employees. However, when soliciting bids from private contractors, the Army is asking for a "cost plus firm fixed fee" contract. These contracts do not require the contractors to estimate their costs, and mean that the Army will have to pay whatever the contractor bills. If this contract is privatized, it could easily cost the Army more money than using the current unionized workforce. That risk alone is sufficient proof that the study is flawed.

The senators also noted that the study was flawed because the Army changed the requirements for the union halfway through. Originally, the Army allowed the union to combine the operations/maintenance and custodial responsibilities into a single bid, which allowed them to achieve economies of scale. Halfway through the process the Army required the union to separate these two contracts, but did not allow them to begin the process over.

Schumer and Gillibrand noted that with such an inherently flawed process, the costs at West Point could indeed increase, leaving the Army and the taxpayer on the hook.

The Office of Management and Budget (OMB) established the A76 study to ensure that the government does not waste taxpayers' money by paying government employees to perform tasks which could be completed at a lower cost by private contractors. However after studies by the Government Accountability Office caused great concern about the accuracy of such studies, Congress acted in the Fiscal Year 2009 Omnibus Appropriations bill to curtail the A76 process.
Earlier this year, Schumer and Gillibrand wrote to Secretary of Defense Robert Gates asking him to suspend the West Point A76 study which, at that point, was still underway. 
The Clean Up Act will reform the A76 process by:
  • Ensuring that work that should be performed by federal employees-whether it is inherently governmental, closely related to inherently governmental, or mission essential-is incrementally brought back inhouse so that it can be performed by reliable and experienced federal employees who put the public interest first;
  • Encouraging agencies to assign new work to federal employees, especially when insourcing would be better than yet another 20 solesource or limited competition contract, and identify obstacles to insourcing more new work;
  • Establishing agency inventories of service contracts so that managers know what contractors are doing, how much they cost, whether the work involved should be performed by federal employees, and when work is not being performed effectively and efficiently;
  • Requiring agencies to determine where there are or will be shortages of federal employees and develop plans to address these shortages;
  • Directing the Obama Administration to make drastic, longoverdue reforms to the OMB Circular A76 process; and
  • Suspending the use of that process until all of the reforms discussed above have been substantially implemented across the federal government.