Letter to OMB regarding FY 04 Transportation Treasury Appropriations Conference Report

November 19, 2003

The Honorable Joshua B. Bolten
Director
Office of Management and Budget
725 17th Street, NW
Washington DC 20503

Dear Director Bolten:

As negotiations continue on the FY04 Transportation Treasury Appropriations conference report, I urge you to oppose restrictive, unnecessary competitive sourcing language that would seriously disadvantage the business community in the federal and global market. The U.S. Chamber of Commerce, the world's largest business federation with more than three million members of every size, sector and region, has been a strong supporter of the President's Competitive Sourcing initiative and has significant concerns with the language contained in the conference report.

First, language included in the conference report would mandate the use of OMB Circular A-76 in virtually every case in which consideration is given to converting work from the public to the private sector and change the process for streamlined competitions to significantly advantage the public sector. Agencies would no longer be able to make sourcing decisions based on the size or nature of the function and would be prohibited from making logical, common sense investments by requiring a 10 percent cost savings from the private sector. These requirements skew the evaluation in favor of the government bidder, disadvantage agencies and the taxpayer and effectively slam the door on small businesses. The language significantly alters the recent revisions to A-76, which were the focus of extensive public debate and comment, and should be removed from the final bill.

Secondly, clarification of the appeals rights language is needed in the final agreement. Under a series of laws and regulations governing both labor and procurement policy, contract appeal rights are limited to individuals who are legally empowered to sign and commit to the terms of a proposal and, upon award, to sign and legally commit the entity to a binding contract. Therefore, no private sector employees or their unions have standing to protest source selection decisions. For that same reason, it is inconceivable that individual federal employees or their unions could be granted standing because they have neither the legal nor financial liability for their "bids" or performance. Doing so would wreak havoc on the process and, even more importantly, raise substantial legal, and possibly constitutional issues.

Finally, the offshore outsourcing prohibition included in the conference agreement is protectionist in nature, unnecessary and shortsighted and should be removed from the final bill. Enactment of this provision is likely to run afoul of numerous international agreement commitments and could invite contentious – and expensive – proceedings in international bodies such as the WTO and in U.S. courts. It would also place U.S. companies at a significant competitive disadvantage particularly as we operate in an increasingly global economy. The offshore outsourcing debate reaches well beyond the federal marketplace. Attempting to address the issue through procurement law without proper consideration of potential ramifications is at best ill-advised.

As you know, the language contained in the FY04 Transportation Treasury Appropriations conference report strikes at the heart of the Administration's Competitive Sourcing initiative. Inclusion of such language in the final agreement clearly violates directives in your office's Statement of Administration Policy dated September 4, 2003 and October 23, 2003, which suggests you would recommend that the President veto this important bill. The U.S. Chamber supports fair, efficient government contracting procedures, and any language that extends beyond basic reporting requirements is arbitrary and restrictive and should be removed from the final bill. Thank you for your consideration of these matters.

Sincerely,

R. Bruce Josten
Executive Vice President, Government Affairs
U.S. Chamber of Commerce