Dear Chairmen: 

On behalf of the undersigned organizations, we thank you and your colleagues for responding to the privatization debacle at Walter Reed Army Medical Center (WRAMC) with important “Wounded Warriors” legislation (H.R. 1538) that would improve care for our nation’s veterans.    

A key part of the House bill (Section 301) is the imposition of a one-year moratorium on the use of the costly and controversial OMB Circular A-76 privatization process for military medical facilities.  The undersigned organizations strongly urge conferees to retain Section 301 in the conference report.   

Not long after the House had passed the legislation, the Department of the Army was implicitly acknowledging the need for the moratorium.  On April 13, the Army announced that with respect to military medical facilities “all competitions that were planned for future announcement in FY 07 and FY 08 will be cancelled”, ostensibly because “of the increased requirement for healthcare assets to support the Global War on Terrorism”.  If the Army needs to scrap its crowded schedule of A-76 privatization reviews in order to serve the needs of military personnel, it is likely that other services are experiencing the same imperative. 

What would DoD sacrifice if it could not subject its hospitals to the A-76 privatization process?  Although DoD brags that it has generated significant savings through its use of the A-76 circular, such claims cannot be proven.  According to the Inspector General (D-2006-028), “DoD had not effectively implemented a system to track and assess the cost of the performance of functions under the competitive sourcing program…In addition, legislators and Government officials were not receiving reliable information to determine the costs and benefits of the competitive sourcing program and whether it is achieving the desired objectives and outcomes.”  In fact, the costs of carrying out the notorious Walter Reed A-76 review, including transition costs, were in excess of the Army’s savings guesstimate, even if we assume that there would not be a single cent of contractor cost overruns. 

DoD would actually benefit from an A-76 moratorium because it would free the military hospitals from the often onerous Office of Management and Budget numerical privatization quotas.  DoD could instead use less costly, less controversial alternatives—everything from reorganizations to labor-management partnerships—to generate savings.  For the last seven years, the A-76 circular has been pushed to the exclusion of all alternatives.  And from the Walter Reed privatization debacle specifically, we know that the A-76 circular even took precedence over the war effort generally and patient care specifically.   

During the moratorium, DoD may well decide to permanently shield from the A-76 process activities associated with health care.  As CRS noted, “Perhaps for some activities A-76 competitions are not appropriate, particularly for activities that affect military health care (including base operations support, maintenance, and repair).  Some would argue that trash removal is not an inherently governmental activity; but for a medical setting, regular maintenance and repair of health care facilities may be critical to the morale of the patient.  A case could be made that any activity that touches the military patient should be considered inherently governmental, including, for example, trash removal or a military health care facility.  When the mission (like patient care) is critical, the risks of mission failure are high.  In this view, base operations support activities should be exempt from competition.”   

Finally, it should be noted that a year-long moratorium on the use of A-76 in military medical facilities is hardly a radical step.  In the FY08 Appropriations process alone, there are several examples of entire agencies being prohibited from conducting privatization studies for one year, usually in both the House and Senate bills, including the Forest Service, the Corps of Engineers, the Bureau of Prisons, and the Department of Labor. 

Thank you for your consideration of our views.   

Sincerely, 

AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO

AMERICAN FEDERATION OF STATE, COUNTY,

AND MUNICIPAL EMPLOYEES, AFL-CIO

AMERICAN FEDERATION OF TEACHERS, AFL-CIO

COMMUNICATIONS WORKERS OF AMERICA, AFL-CIO

DEPARTMENT FOR PROFESSIONAL EMPLOYEES, AFL-CIO

INTERNATIONAL ASSOCIATION OF FIRE FIGHTERS, AFL-CIO

INTERNATIONAL ASSOCIATION OF MACHINISTS, AFL-CIO

INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS, AFL-CIO

INTERNATIONAL FEDERATION OF PROFESSIONAL AND

TECHNICAL ENGINEERS, AFL-CIO

METAL TRADES DEPARTMENT, AFL-CIO

NATIONAL FEDERATION OF FEDERAL EMPLOYEES, AFL-CIO

UNITED AUTO WORKERS, AFL-CIO