Countering Privatization: Defending the U.S. Public Sector in an Era of Privatization Run Amok

An Interview with Bobby Harnage

Bobby L. Harnage, Sr. has served as president of the American Federation of Government Employees (AFGE), the largest union for government workers in the United States with 600,000 federal and D.C. government employees, since 1997. Previously, he served as AFGE national secretary-treasurer, and national vice president for a district comprising most of the U.S. South. After a discharge from the Air Force in 1963, he worked as a civilian sheet metal helper at Warner Robins Air Force Base in Georgia, where he first served as a union steward and became involved in AFGE.

Multinational Monitor: How many federal employees are there and how much does the U.S. government spend on services for either employees or contractors?

Bobby Harnage: Overall, there are a little over 2 million federal employees, if you take out the postal service. We represent about 600,000 of them. The administration’s privatization initiative would cover 850,000 federal employees.

Nobody knows how much the federal government spends on private contractors. There’s no accounting for it. We’ve asked over the past five years to get some accountability of what is being spent on the service contracts replacing federal employees. We know there are four times as many contractor employees as there are federal employees, but we don’t know what the cost is.

MM: The Homeland Security Act includes provisions to change how employees are treated. What do those provisions do?

Harnage: There are several changes. One is how the homeland security employees are paid. Homeland security came up with a different pay system. Their whole intent was to get away from the GS [General Schedule] pay system.

How these employees are hired and fired is to be re-written. Even how they’re promoted, their probationary period, their due process protections in case of adverse actions, disciplinary type actions, are to be revised.

What the Homeland Security Act did protect was existing union contracts, which will continue to be recognized for a specific period of time. We’re not sure what will happen after that specific period of time.

Right now, we’re very much involved in what is called the Design Team, to determine how the personnel system is going to work within the Department of Homeland Security. I’ve been very impressed so far with how open they have been to the unions’ presence on the Design Team and actually got the impression that they are glad we’re there. But that doesn’t mean as this thing develops and moves up the chain that anything is going to come of it. We really don’t know at this point how it will work out.

MM: What was the rationale for moving away from the historic civil service roles?

Harnage: It was a power grab as much as it was anything, based on lies, misinformation and deceit.

When the administration talked about it, they said it takes 18 months to fire someone. That was a lie. It may take 18 months for the terminated employee to get a final decision on his or her appeal, but it only takes 30 days to fire a federal employee, and they’re off the rolls during the appeals process. They were implying that the appeals process was the length of time it took to fire somebody. Neither the unions nor the federal employee wants it to take 18 months to get a decision. They’d like to get one within a week, within a few days.

It is the bureaucracy that bogs that down. It was neither the law nor the regulations. The fact that they underman the Merit Systems Protection Board and don’t properly fund it causes a backlog in cases; they don’t have enough administrative law judges to hear those cases and move them on in a timely manner.

They said it took nine months to hire somebody. That may be true, but if Kay James [director of the U.S. Office of Personnel Management] was pinned down, she would have to admit that it was neither the law nor the regulations that caused that nine months, it was the bureaucracy.

For example, when a supervisor has a vacant position, they’ve got one of three choices. They can abolish the position, and get patted on the back for downsizing government; they can privatize it, and get patted on the back for meeting a quota; or they can fill it with a federal civilian employee. Only the latter one requires justification. And so before they fill a position, they’ve got to go to the next level. Once that is decided, it goes up until it finally winds up at OMB [the Office of Management and Budget], the bean counters. Then their decision comes back down and gets approved. Now, that might take nine months, but it’s not the system, its not the rules or regulations, it’s the bureaucracy. There’s no reason for it to take more than 30 days, if that long, to hire someone.

The example that Kay James gave to show that they need flexibility was of a drunken border control agent who allowed a terrorist across the border. That was absurd and an insult to all federal employees.

We don’t have drunken border patrol employees on duty. They depend upon one another to survive, so they’re not going to tolerate somebody or their buddy being intoxicated when their life may be at stake. But it’s not too smart of a terrorist that would sit around and wait for a drunken border patrol agent to show up at a particular point of entry when all they have to do is go about a mile away and walk across the border.

They could not come up with one example of where belonging to a union or a collective bargaining unit interfered with national security.

They kept talking about how they needed the ability to move people around. Well, they didn’t have a problem with that on 9/11, when civilian employees secured all military installations not knowing where the next attack was coming from or who the enemy was. They didn’t have any problem in World War II, the Korean conflict, the Vietnam war, the Gulf War, Kosovo, Afghanistan and now Iraq with federal employees going into the zone to help support, supply and repair equipment for the military.

All the excuses and rhetoric that the administration used to justify the changes in the civil service were based on the ignorance of Congress and the American public on the environment within the federal government. We don’t negotiate numbers, types or grades of employees and therefore our collective bargaining agreements would never interfere with management’s flexibility to move people around. We have very limited negotiations even on such things as promotion. We can’t negotiate provisions dealing with the hiring process. We can negotiate due process on adverse actions and firing employees, but that’s to make sure they get a fair shake; it doesn’t interfere with management’s rights.

And under the current law, and the law at that time, when it comes to national security, if you have anything in the contract that interferes with national security, then in an emergency situation, it is void, and does not apply.

So all of their justifications for the changes were said as if they didn’t have any of those rights. In fact, they had every one of them already.

It was just an effort to be able to hire people based on who you know, not what you know, and to bust unions.

MM: The Transportation Security Administration (TSA) is now part of the Department of Homeland Security?

Harnage: Yes. It is a little squirrelly right now because the TSA was created with absolutely no rights for employees. The excuse was that they wouldn’t take rights away from anybody since they hadn’t even been hired yet.

But TSA employees are treated differently than any other group of federal employees. TSA management is now having some major problems and they can’t blame it on the union, because they so far have totally refused even to recognize us.

Now that TSA has moved into Homeland Security, there seems to be some conflict in the law as to who will answer to who. Our interpretation is that in some cases Admiral Loy [undersecretary of the transportation for security] doesn’t have to answer to or respond to Secretary Ridge. I’ve asked the question: what happens now that TSA has folded into Homeland Security — do they come under Homeland Security rules? They don’t know the answer to that. We have got TSA people in the room on the Design Team, but there is no assurance that whatever we come up with will necessarily apply to TSA.

MM: Admiral Loy issued an order saying he would not recognize the unions within TSA and you’re challenging that?

Harnage: He said that he could not allow collective bargaining in TSA because it would interfere with national security. And he apparently is interpreting any recognition of a union as constituting collective bargaining. Yes, we have challenged it, we’ve challenged it with the FLRA [Federal Labor Relations Authority], and we’ve challenged it in court.

MM: What is the basis of your challenge?

Harnage: We think that the TSA employees are federal employees and we think that the way the law is written, they come under the FLRA’s jurisdiction. We’ve filed 14 union recognition petitions for 18 different airports and intend to file several more in the very near future. Loy took the position, first, that the FLRA did not have jurisdiction; secondly, if they did have jurisdiction, they couldn’t overturn him because of national security; and third, that if a union is going to be given recognition it must be agency wide, not airport by airport. We did not challenge him on the third point, because we intend to be agency wide. But on the first two we think he’s off base. The authority has asked for briefs from all the parties, but has not yet made a decision. We think we’re going to win, but if we don’t, we’ll be in the court and we’re fairly positive we’ll win there.

MM: The Pentagon has also tried to erode civil service protection. Is it basically the same story as with the Department of Homeland Security?

Harnage: It’s the same story.

What the Pentagon wants to do is to be able to have all their big-shots retire, claim retirement pay, and then hire them back. That’s basically what their plan is, so that everybody in the Pentagon will be alike. There’s a reason that we have a mixture of military and civilian employees and that is to establish checks and balances. For all practical purposes, the Pentagon will have eliminated those checks and balances under their proposal because they will be hiring their own.

The current GS system is designed to eliminate politics from the hiring and firing and the pay of federal employees so that they carry out their jobs in a neutral environment. We enacted the Pendleton Act over a 100 years ago because the federal government was so politicized and ineffective and really a rip-off to the American taxpayer. They’re basically doing away with the checks and balances that keep this country safe and keep it strong.

Another issue is pay, with the Pentagon advocating pay for performance. The current GS system is a pay for performance system. They talk as if everybody gets a step increase every year. They don’t. If you stay in the same grade, it takes you 18 years to move up to step 10. If you get promoted during that process, it will take you longer than 18 years to get to step 10. And every step increase is certified by the supervisor that the person has performed at an acceptable level of competence — which means it is pay for performance.

The fact that most people get their step increase automatically is simply because the managers aren’t doing their jobs; or, because the gap between the federal sector and private sector is so wide and the federal employee is so underpaid, the supervisor feels guilty and goes ahead and gives the employee a step increase as a retention mechanism rather than as a performance mechanism. Managers can deny step increases. Whether they do or not is not a problem with the system, it’s a problem with the bureaucracy. They can take action against a poor performer, the fact that they don’t is poor management, not a problem with the law or regulation.

This thing with the Defense Department is extremely scary. They haven’t provided any information on what they are going to do and how they are going to do it. Yet they have asked Congress to give them blank-check approval. What they’ve done is talk in general terms and say, “Give us the authority and then we’ll tell you what we want to do.” That makes it extremely dangerous.

MM: The Office of Management and Budget’s Circular A-76 establishes the rules for public-private competition for federal contracts. What would OMB’s new A-76 proposal do?

Harnage: The Office of Management and Budget is re-writing Circular A-76 to guarantee that all federal jobs go to the private sector regardless of cost.

They say privatization will bring a 30 percent savings. That again is a lie, it’s absolutely not true. There is normally a 20 percent savings, not in the privatization, but in the competition. When the public and private sector compete for a contract, there’s about a 20 percent savings. Right now, we’re winning better than 60 percent of those competitions. The competition helps eliminate the inefficiency of the government — but this has nothing to do with the federal employees’ performance. Again, it is management’s inefficiency. They could do what is called the “most efficient organization” every day, they could have done that 10 years ago, they could have done that yesterday, but they’re not going to do it until the employees’ jobs are in jeopardy. Then they come up with this most efficient organization.

The contractors actually want to do away with these efficiencies, because they would like to get the job with all the inefficiencies built in. Then they can eliminate them and have a windfall profit.

A lot of jobs are being directly converted to the private sector under A-76. That is without competition, so there’s no savings there. It actually costs more money.

We’re for competition. There’s obviously a savings there. We wish there was a better way of doing it, but we can’t make management be efficient nor can any judge in the United States make management be efficient. So we support competition, but let it be fair competition and let it always be competed.

Most of the jobs that are privatized now are not done through A-76, but through a waiver where they make direct conversion. Now the new A-76 has come up with what’s called “best value” (incidentally, that is what DOD has asked for in their changes in regulation). Best value is subjective.

Under best value, the government issues an RFP [request for proposal] for a particular service. The in-house unit gets down to its most efficient organization and says, ”This is what we can do the job for.”

Then the contractor can come in and say, “Look, we would like to add these bells and whistles, that’s going to cost $10 million more, but we think it’s a much better product and you’ll be happier with it.” Then the selecting official can say, “I like that, you got it.”

That doesn’t mean the taxpayers really needed those bells and whistles or that they did increase the value of that product. It just means that that company was able to convince that supervisor either with the offer of a job or for other reasons.

Under the current rules, if the contractor says, “We want to add these bells and whistles,” the selecting official would have to say, “OK, wait a minute, I have to see what it would cost to do that same thing in house, they were not allowed to bid on that.” So he would go back to the workforce for a new bid. Then you’ve got apples to apples.

But with this best value approach, you’ve got apples to oranges. The public and private sector are not offering the same product, and so the deck is stacked. We could go down to winning only 10 percent of these bids as compared to the current 60 percent, just because of best value.

This is an opportunity for corporate America to rip off the taxpayers and charge $800 for a hammer, or $600 for a commode seat, and it can’t be challenged because it’s in the selecting official’s mind as to what is best value.

All of this privatization and all that’s going on with this administration is nothing but paying off the contractor community for their political contributions.

MM: The new A-76 would also require privatization if managers fail to meet deadlines to review jobs for privatization?

Harnage: Yes. So we’ve got lazy supervisors, so we’re going to do away with all the employees’ jobs — that’s real justice, isn’t it? This rule would convert jobs even where there may be an additional cost.

What kind of madness is that?

As many as a million jobs could be privatized under the new A-76 and other administration programs.

MM: You’ve put forward the Truthfulness, Accountability and Responsibility in Contracting (TRAC) bill as an alternative.

Harnage: The main purpose of the TRAC bill was to get some accountability with contracting. Nobody knows whether or not there is in fact any real savings from privatization. In fact, all of the GAO [General Accounting Office, the Congressional research agency] reports say that it cannot prove that one dime has been saved through privatization.

One of the things that can’t be measured is the flexibility of the federal employee. If we’re making blue widgets, and management tells the employee instead of making blue widgets, we’re now going to make red widgets, it’s done. It is a very simple matter. Federal employees do it and go on about their business. But a contractor will say, “I’d be glad to make red widgets, but we’re going to have to sit down and renegotiate the contract and it’s going to cost you more money.” The government manager doesn’t have any choice, because their federal employees are out of the widget-making business.

They’re locked in to having to depend upon the contractor.

MM: So privatization actually reduces government managers’ flexibility?

Harnage: It reduces your flexibility.

In a lot of these privatization cases, we are seeing the contracts change and costs increase. They say that is because the contractor is now doing more than what was in the original bid. That’s true, but the contractor is not doing more than what the federal employee was previously doing, and there’s no indication that the federal employee could not have done it more cheaply than the contractor.

What you see is that each year of the contract, the cost gets bumped up. By the end of the three-year period, it’s actually costing the government more money than if they’d kept it in house. Nobody is looking back to see that, nobody’s looking back for that accountability because they don’t want to prove themselves wrong, plus they don’t want to bring it back in-house. Instead of saving $10 million, we’re finding out that it actually cost $10 million or $20 million more by the second or third year.

If you look at a lot of these contractors, you will find a lot of people on the board of directors that are high-ranking military retirees.

We’re trying to get some kind of accountability for all of that, and the contractor community and this administration is fighting us tooth and nail. The question needs to be asked: Why are you against accountability? I thought that was what privatization was supposed to be all about!

MM: So what exactly would the TRAC bill do?

Harnage: The TRAC bill would give us that accountability. It would require agencies to look back on each contract and determine whether or not the projected savings were realized and if not, why not. And so we wouldn’t continue to make the same mistakes over and over.

MM: Is there a structure to enable federal employees to bid on something that has already been contracted out, or is that impossible?

Harnage: It’s not impossible, but it’s not likely. A-76 allows it, but the problem is that management has to do it, not the employees themselves. Management has to do it, and they run into a problem with FTEs — full time equivalents — in other words, job positions.

I’ll give you an example. A couple of weeks ago I was at Kirkland Air Force base in New Mexico. I was touring one of the research laboratories at the base. The doctor who was in charge of the laboratories told me that they hoped to add an annex on to his laboratory. He said he has the money and he has the land, but he can’t get the authorization for the positions. Now what kind of sense does that make? Here’s a research lab leader twiddling his thumbs.

It’s not a matter of cost, because they already have the money approved. It’s not a matter of location, because it’s on a military installation right next to the existing laboratory. The problem is that it is new work, and historically federal employees aren’t allowed to compete for new work. And so he’s sitting there waiting for approval. He could contract it out tomorrow, but he wants career federal employees, or a mixture of contractor and career federal employees, which is what he’s got now. But he’s being denied that through the bureaucracy, even though it is what’s efficient and effective for the taxpayers. That’s the game that’s played.

It’s a very ridiculous game that is just ripping the taxpayers off everyday. It’s not just about jobs for federal employees — every federal employee pays income tax — it’s about the efficiency of this country. For them to go out there and say they need all these laws changed for the efficiency of the government is absolutely absurd.

This is not about efficiency and this is not about saving money. This is about moving money from the federal sector to corporate political contributors.

MM: To what extent did the trends of contracting out, privatization and undermining the civil service begin with the Clinton administration?

Harnage: Well, we thought we had a terrible time with Clinton because he gave away 278,000 jobs. The Bush administration has almost doubled that in the first two years of its term, and Clinton did it in eight years, partly through downsizing as well as privatization.

A lot of our people thought Bill Clinton was a problem because he was pro-contractor. They wish they had Bill Clinton back now, because this administration is all about corporate America, not about working people, not about good jobs.

MM: You think this is being driven primarily by just trying to give favors to contractor contributors?

Harnage: There is no doubt they’re putting plenty of money into their lobbying effort, they’re putting plenty of money into the political party to move their agenda, they put Bush in office and he’s paying them back. That ought to be very obvious. Bush represents corporate America. He doesn’t represent working people.

MM: To what extent do you think they are also motivated by trying to destroy public sector unions’ political base?

Harnage: I think that’s a plus for them. They can pay off their friends and at the same time make the Chamber of Commerce and the Right-to-Work Committee happy by eliminating federal unions.

Bush started when he took part of the Justice Department out of the union based on national security.

They had been part of the union for over 20 years and it hadn’t been a problem, but all of a sudden it was a problem for Mr. Bush. Then they saw the opportunity in TSA and saw the opportunity in homeland security, and now they see the opportunity in DOD.

This was easy pickings, because all it took was a change in the law or a stroke of a pen. In the private sector it’s entirely different, because to undermine unions they have to go state by state, community by community.

But I’ll tell you right now that they bit off more than they can chew, and they’re beginning to realize that.

We’re not going to go away. We’ve been growing, and we’ll continue to grow. This is our sixth consecutive year of increasing our membership, and if they think we’re going to go away, they’ve got another thought coming.

We’ll find a way of doing business differently, and it probably will not be as amicable as it otherwise would be. I don’t have to sit down at a table and try to informally resolve something if I’m in an association rather than a union. I can just take you to court. That’s probably where we’re headed.