Measure Continues Contracting Restrictions

The DoD appropriations measure that was signed continues several restrictions on contracting out that have applied in recent years at DoD, which does the bulk of the government’s contracting out studies. The measure requires that for functions employing more than 10 workers, the in-house bid must be based on a most efficient organization, allows work to be converted to contract only if the company showed potential savings of at least 10 percent or $10 million, and prohibits the outside bidder from gaining an advantage by paying less per employee toward health insurance than the government does for federal employees through the FEHB program. It also would cut off studies that have been in progress for more than 24 months for single activities or 30 months for multi-function activities. Meanwhile, President Bush has vetoed the Labor-HHS spending bill (HR-3043) that calls for a moratorium on further contracting out at Labor pending a review by GAO. The administration opposed that language but vetoed the bill for other reasons.