Federal employee unions, always on the watch for signs the government may again pursue converting federal employee jobs to contractor performance, say they see a sign of just that intent in the Trump administration’s recent directive to reform the government while reducing the federal workforce.

The OMB memo envisions accomplishing both those goals by, for example, streamlining mission-support functions including IT, acquisition, financial management and HR. It advocates using shared services within or between agencies and the purchase of commonly used goods and services through vehicles such as GSA supply schedules, government-wide or multi-agency contracts, and “best in class” contracts for use by multiple agencies under the category management program. That part of the directive in essence continues Obama administration initiatives.


However, the new directive also encourages agencies to use “outsourcing to the private sector when the total cost would be lower or insourcing a function to government where a contract can be eliminated or scaled back.”

That stands in contrast to the original hiring freeze memo, which specifically barred agencies from adding contractors to take up the slack as federal employees left and were not replaced.

Unions read the new memo as the latest in a series of signs of intent to restore the OMB “Circular A-76” process under which the costs of federal operations were put up for bid and the work was contracted out if a private sector firm promised to do the work for at least 10 percent less. That program, most commonly pursued during Republican administrations, has been on hold since late in the Bush years through a series of restrictions in annual budget bills.

“The guidance seems to be little more than opening the door to increased contracting out of agency functions and services. The functions of government need to be performed and when there are not enough federal employees to do the work, agencies simply shift it to unaccountable private-sector contractors,” said the NTEU union, which already is opposing a program of limited private collection of overdue tax debt approved during the Obama administration..

Similarly, the AFGE union said that “the federal government already spends twice as much annually on service contractors as it does on its own workforce ($450+ billion on contractors in FY 2016 vs. $200 billion on civilian employees in FY 2016). Nobody knows precisely what these contractors do, how well they do it, who they’re hiring, or where they’re working.”