- The Washington Times - Sunday, November 24, 2002

Nothing else in 2003 will impact the daily work lives of federal workers more than the Oval Office's outsourcing opportunity. In sheer scale, it is breathtaking.
The president's plan to outsource up to 850,000 civil jobs makes the 22-agency, 177,000-employee Department of Homeland Security reorganization look positively puny. The outsourcing blueprint involves moving $34 billion in annual payroll to outside contractors. That wage base represents nearly 2 percent of the $2 trillion annual federal budget. By outsourcing these jobs, the administration estimates that taxpayers will realize annual savings of 20 percent to 30 percent. President Bush knows full well "it's the economy" and that is why this plan is not stupid.
The proposed outsourcing movement marks the beginning of the end for the civil service system as we know it today. It will require the American Federation of Government Employees union reinvent itself as an employee service provider rather than continue to act as a 600,000-member human speed bump. Ironically, it won't shrink the work force but rather create hundreds of thousands of jobs at outsourcing companies that will do the government's commercial work much better and cheaper than the government can. Will the unions be obliterated? Not so fast. Many of companies receiving government contracts will have work forces represented by unions. And happily, 6 in 10 of these outsourcers will be small businesses and minority- and women-owned firms.
More jobs:
The double irony is that by outsourcing commercial-grade government work, Mr. Bush's initiative will decommercialize civil service. Historically, civil service in America has been understood to be noncommercial work: political functions, policymaking or law enforcement. These are the jobs essential to a well-oiled democracy that are best done in a taxpayer-supported administrative meritocracy. Since the 1960s, starting in earnest with the Kennedy administration, the scope of civil service work started to creep into government-related "commercial activities." These "commercial" jobs, routinely performed by private sector firms, include making travel arrangements and running cafeterias in federal facilities. Now, after 40 years of bureaucratic expansion and diligent union influence peddling, some 850,000 of these noncore government jobs now find themselves covered by the most expensive and gratuitous work rules found anywhere in the world. By outsourcing, the work is done by those who do it better and for less.
The Book of Jeb:
By going on the outsourcing offensive right now, President Bush is borrowing a page from his younger brother, Florida Gov. Jeb Bush. After two years of painstaking effort, the Florida governor successfully contracted out the state's personnel functions in 2002. Like his older brother, the Florida governor raised union hackles with his outsourcing plan. In Florida, the administration will save taxpayers money and improve services. Their savings by outsourcing the personnel department alone is expected to net the state $173 million over seven years. Unions say the state will lose 800 juicy personnel department jobs by contracting out the human resources department. But they're wrong. The Florida outsourcing provider, Convergys, plans to hire most all the payroll processors, benefits administrators and HR employees back to serve the 170,000 state employees of Florida, sometimes at wages or bonuses exceeding their state rates. This type of government human resources outsourcing program is a compelling value for taxpayers: better service for state workers on whom taxpayers depend, better career opportunities for outsourced workers, new personnel computer systems that cost nothing up-front, big annual savings, and significant private sector job creation.
Human resources outsourcing is growing at more than 30 percent yearly and is already a $35 billion business, according to leading industry research house, IDC. And outsourcing HR administration is just one of the places where taxpayers can save. There is also real estate management, surplus disposal, transportation services, procurement, computer systems management and many others.
Winning ticket: In outsourcing noncore government work, the younger Bush brother blazed a trail for his older brother to follow. Sure, there is a difference in scale between the younger brother's Florida and the older brother's nuclear superpower. The Florida state work force is only 170,000, while the U.S. payroll is 1.8 million. But like most brothers, these two will mimic each other while at the same time competing as if in some sibling horse race.
And the positive impact of this friendly competition ripples through the entire economy. In both the brother derby and the outsourcing trifecta, the winners are the remaining government workers who get better service, taxpayers who get lower costs, and outsourcing companies of all sizes that get to do what they do best: serve their customers. Whether you play win, place or show, the outsourcing proposal is a winning bet.

Jay Whitehead is a leading analyst in work-force issues and founder of the not-for-profit Human Resources Outsourcing Association (HROA), publisher of HRO Today magazine and producer of the HRO World Conference.


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