Outsourcing of IRS Mailroom Jobs Came Too Late, Judge Rules
Timing is everything.
In a dispute that hinged on when a contract began, a federal court has ruled that the Internal Revenue Service improperly used taxpayer money to outsource mailroom operations to a nonprofit agency.
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The roots of the case go back to the fiscal 2004 omnibus appropriations act, which prohibited the IRS from turning federal work over to a contractor without first conducting a public-private competition. Under the law, the IRS could not make so-called direct conversions between Jan. 23, 2004, and Dec. 8, 2004.
The IRS, however, had decided in 2002 that it should not be sorting mail at its Constitution Avenue headquarters and the following year solicited a bid from ServiceSource, a nonprofit organization in Alexandria. During the prohibited period in 2004, the IRS placed "task orders" with the contractor for a phased conversion, and the last IRS employees lost their jobs on Dec. 10, 2004.
In his ruling, U.S. District Judge Louis F. Oberdorfer cited Office of Management and Budget rules on public-private job competitions. Oberdorfer wrote that the key period was not when the agency decided to convert but when it set out to order up the work.
The judge ordered the IRS and the National Treasury Employees Union, which brought the case, to come up with a plan for resolving issues in the case. The union said it will seek reinstatement with back pay for the IRS employees who lost their jobs.
"NTEU's intention is to hold the IRS -- and other federal agencies -- accountable for every act they do that works to the detriment of their employees," said Colleen M. Kelley , NTEU's president.
Nancy Mathis , an IRS spokeswoman, said that at the time IRS awarded the mailroom contract, "the agency believed it was in compliance with all procurement rules and regulations." She said, "We are currently reviewing the judge's decision."
The Bush administration, shortly after taking office, called on agencies to conduct "competitive sourcing" studies to determine if commercial activities performed by federal employees could be turned over to the private sector. The initiative has roiled the federal workforce and prompted lobbying and legislative battles for more than four years.
Federal employees claim that turning work over to contractors does not lead to long-term cost savings. Administration officials contend the job competitions produce savings, even when in-house teams win.
The IRS case is somewhat unusual because the contractor, ServiceSource, is a community rehabilitation program that provides employment for persons with disabilities. A number of the IRS mailroom employees had disabilities, such as vision and hearing impairments and mental retardation, according to the union.
ServiceSource referred questions to NISH, a nonprofit group in Fairfax County, formerly known as National Industries for the Severely Handicapped. NISH seeks to provide employment opportunities for people with disabilities by securing federal contracts through the Javits-Wagner-O'Day Program, which was created by Congress.
Lynne Harris , a NISH spokeswoman, said the nonprofit organization would not comment on the judge's ruling. Paul Plattner , NISH vice president of operations, said NISH acts as a liaison between the government and nonprofit groups and has helped about 45,000 disabled Americans find jobs with nonprofit groups that hold federal contracts. In the IRS case, there were 87 mailroom employees when the job conversion process began. Over a two-year period, 41 left or found jobs elsewhere in the IRS, according to the agency.
Twenty-eight of the remaining IRS employees took cash "buyouts," and 13 were given layoff notices, the IRS said. NISH hired 15 IRS workers, including some of those laid off, the IRS said.
The contract with ServiceSource is valued at $33 million, the IRS said. It is for one year, with four optional years, and requires the contractor to operate 33 IRS mailrooms.
Stephen Barr's e-mail address isbarrs@washpost.com.
