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  • FACT SHEET: CONTRACTING-OUT IT AT THE DEPARTMENT OF LABOR
    Updated On: Sep 16, 2014

    AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES, AFL-CIO

    AUGUST 2014

    SUMMARY

    The Department of Labor is integrating the information technology (IT) infrastructure of two sub-agencies - its Mine Safety and Health Administration (MSHA) and Employment Training Administration (ETA) - into the agency’s Office of the Chief Information Officer (OCIO).

    The integration plan was developed for DOL by Booz Allen Hamilton, the nation’s seventh largest government contractor. It will result in the outsourcing of DOL IT services historically performed by DOL federal employees. Although no formal notice has been given to the union and no public announcement has been made, DOL in July apparently awarded an $11 million IT Service Desk contract to Booz Allen to “provide continued implementation of the OCIO Integration and Modernization Intiatives” to the agency’s OCIO.

    Once this contract is in place, OCIO will directly convert the IT customer support functions currently performed by federal employees in MSHA and ETA national offices (and 22 MSHA and 6 ETA regional offices) to contractor performance, which will take place in seven regional DOL offices. DOL will also assess a charge-back to its sub-agencies for the work performed by the contractor. In developing this contract, DOL did not conduct a cost-benefit analysis to determine if the project would save taxpayer money or give any consideration to federal employees as required by Obama administration policy. The direct conversions will affect DOL federal employees in Colorado, West Virginia, Georgia and other states.

    AFGE and its National Council of Field Labor Locals Council 73 (the Council) have supported DOL’s effort to integrate its IT operations and make them more efficient. However, AFGE and the Council oppose the plan to contract out the MSHA and ETA functions and view the contracting as illegal direct conversions. The union is asking DOL to rescind the plan, terminate the contract, and renegotiate the impact of its IT integration with the Council. AFGE’s concerns over the contract fall into four categories:

    1. DOL is engaged in direct conversions. Federal agencies are currently prohibited by law from using contractors to perform any work last or currently performed by federal employees. 
    2. DOL’s plan will erode the mission of the department’s MSHA and ETA by creating ineffiencies in the application of IT and adding unnecessary costs to the operations that will flow directly into contractor revenues.
    3. These inefficiences, and the lack of federal employment involvement in the IT process, could have a detrimental impact on MSHA’s mission to protect workers in the mining industry.
    4. AFGE also has great concerns about DOL’s ceding of its authority in the planning of this initiative to Booz Allen Hamilton as well as Booz’s central role in pushing a contracted solution to IT.

    DETAILS

    1. DOL Agencies affected

    The Mine Safety and Health Administration. MSHA was created in 1978 to protect the safety and health of the nation’s miners. The work is critical: according to the MSHA website, “During the first half of 2014, 22 miners were killed in accidents in the mining industry. Fourteen died in metal and nonmetal mining accidents and eight died in coal mining accidents. The toll represents an increase in the mid-year fatality count and reverses a decline in fatal accidents seen in recent years as MSHA and the mining industry worked together to improve mine safety.” Currently, MSHA offices are intentionally located near the mines where the inspectors travel daily, most of which are rural areas.  MSHA IT Staff have been intentionally located in the District Offices to provide the most efficient services to the MSHA inspectors. Their major duties include: maintaining and supporting all hardware and software; providing Tier One and Tier Two help desk support, primarily to mine inspectors (Tiers refer to problems of varying complexity, with Tier Two involving complex hardware and software issues). IT specialists also perform some program analysis, manage web site content and respond to congressional data inquiries, FOIA data requests and mine operator data requests. These functions are currently provided by about 20 DOL federal employees nationwide.

    The Employment Training Administration.  As described by DOL, the ETA “administers federal government job training and worker dislocation programs, federal grants to states for public employment service programs, and unemployment insurance benefits. These services are primarily provided through state and local workforce development systems.” ETA employees travel extensively around the country to support the mission of the agency.

    Other agencies. AFGE also understand that two other large DoL agencies, the Employee Benefit Security Administration and the Bureau of Labor Statistics, are next in line for IT consolidation.  Both have IT Specialists who will be impacted. 

    1. DOL’s IT Consolidation

    The DOL first informed the union of its plans to consolidate IT functions in 2010, and began planning it in September 2011. The initial plans were made in response to an Obama administration directive on consolidating data centers in federal agencies. AFGE supported the initial concept because DOL had at the time nine separate IT systems that could not communicate with each other or share information. From the beginning, Booz Allen, a major DOL contractor, played a central role in the reorganization and participated with DOL officials in conference calls with the department’s federal workers and their union representatives. Booz Allen also prepared a PowerPoint presentation on the consolidation and promised, with DOL officials, to keep the workforce and its unions informed throughout the process of reorganization.

    Despite this promise, however, and despite repeated requests from the union for information, details of the consolidation program and their potential impact on DOL’s federal employees were not disclosed until June 2014, when formal notification was made to the MSHA and ETA employees. Because it was incomplete, the union had to file a formal 7114 request for information to the agency to obtain the full story of what was contemplated. It was not until July 2014 that the union first learned that IT functions performed by federal employees would be contracted out. The contract for the work was initially solicited in 2013 and awarded to NuAxis Innovations of Vienna, VA, on August 4, 2014.

    1. The Contractors

    Booz Allen Hamilton. With $3.4 billion in prime contracts in 2013, Booz Allen is the nation’s seventh-largest federal contractor, according to the trade publication Washington Technology. The company has been engaged in government contracting since the late 1940s, and has become one of the most important contractors to U.S. intelligence and defense agencies. It is best known for employing Edward Snowden, the National Security Agency technical specialist who leaked thousands of classified NSA documents to the media last year. Booz Allen’s role in the DOL IT consolidation has not been publicly announced, but the company was awarded a new $11 million contract in July that appears to apply directly to the consolidation of the Office of the Chief Information Officer. The contract with the Office of the Chief Information Officer (OCIO)/Enterprise Services Office provides “continued implementation of the OCIO Integration and Modernization initiatives (Contract date: 7/02/14; Duration: 2 years - http://www.boozallen.com/media-center/company-news/notable-contract-awards).

    NuAxis Innovations. A relatively new company founded in 2002, NuAxis provides “IT solutions” to a range of federal agencies and private companies. Its government customers include the National Park Service, the Bureau of Land Management, the Department of the Interior, the Pension Benefit Guaranty Corporation and the U.S. Navy.

    THE PROBLEM

    The project as described by the DOL could lead to the loss of federal jobs under an illegal direct conversion of functions from federal performance to private sector contractor performance. AFGE sees the IT consolidation in its current form as wasteful, creating inefficiences and internal confusion and doing harm to the mission of the DOL, particularly in the areas of mine safety and job training.

    Direct conversion

    Federal laws (41 U.S.C. §1710 and the FY2008 Consolidated Appropriations Act (P.L. 110-161, §739(a)(1)) prohibit agencies from converting work performed by/designated for federal employees to performance by contractor personnel without first conducting a formal cost comparison, now embodied in “OMB Circular A-76”.  Because of documented problems, the OMB Circular A-76 cost comparison process is currently prohibited.  Therefore, federal agencies are prohibited from using contractors to perform any function performed by/designated for federal employee performance. 

    Anti-Deficiency Act

    DoL has violated federal law by spending money it doesn't have.  The Anti-Deficiency Act states that an agency cannot enter into a contract unless appropriated funds are available (31 U.S.C 1341 - A federal employee may not involve the government in a contract or obligation for the payment of money before an appropriation is made).  Appropriations law states that an agency cannot use appropriated funds to convert federal employee work to contractor performance without a formal public-private competition, among other requirements (FY2008 Consolidated Appropriations Act (P.L. 110-161 Sec. 739(a), as amended by FY2009 Omnibus Appropriations Act, P.L. 111-8 Sec. 735).  Thus, by directly converting federal IT work to contractor performance, DoL has committed an Anti-Deficiency Act violation. 

    Transfer of Function

    When AFGE’s bargaining team requested a cost analysis of the OCIO integration plan, the DOL provided two OMB memoranda as their rationale for consolidation and cost savings. The two documents were M-13-09, “Strengthening Federal IT Portfolio Management” (March 27, 2013), and M-11-29, “”Chief Information Officer Authorities” (August 8, 2011). According to the latter, agency CIOs are responsible for “improving the operating efficiency of their agencies” and must “rationalize Agency IT investments.” The memo also states that CIOs are accountable for “lowering operational costs,” “delivering meaningful functionality at a faster rate while enhancing the security of information systems,” and delivering “more effective IT to support their agency’s mission.” Reorganizations, the memo states, must not “hamper agency missions” or “waste taxpayer dollars.” The first memo emphasizes that agency IT management must provide “mission-focused IT” with a “service orientation” and ensure that “the Federal government maximizes the return on its investment.”

    AFGE believes the DOL actions violate both of these mandates. AFGE also notes that nowhere in these memos does the OMB direct agencies to outsource federal employees or use contractors.  It also seems quite apparent that moving some agency IT staff to OCIO and then charging their home agencies for that work does not “lower operational costs.” At the same time, taking IT work from existing federal employees, hiring new contractors to perform their work, and then charging the agencies for the contractor work does not lower operational costs.  In addition:

    • Shipping computers to be repaired by contractors in DOL regional centers instead of having them repaired in the agency local offices does not lower operational costs. 

    • Requiring inspectors in the field to call service desk contractors who are not familiar with their operations rather than receiving support from a local federal employee familiar with their operations does not employ a “service orientation.”

    • Increasing the turnaround time for computer repairs from hours or days to weeks does not reflect a “service orientation,” nor is it providing “meaningful functionality at a faster rate.”

    • Delaying the repair of laptops with inspection and citation data on them is not “mission-focused” IT. 

    • Giving contractors unfamiliar with the work of inspectors to change passwords and other functions instead of relying on local federal employees familiar with the inspectors does not “enhance the security of information systems.”

    Inherently governmental

    • MSHA employees were classified as “inherently governmental” in a 2007 Continuing Appropriations Resolution, Section 6602.  By definition, inherently governmental employees cannot be contracted out.

    • ETA employees were classified as “inherently governmental’’ in a recent DOL FAIR Act report on OMB A-76.

    • As described by DOL, the reorganization would involve a Transfer of Function (IT customer support) from Federal Employees to contractors.  However, DOL refuses to recognize the Transfer of Function and abide by the applicable OPM regulations.

    Negative Impact on MSHA’s Mission

    • MSHA inspectors will experience increased computer downtime when they ship their laptops to Philadelphia, Atlanta, or Kansas City instead of having them repaired in the MSHA District office close to mines they inspect. The turnaround time is estimated to increase from 2 days to 10 days.
    • MSHA inspectors will spend more time on the phone with a Service Desk contractor rather than having a Federal employee in their office perform the work.
    • Inspection data loss is more likely since the Service Desk contractors will not be familiar with the interrelationship of the programs used by the MSHA inspectors.
    • MSHA inspectors will have a more difficult time meeting their legally mandated inspection goals.  This in turn could result in more accidents, injuries and fatalities in the mining industry.
    • MSHA will no longer have a dedicated IT Specialist to troubleshoot the scientific laboratory equipment in the National Air and Dust Laboratory in Mt. Hope, WV.  Approximately $1.5 million has been spent to upgrade, automate, and increase staffing in this lab as a direct result of the Upper Big Branch Disaster where 29 miners were killed in an explosion.
    • MSHA will no longer have a dedicated IT Specialist to troubleshoot the scientific laboratory equipment in the Pittsburgh Safety and Health Technology Center where personal dust monitors are tested.   That could impact the implementation of the new Coal Mine Respirable Dust Rules which go into effect in August, 2014.
    • MSHA will no longer have a dedicated IT Specialist to troubleshoot the specialized computer systems at the Approval and Certification Center where technical experts test and approve industry modifications to mining equipment used in permissible environments.  That could delay the approvals back to manufacturers and could cause loss of confidential, proprietary information.
    • MSHA will no longer have dedicated IT support at the National Mine Health and Safety Academy which trains all Coal and Metal Non-metal inspectors in the US, trains industry mine rescue teams, and holds conferences and nationwide meetings.  The facility houses nearly 300+ computer systems of which 75 are lab computers used for inspector training. 
    • MSHA Mine Emergency Operations will be impacted due to the loss of IT administrative privileges during non-deployment times.  They will not be able to adequately test and maintain their equipment and have it in a ready state for an emergency.

    Inefficiences and added costs

    • MSHA and ETA will incur shipping costs or contractor travel costs for computer maintenance when the computers have to be repaired by someone in Philadelphia, Atlanta or Dallas.

    • After the current MSHA and ETA network administrators are moved into DOL OCIO, there will be a charge-back to MSHA and ETA for any work they perform for the agency.  That work is performed without charge now.

    • After the IT administrative permissions and customer support functions are removed from the MSHA and ETA IT staff and given to the new contractors, there will be charge-back to the agency for any work performed by those contractors.

    AFGE’S PROPOSALS

    AFGE and its National Council of Field Labor Locals Council 73 is requesting the following:

    • The Department of Labor should immediately stop all DOL OCIO IT integration until further analysis is performed and full negotiations are conducted with the union.

    • DOL should suspend any contracts signed for the OCIO IT integration, including the August 4, 2014, contract with NuAxis innovations.

    • DOL should allow the affected DOL federal employees to remain in place and receive training so they can continue to work as IT specialists.

    • DOL should provide its legal justification for outsourcing DOL federal jobs, including jobs that have been classified by Congress as inherently governmental.

    • DOL should provide all information related to the DOL IT Integration plan to the union as requested and as part of President Obama’s “Transparency in Government” initiative.

    • DOL should not implement any changes until bargaining is complete with the unions involved.


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