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February 15, 2006

HUD employees prevail in first major A-76 study conducted in 15 years:
A "good news/bad news" update

Although HUD contracts out more than $1 billion a year, almost none of it has ever been the subject of a cost-benefit analysis under OMB Circular A-76. The Agency recently completed its first major A-76 study that sought to "compete" the management and oversight of the non-Section 8 rental housing assistance contract administration. This is work currently done by employees in the Office of Multifamily Housing.

The decision to put this work up for competition was a Presidential Management initiative. Although the A-76 process involves an "in-house" bid, the rules require such a high degree of confidentiality that the in-house bid really does not involve significant employee participation. The employees on the in-house team weren't allowed to share their ideas or seek critical input from other employees. Although we provided the in-house team with a list of Union representatives knowledgeable in Multifamily asset management, to our knowledge, the in-house team did not contact these representatives.

Now that the competition process is complete, the Union has been invited to participate in the discussions on implementation. As this is very early in the process, we don't have a lot of information. But we want to quickly share what we do have.

This is a "good news/bad news" report.

The good news is that we won and the work will stay in-house. Had we lost, the work would be transitioned to contractors over the next six months, and the agency could RIF (or lay-off) 251 Office of Multifamily Housing employees.

The bad news is that the in-house bid requires a structure very different from the current structure--affecting both the location and career potential of employees involved. The solicitation required that contractors bid on the work in eight geographical service areas. Within those geographical areas, the in-house team based their bid on centralizing the work within a single office. As we understand it, the work will be done in: Birmingham, AL; Greensboro, NC; Providence, RI; Buffalo, NY; Indianapolis, IN; Grand Rapids, MI; Phoenix, AZ; and Little Rock, AR.

Using Birmingham as an example, the projected total staffing for the first year is a little less than 30. The maximum grade distribution is as follows: two GS-14s; three GS-13s; three GS-12s; less than four GS-11s; four GS-9s; twelve GS-7s; and two GS-6s. In the fifth year of the proposal, staff increases to a little more than 33, with the increases coming in GS-9s and GS-7s. The other centralized offices are substantially similar.

This grade structure is a radical departure from our current working conditions. Currently, Office of Multifamily Housing employees hold a portfolio of properties, and oversee all of the HUD responsibilities for that property. This involves a mix of higher and lower graded work sufficient to support a career ladder to a journey-level GS-12. The A-76 competition allowed the work to be segregated, with the lower graded work subject to competition. As a general rule, when faced with contracting-out, the Union seeks to keep higher graded work out of the competition. But winning the bid means that HUD will now set up a two-tier system, with one class of employees having career potential to the GS-12 and the other class having no realistic potential beyond a GS-7.

The real irony of this report is that it appears the next lowest bidders (the vaunted private sector) submitted bids roughly two times the cost of the in-house bid. We've been "Wal-Marted"--low wages, low prices everyday.

Future reports will be posted to our website, http://afgecouncil222.com, and we'll notify your Local President when new reports are available. The Council's representatives to the implementation team include Lisa Lowery, Council Treasurer and Multifamily Project Manager from Knoxville, and Ron Wallace, former VP of Local 476 and a Headquarters Multifamily employee.

In solidarity,

Carolyn Federoff, President
AFGE Council 222

a copy of this E:Update and all other E:Notices can be found on the enews page of our website