EXAMPLES OF LITIGATED CASES

1. In 1967, AFGE filed Lodge 1858, AFGE, et al. v. NASA, challenging the propriety of replacing Federal employees with contractor employees who performed the same work, at the same location as Federal employees, indeed working shoulder to shoulder with (and sometimes under the direct supervision of) Federal employees. AFGE argued that this established an illegal employeremployee relationship between the government and the contractor employees. Nine years later (August 12, 1976) the U.S. District Court for the District of Columbia agreed with the AFGE argument and declared that 22 NASA service contracts involved in this case violated 42 USC § 2473 (b) (2). The court declared the contracts null and void and order plaintiffs returned to work retroactively. The government appealed and the case was argued before the U.S. Court of Ap peals for the District of Columbia in March 1977. Plaintiffs' remedy has been stayed pending a decision on this appeal.

2. In 1973. AFGE filed AFGE et al. v. McLucas, when the Air Force reducedin-force 77 custodial employees employed at Randolph AFB, San Antonio, Texas. This case attacks the government practice of using service contractors who pay their employees sub-standard wages in violation of the Service Contract Act. The Federal employees in this case had been receiving $2.90 per hour when they were replaced by the contractor's employees pursuant to a $1.80 per hour Department of Labor prevailing wage certification.

3. In December 1975, AFGE filed AFGE Local 190 v. Middendorf, et al., attacking the practice of using service contracts merely to avoid personnel ceilings. Indeed, an October 1975 letter from the then responsible Base Commander stated that, "The decision for contracting-out all the janitorial functions at the Naval Education Training Center, Newport was not cost savings but rather a reduction in personnel ceilings directed by higher authority." This case is presently in the U.S. District Court for Rhode Island awaiting assignment of trial date.

4. In February 1976, AFGE filed Local 2255, AFGE et al. v. U.S., et al. contesting the RIF of approximately 215 Federal longshoremen on the grounds that the service contract involved in that case was blatantly more costly than in-house performance (as reflected in 3 prior cost analyses and GAO studies). The activity sought to justify the contracting-out by projecting its cost analysis over a ten-year period instead of the traditional 3 year period. The new analysis compared 10 years of projected contractor performance at a continuous static cost with a projected in-house cost reflecting annual inflation increases.

5. Other AFGE cases presently in court awaiting either initial decision or appeal involving similar contracting-out issues include:

Local 1815 AFGE, et al. v. Laird, Resor, et al., (U.S.D.C.D.C. March 1970); AFGE v. NASA, (USDCDC June 1972); AFGE Local 3434, et al. v. NASA, et al., (USDCDC May 1974; AFGE Local 1668 et al. v. Dunn, et al., (USDC Alaska 1975) AFGE Local 882 et al. v. W. Graham Claytor, et al., (1977).

Adding to the plight of Federal employees who have not been able to secure administrative review of the contracts causing their loss of jobs and who have turned to the courts for relief is the Supreme Court decision Sampson v. Murray, 415 U.S. 61 (1974), denying temporary injunctive relief to a probationary employee who had failed to exhaust her administrative remedies. Notwithstanding the fact that employees contesting RIFS caused by contracting-out have no administrative remedies, several district courts have interpreted Sampson to require Federal employees to demonstrate irreparable damage beyond that normally associated with loss of employment before the courts may enjoin a RIF from actually taking place. Thus, the victims of contracting-out, such as the plaintiffs in the NASA case, may spend many years on trials and appeals before obtaining a remedy in the courts.

This kind of delay has been caused in large part by Department of Justice maneuvering to keep the courts from ruling on the merits of AFGE contractingout cases. The Government has argued that the plaintiffs: (1) have failed to exhaust administrative remedies with the Civil Service Commission; (2) lack of standing to contest the Department of Labor's failure to certify the prevailing area rate for contractor employees; (3) lack standing to contest violations of Office of Management and Budget regulations; and (4) lack sufficient property interest to contest the loss of Veterans' preference set-aside positions. The Gorernment has even argued that its contracting actions are protected by sovereign immunity and, therefore, are beyond judicial review.

EXHIBIT V.-NEW CONTRACTS INVOLVING LOSS OF JOBS OF REGULAR GOVERNMENT EMPLOYEES

(1) Camp Covington, Guam: 23 employees; Food Service; effective October 1, 1977.

(2) Fort Sills, Okla.: 91 employees; Laundry Service; effective about September. 1977.

(3) Fort Benning, Ga. (No date stated): 97 employees, Laundry Service; 80 cooks, Food Service; 60 Firefighters.

(4) Warner Robins, Ga.: ? employees; Precision Measuring Equipment Lab; effective date of RIF January 2, 1978.

(5) Lackland AFB, Tex.: 26 employees; Training Fabrication; effective September 1, 1977; ? employees; Audiovisual Services; effective September 1, 1977. (6) Naval Air Station, Whidbey Island, Wash.: 30 employees; Housing Maintenance: effective sometime after September 1977.

(7) Selfridge Air National Guard Base, Mich. : 180 employees; Army Engineering Support Activities and Housing Service function; contract expected to be awarded about October 1, 1977.

(8) West Point, Steward Army Subpost, N.Y.: 75 employees; Operation and Maintenance; effective October 1, 1977.

(9) Keesler AFB, Miss.: 47 employees; Laundry and Dry Cleaning; effective August 1, 1977; 35 employees: Custodial Services; effective October 1, 1977; 38 employees; Hospital Aspetic Services; effective October 1, 1977; 52 employees; Audiovisual Services; effective April 1, 1978; 159 employees; Food Service; effective April 1, 1978.

(10) Randolph AFB, Tex.: 26 employees; Audiovisual Service; effective September 1, 1977.

(11) Patrick AFB, Fla.: 371 employees; Standard Base Supply Services; effective October 1, 1977.

(12) Hartwell and Clark Hill. Ga.: ? employees; Janitorial Services at Powerhouse; effective September 1, 1977.

Mr. BLAYLOCK. I have a couple of items I don't have in my written testimony I would like to discuss with you, and we do have Bob Shannon here from Fort Gordon who has some specific examples he would like to present to this committee.

Senator NUNN. Good; we would be glad to hear from Mr. Shannon. On the point of the general trend in the overall employment of civilians in the Department of Defense, it is interesting to note that from fiscal year 1964 to fiscal year 1976 there has been a reduction of 117.800 in total civilian work force, representing about a 10-percent reduction. There has been a reduction in the foreign indirect hire category of 44,600, which is a 32-percent reduction in that category. The category known as other direct hire employees, which are principally your blue-collar wage board employees, there has been a reduction of 130,900, which is a minus 25 percent.

Now, the other side of the coin is in the General Schedule employees where there has been an increase. Even in the overall decrease in the Department of Defense, there has been an increase of 57.500, which is plus 11 percent. In your GS-1 to 10, there hasn't been that real large increase; it has been plus 6 percent.

In the category of GS-12, there has been an increase of 41 percent. In the category of GS-13, there has been an increase of 46 percent. In the category of GS-14, there has been an increase of 22 percent. In GS-15, an increase of 22 percent. And contrary to. I suppose, popular belief, in the GS-16 to 18 category, there has been a reduction of 3 percent.

That shows you the trend of the last 10 or 12 years; which, frankly, I was astounded to find out about.

Mr. BLAYLOCK. Some of that trend, while we recognize there is a real problem there as it relates to productivity, in being candid about it, part of this trend though is a result of a change in technology in requiring high-skilled people.

Senator NUNN. And civilianization, moving personnel from military to civilians. I think in those areas. I am not saying a lot of it is explainable. That is a tremendous change in the Government force

structure.

Mr. BLAYLOCK. I think the real question before the committee and this administration in that area where there has been reduction of 17,800 people there, I wonder how that work is now being performed and the bottom line is what is it costing us to get it performed now. It has been done by contractors.

Senator NUNN. Some of it is related to reduction in force. The actual civilians haven't come down as much as the military. So, reduction in force necessarily means you are going to have a reduction in overall civilian ranks. I am sure a lot of it is explainable and there are a lot of different reasons for it. There is no definite conclusion that can be drawn from it. But I do think that when you have had that high an increase in GS-12 through 15, it at least calls for an internal kind of analysis.

Mr. BLAYLOCK. I agree, and I am beginning to sound repetitive, but I think every time you and I talk, I mentioned these centralized systems of not contributing to productivity but just have a countereffect. and here again the centralized system requires people at the higher levels for accounting purposes and statistical and data gathering, et

cetera.

Senator NUNN. To take care of the paperwork?

Mr. BLAYLOCK. That is right.

Senator NUNN. You remember Admiral Rickover's statement on the Department of Defense?

Mr. PELLERZI. What you are quoting is part of the ceiling statistics that we were concerned about, and could I simply ask for the record, because we have been trying to get this for a number of years, does the committee have any information as to what part of that reduced manpower figure has been performed by contracts so that it is not a reduction of Government size at all, it is just changing the employees from Government employees to contractors?

Senator NUNN. That is one of the things I pointed out in my original statement. We don't have any adequate planning figures from the Department of Defense in this area. I don't think they have them internally. I don't believe it is something they have got over there in a drawer that they won't let out. We might all be better off if that is the case.

Mr. BLAYLOCK. They provided us with a computer printout 13 inches. We have been totally unable to make any sense out of it. I think Lou has given up on it.

Mr. PELLERZI. We haven't given up, but we haven't made any sense out of it.

Senator NUNN. We don't have that now. That is something we are asking for. We hope that out of this study they will begin to do a better job of managing in advance and do a much better job of letting us know what they are doing, including your people.

Mr. Shannon?

STATEMENT OF ROBERT SHANNON, PRESIDENT OF LOCAL 2017, AMERICAN FEDERATION OF GOVERNMENT EMPLOYEES

Mr. SHANNON. Yes, sir.

Mr. Chairman, my name is Robert Shannon and I am president of local 2017 of the American Federation of Government Employees, AFL-CIO. We represent approximately 3,000 Federal employees at Fort Gordon, Ga. I welcome the opportunity to appear and testify before this subcommittee, and hope that my input will prove useful as you examine the long-term implications of contracting out of Defense Department work formerly performed by Federal employees.

Government workers at Defense installations around the country have had bitter, firsthand experiences of how improper contracting out of commercial and industrial services by local base commanders has damaged employee morale, career plans, and living standards. But we have also seen how it has interfered with normal base operations and actually increased the costs of performing these services.

As a result, we do not see any savings in most cases when private sector contractors are brought on base, but only a drop in the quality of work performed and the absorption by the Federal Government of substantial "hidden costs" which amount to an indirect subsidy to private enterprise by the U.S. taxpayer.

At this time, we would like to share several of our observations with the subcommittee concerning specific contracting "boondoggles" which have occurred at Fort Gordon. Ga.

This should by no means imply this is all that is taking place.

WELDING OF MANHOLE COVERS

For security reasons, the local installation commander decided that all manhole covers on base had to be secured with a metal bracket to prevent any unauthorized access to electrical wiring and circuits contained in the passageways. A contract to perform the welding was granted to a private firm; they subcontracted to a second firm, which in turn subcontracted the project. The first welds did not hold for one simple reason; you cannot form a permanent bond between iron and steel, a fact which apparently was new to the last firm that bid on the job. As a result, the work needed to be done all over again, and this time it was performed properly by experienced civil service personnel.

This is one clearcut example of how the Federal Government paid two contractors for doing nothing, and then a third for such poor quality work that it had to be done over again by Federal employees who could have done the job right the first time. The private contractors make their profit; however, the Government workers lose their jobs, and the U.S. taxpayer foots the bill.

JANITORIAL SERVICES

Janitorial services are provided to many administrative offices, classrooms, and living quarters on post. These jobs were contracted out, and ever since the following conditions were developed:

The EEO Office has plastic tabs and paper punchouts on the floor which have not been swept away for over 6 weeks.

Coffee stains remain on counters unwiped week after week.

As a result of the slipshod cleaning in evidence, a sign was actually posted in Nelson Hall of the signal school informing one and all that floor maintenance was now performed by contractor personnel.

When custodial work was performed by civil service employees, it was properly done, now the physical condition of the facilities is deteriorating week by week.

For example, Ring Hall is one of the bachelor officer's quarters on base. Presently, there are nonappropriated fund maids and janitors working side by side with contractor personnel. The contractor personnel make from $3.07 to $3.50 per hour, and the NAF employees from $2.30 to $2.69 per hour. The private contractor does not properly supervise his employees, and the facility is not being adequately cleaned. In fact, it is not unusual to see the NAF employees cleaning up behind the contractor personnel, finishing work for which the contractor is being paid.

When the occupants of the building became dissatisfied and refused main service as a protest, the official response was to discharge some of the NAF employees, since the contract had to be retained. The supervisor of the NAF employees has even gone so far as to assign work to the maids which properly belongs to the contractor. Furthermore, military trainee personnel, students at the signal school, are now assigned to clean hallways.

There is one aspect of contracting out which bothers me the most. Frequently, the private contractor will bid on a job, knowing full well he cannot make a profit if he attempts to take responsibility for all the activities which were formerly performed by civil service personnel. The issue then becomes the "scope of the contract," with the private contractor placing as narrow an interpretation as possible upon it, while the contracting officer, of course, attempts to see that the same job is done in the future that was done before.

All I can say is that if a labor contractor brought a crew to one of Georgia's peach groves and was hired to do the job, he would never be allowed to get away with picking the easy-to-get-to fruit near the ground and avoiding sending anyone up the ladders because of the time and the expense. Yet what the growers would never tolerate is accepted by the Federal Government, and I think it is wrong.

FURNITURE REPAIR

About 1 year ago, the furniture repair facility on base was shut down and the work given to a private contractor. It is now being done in Alabama, and the furniture must now be transported on a round trip of 400 miles, for which the Federal Government bears the entire expense. Since the contract was let, the quality of the repair work went downhill fast, and when a delegation from our local met with Senator Nunn in March of this year, we brought this fact to his attention. As a result, the furniture inspectors are now under less pressure to approve everything they see, and reject approximately 30 percent of of the work which is being done across the State line. What is hard to believe, however, is that when the furniture is reshipped for further repair work, the Federal Government must again absorb the cost of this transportation, since transporation expenses were not included in