Bills aim to keep work in state

From The Olympian

February 11, 2005

Labor-friendly lawmakers say they think the odds are better this year for passing bills that track and limit the number of state contracts issued for work done overseas.

The "offshoring" practice remains a worry to labor groups in Washington, though state government's record-keeping is spotty.

Close to 150 state contracts were awarded in the previous three years that included at least some work done in foreign countries, according to a rough tally last year by the governor's Office of Financial Management.

Some of it was for trade or university research that couldn't have been done anywhere else, but some of it went to foreign call centers and for foreign-designed computer software.

The value: close to $50 million.

State employee unions have protested the practice but haven't been able to show conclusively that state employee jobs have been lost overseas as a result. Still, they remain concerned as the state inches closer to a July 1 law that allows the state to contract jobs out to the private sector.

So they have pushed for legislation.

Rep. Steve Conway, D-Tacoma, has taken a lead role in that effort.

"We don't like the idea of jobs going overseas that could be done in our state, particularly when our economy could use a boost," Bev Hermanson of the Washington Federation of State Employees told Conway's House Commerce and Labor Committee earlier this week.

Dan Gillespie, a computer programmer from Tacoma who also testified, said he blames offshoring by private information services companies with killing his chances of landing a new job after his old one went away at the Bangor naval base.

But offshore contracting is complex, and obstacles that killed similar legislative proposals last year are in the way again. Any restrictions could tread on international trade agreements; restrictions also raise fears by high-tech interests and others that foreign governments might retaliate against Washington's big export companies.

House Bill 1725, which proposes an outright ban on most outsourced contracts, is "overly drastic" and could keep Canadian companies from bidding for state services, testified Lew McMurran of the Washington Software Alliance. The bill also could raise the cost of services paid by taxpayers, McMurran said.

Nancy Atwood of the Washington Council of AeA, an electronics and technology trade group, warned that one in three Washington jobs is tied to trade. The proposed ban threatens to undermine the global nature of the economy and "sends the wrong message to our international trading partners," she said.

"We're working on ways to make this state more competitive, and this ain't one of them," added Kris Tefft of the Association of Washington Business.

The concerns haven't dissuaded Conway or sympathetic lawmakers such as Rep. Zack Hudgins, D-Tukwila, from pushing on.

Conway and Hudgins' three proposals include a prohibition against offshoring, except when the work must be done overseas. They also want to create a legislative task force to study the problem and require companies with state contracts to disclose the share that is done overseas.

Conway and Hudgins expect their study bill, which cleared the House and died in the then- Republican Senate last year, to pass into law this year. They are hopeful about the other bills.

"Taxpayers like to see their tax dollars being utilized in this state. That seems fundamental to what they believe," Conway said during the hearing on the three bills.

"Job creation is a key issue to us," Conway explained.

A large contingent has testified in favor of restricting offshore contracts. Among the supporters was the chief executive of SafeHarbor Technology, which runs information call centers in the shadow of the former Satsop nuclear plant west of Olympia. Executive Annette Jacobs said her company has a long-term relationship with state government, and she favors a ban on offshoring work that could be done in the United States.

"SafeHarbor is an example that companies can provide competitive services and keep jobs in the state," Jacobs said.

And Dave Johnson of the building trades council noted that prefabricated bridge decking for the new Narrows Bridge is being done in South Korea.

The 20,000 tons of steel work could have employed 250 Washington workers full time, Johnson told the committee.

Six states have adopted outsourcing legislation.

Washington's proposal to ban offshore contracts goes further, said Rep. Cary Condotta, R-East Wenatchee. "They give preference. ... They don't prohibit."

In the face of such potential opposition, Conway said he's willing to investigate other options.

Conway has support from House Speaker Frank Chopp, D-Seattle, to pass some kind of bill. Chopp wants to see call centers that help determine eligibility for state aid to be located in Washington, and he also wishes the Narrows Bridge work had been done here.

In the end, Chopp said he expects Conway's proposal will evolve into more of a preference for Washington firms.

Outsourcing bills

Three bills are in the House Commerce and Labor Committee.

-	House Bill 1724: Requires state contracts for services to include language that forces the contracting company to disclose how much of the work is done outside the United States, by how many workers and at what wage.
-	HB 1725: Prohibits work under certain contracts from being done overseas, although it allows the governor's Office of Financial Management to decide if the only practicable location for the work is overseas.
-	HCR 4405: Creates a task force of 16 legislators to study offshore outsourcing. A 10-member advisory committee would include three representatives each from labor and business.

A separate measure, Senate Bill 5777, would prohibit sending work offshore under state contracts. It gets a hearing at 10 a.m. Tuesday in the Senate Labor, Commerce, Research and Development Committee.

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© 2005 The Olympian

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