Despite Skyrocketing Unemployment, Tennessee Valley Authority Plans to Outsource Hundreds of Federal Jobs to Overseas Companies

Originally published in The Intercept on May 5, 2020.
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As Donald Trump vows to save the economy amid the global pandemic, while the number of Americans filing for unemployment has skyrocketed to 30 million, the Tennessee Valley Authority, or TVA, the nation’s largest government-owned power provider, has announced plans to outsource 20 percent of its highly-skilled technology workforce to Capgemini, CGI, and Accenture — companies based in France, Canada, and Ireland respectively.

At least 120 workers have already learned they will be losing their jobs later this summer, and the TVA has informed the engineers’ union that another 100 jobs are likely on the chopping block. Affected workers were told in late April to prepare to train their own replacements, according to an email reviewed by The Intercept.

While TVA claims the jobs will remain in the United States, citing the existence of  U.S.-based subsidiaries for some of its vendors, workers say outsourcing labor is baked into these firms’ business model. The companies employ substantial workers abroad; Capgemini alone has 100,000 workers based in India. The potential outsourcing of federal jobs flies in the face of the “America First” rhetoric that underpins Trump’s presidency and reelection campaign.

Gay Henson, a TVA worker of 35 years and the current president of Engineering Association (EA)/Local 1937, said that workers there see the move as an attempt to undermine their union. While efforts to outsource their jobs predated the pandemic, Henson is not paranoid to consider how the new economic crisis might be exploited. Historically, companies have used times of economic downfall to slash union jobs — and workers have struggled to recoup those losses. In the 1980s, the only time since the Great Depression when unemployment passed 10 percent, union density declined 30 percent and hasn’t recovered. The resulting wage stagnation among both union and nonunion workers has fueled runaway wealth and income inequality, with nearly all of the economic gains over the past four decades flowing to those at the very top.

Now, with unemployment threatening to reach Depression-era levels again — and some analysts predicting that it may have hit as high as 16 percent in April — unions are feeling vulnerable. Millions of people furloughed and laid off in the past several weeks are unlikely to get their jobs back, and many who will be brought back could be offered substantially less pay. Where possible, employers, as always, will look for nonunion labor to replace organized workers. Young people just entering the workforce will have the trajectory of their lifetime earnings driven downward, while older people now being cast out of it will, as a result of age discrimination, have a very hard time clawing their way back in.

The layoffs at the TVA are just one turn of the screw.

While the agency signed a $15 million contract with Capgemini in September, following an internal review which recommended TVA revamp its internal software writing system, the additional vendors were disclosed in April — well into the coronavirus pandemic.

The company’s stated rationale, according to TVA spokesperson Jim Hopson, is a desire to “increase opportunity for innovation and expertise” that he said is less possible with an in-house technology team. Hopson also told The Intercept that TVA will continue to require its work to be done domestically and that all data be stored on U.S.-based servers.

The International Federation of Professional and Technical Engineers, IFPTE, the union that represents the TVA workers, says it has also seen how this story has played out at other utility companies across the country. In California, for example, when Pacific Gas and Electric laid off hundreds of workers in 2017, at least 70 of those jobs ended up being outsourced to India — a move the company did not initially disclose. And in 2015, when Disney laid off 250 IT workers in Orlando, the company replaced them with foreign guest workers on H-1B visas, employed by global outsourcing firms. In TVA’s case, the company recently increased its use of H-1B visas — which allow companies to replace American workers with foreign nationals for jobs designated a “specialty occupation” with a salary of at least $60,000 — over the last year.

TVA workers stress there’s no evidence whatsoever that their current staff is not capable of doing the software work themselves.

“Our workers absolutely can do the work, can do it well, and we’ve all been trained in it,” said Henson. Company managers have also raised no real objection to their work, and in an email last month praising staff for their performance during the pandemic, a manager said their work was “nothing short of stellar.”

“It’s not an issue of qualification, it’s not an issue of quality of the work,” Hopson, the TVA spokesperson, told The Intercept. “It’s not any fault of theirs, it’s the simple fact that they do not have the same access to tools and breadth of experience that other companies can provide.” Cost was also not a “primary reason” for the outsourcing, Hopson said. (TVA CEO Jeff Lyash, who makes $8 million a year, is the highest-paid federal employee — a salary Trump recently threatened to slash.)

TVA management has delivered the same message internally, telling “workers repeatedly” that they don’t expect the outsourcing will provide cost-savings to the TVA, according to Henson. “They’ve told us this is not about saving the money, but ‘leveraging the market,’” she said.

Finding none of the company’s explanations particularly compelling, Henson said the decision appears to be designed to weaken their union, which has been around since 1937. “At this point I can’t really see what else it could be,” she said.

Hopson, the TVA spokesperson, denied union-busting was a factor. “We understand there are times when decisions need to be made that are contrary to what the union would prefer, however we do believe they are extraordinarily valuable partners,” he said.

To add insult to injury, workers getting pink slips will be expected to train their replacements.

“Over the next few months, employees in Development & Operations will work to transfer knowledge and transition this work to these [new] vendors,” wrote Jeremy Fisher, TVA’s vice president and chief information officer in an email to staff on April 21. “We recognize that participating in the knowledge transfer process is difficult for many of you, but we are counting on your continued professionalism to make the transition to our new operating model a successful one for TVA.”

Fisher did not return requests for comment. Hopson said that while he does not know the specifics of the transition plan, he acknowledged workers might help “familiarize understanding of what’s already there” to make the transition easier.

THE TENNESSEE VALLEY Authority is a federally owned corporation created in 1933 during the Great Depression to provide both electricity generation and “economic development” to the Tennessee Valley region. Its service area covers 10 million people across seven southern states.

Workers say outsourcing the jobs out of the Tennessee Valley flies in the face of its vaunted mission and mandate, and they estimate the proposed layoffs will cost the local economy nearly $88 million over five years.

In a letter sent on Thursday to Sens. John Barrasso, R-Wyo., and Tom Carper, D-Del., the chair and ranking member of the Environment & Public Works Committee, which holds jurisdiction over the TVA, the union asked for an investigation into “an outsourcing process at TVA that lacks transparency, was done in violation of TVA’s own internal contracting processes, will be more costly than simply leaving the work in-house, and is in violation of TVA’s own mission of providing an economic boon to the vast Tennessee Valley community.”

The letter, signed by Henson along with Paul Shearon, IFPTE’s international president, and Matthew Biggs, its secretary-treasurer, also noted it is “alarming” that a federal government entity would be allowed to lay off hundreds of workers right now. The union pressed the senators to add language in the next Covid-19 relief bill preventing TVA from outsourcing the jobs. “Unlike saving other American jobs, saving these will not cost taxpayers a dime,” they wrote.

Sarah Durdaller, Barrasso’s press secretary, told The Intercept the committee had received the union’s letter “and is in communication with TVA regarding the issue.” The committee will continue to conduct oversight of TVA, she added.

This was the IFPTE’s second attempt to bring congressional attention to the threatened layoffs. In January, before Covid-19 upended the global economy, the union wrote to the Senate Subcommittee on Clean Air and Nuclear Safety and the House Subcommittee on Water Resources asking for help in protecting their jobs.

Two lawmakers from Alabama, one of the states serviced by TVA, have so far been the only members of Congress to respond seriously to the workers’ pleas. On March 2, Republican Rep. Mo Brooks sent a letter to TVA CEO Jeffrey Lyash, raising national security concerns with outsourcing the TVA’s electrical grid. “It would be folly to outsource TVA IT work to foreigners, an outsourcing that may allow geopolitical foes to disrupt the stability of power production and distribution across the Tennessee Valley,” Brooks wrote, echoing concerns raised by the union. TVA has defended its decision by pointing to the fact that other federal agencies, including the Department of Justice and the Department of Homeland Security, also contract with these companies. Democratic Sen. Doug Jones has also been in regular communication with the union about the impending layoffs.

When asked about contributing to unemployment during the pandemic, Hopson said their “overriding goal” is to serve their customers “in the most effective and innovative way possible.” While he said they “understand the challenges that could be placed on those who are impacted, ultimately the goal is to serve 10 million people.”

Workers say there is still time for TVA to reverse course and save these jobs, as the pink slips have yet to be issued. About two weeks ago IFPTE even reached out to Peter Navarro, the White House director of trade and industrial policy.

“It’s so far fallen on deaf ears but lord knows there hasn’t been a louder voice on outsourcing American workers than him,” said Shearon, the international president. “These companies do not pay American taxes, often do not employ American workers, and in the face of the promises of the president and this global pandemic and 30 million unemployed, it’s just unacceptable.”

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