Maximus protests labor clause in $6.6B CMS recompete

Complaints about labor issues are not new when you look at the history behind the $6.6 billion Contact Center Operations contract Maximus won in 2022 with the Centers for Medicare and Medicaid Services.

But the fact that the government is now essentially requiring CMS or a new prime to open the door to a unionized workforce is new.

In December 2023, CMS decided it would not renew the options on the contract beyond the current one. Instead the agency is recompeting the program and has included a labor harmonization requirement.

Maximus filed a protest on June 20 with the Government Accountability Office objecting to the inclusion of the provision.

This is part of the wording in the solicitation that is drawing Maximus’ ire:

“Labor harmony agreement means a written agreement between a contractor with a labor organization that represents, or demonstrates intent to represent, service employees.”

The clause also includes a prohibition against picketing, work stoppages, boycotts and other actions that could interfere with the contractor meeting the obligations of the contract.

In its protest, Maximus argues that the labor harmony agreement requirement violates Federal Acquisition Regulation Regulations, the Labor Management Relations Act and the National Labor Relations Act.

The CCO contract is regulated by the Service Contract Act, which caps wages paid to service workers. This is a mechanism that allows the government to try and minimize costs.

In a statement sent through a spokesperson, Maximus argued that the provisions in the solicitation “violate long-standing policy that the United States government remains impartial between federal contractors and labor organizations.” Maximus claims that the clause would force employees to join a union whether they want to or not.

The Communications Workers Association has a webpage dedicated to their effort to unionize the Maximus workforce. Some of the testimonials on the website date back to when General Dynamics IT was running the contact centers. Maximus bought that business in 2018.

The union says it is asking for better pay, benefits and working conditions.

Maximus is defending itself by pointing to its scores in the Contractor Performance Assessment Reporting System.

A summary states that the company met all of its contractual and compliance requirements as well as the service levels agreement. The contracting officer rated the company as Very Good.

CMS also shared customer satisfaction scores with the company that showed over 95% of users of 1-800-Medicare were satisfied with the service they received.

“Despite historically high customer service ratings and uninterrupted performance two years into a 9-year option contract, HHS is recompeting the contract and inserting an unnecessary union organizing agreement, which is a flawed fix to a non-existent problem,” the Maximus statement said.

The Washington Post also recently named Maximus one of the top places to work in the Washington D.C. metropolitan region.

It is nearly impossible to separate out some of the political backdrop here.

The Biden Administration for one has made growing unions a priority. When he was sworn in, President Biden took the unusual step of firing Peter Robb from his role as general counsel of the National Labor Relations Board.

NLRB general counsels serve four-year terms and are considered independent. Robb was a Trump appointee.

Biden replaced him with Jennifer Abruzzo, who had worked at CMS for nearly 20 years. She most recently was special counsel for strategic initiatives with the Communications Workers of America, the same union trying to organize the CCO.

In February 2019, Rep. Rosa DeLauro (D-Connecticut)  wrote to the Health and Human Services secretary and CMS' administrator complaining about how employees were treated by Maximus.

Rep. Gerry Connelly (D-Virginia) showed some support for Maximus by voicing concerns that there would be a disruption of services, according to the Washington Post's report on the rebid decision. He also wrote to CMS asking for an explanation.

The Washington Post also reported that the Department of Health and Human Services, CMS’ parent organization, pointed to worker strikes last year.

“HHS believes rebidding the contract with a labor peace agreement will preserve access to high-quality customer service,” according to the statement provided to the Washington Post.

Putting the labor issues aside, there are other concerns being raised by CMS' decision to recompete the contract.

These include disruptions to service during the transition to a new prime if a company besides Maximus were to win. Nine companies including Maximus pursued the contract in 2022, so there will be competitors.

CMS and Maximus took three years to get the current contract in place because of its size and the complexity of the services. This is more than just answering the phone.

The Contact Center Operations contract covers the management of at least 35 million inbound inquiries per year from customers related to the Health Insurance Marketplace, 1-800-Medicare and other CMS programs.

Examples of contact channels include telephone, postal mail, email, TDD/TYY teletype services for the hard-of-hearing, fax and web chat to enable round-the-clock customer service.

If GAO denies Maximus’ protest, agencies could be given the OK to insert labor harmony agreements into service contracts and more will follow. That’s one we’ll have to wait and see on.

Maximus filed its protest on June 20 and the GAO decision is due Sept. 30.

In the meantime, proposals were due Friday (today) and Maximus will submit a bid. CMS cannot award the contract while the protest is pending.

If GAO denies Maximus' protest and OKs the insertion of the labor harmony agreement, we'll likely see Maximus take its objections to the U.S. Court of Federal Claims.