Congress is one step closer to a showdown with the White House over an administration program that forces some federal workers to compete for their jobs against private contractors.

The House this week added an amendment to the Transportation-Treasury spending bill that would deny funding for the outsourcing (search) program, and the Senate version of the bill has similar language.

But the White House has threatened to veto the funding bill if it contains language blocking the competitive bidding program, which is run under regulations known as Circular A-76 (search).

President Bush's plan aims to privatize "nongovernmental" federal jobs, such as janitorial work or some administrative services. Government employees in these positions must bid for their own jobs against private competitors.

The Office of Management and Budget (search) revised the regulations in May 2003 in ways that critics say unfairly disadvantage federal workers by, for example, letting contractors slash workers' insurance benefits to lower their bids.

Rep. Chris Van Hollen (search), D-Md., who sponsored the amendment, argued that his provision is not "anti-contractor," but is meant to redress those inequalities. He noted that the House included changes to the privatization process when it passed the Defense authorization bill in July.

"This legislation will help ensure that we have an even playing field," Van Hollen said in a prepared statement. "I am not opposed to competitive sourcing but we must put a stop to the administration's ideologically driven agenda to benefit private contractors over federal employees and taxpayers."

OMB spokesman Chad Kolton said the A-76 program (search) is working. He was not able to provide government-wide totals, but pointed to workers at the Department of Energy who were able to save taxpayers more than $30 million by cutting the agency's finance and accounting operations from 15 offices to two.

In fact, Kolton said that to date, government workers in competitive bids have been able to retain their jobs 89 percent of the time.

Even so, federal employees unions were quick to support Van Hollen's amendment.

"We hope passage of this amendment will help revise the current privatization process along the lines already laid down by the Congress for the Department of Defense," said John Gage, president of the American Federation of Government Employees (search). "That certainly would make the process more fair."

In addition to Van Hollen's amendment, the House version of the Transportation-Treasury appropriations bill also includes a 3.5 percent pay increase for federal workers, which the president also opposes.

The Senate is expected to pass its own version of the appropriations bill next week. That bill also includes a ban on A-76 funding, sponsored by Sen. Barbara Mikulski, D-Md.

Should the A-76 language stay in the bill it could face a veto. In a Sept. 15 policy statement, the White House said the president's senior advisers would "recommend a veto" if A-76 funding was blocked.

But one union official said the White House would "have a hard time to muster the veto threat."

"This administration has issued 40 veto threats but not followed through," said John Threlkeld, an AFGE lobbyist. He said it is hard to believe the White House "would do it on something as insignificant as competitive sourcing."

An aide to Van Hollen said "there's no way to know for certain what's going to happen" but the congressman is optimistic.

Capital News Service contributed to this report.