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This story was updated at 5:18 p.m. on Thursday, Aug. 6, 2020, with more information.

Under pressure from the White House, labor unions and critics of outsourcing, the Tennessee Valley Authority Thursday rescinded its decision to lay off information technology workers as part of a restructuring process announced earlier this year.

After meeting with White House Chief of Staff Mark Meadows on Thursday, TVA's interim chairman John Ryder said the federal utility "wholehearted agrees with the administration's direction on jobs" and is reversing its move to outsource about 200 IT jobs in Chattanooga and Knoxville.

"We expressed that our IT restructuring process was faulty and that we have changed direction so that we can ensure American jobs are protected," said Ryder, who was elevated to TVA chairman after President Donald Trump fired Skip Thompson as TVA chair for his support of the outsourcing move.

TVA President Jeff Lyash conceded that TVA should have done better in the way it replaced IT work now done by TVA employees by hiring three contractors, all of which are headquartered outside of the United States.

"We were wrong in not fully understanding the impact on our employees, especially during the pandemic," Lyash said. "We are taking immediate actions to address this situation."

In addition to rescinding all of the layoffs in its IT organization that occurred in 2020, TVA is also reviewing the full scope of contract companies hired by TVA to ensure compliance with the President's executive order regarding workers on H1B visas, which Trump issued Monday to block TVA and other federal agencies from outsourcing U.S. jobs.

TVA previously said it was cutting about 200 non-critical computer software and development jobs in Chattanooga and Knoxville and outsourcing the work to specialized contractors. Although about half of the displaced workers voluntarily left TVA or found other jobs over the past year, TVA was planning to lay off about 100 IT workers still on staff over the next two months until Trump issued the order and fired two of TVA's board members for supporting the outsourcing move.

Trump said his order was "a warning to any federally appointed board" against outsourcing work that costs American jobs.

"If you betray American workers, then you will hear two simple words: 'You're fired,'" Trump said.

Although all of the contract workers doing the IT work are in the United States, the work previously done by TVA workers in Tennessee was contracted out to Capgemini (based in France), CGI (based in Canada) and Accenture (based in Ireland). Some of the workers doing the IT work were foreign citizens working under H1B visas, which President Trump vowed to restrict.

The union representing the IT workers whose jobs were threatened applauded the TVA's decision to reverse the outsourcing move.

"This is certainly a win for American workers, for TVA ratepayers and for everyone who relies on the U.S. electrical grid," said Gay Henson, president of the Engineering Association/IFPTE Local 1937 who has led protests and pickets against the outsourcing and was among those who appealed to Trump to intervene. "Our members will get their jobs back. TVA ratepayers will benefit from having skilled U.S. workers providing quality service."

The move came three days after Trump fired Thompson and former TVA chairman Richard Howorth from the TVA board and threatened to fire other board members unless TVA quit outsourcing U.S. jobs and unless the CEO pay at TVA — the highest of any federal employee, with a compensation package worth over $8 million a year — was cut down to no more than $500,000.

Lyash this week continued to defend market-based pay at TVA, although he said he serves at the will of the TVA board. The TVA Act, as amended in 2005, directs the TVA board to pay competitive wages to all of its employees, including its CEO, and TVA regularly conducts wage surveys of other utilities to benchmark its compensation with other companies.

After meeting with Meadows and White House Counsel Pat Cipollone, Lyash voiced support for the the White House move to help keep U.S. jobs and used the occasion to tout TVA's record of hiring U.S. veterans and promoting growth in the Tennessee Valley.

"We appreciate what the administration has done to grow American jobs and support our military veterans," Lyash said. "At TVA, we are proud that veterans comprise 20 percent of our workforce."

Lyash also noted that by keeping rates relatively low and assisting local economic development efforts, TVA has helped retain more than 350,000 jobs and $53 billion in investment in TVA's seven-state region over the past five years.

"Our mission is clear – delivering low-cost reliable power, economic development and environmental stewardship," Lyash said in a statement Thursday. "We are addressing this disappointing misstep and refocusing our commitment on serving our customers and this nation."

TVA will revamp its future contracts to limit the use of H1B visas and will work to provide training and jobs for all of the IT workers who were to be laid off, TVA spokesman Buddy Eller said.

TVA's reversal ends a months-long campaign by the International Federation of Professional Technicians and Engineers union, which represents the workers targeted for layoffs and more than 2,000 other engineers and technicians at TVA. The union led protests and appeals to Congress, but TVA's reversal came only after the effort gained support from Trump.

The president's attention was caught by a television ad aimed at him and sponsored by U.S. Tech Workers, a nonprofit group fighting the outsourcing of IT and engineering jobs. U.S. Tech Workers bought more than $100,000 of television ads. The president saw the commercial and within a few weeks decided to push TVA to reverse its decision.

Trump can't direct the the policies or actions of TVA, an independent federal corporation which is governed by its own board and does not receive any taxpayer money. But Trump said he would continue to fire TVA directors who are appointed by the president until TVA reversed the outsourcing move.

Following Trump's announcement Monday, Republicans across Tennessee from Senate candidates Bill Hagerty and Manny Sethi to congressional representatives Chuck Fleischmann in Chattanooga and Tim Burchett in Knoxville said they agreed with the president's actions.

In an odd alliance, both labor unions and Republican leaders said TVA shouldn't outsource its own jobs to contractors using foreign workers.

"It was a violation of TVA's mission to take these jobs out of the Tennessee Valley, and it was outrageous that a federal utility would export these jobs during the pandemic and the related economic crisis while the federal government is spending trillions to keep workers employed," said Paul Shearon, president of the IFPTE union. "However, in the end TVA management made the correct decision."

Contact Dave Flessner at dflessner@timesfreepress.com or at 423757-6340

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