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President Donald Trump speaks at Trump National Golf Club Bedminster in Bedminster, N.J., Friday, Aug. 7, 2020. (AP Photo/Susan Walsh)

This story was updated at 4:12 p.m. on Saturday, Aug. 8, 2020, with more information.

President Donald Trump said he helped provide "a major victory for the workers" of the Tennessee Valley Authority last week by firing the current and former chairmen at TVA and pushing the federal utility to reverse what he said was "a terrible thing" to outsource information technology jobs.

But one of the directors Trump abruptly dismissed on Monday worries that the White House is trying to run TVA, which is an independent federal corporation that no longer receives any taxpayer dollars.

"Trump's actions here, but worse, his threat to continue to micromanage TVA, do not bode well for its future, and I won't be surprised to hear talk of privatization now," said Richard Howorth, a former Oxford, Mississippi, mayor who Trump fired from the TVA board on Monday after nine years as a TVA director.

TVA is not under the direct control of the president, but Trump said the agency "changed course totally" at his urging and rescinded layoff notices given to IT workers whose jobs were scheduled to be replaced by outside contractors.

"The leadership of TVA has canceled all of the layoffs — they've given hundreds of American workers their jobs back and they are being rehired as we speak," Trump said during a weekend news briefing at his golf club in Bedminster, New Jersey.

TVA had actually not terminated the IT workers whose jobs are being outsourced, but the agency had given about 100 workers notice that their jobs would end either this month or in October. After Trump criticized TVA for outsourcing jobs and threatened to fire more board members if the policy wasn't changed, TVA rescinded the layoff notices and will keep the IT workers, including rehiring those who may want their jobs back and had already gone elsewhere to work.

TVA's new interim chairman John Ryder called the agency's previous decision to outsource about 20% of the IT staff a "faulty" choice, and TVA CEO Jeff Lyash said "we were wrong" to try to replace workers with contractors during the coronavirus pandemic, which has cost millions of U.S. jobs.

 

TVA's public and business mission

TVA's reversal last week reflects the unique nature of America's largest public utility, which Franklin Roosevelt pushed to create as part of his New Deal in 1933. Roosevelt envisioned TVA as a totally different kind of agency — "a corporation clothed with the power of government but possessed of the flexibility and initiative of a private enterprise."

Former TVA Chairman Craven Crowell, who worked as both a congressional aide and a TVA executive before heading the utility for eight years, worries that TVA has operated in recent years like an investor-owned private utility "while still enjoying the benefits of government ownership," including not paying income taxes and borrowing money at lower rates with the implied backing of the U.S. government.

"It's clear to me that TVA had to be tone deaf to lay off American workers and use non-citizens as replacements during the middle of a presidential campaign where the president is emphasizing the importance of protecting American workers," Crowell said. "This is what an investor-owned utility would likely do without giving any thought to the politics of what they are doing and, unfortunately, I think that is how TVA has been operating."

TVA insisted for months that outsourcing the non-critical software development tasks would improve operations and follow what other private utilities have already done as IT work has evolved and cybersecurity threats have grown. The IT staffing changes TVA began last year were expected to eventually cut about 200 computer and software jobs from the agency's payroll in Chattanooga and Knoxville and shift the work to three contractors that specialize in such work.

 

Trump pushes American jobs

TVA announced the change in its IT strategy three days after Trump met with some of the TVA workers being laid off. Those workers complained that some of those hired by the contractors who were to do their jobs were foreign citizens working in the United States under H-1B visas.

The IT work now done by TVA workers in Tennessee was contracted out to Capgemini (based in France), CGI (based in Canada) and Accenture (based in Ireland). Howorth said CGI is also used by the U.S Department of Homeland Security, the U.S. Navy, and the Department of Justice.

TVA estimates about 13 of the roughly 120 workers scheduled to do tasks for TVA under the new contracts have H-1B visas, which allow foreign citizens to work in the U.S.

TVA requires all of its software and IT work to be done in the United States, but the contractors hired by TVA are headquartered outside of the United States. In accordance with an executive order Trump signed Monday for federal agencies to try to use only American workers, TVA has agreed to apply stricter standards toward using any foreign workers.

All of TVA's roughly 10,000 employees are U.S. citizens, but a limited share of the 12,000 contract workers TVA employs each year for construction, maintenance, security and a variety of other tasks are foreign citizens working in the U.S. under some type of work visa. Lyash said TVA will work to try to limit or even end employing such contractors if they are not U.S. citizens.

TVA must now renegotiate or rework the contracts the company awarded to do part of the IT work at TVA's computer facility in Chattanooga and other IT operations, TVA spokesman Buddy Eller said.

Trump, who personally met Monday with a dozen IT workers from Chattanooga and Knoxville who TVA was planning to lay off due to its outsourcing, praised those workers Friday night and said they will now be able to keep their jobs because of his actions.

"You can never train them [contract workers] as good as what you have because they [the TVA IT workers] have been there for many years, they've done a fantastic job and they love the TVA," the president said during his briefing.

David Littlejohn, one of the IT workers originally scheduled to lose his job at TVA by October, said he is proud of his work at the agency but hated when the utility planned to terminate his job and asked him to train his replacements.

"TVA acts like government when it wants and like a private business when it wants," Littlejohn said after meeting with Trump in the White House.

 

The politics of public power

Howorth said TVA's board, which initially stood behind management when Trump began criticizing TVA and its pay levels earlier this year, has not operated in a partisan or political manner and he had not received any complaints personally from the White House before he was abruptly dismissed Monday.

"I don't like furloughing TVA employees, at all," Howorth said. "But TVA and its board of directors are obligated to provide the greatest possible benefit to all the people of the [Tennessee] Valley."

Over the past four decades, TVA has cut its own staff size by more than 40,000 from its 1981 peak of more than 52,000 employees while turning to contractors to do a bigger share of construction and other short-term and specialized work. The utility has cut more than $800 million in annual operating costs in the past six years to help keep power rates flat, Lyash said.

Howorth, the lone remaining Democrat on the TVA board who was scheduled to leave the board by the end of the year, said "the White House never called to ask the board for an explanation" about TVA's latest strategy in hiring contractors to replace IT workers. Howorth said Trump "threw one of his own appointees, Skip Thompson — one of the finest and ablest leaders I have ever worked with — under the bus" by firing Thompson from the TVA board.

Thompson, chairman of the TVA board for the past year, called the White House's previous attacks on the compensation of TVA's CEO "ill informed" after the president in April called TVA executive pay levels "ridiculous."

Under the reforms adopted by TVA's governing board in 2004 at the urging of then-Senate Majority Leader Bill Frist, TVA was directed to pay competitive salaries with others in the industry and the previous three-member full-time TVA board was replaced with part-time directors who act more like a typical corporate board and hire a full-time CEO.

Crowell, who was one of the last of those serving on the three-member TVA board, said the change in TVA governance implemented in 2005 was not adequately debated in Congress before its adoption. He said the changes have made TVA "just another private utility" not sensitive to its public mission and purpose.

Despite Crowell's criticism of the board change, Lyash said TVA is performing better than it ever has under its new governing structure with lower inflation-adjusted rates, better operating performance and the lowest debt in more than 30 years.

 

Trump vows to fire TVA CEO

Trump has been critical of the compensation package given to Lyash last year, which totaled more than $8.1 million for his first six months on the job. Lyash is the highest paid federal employee in America, but Trump said TVA needs to restore its public service mission and not pay its CEO more than $500,000 a year.

Trump said he wants Lyash fired and TVA's CEO pay cut or he will continue to dismiss TVA directors until they make such changes. The TVA CEO is hired and fired only by the TVA board, but the presidential appointees who serve as TVA directors may be dismissed by the White House.

In TVA's 87-year history, there was only one previous director fired by the president. In 1938, Roosevelt fired TVA's first director, Arthur Morgan, over his inability to work with the other two TVA directors at the time.

Trump vowed last week he was "getting rid of him [Lyash] in one form or another.

"He could've kept the [Paradise coal] plant open in Kentucky, if he wanted to, even if they retrofitted the plant," Trump said about Lyash. "And he didn't do that."

Trump had urged TVA last year to keep the Paradise Fossil Plant in operation to help preserve more jobs in Kentucky's coal industry, but TVA directors voted in early 2019 to shut down the aging coal plant, which Lyash did earlier this year.

Trump has also blasted TVA for paying the highest compensation levels of any federal agency in the country. The TVA act, as amended a decade and a half ago, directs the agency's board to pay competitive salaries with other electric utilities to all employees, including the CEO. TVA employs the consulting firm of Willis Towers Watson Energy Services to survey 37 other electric utilities for employee compensation levels, and Lyash's compensation is now among the lowest 25% of such utilities.

U.S. Sen. Lamar Alexander, the outgoing Republican chair of one of the Senate committees that oversees TVA, helped Frist push though the 2004 reforms that created the CEO post at TVA and the corporate-like nine-member board to oversee the agency.

"TVA may have shown poor judgment hiring foreign companies during a pandemic, but, on most counts, it does a very good job of producing large amounts of low-cost, reliable electricity," Alexander said.

Howorth said he worries that Trump's threat to fire more TVA directors may undermine the agency's future.

"TVA is a great organization that is presently in very good standing," he said. "The board now suddenly has a harder job than it did at any time in my nine-plus years there."

Contact Dave Flessner at dflessner@timesfreepress.com or 423-757-6340.

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