Competitive Sourcing (A-76)
Position: The
Office of Management and Budget’s (OMB)
privatization effort is not about making
federal services more efficient, it is designed
to replace hundreds of thousands of federal
employees with contractors. OMB is
still forcing agencies to use privatization
quotas, the A-76 process is hopelessly
pro-contractor, and OMB justifies its
unprecedented wholesale privatization effort
with unsubstantiated savings claims. We
encourage Congress to adopt rules that will
level the playing field for federal workers in
A-76 competitions, and where appropriate,
eliminate competitive sourcing
altogether.
Competitive sourcing is the method by
which federal agencies attempt to move work
performed by federal workers into the private
sector.
Competitive sourcing is one of the five
elements of the President's Management
Agenda.
While competitive sourcing may seem like
a good way to save the government money in
principle, any savings that the Office of
Management and Budget (OMB) claims are
unsubstantiated. The Government
Accountability Office (GAO) has repeatedly
questioned OMB’s historically grandiose
savings claims. Moreover, OMB officials
acknowledge that:
·
Only a very small
percentage of OMB’s estimated savings from competitive
sourcing, if any at all, result in actual
savings.
Estimated net savings have not been
independently verified.
·
Claims of 40% savings
are completely false. Any such estimates are
qualified with hedge words that demonstrate the
subjectivity of the
claims.
·
Agencies deliberately
use criteria that exaggerate savings from and
minimize costs of conducting privatization
reviews.
Costs of conducting a study can run into
the tens of millions with no guarantee of any
savings at all.
OMB officials have said agencies must
review 850,000 federal employee jobs for
privatization. In order to accomplish that
goal, OMB officials established crude numerical
quotas for agencies. Even though Congress
officially outlawed the use of numerical
privatization quotas in 2003, GAO reports that
little has changed, and the privatization
quotas imposed on agencies are still very much
in place.
OMB is still directing agencies to
conduct certain numbers of privatization
reviews within certain periods of time
affecting certain number of employees.
Competitive sourcing rules lean heavily
in favor of contractors. For
example, contractors, but not federal
employees, can appeal agencies’ contracting
out decisions to independent third
parties.
In addition, federal employees, but not
contractors, are automatically recompeted at
the end of their performance periods. The
list of inequities between federal workers and
contractors goes on and
on.
Opposition to the competitive sourcing
initiative is based on four basic principles:
1) Federal employees should
have the same appeal rights as
contractors.
When federal employees win a
privatization review, contractors can have the
agency’s decision reviewed by independent
third parties—by appealing to the GAO or the
Court of Federal Claims—and perhaps get it
reversed.
However, federal employees have no such
appeal rights. Only very senior managers
can appeal a contracting out decision and they
are allowed to do so in very limited
circumstances. Federal employees should
have the same appeal rights as
contractors. It is basic fairness that
both sides in a contest where jobs are at stake
should have the same appeal rights. A
contracting official can’t help but be biased
now because she knows that only one side—the
contractors—can hold her accountable in
court.
2) Federal employees should
have opportunities to perform new work and
contracted out work and to become more
efficient outside of the narrow OMB Circular
A-76 context.
OMB acknowledges that federal employees
routinely beat their contractor counterparts in
competition after competition. So why
aren’t federal employees allowed to compete
for new work and work that’s already been
outsourced? If public-private
competition is good for federal employees, then
it should be good for contractors, especially
given that insourcing is common practice in
local government and in the private
sector.
Similarly, federal employees should be
allowed to reengineer internally to become more
efficient without going through the costly and
controversial A-76
process.
3) Health care and
retirement costs should be excluded from the
cost comparison process of privatization
reviews used by all federal agencies so that
contractors are not rewarded for providing bad
benefits or even none at all.
Such an approach does not require
contractors to provide comparable
benefits.
Such an approach does ensure that
federal employees won’t be punished for the
fixed costs of the federal government’s
modest health care and retirement benefits in
any public-private competition. Health
care costs are already excluded for the
Department of Defense (DoD), and the same
approach has been advocated for DoD retirement
costs.
However, health care and retirement
costs should not be a consideration in any cost
comparison in any agency.
4) Federal employees should
not be reviewed for privatization because of
guidance, direction, requirement, or
encouragement from OMB officials.
OMB’s use of numerical privatization
quotas was outlawed by Congress.
However, OMB is still forcing agencies
to review arbitrary numbers of federal
employees for privatization merely to achieve
quotas.
OMB political appointees should not be
telling agency career managers how many and
which employees to review for
privatization.
Agency
Exclusions
In some agencies, competitive sourcing
simply does not make sense. One
obvious case is where a single employee has
substantial responsibilities outside of his/her
typical duties. In the Forest Service (FS)
for example, in addition to performing land
management work, the majority of employees
serve a critical homeland security function as
well.
These workers serve in the FS militia,
in which they respond at a moment’s notice to
wildfires and a wide variety of emergency
incidents. Outsource the forest planner
and you lose the highly trained rapid responder
as well. To outsource this workforce would be
to decimate the nation’s emergency response
capabilities. This is just one
agency-specific example of many where
competitive sourcing is a poor model for
reform.
Congressional
Action
The IAM encourages Congress to improve
the competitive sourcing system
by:
1.
Granting federal
workers the same appeal rights as
contractors.
2.
Granting federal
employees opportunities to perform new work and
contracted out work.
3.
Excluding health care
and retirement costs from cost
comparisons.
4.
Eliminating
once-and-for-all the privatization quotas
imposed by OMB.
5. Exempting agencies where competitive sourcing is a poor vehicle for reform.
