A-76 has its place — with proper boundaries

The hot topic these days is insourcing. Many observers have dubbed the Obama administration as one intent on insourcing government work, just as the Bush administration was known to outsource that work.

With the insourcing debate, Daniel Gordon, the nominee to be the administrator of the Office of Federal Procurement Policy, will have to wrestle with the Office of Management and Budget Circular A-76 and its public-private competitions for federal work.

The Senate Homeland Security and Governmental Affairs Committee's questionnaire for Gordon spanned competition for contracts, acquisition workforce issues, strategic sourcing and contingency contracting—a few of the issues he’ll face if the Senate confirms him.

When asked about A-76, here’s what Gordon had to say:

1. Under OMB’s Circular A-76, commercial-type functions are competed between public and private sources in a process commonly referred to as competitive sourcing. Under the last administration, OMB touted billions of dollars in savings achieved under the competitive-sourcing initiative, yet many have questioned the savings, and both federal workers and the private sector have complained about the fairness of the process.

a. In your view, how should the government decide which services should be provided by government employees and which would be appropriate to be potentially provided by contractors?

DANIEL GORDON: "Contractors perform very important functions for the government, and I expect the government to continue to benefit from their services.  That said, we need to ensure first that all inherently governmental functions are performed only by federal employees; and second, that agencies not outsource critical functions needed to protect the agencies’ internal capabilities and capacity to maintain control of their operations.  For functions that an agency determines could be performed by either the public or the private sector, we need processes that are transparent and fair to all sides, including both contractors and federal employees."

b. How do you intend to balance the requirements under Circular A-76 with current insourcing initiatives?

GORDON: "I believe that the two are compatible. The circular provides guidance on conducting public/private competitions, but it recognizes the government’s management authority to identify functions that need to be performed by federal employees. Moreover, the recent statutory direction on insourcing (which, of course, would override the Circular, if there were a conflict between them) reinforces the government’s authority to have work performed by federal employees when, as a management decision, agencies determine that that is necessary."

2. GAO has reported that federal agencies have not developed comprehensive cost estimates associated with public-private competitions under Circular A-76. For example, in a recent review of competitive-sourcing practices at the Department of Labor (DOL) (GAO-09-14), GAO found that DOL reports of savings from competitive sourcing were unreliable. In its estimates of savings, DOL excluded a number of substantial items, including the time in-house staff spent on competition activities, pre-competition planning, transaction costs, and post-competition oversight. GAO recommended that OMB require agencies to systematically report all costs associated with competitive sourcing. 

a. Do you agree with GAO’s recommendation?

GORDON: The credibility of public-private competitions under Circular A-76 depends on, among other things, the reliability of the calculation of the cost of performance by each competing side and accurate reporting on costs and savings following a competition.  In my work at GAO, including as counsel to the congressionally mandated Commercial Activities Panel, I learned of the challenges in calculating each side’s costs in a fair and defensible way.  For these reasons, I think the GAO’s recommendations should be carefully considered.

b. What steps will you take to ensure that agencies keep track of time and expenses related to conducting cost comparisons in-house?

GORDON: "If confirmed, I would work to ensure that agencies have adequate guidance in this area."

c. What steps will you take to ensure that such costs are taken into account in projecting savings from the A-76 process?

GORDON: "As in response to the prior question, if confirmed, I would work to ensure that OMB has provided adequate guidance to agencies in this area."
 
3. Many A-76 competitions drag on for years, putting federal employees in limbo about their future and undermining agency morale. What will you do to ensure that A-76 competitions are completed in a timely manner?

GORDON: "The length of A-76 competitions is a subject of concern that I am very familiar with, from my work at GAO, including in connection with the Commercial Activities Panel.  I would note that lengthy competitions – like doubts about the fairness of the A-76 process itself – have a negative impact on the private sector as well as on federal employees.  If confirmed, I would work to ensure that this concern is adequately addressed."

4. Do you believe that there is new work or work currently performed by contractors that should be subject to public-private competition for possible insourcing? If public-private competitions result in the greatest efficiency for work traditionally performed by government workers, should OMB give federal employees the opportunity to win through competition work that they can perform more efficiently than contractors?

GORDON: "I recognize that the provision in Circular A-76 allowing work to go to the private sector, but not the public sector, without a competition if it is defined as “new” may raise concern, if for no reason other than that one would want to be sure that the “new” label is being used appropriately.  As I hope is clear from my answers to other questions, I believe that the prior Administration may have gone too far in its reliance on contractors, and I support the President’s direction to clarify when outsourcing is and is not appropriate.  With regard to the specific approach raised in this question (that is, conducting public/private competitions about new work), I would want to consult with others and reflect before reaching a recommendation."

Posted by Matthew Weigelt on Nov 12, 2009 at 1:27 PM