Competitive sourcing losses may be hyped

Competitive Sourcing: What Happens to Federal Employees?

Federal employees are not likely to be fired because of competitive sourcing studies, according to a report by two University of Maryland researchers.

Only 5 percent of full-time civilian employees have left government service involuntarily as a result of competitive sourcing, the researchers found in a review of about 1,200 competitive sourcing initiatives in the Defense Department. Temporary employees have a 3 percent chance of being fired, co-authors Jacques Gansler and William Lucyshyn state in their report "Competitive Sourcing: What Happens to Federal Employees?"

IBM Corp.'s Center for the Business of Government provided funds for the research.

Most federal employees whose jobs have been eliminated through competitive sourcing have transferred to other government jobs, according to the report. In all, 16 percent of workers have transferred, and 11 percent have retired.

"It is clear that much of the claims of the negative impact of competitive sourcing on federal employees are unfounded," the authors state.

Competitive sourcing, part of the President's Management Agenda, encourages agency officials to cut costs by forcing federal employees whose work is not deemed to be inherently governmental to compete against private-sector bids for the same work. Competitive sourcing "makes people look around and say, 'What's the smartest way to do this job?'" Lucyshyn said. "Whenever you have a monopoly, that pressure doesn't exist, and there is really no incentive to try to improve."

Competitive sourcing reduced costs by an average of 44 percent per competition, for a total savings of $11.2 billion, according to the report. Researchers also found that after a competitive sourcing competition, remaining employees did not have a burdensome amount of work.

The report's authors note that data they used in the study doesn't capture the effect of federal workers opting to "bump" or "retreat" less tenured employees from their jobs. Previous studies of competitive

sourcing have found the number of

employees directly affected by reassignment "may be as high as four or five times the number of employees separated," the report states.

The researchers also did not examine the rate at which dismissed employees work for the winning private-sector firm, performing the same work they once did for the


"Other studies have found that over half of the workers on outsourced functions went to work for the private-sector firm," said Chris Jahn, president of the Contract Services Association of America, a group representing the government services contracting industry. "When the private sector wins a contract, it does not have a warehouse of people just waiting to take over the job."

A union official attacked the study for using flawed data.

John Threlkeld, a lobbyist for the American Federation of Government Employees, said the authors used "a system that has been sharply criticized by the nonpartisan Government Accountability Office as decrepit and outmoded."

Lucyshyn defended the study's findings, however, and said database issues that Threlkeld raised do not affect the report's conclusion about savings.

"The savings are significant," he said, "and that's clear in every study that's looked at competitive sourcing."

About the Author

David Perera is a special contributor to Defense Systems.

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