OMB: List outsource possibilities

A top-ranking Office of Management and Budget official told industry representatives last week that he plans to ask members of the President's Management Council this month to develop a list of duties performed by government that might be outsourced to the private sector.

The list, which is part of agencies' compliance with OMB Circular A-76, could cover functions from data center operations to special software development projects. Federal agencies and industry then would compete for the work.

The circular, which has been in effect since 1983, calls on agencies to limit performing commercial activities that may go beyond an agency's core mission. In recent years, as agencies have awarded contracts to other agencies to work on such tasks as data processing, industry has complained that the federal government has ignored the policy. Industry representatives this year renewed a push on Capitol Hill for legislation that would mandate outsourcing of government functions that were not "inherently governmental," which include services ranging from landscaping to data processing.

Speaking last week before a conference sponsored by the Professional Services Council (PSC) industry group, Edward DeSeve, OMB's acting deputy director for management, said the A-76 process is working, and he cited the Defense Department's outsourcing of 150,000 full-time positions in recent years as proof. "Why did they do it? To save money," said DeSeve, who pegged DOD's savings at $6.4 billion.

By listing inherently nongovernmental services that could be put up for competition, the government could get "the best deal for the taxpayer," DeSeve said. "We're going to make sure that [agencies] follow DOD's lead."

DeSeve expects agencies to have their lists completed by the end of October, after which industry can offer comments.

Nevertheless, industry and some members of Congress plan to push ahead with legislation to force agencies to give up work that is not considered governmental. "OMB is not in a position to enforce [A-76] even if they chose to," said Sen. Craig Thomas (R-Wyo.). Thomas is the sponsor of a Senate bill that would require federal organizations to compete with the private sector for inherently nongovernmental duties.

Some industry groups want changes in the bill. Bert Concklin, president of PSC, said his organization does not believe public/private competition is the solution but more of a stepping stone to complete outsourcing of all nongovernmental functions. If government competes with industry, it could create conflicts of interest.

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