Keep outsourcing apolitical

Deciding whether to outsource work or do it in-house is one of the most contentious issues in government contracting. But it doesn't have to be.

The government's first policy statement on outsourcing came in 1955 under President Eisenhower and has remained essentially unchanged. As set forth in the current version of Circular A-76 from the Office of Management and Budget, "it has been and continues to be the general policy of the government to rely on commercial sources to supply the products and services the government needs."

There have always been exceptions. The most important and obvious covers "inherently governmental functions," which are never contracted out. A less obvious exception covers functions that may be performed cheaper in-house than under contract. Whether consistent or not with general policy, cost has always been a key factor in government outsourcing.

As A-76 states, an activity ordinarily will not convert from in-house to a contractor, or vice versa, unless a formal comparison reveals a significant savings—generally 10 percent. Moreover, use of those cost-comparison procedures has been incorporated into law.

During the last session of Congress, several legislators introduced the Truthfulness, Responsibility and Accountability in Contracting Act, or TRAC. This bill repeated principles already in Circular A-76 while imposing new reporting requirements.

On its face, the TRAC bill made few substantive changes in the way outsourcing decisions are made. However, the many congressional reporting requirements, combined with similar requirements already in Defense Department statutes, may make it harder to keep politics out of the process.

TRAC was backed by government employee organizations wanting to keep government work in-house. Some outsourcing proponents, however, attacked it as impeding efficient contracting. The bill died in the last Congress but undoubtedly will be reintroduced.

As part of the 2001 Defense Appropriations Act, Congress directed the General Accounting Office to convene a panel of experts to study the entire outsourcing process and to issue recommendations by May 1, 2002. Congress directed GAO to ensure that all interested parties were fairly represented.

This direction, together with the lengthy study period, was supposed to promote cooperation. Inexplicably, GAO limited to December the period for recommending individuals to serve on the panel. It cut off input two weeks before the Bush administration took office and does not represent the cooperative approach that Congress intended.

For decades, the government has followed essentially the same process for making outsourcing decisions. If changes are to be made, they should come only after an impartial and apolitical analysis.

To get this process started right, GAO should ensure that its review panel includes a truly broad spectrum of views and open all of its proceedings to the public.

Peckinpaugh is corporate counsel for DynCorp, Reston, Va.

Materials discussed in this column include:

10 U.S.C. 2460-74; Departments of Defense and Energy appropriations act for fiscal 2001, Pub. L. 106-398, 832, 114 Stat. 1654; Office of Management and Budget Circular A-76,
; 65 Fed. Reg. 75288 (Dec. 1, 2000) (General Accounting Office Commercial Activities Panel).


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