Competition winners to be monitored, OMB says

FAIR Act site

Whether agencies choose to keep work in-house or contract it out, they will have to prove that was the right decision through a new review process being developed by the Office of Management and Budget.

OMB has already started a thorough review of the A-76 process, which is used to determine whether a particular job should be performed by a government agency or outsourced to the private sector.

But OMB director Mitchell Daniels Jr. has decided that simply reviewing the competitive process is not enough. OMB is developing a way to review how well those services are performed, whether by a company or a government agency. "The watchword for the administration will be "competition' but we must be watchful," Daniels said July 17 before the Contract Services Association of America. "We must hold the winner to high standards."

Daniels' statement is consistent with the Bush administration's insistence on holding agencies to overall program performance goals, said Olga Grkavac, an executive vice president at the Information Technology Association of America. "They are all interested in performance measures and making sure you do what you say you're going to do," she said.

The administration's goal for fiscal 2002 is for agencies to offer for competition at least 5 percent of the jobs listed as available for outsourcing in accordance with the Federal Activities Inventory Reform Act of 1998. The goal for fiscal 2003 is 15 percent.

But OMB officials have repeatedly said that just because a function is listed as available for outsourcing, it does not mean that the function must be performed by the private sector. If a federal entity can offer the best value, then functions not inherently governmental should stay in-house, OMB Deputy Director Sean O'Keefe said in May.

"You've accomplished 90 percent of the objective by the mere act of competitively sourcing it, determining what is the best means of delivery," O'Keefe said.

Industry officials have argued that in-house federal organizations have too much of an advantage when it comes to competing with the private sector, and many groups have called for verifying whether federal winners are actually more efficient than industry bidders.

There will be such reviews but not just of the federal winners, Daniels said.

"Verification, regardless of who wins, is important," he said.


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