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While the Office of Management and Budget continues its work to improve the A-76 process — in which agencies compete with the private sector to perform commercial-style functions — the administration is urging agencies to move forward with the competitions themselves, the White House's top procurement official said Oct. 24.

The A-76 process is used in most decisions on whether to outsource a function. It is based on the circular describing how agencies must compare their most efficient organization's performance against the private sector's best offer.

One of the Bush administration's five management priorities is to increase the competition of functions agencies list as possible for outsourcing under the Federal Activities Inventory Reform Act of 1998. However, many government and industry leaders have criticized the A-76 process that is used to do that.

The administration is looking to solve several of their top concerns through legislation introduced Oct. 15 as part of the president's Freedom to Manage initiative, said Angela Styles, administrator of OMB's Office of Federal Procurement Policy. She spoke Oct. 24 to a group of public- and private-sector executives at the Fall Procurement Conference hosted by the Coalition for Government Procurement.

Among other things, the Managerial Flexibility Act gives agencies control over all personnel costs, including the retirement and health care costs currently funded through the Office of Personnel Management, Styles said. This allows program managers to get a true understanding of the full costs of their programs in ways they have not had before, she said.

"One of the problems with the A-76 process is that program managers don't know the true cost of the personnel and the function," Styles said.

The administration's goals for competitive sourcing — to compete 5 percent of the FAIR Act inventories in fiscal 2002 and another 10 percent in fiscal 2003 — depend on that understanding of federal costs. OMB Director Mitchell Daniels Jr. and Deputy Director Sean O'Keefe have stated many times that "we don't really care who wins these competitions, as long as [the competition is] fair and equitable," Styles said.

Beyond the legislation, OMB also is "working through the Commercial Activities Panel" to determine improvements for the procurement process in general and A-76 in particular, she said. The panel is led by Comptroller General David Walker and is made up of experts from government, industry, academia and interest groups.

The Commercial Activities Panel, which Congress created under the fiscal 2001 Defense Authorization Act, plans to release its report in May 2002.


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