Revised A-76 raises competition concerns

Circular A-76

As the Office of Management and Budget puts the finishing touches on proposed revisions to the policy outlining how to determine whether government services should be outsourced to the private sector, many agency officials wonder whether they have enough trained personnel to compete for the work or oversee functions that are outsourced.

The anticipated changes to OMB's Circular A-76 will likely result in more competitions between agencies and vendors, but federal employees' unions are concerned that the requirement to put certain jobs out for bid will force some agencies to outsource work to avoid having to spend money on training and infrastructure.

Several factors are at work. Agencies are under pressure to meet the Bush administration's goal of putting 15 percent of the government's commercial-like functions out for bid by the end of fiscal 2003, and outsourcing is cheaper in the short term, according to Colleen Kelley, president of the National Treasury Employees Union, and Jacqueline Simon, director of public policy for the American Federation of Government Employees, who both testified before a House subcommittee.

The Commercial Activities Panel shares this concern, according to the chairman of that group. Often federal employees have the ability to compete with the private sector, but agencies cannot afford to provide the information technology infrastructure that would allow them to perform the work, said David Walker, comptroller general at the General Accounting Office and chairman of the Commercial Activities Panel, a group with public- and private-sector representatives. Sometimes it's easier to contract the work out, he added during testimony before the House Government Reform Committee's Technology and Procurement Policy Subcommittee Sept. 27.

Agencies may soon feel more pressure to make a choice about investing in internal resources if the Bush administration decides not to hold agencies to arbitrary percentages. If an agency can demonstrate that it is focusing on good management, the administration will be flexible with the competition requirements, said Angela Styles, administrator of OMB's Office of Federal Procurement Policy, at the hearing. "Each and every plan is tailored for the specific needs of each and every agency and their specific circumstances," she said.

OFPP this month plans to release the revisions to Circular A-76 that an interagency working group developed, Styles testified.

The changes will also follow guidelines in OMB Circular A-97, which details how federal agencies can provide services to state and local agencies, and OFPP Policy Letter 92-1, which spells out what are inherently governmental vs. commercial-like functions, she said.

Those moves were applauded by other public- and private-sector officials at the hearing, although all said they plan to watch carefully before deciding whether the changes truly meet the need for a more fair and understandable competition process. The new process will be used primarily to meet the competitive sourcing goals set in the President's Management Agenda.

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Circular A-76

The Office of Management and Budget's Circular A-76 outlines the process for competitionsbetween public- and private-sector organizations for functions that arenot inherently governmental. OMB is expected to issue revisions on the policy this month.

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