Letter to the editor

What I attempted to do below is to capture the bias of both the government and contractor and then make the conclusion that the A-76 process is inefficient it its efforts to make the process fair.

Bias in outsourcing?

Summary: "A-76 is a process only the government could love. [It is inherently so inefficient] in its efforts to be fair." — Army Audit Agency

Bottom line: A-76 is a long, drawn-out, painful process that attempts to level the playing field, albeit not too efficiently or fairly in the long run.

Remember, the government group will be attempting to prepare an "honest" bid, while the outsourcers are attempting to win the contract and get the work.

Government bias: First, the bias for the commander and the in-house workforce is verystrong. The status quo and resistance to change, new structures, new processes and new organizations is real and hard to change. Virtually all managers and commanders want a workforce that maximizes their flexibility and control. Everything the in-house team does should be focused on keeping the status quo, or at least a most efficient organization (MEO) version of the status quo.

Government managers do not want to accept the risk of cutting staff that will reduce their flexibility and ability to respond to unknown and future requirements. Better to keep a few extra employees around, even if the workload and productivity improvements realized each year do not require historical manning levels and static organizational structures.

Contractor bias: Your FCW.com poll question asked, "Is it possible to have a fair competition between public and private groups bidding for the same work?" Can bidding to provide outsourced contracts be fair?

While this is a hypothetical question, there are several clear scenarios where the outsourcing provider (contractor) advantages ensure a biased (unfair) outcome.

First, let's assume that the extra overhead to prepare the bid is identical. Likely it won't be because the federal group will be required to provide statuses and report to many more stakeholders than an outside vendor would. Contractors are free (and likely) to underreport their overhead and administrative costs for the purpose of winning a contract.

Now, let's look at reasons for deviations in the bid outcome (unfairness) that is structural in nature:

* Selling opportunities and expectations. An outsourced contractor/supplier with large involvement in equipment or hardware may cut projected costs to a minimum in the expectation of selling hardware and equipment that deliverables and improved processes will dictate. Internal government staffs do not have that "advantage to make money through sales or leases of hardware and capital equipment."

* Contractor's bias toward (unrealistic) low bids. The contractor may (is likely to) underbid to get its foot in the door, gambling that it will win follow-up work or the supported agency will drop its internal capacity to do the work (thus being a huge contractor advantage in the future). Once the government capacity to do work internally is lost, the possibility of a reverse A-76 process is small to impossible, due to the very strong bias against "growing government."

With a cost-plus-deliverable contract, the contractor can add on deliverables and bill the government for (extra) services and supplies performed and delivered once the contract is in place. The contractor has a built-in advantage and may bid the job low when maintaining a system or process that the contractor has delivered. It has the people and employees on staff, skilled in its development and maintenance.

Finally, a contractor may underbid to achieve a strategic victory over a competitor it, the contractor, is trying to acquire or run out of business (to give two plausible reasons).

Original ideas were provided by Kenneth Harvey, U.S. Postal Service, in conjunction with a Federal Computer Week poll question: "Is it possible to have a fair competition between public and private groups bidding for the same work?"

Jerry Harbison U.S. Army Aviation Center


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