OMB: Competition cuts costs

Public- and private-sector competition for government work during fiscal 2004 will save the federal government $1.4 billion during the next three to five years, according to an Office of Management and Budget letter to Congress. Savings generated by competitive sourcing studies in fiscal 2004 amount to $300 million more than in fiscal 2003, the report adds.

OMB officials estimate that a quarter of the jobs federal workers perform are not inherently governmental and need not be done by civil servants. Although holding public/private contests to do that work dates back to President Eisenhower's administration, the Bush administration has placed renewed and controversial emphasis on the practice by making it one of the five initiatives that form the President's Management Agenda.

The reported savings "sounds like the usual propaganda from OMB," said John Threlkeld, Capitol Hill lobbyist for the American Federation of Government Employees (AFGE).

Proponents and opponents of competitive sourcing are gearing up for another showdown this year. AFGE officials are scrutinizing the most recent list of federal jobs subject to competitive sourcing. The federal government printed in the Jan. 18 Federal Register notification that the Federal Activities Inventory Reform (FAIR) Act catalog of inherently nongovernmental jobs for a bevy of federal agencies is now available. Included in the most recent list is the Defense Department. The law allows interested parties, including unions, to file challenges within 30 days of the inventories' publication.

"In the past we certainly have challenged the agencies on their FAIR Act lists," said Jacque Simon, AFGE's public policy director. "I expect we will certainly do so again this year."

But one competitive sourcing advocate says challenging the inventory is not worth the trouble. "Nothing happens through the appeal process," said Stan Soloway, president of the Professional Services Council, an industry association. Mounting a challenge requires a considerable amount of money, but from industry's perspective, the challenge is to get government to hold competitions on jobs already identified in the FAIR Act list, Soloway said.

"The inventory is large, it's diverse, it's a long way [to go] to applying competitive sourcing to even a significant part of then inventory, and that's what we're looking at," he said.

In fiscal 2004, federal agencies competed out a smaller total number of jobs than in fiscal 2003, but the competitions' average size grew and produced greater cost savings for every full-time equivalent position studied, the report states.

Also unlike last year, no agency reported net losses to department funds as a result of funding competitive sourcing studies and competitions. The Forest Service ran a plethora of small competitions in fiscal 2003 that resulted in the Agriculture Department paying to fund competitive sourcing. In contrast, the Forest Service's competition in fiscal 2004 for 1,200 full-time equivalent positions in its information technology services function will save the government $145 million during five years, the report states. The agency won the competition, but ended up laying off employees nonetheless.

Government bidders won 91 percent of competitive sourcing contest in fiscal 2004, the report states. The government has consistently won an overwhelming majority of its competitive sourcing contests, a fact private-sector advocates of such sourcing cite as a danger to the practice's long-term health. They charge that private companies have already begun to lose interested in submitting bids because the government wins so often.

In the most recent quarterly management agenda score card, DOD was downgraded from green to yellow in the competitive sourcing status column. Pentagon officials failed to complete announced competitive sourcing studies, said Clay Johnson, OMB's deputy director for management. Johnson spoke to reporters Jan. 26.

"To remain green you have to continue to follow your green plan," he said. This marks the first time an agency has lost a green score in the area of competitive sourcing.

About the Author

David Perera is a special contributor to Defense Systems.

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