OMB: 2006 competitive sourcing could save government $1.3B

Public/private competitions in fiscal 2006 could save the government about $1.3 billion in the next five to 10 years as competitive sourcing pushes agency employees to become more efficient, according to the latest results in the Office of Management and Budget's competitive-sourcing report.

The estimated total savings based on the 1,243 competitions completed between fiscal 2003 and 2006 could reach about $6.9 billion in five to 10 years and yield about $1.1 billion in savings annually, the report states. Officials believe savings will continue to grow as agencies conduct more competitions and apply cost control and other performance improvements to more commercial activities, the report states.

While savings could reach more than $1 billion a year, one-time, out-of-pocket expenses for conducting competitions last year were less than $15 million. Fixed costs to manage and oversee the competitive-sourcing program were less than $39 million. The incremental costs for competitions conducted between fiscal 2003 and 2006 were $226 million. That results in a return of about $31 for every dollar spent on competition, according to the report.

In fiscal 2006, agencies competed 1.7 percent of their commercial work, or 183 competitions. The competitions involved 6,678 full-time equivalent employees.

Federal employees continue to fare well. The employees won 87 percent of the competitions in 2006, and they have won an overall 83 percent in the past four fiscal years, according to the report.

“This statistic affirms again that employees are highly successful in using the competition process to eliminate operational inefficiencies and create most efficient organizations,” the report states.

Agencies compete mainly highly commercial jobs in areas such as information technology and property management, the report states. They held 4,978 competitions for IT-related work, which is 20 percent of the 24,315 total competitions held from fiscal 2004 to 2006.

Property management had the most competitions at 25 percent. Agency logistics operations, or work other than nonmanufacturing jobs, equaled IT in overall percentage, the report states.

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