OMB defends stance on competition

The Bush administration last week defended its commitment to public/private competition, an initiative that critics maintain is rife with problems.

"When a commercial function performed by the public sector undergoes competition, that competition results in significant economic savings to the taxpayer," said Angela Styles, administrator of the Office of Management and Budget's Office of Federal Procurement Policy.

Allowing the private sector to compete against government agencies to perform public functions—regardless of who wins—reduces the cost of performance by more than 30 percent, Styles testified June 28 before the House Government Reform Committee's Technology and Procurement Policy Subcommittee. But Styles said even if there are no cost savings, competition improves management, performance and innovation.

The administration's "competitive sourcing" initiative begins with the Federal Activities Inventory Reform Act of 1998, which requires that agencies submit annual inventories of all activities that are not inherently governmental and therefore could be outsourced. For fiscal 2002, agencies must put at least 5 percent of these jobs out for bid (see "OMB raises goal for fed outsourcing in 2003"). Agencies are to use OMB's Circular A-76 as a guide when determining whether a commercial activity should be outsourced to the private sector.

However, the initiative has its critics. "The A-76 process is broken," said Rep. Tom Davis (R-Va.), the subcommittee chairman. Federal employees are not adequately trained in how the process works, and some costs, such as overhead, are calculated differently in the public and private sectors, leading to unfair competitions.

Bobby Harnage Sr., national president of the American Federation of Government Employees union, said he opposes outsourcing without competition — a process known as direct conversion. Harnage and more than 180 members of Congress support the Truthfulness, Responsibility and Accountability in Contracting Act, which would require agencies to track whether contracting efforts are saving money.