Defining 'best value'

Federal employee unions and other groups that oppose increased outsourcing of government services are losing ground fast. Although they may not like the direction things are going, they had better pay attention.

Bush administration officials say the decision to change the rules for competing work between the public and private sectors — as recommended earlier this month by the Commercial Activities Panel — is not intended to increase outsourcing, but to define a fairer process for measuring the costs of commercial-like services.

Yet most people agree that addressing problems in the current process, defined by Circular A-76, will likely make it easier for vendors to win bids for government work. Industry has long complained that A-76 does not accurately account for agency costs and that it favors low-cost bids, which flies in the face of the government's interest in so-called best-value proposals.

Clearly, the White House intends to take a more business-like approach to delivering government services. In cases where commercial firms can provide comparable services at a lower cost, industry will likely win hands down. It's trickier when it comes to evaluating bids for best value, rather than lowest cost. In these cases, commercial firms try to prove that they can provide better service at a comparable cost, or higher, if warranted.

The concept of best value, though, raises another issue that should not be forgotten: Government is not a business.