OMB report says that competitive sourcing saves taxpayers money
Bush administration officials issued a report last week showing that federal employees win most job competitions and that competitive sourcing saves taxpayer money no matter who wins the competition.
The report seems to strike at the two main arguments of federal employee groups that object to the competitions, which pit agency employees against private-sector firms. The Office of Management and Budget's Circular A-76, revised last year, outlines the rules for the process.
According to the report issued to Congress, federal employees won 89 percent of 662 competitions completed in fiscal 2003. The competitions are expected to save the government $1.1 billion during the next three to five years, or $12,000 per full-time employee.
"These are good returns for an initiative that has faced statutory restrictions, cultural challenges and a large learning curve, especially at civilian agencies that, until recently, had relatively little experience with using competition as a management tool," the report states.
Competition yields an average of 15 percent in savings per employee, according to the OMB
The report also offers success strategies, based on observations of mixed results in recent efforts at various agencies. Agency officials should evaluate the extent to which job functions can be opened to competition as a single business unit rather than as a collection of independent positions. The Energy Department has saved an average of $39,000 per employee in standard competitions using that approach, according to the report. Energy also saw a $35,000 per-employee gain in streamlined competitions.
But the practice, one of the cornerstones of the President's Management Agenda, remains highly contentious. Federal employee unions argue that it threatens the jobs of federal workers, and some members of Congress have tried to weaken A-76's hold. Industry groups, whose members stand to gain from winning federal agency work, have generally supported the initiative.
Stan Soloway, president of the Professional Services Council, said that too much federal work is staying in-house and is often not opened to competition at all. Savings could exceed the $1.1 billion estimate if "real competition were taking place across the board," he said.
Chris Jahn, president of the Contract Services Association of America, said the report vindicates CSA's position in favor of opening federal work to competition.
However, federal employee groups challenged the accuracy of the report's figures. The report states that only about $7 million of the $1.1 billion in savings has been realized. The rest is projected future savings.
John Gage, president of the American Federation of Government Employees, said OMB has a "highly political approach to privatization" that produces questionable results.
For example, he said, the agency uses a figure of $77,000 as the average federal worker's salary and benefits when calculating the savings per employee it reports.
But lower-grade federal employees whose total salary and benefits are less than $77,000 perform most of the work that agencies study for potential competition, he said.
Colleen Kelley, president of the National Treasury Employees Union, said the figures in the new report are fiction.
"Even if there are savings — and there's no real proof the savings are either real or substantial — there is undeniably a cost to taxpayers in the form of reduced services affecting important programs," she said in a written statement.
Jahn, however, argued that legislative and other restrictions on public/private competitions stand to hurt taxpayers.
"The deck is being stacked against private companies," he said in a statement. "The taxpayer will be the loser in the long run."
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