The President’s Management Agenda: Chapter 2: Competitive Sourcing

Excerpt from The President’s Management Agenda (Full 600 K Acrobat)

“Government should be market-based -we should not be afraid of competition, innovation, and choice. I will open government to the discipline of competition. “

Governor George W. Bush

THE PROBLEM

• Nearly half of all federal employees perform tasks that are readily available in the
  commercial marketplace -tasks like data collection, administrative support, and
  payroll services. Historically, the government has realized cost savings in a range of
  20 to 50 percent when federal and private sector service providers compete to
  perform these functions. Unfortunately, competition between public and private
  sources remains an unfulfilled management promise. By rarely subjecting
  commercial tasks performed by the government to competition, agencies have
  insulated themselves from the pressures that produce quality service at reasonable
  cost.

• Because agencies do not maintain adequate records on work performed in-house,
  they have often taken three to four years to define the jobs being considered for
  competition.

• To compare the cost of in-house performance to private sector performance, detailed
  estimates of the full cost of government performance to the taxpayer have to be
  calculated. The development of these estimates has devolved into a contentious
  and rigid exercise in precision.

  
  

THE INITIATIVES

To achieve efficient and effective competition between public and private sources, the
Administration has committed itself to simplifying and improving the procedures for
evaluating public and private sources, to better publicizing the activities subject to
competition, and to ensuring senior level agency attention to the promotion of
competition.

• In accordance with the Federal Activities Inventory Reform (FAIR)Act, agencies
  are assessing the susceptibility to competition of the activities their workforces are
  performing. After review by OMB, the agencies will provide their inventories to
  Congress and make them available to the public. Interested parties may challenge
  the omission or inclusion of any particular activity.

• Agencies are developing specific performance plans to meet the 2002 goal of completing public-private or direct conversion competition on not less than five
  percent of the full-time equivalent employees listed on the FAIR Act inventories.
  The performance target will increase by 10 percent in 2003.

• The Administration will adopt procedures to improve and expand competition. As a
  first step, OMB has proposed that reimbursable (fee-for-service)work involving
  performance by a federal agency be recompeted every three to five years, similar to
  standard contract review, renewal, or solicitation procedures.

• The Administration will seek to implement findings of the Commercial Activities
  Panel, a commission created by Congress to examine the policies and procedures
  governing public-private competition.

• Finally, the Administration is pursuing administrative and legislative actions to
  incorporate the full costs of agency work into the daily budget and acquisition
  process. This will eliminate the complex, after-the-fact calculation of public-sector
  costs.

  
  

THE EXPECTED RESULTS

Increased competition consistently generates significant savings and noticeable
performance improvements.

• Recent competitions under OMB Circular A Ð76 have resulted in savings of more
  than 20 percent for work that stays in-house and more than 30 percent for work
  outsourced to the private sector.

• From 1995 through 2000, the Department of Defense completed over 550 A-76
  initiatives, which resulted in an average 34 percent reduction in cost. DoD expects
  to achieve $11. 7 billion in savings as a result of A-76 competition between 1997 and
  2005.

• Numerous studies conducted by the GAO, the Center for Naval Analyses, and
  others confirm the magnitude of these savings.

• Competition promotes innovation, efficiency, and greater effectiveness. For many
  activities, citizens do not care whether the private or public sector provides the
  service or administers the program. The process of competition provides an
  imperative for the public sector to focus on continuous improvement and removing
  roadblocks to greater efficiency.

• By focusing on desired results and outcomes, the objective becomes identifying the
  most efficient means to accomplish the task.