Competitive Sourcing--what's new in A-76?

Lorna DeLay Senior Program Analyst, Competitive Sourcing and Privatization Office, Office of the Secretary of Defense (Installations and Environment)

Ms. Lorna DeLay; senior program analyst with the Competitive Sourcing and Privatization Office, Office of the Secretary of Defense (Installations and Environment), began the workshop with a brief history of the Office of Management and Budget (OMB) Circular A-76 process. The A-76 process started in 1955 when the OMB (then the Bureau of Budget) published its first Circular A-76, titled "Performance of Commercial Activities." The term A-76 is still used today to refer to commercial activities.

The purpose of the A-76 effort is to achieve economies and efficiencies for the federal government through competition. The rationale is that through competition, the government gets the lowest cost, thereby saving taxpayer dollars. The theory behind the recent increase in planned commercial activities studies is that if the private sector has a way to accomplish a function currently being done by government employees, then the government (and the taxpayers) will benefit from having a competition for the right to perform that function. If the government workforce wins the competition, then that organization will become a more streamlined, more efficient group of federal workers. Conversely, if a private sector contractor wins, then the government workforce will be "freed up" to accomplish only that work which is truly governmental in nature (GIN) and should not be competed.

There are steps to this process:

Step 1: Review all activities now being performed by government workers and classify them as either GIN or commercial activities (CA).

Step 2: Record and review the results from the inventory developed under requirements of the Federal Activities Inventory Reform (FAIR) Act.

Step 3: Compete those functions that are CA and do cost comparisons with private industry.

There are many challenges in this process. The following are some of the major challenges:

* It is adversarial and controversial.

* It takes a large time and resource investment.

* It is disliked by unions and current federal employees whose jobs are threatened.

* It is disliked by private sector companies, who think the process is tipped in the government's favor.

* It is disliked by military commanders, who fear losing control of their workforce.

* The present workforce performing the function being studied typically lacks the bid and proposal skill sets needed to be competitive in this process.

* There is a perceived bias at the installation and at senior-management levels. (The A-76 process is formulated to be neutral; it does not presume either public or private sector execution to be superior.)

The OMB published new guidance in May 2003. The new Circular A-76 has some significant changes to the way future CA studies will be conducted. The most significant change is in the time frame allowed for each study. Previously, multi-function studies took an average of 36 months to complete. The new guidance limits this time frame to 12 months from the date of announcement; however, an extension can be requested. This allows the function only 8 months to create the Performance Work Statement (PWS), which is the detailed work requirement on which all competing organizations will bid, and 4 months to formulate the Most Efficient Organization (MEO), which essentially is the government's bid on how it would more efficiently accomplish the work. This shorter time frame will necessitate that agencies do much more preliminary planning before the announcement date.

Another change stipulates that regardless of who wins the competition, the work will be re-competed at the end of the contract period (typically every 3 to 5 years). Also, there will be more scrutiny to ensure that the winners actually perform the work they promised and to the standard they promised.

Attendees at the workshop asked many questions about applying efficiencies already gained and staff reductions already implemented toward to the new study goals. The answer is that, to date, they will not be applied; however, the issue is still being debated.

The bottom line seems to be this: CA is not going away; it is a growing initiative. Federal activities cannot avoid it, so they must be prepared for it. Under the new rules, this means doing substantial preliminary planning before the announcement of a competition because, in general, there no longer will be enough time to complete all required steps if the organization waits until after the announcement to start the required functional studies.

Reported by Elaine Shipman Elaine Shipman serves as the management analysis officer for USACE, New York District. She previously served as a program analyst at the DHPW at the USMA, West Point. A member of the West Point Chapter of ASMC, she earned her CDFM in July, 2001.