Issues Remain After OMB Issues Report on 'Competitive Sourcing'
By Stephen Barr
Thursday, May 27, 2004; Page B02
The new Office of Management and Budget report on "competitive sourcing" raises as many questions as it answers.
The report, released Tuesday, provides a good bit of detail on the Bush administration initiative, which calls for competition between the government and industry to determine whether federal jobs that are commercial in nature can be done more efficiently in the private sector and save taxpayer dollars. Still, it's difficult to figure out what is going on.
Are the cost savings for real? Are agencies spending too much to run job competitions? Is the initiative going too fast or too slow? Are the competitions fair?
The OMB report claims the initiative, one of the cornerstones of President Bush's management agenda, will save about $1.1 billion over three to five years.
According to the projections, competitive sourcing should create about $11,730 in annual savings, on average, per full-time employee studied, the report said.
Such estimates, as General Accounting Office studies have shown, are incredibly difficult to track and prove. But Clay Johnson III, the deputy director for management at OMB, promises the administration will deliver on the projected cost savings. "Federal employees have said we can do this work for 'X,' and now their managers and they are obligated and will be expected to produce it for 'X,' " he said.
Still, it's possible, at the end of the day, that the government may be spending more on competitive sourcing than it saves.
The OMB report shows that the government spent about $88 million to conduct studies in 2003. Perhaps more important, the report suggests that savings will be reaped only at agencies that take a strategic approach and spend time on advance planning.
For example, the OMB report said, the Agriculture Department spent more money running job competitions in 2003 than it now expects to save from the results. The department conducted more than 160 competitions, but half involved three or fewer federal jobs. Not surprisingly, few contractors expressed any interest in such competitions, OMB said.
Overall, the OMB report seemed to show that federal employees can do the work more effectively and efficiently than outsiders.
In 89 percent of the job competitions, federal employees won and will keep the work in-house, the report said. That's a sharp rise when compared with past data, which showed federal employees typically won 50 percent to 60 percent of the time.
At nine large agencies, the data show, federal employees won 100 percent of the time in fiscal 2003.
Contractors looked at the percentage of in-house wins and contended that agencies stacked the deck against them. Federal employees, meanwhile, said they lost even when they won -- because a winning bid usually called for fewer staff members to perform the work.
Some work, of course, did go out the door. The report shows that work performed by 6,244 federal employees was turned over to the private sector. It does not say how many employees left the government payroll because of the job competitions.
OMB officials said few federal employees, if any, were forced out on the street; most of the employees were reassigned to another part of the government, took a cash buyout and voluntarily quit or went to work for the winning contractor.
If that is the case, then it appears that agencies are providing soft landings for displaced employees, certainly a reassuring signal to the federal workforce. It also raises the possibility that the competitive sourcing initiative may not be lowering overhead costs in the government.
According to the report, agencies studied whether to contract out work done by 17,595 full-time federal employees in fiscal 2003. That seems to be a relatively modest effort, given that the administration's initiative is in its third year and that at least 425,000 jobs are in the universe that the White House wants to examine.
All in all, it appears that the Bush program is still trying to find its footing. But it is clearly not going away, and it will continue to be a sore point for many federal employees.
For example, the Agriculture Department, which fared poorly last year, is gearing up again -- this time for a competition involving 1,200 technology jobs performed by federal employees.
© 2004 The Washington Post Company