The Carter administration yesterday reversed a policy President Ford adopted last year to force government agencies to purchase from private companies hundreds of millions of dollars of services now supplied by federal employees.
Official of Management and Budget director Bert Lance told reporters yesterday that the administration had scuttled a Ford rule that every government agency should find five services being performed by federal employees that could be contracted out to private firms.
The administration yesterday also provided temporary new rules that will have the effect of lowering the cost of providing certain "commercial and industrial" services in house in comparison with the bids of private contractors.
For more than a decade federal regulations have required agencies to buy goods and services from the private sector unless the agencies can show it is in the "national interest" for the government to provide the services itself.
One of the criteria the government uses is whether it can perform the service more cheaply.
Lance said yesterday's actions came as part of a "big, comprehensive review of contracting in lieu of providing services in-house."
Among the types of operations involved are guard services, maintenance of buildings and grounds, cafeteria services and film processing.
Lester A. Fettig, administrator of federal procurement policy at OMB, said no one knows for sure how many services, how much money or how many people are involved. That is one of the reasons a study is needed, he said.
In 1971, a study found that the government was operating 18,616 different commercial and industrial activities at a cost of $6.8 billion. Those activities had fixed investments of nearly $10 billion.
Last year, Ford administration officials estimated that about 1,000 operations run by the government are justified solely on the basis of cost. The rules the administration put into effect last year forced agencies to boost the projected payroll costs of providing the services themselves.
Private companies often lost out, Ford officials said, because government agencies sharply underestimated the cost of providing retirement benefits to its employees. The agencies had been adding 7 per cent of the wage bill to account for retirement costs. Under a complicated formula devised by the Civil Service Commission, the Ford administration boosted that charge to 24.7 per cent.
Fettig said yesterday the administration temporarily reduced that figure to 14.1 per cent, but said that the government would totally review the situation, including the Ford numbers.
Fettig noted that the whole issue of contracting out has been "one of the most contentious of government policies" because federal unions want more services to be provided by government workers and private industry wants to keep its business levels up.