OFPP reviewing draft of new A-76 rules

'At this point, I can assure you that the circular will be short, consistent and understandable.'

'Angela Styles

(GCN Photos by Henrik G. DeGyor)

Angela Styles said the administration's revision of OMB Circular A-76 would be a quick one, but few people expected it this soon.

The administrator of the Office of Federal Procurement Policy late last month said at a hearing before the House Armed Services Subcommittee on Military Readiness that she had a draft of the new circular on her desk.

An interagency working group took about two months to draft an update to A-76, which calls for government workers and private contractors to compete for work that isn't considered critical to an agency's mission. The 10-member group included most of the recommendations made in April by the Commercial Activities Panel to improve competitive sourcing, Styles said.

A-76 is intended to reduce costs and improve efficiency, but it has drawn criticism from industry, government workers and federal regulators.

The interagency panel included three officials from the Office of Management and Budget and procurement experts from the Defense Department and civilian agencies.

'We fully support the Commercial Activities Panel's recommendations and look forward to moving forward expeditiously in implementing them,' Styles told lawmakers.

'We are the first to acknowledge that OMB Circular A-76 needs an overhaul,' Styles said. 'At this point, I can assure you that the circular will be short, consistent and understandable.' She called the current version unreadable, repetitive and universally disliked.

The new circular could be released for public comment later this month, according to sources familiar with the rule. Styles said she is aiming for some time this summer.
OMB officials, including Styles, policy experts and legal counsel, are reviewing the draft.

Best value

The new circular likely will include a process to use best value in cost-comparison studies. A-76 competitions currently are based on lowest cost. The CAP report recommended using a best-value approach similar to that in the Federal Acquisition Regulation. Best value takes into account other benefits besides lowest cost such as a higher level of service or a quicker delivery time.

OMB also is tweaking FAR Part 15, which includes instructions about using best value, as it develops the new A-76 process, sources said.

Styles said there would be a pilot to test the new method. OMB likely will ask agencies to volunteer to use the new approach.

'What we are doing is taking a private-private system for competition and imposing it on a private-public competition,' she said. 'There needs to be some recognition that there are problems in the private-private system. The FAR-based competition is not a perfect system, and we may be exacerbating some of those problems when we try to apply it to private-public competitions.'

Styles said volunteer agencies would test the new method on 'appropriate types of services' and OMB will compare the results to similar studies done under the old A-76 process.

Sources said best value must be redefined for the public-private competition. Factors such as past performance and small-business contracting plans are key in deciding private-private competitions, but their importance is mitigated in public-private competitions because federal employees don't have a history of competing for contracts.

'We recognize there needs to be caution and thoughtfulness as we move forward,' Styles said.
The new A-76 circular also likely would include:
  • A process to make government employees more accountable for performance after winning A-76 competitions

  • The creation of centralized, trained management teams to conduct competitions

  • Encouragement to use the model established by DOD, which has conducted more A-76 competitions than any other department, to determine the costs of a government operation

  • Guidance on avoiding conflicts of interest in competitions.

'If we want a fair process we must have checks and balances and accountability on all sides,' Styles said. 'Achieving consensus among the key stakeholders will remain a challenge, but the administration is committed to make significant and lasting improvements.'

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