It's time to make OMB Circular A-76 into law

Office of Management and Budget circulars are presidential decision directives to
federal agencies telling them how to behave. One of the policy directives, OMB Circular
A-76, titled Performance of Commercial Activities, has been a policy constant since

During what is the 43rd year of the bedrock federal policy, it is time to enshrine the
fundamental principle it represents in law. A-76 was initiated by President Eisenhower and
reviewed and updated by the Johnson, Carter and Reagan administrations. At its core,
though, A-76 has never changed. It is sparsely and elegantly written:

"The government should not compete with its citizens. The competitive enterprise
system, characterized by individual freedom and initiative, is the primary source of
national economic strength. In recognition of this principle, it has been and continues to
be the general policy of the government to rely on commercial sources to supply the
products and services the government needs."

Later, A-76 adds, "It is the policy of the United States government to ... rely on
commercially available sources to provide commercial products and services. In accordance
with the provisions of the circular, the government shall not start or carry on any
activity to provide a commercial product or service if the product or service can be
procured more economically from a commercial service."

Let's look at A-76 in this year's context to consider its practical meaning. Take, for
example, federal information and reporting requirements. Agencies should make all
government forms available to the public on the Web. Agencies should create portals to
permit electronic filing of government forms by the public.

But that's it. The government should leave to the private sector the entire area of
electronic commerce, a growing field where vendors can and should take the lead in
providing commercial products and services.

It seems that not all agencies agree that A-76 should apply to them. It should. And the
president and Congress should make A-76 stick.

Is there precedent for turning an OMB circular into law? Absolutely. In 1995 Congress
passed the National Technology Transfer and Advancement Act, which codified A-119 on the
use of voluntary standards in procurement.

Absent such a codification, is A-76 enforceable other than by OMB leaning on agencies?
Can someone in the private sector sue for a violation of A-76? The answer is a resounding
maybe. Interestingly, A-76 does not contain the neutering words of later OMB circulars
which state, or at least imply, that no private right of action exists to enforce them. In
fact, the Administrative Procedure Act, Title 5 of the U.S. Code, could be used for a
groundbreaking suit to enforce the policy.

But a courtroom is not necessarily the right forum to solve the problems. Instead,
Congress should act to enshrine A-76's central policy in permanent legislation. The policy
is sound, well-considered and timeless. Good government dictates its continuation and

Most of the attention on matters relating to A-76 have centered on outsourcing to
vendors certain government-performed functions. Objections to outsourcing are often raised
when federal government workers stand to be replaced by private sector employees.

Outsourcing is a very controversial subject. Federal unions feel threatened by
widespread outsourcing.

The new 12 percent burden rate that will be added to federal employees' bids, in the
absence of more-verifiable cost data, scares federal unions.

As the political fight over legislation now under development by Reps. John Duncan
(R-Tenn.) and Steve Horn (R-Calif.) and in the Senate by Craig Thomas (R-Wyo.) continutes,
people of goodwill can differ on what protections federal workers deserve in A-76
outsourcing issues.

Union officials, for example, want the right to keep work in-house, as in the Federal
Aviation Administration's Integrated Computing Environment'Mainframe and Networking
contract with the Agriculture Department.

Such insourcing is inconsistent with A-76, and should not be encouraged, or even
permitted, without high-quality cost data.

More importantly, the core of A-76--non-competition with the private sector--should not
be lost in the outsourcing debate. It is a critically important principle in its own
right, and the current trend in some agencies places that principle at risk.

Stephen M. Ryan is a partner in the Washington law firm of Brand, Lowell & Ryan. He
has long experience in federal information technology issues. E-mail him at

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