Administration, Congress go'round over plans for a fix

Rep. Tom Davis supports using a best-value approach to A-76 competitions.

Henrik G. DeGyor

OFPP's Angela Styles says the administration's plan is to blend the best elements of public-private competition processes.

OFPP's Jack Kalavritinos says his agency wants to see more accountability and agencies taking ownership of the process.

The 36-year struggle between Congress and the White House to tame OMB Circular A-76 is finally coming to a head. Both branches seem primed to make changes to the reviled competitive sourcing process.

The one thing almost everyone agrees on is that
A-76 is in need of a makeover. But the $64,000 question is: What compromise can be reached that everyone will accept?

Congress and OMB have debated the question for years and there have been several attempts to make the process work.

In 1987, President Reagan issued an executive order requiring agencies to use A-76 to conduct annual studies of at least 3 percent of all commercial activities. In the early 1990s, Rep. John Conyers (D-Mich.) unsuccessfully tried to make the circular law, rather than a regulation. Recently, members of both houses of Congress have submitted bills or amendments to stop, limit or overhaul A-76.

Got to be a faster way

So again, another administration is attempting to reconcile the arduous process'which the Defense Department said requires an average of 22 months to complete'while Congress debates the circular's merits and feels the influence of lobbyists campaigning to keep, alter or eliminate A-76.

The Bush administration, led by Angela Styles, administrator of the Office of Federal Procurement Policy, is taking the first real stab at finding some common ground.

Styles on June 24 told a House subcommittee that she had on her desk a draft of a new version of Circular A-76 that would incorporate a significant majority of the congressionally mandated Commercial Activities Panel's recommendations. The proposed circular will be released for comments later this summer, she said.

'We are looking forward to moving forward expeditiously in implementing the recommendations,' she said before the House Armed Services Subcommittee on Military Readiness. 'Conducting a public-private competition is not easy and the current process has its share of detractors. The circular is virtually unreadable, internally inconsistent, repetitive, vague, lengthy and universally disliked.'

OFPP can incorporate many of the panel's recommendations into the circular administratively. The only two issues Congress must take up are whether to give federal employees the legal standing to protest A-76 decisions'which they don't have now'and whether to let DOD use best value in determining contract awards. A 20-year-old law prohibits DOD from using best value, which takes into account factors other than lowest price, in A-76 competitions.

OMB officials are requiring agencies to compete this year and next a total of 127,500, or 15 percent, out of more than 800,000 jobs determined to be noninherently governmental by inventories agencies conducted under the Federal Activities Inventory Reform Act of 1998.

While OMB works on integrating the panel's recommendations, Congress continues to ponder A-76's value.

Sen. Edward Kennedy (D-Mass.) introduced an amendment to the 2003 Defense Authorization bill that would have forced DOD to perform A-76 cost comparison studies on all service contracts and required all new work to be contracted through a cost-comparison process.

The Senate voted 50-49 to table the motion, thus killing the bill. The vote went pretty much down party lines with 48 Republicans and two Democrats voting to table the amendment and 48 Democrats and one independent voting to let the bill live.

The battle lines are being drawn among lawmakers. Members' opinions usually break down according to those who support the employee unions'members who have large numbers of government employees in their districts'those who promote the best-value approach, and those largely unfamiliar with A-76.

Contractors and unions

Rep. Tom Davis (R-Va.), who has influence over contracting legislation as chairman of the Government Reform Subcommittee on Technology and Procurement Policy, is familiar with both sides of the issue. His district includes both constituencies'large government contractors and a sizeable number of union employees.

He defended the employee unions when Congress passed the Federal Activities Inventory Reform Act, which calls for agencies to list all non-inherently governmental jobs, and he has made clear his disdain for bills such as the Kennedy amendment.

Melissa Wojciak, Davis' staff director, said there are specific changes Davis supports, such as the use of best value in A-76 and use of specialized teams that represent federal workers in preparing their cases as most efficient organizations.

She also said Davis would support a separate team to evaluate the bids and wants to explore employee protest rights.

Other members of Congress are outright hostile to A-76. Rep. Albert Wynn (D-Md.) last year introduced the Truthfulness, Responsibility and Accountability in Contracting Act.

The bill would stop competitive sourcing until a study was completed showing cost savings and improved efficiencies. Even though 190 members co-sponsored TRAC, Wynn has found little success in moving it out of Davis' subcommittee.

'We want to get an efficient and streamlined tool to evaluate public-private contractual efforts,' Wynn said. 'We don't need a process that takes a couple of years, and it must take into account overhead and qualitative factors so we can get the taxpayer the best value.'

Wynn said the claims of cost savings, such as the $5 billion DOD estimates over five years of 782 completed A-76 competitions, have not been supported by facts. Meanwhile, two proposed amendments to the 2003 Defense Authorization bill that would have rewritten the A-76 process went nowhere.

'I'm not sure if any part of A-76 is salvageable,' said Rep. Walter Jones (D-N.C.), who authored one of the proposed amendments. 'We know the employees are willing to be in fair competitions and the key is to make sure they are fair.'

While Congress continues to haggle over the TRAC bill and the Kennedy amendment, OFPP's direction will become clear by the end of the summer.

'Never has the circular been revised this quickly,' said Jack Kalavritinos, OFPP associate administrator. 'In principle, we want to see more accountability across the board, eliminate conflicts of interest and provide someone with an ownership role for the entire process in the agency.'

Kalavritinos said the new process will be faster than the current one, which was last revised in 1996, and will consider employee incentives and other structural changes to the process.

'We will not institute an immediate wholesale replacement of the existing two-step competition procedures,' Styles said. 'We will try to take the best elements of the private-private source selections and the best elements of the current A-76 process.'

Her testimony before the Military Readiness subcommittee offered a glimpse into the OFPP's plans, such as:
  • The use of best value when appropriate

  • Making federal employees more accountable after they win a competition

  • Greater use of trained management teams to conduct the competitions

  • Greater use of DOD's Compare model for determining the costs of services performed by government employees

  • Encouraging performance incentives for federal workers who help win a competition as well as to those who helped outsource work

  • Clarifying guidance on conflicts of interest.

'We are approaching this with a great deal of caution without the assumption that it will work well,' Styles said of the proposed new A-76 version.

'We will start off on a level playing field and go forth with the appropriate types of services with the new FAR-based approach and see how it works,' she said. 'We will compare those to how it worked under the old A-76 process and the modified one.'

Styles also said the new circular would be easier to understand so agencies will not need a 'team of industry consultants to implement' it.

Is cheapest best?

Lawmakers, for the most part, agree with OFPP's focus, or at least are taking a wait-and-see attitude toward the revisions. But some, echoing the concerns of the employee unions, are not sure if best value will be objective enough.

And others, including Davis and Rep. Joel Hefley (R-Colo.), chairman of the Military Readiness Subcommittee, support best value because it takes away the idea that merely cheapest is best, a House staff member said.

Some members also are big proponents of in-sourcing work, by which employees compete for contracts the private sector already holds.

Kalavritinos said OFPP is willing to entertain agency proposals to bring work back in-house, but is not supportive of any wholesale in-sourcing initiative.

Styles said she realizes the obstacles OFPP faces in getting the new circular to work.

'Competitive sourcing is a means to an end,' she said, 'with the means being competition and the end better management of our government and better services to our citizens.'

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