With A-76 in flux, what should managers do?

DLA's Linda Heine says performance work statements are time-consuming but essential.

Olivier Douliery

The changes being proposed for A-76 have left agency managers in limbo.

On the one hand, managers, under pressure to meet the Bush administration's 15 percent competitive sourcing goal in fiscal year 2003, are gearing up to do A-76 cost comparisons.

On the other, modifications to the current process are coming down the pike from the Office of Management and Budget.

And a new sourcing process based on the Federal Acquisition Regulation looms somewhere on the horizon.

What's an agency manager to do? For now, stay the course on the current process.

Stick to basics

'A-76 studies under way or initiated during the near term should continue under the current framework,' said Comptroller General David Walker, head of the General Accounting Office and chairman of the Commercial Activities Panel.

The current framework is OMB's Circular No. A-76 Revised Supplemental Handbook, 'Performance of Commercial Activities,' a 73-page manual issued in March 1996 and revised in 1999 (available at www.whitehouse.gov/omb/circulars/index.html).

The handbook offers general guidance on carrying out an A-76 study, which consists of six basic steps:
  • Develop a performance work statement (PWS), a detailed description of the work under study

  • Create a plan to determine the government's most efficient organization (MEO), usually a smaller, streamlined version of the unit doing the work

  • Assemble a cost estimate for the MEO

  • Issue a solicitation for private-sector offers that incorporate the PWS

  • Select the best private-sector offer, compare it with the in-house estimate and then choose the lower- cost alternative; A-76 allows private-sector proposals to be handicapped by 10 percent

  • Address any appeals submitted under the A-76 administrative appeals process.

Civilian agency managers, most of whom have little experience with the A-76 process, can look to the Defense Department for plenty of lessons learned on A-76.

During fiscal years 1997 to 2001, the department completed 782 A-76 competitions involving more than 46,000 positions.

The Defense Logistics Agency, for instance, has conducted 10 A-76 studies since 1998, most of those involving operations at the agency's 22 distribution depots. DLA is staging the depot studies in phases, and they are scheduled to end in the spring of 2004.

In six of the 10 competitions, contracts were awarded to commercial bidders, and four remained in-house with the MEO, said Linda Heine, DLA's chief of competitive sourcing in Fort Belvoir, Va.

A recent competition at DLA's distribution depot in Richmond, Va., completed earlier this year, resulted in the work remaining in-house. A low-cost MEO was chosen over nine proposals from the private sector.

The study took 29 months, reinforcing the oft-heard criticism that A-76 studies take too long.

Heine said that roughly a year of that time was spent on the performance work statement, the centerpiece of A-76 and perhaps the most vexing part of the process.

She said critics who complain that people take too long to put together a PWS have never done it. 'When you're looking at an entire distribution depot and you're taking people who have done this job every day and suddenly you're saying, 'Put down your whole process in this document and make it performance-based,' it's not terribly easy for them to do. It does take time.'

In a list of A-76 lessons learned (posted on DLA's A-76 Web page, www.dla.mil/J-8/A-76/A-76Main.html), DLA officials encourage managers to:
  • Use a general PWS template for similar functions and studies

  • Get input from customers to help streamline requirements and eliminate duplicated efforts

  • Define levels of service performance in the PWS to make sure that both the MEO and industry bidders understand the requirements in the same way. And remember, the PWS describes what is to be performed, not how.

  • Establish a database maintenance system to update the PWS when changes in workload occur during the process

Agency managers new to A-76 also should bear in mind that each study is going to present different problems, Heine said.

'You never know exactly what's going to surface,' Heine said. 'Even a query by an offerer can surface an error in the PWS or something that wasn't thought through, so a change has to be made, which adds time.'

Front lines

DLA's depot studies are overseen from the depot system's field headquarters, the Defense Distribution Center in New Cumberland, Pa. DDC experts provide leadership and support to local teams working on the PWSes and MEOs.

But local employees have the lion's share of the work, Heine said.

'We have encouraged our [field teams] to use outside consultants because we think it's important to do the best job we can on the PWS, and we're going to be living with those results for a long time,' Heine said.

Ultimately, A-76 success depends on getting everybody involved in the process.
'We provide top-down commitment and encourage bottom-up participation,' Heine said.

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