A-76 isn't popular, but it saves money

You don't have to look far in government procurement circles to find someone with a bad word to say about the Office of Management and Budget Circular A-76.

A-76, a cost-comparison process by which a private-sector company competes with a group of government employees for work that is done by the government employees but not deemed to be inherently governmental, has many detractors. It's been called flawed and frustrating, unreadable and unworkable. And some of those descriptions have come from its supporters.

But in one sense at least, A-76 might have gotten a bad rap. For all the difficulties in conducting A-76 studies, the amount of time the studies take, and the protests that have resulted from competitions that went wrong, A-76 has saved money.

How much is hard to quantify, but the Defense Department, which is by far the government leader in using A-76, has produced some ballpark figures that the General Accounting Office has agreed with'to a point, at least.

In a July 2000 report to GAO, Defense said it has reaped cost reductions of 39 percent'totaling $290 million'from the results of nine A-76 competitions in fiscal 1999. A GAO report agreed that DOD had saved money in seven of the nine cases but said the total was likely less than $290 million.

GAO said exact savings are hard to nail down because, it found, some baseline costs had been miscalculated and DOD's estimates didn't account for the costs of the studies. The report also said that workload requirements change over time, which makes any direct savings estimate inexact.

Overall, DOD has estimated it will reap almost $11.7 billion in savings from A-76 competitions between 1997 and 2005. GAO's report suggests that number might not be quite right but agrees that the department is saving money. Because up-front costs in conducting the studies must be absorbed first, GAO said savings aren't likely to be big in the short term.

782 studies

The primary source of information on A-76 so far has been Defense. Between fiscal 1997 and 2001, DOD conducted 782 cost comparisons or conversions under A-76, affecting a total of 46,129 positions.

Civilian agencies have so far mostly avoided the process. In fact, according to the April report from the Commercial Activities Panel studying A-76, civilian agencies did not perform a single A-76 cost comparison during 1997, and, the report noted, 'recent use by civilian agencies of the A-76 cost-comparison process has been almost nonexistent.'

OMB set about changing that early last year with its directive to take public-private competitions governmentwide. This year, agencies are required to compete at least 5 percent of the jobs determined to be not inherently governmental by inventories conducted under the Federal Activities Inventory Reform Act of 1998.

OMB has ordered agencies to compete another 10 percent of those positions next year and ultimately compete or convert half of their noninherently governmental jobs.

How agencies will conduct these competitions is up in the air, but it will become clearer later this summer when the Office of Federal Procurement Policy releases its proposed revision to A-76.

About the Author

Kevin McCaney is a former editor of Defense Systems and GCN.

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