OMB: A-76 competitions to save agencies $1.4 billion over five years

Public-private competitions for agency IT positions garnered expected savings of more than $36,000 per position studied in fiscal 2004, according to the administration's latest report to Congress on competitive sourcing.

Agencies opened 2,207 full-time IT positions to competition with the private sector under Office of Management and Budget Circular A-76 and estimated the competitions will save departments on average $5.4 million annually over the next five years.

OMB today released these and other findings about competitive sourcing, further stoking the debate about A-76.

'We are seeing an unmistakable link between strategic application of competition and an agency's ability to save taxpayers' dollars through consolidations, results-oriented performance standards and the leveraging of technology,' said David Safavian, OMB's administrator for federal procurement policy.

The report said agencies overall competed 12,573 positions last year, and federal workers won 91 percent of the competitions. OMB said agencies expect to save $1.4 billion over the next five years, or $285 million annually.

The analysis found that, on average, agencies are saving $22,000 per position studied; and with competitions involving two or more private-sector companies, the savings increased to $32,000 per position studied.

Agencies used the standard competition process 79 percent of the time instead of the streamlined method. This is up from 2003, when departments used the streamlined competition process 63 percent of the time. Standard competitions use the best-value approach where agencies write a statement of work, develop their in-house bid and compete it against the private sector. The streamlined method is the quicker way to compete fewer than 65 positions, and the competitions must be finished in 90 days.

The Social Security Administration and the Department of the Treasury used the standard method for three IT competitions. SSA competed 68 positions for IT help desk and expects to save $104,000 per employee, or $7.1 million per year. Treasury competed 360 data processing services positions and 350 IT support jobs and expects to save more than $56,000 per employee.

The American Federation of Government Employees criticized OMB's claims of cost savings.

'If only OMB devoted as much time to ensuring agencies accurately track the costs of conducting privatization reviews as it did trumpeting wholly projected and completely unverified savings estimates,' said John Threlkeld, a legislative representative for AFGE. 'OMB has historically underestimated the costs of conducting privatization reviews. In fact, according to Freedom of Information Act documents, the Department of Commerce has acknowledged that its privatization review of the National Logistics Service Center has cost more than $40,000 per employee reviewed,' he added.

Threlkeld also said while OMB finally recognized the 'superiority of the in-house workforce,' a number of the administration's actions are questionable.

'Given OMB's admission of [federal employees'] superiority, several obvious questions arise: Why does OMB fail to enforce the circular and thus allow agencies to contract out work without public-private competition?' he said. 'Why [do] administrator Safavian and his staff personally intervene to overturn award decisions in favor of federal employees and to prevent federal employees from competing in defense of their work? And why has OMB failed to fulfill commitments in sworn congressional testimony to ensure agencies give federal employees opportunities to compete for new work and contractor work?'

OMB said it plans to improve the A-76 process by:
  • Developing a competitive sourcing tracking system

  • Validating results by having agencies demonstrate net savings or significant business process improvements

  • Identifying best practices for post-award accountability

  • Issuing a competition checklist to 'encourage robust participation by both sectors in competitions'

  • Improving the development of the inventory of what jobs are commercial and non-commercial
  • and
  • Testing alternative competition processes, such as using the multiple award schedules program to obtain offers or using A-76 rules for research and development work.

Congress requested this report in the Transportation, Treasury and Independent Agencies Appropriations Act of 2004.

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