FOR IMMEDIATE RELEASE
May 2, 2008
Contact: OMB Communications, 202-395-7254
Competitive Sourcing Continues to Generate Savings for Taxpayers
Washington, DC — Competitive sourcing is producing significant savings for federal agencies, according to a report released today by the Office of Management and Budget (OMB).
The report shows that public-private competitions completed in FY 2007 are expected to yield almost $400 million in savings over the next five years. For the fourth year in a row, agencies reported an average return of over $25,000, or 25 percent, for each position studied.
“Public-private competition helps agencies continually improve their performance using common-sense management practices, such as workload measurement, adoption of new technologies, and human capital planning,” said Paul Denett, OMB’s Administrator for the Office of Federal Procurement Policy. “They are making their commercial support operations run with greater efficiency so they can have more resources to spend directly on their missions.”
Agencies use competitive sourcing, also known as public-private competition, to compare the costs and overall value of commercial services among private sector and federal government providers. Providers are selected based on who can deliver the best services for taxpayers.
To date, only about three percent of the federal workforce has been subject to competition. The report explains that the vast majority of federal positions will never be considered for competition, either because the work is inherently governmental or it is core to the agency’s mission and needs to be performed by federal employees. Agencies have carefully tailored their use of competition to highly commercial support activities that the private sector is equipped to perform, such as information technology services, logistics, and finance and accounting.
Cumulative projected savings from competitions completed over the past five years are expected to generate over $7 billion, or just over $1 billion in annualized estimated savings. Taxpayers will receive a return of about $30 for every dollar spent on competition, regardless of who performs the work.
“My goal is to get results, and competitive sourcing is doing just that with expected savings of $7 billion. Taxpayers want their government to spend their money wisely,” said OMB Deputy Director for Management Clay Johnson. “Competitive sourcing has meant we’ve gotten more bang for the buck.”
The report shows federal employees won a clear majority – 73 percent – of the work competed in FY 2007 and 83 percent of the work competed between FYs 2003-2007. They are successfully using competition to rethink how their operations are currently structured and how greater efficiencies can be achieved through reorganization.
Agencies have developed plans to validate savings and performance improvements achieved through public-private competitions. Validations are currently being performed on competitions that cumulatively are projected to produce $3.5 billion in savings for the taxpayer over their full periods of performance. Results on initial validations have substantiated the majority of savings.