The Five Initatives
Commercial Services Management
The Process Isn't Pretty, But Savings Can Be Dramatic
Of all of the 5 management initiatives -- I think competitive
sourcing is the most complex and challenging. And the most
politicized. Without you taking the time to understand and
embrace this initiative - we don't have a realistic chance of
"Make or Buy" Decisions
Competitive sourcing asks managers to make very hard management
choices -- choices that effect real jobs held by very dedicated
and loyal career civil servants.
As so many of us know, a key element to the success of any
private sector company is the regular evaluation of whether
necessary services should be provided in-house by company
employees or by another company. The ultimate "make or buy"
When we turn to the federal government, as of June 2000, there
were 850,000 people performing jobs that are commercial in
nature - jobs that people also perform in the private sector.
Many of them are as basic as mowing the lawn, hanging dry wall
or serving food, but not a single one has been exposed to the
rigors of competition.
That's the clincher here, the taxpayer. This initiative strives
to focus the federal government on its mission - delivering high
quality services to our citizens at the lowest cost.
The President's Commitment
The President, during the campaign, talked about opening half,
or 425,000, of all commercial jobs being performed in the
federal government to competition with the private sector. He
didn't put a timeframe on the goal - nor have we. There is
recognition that public-private competition, on any scale of
significance, is not something the civilian agencies have ever
attempted. This Administration needs to build the
infrastructure, knowledge, and motivation at the civilian
agencies. Of course, agencies have been using contracting
out methods, whether to the private sector or to other government agencies, with
varying success for many years. Whether or not
there is a public/private competition, the principle of
competition should always be present.
We Are Making Progress
Over the past 15 months we've seen tangible progress.
Departments and agencies have moved out with this
initiative and are sensitive to the reaction of constituency groups.
At Energy and Interior, the Competitive Sourcing plans were
unveiled in comprehensive ways. At Treasury, they are looking at
some major opportunities for public/private competitions. OPM is
competitively sourcing facilities maintenance, financial systems
programming and computer operations. FEMA is moving ahead with
some innovative ideas to handle emergency disaster needs.
At Commerce, for its FY 2002 and 2003 competitive sourcing
management plan, the Census is conducting a major public-private
cost comparison and competition. The study began August 15,
2001, and is scheduled for completion by February 15, 2003. It will involve 225 FTE who perform a variety of clerical and administrative
support functions on a temporary basis; functions such as secretarial duties,
data entry, photocopying, filing, preparing mailings and similar activities. Census is using a mix of in-house and contractor resources to develop the
performance work statement, management study, and necessary cost
There are challenging workforce issues involved in competitive
sourcing and we're fortunate to have OPM working side-by-side
with the agencies; helping them work through their issues.
Public employee unions, for example, are keenly interested,
especially in light of their representation of a portion of the
federal workforce, their active participation on the GAO's
Commercial Activities Panel and their advocacy of competitive
sourcing-related legislation. Therefore, keeping channels of
communications open is key.
If given the chance, federal employees can find many ways to do
their jobs more effectively and at a lower cost. This is a
morale-booster, giving employees a chance to shine and deliver
more, while looking for waste to be eliminated.
Savings Can Be Dramatic
We have a process for public-private competition that is
equitable. Speaking of the process itself - it is often not
pretty. Yet, it has worked with a lot of effort and management
at the Department of Defense. For example, studies have shown
that on average this process saves 30 percent. The savings to
the taxpayer are dramatic. If agencies apply the savings to
improving the living quarters of our servicemen and women,
improving service to the most needy in society or to securing
the homeland -- we all win. Adding value on behalf of the
American people is the ultimate goal.
OMB Is Working On An Improved Process
But I know we need to improve the process. We recently took part
in the GAO Commercial Activities Panel, which just released a
report that is fair and confirms that public private competition
improves government performance and saves taxpayer dollars.
Where will OMB go from here? Director Mitch Daniels wants to put a
better process in place as quickly as possible. We've set up a working
group to create a new integrated process. But we can't replace
existing procedures right out of the box; the new system will
need to be tested and evaluated.
I can make one guarantee - we aren't coming out with something
unless it is easier for your agency to read, faster to use, and
fairer for all than the existing process. The proposed changes
will go out for notice and public comment in the very near
In the meantime, we continue to be available to visit your agency and speak to your team. We've been part of panel
discussions, helped organize training sessions at agencies such as Agriculture, DEA, Labor, and Justice. We've also
sponsored government wide-conferences.
Don't hesitate to ask me the hard questions -- just call me or
my Deputy Jack Kalavritinos.
The Five Initatives: