Steady Progress
The most recent scorecards indicate that the majority of PMA agencies are on course in their
efforts to improve commercial operations through the use of competition. Agencies are focused
on achieving a better return for the taxpayer dollar and identifying the public or private source
that can best bring about this result.
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The Department of Energy (DOE) recently conducted a competition to lower the cost and improve the
quality of financial services that support the Department's operations. Through competition, DOE
concluded that the best option was to restructure the in-house organization that currently provides
financial services. DOE projects that the restructuring will save taxpayers $31 million over five
years.
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The Small Business Administration decided to convert clerical services supporting its disaster
loan program from in-house to contractor performance after determining through public-private
competition that this action will reduce costs by $1.2 million over a five-year period when
compared to continued in-house performance.
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The National Institutes of Health (NIH) chose to rely on the continued performance of its in-house
providers of real property management and extramural activities. In two separate competitions, the
in-house sources demonstrated their value by focusing on increased efficiency, in part by consolidating
like activities to gain economies of scale, and re-engineering. NIH estimates that these "most
efficient organizations" will generate annual savings of approximately $39 million.
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The Treasury Department's Bureau of Engraving and Printing decided to use the private sector, rather
than its in-house staff, to handle various tour operations, after analysis showed that contractor
performance will save money.
Recent announcements of new competitions indicate that agencies are looking for competitive sourcing
to stimulate improvements for some of their most significant operations. This past quarter, the
Federal Aviation Administration (FAA) and the Department of Homeland Security (DHS) announced the
two largest non-Defense public-private competitions undertaken since the PMA was launched in 2001.
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After extensive planning, FAA announced that it would compete its air flight service station function,
involving approximately 2,750 positions. These employees are responsible, among other things, for
pilot weather briefings, assisting aircraft that are lost or in emergency situations, and providing
search and rescue services to users of the National Airspace System. FAA is counting on the competition
to facilitate the modernization of current operations and will give significant consideration during the
evaluation process to factors such as improved performance through the introduction of new or modified
equipment.
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The Department of Homeland Security (DHS) announced a competition involving 1,143 positions from its
U.S. Citizenship and Immigration Service (CIS). The competition will enable DHS to identify the best
public or private source to provide customer service at CIS offices.
On the Path to Green
Experience over the past two and one-half years shows that taxpayers will win -- regardless of who
performs the work -- when a manager uses competitive sourcing in a considered fashion. For this
reason, no agency may achieve or maintain a "green" status rating on the PMA scorecard unless the
agency has a reasonable long-range competition plan that has been tailored to fit the agency's mission.
In December, OMB issued guidance to assist agencies in developing appropriate long-range visions for
their respective agencies that will allow both careful and regular consideration of competitive sourcing.
The guidance emphasizes the need for agencies to explain how functions are generally selected for
competition, how consistency is achieved between competitive sourcing and the human capital initiative,
what mechanisms are used to incorporate lessons learned from past actions, and what steps are being taking
to minimize potential constraints.
Plans are just one key to the long-term success of competitive sourcing. Having data to evaluate results
is equally critical. Accordingly, OMB will soon launch a database that tracks the results of competition.
The database will enable Congress, managers, employees, vendors, and taxpayers to evaluate the effect of
competitive sourcing as a management tool. Hard data and trend analysis will replace anecdotes to
demonstrate the value of competition and to prompt corrective action when weaknesses are identified.
Sincerely,
Rob Burton
Associate Administrator
The Five Initatives:
