Reasoned and Responsible Public-Private Competition
When the PMA was first announced, few, if any, agencies other than the Department of Defense (DOD) had a significant history of using competitive sourcing. As a result, in the past, most in-house providers of commercial services were not motivated to improve their organizations as they likely would have been if faced with competition. Today, the picture is far different. Civilian agencies across government are positioning themselves to improve many of their day-to-day operations through the strategic application of public-private competition. Of particular importance, agencies are taking steps to ensure sound planning and effective use of competitive sourcing. These steps include:
- Developing customized plans to identify where competition will be most beneficial to the agency's unique mission and workforce mix;
- Enlisting expertise from program, human resources, budget and legal offices to determine the most appropriate competitive sourcing strategies for the agency;
- Ensuring competitive sourcing is applied consistent with each agency's strategic workforce plan; and
- Centralizing oversight to promote fairness and sharing of best practices and lessons learned.
These actions have enabled agencies to identify a variety of activities where they believe competitive sourcing can reduce costs or improve performance. Examples of the types of activities where civilian agencies are already applying, or have already applied, competitive sourcing include:
- Graphics activities at the Department of Energy;
- Archaeological services (in the southeastern United States) at the Department of Interior;
- Office automation support for the Department of Commerce;
- Library services and graphics arts at the Department of Health and Human Services;
- Order fulfillment, inventory management, logistics and warehousing for Internal Revenue Service publications at the Department of the Treasury;
- Immigration information services, marine navigational aides, and public works at the Department of Homeland Security;
- Human resources and payment processing at the Department of Education;
- Nationwide test administration at the Office of Personnel Management;
- Automotive maintenance and repair activities at the Department of Justice;
- Maintenance and light construction activities at the Department of Agriculture
In September, OMB issued its second report on competitive sourcing, describing agency efforts to institutionalize public-private competition as an effective management tool. The report, which may be accessed at http://www.results.gov/agenda/fiveinitatives.html, profiles competition plans of the PMA agencies.
Measuring Up
OMB is measuring progress against the tailored competition plans agencies have developed to take mission and workforce mix considerations into account and the standards for success. (Government-wide numerical goals, which were established to help get the initiative started, have been eliminated.) Status and progress scores on the PMA scorecard indicate that competitive sourcing is beginning to take hold as a viable management practice. As of the end of September 2003:
- Ten agencies had earned yellow status by demonstrating that they have competition plans in place and have begun to implement them. Nearly half showed improvements on either their status or progress grades. About half are green on progress. Only two agencies slipped since the last quarter.
- Agencies have been conducting standard and streamlined competitions for activities they have identified as most attractive for potential performance by the private sector. For example, the Department of Energy has taken advantage of a standard competition to significantly reduce the amount of manpower needed to perform its graphics services. OPM anticipates significant savings from a recently completed standard competition for nationwide test administration. The National Park Service has successfully used a streamlined competition to reorganize its Southeastern Archeological Center into a most efficient organization that proved more cost-effective than private sector alternatives.
- Many agencies are working to create longer-range ("green") plans to institutionalize the practice of identifying suitable candidates for competition by weighing potential performance improvements and expected cost savings against the investment costs and risks associated with competition.
As agencies move forward, they will take advantage of recent revisions to OMB Circular A-76 -- revisions that better ensure a level playing field for public and private sector sources to offer their best services by --
- Eliminating a long-standing policy that discouraged the government from competing with the private sector;
- Ensuring both public and private sector capabilities are considered and their costs properly documented for the performance of smaller activities that have traditionally been directly converted from public to private sector performance; and
- Building confidence in the competitive sourcing process by separating the individuals who define the performance requirements from those who develop the government's offer.
Next Steps
There is more that needs to be done. In particular, we must ensure effective communications within agencies and between agencies and with interested stakeholders in the public and private sectors, especially members of Congress. OMB is reviewing agency-unique competitive sourcing implementation challenges. Best practices will be shared, as will lessons learned from competitions where results fall short of expectations. OMB will also continue to work with agencies to define data elements and appropriate mechanisms for reporting and tracking activities, including the cost of conducting competitions, so Congress and our citizens have the information they need to ensure public resources are wisely spent.
Sincerely,
Rob Burton
Associate Administrator
The Five Initatives: