Agencies Attack Proposed Outsourcing Changes The Bush administration’s proposed revision of outsourcing rules drew howls of outrage from many federal agencies. A favorite target in agency comments was the Office of Management and Budget’s proposed requirement that most public-private job competitions be completed within one year. Many said the deadline is unworkable and they don’t have the resources to move so fast. OMB received 653 public and agency comments on the outsourcing proposal, but more than half of them appear to be identical form letters. (The comments are available at http://www.whitehouse.gov/omb/circulars/index.html#076.) In the proposed revision to Circular A-76, announced in November, OMB said most competitions should be completed within one year, compared with the two to four years that the process usually takes under current rules, and that some competitions should be decided on best-value standards, rather than on cost alone. Angela Styles, administrator of federal procurement policy, said the changes are based on “free enterprise principles.” She spoke Jan. 9 at a Washington meeting of the National Defense Industrial Association. Styles said OMB has identified about a dozen issues in its proposal that need further study. OMB officials have said the proposed revision is on a fast track, with final approval expected in February. The changes clearly struck a sensitive chord in many agencies, and they responded with some harsh comments. “The revision comes across as unnecessarily prescriptive, dictating specific requirements for each step in the proposed competitive sourcing process, and minimizing management discretion,” wrote Lynn Scarlett, assistant secretary of Interior. Several agencies denounced OMB’s proposal that all federal jobs should be presumed to be commercial in nature, and subject to competitive sourcing, unless they can be shown to be “inherently governmental.” In a typical response, EPA said, “Presuming that an activity is commercial reflects a bias that is arguably inconsistent with the FAIR Act itself which contains no such presumption.” Several agencies attacked the plan to re-compete federal jobs periodically. “By mandating competitions every 3 to 5 years regardless of who wins a competition, the draft circular will hinder an agency’s ability to develop a long-term work force strategy for recruiting and retaining top-notch people for government service,” the Department of Transportation said. “This is inconsistent with best commercial practices that embrace the benefits of long term supplier relationships.” OMB proposed that the best-value provisions of Part 15 of the Federal Acquisition Regulation should be used to decide competitions for information technology functions. Two leading contractor organizations, the Professional Services Council and the Contract Services Association of America, urged that best value be used more widely. A coalition of more than 20 trade associations commended the revisions, but said more action is needed in several areas: “more equitable treatment of public and private sector offers, eliminating unnecessary restrictions on the use of real best value processes, making more broadly available the many acquisition strategy options offered by the FAR, and establishing clear timelines for further revisions.” Federal employee unions strongly opposed many of OMB’s changes. Colleen Kelley, president of the National Treasury Employees Union, accused the Bush administration of “stacking the deck in favor of contractors.” Several agencies also objected to a proposed requirement that they conduct public-private competitions on Inter-Service Support Agreements, under which agencies provide services to each other and to state and local governments. The market research firm Input estimates the federal outsourcing market at $6.5 billion in fiscal 2002. It forecasts the dollars spent on outsourcing will more than double over the next five years.