Report Card on Competitive Sourcing: GAO Says Feds Win Most Jobs, Savings Not Proved Federal employees retained more than three-fourths of the jobs that were subject to competitive sourcing studies at seven of the largest departments over the past two years, the General Accounting Office reported. In the most comprehensive look so far at the Bush administration’s competitive sourcing initiative, GAO concluded, “Agencies have focused more on following OMB guidance on the number of positions to compete — not on achieving savings and improving performance.” The auditors looked at activities at the departments of Defense, Education, Health and Human Services, Interior, Treasury and Veterans Affairs. Those departments have about 84% of all commercial jobs in the government. During 2002 and 2003, the departments completed 602 studies under OMB Circular A-76, involving nearly 25,000 jobs. The in-house teams won 76% of the jobs. “It is too early to assess the impact of the studies in terms of efficiencies or performance improvements achieved,” the report said. “OMB’s competitive sourcing guidance to federal agencies has focused more on targets and milestones for conducting competitions than on the outcomes the competitions are designed to produce: savings, innovation, and performance improvements,” the auditors said. “Because these agencies have focused on meeting targets to announce and complete competitions, they have not assessed broader issues, such as weighing potential improvements against the costs and risks associated with performing the competitions.” That finding is likely to give additional ammunition to congressional critics of the initiative. Congress has directed all agencies to file annual reports on their competitive sourcing activities. The reports are to include the number of competitions announced and completed, the cost of conducting competitions and the anticipated savings as a result. OMB has told agencies to submit their first reports by March 31. GAO urged OMB to give agencies more guidance in compiling their FAIR Act inventories, which identify jobs that are commercial in nature and eligible for public-private competition. GAO said greater consistency is needed in classifying jobs. GAO also recommended that OMB identify functional areas for competition, rather than classifying jobs on an ad hoc basis, and focus competition plans more on achieving efficiencies and cost savings. OMB concurred with the recommendations. GAO said most civilian agencies had no experience with job competitions and no staff to handle them when the administration announced its initiative in August 2001. It said most agencies continue to complain that they don’t have enough people, enough knowledge of the process or enough money to conduct the competitions. “Many department-level offices in the civilian agencies we reviewed have only one or two full-time staff to complete FAIR Act inventories, interpret new laws and regulations,and oversee agency selection of positions to compete and the competitions,” the auditors said. The Federal Acquisition Council is studying agency staffing and skill requirements. OMB told agencies to include funding for competitive sourcing studies in the 2005 budget that was sent to Congress last month. The Bush administration originally told agencies to compete 15% of their commercial jobs by October 2003. The numerical target was dropped after it sparked widespread opposition in Congress. Last year OMB revised its Circular A-76, which sets the rules for job competitions. The revision was aimed at speeding up the competitions, which had often dragged on for years under the old rules. Federal employee unions have filed lawsuits against the new rules. The GAO report, “Competitive Sourcing: Greater Emphasis Needed on Increasing Efficiency and Improving Performance,” is number GAO-04-367, available at www.gao.gov.