Competitive Sourcing Initiative

The Competitive Sourcing Initiative was initiated by the Bush administration in spring 2001, when "the Administration announced its intention to open the commercial activities performed by the government to the dynamics of competition between the public and private sectors. Soon thereafter, the President's Management Agenda (PMA) designated this effort, known as competitive sourcing, as a major initiative. This designation reflected the Administration's commitment to market-based government, where competition drives improved performance and efficiency of federal programs." 

Projected to Fail
Steven L. Schooner predicted in a 2004 article published in the Public Contract Law Journal that "the Bush administration's competitive sourcing initiative will fail. Granted, the number of government employees will continue to shrink, while the number of contractor personnel serving the Government will methodically increase. But the Government's unwillingness to appreciate the policy's costs leads to the corresponding failure to identify, obtain, and invest appropriate resources needed to properly effectuate the policy. The Government simply lacks sufficient qualified acquisition, contract management, and quality control personnel to handle the outsourcing burden. Because the Government is ill-positioned to successfully out-source in a manner that generates higher quality services, lower prices, greater efficiency, or, ultimately, better government, an aggressive outsourcing policy will further expose long-standing problems in service contracting, including poor planning, inadequately defined requirements, insufficient price evaluation, and lax oversight of contractor performance. All of which lead to disquieting expectations for the Government's future."

What is Competitive Sourcing?
According to the U.S. Department of Labor's web page on "Competitive Sourcing", the objective of the Initiative is "to ensure that the American people receive the best possible value for their tax dollars. In order to accomplish this goal, the initiative uses a strategy that requires federal agencies to identify commercial-type activities performed by government employees and determine whether these activities are best provided by the private sector, by government employees, or by another agency through a fee-for-service agreement. In general, the competitive sourcing initiative intends to leverage the competitive forces of the market economy to improve government efficiency.

"Competitive sourcing relies on a competitive process for awarding activities to qualified parties. Competitive sourcing is not the same as outsourcing, which assumes that the private sector can perform activities more efficiently than the government and does not allow a government organization the opportunity to compete. In contrast, competitive sourcing allows government organizations to compete for work based on the assumption that both the government and the private sector can deliver commercial services efficiently and cost-effectively.

"Under The Federal Activities Inventory Reform Act (FAIR), P. L. 105-270, federal agencies are required to identify the activities performed by their employees. By June 30th of each year, agencies must submit to the Office of Management and Budget (OMB) an inventory of all of the activities that an agency performs-inherently governmental activities as well as commercial activities-and the reasons for certain designations. Only federal employees can perform inherently governmental functions, which means that those functions cannot be subject to competition. Determining whether or not a function is inherently governmental is a difficult task. Usually, the amount of discretion used in performing the duties of the position is an important consideration. Agencies must justify their inherently governmental classifications in writing.

"OMB reviews the inventory and may request additional justification for certain classifications. Once the inventory is finalized, OMB places a notice in the Federal Register announcing the availability of the agency's inventory on the agency's web site. If an interested party disagrees with the designation of an activity, a challenge may be filed. Interested parties include affected employees, unions, executive steering committees and any other stakeholders.

"OMB Circular A-76 (Revised May 29, 2003) sets forth the procedures that federal agencies must use for the competition of commercial activities. The Circular authorizes two types of competitions: the streamlined and the standard. A streamlined competition may be conducted for activities that involve 65 or fewer full-time equivalents (FTEs). In general, streamlined competitions must be completed within 90 calendar days. In certain cases, an extension of 45 calendar days may be approved. As long as the new method is more cost effective, streamlined competitions are not required to save a specific amount of money. This is in contrast to a standard competition, where a private sector bidder must show a savings of at least 10% or $10 million (whichever is less) in order to win the competition. Standard competitions are generally conducted for activities that involve 65 or more FTEs. The competition may take up to 12 months to complete, with the possibility of an OMB approved six-month extension.

"Regardless of who wins the competition, the winning bidder will be responsible for complying with the requirements in the Performance Work Statement (PWS). The PWS specifies all of the requirements that must be met in order to successfully perform an activity for the government. If a government organization wins the competition, new methods of performing certain functions may be needed in order to ensure that all of the PWS requirements are met. In this way, the competitive sourcing initiative improves post-competition management and accountability.

"Finally, the competitive sourcing initiative does not have specific personnel reduction goals. The objective is to determine who can deliver the best value to the taxpayers. The competition process may change the number of staff needed to deliver a product or service. However, the magnitude of the change is a result of the competition. Changes are not made based on predetermined expectations."

Proponents of Competitive Sourcing

 * Americans for Tax Reform/Grover Norquist
 * Fair Competition Coalition

Related SourceWatch Resources

 * military-industrial complex
 * outsourcing
 * prison-industrial complex
 * Private Military Corporations
 * privatization
 * Walter Reed Army Medical Center scandal

Resources

 * "Competitive Outsourcing," BNA's Web Watch. Links to related articles, testimony, etc.
 * "Competitive Sourcing Resources," Behind The Cutain.

Documents & Reports

 * "The President's Managment Agenda: Competitive Sourcing." White House website.
 * "The President's Management Agenda," Executive Office of the President, Office of Management and Budget, Fiscal Year 2002 (64-page pdf).
 * Circular No. A-76 (Revised): Performance of Commercial Activities, Executive Office of the President, Office of Management and Budget, May 29, 2003.
 * "Competitive Sourcing: Conducting Public-Private Competition in a Reasoned and Responsible Manner," Executive Office of the President, Office of Management and Budget, July 2003 (13-page pdf).
 * "Competitive Sourcing: Greater Emphasis Needed on Increasing Efficiency and Improving Performance," U.S. General Accounting Office Report to Congressional Requesters, February 2004 (53-page pdf).
 * "Federal Acquisition Council Manager’s Guide to Competitive Sourcing," Second Edition, February 20, 2004.
 * "Competitive Sourcing: Report on Competitive Sourcing Results Fiscal Year 2003," Executive Office of the President, Office of Management and Budget, May 2004 (29-page pdf).
 * "United States Department of Agriculture Report to Congress on Fiscal Year (FY) 2004 Competitive Sourcing Activities," U.S. Department of Agriculture, March 2005 (5-page pdf).
 * "Competitive Sourcing Congressional Report - FY 2005 Competitions - # FTE," U.S. Office of Personnel Management.
 * "Review of GSA's Competitive Sourcing Initiative. Report Numbert A050260/O/F/F06019, U.S. General Services Administration, September 29, 2006 (17-page pdf).
 * "Alternate Trajectories. Options for Competitive Sourcing of the Space Shuttle Program" Executive Summary. Report of the Space Shuttle Competitive Sourcing Task Force. "This Task Force study and report were supported by RAND's Science and Technology Policy Institute (S&TPI) and sponsored by the Office of Space Flight (OSF) at NASA. S&TPI is a federally funded research and development center (FFRDC) for studies and analysis, established by Congress and administered by the National Science Foundation (NSF)."

U.S. Department of Defense

 * "Competitive Sourcing: Frequently Asked Questions (FAQs)," U.S. Department of the Army Installation Management Command, undated.
 * Department of Defense's Military Housing Privatization Program. Managed by the Housing and Competitive Sourcing (H&CS) Office under the direction of Joseph Sikes in the Office of the Deputy Under Secretary of Defense (Installations and Environment).
 * "DOD Competitive Sourcing: Results of A-76 Studies Over the Past 5 Years." Report to Congressional Committees, U.S. General Accounting Office, December 2000.
 * "DOD Competitive Sourcing. Effects of A-76 Studies on Federal Employees' Employment, Pay, and Benefits Vary." Report to Congressional Committees, U.S. General Accounting Office, March 2001.
 * "Department of Defense Competitive Sourcing Program," Jacksonville NDIA/OSD, March 14, 2001.
 * President's Plan: Department of Defense, FY2004, Executive Office of the President, Office of Management and Budget. Scroll down to "Focusing on the Military Mission."
 * "Strategic and Competitive Sourcing Programs Interim Guidance," U.S. Department of Defense, undated: Results in FY 2003 & 2004.
 * "Department of Defense Privatization and Outsourcing. PMCS Financial/Resource Topics. Compiled by AUL Staff, Air University Library, Maxwell AFB, AL, March 2004.
 * President's Plan: Department of Defense, FY2005, Executive Office of the President, Office of Management and Budget. Scroll down to "Update on the President's Management Agenda."
 * "Competitive Sourcing. Health Benefits Cost Comparison Had Minimal Impact, but DOD Needs Uniform Implementation Process." Report to Congressional Committees, U.S. General Accounting Office, December 2005.

News Releases and Announcements

 * Announcement of Competitive Sourcing Initiative: Department of Energy Competitive Sourcing Initiative, U.S. Department of Energy Office of Management, undated.

Testimony

 * "Sourcing and Acquisition, Challenges Facing the Department of Defense." Statement of David M. Walker, Comptroller General of the United States Before the Subcommittee on Readiness and Management Support, Senate Committee on Armed Services, U.S. Senate, March 19, 2003 (15-page pdf).
 * "Competitive Sourcing: Implementation Will Be Key to Success of New Circular A-76." Statement of David M. Walker, Comptroller General of the United States Before the House Committee on Government Reform, U.S. House of Representatives, June 26, 2003 (12-page pdf).
 * "The Downside of the Competitive Sourcing Initiative: Numerical Outsourcing Targets Under the Tilted New A-76." Testimony of Charles Tiefer, Professor of Law, University of Baltimore School of Law] Before the Senate Subcommittee on Oversight of Government Management, Restructuring and the District of Columbia of the Senate Committee on Governmental Affairs, U.S. Senate, July 24, 2003 (16-page pdf).
 * Statement of Fran Mainella, Director, National Park Service, U.S. Department of the Interior, Before the Subcommittee on National Parks of the Senate Committee on Energy and Natural Resources, U.S. Senate, Concerning an Oversight Hearing on the Competitive Sourcing Effort Within the National Park Service, July 24, 2003.
 * "National Parks Need Competitive Sourcing." Testimony by Geoffrey Segal, Reason Foundation, Before the Senate Committee on Energy and Natural Resources, Subcommittee on National Parks, July 24, 2003.
 * "An Update on the Bush Administration's Competitive Sourcing Initiative." Testimony by Paul C. Light, Senior Fellow, Governance Studies at the Brookings Institution Before the Senate Subcommitte on Oversight of Government Management, the Federal Workforce, and the District of Columbia, July 24, 2003; 16-page pdf.

Articles & Commentary

 * Jason Peckenpaugh, "House votes to block OMB competitive sourcing initiative," GovExec.com, July 25, 2002.
 * Carl DeMaio and Vincent Badolato, "Competitive Sourcing: The Wait is Over, The Time is Now," Reason Public Policy Institute, May 31, 2003.
 * Gail Repsher Emery, "Congress chips at competitive sourcing," Washington Technology, July 5, 2004.
 * Jaques S. Gansler, "Six Myths of Competitive Sourcing," Reason Public Policy Institute, July 8, 2003.
 * Fran Mainella, "Competitive Sourcing at National Park Service Benefits Citizens," Federal Times (U.S. Department of the Interior), July 28, 2003.
 * Jason Miller, "OMB hails progress on competitive sourcing," GCN.com, October 6, 2003.
 * Steven L. Schooner, Abstract: "Competitive Sourcing Policy: More Sail Than Rudder," George Washington University Law School, Public Contract Law Journal, Vol. 33, No. 2, p. 263, 2004.
 * Jason Miller, "OMB hails benefits of competitive sourcing," PostNewsweek Tech Media (Washington Technology), May 25, 2004.
 * Kimberly Palmer, "Congress drops effort to limit Bush job competition initiative," GovExec.com, November 19, 2004.
 * Christopher Lee, "Bush's 'Competitive Sourcing' Worries Disabled Workers. Initiative May Put Employees With Special Needs At a Decided Disadvantage, Their Advocates Say," Washington Post, April 18, 2005.
 * Shoshanah Cohen and Joseph Roussel, "U.S. Department of Defense Profile: Making the Tail Smaller and the Tooth Stronger," PRTM, November 1, 2005.
 * Matthew Weigelt, "Denett expects to defend competitive sourcing," FCW.com, December 5, 2006.