A-76 rewrite turns up heat on feds

Proposed revisions to Circular A-76

Under a draft policy released last week, the Bush administration would require federal agencies to go through the same competitive process — including submitting bids and facing future recompetes — that companies must follow when bidding on work deemed inherently commercial.

The long-awaited draft revisions to Office of Management and Budget Circular A-76, which outlines how the public and private sectors compete for commercial-like government functions, would require agencies to follow the process when bidding on contracts that will be awarded based on best value, rather than lowest cost.

These and other changes to the procurement rules address industry concerns that the current rules for competition make it too easy for agencies to keep work in-house rather than putting it out for bid.

Although the Defense Department and some civilian agencies conduct A-76 studies to determine if industry can provide services at a lower cost, the studies generally exclude the competitive process required by the Federal Acquisition Regulation (FAR) when running a traditional procurement.

The proposed revisions align A-76 more closely with the competitive process with which government contracting officers are familiar, said Angela Styles, administrator for OMB's Office of Federal Procurement Policy.

The President's Management Agenda, released last year, made it a priority to increase competition between the public and private sectors to perform government services. The Bush administration often cites the statistic that competition leads to a 30 percent cost savings, no matter who wins.

The challenge has been finding a fair way to compare the services provided by agencies with those offered by industry.

Because the new process would be familiar to contracting officers, they may be more willing to run such competitions, Styles said.

The FAR's focus on best-value evaluations is a key addition to the public/private competition process, Styles said, and the revisions authorize IT as the testing ground for the new A-76 process. In the past, most A-76 studies have not focused on IT-related work. But that is expected to change because IT services frequently meet the Bush administration's criteria for being inherently nongovernmental.

"It is very consistent with where OMB wants to take government management," said Larry Allen, executive vice president of the Coalition for Government Procurement.

Under the new A-76 process, agencies, like their commercial counterparts, would be given a set time period in which to develop an offer. All offers would be evaluated at the same time and could be eliminated if they do not meet the requirements, according to OFPP.

The revisions also require agencies to run the competition in a timely fashion, giving them eight months to develop the performance work statement and solicitation, and four months for the proposal period and source selection. If agencies do not comply with those measures, the OMB deputy director for management will become directly involved, Styles said.

Should the federal offeror win the best-value competition, the result would be a binding performance agreement with base years and option years, just like a contract. And "if you're not performing, you're not going to get the option year, and [the function] will go back out for competition," Styles said.

Federal employee unions are still concerned that the new process will only make it easier for industry to win competitions. "We were extremely pessimistic and as we read through [the draft], we were justified," said Wiley Pearson, head of the American Federation of Government Employee's anti-privatization efforts.

The draft will be available for comment for 30 days. Although OMB has not yet set a date for when the final circular will be published, the new process will apply to all competitions after Jan. 1, 2003, according to the draft.

***

Changing the rules

Proposed changes to the Office of Management and Budget's Circular A-76 include:

* Moving to a process based on the Federal Acquisition Regulation, which outlines the acquisition of commercial products and services.

* Setting a time period of eight months for an agency to develop its performance work statement and solicitation, and four months for the proposal period and award.

* Authorizing information technology as the test area for best-value competitions.

* Setting rules for the government bidder in best-value competitions that are almost the same as the rules for private-sector bidders.