OMB wants Congress to lift best-value tradeoff limits

Competitive Sourcing: Report on Competitive Sourcing Results Fiscal Year 2005

While searching for the lowest price for routine jobs, like lawn maintenance, is worthwhile, Bush administration officials say it doesn’t work with highly technical jobs, like modernizing an agency’s information technology systems.

Office of Management and Budget officials want to convince lawmakers that the best-value tradeoffs are beneficial and should not be limited as recent legislation requires.

OMB released two reports on competitive sourcing Thursday. The overview report, titled “Competitive Sourcing: Report on Competitive Sourcing Results Fiscal Year 2005,” confirmed that last fiscal year’s competitive sourcing, which pits the public and private sectors against each other for government contracting jobs, is expected to save $3.1 billion over the next five to 10 years.

In the Fiscal 2006 Transportation, Treasury, Housing and Urban Development, Judiciary, the District of Columbia and Independent Agencies Appropriations Act, Congress set parameters around best-value tradeoffs. The law stops agencies from switching work currently done by more than 10 federal employees to the private sector without showing that the company could do it at a lower cost. The law specifically states that a company must either beat the government's related personnel costs by 10 percent or cost at least $10 million less for the overall project.

“The experience to date suggests that the repeal of [Section 842 of the appropriations bill] would have minimal negative effect while the retention of 842 would have significant negative effect,” stated the second OMB report, titled “Competitive Sourcing: Report on the Use of Best Value Tradeoffs in Public-Private Competitions.”

OMB policy since May 2003 has given agencies more freedom in choosing the best service provider based on cost and quality. The report states that best-value tradeoffs save three times as much money as competitions based solely on cost.

Competitive sourcing is one of five initiatives in the President’s Management Agenda.

Cumulative projected savings from competitions completed between fiscal 2003 and fiscal 2005 are expected to generate $5.6 billion, or about $27 for every dollar spent on competition, according to OMB.

Stan Soloway, the president of the Professional Services Council, said the report shows what most people have long known: real competition and best value trade-offs create much more savings than traditional low-bid competitions.

“Indeed, the report’s data makes clear that we have only touched the tip of the iceberg when it comes to generating meaningful savings and performance improvements through the competitive sourcing process,” Soloway said.