Data center directors balk at A-76 revision

Federal data center directors are objecting to the recent revision of an Office of Management and Budget policy that makes it easier for federal agencies to outsource data center operations and other activities.

The revised Circular A-76, "Performance of Commercial Activities," modifies or eliminates many of the cost-comparison requirements that agency and industry sources believe make it difficult to contract out standard support services.

However, many data center directors believe the revised circular—in practice, if not policy—favors outsourcing over interagency service agreements. That interpretation could side-track many civilian agencies that are now working to respond to 1995 OMB guidelines that push agencies to consolidate small- and midsize data centers.

"We have reviewed it, [and] we have our concerns about how this will slow both the consolidation efforts and cross-servicing," said John Ortego, director of the Federal Systems Integration and Management Center at the General Services Administration. Ortego worked closely with agency executives over the last 18 months to develop a consolidation strategy.

Data center directors reportedly are forming a working group to discuss their concerns with OMB.

Under the new policy, agencies requesting support services from other agencies must compare any proposals "to an in-house and/or commercial offer," according to the A-76 revised supplemental handbook. "A contract shall be awarded by the requesting agency if the commercial offer is more economical."

Although OMB has waived this requirement until October 1997—at which point most agencies should have put in place their new data center strategies—it will hamper any plans to cater to future growth, agency sources said.

The revisions are not intended to restrict agency choices but to give agencies and industry vendors a more open environment, according to OMB.

"We want to create a level playing field to be sure that agencies make the most sensible economic decisions about whether to do something in-house or not," said Bruce McConnell, chief of Information policy and technology for the Office of Information and Regulatory Affairs at OMB.

The perceived difficulties are more a matter of interpretation than policy, McConnell said. "We are talking with [data center directors] to ensure that we interpret this in a way that has a positive impact on the way they run their operations," he said.

The revisions have been welcomed by commercial service providers, which have long seen A-76 as an obstacle to outsourcing business.

OMB has simplified cost-comparison requirements that, under the old policy, were viewed as difficult to the point of being prohibitive, sources said. The new policy also adjusts the requirements to reflect more accurately administrative and other overhead costs of government operations. But these changes are of little interest to agencies trying to sort out business strategies. Agencies are "so far down the track" with consolidation plans that "to throw this [new policy] out now is an injustice," an agency executive said.