Officials: Revised A-76 urges better IT management

Recent revisions to federal policies that concern outsourcing should encourage agencies to manage information technology and other functions better but not necessarily contract them out, Office of Management and Budget officials said last week.

"The main point is to create competition on a level playing field," said John Koskinen, OMB's deputy director for management, to an audience attending an "Intelligent Outsourcing" conference sponsored by the General Services Administration.

By competing with private companies and each other, he said, agencies can make better decisions about the best use of their funds and personnel.

A new version of guidelines for conducting cost comparisons under OMB Circular A-76 is designed to make it easier for agencies to do the analysis necessary to justify retaining, or contracting out, work that is not "mission critical." David Childs, the OMB analyst who developed the guidelines, said the policy "is not an ideological preference for who can do the work better."

Agency officials, particularly directors of federal data centers, have been concerned that the imperatives of the new policy would discourage consolidation and cross-servicing agreements for such functions as payroll processing and financial management.

Benchmark Comparisons

The guidelines urge data centers, beginning next year, to do a benchmark comparison of their operations with the private sector before pursuing new business. Such a benchmark would give data centers a "hunting license," which would liberate them from future cost studies, whether or not they best the private sector, Childs said. Without the benchmark, they will have to compete for each new customer. The rules will not affect any existing cross-servicing arrangement.

Frank McDonough, deputy associate administrator for IT with GSA, said, "We're in the early stages of outsourcing in the government," and "the road ahead looks like a rational approach, not a radical approach." But he said the cost comparison process is still complicated and might discourage agencies from outsourcing when they should.

Meanwhile, he said, although the guidelines urge agencies to constantly reassess their outsourcing decisions, agencies might lose the skills they would need to bring work back in-house if warranted.

Sam Kleinman, director of the Center for Naval Analysis' infrastructure and readiness team, said, however, that his research into Defense contracts found almost every function

"that could be contracted out has been somewhere."

He said this suggests agencies can find models to overcome impediments to contracting out if they have good incentives to do so.

Kleinman also said that, in most cases, workers whose jobs were contracted out sought new positions in the government. Roberta Roberts, a procurement analyst with the Army and an attendee at the conference, said that suggested to her that agencies would "have flexibility to go back and forth" between private and in-house services.

Some agency managers attending the conference said the thrust of the A-76 guidelines made sense, but they were skeptical as to how easily this new philosophy could be applied. Koskinen "seems to be saying things that are attractive, [but] it's tough to go back to the agency and put that in place," said an Environmental Protection Agency official who requested anonymity.

Scott O'Neil, a Navy employee, said that "what's encouraging is the emphasis on doing work the most effective way" rather than assuming agencies will always chose outsourcing.

"That emphasis hasn't really been spoken about a lot," he said.