DOD: New A-76 rules no sweat

Defense Department officials have had more experience with outsourcing than anyone else in the federal government, but they are not concerned about the Bush administration's revision of the rules for putting government work out for bid.

The Office of Management and Budget last month released the latest version of its Circular A-76, which establishes rules for conducting a public/private competition. The circular will be the primary mechanism for fulfilling the Bush administration's competitive sourcing goals.

During the rewrite process, one significant concern was the requirement that agencies complete competitions within 12 months. Under the old process, competitions often dragged on for years. Although OMB received many comments protesting the one-year limit, administration officials decided to keep that provision.

"I'll admit, when I first saw the new 12-month restriction I thought, 'We're never going to be able to do that based on our statistics,'" said Annie Andrews, DOD's assistant director of competitive sourcing and privatization. "But we have a good process in place and we develop a good idea of the direction we're going before we start planning."

DOD started conducting public/ private competitions during the Reagan administration, said Joe Sikes, the its director of competitive sourcing and privatization. The process was pushed aside under President George H.W. Bush and was later revived during the Clinton years. But it wasn't until the current president assumed office that the idea of competing contracts to save money received such strong support from the top.

Frank Sowa, the Navy's program manager for strategic sourcing, said the service is meeting with Pentagon officials to discuss whether the revised rules will affect ongoing projects.

"Not everything will be grand- fathered in under the new circular rules," Sowa said. "OMB was very specific about what would and what wouldn't. If a competition has reached a certain point in the process, it can continue as is. If it hasn't reached that milestone, then the new rules apply."

Both Sowa and Andrews said DOD's long history in public/private competitions makes it better prepared to handle OMB's changes than other agencies.

"Others, I think, are going to have a very hard time with this," Andrews said. "We've had a competitive sourcing office for years, and other agencies are just now standing them up. They're going to have a lot to learn in a very short time."

She applauded OMB for the timing of the latest version's release because it initiates consistency across government.

"It's consistent in its definitions; it's consistent in its terms," Andrews said. "Now we know that bid opening is just that: bid opening."

"So far, we can't tell if the changes are good or bad, but it looks like the process will work about the same way," said Gary Robinson, assistant for competitive sourcing for the Deputy Secretary of the Army for privatization and partnerships. "It may appear that things are moving faster, but I think that's because more preplanning will be required before the competition is announced."

The accountability included in the circular indicates that agencies should designate only one point person or point-of-contact for each contract. Instead of ruling by committee, Andrews said, one person will be responsible for ensuring the bid is right and meets all the requirements.

"This makes us more like the private companies against whom the DOD is bidding," she said. "They have one point person in charge of their bid, so why don't we?"

Another major difference in A-76 involves what Sowa calls leveling the playing field. In the past, the private sector competed internally until one victor emerged to compete against the government. Now the government will compete with the entire sector from the outset.

The OMB circular is now more closely aligned with the Federal Acquisition Regulation, Sowa said. "This marks a major philosophical difference than before. It's not necessarily bad. It's just a fact of life."

Stan Soloway, president of the Professional Services Council, said that although DOD can better deal with the circular's changes, it still faces unique challenges that could present problems.

"DOD has statutes that have not allowed them to pursue a 'best value' contract, and they have been forced to go with best price," he said. "Dealing with that will present DOD with certain limitations. The issue of dealing with best value vs. low price is huge, and if you can't deal in best value, you're stuck in a low-cost, low-bid world."

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By the numbers: DOD and A-76

By 2005, the Defense Department wants to open more than 200,000 jobs to commercial competition, with a goal of saving $11 billion.

According to a December 2000 report by the General Accounting Office, DOD has conducted 286 studies that follow Circular A-76 guidelines. Department officials have said those competitions saved the Pentagon $290 million in fiscal 1999. GAO, however, said those savings could not be fully justified because limitations in baseline cost data — from which savings, study costs and other factors are calculated — make it difficult to estimate savings.