Study: Little firing risk from competitive sourcing

Competitive Sourcing: What Happens to Federal Employees?

Federal employees run minimal risk of being fired because of competitive sourcing studies, a new study finds.

Only 5 percent of full-time civilian employees lost their jobs as a result of competitive sourcing, two University of Maryland researchers found in a review of 65,151 jobs affected by almost 1,200 Defense Department sourcing studies performed between 1994 and the first quarter of 2004. During that time, temporary employees stood a 3 percent chance of being fired, according to the report.

Transferring to another government job was the most common cause of elimination of federal jobs. In all, 16 percent of workers transferred and 11 percent retired.

Competitive sourcing reduced baseline costs by an average of 44 percent per study, for a total savings of $11.2 billion, according to the study. The study also show that after a competitive sourcing competition, remaining employees do not have a burdensome amount of work.

"It is clear that much of the claims of the negative impact of competitive sourcing on federal employees are unfounded," co-authors Jacques Gansler and William Lucyshyn write in the report, "Competitive Sourcing: What Happens to Federal Employees?"

Competitive sourcing, which is part of the President's Management Agenda, encourages agencies to cut costs by forcing federal employees whose work is not deemed a core government function to compete a most efficient organization strategy against private-sector bids to do the same work.

The report comes with one caveat: The data doesn't capture the effect of federal employees opting "to exercise their rights of 'bumping' or 'retreating' lowered tenured employees out of their jobs." Previous studies of competitive sourcing have found the number of directly impacted employees — through reassignment — "may be as high as four or five times the number of employees separated."

Also, the University of Maryland researchers did not examine the rate at which dismissed employees end up working for the winning private-sector firm, performing the same work they once did for the government.

Numbers don't capture all the effects of competitive sourcing, the researchers write. "Low morale, insufficient staffing, and feelings of unfairness can still pervade a workforce affected by competitions," the report states. But the Army and Air Force, which held the vast majority of DOD sourcing competitions, ranked seventh and tenth, respectively, on a recent survey of best places to work in the federal government. "Apparently the morale of their employees has not suffered greatly" from competitive sourcing, the authors state.

Gansler is director of the University of Maryland's Center for Public Policy and Private Enterprise, and a former DOD undersecretary of acquisition, technology and logistics. Lucyshyn is a research director at the Defense Advanced Research Projects Agency and a University of Maryland visiting senior research scholar.

IBM Corp.'s Center for the Business of Government funded the research.