OMB, Congress spar on competitive sourcing again

Congress again is using the appropriations process to undermine the Bush administration's policies for competitive sourcing.

Under H.R. 5384, the Fiscal 2007 Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Appropriations Act, the Agriculture Department can spend no money to study, or enter into a contract with a private party to carry out a study relating to rural development or farm loan programs by using competitive sourcing, unless Congress gives its approval.

Like last year, when similar language was included in the fiscal 2006 version of the bill, the Office of Management and Budget opposes such restrictions. “The administration urges the House to eliminate this provision,” OMB said in its policy statement.

Competitive sourcing, which is governed by the OMB’s Circular A-76, typically pits a private-sector vendor against a team of federal employees to determine what is referred to as the most efficient organization. OMB has pushed public-private competitions for contracts to get the best deal.

But some lawmakers are not convinced.

House Appropriations Committee spokesman John Scofield said there was no hard evidence that savings really exist through competitive sourcing. Spending millions of dollars on consulting fees to save those funds doesn’t make sense, he said. However, OFPP’s report on competitive sourcing helped to make a case for the potential of savings.

“We’re in a better place than in previous years,” he said.

Nonetheless, lawmakers are concerned that agencies will fund these competitions with money not originally intended for that purpose, which is why they want to require departments to get their approval before proceeding with a study.

“I think we’ve gotten their attention,” he added.

In a statement of administrative policy, OMB said it has adopted a responsible way to apply public-private competitions to commercial activities.

Clay Johnson, OMB’s deputy director for management, wrote in a letter sent to the Senate on April 20 that improvements set in motion by competitions completed in fiscal 2005 alone are expected to generate net savings or cost avoidances in excess of $3.1 billion within the next decade.

Johnson’s letter accompanied a report to Congress on competitive sourcing. The report states that in fiscal 2005 agencies completed 181 competitions involving the commercial workload of nearly 10,000 full-time-equivalent employees. The Federal Aviation Administration conducted the largest-ever competition for its automated flight service stations. The report states that the competition will save the government $2.2 billion.

Over two fiscal years, the report estimates a $5.6 billion in savings.

“I don’t see this as a surprising development, although it is an unfortunate one,” said Renée Courtland, senior associate at Dutko Government Markets. “Congress has never supported competitive sourcing.”

Even in the days of a majority consensus in Congress in 2002 and 2003, Republicans normally aligned with the president opposed this portion of the President’s Management Agenda, she added.

In the April 20 letter, which accompanied a congressional report on competitive sourcing, Johnson voiced OMB’s concern about other marginalizing provisions that block consideration of best-value measures.

But Congress is not backing down. The House Appropriations Committee is concerned about quotas for competitive sourcing programs. H.R. 5386, the Fiscal 2007 Interior Department Appropriations Act, states that the quota would force the U.S. Forest Service to take questionable management steps. The House passed the bill May 18.

The Fiscal 2007 Energy and Water Development Appropriations Act (H.R. 5427), which the House recently passed, also has measures hindering competitive sourcing practices.