NAPA says anxiety afflicts A-76 winners

More than 25,000 federal employees are now part of new organizations created under competitive sourcing, a policy that Bush administration officials have promoted to improve government operations and save money. Now the challenge is to identify promising practices to make those organizations as effective as they can be, said Matthew Blum, associate administrator for competitive sourcing at the Office of Management and Budget.

Blum spoke at a recent symposium on competitive sourcing sponsored by the National Academy of Public Administration, a congressionally chartered group of policy experts that advises federal, state and local governments. NAPA’s report on that symposium describes how agencies are still adjusting to the disruptive effects of competitive sourcing. But it offers recommendations to help them cope with unexpected consequences of the administration’s management initiative.

OMB’s Circular A-76 established the rules for competitive sourcing. Under those rules, federal agencies can reorganize federal employees into workgroups known as most-efficient organizations. Agencies often choose to reorganize their information technology organizations to form MEOs. NAPA found that MEOs spend substantially less on employee salaries and benefits because agencies consolidate administrative functions, re-engineer processes and introduce new automation when they create the organizations.

Like all MEOs, those formed to offer IT services operate under a letter of obligation, which is similar to a contract. That agreement establishes the amount of money that the MEO will receive and the IT service standards that it must meet.

The NAPA report recommends, for example, that agencies specify in the MEO letter of obligation the methods and data desired for measuring its performance.

It also quotes Bruce McDowell, director of a recent NAPA project to review the Agriculture Department’s Forest Service MEO. “I bet there is not a single person in the federal government who is really good at managing an MEO — this new hybrid,” he said. “We are still inventing how to do it.”

NAPA closely examined the Forest Service’s Information Solutions Organization and found that it had a fairly successful first year in 2005. But it was not without problems. For example, because it remains subject to federal employee, budgeting and purchasing regulations, the MEO cannot respond to changing workloads as quickly as Forest Service officials had anticipated.

Jacqueline Myers, associate deputy chief of business operations at the Forest Service, said Forest Service managers have not yet adjusted to the new way of managing IT.

“This organizational change, and especially the change to a contract-like relationship with our own internal employees, has been very difficult,” she said during the NAPA-organized symposium. “Our management tends to continue to operate in the way that it had been accustomed.”

The adjustments have been especially difficult in the area of purchasing, Myers said. “The type of things that employees have been able to weigh in on significantly in the past, such as what equipment to buy, when to buy and what kind to buy, are now made at a much higher level in the organization — for the good of the organization,” she said. “But quite frankly, it all sounds good until you tell me I can’t buy what I want to buy when I want to buy it. This has been a challenge to us, and we are working our way through it.”

NAPA also found significant morale problems within the MEO ranks. “We did a lot of change-management training, but quite frankly, it was not enough,” Myers said.

The reorganization of IT services placed unusual stress on employees, who “are subject to new and stressful performance requirements and to major transformations in their job responsibilities, organizational relationships and workloads,” NAPA states in its report.

That situation has created attrition and recruitment problems, according to the report.

Stan Soloway, president of the Professional Services Council, has criticized A-76 competitions in the past for being stacked against companies. He said he empathizes with MEO employees who no longer feel their jobs are secure. But, he added, “I’m not sure that’s a problem we can solve if we’re serious about improving the efficiency and quality of service the government provides.”

Before the reorganization, the Forest Service had 1,260 full-time employees providing support for desktop and laptop PCs, servers, computer software, network connections, information security, voice and video telecommunications, and radios. Now it has 538 full-time federal employees providing that support. They report to the agency’s Information Resources Management Office, which has about 100 full-time federal employees.

NAPA concluded that it is too early to tell how much the A-76 competition and reorganization have improved IT services at the Forest Service. But the pared-down IT organization has done well enough that the agency has extended its letter of obligation for another year.