Union questions A-76 savings

Report: Giving the American People More for Their Money

A prediction that taxpayers could be spared $5.6 billion in the next 10 years through competitive sourcing has come under fire from the National Treasury Employees Union (NTEU), one of the leading critics of the practice.

The President's Management Council made the prediction in a report issued Oct. 13, assessing progress on all aspects of the President's Management Agenda. The report includes statistics on how many competitive sourcing competitions agencies have conducted, the number of full-time equivalent employees involved and the percentage of times the employees prevailed over private-sector challengers.

It also includes projected savings over the next decade. The rationale for competitive sourcing, governed by Office of Management and Budget Circular A-76, is that federal employees who face competition will find ways to become more efficient, saving money for taxpayers even if they prevail in competitions.

The projected savings draw on the actual savings so far of projects completed from fiscal 2003 through fiscal 2005, and predictions about projects to be completed. In projecting the future savings, the report assumes that agencies will hold competitions on half of the projects they identify as eligible, an assumption NTEU regards as unrealistic.

The union has long been a staunch opponent of the program, saying it is emblematic of the Bush administration's desire to turn as much federal work as possible over to the private sector.

NTEU President Colleen Kelley said today that the projected savings figure in the report is "as good as being pulled from thin air.”

The assumption that half the projects will be completed defies experience, she said. So far, as the council's report shows, agencies have held competitions for an average of 17 percent of the activities identified in their mandatory Federal Activities Inventory Reform Act lists as suitable.

The Office of Personnel Management has competed 64 percent of its eligible positions, making it the only agency to have passed the 50 percent mark. Other agencies have held competitions for far fewer positions, some in single digits.

Moreover, Kelley said, the report includes a footnote stating that the "actual level and pace of competition at a given agency will be shaped by workforce needs, feasibility analyses and the strategic goals of the agency.”

That disclaimer, she said, “casts even more doubt on the reliability of guesses on estimated savings.”

Kelley previously criticized earlier Office of Management and Budget projections of savings from competitive sourcing for being based on faulty guidance to federal agencies about how they should report their costs of conducting public/private job competitions. The OMB guidance to agencies requires them to ignore significant and substantial costs such as the time in-house staff may have spent on competitions during regular work hours.

“I see nothing in the management council’s report to the president that addresses serious questions surrounding earlier OMB projections of savings from contracting out,” Kelley said.

The council’s projected 10-year savings assumes that half the activities identified as suitable for public/private competition on agencies’ fiscal 2005 Federal Activities Inventory Reform Act lists will be competed in time.

For the agencies listed, however, an average of only 17 percent of the activities they deem commercial in nature on their fiscal 2005 lists were subject to competition in the 2003-2005 period covered by the report.

Moreover, the council said, “the actual level and pace of competition at a given agency will be shaped by workforce needs, feasibility analyses and the strategic goals of the agency.”

That “casts even more doubt on the reliability of guesses on estimated savings,” Kelley said.

NTEU has been leading the fight against runaway federal contracting, warning others about the costs to taxpayers of waste, fraud and abuse in turning over federal work to the private sector and the dangers inherent in privatizing inherently governmental work, such as tax collection. The union also criticizes federal agencies’ history of lax oversight of their contractors.