Law hinders competitive sourcing, officials say

Competitions between contractors and federal employees for government work dropped in fiscal 2007 because of provisions in law that ban the competitions, administration officials said today.

The number of federal employees or the full-time equivalents of employees who competed in 2007 decreased from 2006 by more than a third, to 10,317 from 16,369, according to an annual report on competitive sourcing released today.

Clay Johnson, the Office of Management and Budget’s deputy director for management, said the decrease is due in large par, to legislative actions that block or otherwise deny funding for competitions. He said the fiscal 2008 Consolidated Appropriations Act, which became law in December, has at least eight new provisions that deal with competitive sourcing, and most of them limit its use.

Johnson said calls from Congress to cut back on the use of contractors “indicates how political the atmosphere has become in regards to cost management.” He said the Bush administration wants to save money through competition with industry, while some lawmakers want contractors out of agencies.

“Members of Congress who make statements [about contractors] have a different goal,” Johnson said. He said they have constituencies and voters to please, while the administration answers to the taxpayer.

Paul Denett, administrator of the Office of Federal Procurement Policy, said provisions against competitive sourcing are Congress’ “poison pills.” They stop interested companies from joining in the competition. He said contractors won’t compete when they see other companies win contracts and then are blocked from doing any work because of the provisions.

“That’s discouraging,” Denett said.

Denett and Johnson expect competitions between federal employees and industry will yield $395 million in savings during the next five years.

Contractors won more competitions in 2007 than in 2006. They won 27 percent of the competitions compared with 13 percent in 2006.

The public and private sectors competed in 2007 mainly for maintenance and property management work, information technology support services and logistics. Those categories totaled 65 percent of the competed work, and competitions since 2004 have centered on those three same categories of work, the report states.

Denett said competitive sourcing is a common-sense management practice that has been employed by the Defense Department since the 1950s. Competitive sourcing pushes agencies to adjust their back-office operations to run more efficiently, which frees more resources to spend directly on the agency mission.

However, contractors won’t compete with federal employees for the majority of work, either because the work is inherently governmental or it’s central to an agency’s mission and should be done by federal employees, the report states.