OMB orders agencies to produce outsourcing lists

Federal agencies have five days to produce lists of federal employees whose jobs could be contracted out to private firms, the Office of Management and Budget announced Thursday.

In Thursday's Federal Register, OMB published final rules implementing the 1998 Federal Activities Inventory Reform (FAIR) Act. Under the FAIR Act, each agency must submit to OMB a list of all activities performed by federal employees that could be done by private firms. Activities that are considered "inherently governmental" are not included on the lists.

Agencies have to turn in the lists by June 30. OMB will then spend about two months reviewing the lists, after which they will be made available to the public.

Agencies are supposed to periodically review the lists for outsourcing opportunities. Under OMB Circular A-76 procedures, agencies give federal employees the opportunity to defend their jobs in head-to-head competitions with the private sector. But according to OMB, agencies have the right to directly outsource work without going through public-private competitions.

The lists will provide an accounting of all federal employees whose jobs are not inherently governmental. Under the FAIR Act, companies can protest an agency's contention that a certain activity is inherently governmental. Conversely, employee unions can protest the inclusion of activities on the outsourcing lists.

OMB is also requiring agencies to submit annual reports detailing their outsourcing efforts.

Andrew Fortin, manager of privatization policy at the U.S. Chamber of Commerce, said the reporting requirement "makes this more of a management tool and less of a rote exercise."

Fortin said he expects businesses and employee unions to take advantage of the protest process.

"This is a debate over the future role of government," Fortin said. "There are people who feel that if you can look it up in the phone book and find two or three companies to bid on the work, it should be turned over to private-sector performance."

Some agencies are turning to outsourcing more than others. The Defense Department, for example, plans to conduct public-private competitions for nearly 230,000 jobs by 2005. Thousands of DoD employees are in the midst of such competitions, in which the employees essentially bid for their jobs. If a private company underbids the federal employees by more than 10 percent, the work is outsourced.