A new study offers a checklist of ways to make public-private competitions fair for both federal employees and private contractors.
Lawrence L. Martin, a Columbia University scholar, identified 13 issues that government agencies should confront in trying to create a level playing field for public employees to compete with private companies for the taxpayers' business.
"The underlining premise of a level playing field is that public-private competition should be conducted in a transparent (open) and fair manner so that the process does not provide an inherent competitive advantage to either the public sector or the private sector," Martin said in the new study, "Determining a Level Playing Field for Public-Private Competition." The study was funded by and is available from the PricewaterhouseCoopers Endowment for the Business of Government.
Martin reviewed policies governing public-private competitions in other countries, at the state and local level and among federal agencies. Competitions at the federal level are governed by Office of Management and Budget Circular A-76. The A-76 process is being used by the Defense Department to compete work currently performed by more than 200,000 civilian federal employees.
Unlike outright privatization or contracting out, public-private competitions give civil servants the opportunity to prove they can perform work less expensively and more effectively than private firms. Many contractors have complained that the A-76 process gives public workers an advantage, while federal unions have complained that the process tilts the playing field in favor of the private sector.
Martin's checklist identifies costing, contract administration and process issues that, if addressed properly, can create a level playing field.
One policy that tilts competitions in favor of the public sector is mandated private sector wage scales, Martin said. While a government organization may want to protect wage earners, doing so disadvantages the private sector during competitions, he said.
In addition, governments should require a memorandum of understanding when public sector workers win a competition, similar to a contract required when a private company wins.
"The development of memoranda of understanding facilitates service monitoring and helps insure that the public sector is held to the same standards as the private sector," Martin said.
In trying to create a level playing field, Martin said, agencies should consider all of the following issues:
- Type of competition
- Public sector access to outside consultants
- Independent review of public sector benchmarks, bids and proposals
- Separation of purchaser and provider functions
- Mandated private sector wage scales
- Mandated private sector employee benefits
- Minimum cost savings threshold
- Cost comparison approach
- Transition costs
- Contract administration and monitoring costs
- Public sector memorandum of understanding
- Penalties for public sector failure to perform
- Provisions for monitoring
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