'A' for Effort, But Try Again

n TDA's effort to privatize the property disposal function, the ideas were commendable, the motivation strong and the approach bold. Who could ask for anything more? Well, perhaps the program manager, who also might like to see better results.

What went wrong? Is there a different model or an approach that would have avoided or at least mitigated some of TDA's problems? Let's look at what worked and what didn't.

No one can fault the team for seeking a more efficient way to perform the property disposal function, particularly if it's not perceived as part of the agency's core mission. In an era of downsizing, where 353,000 federal positions have been lost since the beginning of the Clinton administration, it makes good business sense to preserve federal jobs for those activities that are most critical to the agency's mission. Moreover, the National Partnership for Reinventing Government stresses acting more like the private sector and streamlining operations. It also promotes out-of-the-box thinking to seek creative ways to get things done. All of these factors would support experimentation and new approaches to doing business. The project's right on target in this regard.

But more up-front planning, coupled with better knowledge at the outset of the benefits and limitations of competitive outsourcing, might well have produced a better outcome, or at least a more predictable one.

One Office of Federal Procurement Policy document explains what constitutes an "inherently governmental" function, that is, a function so intimately related to the public interest as to mandate performance by government employees. This document says the private sector can perform all kinds of advisory services for the government. What it can't do is award contracts (in TDA's case, the actual sales). That's a role reserved for federal agencies. The contractor can perform every operational function up to that point, but the agency remains the decision-maker. Recognizing and dealing with that limitation would have avoided the kind of inspector general criticism that causes anyone to question whether innovation is just too risky.

Also, Office of Management and Budget Circular A-76 establishes government policy for acquiring commercial services from the private sector. If a proposal is made to shift a function currently performed by the government to a private firm, then this circular provides the methodology to validate the effort.

The test here is one of cost-effectiveness. Whether the government or the contractor performs the work, the government remains responsible for the activity and the outcome.

In TDA's case, the approach argues for compliance with federal regulations. Here the problem becomes the bidding process. If the rules say sealed bids, then the contractor should comply. From a cost perspective an open-bid auction probably would result in the best deal for the government. If so, the agency should recognize the challenge and try to change the rules, not violate them.

In addition to knowledge about the policies, rules and regulations that are central to the outsourcing process, agencies would benefit from early dialogue with potential suppliers. In TDA's case, putting together a request for information or meeting with potential contractors might well have avoided the first attempt at a procurement that resulted in no bidders. Rather than wasting time on a process that produced no useful results, the procurement could have been structured in such a way as to take advantage of innovations and best practices used by the private sector.

Better planning, more communication with potential bidders, an awareness of the limitations of outsourcing options, and a clear understanding of the government's continuing role and responsibilities in the effort would have avoided much of the pain in the process. Given the difficulties already experienced, starting over might make the most sense.

Allan V. Burman, a former administrator of the Office of Federal Procurement Policy, is president of Jefferson Solutions in Washington.