Outsourcing panel told to scrap Circular A-76

The new Commercial Activities Panel should work to eliminate Office of Management and Budget Circular A-76, witnesses said at the panel's inaugural public hearing Monday. More than 40 people appeared before the panel to share their thoughts on the principles and policies that should govern outsourcing decisions. The 12-member panel heard testimony from contractors, labor union chiefs, independent academics and one member of Congress, Rep. Neil Abercrombie, D-Hawaii. While nearly every witness before the panel was critical of Circular A-76, which spells out the government's public-private competition process, two witnesses called on the panel to eliminate A-76 altogether. "The first thing this panel could do of use is to abolish Circular A-76," said Paul Light, director of governmental studies at the Brookings Institution. In Light's view, the panel should devise a new framework for conducting public-private competitions that is linked to workforce planning. Shiryl Nelson, managing editor with the Virginia consulting firm Acquisition Solutions Inc., said agencies have adopted the lengthy A-76 process as a tool to avoid outsourcing. The panel should eliminate A-76 and instead use the 1993 Government Performance and Results Act (GPRA) as a template for creating results-driven outsourcing principles, she said. At a minimum, Nelson advocated waiving A-76 for information technology services so that agencies can outsource technology projects without completing public-private competitions. Other witnesses suggested merely tweaking the A-76 process. Kenneth Beeks, vice president of the policy coalition Business Executives for National Security, proposed changing A-76 rules to allow larger outsourcing projects to be directly converted to the private sector. Under current rules, outsourcing projects may only bypass public-private competitions if they involve ten or fewer positions. Beeks would raise this competition threshold to 200 positions, freeing nearly 80 percent of all outsourcing projects from the public-private competition requirement. In addition to A-76, many witnesses spoke about defining "inherently governmental" functions that must not be outsourced. Light, William Birkhofer, senior vice president with the consulting firm Jacobs Engineering, and Paul Lawrence, a consultant with PricewaterhouseCoopers, all agreed that inherently governmental jobs should embody those tasks needed to carry out an agency's core mission. Light said the 1998 Federal Activities and Inventory Reform (FAIR) Act should be amended to discourage agencies from using it to set arbitrary targets for contracting out. Under the FAIR Act, agencies must compile annual inventories of jobs that are "commercial in nature" and could be performed by contractors. OMB has ordered agencies to directly outsource or perform public-private competitions on 5 percent of their FAIR Act inventories by October 2002, a directive Light criticized. "That's about the worst way to use the FAIR Act I can imagine," he said of the OMB guidance. "I am so concerned about the use of head counts or arbitrary targets as a driver [for outsourcing]." Office of Management and Budget Deputy Director Sean O'Keefe, who represents OMB on the panel, was not present for Light's comments. Last week, O'Keefe characterized the 5 percent target as a necessary tool for prompting agencies to consider different ways for delivering their services. Panel members asked a variety of questions. Frank Camm, a senior economist from RAND, repeatedly pressed witnesses who criticized A-76 to propose feasible alternatives. American University Professor Robert Tobias asked several witnesses to share their thoughts on how agencies should go about defining what is inherently governmental work. "I think the inherently governmental issue is at the root of our whole discussion," said Tobias when asked about his focus. The major factor in defining inherently governmental should be the mission of an agency, he added. "The issue is not what can be performed by the private sector, but what is within an agency's mission," said Tobias. Tobias and panel member Mark Filteau, who is president of the Florida-based contractor Johnson Controls World Services, had a brief exchange over the consequences of poor performance in the public sector. When Tobias said that Congress holds agencies accountable for poor performance, Filteau questioned if there was a "demonstrated economic burden" for lagging agencies, as there is for private sector firms that can lose contracts through shoddy work. Former Sen. David Pryor, who is now director of the Institute of Politics at Harvard University, urged his fellow panelists to remember the morale of the federal workforce as they consider new outsourcing rules. "The other thing that concerns me is the morale of federal workers today, and the age of the federal workforce," he said. "I'm dealing with bright, energetic students at the Kennedy School…and I would fall out of my chair if one came up and said, 'I'd love to work for the federal government." The panel will convene additional public hearings in Indianapolis on Aug. 8 and San Antonio on Aug. 15.