Program review should come before outsourcing, scholar says

The Bush administration should launch a governmentwide review of federal programs before outsourcing more jobs to the private sector, according to an expert on federal management. In a May 24 memorandum, "Contracting for Services: One Aspect of 'Third Party Government,'" National Academy of Public Administration (NAPA) Fellow Herbert Jasper said that reviewing the need for existing programs should be the first step in the outsourcing process. "A review across-the-board would likely identify numerous activities that should be discontinued, transferred to other agencies, redesigned or devolved to state and local governments," wrote Jasper. The memorandum is the sixth in a series of management briefings from NAPA's Presidential Transition Project for the Office of Management and Budget. OMB has ordered agencies to directly outsource or compete roughly 42,500 jobs with the private sector by October 2002, but has not called for a review of existing programs. "Conceptually and ideally, there would first have been a comprehensive review and evaluation of what government agencies are doing, or should be doing, with the objective of identifying activities that should be transferred or terminated," Jasper said. An OMB official said the memorandum was under review and would not comment on whether the administration plans to conduct a governmentwide program review. In Jasper's view, overlapping program areas such as food safety oversight, which is administered through 35 programs run by 12 agencies, deserve scrutiny because they distract agencies from their core missions. And additional outsourcing could make it more difficult to eliminate overlapping and outdated programs because contractors could lobby to continue them, Jasper said. "Contracting for performance of government activities may make it harder to terminate or reorganize them because the contractors, through their supporters in Congress, become a force for continuing them," he said. OMB could use its outsourcing target to cut excess programs by requiring agencies to prove that any activity they have earmarked for outsourcing is still relevant, according to Jasper. "OMB ought to consider asking the agencies to make an affirmative finding that an activity earmarked for contracting has been evaluated as to its current relevance and its relation to similar activities being conducted elsewhere," he said. The memorandum also addresses a host of contracting issues that could affect the administration's efforts to increase the use of performance-based service contracts and build on the procurement reforms of the 1990s. Jasper urged OMB's Office of Federal Procurement Policy to share best practices in performance-based contracting among agencies and to ensure that agencies are actually doing performance-based work when they claim to be. He also criticized the "control mentality" of procurement officers who bypass governmentwide acquisition contracts in favor of their own agency-based contracts. "[Agencies] have launched … new requests for proposals for basic ordering agreements or indefinite delivery, indefinite quantity contracts that essentially duplicate the Federal Supply Service's Management, Organization and Business Improvement Service contract," he said. While vendors must go through a competitive process to be on the Federal Supply Service schedule, some agencies are requiring vendors to complete additional rounds of competition before they will negotiate a contract. This practice runs up the costs of contractors and results in unnecessary competitions, according to Jasper. In his view, OMB should encourage program managers to "shop around" for procurement services to encourage poor performing procurement offices to shape up.