OMB to let agencies privatize offices for 2003 target

Agencies may privatize some operations in fiscal 2003 to comply with a Bush administration mandate to open federal jobs to the private sector, an Office of Management and Budget official said Thursday. Speaking before an audience of contractors at the mid-year meeting of the Contract Services Association, OMB program examiner David Childs said privatization ventures would count toward the competitive sourcing goal that OMB has set for fiscal 2003. OMB has directed agencies, in fiscal 2003, to give private firms a chance to take over 10 percent, or 85,000, of the 850,000 federal jobs that agencies say could be performed in the private sector. "On a case-by-case basis, we will consider privatization," Childs told the contractors. Childs' announcement signals that agencies will have another method to comply with OMB's competitive sourcing targets in future years. In fiscal 2002, agencies may only use public-private competitions, in which a private firm bids against government workers, or direct conversions, in which jobs are handed over to the private sector without competition, to meet a 5 percent competitive sourcing target. In a direct conversion, a private sector firm performs government work under contract. Privatization, in contrast, shifts an activity to the private sector for good. The government has completed few privatization ventures in recent years. In 1998, the government privatized the U.S. Enrichment Corp.--which enriches uranium for use in nuclear plants. The privatized firm has faced a host of legal and financial problems ever since. In March, U.S. District Judge Gladys Kessler called the process used to sell the corporation "a model of what not to do when considering various options for privatizing a federal entity." U.S. Investigations Services is a more successful privatization example. The Office of Personnel Management spun its pre-employment screening office into the private sector in 1996. Now that the office has been privatized as USIS, it also performs investigative services for private businesses.