No overall outsourcing target in 2004, OMB says

The Office of Management and Budget will likely not set a governmentwide target for competitive sourcing in fiscal 2004, federal procurement chief Angela Styles said Wednesday.

In March 2001, OMB told federal agencies to let private firms compete for 5 percent of all jobs considered "commercial in nature" by the end of fiscal 2002. The goal for fiscal 2003 is 10 percent. Ultimately, the Bush administration wants to put half of all commercial work done in government-425, 000 jobs-up for competition with private firms.

But it won't happen in fiscal 2004, according to Styles. "We never put a time frame on the [50 percent] goal," she said. And instead of holding agencies to a governmentwide competition target, OMB will set individual competition goals for each agency, she added.

"I don't think you'll see us come out with a number like 10 or 15 [in fiscal 2004]," said Styles. "We are working individually with each agency. We're pretty far along with the agencies, and each one will know what is expected of them."

Styles' remarks come as many civilian agencies are starting job competitions to meet OMB's stated targets. While Styles admits that agencies did not meet the 5 percent goal by last month's deadline, she has told agencies to focus on competing 15 percent of their jobs by the end of fiscal 2003. Many competitions are just now beginning.

On Tuesday, for example, the Internal Revenue Service launched a competition for the jobs of 350 print shop employees who work at 10 printing centers around the country. A competition involving 100 IRS building maintenance workers began the next day.

The IRS is also conducting a "feasibility study" to determine whether it makes sense to compete hundreds of information technology support jobs, said IRS competitive sourcing director Bert Concklin in a July interview. The study should be completed this month, according to IRS officials. All told, the IRS plans to let private companies compete for 3,273 agency jobs by the end of fiscal 2003.

The Energy Department plans to compete more than 1,000 jobs, according to Dennis O'Brien, director of Energy's competitive sourcing office. Energy had originally picked 420 IT workers to face competition-224 of whom work at Energy headquarters in Washington-but this number is increasing, he said. "The number involved in the IT study went up the most," he said.

At the Education Department, about 300 human resources, payment processing and audit review workers are competing for their jobs. The department has identified an additional 750 acquisition, IT and financial management workers who could face job competitions as part of its "One-Ed" department management plan.

One of the first competitions to finish will likely be at the Census Bureau, which put up 225 clerical jobs for competition in October 2001. The agency is on track to pick a winner by mid-May, although this decision could be appealed, said Charles Zoltak, a Census Bureau program manager, who is coordinating the study.

To meet OMB's targets, agencies also are using direct conversions, under which jobs are outsourced without competitions. The Health and Human Services Department performed several direct conversions in fiscal 2002, HHS Deputy Secretary Claude Allen said in an October speech. But HHS avoided firing employees by reassigning workers, converting positions after employees retired and converting vacant jobs, he said. Other agencies, including the Interior Department, have also converted vacant jobs.

Styles declined to provide an estimate of how many federal employees are currently facing competition. "We don't really have a good ballpark figure," she said. Agencies regularly report on their competitive sourcing programs to OMB budget examiners, she added.

Some supporters of privatization say civilian agencies have been slow to start competitions. "You haven't seen a lot of progress from the civilian agencies in meeting the targets," said William Eggers, director of public sector research for Deloitte Research, an arm of Washington-based Deloitte Consulting. Ronald Utt, a fellow at the Heritage Foundation, said OMB's rewrite of Circular A-76-which contains federal outsourcing rules-is sapping energy from the competitive sourcing program.

"I would be much happier if resources were being spent on inducing agencies to cooperate in this program," said Utt, who ran the Reagan administration's privatization office. "The farther you get into an administration's life cycle, the more difficult it is to get agencies to respond in this direction."

OMB's decision not to issue a government-wide job competition target in fiscal 2004 is the latest sign the White House has abandoned plans to make agencies put equal percentages of their commercial jobs up for competition. In July 2001, OMB Director Mitch Daniels told an audience of federal contractors that all agencies would be held to the 5 percent goal. But since then, Styles has repeatedly said the 5 percent and 10 percent goals were aggregate targets for all agencies, meaning that some agencies-the Department of Housing and Urban Development, for one-could compete fewer jobs.

Despite these statements, OMB is still pressuring agencies to hit the targets, according to Brian DeWyngaert, executive assistant to Bobby Harnage, president of the American Federation of Government Employees. "The OMB privatization quotas are rigid and the sanctions for failure to comply are severe," he said. Both the House and Senate versions of the fiscal 2003 Treasury-Postal Appropriations bill contain language that would block OMB from holding agencies to any competitive sourcing targets.

Setting unique targets for each agency may make it more difficult for external observers to monitor how agencies are complying with the competitive sourcing program. When asked if OMB would publicly release the targets it had negotiated with the agencies, Styles said she would leave it up to individual agencies to make that information public.