Defense could use new 'best value' competition method under proposal

The Defense Department could use a controversial "best value" method for public-private job competitions under a legislative proposal now before Congress.

The measure would allow Defense to use "best value," and not cost, as the deciding factor in competitions that decide whether federal jobs should be contracted-out to the private sector. A centerpiece of new outsourcing rules created by the Office of Management and Budget, the "best value" method allows noncost factors such as technical performance and reputation to be factored into outsourcing decisions.

Current rules-specifically, Title 10, Section 2462 of the U.S. Code-mandate that job competitions at Defense be decided on the basis of cost, although Defense has managed to hold a kind of "best value" competition before. In its recommendations for the fiscal 2004 Defense authorization bill, the Pentagon urged Congress to amend Section 2462 so job competitions at Defense could be decided by "best value."

"Enactment of this section would improve the DoD's procurement processes by ensuring that Defense considers quality, as well as cost, as a selection factor," a summary of the provision stated. "It would also allow DoD to take advantage of the newly revised OMB Circular A-76 when it is finalized, which, for example, would allow for best value cost-technical tradeoff source selections for information technology functions."

Joe Sikes, Defense's director of competitive sourcing and privatization, said the provision would simply allow the department to use a procurement method that has been endorsed by the General Accounting Office. "We think it gives us more flexibility to make smart decisions," he said.

But a coalition of federal and private sector labor unions oppose Defense's move. Federal unions have long argued that the "best value" selection process is rigged to favor private contractors and will end up wasting taxpayer money.

"At the behest of contractors who are disappointed at winning less than one-half of public-private competitions, Section 824 of the legislative recommendations submitted by DoD calls for the end of objective, cost-based public-private competitions," said a March 19 letter from 13 labor organizations to the chairmen of the House and Senate Armed Services Committees, Rep. Duncan Hunter, R-Calif., and Sen. John Warner, R-Va. The American Federation of Government Employees helped orchestrate the letter.