OMB to stick with current definition of 'inherently governmental'

The Office of Management and Budget is backing off some of its ideas for changing the federal public-private job competition process, including a proposal to revise the definition of "inherently governmental" work, a Bush administration official told Congress on Tuesday.

Angela Styles, the administrator of OMB's Office of Federal Procurement Policy, told a House panel that the final version of OMB's new Circular A-76 would likely include the current definition of "inherently governmental" work, which by law is off-limits for outsourcing. In its draft version of the revised circular, released in November, OMB proposed a new definition of "inherently governmental" and told agencies that federal jobs should be presumed to be "commercial in nature," and eligible for outsourcing.

"I think you will find when we come out with the final circular that we will return to the original definition [of inherently governmental]," said Styles in testimony before the Readiness Subcommittee of the House Armed Services Committee.

But the final circular will still include tight deadlines for completing job competitions and will mandate that federal employees who win competitions be held to binding performance agreements, according to Styles. If employees fail to meet these performance goals, the agency could hold another competition on their jobs, she said.

Michael Wynne, principal deputy undersecretary of Defense for acquisition, technology, and logistics, said performance agreements were needed to make in-house employees fulfill the terms of their bid. "We've had a very hard time getting them to stand up to anything other than [the] projected costs [of their work]," he told the committee.

Styles said OMB had not decided whether the final circular would include the 12-month deadline for competitions included in the draft rules. "That's a decision from [OMB Director] Mitch [Daniels] and it hasn't gotten to his level yet," she told a reporter after the hearing. "He's pretty firm on the 12 months . . . but there are complex studies that clearly will take longer than 12 months," she said.

During her testimony, Styles said that both the Defense Department and National Institutes of Health had indicated support for the 12-month time limit. However, NIH opposed the 12-month deadline in its official comments to the proposed circular. Many other agencies and the General Accounting Office said the one-year time frame was unrealistic in their comments.

The final circular will also urge agencies to provide training and resources for federal employees so they can field a competitive bid, according to Styles. "We've added additional language to at least be clear in the circular that that is very important to us, that there is management commitment to have a competitive public sector bid," she told the committee.

In written testimony, Wynne said the Defense Business Initiatives Council is continuing to craft "alternatives to A-76" that could be used to compete some Defense jobs. These alternatives will be part of a Defense plan to compete 226,000 positions-or half of its commercial jobs-that will be part of the department's fiscal 2005 budget request, he said.