OMB eliminates broad competitive sourcing targets

The Office of Management and Budget will no longer hold agencies to governmentwide numerical targets for competitive sourcing-including the goal of opening 425,000 federal jobs to private competition-federal procurement chief Angela Styles said Thursday.

In written testimony before the Senate Governmental Affairs Committee, Styles said OMB has "moved away" from the governmentwide numerical goals that have been part of OMB's competitive sourcing initiative since its launch in March 2001. Later, she told reporters that OMB had scrapped its goal of competing 15 percent of all federal jobs deemed "commercial in nature" by the end of fiscal 2003, and the ultimate goal of the initiative, competing 50 percent of all commercial positions, or 425,000 jobs.

The target of 425,000 jobs dates to the 2000 presidential campaign, when President Bush called on federal agencies to let private firms bid on half of all commercial jobs in government.

OMB's decision to eliminate uniform targets came about gradually, Styles told lawmakers at the Governmental Affairs Committee hearing. Over the past two and a half years, the administration has noticed so many "exceptions to the rule" when reviewing agencies' individual competitive sourcing programs that it finally decided to drop broad percentage goals, she said.

Instead, OMB will set individual targets for the levels of competitive sourcing feasible at each agency, and hold agencies to their new customized targets. Many of these targets have already been agreed upon during previous discussions about agency-specific competitive sourcing initiatives, Styles said.

In theory, an agency could receive a "green," or top mark, on OMB's traffic-light scorecard for competing just 10 percent of its commercial jobs, providing it had OMB approval, she told reporters after a separate Thursday hearing of the Senate Energy and Natural Resources Subcommittee on National Parks.

Until now, OMB has pushed most agencies to work toward placing 15 percent of positions designated as "commercial in nature" up for competition, in order to earn a yellow light on the management scorecard. For example, OMB upgraded the Defense Department to yellow on its most recent scorecard, after the department competed 71,000 jobs to hit the 15 percent target.

Under OMB's new criteria, outlined in a report to Congress issued Thursday, agencies will receive a yellow light if they complete one competition that meets OMB standards. In the past two quarters, they must have finished 75 percent of all streamlined competitions-those where fewer than 65 full-time equivalent jobs are up for bids-within a 90-day timeframe and have canceled fewer than 20 percent of publicly announced competitions.

Agencies aiming for a green light must have completed at least 10 competitions after January 2001. Over the past year, agencies deserving of the highest possible rating must have canceled less than 10 percent of competitions announced, completed 90 percent of all standard competitions in a year and finished 95 percent of streamlined competitions within 90 days, OMB's modified guidelines mandate.

Despite the emphasis on finishing competitions within tighter timeframes, agencies are at liberty to spend as long as they need to plan competitions, Styles said. The clock only starts ticking when agencies actually begin the competitions, she explained at the Senate Governmental Affairs Committee hearing. Lawmakers from both parties and federal employee unions have attacked the concept of setting targets for competitive sourcing. In a July 24 letter, Sen. Joseph Lieberman, D-Conn., asked OMB Director Joshua Bolten to explain documents and internal memoranda that purportedly demonstrate that OMB and federal agencies "have been violating the law in pursuit of the administration's pre-established numerical quotas for outsourcing."

According to Lieberman, the administration's outsourcing policies to date have "never been based on the circumstances of individual agencies." Instead, OMB set "arbitrary" competitive sourcing quotas, he argued.

"When managed properly, equitable competition for new and existing federal government work is one of several tools that can help agencies reduce costs and become more responsive to customers and taxpayers," Lieberman wrote. "The administration's arbitrary quantitative targets, however, chill other more creative means of achieving cost savings."

Colleen Kelley, president of the National Treasury Employees Union, said she is skeptical that the agency-specific targets OMB develops will differ much from the uniform 15 percent target previously in place. "I'm not convinced that they're not just trading one set of quotas for another," she said. "I'm going to watch this closely."