Report: Agencies lack staff, resources to run job competitions

Several major federal agencies lack the staff and financial support necessary to run effective public-private job competitions and oversee contractors winning work, General Accounting Office researchers concluded in a report published Friday.

Agencies have made progress setting up offices to handle job competitions and establishing internal training programs and policies on competitive sourcing, the report (GAO-04-367) said. But "many civilian department-level offices have only one or two full-time staff to interpret new laws, implement new guidance issued by [the Office of Management and Budget], maintain inventories of positions and activities [eligible for outsourcing], and oversee agency competitions," GAO found.

At the request of Sens. George Voinovich, R-Ohio, Robert Byrd, D-W.Va., and Susan Collins, R-Maine, and Rep. Henry Waxman, D-Calif., the watchdog agency researched competitive sourcing efforts at the Defense Department and six civilian agencies: the Agriculture, Education, Health and Human Services, Interior, Treasury and Veterans Affairs departments. Together, these seven departments include roughly 84 percent of federal jobs classified as commercial -- and therefore vulnerable to private-sector competition -- in 2002 inventories.

Of the six civilian departments surveyed by GAO, all but Education assigned one to three full-time staff members to implement President Bush's competitive sourcing initiative. Education established nine employee teams to work on job competitions.

Civilian agencies need larger staffs to identify jobs eligible for competitions, write accurate descriptions of work up for bids, help in-house teams compete and oversee the winning team, GAO said.

Several of the civilian agencies also told GAO they lacked adequate funding for competitions. In addition, civilian agencies had a difficult time developing accurate lists of jobs considered commercial in nature. This is partly because OMB's guidelines for developing inventories are based on the Defense Department's procedures, the report noted.

The 1998 Federal Activities Inventory Reform (FAIR) Act requires agencies to compile lists of commercial jobs that could be performed by contractors and those that are inherently governmental, meaning that they must be performed by federal employees. Every year OMB reviews the lists and releases them to Congress and the public in several stages.

OMB has improved its instructions for completing inventories, but must do a better job of ensuring that FAIR Act lists are consistent across agencies, GAO said. A job should not be considered commercial at one agency, but not at another, the report noted. Agency officials told GAO that some OMB staffers assigned to review inventories "did not appear familiar with OMB's own guidance."

Defense has a longer history of conducting competitions and has a larger staff devoted to the effort, but could also benefit from more resources, GAO researchers concluded. The Army alone would like 100 to 150 more staff members, including attorneys and human resources and contracting specialists, to help with competitive sourcing, an official there told GAO.

OMB and agency officials generally agreed with GAO's assessment of staffing and funding problems.

The report also concluded that OMB should shift the focus away from urging agencies to put jobs up for competition and ask them to look at whether competitions help them operate more efficiently -- the stated goal of the competitive sourcing initiative.

Under OMB's guidance, "agencies have focused on meeting targets to announce and complete competitions and have not assessed broader issues, such as weighing potential improvements against the costs and risks associated with performing the competitions," the report said.

OMB officials disagreed with that assessment, pointing to new criteria for reaching the highest rating on the competitive sourcing portion of the administration's quarterly management scorecard. The new guidelines, released in December, ask agencies to reveal long-term competitive sourcing strategies and explain the rationale behind the competitions they have conducted.

OMB has also backed off of governmentwide numerical targets for competitive sourcing. In July the administration abandoned its goal of opening 425,000 federal jobs to private competition in favor of letting agencies establish customized targets.

But GAO said that "OMB's revised goals continue to emphasize process milestones such as competitions completed more than enhancing value through performance improvements and efficiencies."

Federal employee unions said GAO's report puts teeth into their longstanding criticism of the competitive sourcing initiative. "It confirms what we've been saying for a long time about this initiative: that it is focused solely on the achievement of mandatory privatization quotas," said Jacqueline Simon, public policy director at the American Federation of Government Employees.

OMB is pressuring agencies to complete competitions without adequate staff or resources, said Matt Biggs, a spokesman for the International Federation of Professional and Technical Engineers. "The administration's intent is very clear," Biggs said. "The primary objective of the administration is to [privatize federal work], regardless of any proof of improvements in efficiency."

But industry groups said the GAO report should in no way slow the competitive sourcing initiative. The report merely points out challenges that agencies and OMB are encountering, said Cathy Garman, vice president for public policy at the Contract Services Association, and Stan Soloway, president of the Professional Services Council, an Arlington, Va.-based contractors association.

"Certainly some of the observations that GAO has made warrant further development and improvement," Soloway said. But none of GAO's findings are particularly surprising, he said.

The administration has spent the past few years focusing on "getting the process right," partly because unions and some lawmakers complained that the administration's job competition rules were skewed toward contractors, he said. Now that OMB has released revised guidelines in the May 2003 Circular A-76, the administration can begin to focus more on competition results and improvements in efficiency, he said.

Like federal employee unions, contractors are very interested in ensuring that agencies have adequate resources to conduct equitable competitions, Garman said. "We want [agencies to have] a trained acquisition workforce to put together good performance work statements and oversee contracts," she said. "You need a good agency [acquisition] staff."