OMB readies new guidance on measuring job competition savings

An administration official acknowledged Wednesday that measuring the savings that result from public-private competitions for federal work is not "a precise science," and said agencies can expect new guidance soon.

During a session at the Excellence in Government conference in Washington, Office of Management and Budget Associate Administrator Mathew Blum said the administration would soon publish guidance on cost and performance validation following competitions run under OMB's Circular A-76. The two-day conference is sponsored by Government Executive.

"We recognize that this is not going to be a precise science," Blum said. "We do ourselves a disservice if we spend too much time arguing about the precise formula for savings." He said that cost and performance validation are important but costly, and OMB will be looking for data on a sampling of competitions, rather than on each one.

A winning in-house bid is governed by a contract-like "letter of obligation" that describes the price and level of performance expected from the new team, and Blum said agencies that are having the most post-competition success use reasonable "give and take" in modifying that letter and "thinking about additional necessary changes."

He said that in implementing a winning in-house bid to perform work through a so-called "most efficient organization," agencies must be flexible and use reasonable judgment to make changes, like budget-neutral personnel swaps that respond to realities on the ground.

The idea that flexibility is needed after a competition stands in contrast with the competition itself, which is characterized by strict rules for how the public and private-sector teams must prepare bids. As Congress has passed laws limiting the use of competitive sourcing, those bids are increasingly based on rigid cost comparisons. At some agencies, for example, bids must eliminate any advantage to private companies that might accrue from offering cheaper health benefits than those enjoyed by federal employees.

Blum said OMB soon will release its analysis of competitive sourcing activities in fiscal 2006. That analysis found that public-private competitions completed last year will save taxpayers $800 million over the next five years, he said.

He said OMB also is working on guidance for agencies on the designation of "high-performing organizations," discrete units much like the most efficient organizations that show particular success.

Some agencies have used the process of creating a high-performing organization as a way to sidestep the costly and time-consuming competitive sourcing process by completing much of the internal analysis and reengineering typically done by in-house teams in putting together a bid. Blum said the process could be useful as an alternative to public-private competitions, especially in cases where there is limited commercial interest in vying for work, or where the commercial aspects of a job are so closely tied with core governmental functions that they are difficult to separate.

During the presentation, panelists discussed the future of competitive sourcing, which some observers said had lost momentum even before Democrats took control of Congress and made pledges to further restrict it.

Glenn Perry, senior procurement executive with the Education Department, said the competitive sourcing process has been useful in forcing the agency to quantify what a particular group of employees does and come up with performance metrics by which to judge success. "I would hate to lose that," he said.

Blum said the administration is very committed to the process, but there could be additional limitations imposed on the dollar values and types of activities competed.