A Bush administration plan to beef up the 1998 Federal Activities Inventory Reform (FAIR) Act will hinge on the government's public-private competition process, experts said Friday. In a recent memo, Office of Management and Budget Deputy Director Sean O'Keefe directed agencies to develop plans for competing at least 5 percent of positions listed on their FAIR Act inventories in the next fiscal year. The FAIR Act requires agencies to review their workforces each year and come up with lists of jobs that could be performed by contractors. O'Keefe's memo outlines two methods for opening up positions to the private sector: direct conversions, in which jobs are converted to the private sector without competition, and public-private competitions governed by OMB Circular A-76. But agencies could use the A-76 process to derail the Bush FAIR Act plan, critics and supporters of outsourcing agreed. A-76 competitions "are long, complex and expensive," said Wiley Pearson, a defense policy analyst with the American Federation of Government Employees. Pearson believes agencies that have long opposed outsourcing will use the A-76 process to keep jobs in-house. "The bureaucracy will slow roll [the administration] on this," he said. The Pentagon's use of "strategic sourcing" shows how agencies can use A-76-like processes to avoid commercial competition, added Stan Soloway, president of the Professional Services Council and deputy undersecretary of Defense for acquisition reform in the Clinton administration. Strategic sourcing refers to the gamut of internal restructuring, streamlining, downsizing and competitive techniques used to yield savings and improve performance. "A department has to be extremely vigilant so [A-76 processes] are not used as a tool to avoid competition," said Soloway. "I know of [Defense] facilities that have no intention of doing competitions." Agencies that do perform public-private competitions must complete them within fiscal 2002, according to the O'Keefe memo. This gives agencies roughly 18 months to launch and complete A-76 studies. But some A-76 competitions at the Pentagon have taken 36 months or more, according to a 1999 General Accounting Office Report. In its fiscal 2000 budget, the Department of Defense specified that competitions should be completed within 24 months. The Bush team's challenge is compounded by the large number of senior administration positions that remain unfilled, according to Allan Burman, president of Jefferson Solutions. Bush has yet to name a deputy director for management at OMB or a director of OMB's Office of Federal Procurement Policy, the lead office on the FAIR Act plan. But agencies that are slow to comply with Bush's outsourcing goals could be held accountable in the administration's fiscal 2003 budget, according to one expert. "I would not want to be the first agency to try that," said Carl DeMaio, director of government redesign at the Reason Public Policy Institute. "The budget process in [fiscal] 2003 provides structures for OMB to take corrective action for agencies that are not in compliance." O'Keefe has said the administration will pursue broad linkages between agencies' performance and funding in the fiscal 2003 budget. The O'Keefe memo requires agencies to compete at least 5 percent of all FAIR Act positions identified as being "commercial in nature," including positions that agencies have exempted from competition for various reasons, DeMaio said. Accordingly, agencies must compete 42,500 of the roughly 850,000 commercial positions on FAIR Act lists. "You want to cast the widest net possible," said DeMaio. "[Five percent] is not an unreasonable goal for year one." O'Keefe's memo reiterates the Bush administration pledge to open half of all commercial positions on FAIR Act lists to competition. President Bush affirmed his goal of de-layering federal management ranks at a press conference last week. While ruling out layoffs across government, Bush said agencies would not move to replace middle managers when they retire. "We've got to understand there is a huge middle layer of bureaucracies, and as people retire, we ask our Cabinet secretaries not to replace them, but to lean out their operations to use the new technologies of the 21st century to make their departments run more efficiently," said Bush. A Feb. 14 memo from OMB director Mitchell Daniels required agencies to include management de-layering goals in their annual performance plans due to Congress on April 3.
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