In a possible setback for one of President Bush's signature government reforms, the Defense Department does not plan to meet Office of Management and Budget targets for opening federal jobs to the private sector, according to Pete Aldridge, undersecretary of Defense for Acquisition, Technology and Logistics. In a Dec. 26 letter obtained by Government Executive, Aldridge told OMB Deputy Director Sean O'Keefe that the Pentagon would develop its own strategy for increasing efficiency through its Business Initiatives Council. OMB targets for competitive sourcing limit the Pentagon's manpower strategy, which is still evolving after the latest Quadrennial Defense Review, he said. "The QDR altered our defense strategy and placed particular emphasis on homeland defense. The effect of these actions on our manpower structure is still under review," he said. "Rather than pursuing narrowly defined A-76 targets, we propose to step back and not confine our approach to only A-76." But OMB still plans to hold Defense to the competitive sourcing targets, according to an OMB official who requested anonymity. "We have a presidential goal here, and we fully expect [Defense] to try their best to meet their goals." The Aldridge letter is part of the back-and-forth that usually occurs as agencies decide how to comply with new guidance, he said. OMB considers Defense a participant in its competitive sourcing program, the official added. Through guidance released last year, OMB directed agencies to directly outsource or hold public-private job competitions on a cumulative 15 percent of all federal jobs considered commercial in nature by the end of fiscal 2003. In October, OMB said that all agencies would eventually be required to compete 50 percent of their commercial jobs. Angela Styles, administrator of OMB's Office of Federal Procurement Policy, has said agencies can miss these targets in the short term if they develop competitive sourcing programs. Until now, no agency has said it will not try to meet the OMB targets. The Pentagon plans to create its own program that examines outsourcing alternatives for all non-core missions, including those performed by military and contractor personnel, according to Aldridge. "Our preferred approach, as discussed in the QDR, involves emphasizing divestitures of non-core missions, regardless of who is performing them, whether military, civilian employee or contract employee," said Aldridge. "Because gaining overall efficiencies is even more crucial since September 11, we will expand our focus to generating savings, not just taking manpower reductions." The OMB official said this approach is consistent with the Bush competitive sourcing plan. "We certainly leave it to agencies to decide on various reengineerings and so forth if that's what they believe is in their best interest as it relates to all five of the President's management agenda items," said the official. The American Federation of Government Employees, which represents more than 600,000 federal employees, hailed the Pentagon letter as an indictment of OMB's competitive sourcing plan. "I think it proves the point that we've been making all along, which is the privatization quotas represent a one-size-fits-all approach that often interferes with agencies' missions," said John Threlkeld, legislative representative with AFGE. "We think this will embolden agencies to reject the quotas." But Threlkeld emphasized that Defense should give federal employees the chance to compete for their jobs and not arbitrarily shift work to the private sector. Paul Light, director of governmental studies at the Brookings Institution, said the Pentagon's move weakens OMB's already fledgling management agenda, which lacks a leader now that O'Keefe has left OMB to be NASA administrator. "Defense is basically saying we're not going to follow your order," he said. "That's an implicit gesture that shows OMB it doesn't have much leverage in Washington on management right now." OMB replied by reiterating its support for public-private competition. "At least it offers important protections to federal employees that many people are looking for," said the official. OMB Director Mitch Daniels remains in charge of the management plan, the official added. "The management agenda has never been stronger," he said. OMB and Defense have haggled over other aspects of the competitive sourcing initiative. OMB has yet to release the Pentagon's Federal Activities and Inventory Reform (FAIR) Act list for 2001, which lists Defense jobs that could be performed by private firms. OMB released all other FAIR Act lists last year. Under the OMB competitive sourcing plan, Defense is required to compete 10 percent of all jobs on its 2001 inventory. On Monday, Styles said OMB and Defense have yet to reach agreement on the composition of the inventory.
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