Alternative to traditional job competitions emerges

Federal employees who face the prospect of losing their jobs to private firms might be able to keep them under a new process developed by the Interior Department that may spread to other agencies.

The Interior plan gives agencies a new option for holding public-private competitions on functions involving 10 or fewer federal employees. Currently, agencies may directly convert such small functions to the private sector without giving civil servants a chance to compete for their jobs. Interior's plan, by contrast, would allow federal employees to keep their jobs if they could perform the work at a lower cost than private firms.

The Bush administration has directed agencies to put 15 percent of federal jobs considered commercial in nature up for competition by October 2003. Agencies may use the process developed at Interior as one way to comply with this mandate, said Jack Kalavritinos, associate administrator of the Office of Federal Procurement Policy at the Office of Management and Budget. But he cautioned that agencies must also use public-private competitions and direct conversions to meet the Bush mandate.

"If [agencies] desire to use this plan fits into a reasonable mix of competition and direct conversion agency-wide, we'll look favorably upon that," he said.

Designed to take two months or less, Interior's process could be especially useful to civilian agencies, many of which feel that the existing methods of public-private competition described in the Supplemental Handbook to OMB Circular A-76 do not fit their needs. Full public-private competitions, which can involve hundreds of federal employees, are difficult for Interior to hold because it lacks sites with dozens of similar jobs that could be competed with the private sector.

Interior is also reluctant to meet the OMB target entirely through direct conversions because it would hurt morale at the agency, according to Michael Del-Colle, director of Interior's competitive sourcing office.

"The methodologies typically available in the [OMB Circular A-76 Supplemental] handbook--full studies, streamlined studies, or direct conversions without further consideration--don't appear to meet our culture and our commitment to our employees very well," he said. "So part of our intent here is to provide our managers with a tool they can use to consider the 10-or-less situation without making that pre-emptive decision to contract."

The crux of Interior's plan is a cost comparison between the existing in-house workforce and private sector firms performing similar work. Under Interior's model, in-house employees would not be required to streamline operations and create a "most efficient organization," as required under a traditional A-76 competition. Instead, officials would simply add up what it costs for current employees to do the work in question. Then they would compare that to the cost of four private sector contracts selected through market research.

If the in-house cost falls within the range of costs represented by the private sector contracts, Interior would use a series of non-cost factors to decide who wins. Such factors could include trends in turnover and performance of in-house employees.

Including these factors means that many decisions could be made by factors besides low cost, according to Del-Colle.

"It's consistent with the idea of best value," he said.

The plan drew a mixed review from an official of the largest federal employee union, the American Federation of Government Employees, who said it represented an improvement on direct conversions but still falls short of true public-private competition. "The good part is that [agencies] are encouraged to make their decisions on the basis of cost," said Jacque Simon, director of public policy at AFGE. "The bad part is that it's contracting out without public-private competition."

Interior will soon post a copy of the plan on its competitive sourcing Web site.

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