Federal agencies and private contractors would compete for the right to perform any activity deemed not "inherently governmental" under a controversial proposal Congress is considering.
Federal managers are increasingly looking at outsourcing as a way to deal with downsizing demands and budget cuts; the Defense Department is putting up 150,000 to 200,000 jobs to public-private competitions over the next five years. But industry representatives and congressional Republicans say more government services need to be privatized.
Under the Competition in Commercial Activities Act, a draft House bill, and its Senate counterpart, the Fair Competition Act, agencies would be required to annually publish a list of activities which are not inherently governmental and which are performed by federal employees. They would then have to hold public-private competitions for those activities, and publish schedules for the competitions in agency performance plans developed under the Government Performance and Results Act. The bills would eliminate OMB Circular A-76, which governs public-private competitions. Industry representatives say the A-76 process favors government agencies.
When agencies chose to keep an activity in-house, contractors would be able to appeal the decision to the U.S. Court of Federal Claims.
At a joint hearing Tuesday of the Senate Governmental Affairs Subcommittee on Government Management, Restructuring and the District of Columbia and the House Government Reform and Oversight Committee Subcommittee on Government Management, Information and Technology, Sen. Sam Brownback, R-Kan., said he wants to move the Fair Competition Act to the Senate floor this session.
The new bills are watered-down versions of the Freedom from Government Competition Act, a bill sponsored by Sen. Craig Thomas, R-Wyo., last year that would have required all non-inherently governmental activities to be privatized without public-private competitions.
Industry representatives hailed the proposals as a step in the right direction at the hearing.
"Government managers who voluntarily decided to perform A-76's found it to be career-ending," said U.S. Chamber of Commerce representative Douglas K. Stevens, Jr., a partner in the Grant Thornton L.L.P. Management Consulting Group. "Since the legislation before us not only makes the competitions for the agencies mandatory with the force of law, but also provides for a schedule under [the Results Act], agencies will no longer be able to make excuses to Congress, and government managers will have the cover of a statutory mandate to perform the competitions."
But the Office of Management and Budget, the American Federation of Government Employees, the National Treasury Employees Union, the Federal Managers Association and Rep. Dennis Kucinich, D-Ohio, oppose the proposals.
"We cannot look to the corporate sector for democratic values," Kucinich said. "I see government employees as an extension of democratic values."
G. Edward DeSeve, OMB's acting deputy director for management, said the Clinton Administration shares "the goal of seeking the most efficient and cost-effective source for the provision of commercial support activities required by the federal government." But he added that "proposed legislation that would establish a new model of federal management must not be so general as to be meaningless to federal managers or so specific as to be inflexible and result in additional administrative burdens and delays."
Union representatives said the government already contracts out for services worth more than $110 billion per year, more than the payroll and benefits costs of the federal civilian workforce ($108 billion per year). They also said agencies lose billions of dollars every year because of contract mismanagement.
Former Office of Federal Procurement Policy Administrator Steven Kelman, now a Harvard University professor, said he was "surprised and disappointed" that union representatives said federal contract administrators weren't doing their jobs properly.
"I believe our federal workforce is perfectly capable of overseeing contracts," Kelman said.
Kelman also challenged Rep. Kucinich's assertion that privatization threatens good government.
"It's time to lower the level of rhetoric of outsourcing and contracting out," Kelman said. "It's not a question of big government/small government, nor is it a question of do you or don't you like the federal workforce. It is a good management principle to stick to your core competency."
The House and Senate versions are draft bills, and have not yet been introduced.
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