Agencies struggle to meet goals on opening work to contractors

OMB's Clay Johnson said lobbying by labor unions has hobbled competitive sourcing effort. OMB's Clay Johnson said lobbying by labor unions has hobbled competitive sourcing effort. Richard A. Bloom/National Journal
Agencies are struggling to make progress on President Bush's initiative to open federal jobs to bids from contractors, according to a new quarterly score card released by the Office of Management and Budget Monday.

The assessment for the third quarter of fiscal 2007, which ended June 30, showed five agencies with with one-level drops in their competitive sourcing grades and a sixth with a two-level downgrade. The score card gives agencies traffic-light-style ratings of red for "unsatisfactory," yellow for "mixed results" and green for "success."

The Agriculture, Labor, State and Transportation departments went down to yellow marks in competitive sourcing, while the Housing and Urban Development department moved down one notch and the Energy Department, two, to red. Only one agency -- the Homeland Security Department -- improved in that area, from red to yellow. Nine of the 26 agencies graded remained at green.

Competitive sourcing, which asks agencies to create inventories of work that could be performed by the private sector and open some of those jobs to bids, had by far the most movement of the five main President's Management Agenda initiatives graded on the score card.

At a roundtable discussion Monday, Clay Johnson, OMB's deputy director for management, said competitive sourcing has come up against legislative resistance since the Democrats took control of Congress. He said he knows members of Congress and their staffers hear a lot about the initiative from labor unions, which generally oppose it. OMB must do a better job to make its case in favor of the effort, he said.

"We're seeing more prohibitions being proposed for different agencies now than in the past, and we attribute that to continued high levels of lobbying by labor unions and more receptivity by Congress because of the change in leadership," Johnson said. "We have to increase our abilities and our energies and make sure we're being as effective as we can be to make sure the members of Congress understand the truth -- the facts about what we call competitive sourcing."

OMB released a sheet seeking to counter what it called "myths" about the initiative, including the belief that it is "a scheme to get rid of federal employees" and that it "doesn't save any money."

"A lot of the myths that we keep hearing about energize the Congress and embolden them to put more poison pills in various legislative packages," said Paul Denett, administrator of OMB's Office of Federal Procurement Policy.

Federal employee unions such as the National Treasury Employees Union and the American Federation of Government Employees have long spoken out against competitive sourcing. NTEU has its own fact and fiction sheet, arguing that it doesn't really save money and brings "major layoffs."

AFGE, a spokeswoman said, "has lobbied aggressively to achieve a level playing field for federal workers and will continue to work to make sure the privatization process is fair."

Jonathan Breul, executive director of the IBM Center for the Business of Government, said that while the competitive sourcing initiative is "relatively agnostic" about whether jobs are performed in agencies or by companies, unions have successfully painted the initiative as shifting jobs away from government to the private sector.

"Many of the legislative restrictions have been supported on the grounds that the initiative is a contracting out initiative…" Breul said. "Framed as a contracting out issue, I think the unions have the upper hand at the moment."

The latest score card also debuted two new management initiatives. The first is designed to make sure agencies that lend money know who their target borrowers are, verify the eligibility of potential borrowers, monitor the risk of their lending portfolios and collect on debt, said Robert Shea, OMB associate director for management.

Of the six agencies to which the improved credit management initiative applies, all started with a score of red except the Treasury Department, which was yellow.

"We've set pretty ambitious criteria to measure success; that's why you see us starting with some pretty low scores," Shea said. "But the agencies have really embraced the initiative and have aggressive plans to improve their lending portfolios."

The second new initiative aims to improve the quality and accessibility of health-related information. Tim Young, associate administrator for OMB's Office of E-Government and Information Technology, said the effort is designed to "encourage and enable the interoperability from the IT perspective of health information across health programs" and to improve transparency by promoting consumer access to health care pricing and quality data.

All four health agencies participating earned red scores to start.

Johnson said he feels confident that the addition of new initiatives will not dilute the importance of the original initiatives and said the new efforts are important enough to the agencies involved to warrant additional work.

For the most part, these new initiatives will involve different people and different subsets of agencies than other initiatives, he said, but "we recognize their importance and whether it's extra work for some people or not, it's something that needs to be done."

Breul said the new initiatives will likely clarify or redirect emphasis and are not major departures from previous areas of focus.

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