Job competitions fall short of agency goals; OMB touts savings

Public-private competitions for federal jobs in fiscal 2007 are expected to yield almost $400 million in savings during the next five years, the Office of Management and Budget reported on Friday.

The slightly more than 4,000 jobs put up for competition in fiscal 2007 were a fraction of the 18,000 that agencies had planned to compete. But OMB continues to call its competitive sourcing effort "a real success." Its latest annual report on the initiative showed that for the fourth year in a row, agencies reported average savings of more than $25,000, or 25 percent, for each position studied.

Paul A. Denett, head of OMB's Office of Federal Procurement Policy, said the number of competitions and amount of money saved was particularly significant, given the obstacles to competitive sourcing. Democratic lawmakers and federal labor unions have strongly opposed the initiative.

John Threlkeld, a lobbyist for the American Federation of Government Employees, said, "We are pleased by OMB's complaints about how AFGE-inspired reforms have significantly reduced the number of federal employees subjected to privatization reviews. We're just sorry that we won't be able to hear this particular OMB complain again next year when we reduce that number even further."

OMB Deputy Director for Management Clay Johnson said agencies have carefully tailored their use of competitions to highly commercial activities that the private sector is equipped to perform, such as information technology services, logistics and accounting. In addition to paring down unnecessary positions, competitive sourcing instills in agencies a desire to increase efficiency, Johnson said.

"What agencies are beginning to do now is take this competitive sourcing-type expertise and applying it to noncompetitive sourcing opportunities," he said. "Agencies … are becoming more and more inclined and capable at determining what it takes to perform a certain function, and how it might be performed less expensively and more effectively."

Federal employees continue to win the majority of public-private competitions, though the percentage dipped in 2007. Employees won 73 percent of the work competed last year, compared to 87 percent in fiscal 2006.

Johnson and Denett said on Friday that projected savings from the competitions completed since 2003 total more than $7 billion. Taxpayers, they said, will receive a return of about $30 for every dollar spent on competitions, regardless of who ends up performing the work.

Denett sited the Social Security Administration as an example of an agency that has generated significant savings through competitions. He said the agency has validated almost $5 million in savings in the past year, which will be applied to addressing its growing disability claims backlog.

Labor unions strongly challenged OMB's savings claims. National Treasury Employees Union officials said OMB does not consider costs incurred by agencies before competitions are announced and uses an underestimated average salary for employees.

"It does not take a CPA to see that the mathematics here are fundamentally flawed," said NTEU President Colleen Kelley. "Very little has been done to validate agency cost savings numbers, and this report fails to take into account substantial costs, from staff time spent on competitions to loss of experienced employees and declining morale of employees whose jobs are being put on the auction block." Johnson and Denett said they will continue to push the initiative through the end of the Bush administration and possibly into the next administration. With budgetary conditions likely to remain extremely tight, Denett said he thinks competition is a necessity, not a political position.

"They may change the title, do some tweaking on the edges, but that core element of competition and reorganizing, coming up with most efficient organizations, that's here to stay," Denett said. "As long as people are looking to save money this has to make their list."

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