Officials with the Army, Navy and Air Force told investigators that "they were not directed by and did not feel pressure from OMB" to hold job competitions, the report stated.
But top Army officials told the IG that they had difficulties implementing the competitive sourcing program, which has since been renamed commercial services management, and that the Office of the Secretary of Defense rejected requests for relief.
Instead, the Army was held to an annual target number -- the exact figure is redacted in the report -- of competitions, established by the DoD Business Initiative Council in fiscal 2003.
"The Army was undergoing many efforts that impacted competitive sourcing planning, such as base realignment and closure, growing the Army, and the war, making it difficult to effectively implement the program," the IG stated.
Competitive sourcing officials from the Army Materiel and Installation Management commands, the service's only two major commands that held competitions under OMB's Circular A-76 in 2008, told investigators they had no direct communication with OMB or the Office of the Secretary of Defense.
But, officials from both commands said the competitions "were announced as a result of pressure" to reach a pre-established target, set in the Army's program budget.
The pressure may have been the most acute at Army Installation Management Command bases in West Point, N.Y., and at Fort Leonard Wood, Mo.
Officials said the two bases asked supervisors to cancel several upcoming competitions because of the effect the efforts were having on their workforces and their ability to sustain operations. The garrison commander at Fort Leonard Wood said the base's population would increase by 11,000 because of base realignment and closure and that staff members were busy playing key roles in the Army's transformation and in the global war on terror.
"Therefore, it did not make good management or business sense to transition a trained, knowledgeable and highly motivated workforce during such a critical period," the IG said. "The garrison commander at Fort Leonard Wood stated that he was verbally told to continue with the public-private competition."
Navy and Air Force officials did not describe any similar influence although some noted there was pressure in the budget to conduct the competitions.
While the IG report did not back charges that OMB had placed undue influence on Defense to conduct competitions, some competitive sourcing critics remained unconvinced.
John Threlkeld, a lobbyist for the American Federation of Government Employees, a labor group that opposes the program, said OMB has a long record of applying pressure to the Pentagon and other agencies to hold competitions.
"There is no question that DoD tried to carry out OMB's direction into calendar year 2008," Threlkeld said. "However, because of a series of 'shocks to the systems' as well as the usual decline in influence that any administration's OMB would experience in its eighth year, that effort could not be sustained over the course of the year."
OMB declined to comment on the IG's report.
For years, labor unions and watchdog groups have accused the agency of setting quotas for job competitions.
In 2002, OMB directed Defense to conduct competitions on half of the jobs identified as suitable under the 1998 Federal Activities Inventory Reform Act. That goal later was revised, but the IG redacted information on the current goals and the number of jobs that have since been competed.
"In this instance, Paulie 'Walnuts' Gualtieri [of The Sopranos] is to Tony Soprano what DoD is to OMB," Threlkeld said. "Paulie may be the one collecting the protection money, but he is doing so at the direction of HBO's fictional suburban New Jersey godfather."
Despite the fingerpointing, the Bush administration's job competition program might be on its last leg.
The IG's report paints a bleak future for the program at the Defense Department. As of Oct. 14, 2008, the Pentagon had 39 ongoing job competitions for about 9,000 government positions, two-thirds of which were with the Navy. But military officials told the IG they had no intentions of announcing more competitions during the remainder of 2008.
The Army is not planning any further competitions through fiscal 2014. Figures for the Navy and Air Force were redacted in the report, but according to documents obtained by Government Executive, the Navy is planning to put 227 government jobs up for competition through 2014 and the Air Force will let the private sector bid on 2,141 positions.
In total, the Defense Department and all of its subagencies will hold contests for 10,798 jobs through 2014, according to the documents.
The Obama team has not discussed competitive sourcing, but most procurement experts expect the program to die a quiet death in the coming months.
The IG report was required under a provision in the fiscal 2008 Defense Authorization Act. The IG issued an interim report with similar findings in April 2008.