Energy weighs freeing feds from competitive sourcing agreements

At least one agency is preparing for the possibility that a program allowing private sector companies to bid on work performed by federal employees is on its last legs.

The Energy Department last month offered to consider terminating six contractual arrangements signed by representatives of federal employee teams that won public-private job competitions, according to an internal memorandum obtained by Government Executive. The arrangements -- called letters of obligation -- are similar to the contracts private sector companies would sign if they prevailed.

An Energy official familiar with the July 13 memo said no decision has been made on whether to terminate any letter of obligation. The source said a mid-level staffer issued the memo in response to questions about the state of public-private competitions, given a legislative moratorium on new contests and an ongoing Obama administration contracting review.

"We are just trying to be proactive and get the information out there to folks and make them knowledgeable of where we are currently and what the prospects are for the future," the official said. "I think it's prudent for folks involved in managing these programs that may be affected be kept up-to-date and educated about what potential decisions may have to be made in the future."

The memo gave federal employee teams -- known as most efficient organizations -- the choice of continuing to operate under the terms of the letters or providing by July 27, 2009, a justification for terminating the agreement. It is not clear how many teams sought to end their letters of obligation.

"This option will reduce the requirement for tracking and reporting," wrote Jeff Davis, who works in Energy's Office of Procurement and Assistance Management, in the memo. "Second, it will free up resources such as the residual organization to focus on other priorities." The residual organization manages work that cannot be performed by the contractor or federal employee team, including oversight.

The Office of Management and Budget's Circular A-76, which contains the rules for public-private competitions, allows agencies to cancel letters of obligation for reasons other than failure to perform, including the elimination of an agency requirement through divestiture, privatization, reorganization, restructuring, national defense or homeland security, according to the memo.

"If you want to terminate the LOO, we will need your justification," Davis wrote. "In many cases, reorganization may be the best reason, especially if you are considering adding, deleting or clarifying tasks, which then affects the staffing. If you have considered becoming a high-performing organization and it requires a different staffing mix, reorganization may again be the best approach."

The Energy official said many of the agreements at issue are five to six years old and could expire within the next several years. The source stressed agency employees are not in danger of losing their jobs if the letters of obligation are terminated.

Union officials representing Energy employees were not familiar with the memo.

Until a decision has been made to permanently cancel public-private job competitions, the program is alive and well, the Energy official noted.

The 2009 omnibus appropriations bill prohibited using funds to hold job competitions until the fiscal year ends Sept. 30. An amendment to the fiscal 2010 Financial Services spending bill, sponsored by Sen. Barbara Mikulski, D-Md., would continue that ban for another year. The bill, which also contains a provision that would require agencies to take an inventory of jobs being performed by contractors to determine if any work was improperly outsourced, passed the House but awaits a vote in the full Senate.

The language in Financial Services bill closely mirrors legislation Mikulski introduced in April. That bill, which has stalled in the Senate Homeland Security and Governmental Affairs Committee, would bar competitions indefinitely until the director of OMB and inspectors general of the five largest agencies determined that "substantial progress" had been made leveling the playing field for federal employees.

In addition to the legislative developments, President Obama in March ordered OMB to undertake an in-depth review of the government's contracting efforts, including the outsourcing of work historically performed by federal employees. The administration last month instructed agencies to begin building up their in-house capacitates, rather than relying excessively on contractors.

A Senate source familiar with the bills said the administration has been kept in the loop about the provisions and they "would not handcuff" OMB in conducting its contracting policy review. The administration is scheduled to release final outsourcing guidance in September.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.


When you download a report, your information may be shared with the underwriters of that document.