Agencies reject challenges to outsourcing lists

Only about 6 percent of challenges to the largest federal agencies' 1999 Federal Activities Inventory Reform (FAIR) Act lists were successful, according to a new General Accounting Office report.

Last year the 24 largest federal agencies identified approximately 900,000 jobs that could potentially be outsourced under the 1998 FAIR Act, which requires agencies to annually review their workforces and submit lists of jobs that are commercial in nature to the Office of Management and Budget. Once the lists are made public, interested parties can challenge and file appeals of jobs left on or off the lists. (For an updated database of agency job lists, see's FAIR Act Report.)

Altogether, 332 challenges and 96 appeals were filed last year. Of those, only 20 challenges and three appeals were successful, according to the report, "Competitive Contracting: Agencies Upheld Few Challenges and Appeals Under the FAIR Act" (GGD-NSIAD-00-244).

"Although the challenge and appeal process did not result in significant changes to agencies' inventories, the process served a broader purpose by identifying the need for greater clarity in agencies' inventories," GAO said.

Contractors' challenges were often outside the bounds of the law, which only provides for challenges to the inclusion or omission of jobs on the lists, GAO found. In fact, two-thirds of the challenges weren't legally valid. For example, the Professional Services Council (PSC), which represents federal contractors who provide professional and technical services, last year sent a blanket challenge to OMB complaining about its general lack of oversight of the FAIR Act process.

PSC's complaints were echoed by many contractors. The most frequent complaint, which 84 of the 105 industry challenges raised, was about OMB's reason codes, which outlined reasons why agencies did or didn't think jobs on the lists should be considered for outsourcing at the time. Contractors complained that agencies did not explain why certain reason codes were used. OMB revised its guidance this year to make the FAIR Act lists more comprehensive, understandable and easily accessible, but admitted that there is still room for improvement.

The Defense Department is the agency most likely to use the FAIR Act for its intended purpose, the report said. DoD, which included more than 500,000 jobs on its 1999 inventory, has used its list to identify jobs that could be put up for competition to the private sector. The civilian agencies that GAO reviewed instead used their FAIR inventories to make more informed management decisions or to improve their lists.

While the FAIR Act doesn't specifically state that the job lists are to be used as a basis for outsourcing, the inventories should help agencies review their operations and use their resources more efficiently, GAO said.

"It will require a sustained leadership effort on the part of OMB to help ensure that agencies review their inventories and identify opportunities for better using agency resources, by, for example, subjecting activities to competition," the report said.

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