OMB directive may lead to more federal outsourcing

The Office of Management and Budget has ordered agencies to submit lists of jobs considered "inherently governmental" with their 2001 Federal Activities and Inventory Reform (FAIR) Act inventories, has learned. OMB's directive will likely cause agencies to put up more federal jobs for competition with the private sector, potentially leading to more outsourcing, according to one expert. The 1998 FAIR Act requires agencies to review their workforces each year and come up with lists of jobs that are "commercial in nature" and could be performed by contractors. Agencies submit their lists to OMB each June. OMB reviews the lists and then releases them to Congress and the public. In 2000, agencies listed 850,000 federal jobs that could be performed by contractors-about half of the federal workforce. Last month, O'Keefe directed agencies to put up for competition or outsource at least 5 percent, or 40,000, of those positions by October 2002. But in an April 3 memo, Office of Management and Budget Deputy Director Sean O'Keefe told agency chiefs that, this June, they must also submit a list of positions that they consider to be "inherently governmental." Government employees must perform inherently governmental jobs. One expert says the lists of inherently governmental jobs will allow OMB to better scrutinize the positions agencies classify as commercial. "I feel there is enormous room for reclassifying positions from inherently governmental to commercial," said Carl DeMaio, director of government redesign at the Reason Public Policy Institute. "Given what OMB has said, it's reasonable to assume the administration feels the same way. The end result will be that additional positions will be classified as commercial." OMB will not release agencies' lists of inherently governmental positions to the public, but will use the information during OMB's review of the commercial lists, according to O'Keefe's memo. While praising OMB's move to count inherently governmental jobs, contractors questioned the administration's decision to not release the lists to the public. Under the FAIR Act, contractors and other members of the public can formally challenge an agency's designation of jobs as either inherently governmental or commercial in nature. "I'm not clear why [the administration] is doing it that way," said Stan Soloway, president of the Professional Services Council. "[Viewing the lists] gives you a perspective that enables you to see from agency to agency how seriously they're taking the requirement." An expert on the history of contracting agreed. "From a truth in government perspective, it would seem axiomatic that the public should be entitled to see everything," said Dan Guttman, a fellow with the National Academy of Public Administration. "Why OMB would want to do this behind closed doors is beyond me." OMB officials did not respond to questions about the memo on Friday afternoon. OMB's directive is not the first time agencies have been asked to compile lists of their inherently governmental positions. In 1998, agencies submitted lists at the request of then-OMB Director Franklin Raines. The Department of Defense has compiled lists of its inherently governmental positions for the last three years. The O'Keefe memo also included an expanded list of function codes for use in the 2001 FAIR Act inventories. Function codes provide a standardized way for agencies to describe jobs on FAIR Act lists. OMB's revised list adds 224 new codes, providing more specific descriptions of activities than the previous list of function codes did.
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