Let Industry Take the Stage

n this era of executive branch restructuring and downsizing, two questions arise: "Who's doing, and who should be doing, the work?" and "Is the government getting what it needs?" In many ways these issues are intertwined, and they pose interesting problems for those advocating a more responsive and effective government of the future.

In addressing these questions, it may help to see what has been happening to both federal employees and dollars. Most of us will agree that perusing the historical tables of President Clinton's 1999 budget is not preferred Saturday morning fare. Nevertheless, it's amazing what one can find with only minimal sleuthing.

Take budget table 8.8, which shows the outlays, or money spent, by the government as a result of congressional appropriations for such areas as defense or agriculture. Combined discretionary funding for defense and domestic programs fell from $534 billion in fiscal 1992 to $482 billion in fiscal 1997, a 10 percent drop. However, over the same period, domestic spending increased 6 percent, from $212 billion to $225 billion.

Now let's take a look at people. Budget table 17.1 provides the headcount of employees on the government's books as of Sept. 30, 1997. From fiscal 1992 to fiscal 1997, total employment fell from 2.22 million to 1.87 million, a drop of 350,000 employees. Overall, that represents 16 percent of the workforce. The last time employment levels were this low was during the Kennedy administration.

Who Should Do the Work?

What do these figures say? It appears that budgets are shrinking, but for domestic agencies, they are, in fact, growing. At the same time, agency staffs are shrinking significantly. Specifically, budgets for domestic agencies grew by 6 percent from fiscal 1992 to fiscal 1997, while their staffs decreased 10 percent. Moreover, budget projections through fiscal 1999 show continuing increases in domestic funding with domestic agency employment well below fiscal 1992 levels. This brings us back to the fundamental question. Who's going to do the work?

Some Congress members, backed by a large coalition of business associations, offer one answer: the private sector. Their legislative proposals, which are titled the Freedom from Government Competition Act (S 1724) and the Competition in Commercial Activities Act (HR 716), would require federal agencies to look to contractors for commercial-type services. The Procurement Round Table under Frank Horton, acting chairman and a former congressman, advocated a similar outcome in a recent report.

The notion of outsourcing government's commercial-type work is by no means foreign to President Clinton or previous administrations. President Eisenhower was first to establish a formal policy along these lines in 1955.

The policy was translated in the 1960s into what is now Office of Management and Budget Circular A-76. It sets the rules for determining which activities can be contracted, and in most cases it allows agencies to compete to retain the work. The regulation also provides a cost comparison methodology, which levels the playing field between government and private-sector bidders.

Outsourcing Needs a Boost

Administrations have long held that there is no need for new outsourcing laws. However, John Palatiello, executive director of the Management Association for Private Photogrammetric Surveyors and a leader of the new Coalition for Taxpayer Value, strongly disagrees. "If people are genuinely interested in a government that works better and costs less," he argues, "they should be supportive of this legislation."

Palatiello complains that agency management plans fail to take advantage of outsourcing techniques. Moreover, OMB circulars, as management guidelines, fail to offer potential private-sector bidders a right to take legal action if agencies don't comply with the rules.

Many laws have been passed over the years protecting government activities from being contracted out. The areas affected include military depots, firefighting activities and Veterans Affairs Department staffing. In Palatiello's view, without legislation to force agencies to conduct cost comparisons, nothing will happen. In spite of the cost benefits of competition, use of the OMB circular has been spotty at best, with virtually all of the recent outsourcing efforts concentrated in the Defense Department.

Given budget and employment trends for domestic agencies, I can only conclude that with or without OMB Circular A-76, more contractors are needed to help the government do its work. Some may lament this trend as producing a "shadow government" that is uncommitted to the nation's needs. Others may applaud the fact that government employees will no longer be doing work better performed by the private sector.

In either case, the question is: Are agencies prepared to redefine their role from running the show and doing the work to better identifying requirements and desired outcomes, and seeing that contractors are performing effectively?

Allan V. Burman, a former Office of Federal Procurement Policy administrator, is president of Jefferson Solutions in Washington.