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Competition
is key to managing the performance of federal commercial activities.
And the Administration's competitive sourcing program is under attack.
The
Reason for Competition
- Since
1955 it has been federal policy to utilize the private sector
to deliver commercial services. Congress furthered this policy
in 1998 with the Federal Activities Inventory Reform (FAIR) Act,
requiring agencies to inventory commercial activities each year.
- Federal
agencies under the Clinton administration performed the first
FAIR inventory, identifying 850,000 commercial positions. These
jobs-making maps, writing software, mowing lawns and others from
high tech to the routine-are done every day by private firms,
including small businesses, across the United States.
- President
Bush's Management Agenda set the goal of having half of the commercial
activities performed by federal agencies face competition over
the next four years. Competition is a reform tool effectively
used, not just by Republicans, but by Democrat mayors in Philadelphia
and Chicago, and Democrat governors in Georgia and Arizona.
The
Results of Competition
- Research
by GAO, the Center for Naval Analysis, and many other sources
shows typical savings from competition are around 30 percent.
- Under
new OMB guidelines for competitive sourcing, winners are chosen
by who offers the "best value," meaning the best combination
of performance and low cost, so the outcome is not just reduced
costs, but improved performance for the taxpayers.
-
Research by GAO, DoD, the National Commission on Employment Policy
and others show that federal workers win competitions about half
of the time, and when they do lose the majority go to work for
the contractor or shift to open positions elsewhere in the federal
government. Typically 7 percent or less are laid off.
EXAMPLE:
In 2002 OMB decided to use competition in response to poor performance
by the Government Printing Office and offered the job of printing
the fiscal 2004 federal budget to competitive bidding. GPO turned
in a bid that was almost 24 percent lower than its price from
the previous year in order to keep its job. That was $100,000
a year that GPO could have saved taxpayers any time it chose,
but it never chose to do so until it was forced to compete.
The
Bottom Line
- Competition
of commercial activities improves the performance of federal agencies
and reduces costs to taxpayers while giving federal workers a
fair chance to show if they can deliver results.
- We
should resist efforts by some to shield favored commercial activities
from competition. Let the results of competition determine the
right way to deliver services.
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