Daniels: Outsourcing a Top Administration Priority

The director of the Office of Management and Budget told an audience of federal services contractors the Bush administration is committed to expanding outsourcing of government services.


Speaking before the Contract Services Association of America July 17, Mitch Daniels said that moving non-core governmental work to more efficient private-sector companies typically has generated 30 percent to 45 percent in savings.


"Given the efficacy of these practices, it's a little sad you have spend half the time keeping them from being rolled back," he said.


Outsourcing, which administration officials prefer to call "competitive sourcing," is one of five priorities OMB is pursuing this year. Other priorities are tying budget decisions to program performance, addressing the needs of people, improving financial management and pursuing electronic government initiatives, Daniels said.


Daniels said he does not expect pending legislation that threatens to cut back or stop federal outsourcing to succeed. But OMB will rigorously monitor competition for federal services contracts to ensure they are fair and aboveboard, he said. He noted he will encourage successful competitors to share savings with their customer agencies.


"We want agencies to have incentives [to participate]," Daniels said. "It would not be wise to identify savings, and then immediately deduct them from an agency's budget."


Competitive sourcing is preferred in government circles to the more common industry term outsourcing, one of Daniels' aides said, because the goal is to foster competition, not simply to move jobs to the private sector.