OMB predicts victory in A-76 battle

Highlights of the new process

OMB Circular A-76 sets out rules for public-private competition of federal jobs. Before this year, the circular had not been significantly revised since 1983. The new circular reflects major changes to the competition process, which include:

  • Permission for agencies to consider "best value," rather than lowest cost, when choosing a winning bidder. In most cases, cost must account for 50 percent of source selection decision.

  • Elimination of a provision that allowed agencies to convert 10 or fewer full-time positions to the private sector without competition.

  • Elimination of two-phase competition under which the government bidder was guaranteed a place in the final competition. Now government and industry compete directly, and both government and private-sector bidders can be excluded if their proposals are deficient.

  • A shortened timeframe for competitions.

  • A requirement that the agency determine if performance meets requirements before exercising options.

  • Centralized oversight and expanded reporting of results.

"Our challenge is to make sure the House and Senate are well-informed ... I believe a majority of them will vote not to halt competitive sourcing." ? Clay Johnson III, OMB

Henrik G. de Gyor

Josh Bolten, OMB director

Rep. Chris Van Hollen, D-Md., said the new A-76 process for public-private competition is rigged against federal employees.

Dan Gross

Congressional opposition catches White House by surprise

A top White House official predicts that Congress ultimately will back the administration's new policy for public-private competitions of federal jobs, despite signs of growing opposition among lawmakers.

In recent weeks, lawmakers in both the House and Senate have attached anti-competitive sourcing amendments to a half dozen spending bills. Although the amendments have yet to be approved by Congress, they have raised industry fears that outsourcing could be dramatically scaled back.

But Clay Johnson III, deputy director for management in the Office of Management and Budget, said President Bush's competitive sourcing agenda is not in jeopardy.

"We are beginning to implement a lot of competitions," Johnson said. "Our challenge is to make sure the House and Senate are well-informed about these matters. I believe a majority of them will vote not to halt competitive sourcing."

Opposition to the OMB Circular A-76 process for public-private competitions, which was finalized in May, was expected. Federal employee unions have resisted such competitions, which can result in the outsourcing of federal jobs to the private sector.

But the unions' success in getting a wide range of support among lawmakers caught the administration off guard, industry officials said.

Angela Styles, who Sept. 15 left her post as administrator of the Office of Federal Procurement Policy, had been the administration's chief advocate for competitive sourcing. With her departure, White House officials at the highest levels now must start lobbying Congress if they want to save the competitive sourcing plan, industry officials said.

[IMGCAP(2)]"This is going to have to become a Clay Johnson, Josh Bolten issue," said Stan Soloway, president of the Arlington, Va.-based Professional Services Council, which supports the president's plan. Bolten is OMB's director.

OMB officials have no plans to revise or backtrack on the new A-76 process, Johnson said. Instead, they intend to focus their efforts on persuading federal employees and lawmakers that this is the best plan for government and its workers.

"We need to do a better job explaining to employee groups and members of Congress what competitive sourcing is all about, the fairness of the process and what it costs to conduct these competitions," Johnson said.


The administration's plan calls for competing more than 400,000 government jobs that are commercial in nature. The officials said they don't care who wins; they just want the best value for the taxpayer.

They said the new A-76 process for competing the jobs is fairer to government employees than the old one. The new process also allows agencies to consider "best value," rather than lowest cost, when choosing a winning bidder.

As soon as the new competition process was finalized in May, federal agencies began announcing new competitions of government jobs. Just as quickly, union leaders called the new process unfair to federal employees, and so they began supporting amendments to spending bills that would halt public-private competitions.

The amendments include a provision added to the Interior Department and Forest Service's fiscal 2004 funding bill that would block funding for new public-private competitions next year.

Another provision, added to the Agriculture Department funding bill, would halt spending on job competitions and completion of job inventories until the department provides information on its "contracting out policies, including agency budgets for contracting out."

An amendment added to the Transportation-Treasury spending bill would prevent all federal agencies from using the new Circular A-76 to compete government jobs. Agencies would have to use the old circular.

This strategy of fighting competitive sourcing through attachments to spending bills represented a shift from recent years, when the unions threw their support behind new legislation, such as the Truthfulness, Responsibility and Accountability in Contracting Act. The TRAC Act would have temporarily suspended all outsourcing, and thereafter would have required any outsourcing to be based on a public-private competition.

Congress never approved the TRAC Act, and similar language attached to an acquisition reform bill was defeated along party lines. So the unions turned to spending bills, said John Threlkeld, legislative representative for the American Federation of Government Employees, which represents 600,000 federal and District of Columbia workers.

"Appropriations bills are great vehicles because they have to pass," Threlkeld said. "The prospects for TRAC in a Congress -- which has been supportive but is becoming less so -- are not good, so with a targeted approach we seem to be having some success. At least we're making the contractor lobbyists work."

By targeting spending bills, Soloway said, the unions are engaged in "guerrilla warfare" that has the White House and its industry supporters scrambling to keep up with the multiple attacks.

These attacks against A-76 are often misleading, industry executives said.

[IMGCAP(3)]For example, Rep. Chris Van Hollen, D-Md., who sponsored the Transportation-Treasury amendment, said the new process is rigged against federal employees, in part because it no longer requires private contractors to show a 10 percent or $10 million savings over the federal employees' bid before work is sent to the private sector.

The circular "does not require contractors to at least show as part of their bids that there are going to be appreciable savings," Van Hollen said in House debate.

Actually, the new circular states that the conversion differential is not required on competitions of less than 65 positions; but on larger competitions, the incumbent contractor must include the differential in its bid. The incumbent contractor could be a private contractor or federal employees.

OMB's Johnson said he believes there's a lot of misinformation about competitive sourcing, and that much of it is "honest misinformation" that can be corrected by talking with lawmakers.

The unions show no sign of giving up the fight against the administration's plan, however.

Threlkeld said the 220-198 House vote in favor of the Van Hollen amendment repudiated the administration's competitive sourcing agenda and "gives OMB an opportunity to come back with a more fair and balanced process."

But Johnson said the administration doesn't plan to revise the circular. A return to the old circular, which the Van Hollen amendment calls for, "is a vote for unfairness," he said. "The push to go back to the old circular is not to make it fairer for employees, it's to stop the [competitive sourcing] process."

Staff Writer Gail Repsher Emery can be reached at

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