Buy Lines: Competitive sourcing ? Yeah, right

Stan Soloway

In October, the Agriculture Department issued a report on its competitive sourcing program, from which one could infer that competition at DoA is, indeed, DOA.

The agency reported studying nearly 2,000 positions, about half in the Forest Service and half in Job Corps centers. The streamlined process is designed for smaller government activities, and requires an agency to conduct meaningful business-case analysis to determine whether to keep work in-house, hold a public-private competition or compete the work among private-sector providers.

Nearly 95 percent of the positions were kept in-house at Agriculture. In none of the studies involving those positions does it appear that any form of real competition was used, although agency officials were quoted in the Washington Post Oct. 13, claiming great efficiencies would be achieved without any cost cutting.

This is remarkable, especially because of the highly commercial nature of the work; for example, scores of Job Corps centers are already successfully outsourced.

Agriculture is not alone. The Defense Department has performed 50 streamlined studies, and all but one remained in-house. The National Institutes of Health conducted 17 streamlined studies, and all remained in-house.

The federal unions claim the streamlined process is a political excuse to convert federal jobs to the private sector. Industry recognizes the logic of the process, and has focused more on accountability and oversight. A 95 percent win rate in either direction is a red flag that should raise concerns about the integrity of the process. If the win rate were 95 percent for the private sector, the unions -- perhaps fairly -- would be screaming to Capitol Hill.

The problems are not limited to the streamlined process. In two recent Army competitions, for example, two highly regarded providers of base operating support were deemed "technically unacceptable" and were eliminated from competition.

It's one thing to lose a competition for the right reasons. But it's highly suspicious when well-known, qualified bidders are arbitrarily eliminated without any discussion, especially when they are the only bidders and their elimination results in no competition.

Moreover, one industry review of 18 Army A-76 procurements revealed that half had either no bidders or no technically acceptable bidders. But the Army still got credit for doing "competitive" sourcing.

Similarly, according to an internal Navy report, that service has canceled 45 percent of its A-76 studies because of political pressure and field resistance. That same analysis documented that the Navy is saving an average of 43 percent through competitive sourcing and only 14 percent when competition is avoided.

Unfortunately, the evidence points to a significant vacuum when it comes to agency implementation of competitive sourcing. The public reporting of decisions and their rationale is almost non-existent, and no one is challenging agencies when their implementation results are so inexplicable. The Professional Services Council has asked agencies to explain these decisions, but to date has received no responses.

Even before the revised circular, few companies were willing to participate in these competitions. Recent history has done nothing to improve the credibility of the process, despite the positive changes to the circular.

Policy improvements are important, but execution is what really matters. As the General Accounting Office and others have noted, although the government has good oversight and insight into government contractor costs and activities, the same is not true of internal government operations. If the government really wants competition, that must change.

The success of competitive sourcing is tied directly to its credibility among all participants. For it to work, accountability, transparency and fairness must cut both ways. Without all three, the process is truly DOA.

Stan Soloway is president of the Professional Services Council. He previously served as deputy undersecretary of defense. His e-mail is soloway@

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