Out of Control Policy Blog

More on OMB FY04 Competitive Sourcing Report

As my colleague Geoff Segal noted last week, OMB recently released its Report on Competitive Sourcing Results, Fiscal Year 2004 (press release | full report). He noted that every dollar spent on competitive sourcing during fiscal 2004 will produce $20 in savings. Here are some other highlights from the report:

  • Public-private competitions completed in FY 2004 are expected to yield $1.4 billion in savings over the next five years, a 27 percent cost reduction for commercial activities (activities that could be done by the private sector) performed in government agencies compared to pre-competition costs.
  • In-house government sources won more than 90 percent of the positions competed.
  • Taxpayers save $22,000 annually for every job examined through competition (regardless of the ultimate provider), an 85 percent improvement from FY 2003 competition results. Some activities, including IT, maintenance and property management, logistics, human resources, and finance and accounting, saw significantly higher savings, ranging from $25,000 to $37,000 in annual per-job savings.
  • Agencies saved over $32,000 per job in competitions with two or more private sector bidders, while they only saved $18,000 per job in competitions when the private sector chose not to bid.

Sounds like good news to me. But apparently some aren't happy:

    To John Gage, president of the American Federation of Government Employees, the 90 percent win rate by federal employees means the government is wasting money to review jobs for privatization, only to keep them in-house. "It's time for OMB to stop frivolously spending hardworking American's money, and own up to its mistakes," he said.

    Both Gage and Colleen Kelley, president of the National Treasury Employees Union, said OMB overestimates savings.

    "Hundreds and sometimes thousands of federal employees are immediately and adversely impacted by the decision to conduct a competitive sourcing study," Kelley said. "Employees whose jobs are part of the study often opt for reassignments and early retirements, rather than wait for the outcome of the study. So even if the employees retain the work, many talented and experienced federal workers are no longer at their jobs."

If I were in a leadership position in a federal employee's union, I might take the alternative view that this report validates the competitive success of the membership. And if I were a union member, I might find it odd that my leaders were effectively downplaying my ability to compete and work in the taxpayers' best interest.

Leonard Gilroy is Director of Government Reform


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