Federal Panel Recommends Overhaul of Federal Privatization Process

Suggestions for public-private competition, outsourcing

Over the objections of public employee unions, the federal Commercial Activities Panel released its final report on April 30th, recommending a radical overhaul of the federal privatization process to make it easier for agencies to conduct competitions to see if services should be provided by government workers or private firms.

Two years ago, Congress ordered the General Accounting Office to convene an expert panel to recommend changes in how the federal government conducts public-private competitions and outsourcing. The report did what many who watched the process expected and recommended scrapping the OMB Circular A-76 process for competitions and replacing it with the best-value competition process based on Federal Acquisition Regulations Part 15.

For more information on the report and related issues:
News Articles and Commentary on the Report:

The report was much awaited by federal agencies, because President Bush has set ambitious goals for federal agencies to use competitions to improve services. The President’s Management Agenda is a set of initiatives designed to improve the management of federal agencies by adopting performance-based criteria for decision making and action, and ultimately tying performance to budget appropriations. The Agenda includes a set of goals for “competitive sourcing,” the most important of which is asking federal agencies to subject 50 percent of all commercial positions identified in their annual FAIR Act inventories to competition from the private sector over the next four years. That is over 400,000 positions

The competition approach recommended by the panel allows performance-based, best-value competitions in a way the old A-76 process does not, giving federal agencies and the Office of Management and Budget a basis for using performance criteria to drive competitions and outsourcing decisions. Such a flexible competition process, mixing low cost and improved quality under a best value outcomes structure, is exactly the way best practices in competition and outsourcing are going in the private sector and among state and local and overseas governments.

A supermajority of the panel (8 out of 12 members) endorsed the report and most of the recommendations only require administrative actions. The head of the Office of Federal Procurement Policy, Angela Styles, says they have already begun acting on the panel’s recommendations and that new federal competition guidelines will be ready within a year.

The most significant legislative changes recommended are repealing a statute that prohibits the Department of Defense from using the kind of best value competition approach the panel recommends.

Not surprisingly, the public employee union members of the panel did not endorse the report and have vowed to fight the changes it recommends, beginning in Congress to stop any effort to remove the restrictions on the Defense department.

The panel’s report has not ended any debate, but has moved it to the next phase. Many in Congress and elsewhere who have equivocated on federal privatization issues may now come down off the fence and chose sides. Now the fun begins.

Adrian Moore is Vice President of Reason Foundation.

Adrian Moore

Adrian Moore, Ph.D., is vice president of policy at Reason Foundation, a non-profit think tank advancing free minds and free markets. Moore leads Reason's policy implementation efforts and conducts his own research on topics such as privatization, government and regulatory reform, air quality, transportation and urban growth, prisons and utilities.

Moore, who has testified before Congress on several occasions, regularly advises federal, state and local officials on ways to streamline government and reduce costs.

In 2008 and 2009, Moore served on Congress' National Surface Transportation Infrastructure Financing Commission. The commission offered "specific recommendations for increasing investment in transportation infrastructure while at the same time moving the Federal Government away from reliance on motor fuel taxes toward more direct fees charged to transportation infrastructure users." Since 2009 he has served on California's Public Infrastructure Advisory Commission.

Mr. Moore is co-author of the book Mobility First: A New Vision for Transportation in a Globally Competitive 21st Century (Rowman & Littlefield, 2008). Texas Gov. Rick Perry said, "Speaking from our experiences in Texas, Sam Staley and Adrian Moore get it right in Mobility First." World Bank urban planner Alain Bartaud called it "a must read for urban managers of large cities in the United States and around the world."

Moore is also co-author of Curb Rights: A Foundation for Free Enterprise in Urban Transit, published in 1997 by the Brookings Institution Press, as well as dozens of policy studies. His work has been published in the Wall Street Journal, Los Angeles Times, Boston Globe, Houston Chronicle, Atlanta Journal-Constitution, Orange County Register, as well as in, Public Policy and Management, Transportation Research Part A, Urban Affairs Review, Economic Affairs, and numerous other publications.

In 2002, Moore was awarded a World Outsourcing Achievement Award by PricewaterhouseCoopers and Michael F. Corbett & Associates Ltd. for his work showing governments how to use public-private partnerships and the private sector to save taxpayer money and improve the efficiency of their agencies.

Prior to joining Reason, Moore served 10 years in the Army on active duty and reserves. As an noncommissioned officer he was accepted to Officers Candidate School and commissioned as an Infantry officer. He served in posts in the United States and Germany and left the military as a Captain after commanding a Heavy Material Supply company.

Mr. Moore earned a Ph.D. in Economics from the University of California, Irvine. He holds a Master's in Economics from the University of California, Irvine and a Master's in History from California State University, Chico.