To date everyone has been talking about theory, I want to provide a little perspective to what this means. The 30 percent figure is thrown around as potential cost savings from competition – let’s assume that this figure is off by a margin of 50 percent and that savings are truly only 15 percent. The National Parks Service, which has 16,000 employees has identified approximately 2,200 positions that are commercial in nature – competing only 20 percent of those would result in savings of $6.6 million in the first year alone (assuming that NPS spends $100,000 on the average position – which is total NPS spending on a per FTE basis). The savings seem small, however, this only represents NPS competitive sourcing efforts – the savings are much, much higher if you incorporate the entire Department of Interior competitive sourcing plan. With that said though, these savings translate into the treatment of over 40,000 additional acres of public lands deemed in danger of catastrophic wildfire; or $6.6 million dollars of additional maintenance, reducing the backlog plaguing our national parks; or allowing for more funds to be transferred into cleaning additional acres of wetlands or degraded lands in our nations parks; or best yet, allow for free admission to popular national parks like Yellowstone, Yosemite, Glacier, the Everglades, or the Statue of Liberty.
If this committee wants to assume that direct federal provision is the most efficient, they must fully understand what the tradeoff is, and the costs associated with it. In this case, it is the opportunity for NPS to better achieve its agency’s mission and goals:
1. Enhance and ensure environmental protection (wetland and degraded land cleanup);
2. Public enjoyment of recreational facilities (maintenance of facilities); and
3. Public safety (wildland fire program)
Again, even if we’re wrong about the 30 percent and savings are only 15 percent, this is better for the American taxpayer.
Recently the management of the National Parks Service (NPS) has been under a microscope. A series of financial lapses and a multi-billion dollar backlog of maintenance and other work signal weak standards and general mismanagement. For example, “in 1997, the NPS inspector general reported that officials at Yosemite used taxpayer money to build 19 staff homes for $584,000 each-and in 2001, the General Accounting Office (GAO) acknowledged recent NPS efforts to overcome this troubled legacy but concluded that efforts had fallen short in several significant areas.”
Additionally, park users themselves have noticed the poor condition of many of our national parks. In a recent Q&A with Interior Secretary Gale Norton two separate questions were posed regarding the condition national parks or the facilities that service the parks were in.
Washington, D.C.: The last time I visited several well-known national parks in the west, the roads were in very poor shape with potholes, no shoulders for bicyclists, hard to read signs and inadequate places to pull over to see park features. Is fixing the roads in the parks part of the backlog your report talks about?
New York, N.Y.: Our national parks are in a bad state, with backlogs and dilapidated facilities.
These reports and observations cannot go unnoticed. Our national parks are the hallmark of what makes America a great nation. For too long, however, they have suffered from mismanagement as maintenance and much-needed upgrades and additions have gone unfinished. The President’s Management Agenda (PMA) is a set of initiatives designed to improve the management of federal agencies by adopting performance-based criteria for decision-making and action. Competition or competitive sourcing is a major component of the PMA, which simply means a systematic effort to have commercial activities in the federal government periodically go through a process of competition.
The competitive sourcing initiative forces agencies to put their fingers on their own pulse. It provides a framework by which agencies examine whether they have the right skill sets, technologies and organization structure to provide Americans the best possible service-service that is effective and efficient. Through the initiative, agencies review certain tasks and activities, evaluating whether they can re-engineer the work to improve service quality. Contrasting the status quo and the re-engineered option with what a private firm, or, potentially, even what a state or local government might charge to perform the same work. The bottom line is that these evaluations are used to determine and provide the best value to citizens.
Competitive sourcing has two oft-overlooked related benefits. First, it allows agencies to refocus on core functions and mission-critical activities. Secondly, it helps them address their human capital management. Essentially, it enables federal managers to rethink the structure of their workforce.
The federal government human capital management challenges have been well documented-while not as severe as originally thought, the problem continues to persist. Competitive sourcing provides a unique opportunity to agencies in managing the structure of the workforce. Put simply, incorporating competitive sourcing into the broader context of human capital challenges creates linkages and improves flexibility. Agencies could move existing staff between agencies or within the agency to activities considered core or mission-critical as needed. Competitive sourcing is a means of tapping new sources of human capital to meet current service needs. Indeed, competitive sourcing is fundamentally about accessing new pools of talent.
Essentially competitive sourcing is a tool that redeploys human capital. A common misconception about competitive sourcing is that it leads to layoffs and to loss of pay and benefits for workers. But a long line of research shows that in fact the majority of employees are hired by contractors or shift to other jobs in government while only 5-7 percent are laid off. In fact, competition leads one portion of existing human capital to join with the new human capital the contractor brings to the table, and either or both may be utilized in new ways to meet the goals of the government agency. Private contractors are more able to crosstrain and develop workers to meet human capital needs. At the same time, the government agency can redeploy many workers who did not switch employment to the private contractor and can retrain and reposition them to meet other human capital challenges. Agencies already do have tools that have assisted them with human capital issues in the past, and these remain promising tools for the future-especially with moving resources and personnel around. The Office of Personnel Management mandates that agencies prepare both a Career Transition Assistance Plan (CTAP) and Interagency Career Transition Assistance Plan (ICTAP) when a reduction in force (RIF) is expected or when an activity is being competitively sourced. These programs give managers an additional tool to fill needs and strategically focus on service delivery.
Competitive sourcing creates three opportunities for meeting human capital challenges: a) it is a means of bringing in private sector human capital to meet government service needs, b) if competitive sourcing displaces some government workers, they can be redeployed and retrained to meet yet other human capital challenges, and c) it changes the way existing human capital is utilized.
With this said, competitive sourcing is not new to NPS. In fact, in 1998 NPS was ordered to contract with private architectural-engineering firms for 90 percent of its design work and required that all construction oversight be handled by private firms. Additionally, House report 105-163 directed the NPS “to continue to increase its contracting of commercial activities, with a goal of divesting itself of such activities by the end of fiscal year 1999.” Furthermore, the report stated that “when services or products of equal quality and cost are available from the private sector, the [NPS] should use the private sector.”
Additionally, the NPS parent department has used competitive sourcing very systematically and effectively. NPS can learn and use this approach. For example, from the start, Interior worked with the unions and has kept costs down. Furthermore, transition strategies were identified for affected employees. And while more than 1,800 positions have been competed, not a single employee was left without a job. In fact, the employee bid has won more times than the private bidder. Additionally, in an effort to mitigate impact in one area, competitions have been balanced; competitions have been targeted in different locations and different pay grades.
So what does all this mean? How can NPS benefit from implementing a competitive sourcing plan? There is overwhelming evidence that competitive sourcing saves significant money. While studies show that the average savings are 30 percent-assuming that this is off by a margin of 50 percent and that savings are truly only 15 percent-of 16,000 NPS employees only 2,200 positions have been identified as commercial in nature. Competing only 20 percent of those would result in savings of $6.6 million in the first year alone (assuming that NPS spends $100,000 on the average position, which is total NPS spending on a per FTE basis). These savings may seem small, but this represents only NPS competitive sourcing efforts. The savings are much, much higher if you incorporate the entire Department of Interior competitive sourcing plan.
With that said though, these savings translate into the treatment of over 40,000 additional acres of public lands deemed in danger of catastrophic wildfire; or $6.6 million dollars of additional maintenance, reducing the backlog plaguing our national parks; or allowing for more funds to be transferred into cleaning additional acres of wetlands or degraded lands in our nation’s parks; or best yet, allowing for free admission to popular national parks like Yellowstone, Yosemite, Glacier, the Everglades, or the Statue of Liberty.
If this committee wants to assume that direct federal provision is the most efficient, it must fully understand what the tradeoff is, and the costs associated with it. In this case, competitive sourcing provides the opportunity for NPS to better achieve its agency’s mission and goals:
1. Enhance and ensure environmental protection (wetland and degraded land cleanup);
2. Public enjoyment of recreational facilities (maintenance of facilities); and
3. Public safety (wildland fire program)
Again, even if we’re wrong about the 30 percent and savings are only 15 percent, this is better for the American taxpayer.
Some opponents of competitive sourcing insist that our national parks are special, and that they should be shielded from competition. However, several states and provinces in Canada have long used competitive sourcing and the private sector to provide services in their respective park systems. In fact, according to the Council of State Governments, parks departments that were surveyed “were more likely than other [executive] agencies to expand [competitive sourcing] in the past five years.” Reasons for seeking competitive sourcing were reduced costs, additional personnel and greater expertise. Respondents also expect the trend to continue for the next five years, with almost three quarters of the respondents stating that they expect to use competitive sourcing “more frequently in the coming years, and most others will maintain current levels.”
Of those agencies that had competed services, “a large portion of parks agencies are saving more than 15 percent of their budgets through competitive sourcing.” This evidence further justifies the claims of at least 15 percent savings from competitive sourcing. Many services that would be competed by NPS were also competed by the states. Those services include: construction, maintenance and janitorial services, operation of individual parks, custodial services, security services, vehicle maintenance, recreational programs and services.
While several states and many cities in the United States have successfully used competitive sourcing and privatization at state and local parks, some of the most interesting examples are efforts of Canadian provincial park systems. Note that Canada’s park systems have faced budget pressures even more severe than those plaguing park systems in the United States.
Alaska
Beginning in the 1990s Alaska State Parks began contracting out the operation of a small number of campgrounds. Currently the department contracts out seven small and isolated parks. Because of their isolation, the parks were costly (relative to revenues) for the department to maintain. Contract lengths are short, running from one to five years. In return for meeting maintenance standards, operators keep the camping fees and have their commercial use permit fee waived. Indicative of the department’s satisfaction with contracting out, Alaska Parks is currently proceeding with a plan to contract out the operation of a “top-flight” park, Eagle River.
Newfoundland
The experience of Newfoundland is significant because of the magnitude of its competitive sourcing efforts. In 1997, faced with a $1.8 million cut in its small budget of $3.2 million, Newfoundland’s Parks and Natural Areas Division competitively sourced 21 of its 34 provincial parks. The 21 parks were rural, primitive parks, with low usage. All parks remain public land (Crown Land); some agreements are leases of duration of up to 50 years, while others are short-term “licenses to occupy.” Significantly, during their first season, 13 operators at the privatized parks made capital improvements, thus using profit incentives instead of tax dollars to mobilize resources to upgrade park facilities. Under private management, the parks no longer need public financing. In fact, the parks are modest revenue producers despite the capital improvements. Bottom line is that they now better serve the public, at no cost to taxpayers.
British Columbia In 1988, B.C. Parks began using private sector contractors to operate its parks; by 1992, the department contracted out 100 percent of park maintenance and operations. In FY 1998, visitor satisfaction was high: 81 percent of visitors rated park facilities and services as excellent or above average. The department has also realized substantial savings, estimated at 20 percent on average.
Alberta
In 1997, Alberta decided to expand its already extensive use of private sector operators of its park and recreational facilities. During earlier budget reductions, the agency used competitive sourcing to withstand cuts, while at the same time actually increasing the size of its recreation and protected areas network. Utilizing a new management strategy that is eerily similar to the NPS core goals (preservation, heritage appreciation, outdoor recreation and tourism), despite seeing its budget reduced by $11 million over a four year period and another $6 million two years later, the department added 34 undeveloped sites to the network over a 25-month period beginning in March 1995. This was primarily achieved through the use of competitive sourcing.
The department enlisted private operators in those program areas where they are firmly established. Doing so helps free department resources from routine operational and maintenance duties, allowing them to focus more on planning and managing protected landscapes and resources inventory, delivering heritage appreciation and environmental education, managing contracts and partnerships, and coordinating volunteer efforts.
Despite the benefits of competitive sourcing there remains skepticism and objections to the initiatives. Some of the more common objections include:
NPS is inherently governmental, and should be shielded from competition.
Ultimately NPS will determine what activities within the agency are commercial in nature, what could be competed, and what actually will be competed. It will determine this based upon the FAIR act and an analysis of its workforce without compromising the core mission of agency. Prohibiting NPS from studying its workforce and determining where efficiencies can be achieved will only hamstring the agency from achieving its goals.
Competitive sourcing also enables the agency to better focus on its mission. The agency can and should focus resources on mission-critical activities and utilize contractors where possible, especially in services like lifeguarding, janitorial, maintenance, computer technicians, and ticket takers.
NPS diversity will suffer.
For starters, competitions can be targeted at locations that don’t have diversity issues. Two other issues come to mind too; first, contractors that win competitions will rely on local labor markets to fill positions. Thus, diversity goals will likely be met regardless of who is providing the service. Secondly, NPS can use competitive sourcing to further its diversity goals by identifying competitions and contractors that will advance its policy. Additionally, diversity concerns assume that the contractors will violate civil rights laws or that minority workers cannot compete with whites and must be sheltered by an undemanding civil service code.
No cost savings will be achieved.
The Department of Defense (DOD) has the greatest amount of experience in competitive sourcing of all U.S. agencies. Between 1978 and 1994 over 3,500 competitions were initiated by DOD involving 145,000 personnel. The competitions resulted in an estimated annual savings of $1.46 billion (FY 1996 dollars). Had the DOD competed the entire inventory of competeable positions, over 13,000 functions employing over 380,000 personnel, competitions would have generated $7.58 billion in annual savings.
The data show an average savings of 31 percent of the baseline cost, and that a majority of competitions remained in-house. However, it also shows that DOD strategically used resources in the most effective and productive manner by subjecting positions to competition. DOD was able to focus more on core functions after resources were freed up from outsourcing. Even if forecasts of savings are wrong by a margin of 50 percent (i.e., savings only equal 15 percent) those are still significant savings. As taxpayers, we should not automatically assume that federal employees are as efficient as they could be. Without even the threat of competition, agencies can grow stale and inefficient, as evidenced just last year.
In 2002 OMB decided to use competition in response to poor performance by the Government Printing Office and offered the job of printing the fiscal 2004 federal budget to competitive bidding. Simply indicating that the agency would be required to compete, i.e., OMB no longer assumed that they were as efficient as they could be, the GPO turned in a bid that was almost 24 percent lower than its price from the previous year. That was $100,000 a year that GPO could have saved taxpayers any time it chose, but it never chose to do so until it was forced to compete.
There will be negative impact on rural communities.
There are real concerns that competitions will lead to work being taken out of local communities, especially rural ones. However, the projects NPS will be competing are mostly small competitions where the work cannot be transferred away from the locations. Put simply, maintenance activities cannot be removed from the locations. Additionally, large companies like Bechtel will not be competing for these jobs. If the in-house team does not win the competition, the winners are actually likely to come from the local communities serving the location. Thus, economic activity will increase, not decrease. Additionally, private companies pay taxes while government doesn’t, creating additional economic activity for local rural communities.
The American taxpayer and park visitors deserve the best services possible. Competitive sourcing gives NPS an opportunity to improve its efficiency, tackle its massive maintenance backlog, and focus its resources and energy on its core functions. Ultimately, competitive sourcing can improve the quality and efficiency of our national park system-in many regards the crown jewel of America. While there are associated upfront costs, the demonstrated savings are significant and competitions pay for themselves many times over.
Competitive sourcing gives NPS a valuable opportunity to focus on the agency’s mission and goals of enhancing environmental protection, ensuring the availability and enjoyment of recreational facilities, and providing for public safety. Again, the goal should be about improving the service that is provided to the American taxpayer, both in terms of quality of service, but also in terms of cost. Can we assume that federal employees are the most efficient and effective given the backlog of maintenance work and past mismanagement issues? We must fully understand what the tradeoff and resulting costs are in stifling the NPS competitive sourcing initiative. In this case, it is mandating inefficient management and lesser quality parks for the American taxpayer.
Geoffrey Segal is director of privatization and government reform at Reason Foundation