Last Thursday, an amendment attached to the FY2018 Defense Appropriations Act passed the House of Representatives, prohibiting any funds from the Act to “be used to plan for, begin, continue, complete, process, or approve a public-private competition under the Office of Management and Budget Circular A-76,” extending the ban on Department of Defense (DOD) competitive sourcing for another year. While the Senate still must vote on the Act for the ban extension to be enacted, the approval of Rep. Matt Cartwright’s (D-PA) amendment is another sign that many in Congress would rather eliminate competitive sourcing than improve the existing A-76 process, in contrast to the opinions of leaders in the DOD and other agencies.
Rep. Cartwright and critics of A-76 competitive sourcing cite the Inspector General of the Department of Defense and the Government Accountability Office (GAO) as stating that resulting competitions have been unable to demonstrate taxpayer savings—even though publications put out by both agencies quote DOD officials to the contrary. Meanwhile, Congressional stalling on the issue prevents the implementation of reforms intended to improve value comparison methodologies. Other criticisms of A–76 competitions include the length of time and costs needed to conduct them.
While there are certainly some valid concerns related to the accuracy of cost assessments of competitions and the administration of the competitions themselves, DOD and other agency leaders tend to agree that competitive sourcing is beneficial, albeit capable of being improved upon.
Further, previous actions by Congress have ensured a lack of reliable figures to make cost comparisons between in–house and contractor service delivery. The moratorium on A-76 competitive sourcing, first enacted in 2008 and extended multiple times since, has limited the amount of beneficial data available on competitive sourcing. Worse, a 2016 ban on Congressional funding being used to fund studies on competitive sourcing (also via an amendment introduced by Rep. Cartwright) further limits the ability to make comparisons.
Since the mere introduction of competition via competitive sourcing has been shown to achieve taxpayer benefits—regardless of whether a public or private entity ultimately provides the service—moratoria on competitions and bans on studying them should concern agency administrators and taxpayers alike.
Since Congress currently isn’t interested in funding research on competitive sourcing, the greatest sources for assessing competitive sourcing are agency leaders, who generally see competitive sourcing as beneficial:
- DOD Inspector General guidance on the FY2008 Defense Authorization Act cited agency officials as claiming that public–private competitions under A-76 generate significant savings, and that any work deemed “commercial” (as opposed to ones deemed “inherently governmental”) should regularly be exposed to competitive pressures over the delivery of services to “ensure efficiencies and cost effectiveness continues.”
- A 2011 DOD Report to Congressional defense committees on public–private competitions recommended immediately lifting the moratorium, though Congress has continued failed to follow suit.
- Outside the DOD, just this week the Department of Transportation announced it was writing rules to encourage public–private partnerships in public transportation. In terms of positions being appropriate for competitive sourcing, the Department of Education (pre–Secretary DeVos) feels that over 50 percent of its functions are appropriate for competition with the private sector, while the Departments of Justice and Health and Human Services feel the same about more than one–fifth of their functions.
The A-76 process, while far from perfect, has and can be improved upon, with planned improvements waiting to be tried and assessed. The Defense Commercial Activities Management Information System (DCAMIS), previously criticized both by the GAO and Inspector General for providing inaccurate information, was taken offline in 2011 before a commissioned study could be completed to assess the reliability after improvements were made to DCAMIS to address those initial criticisms. Agencies could also look to further improve DCAMIS in ways that allow for greater assessment of value, as opposed to pure cost. An evidence–based methodology to determine overhead cost and cost differential estimates used in determining winners in competitions could replace the one–size–fits–all 12 and 10 percent respective rates currently used.
Further, firewalls between competition groups could be reduced to an extent that speeds up competitions and eliminates duplicative effort while avoiding conflict–of–interest issues. State and local governments have successfully conducted competitive sourcing events for a broad range of government activities and at a reasonable amount of time and cost for decades. There appears no reason to think that the DOD or other Executive branch agencies are incapable of doing so. Excluding preliminary planning from imposed time limits on competitions appears worthy of consideration, too.
Instead of improving DOD competitive sourcing, Rep. Cartwright’s amendment shows that the House would rather eliminate a flawed, though beneficial, process than improve it, with last year’s moratorium on studies involving DOD competitive sourcing working to further advance the “end it, don’t mend it” mentality. Agency leaders, seeing the process as not only beneficial but essential, will continue to forgo capitalizing on those benefits, ultimately harming taxpayers.
Without modifications to A–76 or the introduction of some broad new framework for competitive sourcing government services, agencies will be shielded from competitive pressures shown to improve service delivery. Perhaps direction from OMB will force Congress to revisit the issue of competitive sourcing with thicker skin, but with midterms looming next year, it may be too late.