Outsourcing Bill Pushed

A proposed bill would push federal agencies to outsource services that private companies provide by making agencies conduct public-private competitions every year.

House Republicans will introduce the Competition in Commercial Activities Act by the end of March. The act is a revised version of the Freedom from Government Competition Act, a bill that privatization and outsourcing advocates have pushed for the last two years. It was included in the 1998 Treasury-General Government Appropriations bill, but later eliminated in committee.

The GOP proposal would eliminate Office of Management and Budget Circular A-76, which agencies use when they compare the costs of keeping a service in-house versus contracting it out. Critics of the A-76 process say the circular does not require agencies to consider all the indirect costs of using federal employees to perform a service, giving public workers an unfair advantage in competitions with private companies, who must consider all of their costs when bidding for a contract.

The Professional Services Council, which represents contractors, says, "public-private competition fosters competition for resources rather than cooperation among government agencies, places the private sector in competition with its government clients, and raises questions about conflict of interest for the government when government entities are potential future competitors on work the private sector currently performs." The council and several other industry groups have formed a coalition to push outsourcing and privatization of commercial activities.

The proposed bill would also require agencies to create inventories each year of the activities its employees perform that could be performed by the private sector. Once agencies have identified their commercial-like activities, public-private competitions would have to be held each year for at least 20 percent of that work.

In addition, OMB would establish a privatization board to review agencies' decisions and help the agencies through the outsourcing process. Agencies would also have to amend their strategic plans to take account of the bill's provisions.

House aides said the GOP bill will be taken up by the House Government Reform and Oversight Subcommittee on Government Management, Information and Technology by the end of March.