March 05, 2013
Jason Fornicola
(202) 639-6448

AFGE Testifies at OMB Public Meeting on the Long-delayed Insourcing Process

WASHINGTON- American Federation of Government Employees National President J. David Cox Sr. testified before a public meeting conducted today by the Office of Management and Budget on the need to finally develop a methodology that would allow agencies other than the Department of Defense to insource in order to save money. DOD has developed its own process for cost-based insourcing, which Pentagon officials acknowledge has led to significant savings. However, non-DOD agencies have been waiting for OMB to develop its own methodology or to adapt DODs successful methodology since the enactment of an insourcing law in 2009.  

For 16 years, during the Clinton and Bush administrations, federal employees in all agencies were indiscriminately subjected to OMB Circular A-76 privatization studies, Cox pointed out. During the Bush administration, Congress, in bipartisan fashion, shut down the A-76 process in certain functions and certain agencies before shutting it down across the entire federal government because the process had been used politically and punitively, and, as the Government Accountability Office and DOD Inspector General reported, because the process was systematically flawed. According to GAO, Without a better system to assess performance and comprehensively track all the costs associated with competitive sourcing, (agencies) cannot reliably assess whether competitive sourcing truly provides the best deal for the taxpayer 

With the exception of a short period in a single agency during the Obama administration, contractors have never been subjected to such scrutiny, continued Cox. However, before it was largely curtailed because of an arbitrary cap imposed on the size of the civilian workforce, DOD reported huge savings from insourcing, including multi-billion dollar reductions in reliance on service contractors in an astonishingly short period of time.  

There is a public-private cost comparison process for outsourcing which is called OMB Circular A-76and it needs to be fixed. There is a costing methodology that can be used for insourcing that was developed by DOD, and one which has been reaffirmed by Republicans and Democrats alike, known as the Directive-Type Memorandum (DTM) 09-007 on Estimating and Comparing the Full Costs of Civilian and Military Manpower and Contractor Supportand it should be adapted for insourcing by non-DOD agencies now. 

Cox also used his testimony to call for an end to arbitrary constraints on the use of federal employees; limitation of insourcing cost comparisons to work that is not inherently governmental, closely associated, or critical; issuance of comprehensive guidance on direct conversions; exclusion of health care and retirement costs from the cost comparison process in the insourcing context in the same circumstances that such costs are excluded in the outsourcing context; and deference to small business contractors on costs but not performance. His initial submission to OMB is available here:

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