Congress should extend the suspension on the use of the OMB Circular A-76 privatization process until much-needed reforms have been implemented and functions performed by contractors, including commercial functions, are finally being targeted for insourcing. The Office of Management and Budget (OMB), by its own admission, has made no reforms to an A-76 process it acknowledges to be flawed. Schemes to repeal the A-76 suspensions were unsuccessful in 2013, but contractors and their Congressional cronies will no doubt be back again this year.
Consistent with the law, no work last performed by federal employees should be contracted out without first conducting a full and fair public-private competition. The Department of Defense (DoD), the largest department in the federal government, acknowledging that the risk of direct conversions increases significantly during downsizing, issued guidance to ensure compliance with the law. OMB has issued guidance for the non-DoD agencies, but that guidance is not reaching the folks who matter the most—i.e., front-line managers and the acquisition workforce.
Agencies should give special consideration to insourcing functions that were contracted out without competition or are being poorly performed, as is already required by law. Significant savings are possible from insourcing. An independent group determined that contractors are generally twice as costly as federal employees. DoD has claimed significant savings through insourcing. However, that effort was shut down when DoD imposed a cap on the size of its civilian workforce, but not its contractor workforce. And OMB is late, almost five years late, in issuing guidance that would allow agencies to regularly and systematically insource functions for cost reasons.
Agencies, as required by law, should compile inventories of their service contracts so that we know, among other things, how much contractors cost, how many employees are performing each contract, and how well they are performing. Agencies must tonnbe able to identify and control contractor costs to the same extent that they can already identify and control federal employee costs if downsizing is not to disproportionately impact the less costly civil service. After overcoming OMB opposition, DoD has made progress, and, reportedly, is two years away from integrating its contractor inventory into its budget process. However, the Government Accountability Office reports that non-DoD agencies are far behind, principally because OMB allows agencies not to collect from contractors important cost information required by law.