A Congressional Research Service review of contracting out says that the A-76 process remains controversial among federal employees who believe the government is putting up too much work for competition as well as among private sector companies who believe it is not doing enough.
The CRS report said that contracting out is just one of many forms of privatization of government responsibilities and that it in fact goes as far back as 1819, when contracts were issued for the transportation of mail in steamboats. It said two main drivers of contracting policy are the Federal Activities Inventory Reform (FAIR) Act of 1998, which requires agencies to produce inventories of “commercial activities” — those that are not “inherently governmental” and able to be acquired from the private sector — that may be put up for competitive sourcing and OMB’s Circular A-76, which provides agencies with specific directions for undertaking competitive sourcing.
Said CRS, “FAIR and A-76 encourage agencies to outsource. Agencies also are attracted to outsourcing because it can provide cost-savings and flexibility. Additionally, outsourcing is a means for agencies to handle large, infrequent demands for government services. For example, the General Services Administration (GSA) uses private call-center contractors when it expects agencies it supports, such as the Federal Emergency Management Agency, to receive large numbers of telephone calls from individuals affected by episodic tumults, such as hurricanes. Additionally, when an agency uses a contractor, instead of hiring a new federal employee, it need not expend resources training the contractor; nor need it provide medical benefits or pensions to the contractor.”
It noted that last April, OMB announced that activities performed by 26,000 government employees would be opened up to competitions over a year, a five-fold increase over the number competed in the prior year.
“There may also be a trend of increasing the scope of contract services to include areas not previously considered appropriate for assignment to the private sector (e.g., the operation of prisons, the performance of personnel background checks, and the protection of government officials),” CRS said.
“This move to expand competitions has sparked controversies. Government employees, not surprisingly, may feel their jobs are threatened. Meanwhile, private firms, coveting more business opportunities, have challenged agencies’ exclusion of activities from competitions.”