Federal Manager's Daily Report

The Office of Management and Budget estimates that

competitive sourcing will save agencies $1.1 billion over


the next several years by reducing operating costs and

increasing efficiency.

It said it based its estimates on competitive sourcing

reports that agencies prepared for Congress in line with

the Consolidated Appropriations Act for fiscal 2004, and

studies of about 650 commercial activities in fiscal 2003

and several in 2004.

OMB said in-house government sources won 89 percent of

positions competed in fiscal 2003, prompting contractor

groups and others to argue they are unfairly weighted in

favor of feds.

Federal employee groups criticized the report for other

reasons. They argue that OMB overstated benefits partly

by not factoring in costs such as hours worked by staff

during normal business hours, for example. The report put

the total cost of competitions in 2003 at about $88 million.

“There is no way that federal agencies, relying on the

guidance that OMB provided on preparing these reports, can

accurately define their costs related to contracting out,”

said Colleen M. Kelley, president of the National Treasury

Employees Union, who referred to the report as “fiction.”

Not all respondents reported gains. The Department of

Agriculture reported that it lost $3.6 million through

competitions according to the report.

The report noted that agency success with competitive

sourcing depends on intensive commitment: “sound

preliminary planning, grouping related activities to

generate private sector interest, reorganizing inefficient

in-house operations, and aligning competitive sourcing

and human capital efforts to close competency and skills


OMB said it is developing a government wide database to

more systematically collect competition data, and that

it will continue to emphasize the need for long-range

planning and training.