Contracting-Out Policy Revised

The Office of Management and Budget has published a sweeping revision to Circular A-76, the policy governing conversion of federal jobs to private sector performance, designed to speed up and simplify the process. The revised policy, announced in the May 29 Federal Register and effective immediately, sets a 12-month deadline for conducting most competitions-which under the prior policy often stretched over many years-with extensions of up to six months allowed. Meanwhile, the new policy would end the prior authority to directly convert functions employing 10 or fewer federal workers to contractor performance without a cost study. That was replaced with a streamlined version of the formal cost-comparison procedures, generally running only 90 days, that will be available in functions employing 65 or fewer federal workers. Agencies also will have to more closely monitor the results of a decision whether the work is contracted-out or kept in-house, and categorize all of their activities as either commercial or inherently governmental. Cost comparisons already under way generally will continue under the prior rules if solicitations have been issued; otherwise, both ongoing and future cost studies will be conducted under the new rules.