Competitive Contracting

The Federal Activities Inventory Reform (FAIR) Act directs agencies to develop annual inventories of activities done by their employees that are not inherently governmental. OMB Circular A-76 provides guidance on what types of activities are commercial and has guidelines for determining whether it is more effective to do the commercial activities in-house or contract them out to the private sector. The 24 major agencies named by Chief Financial Officers Act identified about 900,000 full-time equivalent positions that did commercial activities, but more than half were exempted from consideration for competition at the time the inventories were compiled. These agencies received and responded to a total of 332 challenges and 96 appeals to their 1999 FAIR Act inventories from interested parties. Agencies challenged by private industry indicated that they did not plan to consider many of the commercial activities on their inventories for competition. In contrast, almost all employee challenges and appeals concerned the inclusion of activities that the employees contended were inherently governmental. Agencies sustained 20 of the 332 challenges and denied the rest. Three of the 96 appeals were successful.

GAO noted that: (1) the 24 CFO Act agencies identified about 900,000 full-time equivalent (FTE) positions in their inventories as performing commercial activities, but over one half were exempted from consideration for competition at the time that the inventories were compiled; (2) these agencies received and responded to a total of 332 challenges and 96 appeals to their 1999 FAIR Act inventories from interested parties; (3) of those submitted, 20 challenges and 3 appeals were successful; (4) private companies or industry representatives filed most of their 145 challenges and appeals at civilian agencies, while employees and labor unions filed most of their 283 challenges and appeals at the Department of Defense (DOD); (5) for example, industry challenged agencies that indicated that they did not plan to consider many of the commercial activities on their inventories for competition; (6) in contrast, almost all of the employees' challenges and appeals were within the provisions of the act because they concerned the inclusion of activities that the employees contended should have been omitted because they were inherently governmental; (7) although the challenge and appeal process did not result in significant changes to agencies' inventories, the process served a broader purpose by identifying the need for greater clarity in agencies' inventories for use by both interested parties and agencies; (8) the civilian agencies have begun to review their inventories to identify ways to improve their inventories or to use the information on them to make more informed management decisions; (9) in contrast, DOD has used its inventories of commercial activities to identify activities, currently performed by federal personnel, for possible competition; (10) it will require a sustained leadership effort on the part of the Office of Management and Budget (OMB) to help ensure that agencies review their inventories and identify opportunities for better using agency resources by subjecting activities to competition; and (11) inventories only provide a portion of the information that agency management could use in making decisions about how all of its activities are carried out and whether the activities are being performed in the most efficient and cost-effective manner.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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