Should Government Work Be Contracted Out to the Private Sector?

by Edith T. Carper

This is a Washington story. It is also a government story. The subject means the story will contain government-ese, a form of English that contains distortions, double meanings and meaningless phrases. But don’t leave now; the coming item is not lengthy.

On 29 May, the Bush administration’s Office of Management and Budget (OMB) announced changes in rules related to whether government work should be done in-house or be performed by private business — by “contracting out,” as the saying goes. This announcement called on government agencies to develop plans to open up jobs held by 850,000 federal employees to competition from the private sector. According to the administration, these jobs (out of a civilian workforce of 1.8 million) are “commercial” in nature, and requiring these workers to compete with the private sector promotes efficiency.

Contained in OMB Circular A-76, the "rules" determine when federal agencies can opt to perform the work “in-house” and when they must invite the private sector to bid on the jobs.

The government and the private sector view the world from different perspectives. The seeds of Circular A-76 grew out of an Eisenhower administration policy that decreed that the government should not compete against its citizens and that, therefore, government agencies should use the private sector to provide as many services as possible.

To bolster the arguments for change, the Bush administration cited studies that show that competition would produce savings of up to 30 percent “for taxpayers.” In listing the changes, OMB said the new rules require federal agencies to divide jobs into categories as either “commercial or inherently governmental” as a way to provide an accurate picture of the activities of each agency. The policy affects not only blue-collar workers, but a large number of white-collar employees as well.

The changes are causing reverberations on Capitol Hill. In May, the House was working on the defense authorization bill, which included a directive to the Pentagon to report back to Congress on how the new OMB rules affect the Pentagon. The measure also instructed the Pentagon to wait 45 days before implementing the new rules.

As spring rolled into summer, the administration announced additional changes to the earlier policy. Then, in late July, the White House said it would not require federal agencies to meet certain government-wide quotas for privatizing certain government jobs. By September, the outsourcing initiative was running into trouble, with opposition coming from both Congress and federal employee unions. On 9 September, in an amendment to an appropriations bill, the House approved a measure that prevents OMB from using the new rules to speed up competition throughout the government. The measure requires a return to rule of Circular A-76.

Stay tuned.

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Edith T. Carper is a special correspondent to IEEE-USA Today’s Engineer.