Bureau of the Budget Bulletin 55-4 stated, “The Federal government will not start or carry on any commercial activity to provide a service or product for its own use if such product or service can be procured from private enterprise through ordinary business channels.”
While that document still exists, now found in Office of Management Budget (OMB) Circular A-76, the policy statement was removed by the Bush Administration in 2003. The current A-76 calls for public-private cost comparisons to determine whether federal employees or private contractors should carry out governmental activities that are commercial in nature.
“Regrettably, even that common sense proposition is now dead. Congress enacted a provision in the recent ‘megabus’ appropriations bill to prohibit agencies from beginning or announcing ‘a study or public-private competition regarding the conversion to contractor performance of any function performed by Federal employees pursuant to Office of Management and Budget Circular A-76 or any other administrative regulation, directive, or policy,'” said John Palatiello, President of the Business Coalition for Fair Competition (BCFC).
As a result of the failure of the “Super Committee” to reach agreement on budget reductions pursuant to the debt limit agreement last August, sequestration will kick-in with across the board cuts. Compounding that is the new defense strategy President Obama and Secretary Panetta unveiled earlier this month to make our military, in the President’s words, “agile, flexible, and ready for a full range of contingencies and operations.”
Palatiello continued, “If federal managers in civilian agencies and commanders in military operations cannot look at whether using private contractors is more cost-effective than federal employees, or determine that a commercially available function is better left to the private sector than continuing government performance, the implementation of sequestration and the defense strategy will be chaotic, if not impossible.”
More than 850,000 federal employees are engaged in commercial activities that duplicate and in some cases compete with private enterprise, including small business. Ranging from architecture to zoology and including audits, buses, construction, debt and bill collections, engineering, equipment repair and maintenance depots, food service, furniture, information technology, laboratories, landscaping, laundry and dry cleaning, office products, mapping, meeting planning, marketing research, roofing, motorcoaches, printing, public storage, surveying, tax preparation, transportation and utilities.
“A government that does virtually everything that can be found in the Yellow Pages is simply too big to succeed,” Palatiello said.
Further compounding the problem is the Obama Administration’s implementation of “insourcing,” converting work previously carried out by contractors into agencies for performance by federal employees. Ostensibly designed to save money, then-Defense Secretary Robert Gates backed off of insourcing when such savings were not realized.
Jacques Gansler, undersecretary of defense for acquisition, technology, and logistics in the Clinton Administration said it best. “The surest way to reduce and hold down procurement costs is through competition, whether among commercial providers or between commercial providers and in-house government alternatives. For the latter cases, no matter who wins, the savings have been more than 30 percent.”
Or, as former New York governor Mario Cuomo once said, “It is not a government’s obligation to provide services, but to see that they are provided.”
“It is time renew the Eisenhower policy, lower the cost of government, create private sector jobs, and focus federal employees on activities and functions only government can perform,” Palatiello concluded.