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Summary

There is a long-standing public debate over the conduct of public-private competitions under Office of Management and Budget (OMB) Circular A-76. OMB Circular A-76, first issued in 1966, defines federal policy for determining whether recurring commercial activities (sometimes called functions) should be performed by the private sector or federal employees. The core objective of the Circular states that to achieve greater efficiency and productivity, the federal government should, whenever possible, conduct competitions between public agencies and the private sector to determine who should perform the work. The policy of the government relying on the private sector for the performance of commercial services was first initiated by the Bureau of the Budget during the Eisenhower Administration. It was later developed into the A-76 policy in 1966. The Circular has been revised several times; the latest revision was released in 2003. Competitive sourcing through managed competitions was a major initiative of President George W. Bush Administration's Presidential Management Agenda (PMA), and one of five government-wide initiatives put forth to improve the management and performance of the federal government. The Department of Defense (DOD) is the largest federal agency, and has conducted more A-76 competitions than any other federal agency. The characteristics of the DOD workforce make conducting A-76 competitions particularly challenging. OMB Circular A-76 policy has drawn criticism from both public and private sectors. Some in Congress have expressed continued concern over A-76 competitions partly due to the aftermath of the events surrounding the A-76 competition at the U.S. Army Walter Reed Army Medical Center in 2007. A series of events converged at Walter Reed in 2007 which resulted in numerous media investigations, federal investigations, congressional hearings, and the passage of legislation to prohibit the conduct of future A-76 competitions at military medical facilities. In P.L. 111-8, the Fiscal Year 2009 Omnibus Appropriations Bill, Congress prohibited the initiation of any new public-private competitions under Circular A-76. Similar moratoriums were proposed in both House and Senate versions of the Fiscal Year 2010 DOD authorization and appropriation bills. The Conference Report of the proposed Fiscal Year 2010 National Defense Authorization Act (H.R. 2647) contains no provisions on terminating A-76 competitions. Questions about A-76 are largely centered around the costs and length of time to conduct competitions, how long-term savings are calculated, the effect of competitions on employee morale, and whether contractors are performing functions that are inherently governmental - functions that should be performed by federal employees. This report will discuss the current moratorium on the conduct of A-76 competitions. In the event that A-76 competitions are no longer conducted within DOD, Congress may opt to examine other mechanisms to help federal agencies achieve greater efficiencies and garner costs savings.

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