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OMB, Agencies Working at Cross Purposes in Federal Acquisition Reform

Leonard Gilroy
July 31, 2009, 6:14pm

White House Office of Management and Budget director Peter Orszag released a new policy memorandum on federal acquisition this week, but as Stan Soloway at Washington Technology writes, several agencies are already moving down the path of de-privatization (so called "insourcing") in a manner contrary to the administration's new policy objectives:

The Obama administration released this week the first in a series of much-anticipated policy memorandums focused on federal acquisition. The new guidance focuses on contractor past performance, managing the multisector workforce, and improving acquisition. President Barack Obama directed Office of Management and Budget to develop the guidance in his March memorandum on contracting. Additional guidance on inherently governmental functions, enhancing competition, and more will follow in September. [...]

The most significant document is that which deals with managing the multisector workforce and how to approach the possible insourcing of contracted work. Consistent with (unfortunate) legislative direction, the document makes clear that insourcing must be considered in a range of circumstances. But it also properly and thoughtfully sets forth a decision process that provides agencies the requisite flexibility to do the right thing for their missions and the taxpayer.

Indeed, the document intentionally and overtly strikes an impartial tone, which itself is a welcome and notable relief from the jingoistic tone that has been struck by those whose focus is far more parochial than substantive. The same is true with its treatment of the multisector workforce. There, the guidance lays out very reasonable and impartial guidelines for assessing both agency need and agency capability which, together, help drive smart sourcing decisions.

In sum, the administration’s first substantive acquisition policy foray offers a positive direction and opens the door to important improvements that will both serve the public’s interest and help improve confidence in the process. Unfortunately, even as the guidance was being developed, numerous components, particularly but not only in the Defense Department, have launched their own insourcing and acquisition policy initiatives that are to varying degrees inconsistent with the new administration guidance and, frankly, inconsistent with the best interests of their departments or the taxpayer.

When it comes to functions that are neither inherently governmental in nature nor so critical to mission performance that they really should be performed by government employees, there must be a disciplined process associated with any insourcing decision. That process must carefully consider accurate, total, life cycle costs, performance and the availability of talent. Simply put, it is both fair and important that agencies be required to assess the full range of factors that should inform any sourcing decision. As taxpayers, we should demand no less.

Unfortunately, that discipline appears to be missing in much of the field’s early insourcing activity. Perhaps this would be a good time for everyone to step back and carefully consider the president’s directive and guidance. In so doing, perhaps they, too, can step up.

Well put. Decisions on what to privatize or not should be made in a dispassionate, analytical process, rather than be driven by politics. This is exactly why entities like Florida's Council on Efficient Government are so valuable in the policy framework—policymakers need to be focused on making smart spending decisions divorced from politics and justified by a business-case type of analysis. That's a standard part of decisionmaking in private enterprise, and it's one that's severely underutilized in government at all levels.

» Reason Foundation's Privatization Research and Commentary


Leonard Gilroy is Director of Government Reform


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