Competitive Sourcing Continues to Fail

by Adam Hughes*, 11/24/2008

The Government Accountability Office (GAO) released a new report on Friday on the Bush administration's competitive sourcing initiative, which allows the federal government to hold public-private competitions for the right to deliver commercial services for the government (things like janitorial services or food preparation or maintenance). If a private sector bid can show savings of $10 million or more or 10 percent of the cost of providing those services in-house, they win the competition. /p>

The Bush administration has repeatedly claimed fairly significant savings as a result of the competitive sourcing program - just see about any report on this OMB webpage (btw, the program was recently renamed by the Bush administration to the "Commercial Services Management Initiative"). Unfortunately, there continues to be evidence that these claims of savings are either intentionally overstated, or flat out made up.

The latest GAO report echoes past criticisms of the competitive sourcing initiative - this time after studying its implementation at the Department of Labor (DOL). From the report's summary:

  • DOL lacks a departmentwide process for tracking and addressing deficiencies and recommendations for improvements that are identified in postcompetition accountability reviews.
  • Though consistent with OMB guidance, DOL excluded a number of substantial costs in its reports to Congress—such as the costs for precompetition planning, certain transition costs and staff time, and postcompetition review activities—thereby understating the full costs of this contracting approach.
  • DOL's savings reports are not reliable: a sample of three reports contained inaccuracies, and others used projections when actual numbers were available, which sometimes resulted in overstated savings.
  • Because of these and other weaknesses, DOL is hindered in its ability to determine if services are being provided more efficiently as a result of competitive sourcing.

    In addition, the GAO report found that federal employees who participated in the competitions felt demoralized by the process and felt it wasn't implemented well - a fact that has not escaped the notice of Rep. David Obey (D-WI) and Sen. Tom Harkin (D-IA) - the two legislators who requested the GAO to study this program at DOL. GAO also points out on page 6 that these finds are similar to other studies they have conducted of the competitive sourcing initiative at the Departments of Defense and Agriculture.

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