REE Commercial Services Management Program
The key concept of A-76 is that competition enhances quality, economy and productivity.
OMB Circular A-76 provides procedures to conduct managed
competitions between public and private sectors. Such competitions will determine
whether it's more efficient for a function to be performed by the private sector,
by an in-house government workforce, or through an inter-service support agreement
with another government activity. In A-76 competitions, agencies and contractors
are equal and viable competitors.
The A-76 process provides a level playing field between public and private providers of goods/services, encourages competition and choice in the performance of commercial activities, and helps ensure that sound and justifiable business decisions are made. Competition is important to ensuring financial flexibility and reducing costs. An A-76 study will examine and improve the processes and make them more cost-effective. An A-76 study is not "contracting out" of a function - rather, it is a competition between the Government and private sector offerors. An A-76 study can help us develop a more efficient government operation and demonstrate its effectiveness through competition. There are two types of competitions in the revised circular. A Streamlined Competition which can take from 90 to 135 days from official announcement, or the Standard Competition which can take from 12 to 18 months from official announcement. They are discussed below.
Following the guidelines set forth in OMB Circular A-76, for a Standard Competition,
the managed public/private competition process examines the financial impact
of continuing to provide certain services in-house or by contract. A team of
employees or a consultant (or a combination of employees and consultant support)
develops a PWS and QASP. A second team, the agency bid team, separately and
confidentially, prepares a proposal for undertaking the function described in
the PWS, much as a commercial source would do. Specific guidelines are included
in the process to cover all costs and performance requirements. The government
participates in the competition on an equal basis with the commercial sources.
Using this process, the competition winner, whether commercial or governmental,
must adhere to and meet the performance parameters contained in the PWS.
The agency bid team is established to design and create a management plan that includes a Most Efficient Organization (MEO) to compete against industry. The creation of a management plan also includes developing an in-house cost estimate based on the MEO. The MEO estimates the number and type of government personnel required to perform the tasks cited in the PWS. The MEO/in-house cost estimate will be completed at the same time initial offers are due from private sector firms on the solicitation containing the PWS.
Once initial private sector offers are received, these offers are evaluated and rated like any other service contract solicitation. With the new circular, the government offer, or “tender” will be evaluated along with the private offerors using the same criteria. The final decision is based on either cost alone, or cost with consideration of other factors (in a Cost Technical Trade Off solicitation). Once this decision is made, conversion to either the MEO or a private contract must occur within 60 – 90 days.
Following the guidelines set forth in OMB Circular A-76, for a Streamlined
Competition, the managed public/private competition process examines the financial
impact of continuing to provide certain services in-house or by contract. The
Streamlined Competition differs from the Standard Competition. In the Streamlined Competition,
it is limited to organizations with 65 or fewer FTE, or an MEO that would result
in 65 or fewer FTE. Using this process, the competition winner, whether commercial
or governmental, must adhere to and meet the performance parameters contained
in the PWS.
In the Streamlined Competition, the Government may use the as-is organization or develop an MEO at their option. There is may not be a PWS, and the private sector costs are developed using market research, or soliciting cost proposals IAW the FAR (in which case a PWS may be developed). Some of the adjustments used in the Standard Competition are not utilized in the Streamlined such as the “One-time-conversion” cost of 10% or $10 Million (whichever is smaller).
The Cost Comparison Decision is based on the lowest cost option. Once this decision is made, conversion to either the MEO or a private contract must occur within 60 – 90 days.
What is the direct conversion methodology?
Formerly, if 10 or fewer positions perform a commercial activity, the Circular permitted direct conversion to a contractor operation without the private sector/Governmental competition. In some cases direct conversion to firms associated with the Javit’s – Wagner O’Day Act (JWOD) program was possible without competition under the provisions of this preferential procurement program. At present, the new Circular excludes this option directly, but provides a deviation process that allows, in fact encourages, Agencies to “…use this deviation procedure to explore innovative alternatives to standard or streamlined competitions...” There are no current plans to request Direct Conversion Authority in REE.
Some think competitive sourcing is synonymous with privatization. This assumption is not correct. Under competitive sourcing there is managed competition between the public and private sector to determine the most cost effective methods of accomplishing a function. Privatization refers to a decision by the government to get out of a given line of business and turn over operations and possibly assets to a contractor to perform that business, with or without competition. Privatization is the process of changing a government program to private management, control and/or ownership. Under privatization, the government no longer retains responsibility or control over the delivery of the privatized goods or services, depending on the privatization model used.
In a Standard Competition, the PWS will define what is being requested, what the performance standards and measures are, and what time frames are required. The procurement will be conducted in accordance with the Federal Acquisition Regulation and OMB Circular A-76. The source selection board (as determined by the contracting officer and the managers in the activity under study) will evaluate all contractor proposals and the agency tender. Then, after all necessary adjustments have been made to ensure that the government’s in-house cost estimate and the other offers are based on the same scope of work and performance standards, the contracting officer will open the government’s in-house cost estimate and/or provide to the study team to complete the cost comparison. In the former circular, there were two rounds; a “Best Value” round between contractors, and a comparison between the winner of that and the MEO offer. The new cost comparison is only one round. All offers (including the agency tender) are compared at the same time, by the same board, and the decision is based on the lowest cost, or consideration may be given to other factors in a Cost-Technical-Trade-Off solicitation.
Should an activity wait until it has been identified for cost comparison to begin optimizing work processes?
Improving service and product delivery should be an ongoing activity. Where an organization can begin to improve performance and service prior to initiating a competitive sourcing study it should do so. Improvements should not be undertaken once a study has been announced. Until such time as an activity has been identified for study, employees should work to prioritize tasks and identify those that could be contracted regardless of the competitive sourcing initiative.
While the study is taking place, employees are expected to continue performing their work assignments in the same manner as before the study was announced. Until the study is completed and a decision made, it is impossible to predict the outcome or degree of impact. While feelings of uncertainty, stress, and/or anxiety are natural, the organization is committed to providing a supportive atmosphere to help employees be proactive in dealing with these emotions. Employees may choose to explore career options, other employment opportunities, update their Official Personnel Folders, etc. Employees may be called upon to provide information and review of some of the study products or serve on teams from time to time. Give this activity your best effort to provide the most competitive position possible to the Government Proposal.
How can an employee help safeguard information that may give prospective contractors an unfair advantage?
During the course of the study, employees should only discuss their jobs and the nature of their work with those who have a genuine need to know. While the study is underway, prospective contractors may try to find out about an employee’s job through casual conversation with the employee. The employee may not even know that person is associated with a contractor. In short, employees should know who they are talking to and why. All persons with any knowledge of the functions under study are obligated to safeguard that information.
Last updated: 11/06/07