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Questions for Competitive Sourcing Hearing Record

GAO-04-155R: Published: Oct 3, 2003. Publicly Released: Oct 3, 2003.

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The Subcommittee on Oversight of Government Management, the Federal Workforce, and the District of Columbia, Senate Committee on Governmental Affairs requested GAO's views on various competitive sourcing issies, including the recent revisions made by the Office of Management and Budget (OMB) to its Circular A-76. GAO answered questions on (1) making "best value" instead of "lowest cost" the factor that agencies must use in determining who will win a public-private competition; (2) agencies' capability to effectively manage public-private competitions and overseeing contracts; and (3) whether the 12-month time limit placed on competitions in the revised OMB Circular A-76 is appropriate and how much of the time taken to conduct competitions in the past was used to do things that could be handled before the competition begins.

For many years, federal agencies conducting negotiated procurements under the Federal Acquisition Regulation (FAR) routinely have traded off cost and non-cost factors in making contract award decisions. The tradeoff process is often called "best value." Tradeoffs reflect a widespread practice used by other governments (state, local, and foreign) as well as by the private sector. The tradeoff process moves the federal government past the "low bid" mentality of the past, with increasing consideration of factors such as quality and past performance. It entrusts federal employees acting as source selection officials with the authority to use their judgment in selecting among proposals offered. An award decision must comply with pre-established evaluation criteria, and is subject to challenge if it appears it did not. Under the terms of the new Circular, a tradeoff source selection is allowed in a standard competition for (a) information technology activities, (b) commercial activities performed by a private sector source, (c) new requirements, or (d) certain expansions of current work. An agency also may use a tradeoff source selection process for a specific standard competition if, prior to the public announcement of the competition, the agency's Competitive Sourcing Official approves use of the process in writing and notifies OMB. The extent to which cost in tradeoff decisions will be a significant factor under the new Circular is unknown. With a likely increase in the number of public-private competitions and the requirement to hold accountable whichever sector wins, agencies will need to ensure that they have an acquisition workforce sufficient in numbers and abilities to administer and oversee these arrangements effectively. Agencies will need to build and maintain capacity to manage competitions, to prepare the in-house most effective organization (MEO), and to oversee the work--regardless of whether the private sector or the MEO is selected. While the level of resources needed will vary among the agencies, building and maintaining this capacity will likely be a challenge for many agencies. A major challenge agencies will face will be meeting the 12-month limit for completing the standard competition process in the new Circular. This provision is intended to respond to complaints from all sides about the length of time historically taken to conduct A-76 cost comparisons. The new Circular also states that agencies shall complete certain preliminary planning steps before a pubic announcement. Our studies of competitive sourcing at the Department of Defense have found that competitions can take much longer than the time frames outlined in the new Circular. Additional financial and technical support and incentives will be needed for agencies as they attempt to meet the ambitious 12-month time frame. In this regard, the implementation of the government-wide fund would help to assure that the needed resources are available.

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