**[Congressional Report Item #10]{.underline}**

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## **HHS Competitive Sourcing / Strategic Workforce plan**

[Relation to Human Capital Plans]{.underline}. The HHS competitive
sourcing plan is directly related to the Department's Human Capital
Plan. Competitive sourcing considers several important aspects of the
Department's human capital initiatives that support the pursuit of
science and the health and well being of the American public. Likewise
the HHS Human Capital Plan notes that as the Department continues to
consolidate administrative functions, eliminate duplicative
organizations and limit management layers, and as more organizations and
functions are reviewed for competitive sourcing, new and innovative ways
to redeploy affected staff members will need to be found.

In order to ensure competitive sourcing plans are consistent with and
support human capital plans, each Operating and Staff Divisions
(OP/STAFF/DIV) involves a Human Resource Advisor (HRA) in the
formulation of competitive sourcing plans. Once the draft plans have
been developed, the plans are again coordinated with the HRA prior to
submission. For example, if a commercial activity is pending an
OP/STAFF/DIV approved restructuring decision (e.g., realignment,
reorganization); the HRA may recommend deferring the competition until
the restructuring action has been implemented. Decisions to pursue
competition will take into account the recommendations of the HRA.
Positions that the HRA identifies as desirable for career ladder
promotion to attract, motivate, retain and reward a high-performing
workforce may be excluded from consideration for competition. The HRA
further serves to minimize workforce disruption throughout the
competitive sourcing process.

All HHS OP/STAFF/DIV's Human Resource and Competitive Sourcing managers
are making concerted efforts to weigh the benefits and drawbacks of
public-private competition as a tool to improve their performance --
e.g., to eliminate operational redundancies and inconsistencies and to
achieve greater productivity, efficiency, and functional effectiveness.
Although, the format for the decision making process may vary,
OP/STAFFDIVs, have considered in a disciplined way the selection,
formulation and sequencing of commercial activities for competition and
are enlisting the expertise from program, human resources, acquisition,
budget and legal offices to determine the most appropriate competitive
sourcing strategies and actions for that particular Division. The
following are examples of evaluation factors, which are considered, that
directly take into consideration the Human Capital initiative as it
relates to Competitive Sourcing.

> \(1\) [Consolidation and Centralization Activities]{.underline}. HHS
> has embarked on an aggressive policy to consolidate and centralize
> common support activities for the purpose of redirecting resources to
> program priorities, which effectively will result in less FTEs
> available for competition in the short term but will improve the
> quality of future competitions. The HHS FY 2005 Human Capital Plan
> notes the consolidation of administrative functions as a means to
> eliminate duplication. Hence, this plan takes into consideration
> pending agency reorganizations, delayering and associated workforce
> reductions separate and apart from, but in addition to those that may
> result from competitive sourcing.
>
> \(2\) [Workforce Demographics]{.underline}. Workforce eligibility for
> retirement and annual attrition rates are taken into consideration
> when selecting functions for competitive sourcing competitions. The
> tactical use of buy-outs and early-outs, consistent with the companion
> human capital plan, will serve to accentuate this advantage and if
> managed within tolerance, anticipated reductions should occur through
> voluntary separations.

As an example, these factors were successfully applied both to NIH's
Visual and Medical Arts competition and FDA's competition for clerical
support. Both activities identified these functions as management
support positions that were deemed suitable for competition. Neither
function was subject to either a Department directed or internally
directed consolidation or centralization effort. A demographic review of
the impacted workforce indicated that approximately 30 percent were
eligible for some form of retirement. After carefully examining
alternatives to conduct multiple, but smaller studies, NIH and FDA
concluded each had sufficient expertise and internal capacity to conduct
the reviews and each had acquired sufficient contractor advisory and
assistance services.

Subsequently HHS has worked to place employees that have been adversely
affected by a competitive sourcing decision. OP/STAFF/DIVs are utilizing
placement and training programs to help transition work as smoothly as
possible for these affected employees. To date, no HHS employee has been
involuntarily separated due to competitive sourcing study, in large part
due to competitive sourcing and human capital officials working in
direct correlation with one another.