**Competitive Sourcing (A-76) Q&A**

[What is A-76 & Why Are We Doing It?]{.underline}

Q: What is A-76?

A: OMB Circular A-76 establishes Federal policy regarding the
performance of commercial activities. The circular establishes
procedures (cost comparison) for determining whether commercial
activities should be performed under contract with commercial sources or
in-house using Government facilities and personnel.

Q: Where can I go to learn more about Commercial Sourcing (the A-76
Process)?

A: We have a number of links from this web page to [**OMB Circular
A-76 - Performance of Commercial
Activities**](http://www.whitehouse.gov/omb/circulars/). Links to the
circular, supplemental handbook, transmittal memorandum, Year 2002
inventory of commercial activities and OMB\'s FAIR Act inventory. We
also have [**A-76 Related Links**](http://www.govexec.com/outsourcing)
to *Government Executive Magazine* links and information related to A-76
and outsourcing.

Q: Define these terms: "Function", "Position", "Inherently Governmental"
and "Commercial Activity".

A: See link on the NIH A-76 web page to [**Definition of
Terms**](http://a-76.nih.gov/DefofTerms.htm).

Q: Where can I find the schedule of functions and corresponding FTE to
be reviewed in FY03 and FY04?

A: In 2003 NIH will review functions in Facilities and Installation
Services, and Grant Support. 2004 functions are currently subject to
change pending the revision of the 2003 FAIR Act inventory.

Q: What are the various types of Competitive Sourcing Reviews?

A: Generally, there are two types of reviews, Full Generic Reviews \--
which are more time consuming, but allow an agency to be more
competitive by developing a more efficient organization proposal (Most
Efficient Organization) that will then be compared to contractor bids;
and Expedited Reviews \-- which allow an agency to calculate the costs
of how they currently do business and compare these to existing
comparable contracts. Agencies can also directly convert a function to
contract without cost competition.

Q: What does this Administration hope to accomplish through the A-76
Competitive Sourcing Process?

A: The goal is to have a more responsive government that is cost driven
and allows either commercial sources or in-house government personnel to
provide the service if they can show that they can do so more cheaply.

Q: Generally, contract employees cost more money than government
employees. If this is true, how can the Government expect to save money
through Competitive Sourcing?

A: If the contract bid is shown to cost more than the Federal bid for
the work, the contract would be awarded to the Federal offer. Circular
A-76 requires tracking of contracts to ensure the contract meets the
requirements upon which it bid and won. Under the proposed revisions to
Circular A-76, similar tracking would be required for Federal personnel
that win an A-76 cost comparison.

Q: What studies have been done to prove Competitive Sourcing is
effective in reducing the cost of performing a particular commercial
activity while maintaining or improving quality?

A: The Department of Defense has been conducting competitive sourcing
(A-76) reviews for several years and has recorded millions of dollars in
savings. NIH has shown that in many cases, contract performance is
cheaper than performance by Federal employees.

Q: Since NIH is a scientific community, what evidence exists (scientific
or otherwise) that supports this agenda?

A: NIH has many functions that support the science at NIH that are
commercial in nature (i.e., they are provided by commercial sources as
well). The NIH is currently supported by hundreds of contracts that
provide the service due to their ability to offer services at a reduced
cost and increased efficiency.

# Competitive Sourcing Process and the FAIR Act Inventory

Q: How did NIH arrive at its current FAIR Act Inventory of approximately
9000 commercial positions when inventories at other federal agencies
(within HHS and across the government) are only about 20-25% of their
total employees?

A: NIH worked with program offices to develop definitions of functions
in accordance with the requirements of the FAIR Act which requires the
inventory. ICs then placed their employees in the appropriate function.
Many agencies, including other DHHS operations divisions, have
inventories of commercial activities greater than NIH. Under the
proposed revisions to Circular A-76 all functions are assumed to be
commercial in nature unless an agency can prove the function is
inherently governmental based on the OMB requirements.

Q: Were the number of positions to be studied from each IC determined
relative to the absolute size of the IC or was it based on a percentage
of the total number of NIH employees overall?

A: In 2002, NIH assigned cost comparison requirements to each IC based
on their relative size at NIH (based on total FTE). NIH completed these
reviews and received a passing grade. In 2003 and beyond, NIH is
conducting reviews in a corporate fashion, meaning that a given function
is completely reviewed wherever it exists at NIH, regardless of size IC
by IC.

Q: Who at NIH is involved in implementing the A-76 Process and
conducting the actual reviews?

A: There are thousands of people involved in the competitive sourcing
(A-76) program at NIH. Some of the key groups include the following: The
Commercial Activities Steering Committee is chaired by the NIH Deputy
Director for Management and includes several IC Executive Officers as
well as key management officials in the Office of the Director. The
Commercial Activities Review Team (CART) in the Office of Management
Assessment, has primary responsibility for coordinating the reviews
across NIH. Teams of program staff (Co-chair workgroups) are involved in
reviewing the inventory of commercial functions at NIH and ensuring it
is being applied uniformly and consistently across the ICs. Numerous
program offices are involved in reviewing the functional definitions and
assisting the Co-chair groups with revisions of the inventory as
necessary. And all employees in a function that has been identified for
cost comparison are given the opportunity to provide their input on the
task they perform.

Q: My job involves activities that cover more than one function. How is
this reflected in the FAIR Act Inventory? How am I affected if only some
of my job activities fall under a function that is being outsourced?

A: Competitive Sourcing reviews functions, not individual FTE. Most of
us conduct more than a single function. However, NIH ran several pilots
and determined that the best way to calculate the function an individual
was assigned to was to list them based on their primary duty (based on
the majority of their time). Once the review of the function begins, the
employees and their managers are interviewed to determine the full scope
of the function and separate it from other duties that are not related
to the competitive sourcing review.

Q: How do the employees know the FAIR Act Inventory process was done
fairly?

A: It is our goal to have a process that is transparent and accountable.
Proper documentation is kept for all stages of the review process.
Thousands of staff across NIH are involved in the process. Once a review
is completed it is subjected to independent review to ensure all factors
in the review are conducted fairly and equitably.

Q: Are there guidelines about reviewing a function more than once within
a certain time period?

A: Once a function has been reviewed, OMB guidelines state that it
should be reviewed again within 5 years.

Q: If I am reassigned to a new function within NIH are their guidelines
that protect me from having my new function reviewed within a certain
time period?

A: No. If you are reassigned to another commercial function that is then
identified for review, all staff in the function will be included in the
review. It is necessary that the full scope of the function be reviewed.

Q: Will attrition and/or contractors currently at NIH count towards the
A-76 requirements for FY03?

A: The requirement is for NIH to review 10% of the commercial inventory
in 2003. This is equivalent to 930 FTE. If the functions being reviewed
have vacancies, those will count toward the review for credit.
Contractors currently at NIH only count if we directly converted all or
part of the function during the review period. Current contractors
(already conducting the function at the beginning of the review) are not
credited toward the review.

Q: Will the cost of doing background checks and maintaining campus
security be incorporated into workload estimate?

A: Background checks and campus security are a requirement regardless of
who is performing the function. Therefore, it would only be included as
a cost factor if it was unique to the contractor of federal employees.

Q: How much advance notice will employees receive if it is determined
their function is going to be contracted out?

A: We are trying to give employees as much notice as possible, generally
two to four weeks before a review is begun and they are interviewed, but
it is possible that the timeframes could be much shorter as the scope of
the review is clarified and additional employees are added or removed
from the scope. Once the review is completed, employees will be notified
of the results. As part of the review process, the government must
develop a transition plan (for converting either to a Most Efficient
Organization or to contract). In the event that a function is to be
converted to contract, the government generally has one year to convert
the function.

Q: I read last week that now bids will be awarded based on \"best
value\" rather than lowest cost. Can you please elaborate on how this is
supposed to make the bidding process fairer and when will these new
guidelines take effect at NIH?

A: Under circular A-76, the competitive sourcing review is determined
based on cost. If there are performance requirements they must be
included in the Performance Work Statement (similar to a Statement of
Work). Both the contractor offer and the federal offer are compared
against the Performance Work Statement.

Q: What performance measurements and consequences will be put in place
to ensure that contractors are held to the same standards as Federal
employees?

A: Contractors are in fact held to performance standards. Contractors
are evaluated based upon a number of criteria, including their
performance relative to the Statements of Work to which they bid. It is
therefore imperative that the Performance Work Statement on which the
contractor and federal employees compete accurately describe the
requirements of the function, and these requirements be translated into
a common, measurable set of performance criteria.

Q: What performance measurements and consequences will be put in place
to hold contractors to performing the work for the price, standard, and
within the timeframe of the original bid?

A: Competitive Sourcing is similar to other contract requirements and
follows the Federal Acquisition Regulations (FAR).

Q: How far down the management structure is management protected from
the A-76 Process?

A: Nobody is "protected" from A-76. Once a function is identified for
review at NIH, all staff in that function are included in the review.

Q: What changes were made to the functions originally scheduled for
review?

A: Previously, On October 30, 2002, we sent out an all-hands memo
outlining the functions to be reviewed in 03 and 04. It listed a number
of smaller reviews that we thought we would conduct. However, due to
difficulties in finding comparable contracts for many of these reviews,
the number of reviews, and the changes being made to Circular A-76,
Warden Associates and the Commercial Activities Review Team (CART)
recommended a shift to two or three large reviews. Performing the larger
reviews will also allow NIH the opportunity to submit a Most Efficient
Organization (MEO) proposal that will allow the NIH employees currently
in those jobs a better opportunity to compete against the private
sector. This change of review strategy was approved by the A-76 Steering
Committee.

Changes in the Facilities and Installation Services functions: The
majority of the changes involved a repackaging to combine most of the
Facilities and Installation Services reviews scheduled in both 03 and 04
to now compete them in 03.

Changes in the Grants functions: The current plan is to review the
Grants Tech and admin support functions in Program, Review and Grants
Management areas all in 03. Previously the Grants Management Tech
function was scheduled to be reviewed in 03 and the review functions
were identified for review in 04. However, in discussions with, several
EOs, Chick Leasure, and the Grants Co-chair Working Group there was a
consensus that it did not make sense from a programmatic perspective to
compete these similar functions separately and potentially end up with
separate contracts if the outcome of the review resulted in a decision
to outsource.

Fire Protection function: We are continuing the review of the Fire
Protection function as mandated by the budget pass back and with an
expected completion date in FY 04.

Q: Can contractors be involved in the reviews and answer questions about
their role in meeting the NIH mission?

A: Contractors can provide information, but should not be involved in
the decision making process. Once a contractor is involved in the
decision making process, they will be restricted from competing for the
work.

Q: I am a Project Officer and have responsibility for managing an NIH
contract. I have been recorded on the FAIR inventory as Inherently
Governmental (IG). Is it therefore accurate to say that I am exempt from
the cost comparison process?

A: No. It is the function of the Project Officer that is IG, not the
individual. NIH is restricted from outsourcing the oversight of
government contracts (IG functions). However, the individual generally
has assignments that are made up from both IG and commercial functions.
NIH has the authority to restructure the functions that make up an
individual's assignments to meet the mission regardless of whether they
are commercial or IG. Just because an individual has been designated as
IG for the FAIR Act inventory because the preponderance of their duties
are currently considered IG, does not mean the function is exempt from
review and restructuring. It is entirely possible that a given
individual's responsibilities, both IG and commercial could be
reorganized to support a more efficient and effective structure.

[Workforce Planning]{.underline}

Q: How does NIH plan to recruit the best people while publicly stating
that it intends to contract out a percentage of the workforce? In other
words, why would anyone start a new career in the federal government
with A-76 issues as a future threat to any position?

A: NIH does not have a target for contracting out work to the private
sector. A-76 targets only require that a percentage of the NIH
commercial workforce be reviewed. NIH continues to offer an exceptional
opportunity for scientific and administrative staff to be part of a
respected and successful Federal program.

Q: Why is NIH still hiring from outside the Government for
commercial-related functions when we know A-76 is not going away?

A: As long as NIH retains the function, a viable workforce has to be
maintained. The Agency does not assume that a function will be
outsourced merely because a cost-comparison study is planned. However,
NIH management will continue to limit hiring in areas where outsourcing
could occur in order to minimize the number of displaced employees.

Q: Can the Department provide assurances that the A-76 Process will not
compromise the mission of NIH?

A: Yes, but much of the responsibility for preserving NIH's programs
lies within its own staff. All employees must do all they can to
minimize any disruption brought by A-76 and any other restructuring
initiatives while still ensuring that we meet our requirements under the
President's Management Agenda, including competitive sourcing.

Q: How does NIH intend to account for the institutional knowledge that
will be lost as a result of outsourcing?

A: This issue is not new. Regular staff turnover and attrition can lead
to a loss of valuable knowledge, and NIH is always seeking to retain as
much of it as possible. Because the A-76 process requires a schedule of
functions to be studied, staff can anticipate and begin to prepare for
changes that may come. This will allow adequate time for sharing
knowledge and experiences, as well as proper training. Federal project
officers who oversee these new contracts must take the necessary steps
to acquire the knowledge and skills necessary for proper oversight and
management.

Q: Is it anticipated that any minority groups (including women and
persons with disabilities) will be disproportionately affected by the
A-76 Process? If so, what steps are being taken to prevent this?

A: The Office of Equal Opportunity and Diversity Management (OEODM) has
been involved with A-76 initiatives from the start. OEODM has been
evaluating the potential effects of outsourcing in an effort to predict
and prevent any unintentional adverse impact. In addition, the NIH
Diversity Council has formed a subcommittee to coordinate workforce
issues related to restructuring, and that subcommittee continues to meet
on a regular basis in order to remain aware of the latest developments.

[Grants Support (Grants Mgmt/Program/Review Support)]{.underline}

Q: Will the activities/functions of the people who are interviewed be
automatically considered part of the developing Performance Work
Statement?

A: No.  Being interviewed does not mean that person\'s
activities/function will be subjected to competitive sourcing.  The
Performance Work Statement must be composed of elements that fit well
together.  Some activities/functions may simply not fit within the final
PWS.

 

Q: Are committee management (R103.15) and committee management support
(R103.16) included in the Grants function?

A: The Grants Function Committee has not yet made a determination.  In
most ICs, they serve intramural and extramural and the Office of the
Director in the IC.  For the purposes of the FY03 Grants function
interviews, committee management support (R103.16) staff members will
NOT be interviewed.  The function MAY eventually move out of grants and
into general admin.

 

Q: Should program analysis (R103.9) and program analysis support
(R103.10) FTEs be interviewed?

A: Yes if they serve an extramural function (program, review, or grants
management).  We understand that this will include staff with a broad
range of grade levels and responsibilities.  However, because ICs may
use a wide variety of titles and grade levels to perform this function,
the Grants Function committee can think of no other way to achieve
equity across ICs.  The interviews will help determine which functions
fit within the developing Performance Work Statement and which do not.

 

Q: What code should be used for the more senior scientific managers and
supervisors, such as branch and IRG chiefs, division directors, and
heads of extramural activities/EPMC representatives?

A: ICs seem to have used a variety of codes - 103.3A, 103.3B, 140.7, and
perhaps others that we have not yet discovered.  How to achieve
consistency in this area will be a topic of discussion for a future
Grants Function Committee meeting.

 

Q: Should the support staff (by whatever title is used) for all managers
and supervisors in program, review, and grants management such as branch
and IRG chiefs, division directors, and heads of extramural
activities/EPMC representatives be interviewed?

A: Yes.  This will provide the PWS Team with the most data from which to
craft the PWS.

Q: Will Lead Grants Techs be included in Grants Support review?

A: Yes, at least initially. There is sufficient vagueness on what would
potentially make this function Inherently Governmental as well as the
consistency with how it is being reported across ICs. We will include
this function in the review in order to more clearly define it, and
based on the review we will work with the Grants Co-chair group to
determine if it should be classified as IG, Commercial Core, or
Commercial Competitive, and how to best apply it consistently across the
ICs. We believe this is the only way to fairly review this function.