**FREQUENTLY ASKED QUESTIONS**

**Q. What is the President's Management Agenda?**

The "PMA" is a set of initiatives designed to improve the management of
federal agencies by adopting performance-based criteria for
decision-making and action, and ultimately tying performance to budget
appropriations.

**Q. What is the Administration's competition program?**

Competition is a major component of President Bush's Management Agenda.
The concept is called "Competitive Sourcing" which simply means a
systematic effort to have all commercial activities in the federal
government periodically go through a process of competition. Commercial
activities have been identified for several years in the FAIR Act
inventories.

**Q. What is the FAIR Act?**

The Federal Activities Inventory Reform (FAIR) Act took the regulatory
requirement of OMB Circular A-76 to conduct an annual inventory of
commercial activities and made it the law in 1998. Under the provisions
of the FAIR Act, each agency must annually provide OMB with a list of
the commercial functions performed in that agency that are "not
inherently governmental". The definitions that led to designations of
"commercial" and "inherently governmental" are published by OMB and must
be applied in all government agencies. These lists of commercial
functions are also made available to the public, after review by and
consultation with OMB.

**Q. What is A-76?**

The Office of Management & Budget (OMB) is responsible for publishing
and updating Circular A-76 which 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 Personnel. This process is known as
Competitive Sourcing and is identified as one of the primary initiatives
in the President's Management Agenda.

Q.  **Why is competitive sourcing important?**

Competitive sourcing is part of a performance-based management
initiative designed to improve performance and efficiency. When done
correctly, competition often dramatically drives down costs and ratchets
up performance. A long-term study of federal public-private competitions
found that competition drove costs down over 30% while improving
performance. Without competitive forces program structures and
approaches often stagnate. Applying competition drives management to
identify the true cost of doing business. Ultimately, the goal of
realizing efficiencies compels an agency to use performance measurement
to track and compare quality and value.

**Q. If competitive sourcing isn't "outsourcing", then what are the
benefits?**

As a good example, OMB criticized the Government Printing Office (GPO)
for high costs and lousy service for years. In 2002, OMB decided
competition was the only way to wake the GPO up, so they offered the job
of printing the fiscal 2004 federal budget to competitive bidding. After
much complaint, the GPO turned in a bid that was almost 24% lower than
its price from the previous year, enabling both sides to claim victory.
The OMB said it proved competition could save the government money,
while the printing office said it demonstrated that no one could beat
its price. To put it into perspective, GPO could have saved taxpayers
\$100,000 per year if it chose, but it never chose to do so until it was
forced to compete.

Additionally, agencies use competition to:

-   Gain access to new skills and technology

-   Find new ways to structure work to meet changing demand for services

-   Speed up completion of needed projects

-   Uncover innovations that improve the quality or value of services

**Q. What are the various types of Competitive Sourcing Reviews?**

![](media/image1.png){width="4.1666666666666664e-2in"
height="6.25e-2in"}

Generally, there are two types of reviews, standard reviews and
streamlined reviews. The rules of A-76 require standard reviews be
completed within 12 months, with an extension of up to 6 months
available in rare circumstances. Under the standard review procedures,
the agency develops a proposal for a "most efficient organization" or
"MEO" that competes with bids from the private sector. Under a
streamlined review, agencies calculate the cost of how they currently do
business and compare this to an estimated private sector cost using
documented market research or soliciting cost proposals in accordance
with the Federal Acquisition Regulation (FAR). Under a second type of
streamlined review, the agency may also develop an MEO as part of the
process. Streamlined reviews must be completed in 90 days, with 45-day
extension possible in cases where the agency develops an MEO.

**Q. How does the A-76 competition process work?**

The managed public/private competition process examines the financial
impact of continuing to provide certain services in-house or by
contract. During a Standard Competition, a team of employees,
consultants, (or a combination) develops a performance work statement
(PWS) and a quality assurance surveillance plan (QASP). These documents
outline the technical and operational requirements for performing the
work and specify the criteria for measuring the effectiveness and
quality of the work performed. Under a Streamlined Competition, a team
of employees, consultants, (or a combination) develops a Requirements
Document (RQ) which outlines the technical, functional, and performance
characteristics necessary to perform the function. These documents
define the "scope of work" for the competition.

The scope of work is released to the public as a solicitation and
bidders may submit offers to fulfill the requirements of the PWS or RQ.
The government's bid team separately and confidentially prepares a
proposal for undertaking the function describe in the PWS or RQ. This
team is established within an affected functional area to design and
create a management plan that includes a Most Efficient Organization
(MEO) to compete against the private sector offer. Under a streamlined
study, the MEO is evaluated against current market research and cost
estimates. Under a standard competition, the proposal is evaluated
against the private sector offer under the guidelines of the Federal
Acquisition Regulations (FAR).

Once the offers are received, the Source Selection Board (SSB), made up
of government acquisition officials, evaluates all offers determines the
outcome of the competition based on the "best value" (performance value
relative to cost), then a performance decision is announced. Once the
decision is announced, conversion to either the MEO or the private
sector contract must begin.

**Q. Who at NIH is involved in implementing A-76 Processes and
conducting the actual reviews?**

There are thousands of people involved in the competitive sourcing
program at NIH. Some of the key groups include:

1.  **The Commercial Activities Steering Committee (CASC)**: 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.

2.  **The Commercial Activities Review Team (CART)**: Located in the
    Office of Management Assessment, this group has primary
    responsibility for coordinating the reviews across NIH.

3.  **Teams of program staff (Co-Chair workgroups)**: Involved in
    reviewing the inventory of commercial functions at NIH and ensuring
    it is applied uniformly and consistently across the ICs.

4.  **Numerous Program Offices**: Involved in reviewing the functional
    definitions and assisting the Co-Chair groups with revisions of the
    inventory as necessary.

5.  **Office of Strategic Management Planning**: The Transition Center
    serves as a key resource for managers and employees throughout the
    competitive sourcing process. A key function is to consistently
    perform the Human Resources Advisory role throughout each phase the
    competition. Additionally, the Center offers training, workshops,
    and transition services to affected populations and facilitates the
    placement of transitioning employees.

6.  **Employees performing functions identified for study**: All
    employees who perform functions identified for cost comparison are
    given an opportunity to provide input on the tasks they perform.

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

NIH has setup a website dedicated to A-76 activities:
<http://a-76.nih.gov/>. This website provides an overview of competitive
sourcing activities specific to the NIH environment. Additionally,
information is available at [OMB Circular A-76 - Performance of
Commercial
Activities](http://www.whitehouse.gov/omb/circulars/a076/a76_incl_tech_correction.html)
which gives specific information about the circular and provides a
detailed outline of the competitive sourcing process. You may also want
to consult the A-76 Related Links to Government Executive Magazine,
which contains additional information related to competitive sourcing.

**Q. Has anyone identified for NIH and DHHS the real impact of A-76 on
employees, customers, and the long-term reputation of NIH? Employees
would like to see cost/benefit data that makes a clear argument for
competitive sourcing.**

![](media/image1.png){width="4.1666666666666664e-2in"
height="6.25e-2in"}

Since NIH (and most civilian agencies) began conducting competitive
sourcing reviews in 2003, significant cost savings have been identified
within the organizations studies and reengineered. Most of the studies
conducted at NIH have resulted in the commercial activities being
retained by the in-house service provider. The government's proposal
resulted in additional cost savings over the existing organization, as
well as the private sector offeror. Each year, the Competitive
Activities Review Team (CART) provides a report to DHHS, which is then
submitted to Congress, outlining the substantial cost savings realized
by conducting reviews and implementing the results. The outcome of
competitive forces create the best value for NIH in acquiring commercial
services.

**Q.** **What is "best value"?**

Best practices for government procurement and service contracting are
steadily moving toward "best-value" techniques, where, rather than
selecting a private partner based on low cost alone, the government
chooses the best combination of cost and quality. This approach has long
been the standard in the Federal Acquisition Regulations, and is now the
standard for competitive sourcing under OMB Circular A-76.

Best value is rooted in the simple concept of value: choosing a team to
provide complex services or projects based on qualifications and
technical merits, as long as the price is a value for what is promised.
The Federal Government is beginning to recognize what every consumer
already knows -- sometimes if you pay more, you get more; that is the
cheapest is not always the most desirable or best value for the money.
Best value procurements allow all factors to be weighed appropriately
when the goal is a mix of cost savings and high quality for products and
services.

**Q. How are employees performing commercial functions notified they are
impacted by a cost comparison?**

The Competitive Sourcing Official, or their delegate, is required to
notify the workforce as soon as Congress is notified of a decision to
compete a function. This communication may come as an official letter or
email from the CSO or delegate office to the entire population.

**Q. Why is it that when we go to meetings with upper management, there
is no concrete information communicated?**

![](media/image1.png){width="4.1666666666666664e-2in"
height="6.25e-2in"}

NIH management tries to communicate the information that is known at the
time of the discussion. However, the issues are complicated and there
are many variables that are still unknown. NIH management is trying to
deal with many, often competing, requirements. Another obstacle is
trying to clearly convey complex information with many subtleties in
simple and straightforward language. NIH management is making every
effort to convey the most accurate information in a thoughtful and
timely manner. Information posted on the A-76 website
(<http://a-76.nih.gov/>) is kept as current as possible.

**Q. What can be done to improve the morale of civilians who tend to
give up and become less productive during the competitive sourcing
process?**

Frequent communication is essential. It is in the best interest of the
workforce to remain informed and involved throughout the competition
process. In particular, employees should provide inputs and assistance
in developing the Performance Work Statement (PWS) which identifies the
technical and organizational requirements for performing the commercial
activity. Employee input ensures an accurate PWS. It is also in their
best interest to either assist or provide inputs to the Government
Management Plan. Additionally, the *Transition Center* provides
resources and support for all employees throughout the competitive
sourcing process. These services include workshops on change management,
resume writing, retirement planning, and many other appropriate topics
that enable employees to stay productive and proactive during every
phase of the competition process.

**Q. Are there functions that can not be competed?**

Yes. There are inherently governmental activities that are so closely
related to the public interest that they require performance by Federal
government personnel. These activities require the exercise of
substantial discretion in applying government authority and/or in making
decisions for the government. Inherently governmental activities
normally fall into two categories: the exercise of sovereign government
authority or the establishment of procedures and processes related to
the oversight of monetary transactions or entitlements. More information
can be found in the OMB Circular A-76.

**Q. What should an employee do while the study is taking place?**

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 is made, it
is impossible to predict the outcome or determine the degree of impact.
At NIH, employee organizations have won the majority of the competition
held to date. However, this does not mitigate the feelings of anxiety
and insecurity associated with restructuring initiatives such as A-76.
These feelings are natural and NIH is committed to providing a
supportive atmosphere. The NIH Transition Center was established to help
employees deal with their apprehension about competitive sourcing
activities and assist then in finding ways to be proactive in their
approach to managing change and handling stress during a period of
uncertainty.

**Q. How is the tentative or final decision announced?**

The Contracting Officer (CO) announces the tentative and final decision
to affected parties, but the Competitive Sourcing Official (CSO), or
their delegate notifies the affected workforce. In the case of a
tentative competition decision, civilian employees and their
representatives may submit an appeal during the Public Review Period.
After the Public Review Period ends, the Administrative Appeal Authority
reviews any appeals and makes a final decision. In the case of contract
decisions, Congressional notification is required prior to announcing
the formal final decision.

**Q. If there is a contract decision, can it be appealed?**

Yes. Upon the announcement of the tentative decision, the A-76
Administrative Appeal Process begins. This process is available to
civilians and their representatives, as well as contractors who have
submitted formal offers. Appeals must be submitted within 20 calendar
days after the public announcement (or within 30 calendar days if the
study is particularly complex). The Administrative Appeal Authority
should make a final decision within 30 days of receipt of the appeal.
The tentative decision becomes a final decision upon the resolution of
the appeal.

**Q. If the cost comparison favors contract performance, how much time
is there before civilian personnel impacts occur?**

The timing of the conversion to the winner of the performance decision
depends on the specific transition plan outlined in the proposal.
However, as soon as there is a final cost comparison decision,
transition activities begin immediately to contract or MEO performance,
and personnel (both civilian and military) impacts begin. Employees are
offered VERA/VSIP. However, at NIH civilian federal employees not placed
in the new organization (MEO) are placed in other Federal jobs via the
Employee Placement Program (EPP) administered by the Transition Center
in cooperation with the Office of Human Resources.

**Q. If a contractor wins, do affected civilians have a right of first
refusal for jobs for which they are qualified?**

Civilian employees in the Federal Government are afforded the right of
first refusal as stated in the Federal Acquisition Regulation (FAR)
52.207-3: \"The contractor shall give government employees who have been
or will be adversely affected or separated as a result of award of this
contract the right of first refusal for employment openings under the
contract in positions for which they are qualified."

Q.  **What happens to my grade and base pay if I am placed in another
    position as a result of competitive sourcing actions?**

NIH employees serving in permanent appointments who choose to take a
voluntary change to lower grade into an MEO position are eligible for
retained grade and retained pay.

Retained grade is applicable for two years commencing on the date the
employee is placed in the lower graded position. During the two-year
period, an employee's retained grade is considered the employee's grade
for pay administration purposes, retirement, and life insurance, as well
as eligibility for training and non-competitive promotions. The employee
is entitled to receive within grade increases and comparability
increases at the retained grade level.

Following the two-year period of retained grade, the employee's grade
reverts to the original lower grade. At this point, retained pay comes
into play. Unless terminated under the conditions spelled out in Title
5, Code of Federal Regulations (CFR) 536.209, pay retention continues
until the maximum rate for the grade the employee is occupying equals or
exceeds the employee's retained pay rate. Under pay retention, an
employee only received 50% of the annual pay adjustment. This each year
the gap between the employee's retained pay rate and the rate of pay for
the position occupied gets smaller.

Employees not assigned to a position within an MEO, are enrolled in the
Employee Placement Program (EPP) and are placed into new positions at
their equivalent grade level in other organizations, outside the MEO
within the same IC or in a different IC. The Transition Center
facilitates this placement process and provides support to transitioning
employees through career counseling, job application assistance and
retraining opportunities.

**List of Additional Resources:**

Acquisition Net Website: <http://www.arnet.gov/>

The Code of Federal Regulations (CFR):
<http://www.access.gpo.gov/nara/cfr/waisidx/5cfr752.html>

Revised Supplemental Handbook :
[http://www.whitehouse.gov/omb/circulars/a076supp.pdf](http://www.whitehouse.gov/omb/circulars/a076supp.pdf )

Federal Acquisition Council: <http://www.fac.gov/>

Federal Acquisition Institute: [http://fai.gov](http://fai.gov/)

DHHS Competitive Sourcing website:
<http://intranet.hhs.gov/ocs/index.html>

NIH Competitive Sourcing website: <http://a-76.nih.gov/>

NIH Office of Strategic Management Planning: <http://osmp.od.nih.gov/>

Government Executive Magazine website:
<http://www.govexec.com/outsourcing/>

Share A-76:
<http://sharea76.fedworx.org/inst/sharea76.nsf/CONTDEFLOOK/HOME-INDEX>

Office of Personnel Management (OPM) websites:

Classification Info: <http://opm.gov/fedclass/>

Employee & Labor Relations Info:
<http://www1.opm.gov/pubs/newsletters/nd/index1.htm>