# Presentation: 132544

## Competitive Sourcing 

**The FAIR Act and OMB Circular A-76:**

**Ron Lentz, Agency Competitive Sourcing Team**

## President’s Management Agenda

- Competitive Sourcing
- (FAIR Act and OMB Circular A-76)
- Strategic Management of Human Capital
- Improved Financial Performance
- Expanded Electronic Government
- Budget and Performance Integration

## Competitive Sourcing: View from the Top

-  *“**Government should be market-based – we should not be afraid of competition, innovation, and choice.  I will open government to the discipline of competition.”* *-- George W. Bush*
*“**Competition results in better value and improves performance by bringing viable, responsive, innovative and cost-effective competitors (public and private) to the table.” *
*	**Angela B. Styles, Administrator OFPP*

## Competitive Sourcing: What

- Not necessarily outsourcing but...
- Exposing Government activities to competition.
- Exposing means competing, comparing, or converting.
- The process of competition provides a focus on continuous improvement.
- The objective is to focus on the most effective and efficient way of accomplishing the agency’s mission regardless of whether it is done by civil servants or contractors.

## Federal Activities Inventory Reform Act

***FAIR Act Requirements:***
- Agencies must inventory all of their activities by function
- Annual inventory must be submitted to OMB by June 30
- Inventories are made available to the public
- Interested parties may challenge the inclusion or exclusion of activities in the inventory
- OMB has also required a listing of inherently governmental activities

## Inventory

- Review/classify all activities as inherently governmental or commercial
- All activities are to be categorized as commercial unless unequivocally inherently governmental

## Inherently Governmental Activities(Examples)

- Conducting criminal investigations
- Obligating funds
- Establishing procurement requirements
- Approving specification waivers/deviations
- Providing advice of a nature so extensive and so far advanced toward completion as to limit the decision-makers’ discretion and to restrict the agency’s ability to develop and advance options other than those provided.
- [Not necessarily core capability or mission essential]

## FAIR Act Inventory

- All commercial activities must be assigned a reason code
- Nine reason codes (A-I)
**A - Specifically exempt by the agency**
**B - Subject to the cost comparison or direct conversion**
**C - Specifically exempt by Congress, Executive Order or OMB**
- D - In process of being cost compared of converted directly
- E - Retained in-house as a result of a cost comparison
- F - Review is pending force restructuring decisions
- G - Function is prohibited from conversion because of legislation
- H - Waiver issued
- I - Being performed in-house as a result of a cost comparison resulting from a decision to convert from contract to in-house performance

## Commercial Activities:Category A 

- Whatever specific activities that the Agency Head determines must be accomplished in-house (Not Outsourced)
- Requires Substantial Rationale and
- 		Approval of the NASA Administrator
- May include some core mission activities

## Commercial Activities:Category B

- Decision to keep activities in-house or outsource is both quality and cost based
- Decision would be based upon the results of a direct conversion competition (when authorized), or a cost comparison per A-76 procedures
- May include some core mission activities
**	**

## Commercial Activities:Category C

- The problem is to get the right people, the right skills, the right knowledge at the right place and at the right time.  (Irrespective of in-house vs. outsource)
- Decision as to who should perform the work is generally not a cost-based decision and a cost comparison would be inappropriate.
- Therefore, A-76 procedures do not apply to
- 	Category C (eight specific sub-categories)
- May include some core mission activities

- Category CEight Sub-Categories

**Core Capability**
**Research and Development**
**10 or Fewer FTE**
**No Satisfactory Commercial Source Available**
**Executive Order**
**National Defense/Security Determination**
**Direct Patient Care**
**Industry performance standards are met**

## Competitive Sourcing Plan

- Required by President’s Management Agenda
- Government-wide Competitive Sourcing Goals:
- 15% FY 2003 (Base is Year 2000 Inventory)
- 50% FY TBD (Base is-currently- Year 2000)
- The sum of FTE in all commercial activities codes (A-I) is the the base for Competitive Sourcing Plan goals.  Categories B and C will comprise most of the pool, i.e available for competitive sourcing.
- Periodic progress report required by OMB regarding actions taken on the inventory

## Competitive Sourcing Options 

- Direct conversions from in-house
- Cost comparisons per OMB Circular A-76
- Full or streamlined comparisons
- Other transformational activity, e.g. privatizations

## A-76 Five Possible Processes

**Activities with 10 or Fewer FTE** – may be performed by in-house, contract or Inter Service Support Agreement (ISSA) performance, without cost comparison (i.e., direct conversion).
**Activities of 11 or More FTE** – may be converted to contract or ISSA, without cost comparison, if–
- a. fair and reasonable prices can be obtained through competitive award, and
- b. all directly affected Federal employees serving on permanent appointments are reassigned to other comparable Federal positions for which they are qualified.

## A-76 Five Possible Processes

**3.  Activities of 11-65 FTE** **and any** **Federal employee adversely affected:**
-  	*Streamlined Cost Comparison: *
- 	No solicitation is issued.  The in-house estimate is based on the existing organization.  Compare the in-house estimate with four comparable service contracts.
**4.  Activities 65+ FTE** **and any Federal employees adversely affected:**
- 		*Full A-76 Cost Comparison Required*

- A-76 Five Possible Processes

**5.  ****Preferential Procurement Programs** – A commercial activity of any size may be converted to contract performance, **without cost comparison—even if it results in adverse employee actions**, if the contract is awarded to a preferential procurement source at a fair market price. At the agency’s discretion, a cost comparison may be conducted.
**Definition: *****“Preferential Procurement Program**** – These are special “commercial” source programs, such as Federal Prison Industries and the workshops administered by the Committee for the Purchase from the Blind and Other Severely Handicapped under the Javits-Wagner-O’Day Act.”*

## Full A-76 Cost Comparison:Major Components

- Performance Work Statement
- Most Efficient Organization
- Transition Plan
- Technical Performance Plan
- In-House Cost Estimate
- Quality Assurance Surveillance Plan

## Full A-76 Cost Comparison:Process

- Issue RFP
- Receive government management plan
- Receive proposals
- Tentatively select proposal
- Compare “winning” proposal (plus 10% bogey) to in-house cost estimate
- Resolve Appeals

## Full A-76 Cost Comparison:Historical Outcome

- Government wins >50% of competitions
- Resulting activity is streamlined
- Performance monitored by agency
- Experience demonstrates that the use of public-private competition consistently reduces the cost of public performance by more than 30 percent

## Competitive Sourcing: Status

- Issue Inventory Call			February 27
- ViTS for Centers: A-76		April 17
- Center Inventories and Competitive
- 	Sourcing Plans (CSP) to HQ 		May 1
- HQ review/adjustment/approval 	June 1
- Agency CSP Developed		June 14
- Begin Executive Review of CSP	June 17
- OMB submission due			June 30

## Related Activities

- Strategic Resources Review
- 10-Year Look Back Study
- Inter-Service Support Agreements Inventory and Competitive Sourcing Plan
- OMB and NASA Stoplight Charts
- Management Scorecard Action Plan

## HQ Points of Contact

- Code B		Phil Smith/Cheryl Hood	202 358-1022/2501
- Code C		Chris Jedrey		202 358-0543
- Code E		Mervyn Jones		202 358-0683
- Code F		Craig Conlin		202 358-1180
- Code G		Bernie Roan		202 358-2072
- Code J		Deanna Murphy		202 358-1313
- Code M		Mike Reilly		202 358-1407
- Code R		Jay Henn		202 358-4741
- Code W		Diane Frazier		202 358-0419
- Code X		Sharon Chambers		202 358-4469
- Code Y		Rick Keegan		202 358-0789

## Center Points of Contact

| Center | Name | Telephone |
| --- | --- | --- |
| ARC | Nancy Bingham | 650-604-6544 |
| DFRC | Monique Sullivan | 661-276-2593 |
| GRC | Brad Baker | 216-433-2800 |
| GSFC | Mike Ladomirak | 301-286-7522 |
| JSC | Gregory Hayes | 281-483-2316 |
| KSC | Jim Hattaway | 321-867-7212 |
| LaRC | Lana Couch | 757-864-6114 |
| MSFC | Steve Beale | 256-544-0257 |
| SSC | Rebecca Dubuisson | 228-688-1636 |

## More Information

- WEB Sites
- _[http://www.whitehouse.gov/omb/procurement/fair-index.html](http://www.whitehouse.gov/omb/procurement/fair-index.html)_
- _[http://www.govexec.com/outsourcing/](http://www.govexec.com/outsourcing)_
- _[http://www.whitehouse.gov/omb/circulars/](http://www.whitehouse.gov/omb/circulars)_
- _[http://www.doi.gov/pam/competitivesourcing/](http://www.doi.gov/pam/competitivesourcing/)_
- _[http://emissary.acq.osd.mil/inst/share.nsf](file:///C:/Documents%20and%20Settings/smarucci/My%20Documents/emissary.acq.osd.mil/inst/share.nsf)_** **
- _[http://www.gao.gov](http://www.gao.gov/)__ (click on “Commercial Activities Panel”)_
**Agency Competitive Sourcing Team:**
- Joe LeCren, 202-358-0431, _[jlecren@hq.nasa.gov](mailto:jlecren@hq.nasa.gov)_
- Ron Lentz, 202-358-1064, _[rlentz@hq.nasa.gov](mailto:rlentz@hq.nasa.gov)_
- Deborah O’Neill, 202-358-1534, _[doneill@hq.nasa.gov](mailto:doneill@hq.nasa.gov)_
- Ken Sateriale, 202-358-0491, _[ksateria@hq.nasa.gov](mailto:ksateria@hq.nasa.gov)_