# Presentation: 669118

## Competitive Sourcing OverviewDOI Annual Business Conference

- May 24, 2006

- The Department of the Interior
-                     (DOI)

## Competitive Sourcing Defined

- Competitive Sourcing (CS) is one of five President's Management Agenda (PMA) initiatives.
- 	CS is implemented through OMB Circular A-76 (revised 5/2003).
- 	The revised A-76 emphasizes competition over the longstanding general principle of reliance on the private sector to perform recurring commercial functions.

## Definitions – continued

- Differences between:
- Privatization	*versus*
- Outsourcing	*versus*
- Competitive Sourcing

## Privatization is not competitive sourcing.
Privatization is the public sector exiting from the business line and often selling its assets.  There is no government versus private sector competition in this process.  Once a segment or unit is privatized the government no longer has responsibility or control of the work or the goods to be delivered.

We are not using the privatization process.

- Privatization is the public sector exiting from the business line and often selling its assets.  There is no government versus private sector competition in this process.  Once a segment or unit is privatized the government no longer has responsibility or control of the work or the goods to be delivered.
- We _are not_ using the privatization process.

*Privatization*

## Outsourcing.
Outsourcing is not competitive sourcing. Outsourcing is when the government buys a product or service from the private sector.  
 Example: contracting for construction, contracting for custodial services, buying computers.
We are not using the outsourcing process in the context of competitive sourcing.

- Outsourcing _is not_ competitive sourcing. Outsourcing is when the government buys a product or service from the private sector.
-  Example: contracting for construction, contracting for custodial services, buying computers.
- We _are not_ using the outsourcing process in the context of competitive sourcing.

*Outsourcing*

## Competitive sourcing.
CS requires public and private sector competition to improve value.
CS is applied to commercial activities - however competitions generally consider entire business units.
 CS can result in performance by the Public Sector (Agency or reimbursable provider) or Private Sector (contractor or non-profit).
There are no FTE reduction goals in the CS process, (there may be FTE increases or reductions based on the outcome of the competitions).
We are using the competitive sourcing process.

- CS requires public and private sector competition to improve value.
- CS is applied to _commercial _activities - however competitions generally consider entire business units.
-  CS can result in performance by the Public Sector (Agency or reimbursable provider) or Private Sector (contractor or non-profit).
- _There are no FTE reduction goals_ in the CS process, (there may be FTE increases or reductions based on the outcome of the competitions).
- We _are_ using the competitive sourcing process.

*Competitive Sourcing*

## Competitive Sourcing Acronyms

- C = Commercial in Nature
- CS = Competitive Sourcing
- FAIR Act = Federal Activities and Inventory
-                       Reform Act of 1998
- IG = Inherently Governmental
- MIT = Management Initiatives Team
- MEO = Most Efficient Organization
- OFPP = Office of Federal Procurement Policy
- OMB = Office of Management and Budget
- PMA = President’s Management Agenda
- PWS = Performance Work Statement
- The Circular = OMB Circular A-76

## External Factors Affecting DOI Competitive Sourcing Program

- Existing Legislation
- Congress
- Office of Management and Budget
- Office of Personnel Management
- Chief Acquisition Officers Council
- Labor Unions
- Contractor Organizations
- Consistency across Bureaus/Agencies

## Competitive Sourcing Program Outputs

- FAIR Act
- Competitive Sourcing Green Plan/updates
- OMB Scorecard
- DOI Internal Scorecards
- Report to Congress
- Audits of cost savings

## FAIR Act Inventory

- The Federal Activities Inventory Reform (FAIR) Act of 1998 requires the head of each Executive Agency to maintain an inventory of commercial and inherently governmental activities by FTE.
- Inherently Governmental = absolutely must be performed by a Government official. Justification is required – written by program office and approved by CSO (Tom Weimer) and OMB.
- Commercial activities are broken down into 6 categories – the first two (A & B) being important to this discussion:
-        A= even though commercial – not suitable for competition per justification written by program office and approved by CSO (Tom Weimer) and OMB.
-        B= commercial and suitable for competition – This does not mean that the FTE or office will automatically be subjected to a competition.

## FAIR Act Inventory (cont.)

- Inventory submission to OMB by 6/30
-    Review #’s
-    Review justifications
-    Negotiate/make changes
- Publish in Federal Register
- DOI publishes on website
- Inventory Challenges
- Inventory Appeals

## Does it matter which code you are in the FAIR ACT inventory when the Commercial Activity is identified for potential competition?

NO – the entire business unit is studied initially. 

Inherently governmental and other “residual” activities are initially included in the study.

- NO – the entire business unit is studied initially.
- Inherently governmental and other “residual” activities are initially included in the study.

*Reality Check*

## The Competitive Sourcing Green Plan 

- The Green Plan is an OMB approved plan 2005-2008 of activities that likely will be announced for public/private competition.  This is an entirely separate/different document from the FAIR inventory.  How do we decide what to study (compete)?
- What workforce planning challenges exist?
-    Critical skills shortages – fire management, IT, facilities management, engineering, administration. Tied to Strategic Human Capital Management Plan.
- New technology, obsolete processes.
- Are there opportunities for consolidated studies across bureaus?  (example Fire w/4 bureaus and Forest Service)
- Require preliminary planning in accordance with the Circular.
-          Is it cost effective - # of FTE and/or potential savings?
-          Is there a private sector market to provide competition?

## The Competitive Sourcing Green Plan (continued)

- DOI Management Initiative Team (MIT) consisting of senior leadership at the Assistant Secretary/Bureau Director level votes on plan approval.
- Plan is submitted to OMB for negotiations/approval.

## SES Performance Standards

- DOI has two mandatory performance standards for all SES w/ direct reports.
- 1.  **FAIR Act Inventory**.

***Fully Successful:*** Inventory is on time and requires only very minor revisions by the Department or OMB.
***Commendable:***  DOI and OMB can track the Bureau/Office’s consistent approach to coding of like activities between DOI bureaus and other agencies.  Justifications for inherently governmental and commercial A (not suitable for competition) are complete, accurate and approved by DOI and OMB without exception.

**	****Management reviews or Competitive Sourcing studies conducted by executive’s organization achieve quantifiable savings.**

***Fully Successful: ***Reviews and/or studies are completed with establishes timeframes and projected savings are realized and tracked.
***Commendable:*** Bureau/Office has announced and completed all competitions in accordance with the approved Competitive Sourcing Green Plan as revised in August of each year; and can demonstrate through post implementation audits the extent that projected savings have been achieved on completed competitive sourcing studies or implementation of High Performance Organizations (HPO).

**2****.**

## The Competitive Sourcing Program 

- Challenges:
-    Decentralization of DOI organization
-    Different missions & risks
-    Different interpretations of definitions, etc.
-    Validation of cost savings/efficiencies
-    Budget constraints
-    Employee morale
-    Overall belief in the value of the program

## STATISTICS

- Competitions have been held on 3,200 FTE since 2001
- DOI has spent a total of $5.2M for consultants and in-house full-time staff
- DOI expects to save $35M over the next 5 years due to efficiencies developed by our own employees – the MEO.
- DOI has won all major competitions in-house.

## Information

- Website: _[http://www.doi.gov/perfmgt/competitivesourcing/](http://www.doi.gov/perfmgt/competitivesourcing/)_
- Donna Kalvels
-    Director, Center for Competitive Sourcing Excellence
-    Room 2038, MIB
-    202-219-0727
-    QUESTIONS????