The process is defined in OMB Circular A-76. Competitive sourcing more accurately describes the process that identifies the most efficient provider of a service. Privatization occurs when the government relinquishes ownership and control of an operation by divesting itself of the commercial activity, including the associated real property, and becomes a customer that purchases goods and services from a commercial source. Privatization sounds like Competitive Sourcing. Competitive Sourcing retains ownership and control of an operation whether government employees or contractors provide the service.
Privatization divests the government of ownership and control of the activity.
After a study is announced, the government and commercial firms develop their most efficient organizations and the cost of performing the functions identified in the performance work statement. The bids are opened by the contracting office and recorded on a standard cost comparison form. A Direct Conversion is a conversion to contract without a formal cost competition study. Specific conditions must be met to use direct conversion. These sources are specified in FAR Part 8.