considered by executive agency officials to be more 
appropriate for performance by Federal employees. 
(4) 
BUSINESS
PROCESS
REENGINEERING 
PROJECT.—The 
term 
‘‘business 
process 
re-
engineering project’’ refers to a process whereby an 
existing organization is reinvented, consolidated, or 
expanded to result in a new organization whose per-
formance exceeds that of previous and comparable 
performers, whether performed by Federal employ-
ees or contractors or a combination of Federal em-
ployees and contractors. 
(5) EXECUTIVE AGENCY.—The term ‘‘executive 
agency’’ has the meaning given the term in section 
133 of title 41, United States Code. 
(6) 
PERSONAL
SERVICES
CONTRACT.—The 
term ‘‘personal services contract’’ has the meaning 
given to the term under section 37.104 of the Fed-
eral Acquisition Regulation, unless the functions to 
be performed under the contract are included in 
statutory exceptions, including sections 129b and 
1091 of title 10, United States Code. 
(7) STANDARD
STUDY.—The term ‘‘standard 
study’’ has the meaning given to the specific type of 
cost-comparison study outlined in attachment B in 
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the OMB Circular A–76 process, as revised in May 
2003. 
SEC. 3. FINDINGS. 
Congress makes the following findings: 
(1) Functions that should have been performed 
by Federal employees because they are inherently 
governmental functions, functions that are closely 
related to inherently governmental functions and re-
curring, or mission-essential functions have been 
wrongly outsourced, including preparing budgets, de-
veloping policy, supporting acquisition, developing 
and interpreting regulations, developing reorganiza-
tions, and developing and implementing ‘‘competitive 
sourcing’’ plans. 
(2) Federal agencies have been pushed to 
outsource significant amounts of work with little 
competition, while Federal employees, despite having 
won 83 percent of the OMB Circular A–76 privat-
ization reviews conducted since the circular was re-
vised in 2003, are rarely given opportunities to per-
form new work or outsourced work. 
(3) The capacity of the Federal Government to 
oversee contractors and the OMB Circular A–76 pri-
vatization process continues to decline, as dem-
onstrated in scandals involving reconstruction efforts 
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in Iraq, Hurricane Katrina recovery efforts, and 
conditions at Walter Reed Army Medical Center. 
The Government Accountability Office (GAO), in 
two 2008 reports on the use of ‘‘competitive 
sourcing’’ in different agencies, determined that 
costs of A–76 privatization reviews often exceeded 
savings because of systematically bad direction from 
the Office of Management and Budget. In the latter 
report, on the Department of Labor, GAO wrote, 
‘‘Without a better system to assess performance and 
track all of the costs associated with competitive 
sourcing, DoL cannot reliably assess whether com-
petitive sourcing truly provides the best deal for the 
taxpayers.’’. 
(4) The OMB Circular A–76 process retains 
fundamental inequities. The minimum cost differen-
tial fails to take into account the quantifiable costs 
(such as hiring consultants and diverting Federal 
employees from their regular duties) of carrying out 
A–76 privatization studies. All in-house bids are 
charged 12 percent of their personnel costs for over-
head costs, even though a Department of Defense 
Inspector General study revealed that overhead costs 
may not differ significantly, if at all, whether the 
functions are kept in-house or contracted out, even 
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in the case of studies of large numbers of Federal 
employees. Despite time limits established in law 
and as part of the OMB Circular process A–76 proc-
ess, privatization studies are allowed to continue in-
definitely. The longer an A–76 privatization study 
lasts, the more it costs to conduct, the less likely 
there are to be savings from that study, and the 
more likely it will cost taxpayers more than it will 
save. In fact, given the costs and controversies asso-
ciated with the OMB Circular A–76 privatization 
process, OMB should be encouraging agencies to use 
internal reengineering efforts, as OMB finally did, 
during the last year of George W. Bush’s presidency. 
SEC. 4. PURPOSES. 
The purposes of this Act are as follows: 
(1) To build upon the foundation established by 
the 110th Congress that suspended the use of the 
OMB Circular A–76 privatization process, required 
all executive agencies to develop policies to promote 
the insourcing of new work and outsourced work, 
and required the Department of Defense to develop 
a comprehensive inventory of its service contracts. 
(2) To establish a policy that provides that— 
(A) Federal employees must perform inher-
ently governmental functions, functions closely 
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related to inherently governmental functions, 
and mission essential functions; 
(B) other functions may be performed by 
Federal employees or contractors, depending on 
the needs of executive agencies and all relevant 
public-private competition requirements; and 
(C) Federal employees should not be sub-
ject to headcounts, personnel ceilings, or con-
straints, which force executive agencies to con-
tract out functions without public-private com-
petition. 
(3) To prevent executive agencies from con-
tracting out new functions if those new functions 
should be performed by Federal employees and re-
quire agencies to explain in annual reports to Con-
gress why functions ultimately contracted out were 
not considered for performance by Federal employ-
ees. 
(4) To require executive agencies— 
(A) to determine which of their functions 
must actually be performed by Federal employ-
ees because the work is inherently govern-
mental, closely related to inherently govern-
mental work, or mission essential, and how 
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