The Office of Personnel Management is responsible for developing human resources policy and guidance for Federal employees throughout government. In a major policy speech at the Human Resource Outsourcing World Conference & Exposition in New York City, OPM director Kay Coles James articulated the administration’s views on “competitive sourcing.”
Competitive sourcing is likely to impact virtually all federal employees in one way or another. Unless you are retiring in the very near future, you should download James’ speech from the link on the left hand side of this page and read it. Whether you agree or not, you need to understand the philosophy and how it is likely to impact you and your agency.
This article is a summary of James’ views on the competive sourcing of government work.
Citing the Office of Management and Budget, James says “Our taxpayers simply cannot afford – nor should they be asked to support – a system that operates at an unnecessarily high cost because many of its commercial activities are performed by agencies without the benefit of competition.” In other words, OPM and the administration want to ensure there is competition for performing the work of government.
As the CEO for the Federal Government, President Bush, wants competition because it produces good results. It doesn’t matter who wins the competition as long as the winner can get the job done and can be held accountable for the outcome.
Typically, the government wins just over 50% of public-private competitions.
What are the primary benefits of “competitive sourcing?” Citing a University of Maryland professor as the source, she cites these benefits:
• Performance Improves Significantly
• Costs Decrease Significantly
• Promised Savings are Realized Over Time
• Small Businesses Benefited
• Involuntary Separations of Government Employees are Few, and
• Government has Greater Control
James says there is confusion in government about outsourcing and what it really means. It doesn’t mean automatically turning over jobs performed by federal employees to a private contractor. “Competitive sourcing,” says James, is the name for a process of getting work done. Outsourcing is one possible outcome of this competitive process.
James says that “As taxpayers, we all have very little patience for wasted government dollars that we see taken out of every paycheck and are reminded of every April 15th. We want our hard earned money used efficiently, effectively and sparingly.” Private companies often contract out their payroll or their human resources function. The reason is because an organization that specializes in providing these services may be able to do it more effectively and efficiently and provide a larger profit for the shareholders of that company.
Since the Office of Personnel Management determines human resources policies for the Federal Government, her statement that 85% of the companies who outsource human resource operations have become more profitable is certainly significant for Federal agencies. James also emphasized that OPM will become more involved in auditing HR contracts in government.
The Administration’s policy is not to give advantages to private companies or to Federal employees but to get the best value for the money spent by taxpayers for an effective, efficient government.
The traditional way of contracting for government services doesn’t work well, according to James. She contends: “We know we need to improve our skills at contract management and the private contractor needs to understand our role as manager and to embrace our agencies and our missions.” She says the government is seeking a partnership with companies that “will have thought through every possibility far beyond just crunching the numbers. What is our mission? Who are our people? How will we solve problems that, right now, we don’t even know exist?”
In short, the policy is to change how government operates for the ultimate purpose of improving government services and efficiency.