Proposed Revisions to OMB Circular A-76

The scope section of OMB Circular A-76 final version encourages agencies to use alternatives to standard or streamlined competitions, including public-private partnerships and high performing organizations. Including these alternatives, approaches can result in improved efficiency and enhanced performance, and improve government-wide policy decisions to use the private sector for commercially available goods and services.

OMB Circular A-76 deleted from the trade-off source selection process, the requirement that an agency's performance decision to select other than the lowest cost be "quantifiable".

The OMB Circular A-76 final version requires agencies to complete all "standard competitions" within 12 months from public announcement to performance decision, unless the Competitive Sourcing Official extends the time to a maximum of 18 months before the competition announcement. While the periods themselves were not extended, the timeframes do not include the agencies' preliminary planning period before announcing the competition. In essence, the agencies have more flexibility to prepare for the competition. Competitive Sourcing Officials may extend the time period for completing a streamlined competition where the agency is developing a most efficient organization (MEO) and can also extend the standard competition if it is expected to be complex. With regard to resources, OMB, in its fiscal year 2003 report to Congress on competitive sourcing results, stated that successful application of competitive sourcing requires a workforce with the skills to run competitions in a strategic manner, conduct a transparent selection process, and properly manage the resulting contract or letter of obligation. On April 15, 2005, OMB announced new efforts to improve the collective capabilities of the federal acquisition workforce. OMB issued a policy letter "Developing and Managing the Acquisition Workforce" that establishes the government-wide framework for creating a federal acquisition workforce with the skills necessary to deliver best value supplies and services, find the best business solutions, and provide strategic business advice to accomplish agency missions. OMB also issued policy letter 2005-08, emphasizing the importance of the Federal Acquisition Workforce, creating new training and development requirements for civilian agencies. The letter broadens the definition of the acquisition workforce, aligns requirements to ensure that the federal acquisition workforce has common training standards, and advances the new partnership between the Federal Acquisition Institute and the Defense Acquisition University. This partnership will enhance the capabilities of the federal acquisition workforce thus ensuring that the acquisition professionals have the necessary program manager and contracting skills to comply with the A-76 requirements.

The revised OMB Circular A-76 introduced a streamlined competition process for commercial activities that involve 65 or fewer civilian Full-time Equivalent. The streamlined process permits agencies to use undefined market research instead of seeking a private offer, encourages in-house employees to develop a most efficient organization (MEO), and permits agencies to conduct an expedited cost comparison within 90 calendar days (may be extended to 135 calendar days) to determine if the agencies' performance would be more advantageous than that of the private sector. Prior to these Circular revisions, the rules allowed for the use of a streamlined process, but did not permit in-house employees to restructure operations. On May 25, 2005, The Office of Management and Budget, released a report entitled "Report on Competitive Sourcing Results in Fiscal Year 2004." It states that agencies are making an effort to give in-house providers the opportunity to develop an MEO and identify better and more cost effective business practices as part of the competitive sourcing process. OMB cites data indicating that half of the agencies that conducted streamlined competitions under revised OMB Circular A-76 gave in-house providers the opportunity to develop an MEO. OMB also reports an increase in the use of standard competitions requiring the in-house team to use business re-engineering processes.

The revised OMB Circular A-76 introduced a streamlined competition process for commercial activities that involve 65 or fewer civilian Full-time Equivalent. The streamlined process permits agencies to use undefined market research instead of seeking a private offer, encourages in-house employees to develop a most efficient organization and agencies to conduct an expedited cost comparison within 90 calendar days (may be extended to 135 calendar days) to determine if the agencies' performance would be more advantageous that that of the private sector. Prior to these Circular revisions, the rules allowed for the use of a streamlined process, but did not permit in-house employees to restructure operations. The fiscal 2005 defense authorization bills passed by both houses of Congress include provisions that would limit the Department of Defense competitive sourcing initiative by eliminating the use of the streamlined process now in the OMB Circular A-76. Differences between the two versions must be resolved during conference.