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Savings and Performance Improvements Continue to Grow in FY 2006

In December, agencies submitted reports to Congress on their competitive sourcing activities for FY 2006. These reports indicate that public-private competition continues to serve as a valuable management tool for bringing cost control and new efficiencies to commercial activities, such as maintenance and property management, logistics, and human resources. In particular:

Agencies completed 183 competitions involving 6,700 FTEs.
Improvements set in motion by these competitions are expected to generate net savings or cost avoidances totaling $780 million over the next 5-10 years.
Employees received approximately 87 percent of the work competed in FY 2006.
Expected annualized savings from competitions completed between FY 2003-2006 is approximately $1 billion.

Competitions ongoing as of the end of 2006 will help to improve performance of a wide range of commercial activities, including:

data collection at the Department of Education related to the implementation of the No Child Left Behind program and other K-12 programs;
IT support at the Census Bureau; and
administrative support at the Small Business Administration’s Office of Financial Operations.

Additional details on results will be provided in OMB’s consolidated report on FY 2006 competitive sourcing activities to be issued in the coming quarter.

Reinvesting savings

Agencies report that savings and cost avoidances generated by competitive sourcing are helping to meet other needs within their agencies. For example, over the last 2 years the Fish and Wildlife Service (FWS) conducted 7 competitions involving its administrative support staff. Efficiencies gained through the competitions are being reinvested to provide additional support for field station operations at FWS -- including more than 50 refuges, fish hatcheries, and other resource offices.

Savings at other agencies are being used to:

support medical research and laboratory science at Health and Human Services; and
improve disability claims processing at the Social Security Administration.

Department of Justice (DOJ) moves to green status

DOJ developed a long-range green plan for the strategic use of competitive sourcing that will help the Department use competition in a reasoned and responsible manner to achieve greater efficiencies across its bureaus. From FYs 2003-2006, DOJ has completed 13 competitions, involving support activities such as vehicle maintenance, dialysis services, finance and accounting, and laboratory services.

Paul A. Denett
Administrator
Office of Federal Procurement Policy