The

1

• The
• Competitive Sourcing
• Initiative

2
Results in FY 2003 2004

• 879 competitions were completed governmentwide
  involving approximately 30,000 positions.
• - 136 competitions completed by DOD involving
  approximately 16,700 positions.
• - pace of competition activity at DOD fell
  significantly in 2005.
• These competitions are expected to save agencies
• -more than 2.5 billion over the next 3-5 years
  for redirection to higher priorities.
• - approximately 552 million in annualized gross
  savings.
• One-time out-of-pocket expenses were 162
  million.
• Savings achieved from competitions are
  increasing
• - Agencies expect to save 12,000 (15) per FTE
  studied in FY 2003.
• - Agencies expect to save 22,000 (27) per FTE
  studied in FY 2004.
• Civilian agencies are becoming more strategic in
  their selection of activities and packaging
  activities across regions or by business line.

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Activities Generating the Highest Annualized
Savings per FTE in FY 2004

• Information technology 36,900
• Maintenance/Property Mgmt 27,900
• Logistics 26,500
• HR/Personnel Mgmt Ed 25,300
• Finance Accounting 24,800

4
Sources of Savings

• Savings have been achieved through workforce
  realignments, process reengineering, technology
  investments, operational consolidations, and
  other efficiencies.
• Civilian agencies, like DOD, are focusing their
  attention on standard competitions.
• - In FY 2003, 63 of FTEs competed were through
  streamlined competitions.
• - In FY 2004, 79 of FTEs competed were through
  standard competitions.
• FAA competed more than 2000 positions in its
  Automated Flight Service Stations (which provide
  weather briefings, flight planning, and search
  rescue support).
• - This is the largest public-private competition
  in the 50-year history of the competitive
  sourcing initiative.
• - Studies by FAA and DOTs IG identified
  significant deficiencies.
• - The selected service provider (a contractor)
  will modernize and consolidate stations (from 58
  to 20).
• - Expected savings 2.2 billion from the date
  the competition was first announced through the
  life of the 10-year contract.

5
Source of Savings (cont.)

• IRS competed 360 jobs at their forms distribution
  centers.
• - Facilities are aging and expensive to
  maintain demand for paper-based forms is
  diminishing significant opportunities existed
  to apply cost-savings technologies lots of
  private sector interest expressed in performing
  this work.
• - Federal employees were selected as the best
  value provider. Warehouses will be consolidated
  and new technologies leveraged.
• - Expected savings 108 million over 5 years.
• When agencies use streamlined competitions, they
  are increasingly giving in-house incumbent
  providers the opportunity to develop most
  efficient organizations. As a result of more
  strategic applications of streamlined
  competitions, annual average net savings have
  improved dramatically from 900 in FY 2003 to
  more than 10,000 in FY 2004.

6
Ongoing challenges related initiatives

• Tracking results of competitions.
• - DOD relies on CAMIS, but there is no
  government-wide system.
• - At the end of September, a contract was
  awarded on OMBs behalf to develop a
  government-wide database. The database will
  become operational later this fiscal year. The
  database will incorporate data from DOD, but DOD
  will continue to use CAMIS to track its
  competitions.
• - The new database will build on current
  governmetwide reporting requirements (i.e., so
  called section 647 reporting) to ensure
  consistent and clear reporting of data. The
  database will allow OMB to monitor governmentwide
  trends more effectively, promoting successes and
  making adjustments where weaknesses are
  identified.

7
Ongoing challenges related initiatives (cont.)

• Improved accountability for results.
• - GAOs CAP report identified poor
  post-competition accountability as a weakness in
  the use of competitive sourcing.
• - DOD has developed standardized methodology for
  establishing baselines.
• - OMB is reviewing civilian agency methodologies
  for identifying and tracking actual savings.
• - OMB is developing a basic post competition
  assessment rating tool to gauge if certain basic
  steps are being taken after the competition (e.g,
  if the government wins, was a letter of
  obligation established? Has the MEO been
  implemented in a timely manner? Irrespective of
  who wins, are actual costs for a performance
  period consistent with estimated costs?)
• - The competitive sourcing working group of the
  Chief Acquisition Officers Council, in
  coordination with OMB, will update its managers
  guide to answer frequently asked questions about
  post-competition accountability (e.g., elements
  of a letter of obligation, evaluating and
  monitoring of MEO performance under a letter of
  obligation).

8
Ongoing challenges related initiatives (cont.)

• Lines of Business Migrations
• - The Administration seeks to eliminate
  redundant technology investments made by
  individual agencies to support the performance of
  common commercial functions, such as financial
  management human resources.
• - The LOB migration initiative seeks to
  eliminate this waste by having individual
  agencies migrate this work over time to federal
  centers of excellence (also referred to as
  shared service centers) that would develop super
  MEOs or private contractors based on
  public-private competition.
• - OMB is developing guidance.

9
Ongoing challenges related initiatives (cont.)

• Overcoming legislative barriers.
• - In terms of governmentwide provisions, the
  Administration continues to fight efforts in the
  TT\HUD Appropriations to either preclude use of
  the revised Circular or marginalize the
  consideration of quality in competitions and
  force decisionmaking based on lowest cost as
  opposed to best value.
• - In terms of DOD-specific provisions, the
  Administration has raised strong objections to
  the continuation of mandates in the Defense
  Appropriations Act (section 8014) that make
  instrusive demands for health care data from
  contractors bidding on DOD competitions. The
  Administration seeks to eliminate this
  requirement or, at a minimum, to amend the
  requirement to acknowledge that contractors
  provide health benefits to their employees using
  a variety of tools, such as health savings and
  medical savings accounts.