In a previous installment we talked at some length about contractor outsourcing opportunities that arise out of the FAIR Act and OMB Circular A-76. A number of folks attending our seminars seem interested in this subject, so we thought we'd address it again, focusing this time on some important new developments.

To reiterate briefly:

OMB Circular A-76 establishes a policy that, for commercial activities, agencies must compare the cost of contracting to the cost of in-house performance to determine who gets to do the work.

The related FAIR Act requires all executive agencies to submit to Congress an annual inventory of activities that are not "inherently governmental" and to make this information available to the public. The Act defines an activity as inherently governmental when it is so intimately related to the public interest as to mandate performance by federal employees. All other activities performed by federal employees are deemed "commercial."

KEY A-76 CHANGES

Circular A-76 has been around longer than a lot of people realize: since 1966. The Bush Administration, however, believes that the policies and processes of the Circular, while generally sound, have not been widely applied. The Office of Management and Budget (OMB) points to five factors to explain why:

• Federal agencies are allowed to provide services to one another under reimbursable fee-for-service agreements, known as ISSAs. Work performed under ISSAs are exempt from A-76 competition requirements. There is no requirement to subject ISSAs to competition unless an agency decides to change its current provider.
• The A-76 competition process is too strange and complex.
• Agencies are not granted enough "best value" flexibility in evaluating competing sources.
• Agency officials -- who generally have a vested interest in selecting public sources -- have too much control over the process. Agency officials have been known to delay the start of and drag out competitions, reducing the number of private sector firms willing to compete.
• When public employees compete and win, agency managers aren't always held accountable for living up to the promised savings in the offer.

To combat these problems (perceived or otherwise), OMB focuses on three key areas in its recent proposed Circular A-76 revision:

1. Improve and Expand the Use of Competition

   The revised Circular A-76 sets a policy that says that all government activities are presumed to be commercial in nature (thus, open to competition). The burden is on agencies to justify those activities deemed inherently governmental (exempt from competition).

   Among the more interesting changes: authority that allows companies and in-house employees to go up against one another in a one-step, winner- take-all competition. Under this process, in-house teams can be eliminated before the final round of competition.

   Other changes include:

   • Agency-to-agency arrangements, or ISSAs, must be competed within five years.
   • Agencies relying on in-house or public reimbursable providers will have to document changes to the solicitation, track costs, and terminate for performance failure.
   • Agencies will have a number of options in conducting standard competitions, including relying on cost-technical tradeoffs similar to those authorized under FAR Part 15.
2. Ensure Fairness, Integrity, and Transparency

   The revised Circular sets up a wall of separation between the government employees who develop the solicitations (or "tenders" as they're called in the Circular) and those who respond to it.

3. Strengthen Accountability for Results

   The revised Circular A-76 sets up procedures to help ensure that competitions are fair and that selected public or private sources live up to the promises made in their offers. For example, the Circular:

   • Requires agencies to establish an overseeing A-76 program office.
   • Imposes competition timeframes. Generally, competitions must be completed within one year of announcement.
   • Increases post competition oversight. Agencies will have to track actual costs and, before exercising options for additional periods, determine that performance by in-house, public reimbursable, or private contract providers meets solicitation requirements and that continued performance is beneficial.

Tracking Opportunities

A-76 business opportunities fall within two general categories:
(1) helping agencies manage their A-76 competitions, and
(2) performing government work deemed "commercial" and later privatized (i.e., outsourcing "fallout" work). In either case, to find relevant opportunities companies must diligently track and then zero in on specific A-76 activities.

Let's take a closer look:

The revised A-76 Circular REQUIRES that agency officials seek outside help -- including human resources, procurement, and management experts -- in implementing the Circular's complex requirements. If your firm is capable of providing A-76 consulting services, where do you start?

There are three letters to keep in mind: GSA. In finding expert help, most agency officials will avoid messing around with traditional competitive procurement procedures. That means your firm should be on GSA's Schedule 874, Management, Organization, and Business Improvement Service (MOBIS). There's a specific special item number (or "SIN"), 874-6, for companies that specialize in A-76 consulting. When agency officials need help, that's where they go to find it.

Once your firm has received an award under Schedule 874, does that mean consulting work will come to you? No. (After all, you're competing, in the broad sense at least, against all other firms holding a MOBIS Schedule.) You've still got to get out there, of course, and talk to agency officials, assess their needs, match up your capabilities with those needs, etc. But Schedule status can make the close of sale easier after you've done all that hard work. Plus, your pool of potential buyers will be much larger.

The other thing to do, for both consultants AND companies hoping to benefit from privatization fallout, is (and it's probably fairly obvious) keep close tabs on agency announcements at the official federal procurement opportunity site, FedBizOpps.gov.

We ran a text search on "A-76," limiting results to only the last week, and came up with NINE hits. We found significant A-76 activity at such places as these:

• Naval Air Warfare Center Aircraft Division Pax River, MD
• Air Force Reserve Command, Robins AFB, GA
• Department of Transportation, Maritime Administration
• Naval Facilities Engineering Command, San Diego, CA

Another strategy: go to Firstgov.gov and do a search on "A-76" to locate A-76 offices, and just start calling. You'll have more places to choose from than you can imagine. The trick will be -- as it often is -- to focus your sales efforts, find your best targets.

There's a ton of A-76 activity out there and, consequently, a lot of business to be found. We're in the early stages now of frenzied activity. Remember: OMB's goal is to subject 425,000 federal jobs to private sector competition. If your firm has the necessary capabilities, roll up your sleeves and start looking around with a focused eye. Get out there and "get," as they say, "while the gettin's good."