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Defense Outsourcing: The OMB Circular A-76 Policy (CRS Report for Congress)

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Release Date Revised Oct. 5, 2006
Report Number RL30392
Report Type Report
Authors Valerie Bailey Grasso, Foreign Affairs, Defense, and Trade Division
Source Agency Congressional Research Service
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Summary:

This report provides information on the Office of Management and Budget's (OMB) Circular A-76, 'Performance of Commercial Activities,' and the impact of a related reform initiative, the Federal Activities Inventory Reform Act (FAIR) of 1998, within the Department of Defense (DOD). The Circular defines federal policy for determining whether recurring commercial activities should be transferred to performance by the private sector, or performed by federal government employees. The FAIR Act creates statutory reporting requirements for federal executive agencies, by requiring federal executive agencies to identify activities both 'inherently governmental' and those not inherently governmental, and to conduct managed competitions to determine who is best to perform the service. Competitive sourcing, through managed competitions, was a major initiative identified by the first Bush Administration's Presidential Management Agenda, and one of five government-wide initiatives to improve the management and performance of the federal government. It is likely that competitive sourcing will continue to serve as a major initiative in the second Bush Administration. […] The degree to which managed competitions, throughout the federal government, increase efficiency and save money will likely depend on the extent to which federal agencies employ OMB Circular A-76 and the FAIR Act. Congress can exercise its oversight authority by (1) monitoring federal agency progress in the implementation of OMB Circular A-76 policy and FAIR (2) determining whether cost savings are real; and (3) granting federal agencies the authority to explore alternatives to achieve costs savings besides OMB Circular A-76.
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