Competitive Sourcing
Background
The FAIR Act—Annual Inventory of
Commercial Activities
Commercial Activities Panel
Contracting Out Process
Lessons Learned
Resources
Appendix A: 8-Step Outsourcing Process
Appendix B: Library Services
Contributors: Denise Diggin, Jan Oberla, Carol Emery, Susan M. Tarr, and Sandy Schwalb
In recent years, reinvention, competitive sourcing and downsizing initiatives have encouraged the privatization of federal programs by emphasizing potential efficiencies from contracting out government activities. Some agencies have categorized certain federal library activities as "commercial"--i.e., not "inherently governmental" (defined in the OMB Circular A-76 supplemental handbook as "a function that is so intimately related to the public interest as to mandate performance by Government employees"). However, the roles and functions of federal libraries within their respective agencies vary widely, and privatization decisions in one agency may not be instructive for another agency. Federal librarians and their managers need to be familiar with the terms and procedures used to determine whether contracting is a legal, viable and beneficial alternative to federal staffing for their library services. This section will provide a brief overview of contracting out, describe some basic resources, and provide "lessons learned" by those who have experience contracting for library services.
BackgroundSince 1955 US Government policy has advocated greater reliance on the private sector to provide commercially available services and products. Circular A-76, "Performance of Commercial Activities," first issued by the Office of Management and Budget (OMB) in 1966, established a methodology for determining whether a government activity is best carried out by federal or contract staff. Click here for the 1999 edition of the OMB Circular A-76 Supplemental Handbook.
During the 1980s the "reliance on the private sector" gained momentum and became a priority in the federal government. During this period several federal libraries, including the field libraries in the Environmental Protection Agency and the National Oceanic and Atmospheric Administration (NOAA), and the headquarters libraries at the Departments of Energy, Labor, and Housing and Urban Development, contracted to the private sector. In the 1990s, the Department of Labor began reinstating federal library staff for selected functions but retained contracted services for general library operations. NOAA's headquarters library contracted out only technical support services and retained federal staff for all other functions.
The
FAIR Act—Annual Inventory of
Commercial Activities
Beginning in 1998, the Federal Activities Inventory Reform Act [http://www.whitehouse.gov/omb/circulars/a076/a076tm20.html] has required executive agencies to publish lists of all activities they perform that, “...in the judgment of the head of the executive agency, are not inherently governmental functions.” (P.L. 105-270, Section 2) The definition of “inherently governmental function” in the Act is essentially the same as the one used in OMB’s Circular A-76; examples cited include binding the U.S. by contract and exerting “ultimate control over the acquisition, use, or disposition of the property, real or personal, tangible or intangible, of the United States....” Everything that is not identified as inherently governmental is considered a “commercial activity” and must appear on an annual inventory of commercial activities [http://www.whitehouse.gov/omb/memoranda/m02-04.pdf] published by the agency on its public Web site.
To complete the inventory, every year agencies review all their federal positions, categorize the functions of the positions as either commercial or inherently governmental (providing a pre-established “Reason Code” for the decision), assign a function code [http://www.whitehouse.gov/omb/procurement/functioncodes.pdf] to each function, and pass their listing through OMB for review before publication. In the 2002 inventory, the codes available for library-type functions were G102-G105 under “Social Services” and Y850 under “Force Management and General Support” (the latter not used in some civilian agencies). In 2002, the only definitions published for these codes[http://www.whitehouse.gov/omb/procurement/fair/2003spreadsheetguidance.pdf] were those used by the Dept. of Defense.
The National Defense Authorization Act for FY2001 directed the Comptroller General to “...convene a panel of experts to study the policies and procedures governing the transfer of commercial activities for the Federal Government from Government personnel to a Federal contractor....” The Commercial Activities Panel held its first hearing on June 11, 2001, and submitted its final report to Congress in April 2002, “...including recommended changes with respect to implementation of policies and enactment of legislation.” (See Section 832 of P.L. 106-398.) The Panel considered its mission to be to “improve the current sourcing framework and processes [of the Federal Government] so that they reflect a balance among taxpayer interests, government needs, employee rights, and contractor concerns.” The Panel unanimously recommended the adoption of 10 sourcing principles; a “supermajority” of the Panel also recommended that public-private competitions be conducted under the Federal Acquisitions Regulations FAR) rather than Circular A-76 (see the Panel’s report at http://www.gao.gov/). In line with the Panel’s FAR preference, at the time of this writing OMB had proposed a revision of OMB Circular A-76 incorporating the preferred processes of the FAR. (See the Federal Register notice at http://www.whitehouse.gov/omb/fedreg/a76proposed_revision_111902.pdf.)
Although most federal libraries are not contracted out in their entirety, for years libraries have benefitted from using contracted personnel and services in areas such as: cataloging and bibliographic information, materials processing, online information services, binding, books and serials acquisitions, interlibrary loan and other non-customer intensive services. Normally the contracting of such services is performed according to the Federal Acquisitions Regulations (FAR) and other agency procurement procedures, but does not require the in-depth analysis outlined in Circular A-76.
When agency management applies the A-76 guidelines to "competitively source" an entire library or network of libraries, they can use the Cost Comparison methodology, in which they invite the in-house library staff to make a proposal (the "Most Efficient Organization" or MEO) that is compared with the private sector bids to determine if outsourcing will be beneficial. Or, if the staff of a library comprises 10 or fewer federal employees, the agency can opt for Direct Conversion (no-cost comparison) when the service can be provided commercially at a "fair and reasonable" price. (See note at end of this section for third option available in the U.S. Air Force.) In either case, it is important for librarians in the agency to have a thorough knowledge of the terminology and formulas of A-76 to help their agency execute an intelligent and thorough analysis of the options. Because of the complexity of the process and the long-term consequences of the final decision, classroom training on A-76 is recommended for all librarians taking part in an A-76 process. (See Resources section below.)
To provide a clearer picture of the contracting process, Appendix A contains an explicit, but concise, eight-step outsourcing guide developed by a federal librarian from her own experiences with the process in her agency.
Note: The NAFI MOA is a Strategic Sourcing option that has been beneficial to the Air Force. The use of MOAs makes good business sense in some Services activities. A NAFI can operate a Services activity while at the same time saving valuable taxpayer resources. Under the MOA OPTION, all parties are Air Force entities and under the control of the installation commander. Services Blueprint activities not using the NAFI MOA approach MUST use the A-76 or direct conversion process to generate mandated savings.
The Air Force and Services use NAFI MOAs to: (1) achieve mandated savings by improving performance and reducing costs for support services in order to redirect resources to force modernization; (2) increase flexibility to enable management to better tailor programs and staffing requirements to customer needs;(3) provide better control of resources through positive control of personnel and financial assets; and (4) maintains in-house capability in that the provider of the service remains an Air Force resource.
One of the most important elements in successful library outsourcing is a knowledgeable contract manager (often called the COTR, "Contract Officer's Technical Representative" or QAE, "Quality Assurance Evaluator"). The contract manager is a federal employee who must understand what libraries do and how their work is measured; ideally the contract manager is a trained librarian who helped prepare the statement of work (SOW) and participated in the selection of the successful bidder by evaluating the technical proposals. Without a knowledgeable contract manager and a plan for succession of knowledgeable contract managers into the future, outsourced libraries can lose focus, fail to update services, and generally degenerate over time. The cost of this continuing function needs to be acknowledged in any A-76 analysis.
The other essential component of successful library outsourcing is a carefully crafted statement of work (see Appendix A, Step 1, and Lessons Learned #2, below). Although A-76 processes are often deadline-driven, if an agency is serious about continuing high quality library service, it must allow adequate time for a well considered and thoroughly reviewed statement of work, in which the agency's mission and goals for its library are explicit. All requirements must be clearly described so that they can be costed. For example, if some services (e.g., interlibrary loans) depend on reciprocal services to other libraries, the requirement for that reciprocation must be specified in the statement of work. Ideally, the agency should ask federal library managers with outsourcing experience in other agencies to review the statement of work for clarity and completeness before proceeding to solicit private sector proposals.
The following lessons were learned through the recent A-76 process conducted by the Air Force competitively to source a number of base libraries:
- Lessons learned about the A-76 analysis period:
- Long-term planning for the library is severely limited when the future is uncertain
- Federal staff departs and leaves the library short-staffed
- Technical expertise for the evaluation team often departs with the staff
- Lessons learned about Statement of Work:
- Missed requirements can increase costs
- Free service from volunteers or prison labor must be replaced by paid contractor activities
- Staff training is important to libraries and should be anticipated in costs
- Professional qualifications are critical
- Technical library expertise on SOW team is important
- Work analysis (the foundation of the SOW) takes time, start now
- Current workload statistics help identify staffing requirements
- To ensure adequate quality assurance, require plan and self-inspection checklists
- Specify the format and due date for all mandatory work reports (e.g., an annual report).
- Lessons learned about Acquisition process:
- A successful bidder may lack corporate expertise in library service
- Past performance data on a bidder may be limited
- Contractor often underestimates cost of quality control; use internal quality control plans as evaluation factor for a contract award to identify knowledge and ability to perform
- Incentives help assure quality service
- Time of contract start can affect library service (e.g., academic course support)
- One-time cost for backlogs from transition period may increase first-year costs
- Dept. of Labor wage scales are low; if possible, opt for federal professional equivalency (DoL lists are primarily for nonprofessional positions, although librarians are included)
- Composition of Technical Evaluation Team is key to selecting a qualified contractor.
- Lessons learned about an initial year of a contract:
- Inventories of government property can be difficult but are important
- Keys and passwords must be assigned
- Continuity Book can be helpful
- The phase-in (overlap between federal and contract staffing) should be kept as short as possible but must be adequate to turn over property, demonstrate unique systems and answer questions
- Contract staff turnover may be high, raising hiring/training costs for contractor, lowering service, and hindering program momentum
- Changes in contract requirements (e.g., to accommodate changes in agency mission or goals, or to support unanticipated needs) may increase costs to the agency
- Once competitively sourced under A-76, return to federal staffing requires another A-76 study.
- Lessons learned about Quality Assurance:
- Quality Assurance Evaluator (QAE) should be appointed early in the process and trained QAE (also called COTR or contract manager) must have expertise in librarianship and thorough knowledge of contract requirements
- In the military, civilian QAEs are more stable; military QAEs deploy
- Value of Quality Control Plan often overlooked until it is too late
- Air Force Golden Eagle Standards useful for Service Delivery Summary.
The FLICC Web Page's Federal Forum section on Personnel is a source of outstanding information. These resources evolved from the 1998 FLICC Information Professional Symposium that examined the current state of outsourcing in federal libraries. The symposium was designed to help librarians control the contracting process and to take credit for their own successes. "Contracting Out: Making It Your Job" is a program that explores the risks and benefits of outsourcing. It shows how librarians might keep some activities in-house and they may expand their skills as contract writers and administrators. The FLICC Newsletter covered the symposium in detail.
If interested in federal library practices in serving (or not serving) agency contract staff, see Appendix B, below.
A comprehensive outsourcing bibliography is in the Resources Chapter of this handbook. ]
Appendix A: 8-Step Outsourcing Process at Department of Energy
The process outlined below is one used by the Department of Energy. Librarians in other agencies will probably find significant differences in their process, including different terminology. For example, Statements of Work (SOWs) are also called Statements of Need (SONs) or Performance Work Statements (PWSs) in other agencies. Similarly, Contracting Officer Technical Representatives (COTRs) are sometimes called Quality Assurance Evaluators (QAEs). Other federal agencies and departments may have more complex or more streamlined processes, which will be guided by their respective contracting officers. Nonetheless, this process clearly illustrates the complexities that librarians tend to overlook or consider routine. Many steps in the process shown contain confidential or proprietary information that cannot be shared in this web document. Federal employees can request the entire detailed package by emailing Denise Diggin or by calling (202)586-6022.
Step 1 Request for Proposal (RFP)/ Procurement Package usually includes:
- Direct Productive Labor Hours (DPLH) by base period and by option periods, including overtime hours for work to be performed.
- A synopsis of technical and personnel requirements of the Statement of Work (SOW).
- Table of Contents to the Statement of Work.
- A statement of Work.
The actual SOW should include the following: (A) an introductory statement describing the library's environment, site locations, relationship to rest of the agency, etc.; (B) a description by service area of the work to be performed; (C) operating standards; and (D) deliverables for each work area.
- Appendices.
Forms, supplementary information, agency directives to be followed, technical specifications for work products, etc., and a glossary of terms.
- Proposal Evaluation Criteria (technical aspects only).
- Personnel Qualifications.
- Evaluation Plan (if contract is an award fee contract).
- A breakdown by area of labor hours per position for each base year and each option year.
- Breakdown by category for each base year and each option year of "Other Direct Costs."
- Travel Requirements.
- Resume Format.
- Government-provided equipment.
- Concurrence memo for inclusion of data processing services in the RFP.
- Memo requesting approval for use of an agency facility by a contractor. This is usually sent to an agency's Administrative Services Office.
- A synopsis of the Statement of Work for inclusion in the Commerce Business Daily.
A SAMPLE RFP IS AVAILABLE TO FEDERAL LIBRARIANS.
Step 2 Pre-Award Contractual Issues -- Available to Federal employees by request only is information about different issues of concern before the contract is awarded including:
- Type of contract
- Time frames and sequence of events
- Transition planning and the RFP
- Requirements letters, justifications, time tables, etc.
Step 3
After Award has been made -- A list of To-Do's for getting the ball rolling is available to Federal employees by request only.
Step 4 Transition of Contractor into your Operation -- Some agencies and departments will not have a transition period, except for inventory verification. For agencies that require a transition period, a list of To-Do's to ensure the smooth transition of contract staff into your library program is available to Federal employees by request only.
Step 5 Orientation -- An orientation presentation is especially needed when there is a switch from one contractor to another, or from a government-run operation to a contractor-run operation, where a significant number of new staff members are brought on board. I suggest that this presentation be given to incoming contractor staff at a site away from the library and the incumbent staff. A walk-through of the library sites and other pertinent support offices should be given. Topics for the orientation should include:
- Organizational chart showing where the library falls within the agency's hierarchy.
- Any branches or site locations
- Security considerations - badging, escorts, access, etc.
- Access to LANs and building facilities.
- Library staff
- Reporting requirements - statistics, daily call-ins, etc.
- Library budget
- Library collections - general and special
- Library services
- Acquisitions - policy overview
- Cataloging - major tools used, authority control, classified document control, policies, etc.
- Courier/Messenger service
- Intra- and Interlibrary loan and document delivery
- Reference services
- Library automation: OPAC, home page, data processing.
- Library's equipment - photocopiers, PCs, printers, audio visual, etc.
- Library publications
Step 6 Role of the Contracting Officer's Technical Representative (COTR) or Quality Assurance Evaluator (QAE) -- If the COTR or QAE have the professional qualifications of a librarian, the duties would be more complex and include management level responsibilities. Below is provided a list of general duties and responsibilities for the COTR or QAE who may not necessarily be a professional librarian:
- Provide technical assistance to contract management in coordinating services under the contract.
- Coordinate orientation sessions to contractor staff to acclimate and familiarize them to the agency environment; conduct orientation briefings.
- Prepare and conduct program reviews of library activities for Agency officials.
- Ensure compliance, Department-wide, on library and information issues.
- Provide justifications and procurement packages to obtain library oriented hardware, software, and services for the Agency.
- Determine and allocate utilization of man-hours in connection with work to be performed as for example, in the Statement of Work.
- Monitor work performance under the contract; keep the contractor on target.
- Coordinate evaluation procedures.
- Develop policies and customer service standards for library operations.
- Transition operations from contract to contract.
- Administer expenditures for services, materials, and equipment against Agency's annual allocations.
- Ensure compliance by the contractor with EEO percepts.
- Develop contingency plans in case of a break in service.
- Draft/concur on requisitions for construction, furniture moves, repairs, installation of LAN's, electrical circuitry, etc. within the library.
- Serve as Accountable Property Representative for library sites.
- Approve contractor's invoices for payment
- Concur/approve on training, travel for contractor staff.
- Provide approval for all expenditures of funds by the contractor.
Step 7 Evaluation Templates -- Provided to Federal employees by request only are evaluation templates for Overall Project Management, Reference, Public Services, Cataloging, Technical Processing, Data Processing, Editing/Publications, Systems Coordination/Integration/Monitoring, Supervisory Services, Acquisitions, Periodical Subscription Maintenance & Renewal, etc. These templates will be useful for librarians developing an SOW or PWS.
Step 8 Managing the Contract -- Available to Federal employees by request only is a list of considerations for managing the contract including:- Incremental funding
- Authorizing Option Years
- Approving invoices
- Approving overtime
- Staffing issues
- Comments from customers
- Institutional memory
- Contingency plans
Appendix B: Library Services to Contract Personnel
Contract personnel are employed throughout federal government, and Federal librarians continue to tackle the issue of providing library services to non-federal employees. The clearest answer as to whether and what level of services to provide to an agency contractor should come from the contract manager, or COTR (Contract Officer's Technical Representative) and ideally will have been made explicit in the agency's contract with the private sector vendor when the vendor was hired. If library services are not covered in the contract but appear to be required, the librarian may wish to advise the contract manager of the need for revision of the contract terms. An informal survey of several federal libraries was conducted to ascertain current policies and practices concerning contract personnel. Seventeen federal libraries responded. Respondents were almost evenly split between those that distinguish between federal and contract employees when providing services and those that do not. For libraries not providing equal services to contract staff, the most frequent difference was requiring either COTR signature or federal employee sponsorship to borrow items from the collections; other distinctions included restrictions on online services and on interlibrary loans.
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