Competitive Sourcing: What Happens to Federal Employees?
By: Jacques Gansler, William Lucyshyn
Competitive sourcing has proven to be effective in improving the quality of government services while lowering the cost for taxpayers. While both the Clinton and Bush administrations have encouraged competition between in-house and contractor providers, federal employees and their advocates claim that competition with the private sector leads to massive government layoffs; and that has made many agencies reticent to undertake such initiatives. Although there have been previous studies on the impact of competitive sourcing on federal employees, they have been limited in number and scope.
This report examines the actual impact of competitive sourcing on employees through data provided by the Commercial Activities Management Information System (CAMIS), a database that tracks competitive sourcing initiatives in the Department of Defense (DoD), where the vast majority of competitions have occurred. In examining DoD data, it is clear that much of the claims of the negative impact of competitive sourcing on federal employees are unfounded. Of the 65,157 civilian positions studied since 1995, only 5 percent were reduced through the involuntary separation of federal employees. Instead, positions were more likely to be reduced in the winning bids through the transfer of employees to other government jobs or through early retirement.
The CAMIS data also affirmed previous research on the benefits of competition, as estimated savings in the winning bids averaged 44 percent of baseline costs. Much of these savings were due to increased efficiency, as bids averaged 39 percent fewer civilian positions than were initially studied for competition. And while contractors won a slight majority of these competitions (56 percent), the number of winning in-house bids has been rising steadily over the past few years. By 2003, in-house bidders won nearly twice as many competitions as contractors. This trend could reduce the number of involuntary separations, since an in-house win generally results in fewer employee displacements.
Though CAMIS data have demonstrated that only a small percentage of federal employees are involuntarily separated as a result of competitive sourcing, it is still important for government agencies to provide these employees with the resources necessary to transition to other employment. There are several “soft-landing” programs, such as explicit consideration in the competitive solicitation, career transition assistance, early retirement, and severance pay, offered by the federal government to assist employees. Thus, this report also includes four case studies that illustrate how managers have used extensive planning and creative solicitation tactics to prevent unnecessary layoffs and minimize the negative impacts of introducing market-based government sourcing approaches on their employees.