The OMB Circular A-76 Policy - GlobalSecurity.org

Defense Outsourcing:
The OMB Circular A-76 Policy
Introduction
The end of the Cold War and the reduction of Department of Defense (DOD)
spending created a strong need to reform the manner in which the federal government
procured goods and services. In the 1980s, the Reagan Administration emphasized
the view that big government was inefficient, wasteful and unmanageable. Later, the
recommendations of the Clinton Administration’s National Performance Review
(formerly called NPR, now the National Partnership for Reinventing Government)
served as an impetus for the executive branch to propose new procurement reform. 1
The NPR effort broadened the goal of creating a government that “works better and
costs less “ to a government that “works better and does less.” 2 The NPR promoted
the idea that the government should focus its attention on those activities which it
should and could do best, and then put incentives in place to insure optimum results.
In August 2001, President Bush unveiled “The President’s Management Agenda,”
which identified competitive sourcing as one of five management initiatives designed
to enhance government effectiveness. 3
DOD has substantially reduced its force structure since the end of the Cold War.
Unfortunately, defense operations and support costs have not reduced proportionately
to the size of the force. 4 As a result, DOD must reduce spending further to achieve
greater cost savings to finance weapons and military equipment modernization.
Combined with a national mood reflecting a growing change in the public’s
perception of the role of government, a shrinking defense procurement budget,
increased private sector lobbying for government contracts, the notion of contracting
out, or outsourcing, of federal procurement activities has taken center stage.
Outsourcing is a decision by the government to purchase goods and services
from sources outside of the affected government agency. In the past, outsourcing has
1
Office of the Vice President. From Red Tape to Results: Creating a Government that
words Better and Costs Less. Report of the National Performance Review. Washington
1993, 168p.
2
Office of the Vice President. Serving the American Public: Best Practices in Downsizing,
Bench-marking Study Report. Report of the National Performance Review. Washington
1997, 36 p.
3
U.S. Office of Management and Budget. The President’s Management Agenda for FY2002
(Washington: OMB, 2001), p. 1. [http://www.results.gov/agenda/fiveinitatives.html]
4
General Accounting Office. Observations on the Department of Defense’s Fiscal Year
2000 Performance Plan. July 20, 1999. GAO/NSIAD-99-178R. 14 p.