Government outsourcing is driven by necessity and, in most nations, it has been a matter of money. Forcing the US to come on board is the recognition that the public sector is losing its competitive edge. The government has taken note of corporate America’s quantum leap in becoming more efficient and globally competitive and has taken the initiative at all levels to explore outsourcing and privatization.
Although the potential for government outsourcing in America is huge, it is also embryonic and experimental at this stage. The market is loaded with perplexing hurdles of politics, bureaucracy, and a culture that differs from the private sector; yet, difficulties do not render it hopeless. It is an immature market, but the possibilities that may be hatched from this outsourcing embryo are tremendous; so it is crucial that the right lessons in outsourcing experimentation be learned and applied. The private sector must partner with government to uncover opportunities and design more effective alternatives to current processes.
In this new government column of the OutsourcingJournal, we will look each month at the big picture—best practices, success stories, failures, lessons learned—as well as ideas to make government outsourcing work well. As is happening with the Center for Public-Private Enterprise (CPPE), communication and the cross-fertilization of thinking between the public and the private sectors are invaluable in this business revolution.
Current State of Affairs
Although government outsourcing is still immature, notable success has been achieved on the federal level by the Air Force Space Command. It outsourced supply across the command, with savings at some locations as high as 80% while tapping into world- class capability. At state and local levels, many successes exist but have not yet made it to the federal level because of procedures required at the federal level, which are so onerous that they often undermine innovation and best business practices.
Currently, the federal framework for public-private competitions (OMB A-76) is an adversarial, troublesome approach—just at a time when constructive partnering with private industry is most strongly encouraged as government policy. The federal government’s overly prescriptive fashion of preparing solicitations is seen by industry as being antiquated, unfair, and counterproductive to best business solutions. At the federal level, there is no guidance on how to determine best value, so selection is often made on low cost. This is a disincentive for leading private companies to offer better solutions. We have highlighted both of these issues and also present lessons learned at the federal level in this month’s story about progress in the Department of Defense.
Among other problems, the biggest stumbling block to government outsourcing is the work force in the public sector. Understandably, they want to keep their jobs; however, that can be accomplished in the private sector, where demands are made for the best performance for the best price. Leaders currently do not adopt a sophisticated, businesslike approach of how to migrate the government work force to civilian jobs; however, taxpayers deserve the best business solutions for accomplishing commercial activities. Unions often play a dominant role in slowing government outsourcing rather than objectively assessing the long-term viability of certain commercial activities as government careers.
Steps in the Right Direction
One way or another, change is coming; but without someone driving change, it will be a long process to move toward the vision of how government could work better. It can’t be done overnight but, with enlightened leadership, it can be done right.
We need, first of all, partnering between the major stakeholders. There is very little momentum in government for new ideas. The private sector needs to aggressively seek strategic approaches and partnerships with government, just as it does in industry now. Industry has to play a strong role in influencing and tracking policy development within all government levels. Perhaps the most effective role the private sector can play in advocating a more strategic approach is to put together some compelling stories of opportunity, showing the government how it could achieve best performance and better price. In government, everyone looks one level above for someone to give them top cover when they make changes. Without that top cover, managers fear damage to their careers and are not incentivized to change.
The role of IT in enhancing opportunities in this market cannot be overstated. It must be utilized effectively in identification and management of inventories of opportunities, as well as measurement of progress in outsourcing initiatives. Most importantly, IT must shape the structure of a new transformation framework that moves the government toward optimum change.
A center of excellence should be instituted to establish standards for performance work statements and how sourcing selections will be made. We also need a proactive program to facilitate the government commercial work force’s ability to act more like private industry. What does the government do best, and what does the marketplace do best? This, along with reasons why the private sector often performs better than the public sector in commercial activities is part of the discussion presented in this month’s story about MAXIMUS.
So many outsourcing initiatives now focus only on jobs. Much opportunity is lost by not looking at the assets aspect. Tremendous potential lies in factoring in such matters as savings down the road if the government exits a business unit entirely and no longer needs the infrastructure. Outsourcing should not be just a head count process. If we cut down on government jobs, the government buildings can be used in the private sector, better leveraging the taxpayer’s investment in the infrastructure.
Finding what works and refining the process must be the goal of both private industry and government; we at OutsourcingJournal will apprise you of developments. We also encourage you to attend the 2000 Outsourcing World Summit (February 21-23), where the CPPE is chairing two panels on local, state and federal outsourcing, It will be followed on February 24 with a day dedicated to an in-depth look at “New Workforce Strategies in a Strategic Sourcing Environment.”