FEDERAL
SECTOR REPORT
September 2001
(c) P2C2 Group,
Inc.
IN THIS ISSUE
Unexpected
Events
Feds to Privatize $32 Billion of Work?
The
Painful Truth about Federal Grants
UNEXPECTED
EVENTS: SEPTEMBER 11th
A few hours
can change everything in Washington. Last night, on September
10th, I wrote this newsletter about outsourcing government work. This
morning, I stood in Washington near the National Mall, watching smoke
billowing from the direction of the Pentagon and State Department. A
U.S. Marshall was in the foreground with a heavy assault rifle drawn.
Someone else gave me directions to a nearby nuclear fallout shelter ...
just in case I needed to know.
In the wink of
an eye, federal priorities can change. I don't know what
will happen to outsourcing government jobs, but almost anyone can
predict
that security for national infrastructure, transportation, and
government
operations will come to center stage.
Maybe a
greater emphasis on security is a good thing. But I feel sad today,
because a lot of other things like education and health deserve to be
center stage. Terrorists kill opportunity and hope, as well as people.
Please stay in
touch, and you will need my new address and phone number
to do so. Take a moment to note the new information at the end of the
newsletter.
OMB
PROPOSES SWITCHING $32 BILLION OF WORK TO CONTRACTORS
The Bush
Administration wants to privatize as much as $32 billion of federal
work. A draft memo by Office of Management and Budget Director Mitchell
Daniels, Jr. proposes awarding the work to businesses-especially small
firms owned by women and minorities. The goal is to "compete out" as
many as 425,000 government jobs. That is nearly $32 billion of work,
assuming $75,000 per year of direct and indirect costs per government
worker.
Federal policy
already pays lip-service to contracting out functions that
are not inherently governmental, but the A-76 process is so burdensome
that government workers usually keep their jobs. However, the
administration
seeks streamlined acquisition policies to shrink the federal workforce
quickly. According to the proposal, the private sector could win
contracts
without having to compete against government employees for the work.
The contracts would go on the fast track to small businesses owned by
minorities, women, and veterans, and those located in distressed urban
zones. Native American- and Alaskan-owned firms would qualify
regardless
of size.
The proposal
is likely to cause heated debate because traditional political
blocs will split on the issue. Many conservatives want smaller
government
but detest "preferential contracting" which they label as "affirmative
action." Liberals will feel the pinch because their loyalty will be
split
between government employee unions and support for minority- and
woman-owned
businesses.
Daniels
earlier this year ordered agencies to outsource or put up for
competition five percent of the jobs the government has identified as
"commercial," which includes everything from computer programmers to
editors and electricians. However, some jobs like policymaking are
inherently
governmental and cannot be contracted out. By 2003, an additional 10
percent, with the ultimate goal of competing out 425,000 government
jobs.
The proposal
is designed to speed the transfer of public jobs to the private sector.
Daniels' draft memo proposes awarding the work to small businesses
as the vehicle for privatization. Winners would include small
businesses
owned by minorities, women, and veterans, and those located in
distressed
urban zones. Native American- and Alaskan-owned firms would qualify
regardless
of size.
BUT
DON'T BANK ON THAT $32 BILLION YET ...
There will
likely be more "competing out" of federal work, as the federal
government adopts the outsourcing strategies of the private sector.
However,
the dollar value of new business awarded to contractors may be a lot
less than $32 billion because ...
- Members of Congress will
oppose the loss of federal work in their
home districts
- Our two major political
parties may get into a dog-and-cat fight
over appropriations, possibly even disrupting government operations
- The newly introduced tax
cuts will reduce the dollars available
for discretionary spending.
Bottom line:
the federal workforce will shrink somewhat but not as much
as proposed. Contractors will gain some additional revenues ... but
less
than the current agency budgets would suggest. And political wrangling
will cause stormy weather for everyone.
THE
PAINFUL TRUTH ABOUT FEDERAL GRANTS
Some people
apparently think there is "free grant money" available from
the federal government. Almost every week, individuals will contact me.
They want information about how to tap into Uncle Sam's pot of gold.
about.com
takes a shot at dispelling the Pot of Gold fable. Check
it out at http://usgovinfo.about.com/library/weekly/aa060400a.htm.
Several choice sentences from the article:
By far, most
government grants are applied for and awarded
to other federal agencies, states, cities, colleges and universities,
and research organizations. Few individuals have the money or expertise
necessary to prepare adequate applications for federal grants. Most
active grant-seekers, in fact, employ full time staffs to do nothing
but apply for and administer federal grants.
The P2C2 Group
provides proposal competition services for experienced
grantees who understand the complexities of competing for and winning
competitions. This is a brutal game where novices can spend substantial
dollars without achieving a return.
LINK
OF THE MONTH
The federal
executive branch has put a new face on its web sites. The
emphasis is on user-friendly topics. In many cases, there is greater
use of text and fewer graphics-partly to improve accessibility. You can
begin your tour at http://www.whitehouse.gov.
