Sourcing Policy: Statutes and Statutory Provisions

Sourcing Policy: Statutes and Statutory Provisions

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Sourcing Policy: Statutes and Statutory
Provisions
L. Elaine Halchin
Specialist in American National Government
February 15, 2012
Congressional Research Service
7-5700
www.crs.gov
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CRS Report for Congress
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Sourcing Policy: Statutes and Statutory Provisions

Summary
The federal government’s sourcing policy dates to the 1950s with the publication of three Bureau
of the Budget bulletins. The bulletins’ emphasis on governmental reliance on the private sector
for the provision of goods and services was followed, in 1966, with the publication of Office of
Management and Budget (OMB) Circular A-76. Under the circular, commercial activities
performed by federal employees are subjected to public-private competition. Until the late 1990s,
the executive branch, namely OMB, almost exclusively, led the competitive sourcing effort,
issuing revisions to the circular, overseeing implementation of the policy, and providing guidance
to agencies.
Another strain, or facet, of sourcing policy emerged during the Administration of President
Barack Obama. OMB’s July 2009 memorandum on multi-sector workforce management,
combined with legislation and other government documents, laid the groundwork for this
approach, which focuses on agencies determining the appropriate mix of federal employees and
contractor employees.
Congressional interest and involvement in sourcing policy, as measured by legislation that has
been enacted, has grown over the years. Throughout the 1980s and 1990s (93rd through the first
session of the 106th Congresses), a total of 10 bills with provisions related to sourcing policy were
enacted, including, for example, the Federal Activities Inventory Reform (FAIR) Act (P.L. 105-
270). The 108th and subsequent Congresses experienced a marked increase in the number of bills
enacted with provisions involving sourcing policy. To date, 35 bills have been enacted during five
Congresses (108th through 112th). Recently enacted provisions have addressed, for example,
protest rights for federal government employees, funding limits on competitive sourcing
activities, the development of a single consistent definition of “inherently governmental,” and the
development of “insourcing” guidelines. This report will be updated if relevant legislation is
enacted.

Congressional Research Service

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Sourcing Policy: Statutes and Statutory Provisions

Contents
Background...................................................................................................................................... 1
Legislation ....................................................................................................................................... 4
Selected Topics Related to Sourcing Legislation........................................................................... 28
Commercial Activities Inventory............................................................................................. 28
Commercial Activities Panel ................................................................................................... 28
Competitive Sourcing Targets ................................................................................................. 29
Conversion from Contractor to Government Performance ..................................................... 29
Funding Limits on Agency Competitive Sourcing Activities.................................................. 30
Inherently Governmental......................................................................................................... 31
MEO and Conversion Differential Requirement..................................................................... 31
Protest Rights........................................................................................................................... 32
Reporting to Congress ............................................................................................................. 32
Unconditional Prohibition on Competitions for Certain Functions......................................... 33
Concluding Observations............................................................................................................... 33

Tables
Table 1. Statutes That Include Sourcing Provisions, 93rd Congress–Present.................................. 2
Table 2. Sourcing Statutes and Provisions....................................................................................... 4

Contacts
Author Contact Information........................................................................................................... 33

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Sourcing Policy: Statutes and Statutory Provisions

Background
Sourcing policy refers, generally, to determining who should do the work of federal government
agencies—federal employees or contractor employees.1 The first strain of sourcing policy that
emerged, and was later labeled “competitive sourcing” by the Administration of President George
W. Bush, focuses on subjecting commercial activities performed by federal government
employees to public-private competition.2 The second strain of sourcing policy, which emerged
during the Administration of President Barack Obama, focuses on ensuring that federal agencies
have the most appropriate mix of federal employees and contractor employees.
The primary source of the policy and procedures (including revisions and other changes)
involving competitive sourcing had been, for a number of years, the executive branch, namely the
U.S. Office of Management and Budget (OMB) and its predecessor, the Bureau of the Budget.3
The bureau issued the original Circular A-76, dated March 3, 1966. OMB has published six
revisions to the circular and issued additional guidance, generally in the form of memoranda, on
various subjects related to competitive sourcing.4 The Administrations of Presidents Ronald
Reagan and George W. Bush also were directly involved in competitive sourcing policy and
guidance. In 1987, President Reagan signed an executive order that directed federal agencies,
beginning in FY1989, to subject at least 3% of their civilian positions to public-private
competition each fiscal year until all commercial activities had been studied.5 In 2001, President
Bush identified competitive sourcing as one of the five major components of the President’s
Management Agenda (PMA).6
The history of the second strain has involved a combination of executive branch documents and
legislation. Two key documents are OMB’s July 2009 memorandum,7 which addresses the
management of a multi-sector workforce, and Office of Federal Procurement Policy (OFPP)
Policy Letter 11-01, which was released in September 2011.8 The policy letter was drafted to
meet a statutory requirement,9 and it provides definitions and guidance regarding inherently
governmental functions, critical functions, and functions closely associated with inherently
governmental functions. Additionally, Section 736 of P.L. 111-8, Omnibus Appropriations Act,
FY2009, requires agencies to develop insourcing guidelines.

1 For more information regarding the federal government’s sourcing policy, see CRS Report R42341, Sourcing Policy:
Selected Developments and Issues, by L. Elaine Halchin.
2 A commercial activity is “a recurring service that could be performed by the private sector,” whereas “an inherently
governmental activity is an activity that is so intimately related to the public interest as to mandate performance by
government personnel.” (U.S. Office of Management and Budget, Circular No. A-76 (Revised), May 29, 2003, pp. D-2
and A-2, available at http://www.whitehouse.gov/omb/circulars/a076/a76_incl_tech_correction.pdf.)
3 The origins of this approach were Bureau of the Budget Bulletins 55-4, 57-7, and 60-2. All were published in the
1950s. The Bureau of the Budget was the precursor to the Office of Management and Budget.
4 Revisions were published in 1967, 1979, 1983, 1996, 1999, and 2003. The 1999 and 2003 revisions are available at
http://www.whitehouse.gov/omb/circulars/index.html.
5 U.S. President (Reagan), “Performance of Commercial Activities,” Executive Order 12615, Federal Register, vol. 52,
no. 225, November 23, 1987, p. 44853.
6 See http://www.whitehouse.gov/results/agenda/index.html.
7 Peter R. Orszag, Director, U.S. Office of Management and Budget, “Managing the Multi-Sector Workforce,”
memorandum M-09-26, July 29, 2009, at http://www.whitehouse.gov/omb/assets/memoranda_fy2009/m-09-26.pdf.
8 The policy letter is available at http://www.gpo.gov/fdsys/pkg/FR-2011-09-12/pdf/2011-23165.pdf.
9 Section 321 of P.L. 110-417, Duncan Hunter National Defense Authorization Act, FY2009.
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Sourcing Policy: Statutes and Statutory Provisions

Congressional involvement in sourcing policies and procedures, as measured by legislation that
has been enacted, has increased over the years, from the 93rd Congress through the present.10
Table 1. Statutes That Include Sourcing Provisions,
93rd Congress–Present
Number of
Congress
Statutes
Scope of Statute(s)a
93rd
0
94th
0
95th
0
96th
0
97th
1
Department of Veterans Affairs (VA)
98th
0
99th
0
100th
0
101st
2
Department of Defense (DOD)
102nd
3 DOD
103rd
1 DOD
105th
1 Government-wide
106th
2
DOD and government-wide
107th
0
108th
9
Government-wide, DOD, Department of the Interior (DOI), Department of
Agriculture (USDA), Department of Energy (DOE), Department of Homeland
Security (DHS), U.S. Equal Employment Opportunity Commission (EEOC)
109th
8
DOI, USDA, DHS, Government-wide, DOD
110th
7
DOE, Department of Labor, USDA, Department of Justice (DOJ), DOD, DHS,
DOI, and Government-wide
111th
7
USDA, DOJ, USACE, DHS, DOD, and Government-wide
112th
4b
USDA, DOD, DHS, and Government-wide
Source: Legislative Information System, available at http://www.congress.gov.
a. Within each statute, the applicability of competitive sourcing provisions varies. Some provisions apply to the
entire agency; other provisions apply to a specific function, activity, or, for the Department of Defense,
military installation.
b. As of February 15, 2012.
As Table 1 shows, three or fewer bills with sourcing provisions were enacted during each
Congress until the 108th Congress, when nine bills with sourcing provisions were enacted. During
the five Congresses following the 107th Congress, 35 statutes with sourcing provisions have been
enacted. The sourcing provisions of measures enacted during the 97th through 112th Congresses

10 The identification of statutes that include competitive sourcing provisions is made possible by the Legislative
Information System (LIS), available at https://www.congress.gov. LIS includes all Congresses beginning with the 93rd
Congress.
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Sourcing Policy: Statutes and Statutory Provisions

are summarized below, in Table 2. Following the table is a discussion of selected topics related to
sourcing legislation that has been enacted.

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Legislation
Table 2. Sourcing Statutes and Provisions
Statute Scopea
Duration
Summaryb
P.L. 97-66, Section 601
Department of
Indefinite
—Funds appropriated to the accounts for medical care, medical and prosthetic research, and
Veterans Affairs (VA)
medical administration and miscel aneous operating expenses may not be used for conducting
Veterans’ Disability
public-private competitions unless funds are specifically appropriated for this purpose.
Compensation, Housing, and
Memorial Benefits
Amendments of 1981
P.L. 101-189, Sections 1131-
Department of Defense Varies
—Commanders of military installations have the authority and responsibility to enter into
1134
(DOD)
contracts that resulted from A-76 competitions. Commanders are to prepare an inventory of
commercial activities; decide which commercial activities will be subjected to A-76
National Defense
competitions; issue solicitations for commercial activities selected for conversion to contractor
Authorization Act, FY1990
performance; and, for activities selected for conversion, assist in finding suitable employment
and FY1991
for any DOD employees displaced as a result of the contract.
—A DOD commercial or industrial type of function that is included on the procurement list of
goods and services produced and provided pursuant to the Javits-Wagner-O’Day (JWOD) Act
is exempt from A-76 competition.
—Commercial activities performed by government personnel at Ft. Benjamin Harrison, IN, may
not be converted to private sector performance under Circular A-76 until the Secretary of the
Army completes a commercial activities study for the installation.
—Commercial activities performed by government personnel at the Niagara Falls Air Force
Reserve Base, NY, may not be converted to private sector performance under Circular A-76
until the Comptroller General evaluates the most recently completed commercial activities
study for the base and submits a report to the Secretary of the Air Force; and the Secretary, in
turn, submits a report to the Senate Armed Services Committee (SASC) and House Armed
Services Committee (HASC).
P.L. 101-511, Title II (Navy
DOD
FY1991
—Funds from the appropriation for the alteration, overhaul, and repair of naval vessels and
and Marine Corps), Sections
aircraft shall be available to acquire these functions by competition among public and private
8072, 8087, and 8129
shipyards, naval aviation depots, and private companies.
Department of Defense
—None of the funds appropriated for the operation and maintenance of the Marine Corps may
Appropriations Act, FY1991
be used for converting facilities maintenance, utilities, and motor transport functions at Cherry
Point Marine Corps Air Station, NC, to performance by a private contractor under Circular A-
76 until the U.S. General Accounting Officec (GAO) completes its audit and validates the
decision.
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Statute Scopea
Duration
Summaryb
—The Secretary of Defense may acquire the modification, depot maintenance, and repair of
aircraft, vehicles, and vessels through competition between DOD depot maintenance activities
and private firms. Circular A-76 shal not apply to these competitions.
—None of the funds appropriated by this act may be used for a public-private competition
carried out under Circular A-76 if the competition exceeds 24 months (single function study)
or 48 months (multifunction study).
—None of the funds available during FY1991 to DOD, any of its components, or any other
federal department, agency, or entity may be used to complete an A-76 competition for
firefighting or security guard functions at Indian Springs Air Force Auxiliary Field, NV.
P.L. 102-172, Title II, Sections
DOD
FY1992
—Funds from the appropriation for the alteration, overhaul, and repair of naval vessels and
8069 and 8120
aircraft shall be available to acquire these functions by competition among public and private
shipyards, naval aviation depots, and private companies.
Department of Defense
Appropriations Act, FY1992
—None of the funds appropriated for the operation and maintenance of the Marine Corps may
be used for converting facilities maintenance, utilities, and motor transport functions at Cherry
Point Marine Corps Air Station, NC, to performance by a private contractor under Circular A-
76 until GAO completes its audit and validates the decision.
—None of the funds appropriated by this act may be used for a public-private competition
carried out under Circular A-76 if the competition exceeds 24 months (single function study)
or 48 months (multifunction study).
—The Secretary of Defense may acquire the modification, depot maintenance, and repair of
aircraft, vehicles, and vessels through competition between DOD depot maintenance activities
and private firms. Circular A-76 shal not apply to these competitions.
P.L. 102-396, Title II (Marine
DOD
FY1993
—None of the funds appropriated for the operation and maintenance of the Marine Corps may
Corps), Sections 9065 and
be used for converting facilities maintenance, utilities, and motor transport functions at Cherry
9095

Point Marine Corps Air Station, NC, to performance by a private contractor under Circular A-
76 until GAO completes its audit and validates the decision.
Department of Defense
Appropriations Act, FY1993
—None of the funds appropriated by this act may be used for a public-private competition
carried out under Circular A-76 if the competition exceeds 24 months (single function study)
or 48 months (multifunction study).
—The Secretary of Defense may acquire the modification, depot maintenance, and repair of
aircraft, vehicles, and vessels through competition between DOD depot maintenance activities
and private firms. Circular A-76 shal not apply to these competitions.
P.L. 102-484, Section 312
DOD
FY1993
—The Secretary of Defense is prohibited from entering into any contract that is the result of a
public-private competition under Circular A-76.
National Defense
Authorization Act, FY1993
—This prohibition does not apply to any contracts for work performed at a location outside
the United States where U.S. military personnel would have to perform the commercial activity
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Statute Scopea
Duration
Summaryb
at the expense of unit readiness, or any contracts (including renewals) for a commercial activity
under contract as of Sept. 30, 1992.
P.L. 103-160, Section 313
DOD November
30,
—The Secretary of Defense is prohibited from entering into any contract that is the result of a
1993 through
public-private competition under Circular A-76.
National Defense
April 1, 1994
Authorization Act, FY1994
—This prohibition does not apply to any contracts for work performed at a location outside
the United States where U.S. military personnel would have to perform the commercial activity

at the expense of unit readiness, or any contracts (including renewals) for a commercial activity
under contract as of Sept. 30, 1992.
P.L. 105-270
Government-wide,
Indefinite
—Agencies are required to submit inventories of commercial activities to OMB by June 30.
excluding GAO,
Federal Activities Inventory
government
—Inventories are sent to Congress and made available to the public.
Reform (FAIR) Act
corporations,
—Interested parties may appeal the omission of an activity from, or the inclusion of an activity
nonappropriated funds
on, an agency’s list.d
instrumentalities, and
certain DOD depot-
—An inherently governmental activity is a function that is so intimately related to the public
level maintenance and
interest as to require performance by federal government employees.
repair functions
P.L. 106-79, Sections 8026,
DOD
FY2000
—None of the funds appropriated by this act may be used for a public-private competition
8037, 8108, and 8109
carried out under Circular A-76 if the competition exceeds 24 months (single function study)

or 48 months (multifunction study).
Department of Defense
Appropriations Act, FY2000
—Circular A-76 can not be used for competitions between DOD depot maintenance activities
and private firms for certain functions, including depot maintenance and repair of aircraft,

vehicles, and vessels.
—The total amount appropriated in Title II of this act is reduced by $100,000,000 to reflect
savings that resulted from reviews of DOD missions and functions conducted pursuant to
Circular A-76.
—The Secretary of Defense is required to submit a report within 90 days of enactment of the
act that provides specified information about DOD public-private competitions that had been
conducted since 1995. The report also is to include information about any A-76 competitions
held for work that had been converted from contractor performance to government
performance, and recommendations for maximizing the possibility of effective competitions for
work that had been contracted out previously.
—The Comptroller General is required to submit to the House and Senate Appropriations
Committees his or her views on whether DOD has complied with the reporting requirements.
P.L. 106-398, Section 832
Government-wide
Report due by
—GAO is directed to convene a panel of experts to study the policies and procedures
May 1, 2002
governing the transfer of commercial activities to contractors, including how to determine what
Floyd D. Spence National
functions should continue to be performed by federal employees, how costs of public and
Defense Authorization Act,
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Statute Scopea
Duration
Summaryb
FY2001
private performance should be compared, and how DOD has implemented the FAIR Act and
Circular A-76.e
—Commercial Activities Panel (CAP) is required to study A-76 procedures, implementation by
DOD of the FAIR Act, and DOD procedures for public-private competitions.
P.L. 108-7, Section 647
Government-wide
FY2003
—None of the funds appropriated by the Treasury and General Government Appropriations
Act, FY2003, may be used to establish, apply, or enforce any numerical goal, target, or quota
Consolidated Appropriations
for public-private competitions unless the goal, target, or quota is based on considered
Resolution, FY2003
research and sound analysis.
P.L. 108-87, Sections 8014 and DOD
FY2004
—None of the funds appropriated by this act may be used to convert a function that had more
8022
than 10 DOD civilian employees from government performance to contract performance

unless a most efficient organization (MEO) is developed and the conversion differential is
Department of Defense
applied.f
Appropriations Act, FY2004
—This section does not apply to Javits-Wagner-O’Day (JWOD) Act suppliers, Indian tribes,

Native Hawai an organizations, and depot contracts or contracts for depot maintenance.g
—Any conversions to contractor performance under this section count toward any
competitive sourcing goal or target.
—None of the funds appropriated by this act may be used for a public-private competition
carried out under Circular A-76 if the competition exceeds 24 months (single function study)
or 36 months (multifunction study).
P.L. 108-108, Section 340
Department of the
Varies
—Beginning with FY2005, the Departments of the Interior and Energy and the Forest Service
Interior, Department of
are to identify separately in their budget requests funds needed to perform competitive
Department of the Interior
Agriculture (USDA),
sourcing studies.
and Related Agencies
and Department of
Appropriations Act, FY2004
Energy (DOE)
—Beginning in 2003, the Secretaries of Agriculture (Forest Service), Energy, and the Interior
programs and activities
are to submit reports on their competitive sourcing studies to the Committees on
for which funds are
Appropriations no later than December 31 each year.
appropriated by this
—For FY2004, each Secretary named above is to submit a report that identifies planned
statute
competitive sourcing studies.
—In FY2004, the Department of Energy and the Department of the Interior may spend only
$500,000 and $2.5 million, respectively, on competitive sourcing activities unless a
reprogramming proposal is processed. No more than $5 million of the funds appropriated by
this act may be used in FY2004 for Forest Service competitive sourcing studies.
—None of the funds appropriated by this act may be used to convert a function with more
than 10 federal employees from government performance to contract performance unless an
MEO is developed and the conversion differential is applied. Exceptions include JWOD
suppliers, Indian tribes, and Native Hawaiian organizations. Any conversions to contractor
performance that occurs under this section is to be counted toward any competitive sourcing
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Statute Scopea
Duration
Summaryb
goal or target.
P.L. 108-136, Sections 334-
DOD
Varies
—Any deadline or other schedule-related milestone for the completion of a DOD public-
337 and 906
private competition shall be established solely on the basis of considered research and sound
analysis regarding the availability of sufficient personnel, training, and technical resources for
National Defense
conducting a competition in a timely manner. The DOD official responsible for the managing
Authorization Act, FY2004
the department’s competitions shall extend any deadline or schedule if insufficient resources
are available for timely completion of the competition.
—The Secretary of Defense is required to submit a report to Congress on the effect of the
May 29, 2003, revisions on DOD competitions and employees. No A-76 competition may be
conducted until 45 days after the Secretary submits his report to Congress.
—The Secretary of Defense is authorized to conduct a pilot program whereby the best-value
source selection method may be used for A-76 competitions involving information technology
services. The pilot program expiration date is Sept. 30, 2008. GAO is to review the pilot
program and submit a report to Congress.
—The Secretary of Defense is authorized to establish a pilot program under which high-
performing organizations (HPO) may be created or continued at selected military installations
and facilities through the department’s Business Process Reengineering initiative. The Secretary
may not require any organization to conduct an A-76 competition or other public-private
competition involving any function of the organization covered by the reengineering initiative.
—Regarding the transfer of personnel security investigation functions from DOD to the Office
of Personnel Management (OPM), any function performed by DOD employees as of the date of
enactment of this act may not be converted to contractor performance until the Director of
OPM reviews the function, determines that the function is not inherently governmental, and
conducts an A-76 competition.
P.L. 108-199, Divisions A and
Agriculture, Rural
Varies
—None of the funds in this act may be obligated for FAIR Act or Circular A-76 activities until
F
Development, Food
the Secretary of Agriculture submits a report to the Committees on Appropriations that
and Drug
describes the department’s contracting-out policies, including agency budgets for contracting
Consolidated Appropriations
Administration, and
out.
Act, FY2004
Related Agencies
(Division A);
—Unless USDA receives specific authorization in subsequent legislation, the department may
Departments of
not use the funds made available in this statute to study a competitive sourcing activity relating
Transportation and
to rural development or farm loan programs.
Treasury, and
—None of the funds appropriated by this statute may be used to convert a function with more
Independent Agencies
than 10 federal employees from government performance to contractor performance unless an
(Division F)
MEO is accomplished and the conversion differential is applied.
—Annual y, the head of each executive agency is to submit to Congress a report on
competitive sourcing activities in his or her agency.
—Agency heads are not required to limit the performance period in a letter of obligation
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Statute Scopea
Duration
Summaryb
issued to an MEO to five years or less.h
—Agency heads may use appropriated funds, and any other funds made available to their
agencies, for monitoring the performance of an activity that has been subjected to a public-
private competition.
—Any work converted to contractor performance cannot be moved to a location outside the
United States if the work has been previously performed by federal government employees
within the United States.
P.L. 108-287, Sections 8014
DOD
FY2005
—None of the funds appropriated by this act may be used to convert a function that has more
and 8022
than 10 civilian employees from government performance to contract performance unless an
MEO is developed, the conversion differential is applied, and the contractor does not receive an
Department of Defense
advantage for his or her proposal by not making a health insurance plan available to employees
Appropriations Act, FY2005
who are to be employed in the function or study, or by offering a health insurance plan that
costs the contractor less than the amount paid by DOD.
—This section does not apply to JWOD suppliers, Indian tribes, Native Hawaiian organizations,
or depot contracts or contracts for depot maintenance.
—Any conversions to contractor performance occurring under this section are to count
toward any competitive sourcing goal or target.
—None of the funds appropriated by this act may be used for a public-private competition
carried out under Circular A-76 if the competition exceeds 24 months (single function study)
or 36 months (multifunction study).
P.L. 108-334, Section 527
Department of
FY2005
—None of the funds appropriated by this statute may be used to approve or conduct a public-
Homeland Security
private competition involving employees of U.S. Citizenship and Immigration Services (USCIS)
Department of Homeland
(DHS)
who are known as immigration information officers, contact representatives, or investigative
Security Appropriations Act,
assistants.
FY2005
P.L. 108-375, Sections 326-
Government-wide
Varies
—Amends 31 U.S.C. §§ 3551(2), 3552, and 3553, which means, in effect, that an agency tender
328
(Section 326); DOD
official (ATO) may file a protest in connection with a public-private competition.i The
(Sections 327 and 328)
determination to file, or not file, a protest is not subject to administrative or judicial review. An
Ronald W. Reagan National
agency tender official is to notify Congress when he or she determines there is no reasonable
Defense Authorization Act,
basis for a protest.
FY2005
—For any competition that is required to include a formal comparison of the cost of federal
employee performance with the cost of contractor performance, the function is to remain in-
house unless the competitive sourcing official (CSO) determines that contractor performance
would be less costly by an amount that equals or exceeds the lesser of the following: 10% of
the MEO’s personnel-related costs or $10 million.j
—The Secretary of Defense is to ensure that no DOD organization, function, or activity is
altered in any way for the purpose of exempting the department from the requirement to
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Statute Scopea
Duration
Summaryb
formally compare the cost of federal government performance with the cost of contractor
performance. This provision does not apply to any competitions conducted as part of a pilot
program authorized by Section 336 of P.L. 108-136 (National Defense Authorization Act for
Fiscal Year 2004).
—The DOD Inspector General (IG) is required to submit a report no later than February 1,
2005, to Congress that addresses the questions of whether DOD has a sufficient number of
adequately trained civilian employees to conduct public-private competitions and to administer
any resulting contracts, and whether the department has implemented a comprehensive,
reliable system to track and assess the cost and quality of work done by service contractors.
P.L. 108-447, Divisions A, B,
Agriculture, Rural
FY2005
—None of the funds in this act may be obligated for the FAIR Act or Circular A-76 activities
and E
Development, Food
until the Secretary of Agriculture has submitted a report to the Committees on Appropriations
and Drug
and the House Committee on Government Reform that describes the department’s contracting
Consolidated Appropriations
Administration, and
out policies, including agency budgets for contracting out.
Act, FY2005
Related Agencies
(Division A);
—Unless the Department of Agriculture receives specific authorization in subsequent
Departments of
legislation, the department cannot use the funds made available in this statute to study a
Commerce, Justice, and
competitive sourcing activity relating to rural development or farm loan programs.
State, the Judiciary, and
—The EEOC cannot implement any workforce repositioning, restructuring, or reorganization
Related Agencies
until the Committees on Appropriations have been notified of such proposals.
(Division B);
Department of the
—None of the funds provided under this act or under previous appropriations acts for these
Interior and Related
agencies is to be used, through a reprogramming of funds, for contracting out or privatizing any
Agencies (Division E)
functions or activities presently performed by federal employees, unless the Appropriations
Committees are notified 15 days in advance of such reprogramming of funds.
—In FY2005, the Department of Energy and the Department of the Interior may spend only
$500,000 and $3.25 million, respectively, to continue or initiate competitive sourcing studies
until a reprogramming proposal has been processed. No more than $2 million of the funds
appropriated by this act may be used in FY2005 for Forest Service competitive sourcing studies
and related activities.
—Section 340(b) of P.L. 108-108 is repealed.
—For any competitions conducted by the Forest Service prior to FY2005 that meet the criteria
outlined in Section 332(d), the Forest Service is exempt from implementing a letter of
obligation and post-competition accountability guidelines.k
—Agencies funded by this act are to include, in any competitive sourcing reports submitted to
the Committees on Appropriations, incremental costs directly attributable to conducting
competitions.
P.L. 109-54, Section 422
Department of the
FY2006
—In FY2006, the Department of the Interior can spend only $3.45 million from this act or any
Interior and USDA
other act on competitive sourcing activities, unless a reprogramming proposal is processed. No
Department of the Interior,
more than $3 million of the funds appropriated by this act can be used by the Forest Service in
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Statute Scopea
Duration
Summaryb
Environment, and Related
FY2006 for competitive sourcing activities.
Agencies Appropriations Act,
FY2006
—For any public-private competition conducted by the Forest Service that involves 65 or fewer
full-time equivalents (FTEs),l that is decided in favor of the agency provider, that does not yield
a net savings, and that was completed prior to the date of this act, the Forest Service is
exempted from implementing the letter of obligation and post-competition accountability
guidelines.
—Agencies funded by this act shall, in preparing any reports to be submitted to the
Committees on Appropriations, include all costs directly attributable to conducting public-
private competitions, including costs attributable to paying outside consultants and contractors.
—For any competitions involving Forest Service employees, the Secretary of Agriculture is to
determine whether any of the employees concerned are also qualified to participate in wildland
fire management activities and to consider the effect that outsourcing would have on the Forest
Service’s ability to fight and manage wildfires.
P.L. 109-90, Section 520
DHS
FY2006
—None of the funds appropriated by this act may be used to process or approve a public-
private competition for services provided as of June 1, 2004, by employees of USCIS who are
Department of Homeland
known as immigration information officers, contact representatives, or investigative assistants.
Security Appropriations Act,
FY2006
P.L. 109-97, Title I
USDA
FY2006
—None of the funds provided by this act may be obligated for the FAIR Act or Circular A-76
(specifically, “Office of the
activities until the Secretary has submitted a report to the Committees on Appropriations and
Chief Financial Officer”) and
the House Committee on Government Reform that describes the department’s contracting out
Section 786
policies, including agency budgets for contracting out.m
Agriculture, Rural
—Unless the department receives specific authorization in subsequent legislation, the
Development, Food and Drug
department cannot use the funds made available in this statute to conduct a competition of an
Administration, and Related
agency activity relating to rural development or farm loan programs.
Agencies Appropriations Act,
FY2006
P.L. 109-115, Sections 840 and Government-wide
Varies
—The FAIR Act does not apply to executive agencies with fewer than 100 ful -time employees.
842
However, if such an agency plans to conduct a public-private competition, it is subject to
Section 2 of the FAIR Act.
Transportation, Treasury,
Housing and Urban
—None of the funds in this act or any other act can be used to convert a function with more
Development, the Judiciary,
than 10 federal employees from government performance to contractor performance unless an
the District of Columbia, and
MEO is accomplished and the conversion differential is applied. This provision does not apply
Independent Agencies
to, for example, DOD, commercial or industrial type functions that can be provided by JWOD
Appropriations Act, FY2006
organizations, and depot contracts.
—Nothing in Circular A-76 shal prevent an agency head from conducting public-private
competitions to evaluate the benefits of converting work performed by contractors to the
federal government. Circular A-76 is to provide procedures and policies for these types of
CRS-11

.

Statute Scopea
Duration
Summaryb
competitions that are similar to the procedures and policies applied to competitions where the
government is the incumbent.
P.L. 109-148, Sections 8014
DOD
FY2006
—None of the funds provided by this act can be used to convert a DOD function that has
and 8021
more than 10 civilian employees from government performance to contract performance unless
an MEO is developed, the conversion differential is applied, and the contractor does not receive
Department of Defense
an advantage by not making a health insurance plan available to employees who are to be
Appropriations Act, FY2006
employed in the function, or by offering a health insurance plan that costs the contractor less
than the amount paid by DOD for the affected civilian employees.
—This section does not apply to JWOD suppliers, Indian tribes, Native Hawaiian organizations,
depot contracts, or contracts for depot maintenance.
—Any conversions to contractor performance occurring under this section are to count
toward any competitive sourcing goal or target.
—None of the funds appropriated by this act may be used for a public-private competition
carried out under Circular A-76 if the competition exceeds 24 months (single function study)
or 36 months (multifunction study).
P.L. 109-163, Sections 341-
DOD
Indefinite
—Public-private competitions that involve 10 or more DOD civilians cannot be converted to
344 and 672n
contractor performance unless the public-private competition includes a formal comparison of
the cost of government performance and the cost of contractor performance, an agency tender
National Defense
(including an MEO), a solicitation, a determination of whether submitted offers meet DOD’s
Authorization Act, FY2006
needs with respect to non-cost factors, the application of the conversion differential, estimated
costs of government performance and contractor performance, an estimate of all costs and
expenditures the government would incur if the work was converted to contractor
performance, and an examination of the effect contractor performance would have on the
military mission associated with the function to be competed.
—A DOD function that is, for example, reengineered or reorganized, but still provides
essentially the same services is not to be considered a new requirement.o
—A DOD function cannot be changed in any way for the purpose of exempting the function
from the requirements of Section 341, and a function cannot be converted to contractor
performance to circumvent a civilian personnel ceiling.
—The Secretary is no longer permitted to delegate report preparation pursuant to 10 U.S.C. §
2461(b)(1).
—The Secretary is required to submit a report for each public-private competition conducted
by DOD to Congress. A decision made on the basis of a public-private competition cannot be
implemented until after the report has been submitted to Congress.
—The Secretary is required to submit an annual report to Congress by June 30 each year with
information about, for example, the cost of conducting competitions and the actual savings.
CRS-12

.

Statute Scopea
Duration
Summaryb
—The Secretary is required to monitor the performance of functions that have been the
subject of public-private competitions.
—10 U.S.C. 2461(a)(1)(E), as amended by P.L. 109-163, does not apply to the pilot program for
best-value source selection for information technology services.
—10 U.S.C. § 2463 is repealed.p
—Section 327 of P.L. 108-375 is repealed.q
—The description of how a contractor may help fund health care for employees has been
broadened to include payments that could be used in lieu of a health care plan, a health savings
account, and a medical savings account. An inadequate contractor-provided health plan is one
that does not comply with any federal law that governs the provision of health care benefits by
government contractors.
—The Secretary is required to prescribe guidelines and procedures for ensuring that
consideration is given to federal employees for work that is currently performed or would
otherwise be performed under DOD contracts. The guidelines and procedures are to provide
special consideration to certain contracts, such as contracts that were not awarded on a
competitive basis or are associated with the performance of inherently governmental functions.
—The expiration date of the Secretary’s authority to award contracts for increased
performance of security guard functions at military installations or facilities under the
Secretary’s jurisdiction is extended from 2006 to 2007.
—The Defense Commissary Agency is exempt from performing any public-private competitions
until December 31, 2008.
P.L. 109-289, Sections 8013,
DOD
FY2007
—None of the funds provided by this act can be used to convert a DOD function that has
8019, and 8026
more than 10 civilian employees from government performance to contract performance unless
an MEO is developed, the conversion differential is applied, and the contractor does not receive
Department of Defense
an advantage by not making a health insurance plan available to employees who are to be
Appropriations Act, FY2007
employed in the function, or by offering a health insurance plan that costs the contractor less
than the amount paid by DOD for the affected civilian employees.
—This section does not apply to JWOD suppliers, Indian tribes, Native Hawaiian organizations,
depot contracts, or contracts for depot maintenance.
—Any conversions to contractor performance occurring under this section are to count
toward any competitive sourcing goal or target.
—None of the funds appropriated by this act may be used for a public-private competition
carried out under Circular A-76 if the competition exceeds 24 months (single function study) or
36 months (multifunction study).
—Circular A-76 shal not apply to competitions between DOD depot maintenance activities
CRS-13

.

Statute Scopea
Duration
Summaryb
and private firms that involve the acquisition of the modification, depot maintenance, and repair
of aircraft, vehicles, and vessels, and the production of components and other DOD-related
articles.
P.L. 109-295, Section 516
DHS
FY2007
—None of the funds appropriated by this act may be used to process or approve a public-
private competition for services provided as of June 1, 2004, by employees of USCIS who are
Department of Homeland
known as immigration information officers, contact representatives, or investigative assistants.
Security Appropriations Act,
FY2007
P.L. 110-28, Sections 6201 and DOE and Department
Varies
—Employees of the National Energy Technology Laboratory are classified as inherently
6602
of Labor
governmental for the purposes of the FAIR Act.r
U.S. Troop Readiness,
—None of the funds made available to the Mine Safety and Health Administration by P.L. 109-
Veterans’ Care, Katrina
289, as amended by P.L. 110-5, can be used to pay for a contract awarded as the result of a
Recovery, and Iraq
public-private competition under Circular A-76.
Accountability Appropriations
Act, FY2007
P.L. 110-116, Sections 8021
DOD
FY2008
—None of the funds appropriated by this act may be used for a public-private competition
and 8028
carried out under Circular A-76 if the competition exceeds 24 months (single function study) or
36 months (multifunction study).
Department of Defense
Appropriations Act, FY2008
—Circular A-76 shal not apply to competitions between DOD depot maintenance activities
and private firms that involve the acquisition of the modification, depot maintenance, and repair
of aircraft, vehicles, and vessels, and the production of components and other DOD-related
articles.
P.L. 110-161, Divisions A, B,
USDA, Department of
Varies
—None of the funds provided by this act may be obligated for the FAIR Act or Circular A-76
C, D, E, F, and G
Justice, DOD, DHS,
activities until the Secretary has submitted a report to the Committees on Appropriations and
Department of the
the House Committee on Government Reform that describes the department’s contracting out
Consolidated Appropriations
Interior, Department of
policies, including agency budgets for contracting out.m
Act, 2008
Labor, and
Government-wide
—Unless USDA receives specific authorization in subsequent legislation, the department may
not use the funds made available in this act to study a competitive sourcing activity relating to
rural development or farm loan programs.
—None of the funds appropriated by this act may be used for any activities related to
conducting a public-private competition under Circular A-76, or any successor administrative
directive, policy, or regulation, for work performed by employees of the Bureau of Prisons or
Federal Prison Industries.
—None of the funds appropriated by this act may be used for conducting a Circular A-76
competition or for converting a function from government to private sector performance
(without a competition) unless the fol owing condition is met: a representative selected by a
majority of the affected employees is treated as an interested party for the purpose of
CRS-14

.

Statute Scopea
Duration
Summaryb
submitting a protest to GAO.
—None of the funds in this act, or previous acts, available for energy and water development
can be used for any competitive sourcing activities under Circular A-76, or for implementing
high-performing organizations for the USACE.
—None of the funds in this act or any other act can be used to convert a function with more
than 10 federal employees from government performance to contractor performance unless an
MEO is accomplished; a public-private competition is held; the conversion differential is applied;
and the contractor does not receive an advantage by not making a health insurance plan
available to employees who are to be employed in the function, by offering a health insurance
plan that costs the contractor less than the amount paid by the federal government for the
affected civilian employees, or by offering to such workers a retirement benefit that costs less
than the annual retirement cost factor applicable to federal employees. This provision does not
apply to, for example, DOD, commercial or industrial type functions that can be provided by
JWOD organizations, and depot contracts.
—Nothing in Circular A-76 shal prevent an agency head from conducting public-private
competitions to evaluate the benefits of converting work performed by contractors to the
federal government. Circular A-76 is to provide procedures and policies for these types of
competitions that are similar to the procedures and policies applied to competitions where the
government is the incumbent.
—Amends 31 U.S.C. §3551(2) to include under the definition of “interested party” any official
who submits an agency tender in a Circular A-76 competition (regardless of the number of
“ful -time equivalent employees” in the affected agency work centers,t), and any one person who
has been designated by a majority of agency employees in the affected work center as their
representative for the purpose of representing them in a protest.
—An interested party (as defined in 31 U.S.C. §3551(2), as amended by this statute) is entitled
to intervene in a civil action that was initiated by a private sector interested party.
—31 U.S.C. §3551(2)(B) and 28 U.S.C. §1491(b) apply to protests and civil actions that
chal enge final selections of sources of performance that are made pursuant to a Circular A-76
competition begun on or after January 1, 2004, and any other protests and civil actions related
to Circular A-76 competitions or decisions to convert performance of an agency function from
government employees to a contractor on or after the date of enactment.
—None of the funds available in this act may be used by OMB to require an agency to prepare
for or conduct a public-private competition or direct conversion under Circular A-76 or any
other directive, policy, or regulation. Additionally, none of the funds available in this statute may
be used by an agency to take any of the specified actions as a result of direction or requirement
by OMB.
—None of the funds available under this act or any other act may be used to conduct a public-
private competition or direct conversion under Circular A-76 or any other directive, regulation,
CRS-15

.

Statute Scopea
Duration
Summaryb
or policy for the human resources lines of business (LOB) initiative until 60 days after OMB
submits a report on the use of competitions and direct conversions for the human resources
LOB initiative to the Senate and House Appropriations Committees and GAO. The report is to
include, for example, an estimate of the annual and recurring savings the initiative is expected to
generate. GAO is to review the report and brief the Appropriations Committees within 45 days
after receiving the report.
—None of the funds appropriated by this act may be used to conduct a Circular A-76
competition for services provided as of June 1, 2004, by immigration information officers,
contract representatives, or investigative assistants employed by USCIS.
—None of the funds appropriated by this act may be used to conduct or implement the results
of a Circular A-76 competition for Coast Guard National Vessel Documentation Center
functions or activities.
—The Department of the Interior cannot spend more than $3,450,000 of the funds made
available by this act or any other act to the department in FY2008 on competitive sourcing
studies for programs, projects, and activities for which funds are appropriated by this act.
—None of the funds made available by this act or any other act may be used for competitive
sourcing studies in FY2008 that involve Forest Service personnel.
—The Forest Service is exempted from implementing the letter of obligation and post-
competition accountability guidelines for certain competitive sourcing studies conducted prior
to FY2006. This exemption applies to competitive sourcing studies that involved 65 or fewer
FTEs; resulted in decisions in favor of agency performance; did not achieve any net savings; and
were completed prior to the date of this act.
—In preparing any reports to the Committees on Appropriations regarding competitive
sourcing activities, agencies funded in this act are to include all costs attributable to conducting
public-private competitions including, for example, any costs attributable to outside consultants
and contractors.
—The Secretary of the Interior shall, for any competitive sourcing study involving department
employees, determine whether any of the employees concerned are also qualified to participate
in wildland fire management activities and consider the effect that contracting with a private
sector source would have on the ability of the department to fight and manage wildfires
effectively and efficiently.
—None of the funds available in this act may be used to conduct a public-private competition
or a direct conversion until 60 days after GAO provides a report to the Committees on
Appropriations on the Department of Labor’s use of competitive sourcing.
P.L. 110-181, Sections 326 and DOD and
Indefinite
—Amends 10 U.S.C. §2461(a)(1). DOD cannot convert a function that has more than 10
327
Government-wide
civilian employees from government performance to contract performance unless the
contractor does not receive an advantage by not making a health insurance plan (or a health
National Defense
CRS-16

.

Statute Scopea
Duration
Summaryb
Authorization Act, FY2008
savings account or medical savings account) available to employees who are to be employed in
the function, by offering a health insurance plan that costs the contractor less than the amount
paid by the federal government for the affected civilian employees, or by offering to such
workers a retirement benefit that costs less than the annual retirement cost factor applicable to
federal employees.
—Each officer or employee of DOD who is responsible for determining under Circular A-76
whether to convert a DOD function to contractor performance shal consult at least monthly
with the civilian employees who will be affected by the determination and consider their views
on the performance work statement and management efficiency study. Under certain
circumstances, consultation with representatives of the appropriate labor organization, or other
representative(s) of the employees, shall satisfy this requirement.
—Amends 10 U.S.C. §2461(a). A military department or a defense agency may not be required
to conduct a public-private competition at the end of the performance period specified in a
letter of obligation or other agreement.
—Amends Title 10 of the U.S. Code by adding a new section (Section 2463). The Under
Secretary of Defense for Personnel and Readiness is required to issue guidelines and
procedures designed to ensure that consideration is given, on a regular basis, to using DOD
civilian employees to perform new functions and work that is being performed by contractors.
Special consideration is to be given to certain functions and activities. Under certain
circumstances, conducting a public-private competition is conditional. For example, a public-
private competition cannot be conducted for a new function until performance of the function
has been assigned to DOD civilian employees. The Secretary of Defense is to implement the
guidelines and procedures within 60 days of the date of enactment of this statute. DOD’s
inspector general shall report on the implementation of this section within180 days after the
date of enactment.
—OMB may not direct or require the Secretary of Defense or the Secretary of a military
department to prepare for, undertake, continue, or complete a public-private competition or
direct conversion of a DOD function.
—The Secretary of Defense and the Secretaries of the military departments may not prepare
for, undertake, continue, or complete a public-private competition or direct conversion of a
DOD function by reason of any direction or requirement provided by OMB. DOD’S IG shall
conduct a review that addresses the department’s compliance with this restriction, and shall
report to the congressional defense committees on this matter.
—Amends 31 U.S.C. §3551(2) to include under the definition of “interested party” any official
who submits an agency tender in a Circular A-76 competition, and any one person who has
been designated by a majority of agency employees in the affected work center as their
representative for the purpose of representing them in a protest.s,t
—An interested party (as defined in 31 U.S.C. §3551(2), as amended by this statute) is entitled
CRS-17

.

Statute Scopea
Duration
Summaryb
to intervene in a civil action that was initiated by a private sector interested party.
—31 U.S.C. §3551(2)(B) and 28 U.S.C. §1491(b) apply to protests and civil actions that
chal enge final selections of sources of performance that are made pursuant to a Circular A-76
competition begun on or after January 1, 2004, and any other protests and civil actions related
to Circular A-76 competitions or decisions to convert performance of an agency function from
government employees to a contractor on or after the date of enactment.
—Amends 41 U.S.C. §403 et seq. by adding a new section (Section 43). A public-private
competition involving 10 or more civilian employees may not be converted to contractor
performance unless the public-private competition includes the following: a formal comparison
of the cost of performance by agency employees with the cost of performance by a contractor;
an agency tender (including an MEO); a solicitation; a determination that submitted offers meet
the agency’s needs with regard to non-cost factors; an examination of the cost of performance
by agency employees and the cost of performance by one or more contractors to show
whether conversion to contractor performance will result in savings to the government over
the life of the contract; and an examination of the effect of contractor performance of the
function on the agency mission. Additionally, continued performance of the function by agency
personnel is required unless it has been determined that contractor performance would be less
costly by an amount that equals or exceeds the lesser of the fol owing: 10% of the MEO’s
personnel-related costs or $10 mil ion. An agency function that has been, for example,
reengineered or reorganized, but still provides essentially the same service shall not be
considered a new requirement. A function being performed by executive agency personnel
cannot be altered for the purpose of exempting the conversion of the function from the
requirements of this section. Each civilian employee of an agency who is responsible for
determining under Circular A-76 whether to convert an agency function to contractor
performance shall consult at least monthly with the civilian employees who will be affected by
the determination and consider their views on the performance work statement and
management efficiency study. Under certain circumstances, consultation with representatives of
the appropriate labor organization, or other representative(s) of the employees, shall satisfy
this requirement. Before an agency begins a public-private competition, the agency head shall
submit a report to Congress containing, for example, the number of civilian employees who
might be affected by the competition and an examination of the potential economic effect of
contractor performance of the function on agency civilian employees who would be affected by
a conversion to contractor performance. The report must include a certification that proposed
performance of the function by a contractor is not a result of an agency official’s decision to
impose predetermined constraints or limitations on agency employees. A representative
individual or entity at a facility where a public-private competition is conducted may submit an
objection to the agency head on the grounds that the report to Congress has not been
submitted or the certification was not included in the report. If the agency head determines
that the report was not submitted or did not include the certification, a contract may not be
awarded until a (complete) report is submitted. This section does not apply to an agency’s
commercial or industrial type of function that is included on a list established pursuant to
CRS-18

.

Statute Scopea
Duration
Summaryb
JWOD, or during war or a national emergency declared by the President or Congress.
—A public-private competition cannot be conducted pursuant to 10 U.S.C. §2461 for a DOD
function at a military medical facility until the Secretary of Defense submits a certification and a
report to the Armed Services Committees. The Secretary of Defense is to certify that he or
she has taken steps to ensure that the quality of medical care and the availability of qualified
personnel to carry out DOD functions related to military medical care will not be adversely
affected by the process of considering the function for possible conversion to contractor
performance or the conversion of such a function to contractor performance. Within 180 days
after the date of enactment of this act, the Secretary of Defense shall submit a report to the
Committees on Armed Services regarding public-private competitions for DOD functions that
are in progress at military medical facilities. The report shall include for each competition, for
example, the cost of conducting the competition, the estimated savings, and the savings actually
achieved.
P.L. 110-234, Section 5306
USDA
Indefinite
—Unless the department receives specific authorization in subsequent legislation, the Secretary
may not conduct a competition of an agency activity relating to rural development or farm loan
Food, Conservation, and
programs, or award a contract to a company to do so.
Energy Act, 2008
P.L. 110-246, Section 5306
USDA
Indefinite
—Unless the department receives specific authorization in subsequent legislation, the Secretary
may not conduct a competition of an agency activity relating to rural development or farm loan
Food, Conservation, and
programs, or award a contract to a company to do so.
Energy Act, 2008
P.L. 110-329, Sections 8016,
DOD and DHS
FY2009
—None of the funds provided by this act can be used to convert a DOD function that has
8023, 8029, 514 and 532
more than 10 civilian employees from government performance to contract performance unless
an MEO is developed, the conversion differential is applied, and the contractor does not receive
Consolidated Security,
an advantage by not making a health benefits plan available to employees who are to be
Disaster Assistance, and
employed in the function, or by offering a health insurance plan that costs the contractor less
Continuing Appropriations
than the amount paid by DOD for the affected civilian employees.
Act, FY2009
—This section does not apply to JWOD suppliers, Indian tribes, Native Hawaiian organizations,
depot contracts, or contracts for depot maintenance.
—Any conversions to contractor performance occurring under this section are to count
toward any competitive sourcing goal or target.
—None of the funds appropriated by this act may be used for a public-private competition
carried out under Circular A-76 if the competition exceeds 24 months (single function study)
or 30 months (multifunction study).
—Circular A-76 shal not apply to competitions between DOD depot maintenance activities
and private firms that involve the acquisition of the modification, depot maintenance, and repair
of aircraft, vehicles, and vessels, and the production of components and other DOD-related
articles.
CRS-19

.

Statute Scopea
Duration
Summaryb
—None of the funds appropriated by this act may be used to process or approve a Circular A-
76 public-private competition for services provided as of June 1, 2004, by employees of USCIS
who are known as immigration information officers, contact representatives, or investigative
assistants.
—The functions of the Federal Law Enforcement Training Center are to be classified as
inherently governmental for the purpose of the FAIR Act.
—None of the funds appropriated by this act may be used to conduct or implement the results
of a Circular A-76 competition for Coast Guard National Vessel Documentation Center
activities.
P.L. 110-417, Sections 321 and Government-wide and
Indefinite
—The head of OMB, in coordination with representatives of the Chief Acquisition Officers
323
DOD
Council (CAOC) and the Chief Human Capital Officers Council, (CHOC) is to review the
existing definitions of “inherently governmental” and develop a single consistent definition for
Duncan Hunter National
this term; develop criteria to aid agencies in identifying critical functions; and provide criteria
Defense Authorization Act,
that would aid in identifying agencies’ positions that are to be performed by civilian or military
FY2009
personnel with the objective of ensuring that each agency develops and maintains sufficient
organic expertise and technical capability.
—The head of OMB, in consultation with the CAOC and CHOC, shal submit a report to
HASC, SASC, the Senate Committee on Homeland Security and Governmental Affairs, and the
House Committee on Oversight and Government Reform, within one year of the date of
enactment of this act, on the actions taken by the OMB director under Section 321.
—The Comptrol er General is to review and report on DOD’s high-performing organization
(HPO) initiatives, including those undertaken pursuant to Circular A-76, to the congressional
defense committees.
P.L. 111-8, Division A, Title I,
USDA, DOJ, DOD, and Varies
—None of the funds provided by this act may be obligated for FAIR Act or Circular A-76
Sections 212, 102, 736, 737,
Government-wide
activities until the Secretary of Agriculture has submitted a report to the Committees on
and 414
Appropriations and the House Committee on Government Reform that describes the
department’s contracting out policies, including agency budgets for contracting out.m
Omnibus Appropriations Act,
2009
—None of the funds appropriated by this act may be used for any activities related to
conducting a public-private competition under Circular A-76, or any successor administrative
directive, policy, or regulation for work performed by employees of the Bureau of Prisons or
Federal Prison Industries.
—None of the funds in this act, or previous acts, available for energy and water development
may be used for any competitive sourcing activities under Circular A-76, or for implementing
high-performing organizations for USACE.
—Each head of an agency subject to the FAIR Act is to develop and implement guidelines and
procedures to ensure that consideration is given to using federal employees to perform new
functions and functions performed by contractors that could be performed by federal
CRS-20

.

Statute Scopea
Duration
Summaryb
employees. Special consideration is to be given to certain functions performed by contractors,
including functions closely associated with the performance of an inherently governmental
function.
—Executive agencies may not conduct competitions under certain circumstances. For example,
an agency head may not conduct a competition for a new agency function before assigning the
performance of the activity to federal employees.
—None of the funds appropriated or otherwise made available by this act or any other act may
be used to begin or announce a public-private competition regarding the conversion to
contractor performance of any work performed by federal government employees.
—None of the funds made available by this or any other act may be used in FY2009 for public-
private competitions and any related activities involving Forest Service personnel.
P.L. 111-80, Title I
USDA
FY2010
—None of the funds provided by this act may be obligated for FAIR Act or Circular A-76
activities until the Secretary of Agriculture has submitted a report to the Committees on
Agriculture, Rural
Appropriations and the House Committee on Government Reform that describes the
Development, Food and Drug
department’s contracting out policies, including agency budgets for contracting out.m
Administration, and Related
Agencies Appropriations Act,
2010
P.L. 111-83, Sections 513, 530
DHS
FY2010
—None of the funds appropriated by this act may be used to approve or conduct a public-
private competition for services provided as of June 1, 2004, by employees of USCIS who are
Department of Homeland
known as immigration information officers, contact representatives, or investigative assistants.
Security Appropriations Act,
2010
—None of the funds appropriated by this act may be used to conduct or implement the results
of a Circular A-76 competition for Coast Guard National Vessel Documentation Center
functions or activities.
P.L. 111-84, Sections 322, 325, DOD and
Varies
—A DOD public-private competition conducted pursuant to Circular A-76 may not exceed 24
326, and 327
Government-wide
months, although the Secretary of Defense may specify an alternative period of time, which may
not exceed 33 months, if he deems it necessary.
National Defense
Authorization Act, 2010
—The Secretary of Defense shal submit an annual report to the House and Senate Armed
Services Committees on the use of alternative time periods for public-private competitions
within DOD.
—During FY2010, the Secretary of Defense shal conduct a comprehensive review of DOD’s
policies regarding public-private competitions and shall submit a report to the HASC and the
SASC.
—The Secretary of Defense shall certify that he completed the review of public-private
competition polices, completed and submitted to HASC and SASC an inventory of services
contracts as required by 10 U.S.C. §2230a, and completed certain other actions.
CRS-21

.

Statute Scopea
Duration
Summaryb
—The Comptroller General shall assess the Secretary’s review of public-private competition
policies and report its findings to the Armed Services Committees.
—Beginning with the date of enactment of this statute and ending 30 days after the Secretary of
Defense submits his certification (see above) to HASC and SASC, DOD may not begin or
announce a public-private competition for any function performed by DOD civilian employees.
—The head of the Office of Federal Procurement Policy shall revise the Federal Acquisition
Regulation (FAR) to allow federal employee representatives designated as such pursuant to 31
U.S.C. §3551(2)(B) to receive debriefings to the same extent and under the same circumstances
as any offeror. This provision applies to public-private competitions where federal employees
perform the work that is being competed.
—Regarding public-private competitions, a new meaning for the term “protest” was added to
31 U.S.C. §3551, and the description of the agency official who is eligible to file a protest was
modified. A new option was added to the list of options that the Comptrol er General may
recommend to an agency upon determining that the solicitation, proposed award, or award
does not comply with a statute or regulation.
P.L. 111-85
DOD (USACE)
FY2010
—None of the funds appropriated by this act or previous acts for energy and water
development may be used to carry out any pending or future competitive sourcing activities
Energy and Water
pursuant to Circular A-76 or to implement any high performing organizations for USACE.
Development and Related
Agencies Appropriations Act,
2010
P.L. 111-117, Sections 212,
DOJ and Government-
Varies
—None of the funds appropriated by this act may be used for any activities related to
735, and 743
wide
conducting a public-private competition under Circular A-76, or any successor administrative
directive, policy, or regulation, for work performed by employees of the Bureau of Prisons or
Departments of
Federal Prison Industries.
Transportation and Housing
and Urban Development, and
—None of the funds appropriated or otherwise made available by this act or any other act may
Related Agencies
be used to begin or announce a public-private competition regarding the conversion to
Appropriations Act, 2010
contractor performance of any work performed by federal government employees.
—Excluding DOD, each agency that is subject to the FAIR Act is to compile and submit to
OMB an annual inventory of service contracts. Beginning in FY2011, if an agency fails to submit
an inventory for the previous fiscal year, it may not initiate a public-private competition for any
function performed by federal employees. This provision also requires agency heads to identify
contracts that should be considered for conversion to performance by federal government
employees.
—Each agency is to make its inventory of services contracts available to the public and to
announce, in the Federal Register, that the inventory is available.
—The head of OMB shal submit to Congress, and make available on its website, a report on
CRS-22

.

Statute Scopea
Duration
Summaryb
the services contract inventories submitted by agencies.
P.L. 111-118, Sections 8023,
DOD
FY2010
—None of the funds appropriated by this act may be used to conduct a public-private
8029, 8117, and 8122
competition if the competition exceeds the time period permitted by Section 322 of P.L. 111-
84.
Department of Defense
Appropriations Act, 2010
—Circular A-76 shal not apply to competitions between DOD depot maintenance activities
and private firms that involve the acquisition of the modification, depot maintenance, and repair
of aircraft, vehicles, and vessels, and the production of components and other DOD-related
articles.
—None of the funds appropriated by this act or funds that remain available to DOD from P.L.
111-329, P.L. 111-5, and P.L. 111-32 may be used to initiate a public-private competition to
convert functions performed by federal employees to contractor performance. This prohibition
does not apply to competitions once the reporting and certification requirements of Section
325 of P.L. 111-84 have been satisfactorily completed.
—Agencies shall submit reports to OMB summarizing the actions taken pursuant to the review
and planning requirements found in this provision (Section 743(e)).
—Per guidance provided in this provision, GAO shall prepare and submit reports to OMB, the
Senate and House Appropriations Committees, the Senate Committee on Homeland Security
and Governmental Affairs, and the House Committee on Oversight and Government Reform.
—None of the funds appropriated or otherwise made available by this act may used to convert
to performance by a contractor any function performed by federal employees at the United
States Military Academy as of the date of enactment of this statute.
P.L. 112-10, Sections 8015,
DOD
FY2011
—None of the funds provided by this act can be used to convert a DOD function that is
8027, and 8103
performed by civilian employees from government performance to contract performance
unless a most efficient and cost effective organization plan is developed, the conversion
Department of Defense and
differential is applied, and the contractor does not receive an advantage by failing to make a
Ful -Year Continuing
health benefits plan available to employees who are to be employed in the function, or by
Appropriations Act, 2011
offering a health insurance plan that costs the contractor less than the amount paid by DOD for
the affected civilian employees. This section does not apply to JWOD suppliers, Indian tribes,
Native Hawai an organizations, depot contracts, or contracts for depot maintenance. Any
conversions to contractor performance occurring under this section are to count toward any
competitive sourcing goal or target.
—Circular A-76 shal not apply to competitions between DOD depot maintenance activities
and private firms that involve the acquisition of the modification, depot maintenance, or repair
of aircraft, vehicles, and vessels, or the production of components and other DOD-related
articles.
—None of the funds appropriated or otherwise made available by this act to DOD may be
used to begin or announce a public-private competition regarding the conversion to contractor
CRS-23

.

Statute Scopea
Duration
Summaryb
performance of any work performed by federal government employees. This prohibition does
not apply to competitions once the reporting and certification requirements of Section 325 of
P.L. 111-84 have been satisfactorily completed.
P.L. 112-55, Division A, Title I, USDA and DOJ
FY2012
—None of the funds provided by this act may be obligated for FAIR Act or Circular A-76
and Section 212
activities until the Secretary of Agriculture has submitted a report to the Committees on
Appropriations and the House Committee on Oversight and Government Reform that
Consolidated and Further
describes the department’s contracting out policies, including agency budgets for contracting
Continuing Appropriations
out.m
Act, 2012
—None of the funds appropriated by this act may be used for any activities related to
conducting a public-private competition under Circular A-76, or any successor administrative
directive, policy, or regulation for work performed by employees of the Bureau of Prisons or
Federal Prison Industries.
P.L. 112-74, Section 515, 519,
DOD,
FY2012
—Circular A-76 shal not apply to competitions between DOD depot maintenance activities
533, 733, 8026, and 8039
Governmentwide, and
and private firms that involve the acquisition of the modification, depot maintenance, or repair
DHS
of aircraft, vehicles, and vessels, or the production of components and other DOD-related
Consolidated Appropriations
articles. However, the Senior Acquisition Executive of the relevant military department or
Act, 2012
defense agency is required to certify that successful bids “include comparable estimates of al
direct and indirect costs for both public and private bids.”u
—None of the funds provided by this act can be used to convert a DOD function that is
performed by civilian employees from government performance to contract performance
unless a most efficient and cost effective organization plan is developed, the conversion
differential is applied, and the contractor does not receive an advantage by failing to make a
health benefits plan available to employees who are to be employed in the function, or by
offering a health insurance plan that costs the contractor less than the amount paid by DOD for
the affected civilian employees. This section does not apply to JWOD suppliers, Indian tribes,
Native Hawai an organizations, depot contracts, or contracts for depot maintenance. Any
conversions to contractor performance occurring under this section are to count toward any
competitive sourcing goal or target.
—None of the funds appropriated or otherwise made available by this act or any other act may
be used to begin or announce a public-private competition regarding the conversion to
contractor performance of any work performed by federal government employees.
—None of the funds appropriated by this statute may be used to approve or conduct a public-
private competition involving employees of USCIS who are known as immigration information
officers, contact representatives, or investigative assistants.
—The functions of the Federal Law Enforcement Training Center are to be classified as
inherently governmental for the purpose of the FAIR Act.
—None of the funds appropriated by this act may be used to conduct or implement the results
of a Circular A-76 competition for Coast Guard National Vessel Documentation Center
CRS-24

.

Statute Scopea
Duration
Summaryb
activities.
P.L. 112-81, Section 808, 845,
DOD
Varies
—The Secretary of Defense is required to issue guidance to the military departments and
931, 937, and 938
defense agencies regarding implementation of a temporary limitation on the aggregate annual
amount of funds available for contract services, FY2012 and FY2013. This guidance is to
National Defense
require, among other things, the elimination of contractor positions that a military department
Authorization Act for Fiscal
or defense agency has identified as being responsible for the performance of inherently
Year 2012
governmental functions. This guidance also is to require the military departments and defense
agencies to reduce by 10% each fiscal year (FY2012 and FY2013) funding for contracts that
involve the performance of functions closely associated with inherently governmental functions.
—Section 845 amends Section 806 of P.L. 107-314 (10 USC § 2302 note) by replacing the word
“supplies” each place it appears with the words “supplies and associated support services”
(except for Section 806(a)(1)(B) and (f)) and defining associated support services. The definition
excludes inherently government functions and any other functions that are “otherwise
exempted from private sector performance.”
—Section 931, which amends 10 USC § 129a, requires the Secretary of Defense to establish
policies and procedures for determining “the most appropriate and cost efficient mix” of
military, civilian, and contractor personnel; lists the DOD officials to whom the Secretary will
delegate certain responsibilities for total force management; identifies documents to be used in
making workforce determinations; and states that the Under Secretary of Defense for
Personnel and Readiness shall ensure compliance with 10 USC §§ 2461 and 2463 when
conversion from federal performance or from contractor performance is considered. Under
the heading “Construction With Other Requirements,” Section 931 states, among other things,
that “[n]othing in this title [Title IX of P.L. 112-81] may be construed as authorizing … the use
of contractor personnel for functions that are inherently governmental even if there is a
military or civilian personnel shortfall” in DOD.
—Section 937 amends 10 USC § 2461(a)(5)(E) and (F), which addresses the preliminary
planning and duration of public-private competitions, by striking text and inserting language that
enhances the specificity and clarifies the applicability of these provisions. For example, an
original reference to “military department” now reads “military department or Defense
agency.”
—Section 938 amends 10 USC § 2463, “Guidelines and Procedures for Use of Civilian
Employees to Perform Department of Defense Functions.” Section 2463(b), as amended,
includes critical functions, acquisition workforce functions, and functions that had been
performed by DOD civilian employees at any time in the past 10 years in a list of functions to
which DOD is to give “special consideration” to using federal civilian employees. Section 2643,
as amended, includes language requiring the Secretary of Defense, “in determining whether a
function should be converted to performance” by DOD civilians, (1) to develop a cost
methodology for comparing the costs of federal employees (civilian and military) and
contractors; (2) consider any supplemental guidance issued by the Secretary of a military
CRS-25

.

Statute Scopea
Duration
Summaryb
department regarding the conversion of functions; and (3) ensure that the difference between
the cost of contractor performance and the cost of federal employee performance “would be
equal to or exceed the lesser of” 10% of the government’s personnel-related costs or $10
mil ion. Section 938 also requires the Secretary of Defense to establish procedures for the
timely notification of “any contractor who performs a function that the Secretary plans to
convert to performance” by DOD civilian employees.
Notes: In an omnibus appropriations statute, a reference to “this act” generally refers to a specific division in the statute. For example, at the end of Division E in P.L. 110-
161, Consolidated Appropriations Act FY2008, it is noted that the division may be cited as the “Department of Homeland Security Appropriations Act, 2008.” (Division E
of P.L. 110-161; 121 Stat. 1844, at 2097.)
a. Although some competitive sourcing provisions may apply only to a specific, named agency or department component or program, only the parent agency or
department is listed in this column.
b. In the earlier years of Circular A-76, several different terms, such as “cost comparison study,” were used to refer to a competition between an agency and private
companies. For the sake of consistency, the terms currently used, such as “public-private competition,” or simply “competition,” are used throughout the table.
c. In 2004, the General Accounting Office was renamed the Government Accountability Office.
d. For the purposes of filing a challenge or appeal under the FAIR Act, an interested party is, in brief, a private sector source, a representative of a business or
professional association, an officer or employee of an organization within an executive agency, or the head of a labor organization. See Section 3(b) of P.L. 105-270 for
the specific criteria that qualify an individual or an organization as an “interested party.”
e. Commercial Activities Panel, Improving the Sourcing Decisions of the Government (Washington: U.S. General Accounting Office, 2002).
f.
The most efficient organization (MEO) is the staffing plan of the agency tender, which is the government’s response to a solicitation. The MEO is the entity that would
perform the work if the government wins the competition. The conversion differential, $10 million or 10% of the government’s personnel costs for the function under
study, whichever is less, is added to the price or cost of the non-incumbent’s proposal.
g. The Javits-Wagner-O’Day Act (JWOD; 41 U.S.C. § 47) directed that, when government agencies purchase goods, priority is to be accorded to qualified nonprofit
agencies for the blind and qualified nonprofit agencies for other severely handicapped individuals.
h. A letter of obligation is “a formal agreement that an agency implements when a ... competition results in agency performance (e.g, MEO).” (U.S. Office of Management
and Budget, Circular No. A-76 (Revised), May 29, 2003, p. D-6.)
i.
An agency tender official (ATO) is “an inherently governmental agency official with decision-making authority who is responsible for the agency tender and represents
the agency tender during source selection.” (Ibid., p. D-2.)
j.
A competitive sourcing official (CSO) is “an inherently governmental agency official responsible for the implementation” of Circular A-76 within his or her agency.
(Ibid., p. D-3.)
k. Post-competition accountability guidelines may be found in Circular No. A-76 (Revised), pp. B-19-B-20.
l.
A full-time equivalent (FTE) is “[t]he staffing of Federal civilian employee positions, expressed in terms of annual productive work hours (1,776 [hours]) rather than
annual available hours that includes non-productive hours (2,080 hours).” (U.S. Office of Management and Budget, Circular No. A-76 (Revised), p. D-5.)
m. Contracting out is one of several possible outcomes of a public-private competition. Considering the context in which the term “contracting out” is used here, it is
likely that this term actually refers to, or means, competitive sourcing.
CRS-26

.

n. Sections 341-344 of P.L. 109-163 amend 10 U.S.C. §§ 2461-2463; and, therefore, it may be necessary to closely examine the statute and the U.S. Code in order to fully
understand the changes.
o. A new requirement is an “agency’s newly established need for a commercial product or service that is not” being provided or performed by federal government
personnel or a contractor. A public-private competition “is not required” for a new requirement if an agency decides that a contractor should perform the work.
However, government personnel cannot perform work associated with a new requirement until and unless a public-private competition has been held. (U.S. Office of
Management and Budget, OMB Circular No. A-76, pp. 2 and D-7.)
p. 10 U.S.C. § 2463 had required the Secretary to col ect and retain cost information on DOD functions converted to contract performance, and DOD functions
converted from contract performance to government performance. Apparently, cost data are or will be collected pursuant to some other provision, because the title
of Section 341(f), which repealed 10 U.S.C. § 2463, is “Repeal of Redundant Provision.”
q. Section 327 of P.L. 108-375 had required, under certain conditions, the application of the conversion differential to public-private competitions and had prohibited
modifying DOD functions in order to avoid having to formal y compare the cost of government performance and the cost of contractor performance of a function.
Section 327 was rendered moot by Section 341(a) of P.L. 109-163, which requires, when 10 or more DOD civilian employees are involved, the use of the conversion
differential and a formal comparison of the cost of government performance and the cost of contractor performance.
r. Although this legislative provision states that employees shall be classified as inherently governmental, it is actually activities and full-time equivalents that are designated
as inherently governmental, or commercial. (Italics added for emphasis.)
s. Prior to the passage of P.L. 110-161, the relevant portion of the definition of “interested party” was as fol ows: an interested party “includes the official responsible for
submitting the Federal agency tender [also known as the agency tender official] in a public-private competition conducted under Office of Management and Budget
Circular A-76 regarding an activity or function of a Federal agency performed by more than 65 full-time equivalent employees of the Federal agency.” (31 U.S.C.
§3551(2).) The correct term is “full-time equivalent” (FTE). It is unclear why the word “employees” was inserted, or whether the inclusion of this word would alter the
meaning of “full-time equivalent” in this case. A full-time equivalent is the “staffing of [a] Federal civilian employee [position], expressed in terms of annual productive
work hours (1,776) rather than annual available hours that includes non-productive hours (2,080 hours).” (U.S. Office of Management and Budget, Circular No. A-76
(Revised), May 29, 2003, available at http://www.truckload.org/pressroom/2005/ISAC%20050919.pdf, p. D-5.)
t.
As discussed in the preceding note, prior to the passage of P.L. 110-161, an agency official who submitted a tender was an interested party, but only for a competition
that involved an agency function or activity that had more than 65 FTEs. The inclusion of the FTE criterion is consistent with Circular A-76: the circular permits
protests for standard competitions, and a standard competition must be used for competitions involving more than 65 FTEs. (U.S. Office of Management and Budget,
Circular No. A-76 (Revised), pp. B-1 and B-20.) Under Circular A-76, protests are not permitted for streamlined competitions, which an agency may use for a
competition involving 65 or fewer FTEs. (Ibid., p. B-20.) The effect of Section 739(c)(1) of P.L. 110-161, which permits an agency tender official for a streamlined
competition to be considered an interested party for the purpose of filing a protest, is unclear. One possible interpretation is that, by amending 31 U.S.C. §3551(2),
Section 739(c)(1) will enable an agency tender official to file a protest in a streamlined competition.
u. Section 8026 of P.L. 112-74.

CRS-27

.
Sourcing Policy: Statutes and Statutory Provisions

Selected Topics Related to Sourcing Legislation11
Commercial Activities Inventory
The requirement for federal agencies to compile inventories of their commercial activities, or
functions, dates to the original Circular A-76 in 1966. Passage of the FAIR Act in 1998
transformed this requirement into a statutory one and directed agencies to submit their
commercial activities inventories to OMB by June 30 each year. The FAIR Act is also notable for
including a definition of “inherently governmental,” a term that previously had been defined only
in OMB guidance.12 The subject of inventories was revisited in 2003, when OMB, in its revision
of Circular A-76, included a requirement for agencies to compile and forward to OMB lists of
their inherently governmental activities.
Applicable statutes: P.L. 105-270, P.L. 109-115.
Commercial Activities Panel
During the 106th Congress, Senator John Warner proposed an amendment to S. 2549,13 S.Amdt.
3464, that directed GAO to convene a panel to study the policies and procedures governing the
transfer of commercial activities from the federal government to a contractor. Taking note of
concerns voiced by federal employee unions and private industry about Circular A-76, Senator
Warner concluded that an objective, systematic study of the competitive sourcing process was
needed. The 13-member Commercial Activities Panel (CAP), which was chaired by the
Comptroller General, issued its report, Improving the Sourcing Decisions of the Government, on
April 30, 2002. The panel recommended that the government adopt a series of 10 sourcing
principles, make limited changes to Circular A-76, develop and demonstrate an integrated
competition process that would draw from both the Federal Acquisition Regulation (FAR) and
Circular A-76, and promote the development of high-performing organizations (HPOs).14 The
panel’s work may have served as an impetus to OMB, which issued a revised Circular A-76 on
May 29, 2003.15
Applicable statute: P.L. 106-398.

11 For additional information on competitive sourcing, see CRS Report RL32017, Office of Management and Budget
Circular A-76: Selected Issues, by L. Elaine Halchin; CRS Report RL32079, Federal Contracting of Commercial
Activities: Competitive Sourcing Targets, by L. Elaine Halchin; CRS Report RL31024, The Federal Activities
Inventory Reform Act and Circular A-76, by L. Elaine Halchin; and CRS Report RS21489, OMB Circular A-76:
Explanation and Discussion of the Recently Revised Federal Outsourcing Policy, by John R. Luckey.
12 Office of Federal Procurement Policy (OFPP) Policy Letter 92-1, dated September 23, 1992, available at
http://www.whitehouse.gov/omb/procurement/policy_letters/92-1_092392.html.
13 S. 2549 was a defense authorization bill. It was incorporated as an amendment to H.R. 4205, which was enacted as
the Floyd D. Spence National Defense Authorization Act for Fiscal Year 2001 (P.L. 106-398, 114 Stat. 1654A-1, at
1654A).
14 Commercial Activities Panel, Improving the Sourcing Decisions of the Government (Washington: U.S. General
Accounting Office, 2002), pp. 46-53.
15 The Office of Federal Procurement Policy (OFPP) Administrator, who headed the effort to revise the circular, was a
member of the panel.
Congressional Research Service
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Sourcing Policy: Statutes and Statutory Provisions

Competitive Sourcing Targets16
When the Bush Administration launched its competitive sourcing initiative in 2001, it established
competitive sourcing targets for federal government agencies: subject 5% of the full-time
equivalents (FTEs)17 listed on their commercial activities inventories to public-private
competition by the end of FY2002; and compete an additional 10% by the end of FY2003.18 An
OMB memorandum indicated that the long-term goal for the federal government was to subject at
least 50% of the FTEs listed on FAIR Act inventories to public-private competition.19 Criticism of
these targets arose in 2002; the primary criticism was that the goals were arbitrary. Senator
George V. Voinovich commented, in March 2002, that the targets were “arbitrary and potentially
damaging.”20 Eventually, in 2003, OMB dropped the 5% and 10% targets while encouraging
agencies, with the promise of earning the highest grade for competitive sourcing on the
President’s PMA scorecard, to develop a competition schedule that would show that all agency
commercial activities from FY2004 through FY2008 were slated for competition.21
Applicable statute: P.L. 108-7.
Conversion from Contractor to Government Performance
Although Circular A-76 does not prohibit conducting a public-private competition for a function
or activity that is being performed by a contractor, this type of competition apparently has rarely
occurred.22 The government’s competitive sourcing initiative under the Administration of George
W. Bush focused exclusively on inventorying work—both commercial and inherently
government—that was being done by federal government employees and, where appropriate,
subjecting commercial activities to public-private competition. An example where OMB declined
an opportunity for federal government employees to participate in a public-private competition

16 See CRS Report RL32079, Federal Contracting of Commercial Activities: Competitive Sourcing Targets, by L.
Elaine Halchin.
17 A full-time equivalent (FTE) is “[t]he staffing of Federal civilian employee positions, expressed in terms of annual
productive work hours (1,776 [hours]) rather than annual available hours that includes non-productive hours (2,080
hours).” (U.S. Office of Management and Budget, Circular No. A-76 (Revised), p. D-5.)
18 U.S. Office of Management and Budget, “Performance Goals and Management Initiatives for the FY2002 Budget,”
memorandum M-01-15, March 9, 2001, p. 1, available at http://www.whitehouse.gov/omb/memoranda/index.html;
information provided electronically by the Office of Federal Procurement Policy, Jan. 14, 2003.
19 U.S. Office of Management and Budget, “Performance Goals and Management Initiatives for the FY2002 Budget,”
p. 1.
20 U.S. Congress, Senate Committee on Governmental Affairs, Who’s Doing Work for the Government?: Monitoring,
Accountability and Competition in the Federal and Service Contract Workforce, 107th Cong., 2nd sess., Mar. 6, 2002
(Washington: GPO, 2002), pp. 19-20.
21 U.S. Office of Management and Budget, Competitive Sourcing: Conducting Public-Private Competition in a
Reasoned and Responsible Manner, July 2003, pp. 4-5; Clay Johnson III, Deputy Director for Management, U.S.
Office of Management and Budget, “Development of ‘Green’ Plans for Competitive Sourcing,” memorandum to the
President’s Management Council, Dec. 22, 2003, available at http://www.whitehouse.gov/omb/procurement/
index_comp_sourcing.html.
22 Apparently, a function was insourced (that is, converted from contractor performance to government performance)
approximately 20 years ago. As reported in Federal Times, after the General Services Administration had outsourced
building maintenance at the Interior Department’s headquarters, agency officials came to believe that the contractor
was charging too much for its services. A new public-private competition was held, and GSA employees won the
competition. (Tichakorn Hill, “Competitive Sourcing Manager Also ‘Insourcing’ Advocate,” Federal Times, Jan. 9,
2006, available at http://www.federaltimes.com/index2.php?S=1451960.)
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Sourcing Policy: Statutes and Statutory Provisions

for work being performed by a contractor involved the Defense Logistics Agency (DLA).23
According to a 2005 article in Federal Times, a private firm won a public-private competition in
2001 for distribution operations at DLA’s Defense Distribution Depot at Cherry Point, North
Carolina (DDCN).24 The contract was allowed to expire because the agency and the contractor
had disagreed over pricing and workload. To keep distribution operations functioning, DLA hired
temporary civilian employees to work at DDCN. When it was suggested that the temporary
employees be permitted to continue working for two years so that their performance could be
compared to a contractor’s, OMB objected. Reportedly, the then-head of the Office of Federal
Procurement Policy (OFPP) responded to this idea by saying:
A second public-private competition so soon after the first would not likely yield
significantly different results in terms of public-sector performance.... By contrast, a
recompetition among private-sector sources should enable [the Defense Logistics Agency] to
enter into a better contract.25
The head of competitive sourcing for the Department of Homeland Security, who previously had
been the focal point at OMB for competitive sourcing, offered the following rationale for
focusing on commercial activities:
Managers ought to know enough about their business to have a sense where competition for
contracted work and competition for in-house work has the greatest probability of payback to
the taxpayer.... It’s an economic decision by competent managers to study that [commercial
activities being performed by government employees] which has never been studied before.26
Beginning with the 109th Congress, however, several measures have been enacted that promote
the notion that work performed by contractors could be converted to federal government
performance. This phenomenon is popularly known as “insourcing.” P.L. 109-115 notes that
Circular A-76 does not prohibit agencies from conducting public-private competitions for
activities performed by contractors. P.L. 111-8 requires the heads of agencies subject to the FAIR
Act to develop and implement guidelines and procedures to ensure that agencies consider using
federal employees to perform new agency functions and activities accomplished by contractors.
Applicable statutes: P.L. 109-115, P.L. 109-163, P.L. 110-161, P.L. 110-181, P.L. 110-329, P.L.
111-8.
Funding Limits on Agency Competitive Sourcing Activities
Over the years, since the inception of Circular A-76, there does not appear to have been any
coordinated, government-wide effort to calculate the costs of competitive sourcing to agencies,
and to provide them, in turn, with funding for this initiative.27 Addressing this apparent lack of

23 The term “insourcing” refers to converting a function from contractor performance to government performance as a
result of a public-private competition.
24 Tichakorn Hill, “DLA Employees Barred from Competing for Jobs; OMB: Past Study Already Proved Outsourcing
Is the Better Deal,” Federal Times, June 27, 2005, p. 4.
25 Ibid.
26 Ibid.
27 Competitive sourcing activities include, but are not limited to, the development and maintenance of inventories of
commercial activities and inherently governmental activities; responding to challenges and appeals concerning the
inventories; preparing for, and conducting competitions; and carrying out post-competition tasks and activities.
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Sourcing Policy: Statutes and Statutory Provisions

financial support, the conference committee that was convened for H.R. 2691 (P.L. 108-108)
wrote:
The managers support the underlying principle of the Administration’s competitive sourcing
initiative.... The managers are concerned that this far-reaching initiative appears to be on
such a fast track that the Congress and the public are neither able to participate nor
understand the costs and implications of the decisions being made. The managers remain
concerned that the Administration has failed to budget adequately for the cost of the
initiative and to justify such costs in budget documents. As a result, significant sums are
being expended in violation of reprogramming guidelines and at the expense of critical, on-
the-ground work such as the maintenance of Federal facilities.28
Other efforts to address the funding of competitive sourcing include a statutory prohibition
involving the Department of Veterans Affairs (VA) and certain reporting requirements levied on
federal agencies. 38 U.S.C. § 8110(a)(5) states that “funds appropriated for the Department [of
Veterans Affairs] under the appropriation accounts for medical care, medical and prosthetic
research, and medical administration and miscellaneous operating expenses may not be used for”
any public-private competition. Among the information agencies are required to report annually
to Congress under Section 647(b) of P.L. 108-199 is “the incremental cost directly attributable to
conducting [public-private] competitions ... including costs attributable to paying outside
consultants and contractors.”
Applicable statutes: P.L. 97-66, P.L. 108-108, P.L. 108-447, P.L. 109-54, P.L. 110-161.
Inherently Governmental
It is the policy of the federal government to have federal employees perform functions identified
as “inherently governmental.”29 P.L. 105-270, which requires agencies to submit inventories of
their commercial activities to OMB annually, includes a definition of “inherently governmental.”
In an effort to reconcile the definitions and examples of inherently governmental functions that
exist, Section 321 of P.L. 110-417 directs OMB to, among other things, develop a single
consistent definition of the term “inherently governmental.”30
Applicable statutes: P.L. 105-270, P.L. 108-136, P.L. 110-28, P.L. 110-329, P.L. 110-417.
MEO and Conversion Differential Requirement
Under the 2003 circular, the instructions for standard competitions and streamlined competitions
vary concerning, among other things, MEOs and the conversion differential.31 An MEO and the

28 U.S. Congress, Conference Committee, 2003, Making Appropriations for the Department of the Interior and Related
Agencies for the Fiscal Year Ending September 30, 2004, and for Other Purposes, conference report to accompany
H.R. 2691, H.Rept. 108-330, 108th Cong., 1st sess. (Washington: GPO, 2003), pp. 85-86.
29 Subpart 7. 5 of the FAR; U.S. Office of Management and Budget, Circular No. A-76 (Revised), May 29, 2003, at
http://oam.ocs.doc.gov/docs/OMB%20Circular%20A-76%20Revised%202003.pdf, p. 1.
30 The following CRS report provides a comprehensive discussion of the term “inherently governmental”: CRS Report
R40641, Inherently Governmental Functions and Department of Defense Operations: Background, Issues, and Options
for Congress, by John R. Luckey, Valerie Bailey Grasso, and Kate M. Manuel.
31 A standard competition must be performed for functions that have more than 65 FTEs. An agency may use
streamlined competition procedures for functions that have 65 or fewer FTEs.
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conversion differential are required for standard competitions.32 An MEO is not required for, and
the conversion differential is not applied to, streamlined competitions.33
An argument for requiring an MEO is that government employees should have an opportunity to
prepare an agency tender that is competitive. In developing an MEO, agency employees may
draft a staffing plan that is more efficient and effective than the current plan, incorporates
innovative practices or procedures not used by the incumbent function, and/or includes new or
different equipment that would enhance the function’s productivity or quality of work. If an MEO
is not developed, then an agency bases its agency tender on an estimate of the cost of the
incumbent activity. As described in Circular A-76, the rationale for having and applying a
conversion differential is that it “preclude[s] conversions based on marginal estimated savings,
and captures non-quantifiable costs related to a conversion, such as disruption and decreased
productivity.”34
Applicable statutes: P.L. 108-87, P.L. 108-108, P.L. 108-199, P.L. 108-287, P.L. 108-375, P.L.
109-115, P.L. 109-148, P.L. 109-163, P.L. 109-289, P.L. 110-161, P.L. 110-181, P.L. 110-329, P.L.
112-10, P.L. 112-74.
Protest Rights
Private sector sources, but not federal employees, have been eligible to file protests involving
Circular A-76 competitions with GAO.35 By amending 31 U.S.C. §§ 3551(2), 3552, and 3553,
P.L. 108-375 has made it possible for an agency tender official (ATO) to file a protest on behalf of
agency employees whose work is the subject of a public-private competition. Individual
employees and unions are not allowed to file protests.
Applicable statutes: P.L. 108-375, P.L. 110-161, P.L. 110-181, P.L. 111-84.
Reporting to Congress
A longstanding problem of competitive sourcing has been the dearth of accurate, reliable, useful,
and comprehensive information about agency competitive sourcing activities and outcomes.
Information has been made available, or otherwise obtained, on an ad hoc basis. Notable
exceptions are DOD’s Commercial Activities Management Information System (CAMIS) and the
release of FAIR Act inventories and inherently governmental inventories. The statutory
requirement for agencies to provide the same competitive sourcing information on a regular basis
to Congress might aid in conducting oversight of the competitive sourcing initiative.36

32 The MEO is the staffing plan of the agency tender, which is the government’s response to a solicitation; and it is the
entity that would perform the work if the government wins the competition. The conversion differential, $10 million or
10% of the government’s personnel costs for the function under study, whichever is less, is added to the price or cost of
the non-incumbent’s proposal.
33 U.S. Office of Management and Budget, Circular No. A-76 (Revised), May 29, 2003, pp. B-4, C-2.
34 Ibid., p. B-16.
35 GAO does not have bid protest jurisdiction over the Federal Aviation Administration (FAA), which has its own
procurement system. FAA’s Office of Dispute Resolution for Acquisition (ODRA) handles bid protests involving the
FAA.
36 Section 647(b) of P.L. 108-199; 118 Stat. 361.
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Applicable statutes: P.L. 106-79, P.L. 108-108 (relevant section subsequently repealed), P.L. 108-
199, P.L. 109-54, P.L. 109-163, P.L. 110-161, P.L. 110-181.
Unconditional Prohibition on Competitions for Certain Functions
Numerous statutory provisions have declared that a named agency function or location cannot be
subjected to public-private competition. For example, in each of several Department of Homeland
Security appropriations acts, a provision states that none of the funds appropriated by the statute
may be used to carry out a competition involving immigration information officers, contact
representatives, or investigative assistants of the U.S. Citizenship and Immigration Services.
Work performed by employees of the Bureau of Prisons or Federal Prison Industries has also been
exempted, on occasion, from competition. A provision in P.L. 111-118 prohibits DOD from using
any of the funds appropriated by this statute to convert any function performed by federal
employees at the U.S. Military Academy to contractor performance.
Applicable statutes: P.L. 101-511, P.L. 108-334, P.L. 109-90, P.L. 109-163, P.L. 109-295, P.L.
110-28, P.L. 110-161, P.L. 110-329, P.L. 111-8, P.L. 111-83, P.L. 111-85, P.L. 111-117, P.L. 111-
118, P.L. 112-55, P.L. 112-74.
Concluding Observations
For many years, the executive branch has led the way with regard to sourcing policy, particularly
the strain that focuses on public-private competition. Circular A-76 was developed by OMB, and
this agency has been actively involved in its implementation. Increasing interest on the part of
Congress in sourcing is demonstrated by the legislation that has been enacted, particularly during
the 108th-111th Congresses. Legislation has touched upon a variety of topics, such as protest rights
for federal employees, the Defense Department’s policies and procedures for total force
management, and the definition of inherently governmental. It remains to be seen whether this
trend of sourcing legislation continues throughout the current Congress and, if so, what kinds of
issues Members elect to address.

Author Contact Information

L. Elaine Halchin

Specialist in American National Government
ehalchin@crs.loc.gov, 7-0646

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