Last modified Wed., March 05, 2008 - 04:35 PM
Originally created Thursday, March 6, 2008

Competitive sourcing fosters innovation

By Mark Zenthoefer, Program Director, Navy Competitive Sourcing

Dennis Veloni, human resources advisor for Commander, Navy Installations Command (CNIC), gives an update on the status of the CNIC Competitive Sourcing program during a town hall brief Feb. 28 at the NAS Jax Transient Visitor's Quarters conference room. The brief was held to inform members of the Security and Fire Departments and Safety Office about the Competitive Sourcing process which is a study to determine if the Navy should continue to fund emergency management dispatch, safety support services and non-guard security support services or contract them out to commercial activities. Photo by Kaylee LaRocque

The Navy has embarked on a bold work-force-shaping strategy that embraces competition as a means to improve services and reduce cost. The plan calls for completing competitions that include more than 25,000 military and civilian billets within the next five years.

A diverse work force, including military, civilian and contractor components, performs Navy support functions. The Navy seeks to shape the work force so that each component maximizes its competencies. Many support functions, needed to keep the ships sailing and the planes flying, are commercial activities. They fall under Office of Management and Budget Circular A-76 requirements to "rely on the private sector for needed commercial services ... subject to the forces of competition."

The Navy's use of competition evolved into the current program from three major factors: significant conversion of military billets to civilian, formation of an installation command and the May 2003 revisions to A-76. The Navy depends on the same vitality that drives productivity in our economy to drive productivity in the Navy's internal economy.

The Defense Department encourages the military services to reduce the number of military personnel serving in positions not required to perform military functions. Reductions in personnel costs are needed to save money. Through the military to civilian conversion process, the Navy strives to improve the "tooth to tail" ratio for military personnel by moving them into war-fighting positions and having civilians and contractors perform work that does not require military authority or expertise. Military positions that are not needed to provide relief from sea duty and are performing commercial activities are competed using streamlined A-76 procedures. If contracting is determined to be the lowest-cost means of performing these commercial activities, the work is quickly transitioned to the private sector.

Converting military work to civilian performance coincided with creation of a new command, Commander Navy Installations Command (CNIC), in 2003. For the first time, the Navy had a single command to manage installations. CNIC brought about a national focus to installation management. The Navy built a competitive sourcing plan focusing on support functions as unique business lines.

Other commands also embraced the concept of managing business lines with a national or regional focus. This strategy is evident in the competitive sourcing plans for Fleet Forces Command, Naval Facilities Engineering Command and Naval Supply Systems Command. By focusing on business lines, the Navy is able to establish national standards of service, which translate well into performance- based competitive sourcing solicitations. Defining the work is one of the most difficult aspects of the competitive sourcing process because the focus is often more on what the work force does rather than the desired results.

Finally, the 2003 revision to Circular A-76 contributed to the Navy's choice of competitive sourcing as a means to improve services and reduce cost. The circular was revised so that the same Federal Acquisition Regulations that ensure the government is buying at competitive prices are used to make competitive sourcing decisions.

The Navy's program is built to maximize competition. The Navy structured the program to ensure public- and private-sector bidders are competing on equivalent terms. To do this, it established one contracting office to do all A-76 procurements. The contracting officers are A-76 experts in addition to being talented contracting professionals.

This contracting office leads the commands in defining which functions are appropriate for competition and evaluating the private sector's potential for bidding on competitions. The Navy also committed substantial resources to provide agency tender officials (ATO), who represent federal employees who compete for work in teams known as most efficient organizations.

The revised circular requires strict firewalls between the officials managing procurement requirements and the officials supporting the ATO. It is difficult to dedicate resources to both sides of the firewall, but the result is a competitive environment that sparks innovation with the expectation of improving productivity.

Competitive sourcing is often perceived as a means to export government civilian jobs. The Navy's approach to competitive sourcing does not share this view.

The Navy is a large, complex enterprise that is challenged to manage effectively and efficiently. The innovation inherent in competition is needed to ensure commercial activities are motivated toward continuous improvement. The purpose of competition is not to export jobs but to import innovation.