March 11, 2009

Administration Makes First Moves on A-76
In the Obama administration's first moves on contracting out policy 
under OMB Circular A-76, the IRS has canceled private collection of 
overdue tax debt, and a presidential memo has ordered OMB to "clarify 
when governmental outsourcing for services is and is not appropriate." 
The memo calls for a redefinition of what work is "inherently governmental" 
and thus off limits to contracting out, by July 1. "The line between 
inherently governmental activities that should not be outsourced and 
commercial activities that may be subject to private sector competition 
has been blurred and inadequately defined. As a result, contractors may 
be performing inherently governmental functions," it says. By making the 
standard tighter, the administration could effectively rope off many 
federal jobs from competition with the private sector. Federal employee 
organizations hope that the administration will severely limit the program 
if not repeal it entirely. However, the memo says only that agencies "must 
operate under clear rules prescribing when outsourcing is and is not 
appropriate." The IRS program had been controversial since its launch, and 
numerous moves had been made to end it legislatively, although none of them 
had succeeded against support for the program from the Bush administration 
and from some in Congress.