Mr. Chairman, thank you for calling today's hearing. This Committee has a long tradition of holding an annual oversight hearing on acquisition policy issues. This morning we will focus on the significant changes in outsourcing policy currently under consideration in the Department of Defense and elsewhere in the executive branch.

Late last year, the Administration proposed a revised version of OMB Circular A-76, to authorize a streamlined "best value" type of competition. The Administration's legislative package contains a provision that would amend Title 10 to enable the Department of Defense to fully implement this change.

I believe that decisions to contract out government functions should be based on fair and objective competition. In my view, true competition must be cost-effective, fair, and most promote trust through transparency and public accountability.

I do not automatically rule out the use of "best value" competitions, which appear to have worked well in the acquisition of products and services from the private sector. However, the subjective quality of best value decision-making requires a great deal of trust in the impartiality of the decision-maker. As the GAO Commercial Activities Panel noted in its final report:

"Because the sourcing decision under Circular A-76 is based on a cost comparison, some view it as objective and therefore less open to an abuse of discretion by management. In the context of the distrust that often permeates the sourcing process, participants (particularly federal employees) often prefer a cost-only basis for a decision, rather than one that permits the exercise of discretion based on subjective factors."

The GAO Commercial Activities Panel concluded that federal employees' trust in a streamlined, "best value" process would be measured, in part, on the extent to which the process provides the federal workforce appropriate rights and protections.

I am concerned that the proposed revision to the A-76 public-private competition process falls short of providing those rights and protections in several important areas. For example:

The proposal would not eliminate arbitrary numerical goals for conducting public-private competitions, as recommended by the GAO panel.

The proposal would not give unions the same right to file bid protests that the private sector already has, as proposed by the GAO panel.

The proposal contains unrealistic timelines for conducting public-private competitions that appear designed to push work out the door to the private sector as fast as possible. The Comptroller General has stated that these timelines are "unrealistic".

The proposal would provide expanded authority to conduct "direct conversions" to private sector performance without any competition at all. The Comptroller General has noted that this approach "sends an unfortunate signal" to federal employees.

The proposal would unduly burden federal managers, and we must ensure they have the resources, training, and people needed to meet competition requirements.

Mr. Chairman, I believe that we can design outsourcing policies that achieve the best deal for the taxpayer without being unfair to our federal workforce. The proposed revisions call for a pilot project that would allow for the use of a "best value standard" for IT projects. I am open to a genuine pilot project to test the feasibility of best value competitions in the Department of Defense, but I hope that we will also be able to address some of the concerns that I have raised. I look forward to working with you on these important issues.