July 24, 2003

Mr. Chairman, thank you for the opportunity to appear before your Committee to present the views of the Department of the Interior (Department) on the President's competitive sourcing initiative within the National Park Service (Park Service).

Management excellence lies at the heart of fulfilling our mission and serving citizens. Competitive sourcing, as part of the President's Management Agenda, helps us achieve management excellence. It gives us a tool to test ourselves and ask: "Are we the best that we can be?"

Every organization in society needs to periodically ask if there is a better way to organize itself to accomplish its mission. By comparing how we currently do business with other options, competitive sourcing helps us find new ways to add value to how we serve the public. It is a tool all federal agencies are using to accomplish this self-examination. The goal of competitive sourcing is to ensure that we provide the public maximum quality services at the best possible value.

Some past government reforms have focused specifically on downsizing or outsourcing, without regard for the overall effects of those choices on performance. By contrast, competitive sourcing is a review process. Through this competitive review, as I like to call it, we look at certain activities and organization structures and ask: 1) should we reorganize for greater efficiency; 2) might a different provider-a local government or a private business, for example, be better configured to provide a service? This process assures that we maintain management vigilance. Even if competitive sourcing were not a Presidential initiative, it would be important for the Park Service to periodically check our efficiency and effectiveness by comparing ourselves to others who provide similar services.

OMB Circular A-76, revised May 29, 2003, provides a mechanism with which to test the results of public/private competitions for commercial services routinely provided by both the federal government and private industry. But the recent revision to the Circular does not tell the entire story about the care, efficiency, and transparency with which the Park Service is undertaking its competitive reviews.

The media has paid significant attention to the competitive sourcing issue. In their reporting, they presented as final decisions certain Park Service internal and draft memoranda, which were prepared for agency deliberations only. The erroneous characterization of these draft documents has contributed to some misunderstandings currently associated with the Park Service competitive sourcing initiative.

I would like to correct these misunderstandings for the Committee today. I have personally visited and interviewed employees from some of the parks being studied and want to reiterate that the National Park Service has the finest employees in the federal service who have the highest dedication to our mission. So far, the Department has experienced its employees winning about 40 percent of the bids. We believe that the Park Service will do better than that. We believe that through a competitive review process, we can win many of these competitions and, through that process, we will find ways to enhance our own effectiveness. Our employees know that we are behind them and support their efforts to succeed in providing outstanding service to the public. I have reinforced this message to the National Park Service workforce in several memoranda to employees.

The National Park Service manages 388 parks units, seven regional offices, a central office, and two service centers. Our parks offer a seamless operation of visitor services, resource and visitor protection. The Park Service, with its many locations, facilities, and infrastructure, is like a small city. Just like any small city, we have many business partners to help us prepare food, maintain our buildings, repair our vehicles, and do the many other activities associated with managing lots of buildings and infrastructure.

Though we have an average of 20,000 federal government employees, over 48,000 individuals participate in these services, helping maintain our facilities, and greeting and interacting with the public. In addition to our 20,000 federal employees, private-sector employees, contractors, volunteers and partners provide concession operations, design, and countless service contracts such as sanitation, trash pickup, lifeguards, professional and administrative services. In addition, several thousand construction workers engaged in all types of projects throughout the park system.

Most of the existing contracts are the result of outsourcing - the process of contracting certain services without competing them between the private sector and Park Service employees. Over the years, the Park Service has outsourced many functions realizing that such services can be performed by contractors in support of the National Park Service mission. These contractors are readily available in the private sector to perform services that the Park Service has chosen not to accomplish in-house with the federal workforce. The Park Service currently outsources well over one billion dollars annually.

An important distinction needs to be made between these traditional outsourcing efforts and competitive sourcing.

Competitive sourcing is the process of competing services between the public and private sector, utilizing the fair, transparent processes outlined in OMB Circular A-76. Under this process, both the public and private sector have an opportunity to realign their organizations to provide the most cost-effective, efficient organization possible. The competition is conducted in accordance with the Federal Acquisition Regulation (FAR) and prescribed procedures outlined in Circular A-76. Either low price or best value (low price and most technically qualified) is established at the outset of a competition as the criterion for award. The current Park Service competitive sourcing plan, which allows for the competition of approximately 1,700 full-time equivalent (FTE) positions, is being accomplished under these competitive sourcing rules.

Outsourcing involves the process of announcing a competition between private sector contractors utilizing only Federal Acquisition Regulation. It does not include competing with established public sector (federal) providers. Federal employees do not have a chance to compete under outsourcing procedures or re-engineer their services to enhance their prospects of prevailing in a competitive sourcing review.

As described above, the Park Service currently contracts on average 28,000 jobs to private industry using outsourcing procedures under Federal Acquisition Regulation and competitions between concessionaires as outlined in 36 CFR, Part 51, Concession Contracts.

Privatization is a broader concept, encompassing transfers in the production of goods and services from the public sector to the private sector, and can include asset sales, long-term leases, and other public-private transactions. The Park Service has no intention of privatizing assets in this way.

The Park Service, like all civilian agencies, has been working on competitive sourcing issues in compliance with OMB Circular A-76 for many years. During the 1980's, the Park Service engaged in several A-76 competitions. From 1987 through 1997, the Park Service turned in an inventory of commercial positions, but did not actively engage in public/private competitions. The enactment by Congress in 1998 of the Federal Activities Inventory Reform (FAIR) Act signaled an increased emphasis on the A-76 program.

Through your diligence and leadership, Mr. Chairman, the FAIR Act turned from a bureaucratic exercise to a valuable planning tool for agencies to use. The FAIR Act assists agencies in monitoring their inventories in a systematic way and identifies potential study areas. The FAIR Act requires all agencies to submit an annual inventory of commercial and inherently governmental FTE positions to OMB for release to Congress and the public. The Act provides a process wherein interested parties may challenge the inclusion or non-inclusion of positions on either side of the inventory to the agency. The Act also provides for an appeals process if the challenger is not satisfied with the agency response.

To comply with the FAIR Act, the Park Service conducted a survey of all positions utilizing the Federal Personnel Payroll System (FPPS) to establish a benchmark for inherently governmental and commercial activities.

Seeing the growing interest and emphasis on the initiative, the Park Service convened a panel of 30 subject matter experts in March 2000 to do an in-depth review of all 237 job series in the Park Service to determine which were inherently governmental and which were commercial. The 2002 inventory contains 11,525 FTEs on the commercial inventory and 8,220 FTEs on the inherently governmental inventory for a total of 19,745 FTEs. This represents all employees, including permanent and temporary, on the payroll as of September 30, 2002. This differs slightly from numbers cited in the budget, because the inventory is a snapshot at one particular time while the budget shows the number of FTEs funded over the entire year. It is important to note that all ranger positions (0025 job classification series) are included on the inherently governmental inventory. None are considered commercial and none have or will be competed.

Prior to the cutoff date of May 29, 2003, when the revised OMB Circular stipulated that no further direct conversions should occur, the Park Service successfully converted 859 positions to contract positions. All 859 positions were either vacant or involved new work where the positions contracted out were unencumbered. Not one permanent Park Service employee lost his or her job due to these direct conversions. In addition, the Park Service conducted all direct conversions and express studies without the use of consultants. Therefore, no appropriated dollars were spent on consultants to accomplish the 859 direct conversions - over half of the goal established for Park Service competitions.

There has also been confusing media coverage concerning the number of Park Service positions or FTEs being studied under the competitive sourcing initiative. Some media coverage has suggested that the Park Service is subjecting as many as 70 percent of its employees to study under competitive sourcing. This is not correct. The Department has asked the Park Service to study approximately 1,700 FTEs by the end of FY 2004. This represents approximately 15 percent of the 11,525 commercial FTEs. We can only conclude that the 70 percent figure in some press reports came from an erroneous calculation of potential studies if the Park Service was to review all or a majority of the 11,525 FTEs identified on the commercial inventory.

The Park Service funded 20,505 FTEs in FY 2002. To clarify, one FTE amounts to 2,087 hours of work in a year, as opposed to a position which is generally encumbered by one individual and could be anywhere from a seasonal - who might work 2 or 3 months during the summer season (.25 FTE) - to a permanent full-time position, which would equate to 1.0 FTE. The Park Service employs approximately 26,000 funded positions, including year-round and seasonal jobs. In a given year, at the height of the summer season, that translates into approximately 19,000 FTEs.

One concern relating to competitive sourcing that has been raised by some observers is its potential impact on diversity. We are proud of our accomplishments in promoting equal employment opportunities for all Americans. We are equally proud to announce that we are working with the communities where competitive reviews are underway and are confident that the same diverse workforce living in those communities will continue to get those jobs. Whether a community provides a diverse pool of workers for the federal government or a similarly diverse workforce for the private sector, we take pride in the community retaining the jobs.

For example, in Florida, a minority contractor has provided workers for lifeguard and maintenance worker positions. In addition, the winning contractor hired all of our former temporary and seasonal employees who were interested in being rehired, and these employees report they are now working more hours for the contractor than they did previously with the Department (taking into account work performed both for the government and private sector clients), resulting in higher incomes. In Harpers Ferry, West Virginia, and Denver, Colorado, contractors associated with the Javits-Wagner O'Day Act (providing jobs for the severely handicapped and the blind) have been contracted to provide file and mail services. These contractors and service organizations deal directly with minority and small businesses to provide workers from the local communities that truly benefit from these contracts. In the majority of instances, local contractors have won the competitions for Park Service work.

The Park Service has also been criticized for spending many millions of dollars on competitive sourcing. Let me set the record straight. The Park Service has never spent over the $500,000 reprogramming threshold in any given fiscal year since the competitive sourcing initiative began. We do have a reprogramming request now pending before the appropriations committee to spend another $1.1 million on these studies in FY 2003.

It has been reported, for example, that the Park Service used monies designated for the maintenance backlog at Mount Rainier National Park to fund competitive sourcing studies. This is not true. No maintenance backlog funds have been or will be used on competitive sourcing at any location. Mount Rainier is not currently on the Park Service competitive sourcing plan for FYs 2003 and 2004.

In conclusion, the National Park Service fully supports the competitive sourcing initiative of the President's Management Agenda. The competitive review that this initiative fosters is an important tool used to ensure we are giving the American public the very best service for their tax dollars. We have the finest, most dedicated employees in the federal service, and we are working with them to find innovative ways to accomplish this initiative. We are doing our best to ensure fairness, effectiveness, and efficiency as we fulfill our grand mission of ensuring Americans can enjoy this Nation's outstanding historic, cultural, and natural heritage now and into the future.

Mr. Chairman, thank you for the opportunity to comment. This concludes my prepared statement and I will be happy to answer any questions you or other Committee members might have.