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No One To Lose Job, But Work May Differ
NIH Works To Apply A-76 Fairly

By Rich McManus

On the Front Page...

No less than the wisdom of Solomon is required of NIH officials who are obliged to comply with an old federal policy given new urgency by the Bush administration: namely, that the government should not compete with private industry for services that the private sector can provide. The challenge at NIH is that almost half the workforce of 18,000 people fall into occupational categories that are commercial in nature, not inherently governmental. In order to comply with OMB Circular A-76 and the FAIR (Federal Activities Inventory Reform) Act of 1998, NIH must review up to half of the total of its potentially commercial positions in the next few years, and "outsource" those jobs that the private sector can do in instances where the company can provide the same goods or services that federal workers had been providing, at at least a 10 percent savings to Uncle Sam.


Charles E. "Chick" Leasure Jr., who is NIH deputy director for management and chief financial officer, is at the top of a major effort on the part of executive officers and other officials from all institutes and centers to review commercial activities throughout NIH and provide a fair comparison — "apples to apples" — of functions currently done inhouse that could conceivably be done more cheaply and just as well or better by the private sector.

This can be fearful news to the half of us who do work that is also done outside government. But Leasure has an armload of assurances for frightened federal workers: "First of all, the Secretary (of HHS) has said that everyone (currently federally employed) will have a job, whether contracted out or not. Second, just because jobs are studied does not mean that they will be contracted out — we have to await the outcome of the study. If it turns out to be in the best interests of NIH, we'll pursue contracting."

The A-76 process began, conceptually, during the Eisenhower administration, explains Tom Fitzpatrick, who directs the commercial activities review team (CART) at NIH. It became policy, however, in 1965, when the Office of Management and Budget published its circular directing all agencies to assure that Uncle Sam wasn't taking jobs away from private industry. Successive administrations have put more and less emphasis on the policy, but President Bush has elevated competitive sourcing to one of the top five items on his President's Management Agenda (along with e-government, human capital management, budget and program integration), said Leasure. "This raises A-76 to another level."

NIH began responding to the initiative in fiscal year 2001, when it was directed to review 5 percent of its potentially commercial functions, or some 465 positions. Targets for FY 03 and 04 are 10 percent of the commercial total, or about 930 positions for each of those years. The review doesn't end until NIH has examined some 4,650 positions, or half the estimated 9,300 jobs that could potentially be outsourced.

Many jobs at NIH are already outsourced: "There are well over 3,000 contractors on the Bethesda campus every day," said Leasure, "and that doesn't include all of the construction workers." But NIH doesn't get credit for those in the current A-76 review, he cautioned; "We have to study today's workforce."

Certain jobs at NIH, Leasure explained, have almost always been done by contractors — the people who cut the grass, run the cafeteria, and guard the campus as hired security. "We know there are functions at NIH that can, and should be, performed by contractors," he continued. "The challenge now is to find, 'What else?'"

Protected positions — those deemed "inherently governmental" — include setting program direction and obligating funds. Patient care, too, is protected, as is direct intramural research.

But that leaves seven broad functional areas ripe for review: information technology, personnel, general administrative, facilities and installation services, R&D, grants and finance. The process of review is time-consuming and sometimes repetitive.

The OMB tools used by reviewers were originally developed by the Department of Defense, observes CART's Fitzpatrick, and have had to be modified to apply accurately to civilian positions. The A-76 review process itself is undergoing modification, he said, which will determine how extensive the examination of each position must be (see sidebar).

Leasure acknowledges that it can be unnerving to learn that one's job is under review as a potentially commercial activity. "It's a complex deal, and hard for employees to understand," he said. "People want me to estimate what percentage of (NIH jobs) will be contracted out, and I can't answer. There's no historical precedent to go by.

"It's easy for me to understand why employees are concerned," he continued. "They may be retrained, moved or end up working for a contractor. Obviously these things can be unsettling to people. But I can't assure them until the studies are complete." Thus far, the printing function at ORS has been studied, soon to be followed by animal care, grants technical assistants, and the fire department; a recent all-hands email from Leasure details functions to be reviewed in FY 03 and 04.

Leasure sees an upside to a policy that forces the government to examine whether it is running a fiscally tight operation, but admits it means walking a knife-edge: "We shouldn't be wasting taxpayer money, but we also don't want to destroy the commitment and quality of work done by federal employees," he said. "(A-76) seems to me not totally a bad thing. It combines the best interests of NIH and the taxpayers. We can concentrate on the things that we do well. It forces us to get our own house in order, which is a side benefit of this exercise." He envisions potential savings as workers are retrained in areas where there is more demand for a particular skill.

Leasure chairs the steering committee in charge of A-76/FAIR at NIH, which is composed of representatives of the institutes and centers in areas such as EEO, personnel, information technology and contracts. Their goal is to apply consistency of criteria and methodology in all reviews. They have hired a private firm — Warden Associates — with expertise in this field.

Leasure is aware that many NIH employees perform multiple duties, and are not easily categorizable. "Most of us perform several functions, for example secretary and timekeeper. That person might also do some editorial assistant work, and maybe some travel and procurement. It's a very difficult process to determine how to fairly assign a job category, and to be as fair and judicious as possible.

"What we're trying to get is the best bang for the buck — that's the common theme for both the government and private industry," Leasure summed up. "In an ideal situation, everybody wins."

He knows there are fears out in the workforce "that highly paid people who are at no risk personally are making decisions for people in some smoky back room," but insists he is only working toward goals elucidated by NIH director Dr. Elias Zerhouni; that in all dealings, NIH be transparent, proactive and accountable.

He laments, "I can't guarantee anybody anything. But I do assure you that we are not keeping any secrets. I feel kind of like (Mongomery County Police) Chief Moose (who oversaw the recent sniper investigation) — I need to reassure NIH'ers that we are looking out for what's best for them. I know it's a tension-raising, emotional business. That's why it's critical that we do it right the first time...If we're good at what we do, we can benefit everyone. It won't be easy, but I think it can be done."

He repeats one of his management mantras: "Fair does not mean equal...At NIH, people don't fit into neat pigeonholes very well."

NIH expects to open an outplacement office, he said, for those who want to seek employment elsewhere, under the direction of Fred Walker, director of the Office of Human Resources. Leasure also foresees offers of early or optional retirement. But buyouts are not currently an option. Follow developments in the A-76/FAIR Act story as they unfold at

Sparing Employees Pain, Uncertainty

There are agencies within the federal government where compliance with the mandates of OMB Circular A-76 and the FAIR Act of 1998 are given rather less attention than NIH is devoting, especially when it comes to the concern for its employees, said Tom Fitzpatrick, a veteran of several federal agencies — most recently GSA — who has joined NIH to direct the commercial activities review team, a key player in the A-76 role. Along with his boss, Tim Wheeles, who directs the Division of Management Support, he is responsible for assuring that, when a comparison is done between what federal workers do and produce vs. what a contractor can offer, the terms of the equation are virtually identical. That is, that apples are compared with apples, and oranges with oranges.

There is lots of nit and grit when it comes to this subject, and these two are elbow-deep in it. Fortunately for NIH'ers, they are also dedicated to a fair and open approach. Says Fitzpatrick, "We try to help federal employees to win (retain their status as federal employees) by giving them every opportunity to win. We have the welfare of the NIH community in the forefront of our minds."

A-76 is a process governed by rules originally developed for the military. It initially included some 900 "function codes" used to place worker bees into distinct categories. But those have since been fine-tuned, to add flexibility. FAIR, on the other hand, is an inventory that must be undertaken annually by every federal agency to determine what activities are commercial and which are inherently governmental; it tells the private sector where opportunities to compete with government can be found. Both activities are mandatory requirements for federal agencies.

"The FAIR Act means you have to say which employees are doing what, and what the actual numbers are," said Wheeles. "A-76 compares functions; (FAIR Act accounting and A-76 accounting) don't necessarily match up one-for-one."

The managers know they must overcome a bias — "that everything done at NIH is inherently governmental" (and that some supervisors will inevitably try to "hide" employees from scrutiny). They also know that blue-collar jobs are typically commercial, whereas white-collar posts are more vague, which can lead some groups to feel targeted. Fitzpatrick jokingly refers to the "Yellow Pages test: If you can find (a job description) there, it can be contracted out." Along with the executive officers at NIH, they are committed to a "corporate approach, so that both the benefits and pains are shared across NIH."

When a job is under review, different cost comparison methods can be used. The most strict is a "full generic review," which is very involved and can take from 2 to 3 years. A "streamlined review" takes only 3-4 months, and is used for study sizes of 65 or fewer FTEs. An "expedited review," which is an NIH invention, can be completed in 2 months, and is also for groups of 65 or fewer.

What happens when "challenger" faces "incumbent?" The incumbent's strength lies in two areas: its MEO (most efficient organization, in other words, a self-description of a group's leanest, meanest version of itself), which in turn depends on a well-written and comprehensive performance work statement (also known as an SOW, or statement of work). It says to private industry, "Match this."

Fitzpatrick says an accurate SOW is paramount for groups under review; a strong one is the best defense against loss to private industry. It is important to capture all of the details of the work we do in the SOW in order to level the playing field and be competitive, Wheeles adds. "If, at that point, in the process of studying ourselves we find out that we're not competitive, then A-76 says, 'Why are we doing (the activity)?'"

All NIH jobs that come under review first evaluate themselves, according to commonly agreed upon criteria developed in a software program called ExpertChoice, to determine which functions get reviewed first. "That's a defensible model," according to Wheeles.

Both men know of situations, albeit not under the A-76 program, where federal activities were contracted out, only to be brought back under Uncle Sam's umbrella after costs skyrocketed and performance suffered. "Not all of these (conversions) are going to work out perfectly," said Fitzpatrick.

Some functions are already converting to contract. The Clinical Center's housekeeping department is converting, but only by attrition — no one currently on staff is being forced out. "We hope to do more of this," Wheeles noted. Lab technicians, and some aspects of intramural research, are also due for review.

Meanwhile, the A-76/FAIR team is doing its best to educate, clarify and maintain fairness and consistency as the review rolls forward. "We're an incredible congress at NIH," notes Wheeles. "Any 'senator' can shut down the process. So there's lots of education on what A-76 is and what it isn't. We've got a lot of scared employees who think we're going to give their jobs away. There's a lot of 'Anywhere but my backyard.' But for every one person who is trying to spin us in the wrong direction, there are twice as many urging us to do it right."

Like NIH Deputy Director for Management Chick Leasure, they hope that at the end of the day, NIH retains its core strengths — the things at which it excels — and cedes, in accordance with the President's policy, to the private sector those activities that companies do best — and at least 10 percent cheaper.

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