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1、529U.S. Federal Government Outsourcing Initiatives, Implementation and BenefitsMary Johnson Florida Atlantic University, Florida, U.S.A. 33441Abstract Ambitious plans of the U.S. government to outsource commercial activities are reviewed. The institutional model of Douglass North is applied as justi
2、fying these initiatives under the cost savings generated. Beyond transaction costs considerations, the role of motivations, institutions and descriptive jargon are discussed as relevant to current trends of outsourcing in the federal sector and private sector. Enabling legislation is traced that sup
3、ports federal policy actions. In addition, the strategic sourcing policy under the George W. Bush administration is examined as the most current spin on federal outsourcing initiatives. Key words outsource commercial activities, federal outsorucing initiatives1 Introduction A pervasive trend in fede
4、ral government practice has been the increasing rate at which the government promotes outsourcing or competitive sourcing for the performance of governmental activities. Most recent history reaches back to the 1950s with the A-76 Memorandum of the Office and Management and Budget. This document unde
5、rwent several revisions in the years that followed. The intent, to rely on private business to perform governmental commercial activities, has been augmented in recent years. This is partly due to the increased use of outsourcing by private companies who are organizing their work around their core f
6、unctions and outsourcing the rest of the work. Governments, federal, state and local are experiencing similar successes of cost-savings and increased benefits through the hiring of outsourced specialists. The most common measure of the success of the outsourcing effort is cost-savings reported. With
7、 this standard measure, the Douglass North model of institutions and the goal of minimizing transaction costs through institutional behavior fits nicely to explain the behavior of the federal government. The steady progression of outsourcing, competitive sourcing and engagement of the private sector
8、 in governmental activities can be seen as movement to reap cost- savings and provide better value to nations citizens. The justification for competitive sourcing as shown in the recent report by the IBM Endowment for Business cites cost-savings as the number one benefit from engagement in competiti
9、ve sourcing by the federal government. Thereby, the North model of institutions and underlying thread of minimizing transaction costs as a purpose of institutional behavior serves to explain the federal government behavior relative to outsourcing and competitive sourcing During the 1990s, the U.S. g
10、overnment made dramatic steps toward outsourcing at the federal level. This progression continued through the current administration of President Bush. The subject matter of the paper, outsourcing in the federal government, has a history of application through the A-76 OMB circular and its effects i
11、n the objective of allowing private business to perform government business that is of a “commercial nature.” Outsourcing became a popular policy tool during the 1990s after its reported successes in private business. There have been cases of reported savings of up to 90 percent of contract cost by
12、private businesses outsourcing manufacturing (Garrett, 2004). Thereby, the federal government was implored to adopt this method of conducting business activities if a similar amount of savings could be realized. A cultural norm was created with a belief structure that outsourcing activities could re
13、sult in major cost-savings. Government rules existed through the A-76 program to implement the practice of outsourcing at the federal level. The institutional framework had in its 530hands the rules that were needed to proceed with the task of outsourcing bigger and bigger pieces of governmental wor
14、k. In a similar vein, the concept of “performance based contracting” evolved from its early roots in the Air Force in the 1970s to become a contracting form in private business and government that increased the returns of cost-savings to the contracting party by restructuring the statement of work a
15、nd measurement of results toward an “outcome” focus. Through this method, the parties serving as contractor were able to implement their best efforts and know how as to how to achieve the results rather than complying with specified procedures. Innovation and improved processes could benefit the con
16、tractor and the contracting party alike through significant cost- savings. Moreover, the Republican dominated Congress that President Clinton worked with during his administration was driven to balance the budget. Any method that could be employed to reduce costs and create savings was considered. This included reduction in personnel costs attributed to early retirement inducements and outsourcing governmental commercial activ
