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Summary:
This report examines the issues surrounding the recent Walter Reed publicprivate competition conducted under OMB Circular A-76 and its potential impact on future Department of Defense competitions. Circular A-76 is a policy and a process first initiated in 1966 that was designed to determine whether federal employees or private sector contractors are best to perform activities deemed commercial. A series of articles that first appeared in the Washington Post chronicled the dilapidated conditions and the substandard medical treatment afforded to returning veterans. Media reports surrounding the competition have suggested that one possible contributing factor to the Walter Reed controversy was the decision to privatize base support services. Competitive sourcing through A-76 managed competitions is a major initiative of the Bush Administration's Presidential Management Agenda, and one of five government-wide initiatives to improve the management and performance of the federal government. In 2003, the Bush Administration revised OMB Circular A-76, the revision being a recommendation of the Commercial Activities Panel. There are a number of provisions in H.R. 1585, the House-passed FY2008 Defense Authorization bill, that would affect the A-76 policy and competition process. What caused the problems at Walter Reed? To what extent were the problems publicized in media reports related to the A-76 competition? Did it go badly because A-76 is an inherently flawed policy, or was it a convergence of events? Should Congress draw any conclusions from the outcome of the Walter Reed competition for future competitions on military medical facilities? While it may be hard to draw conclusions of cause and effect, there may be lessons learned applicable to future competitions. Some have suggested that constrained Army resources, due to a convergence of events, may have caused and/or contributed to the problems in the competition, and may have led to the attrition of skilled base support services staff. Other factors which may have affected the process were the entry of the United States into combat operations in Iraq and Afghanistan, a 2005 Base Realignment and Closure Commission recommendation for the consolidation of Army and Navy military medical services into a single tertiary hospital at the campus of the Bethesda Naval Hospital (effectively closing the Walter Reed campus), a surge in the number of outpatient medical care visits for veterans returning from the war; and the Army's push to achieve the Bush Administration's competitive sourcing goals. The Walter Reed A-76 competition is a case where a lot of things went wrong. Some assert that for some types of settings (like military medical facilities) conducting A-76 competitions may not be the most appropriate vehicle for saving money. Congress may want to act so that what happened at Walter Reed not happen elsewhere. This report will be updated as events warrant.
