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ABSTRACT. Competitive sourcing is the government's term for transferring the operation of an internal process or function to either an external supplier or a reengineered government team. The competitively sourced function is managed through performance metrics. These metrics must be thorough, appropriate and well designed to ensure the government is receiving the level of service required to fulfill its various missions. This research effort develops a performance metric evaluation system that was synthesized from metric design literature, Total Quality Management concepts, and the Government Performance Results Act. Use of the system in a case study is discussed along with how to evaluate the results. Results indicate that some Air Force performance metrics have insufficient and improperly designed metrics.
INTRODUCTION
Competitive sourcing is the federal government's term for outsourcing. Outsourcing is a strategic term used by private sector companies seeking to focus their company's skill and resources on core competencies by transferring the ownership of certain internal processes or functions to an external supplier (Outsourcing Center, 2001). By outsourcing certain functions, companies can focus on their core competencies where they obtain "definable preeminence" and can offer their customers unique value. Results of outsourcing can be significant because the outsourcing company gains the utilization of an external company's resources, to include investments, innovations, and specialized capabilities, all of which would be too expensive or impossible to duplicate internally. Outsourcing can lower investments and create better responsiveness to customer needs (Quinn & Hilmer, 1994). This reasoning suggests a company can improve efficiency through the use of an external company's capabilities, such as its innovations and specialized capabilities, and improve efficiency by potentially improved customer responsiveness.
Other outsourcing research efforts have realized less than positive results. Prager and Desai (1996) evaluated an outsourced public-sector function to see if there were, in fact, savings and increased efficiencies. Their results were less than flattering and did not yield solid support for outsourcing. An analysis was conducted to determine if quality and efficiency increased as cost decreased by outsourcing foster care at group homes. Significant problems were discovered: a) the efficiency and effectiveness of processes were difficult to define, b) cost data was not maintained on in-house functions to make the post outsourcing comparisons, and c) many contracts were not monitored...