The phenomenon of competitive sourcing (A-76) recently tested the federal agencies' ability to adapt to a fluid environment. The Bush administration policy of regularized job competitions between government employees and contractors threatened not just agency staffing levels but also the foundation of civil service. As many agencies were neither equipped for competition nor functionally suited to A-76, policy implementation for them became not just a matter of compliance but also management of uncertainties and defending their organizations. Through the lens of organization theory and bureaucratic politics, this article tries to capture the responses of two federal agencies to A-76. Taking the focus away from efficiency of privatization initiatives to the dynamics of agency response to a threatening mandate, this study finds support for previous theories of policy implementation. It likewise contributes to theory by demonstrating the mechanisms of adaptation and compliance given the different organizational attributes and multiple political interests that agencies had to balance in competitive sourcing.